Los Gatos-based Netflix posts higher profit as revenue growth worries mount
Netflix reported third-quarter profit above expectations Tuesday in Los Gatos, California. Lowered advertising sales forecasts sent company stock down in after-hours trading. The results arrive alongside newly announced job cuts.
The firm earned $3.66 billion, or 87 cents per share, for the July-September period. That is up 44% from $2.55 billion, or 59 cents per share, a year earlier. Revenue rose 12% to $12.87 billion from $11.51 billion.
Analysts surveyed by FactSet predicted earnings of 82 cents per share on revenue of $12.87 billion.
“With Netflix under pressure to find alternative lines of revenue beyond subscriptions, it’s concerning that the company lowered its estimate for its ad business,” said Emarketer senior analyst Ross Benes.
Revamping content strategy is not enough to fix this challenge but it is a worthwhile start. Guidance is not as aggressive as investors have grown accustomed to.
Last week, the Los Gatos business announced plans to lay off about 6% of its workforce. The cuts amount to nearly 1,000 positions. The firm cited wider organizational changes for the decision.
At the end of 2025, regulatory filings showed Netflix had about 16,000 full-time employees worldwide. This marks the biggest round of cuts rolled out in years. Changes also hit leadership.
The company announced last week that Chief Content Officer Bela Bajaria will depart. Peter Rice will replace Bajaria. Rice takes over the post on Oct. 26.
Rice will lead the global content group. He will oversee scripted and unscripted series, film and live events across all regions. Bajaria worked at the streaming service for nearly a decade.
The firm faces competition from Prime Video and Disney+. An $81 billion buyout of Warner Bros. Discovery by Skydance united HBO Max and Paramount+. Netflix dropped an offer for Warner Bros. Discovery in February.
Short video platforms YouTube and TikTok also compete for consumer screen time. Competition remains fierce.
For the current quarter, the platform forecasts revenue of $13.4 billion. Analysts expected $13.5 billion.
Upcoming releases include:
- “East of Eden”
- Season four of “The Diplomat”
- The final season of “Emily in Paris”
The company also released “La Bola Negra.” The Spanish film cost $15 million to make. For the first time in history, Netflix disclosed movie box office figures.
The film made $313,391 over the weekend through Monday in four theaters. It is expected to challenge “The Odyssey” for best picture awards.
Shares fell $2.79, or 4.1%, to $65.90 in after-hours trading. As of Tuesday’s close, the stock is down about 25% year to date.
“Investors are concerned about soft engagement trends, decelerating revenue growth, a slower margin expansion outlook, and most recently content executive leadership changes,” said John Belton, portfolio manager at Gabelli Funds.
Publicly traded corporations report financial statements quarterly to inform shareholders and federal regulators about performance. These regular filings provide details on corporate income, operational expenses and future guidance. Companies based in Los Gatos operate under standard securities disclosure regulations.
Stock prices fluctuate during trading sessions based on investor reactions to these corporate earnings disclosures.
