Netflix earnings rose 49% year over year in the third quarter of 2026, beating expectations, but its shares reached a new 52-week low following the results. The October 21 snapshot showed a business still expanding profitably, while fourth-quarter guidance pointed to slower revenue growth and management reduced its full-year advertising revenue forecast.
Key Takeaways
- Third-quarter earnings per share reached $0.87, while revenue rose 11.8% to $12.87 billion.
- Netflix cut its 2026 advertising revenue forecast to $2.7 billion from $3.0 billion.
- Fourth-quarter guidance calls for 11.5% revenue growth and a 26.0% operating margin.
Table of Contents
- Netflix earnings rise faster than revenue
- Advertising forecast falls as capabilities expand
- Engagement and regional growth show a mixed picture
- Fourth-quarter outlook points to further moderation
- Conclusion
Netflix earnings rise faster than revenue
Third-quarter revenue met expectations, but its growth rate slowed from 13.4% in the second quarter and 16.2% in the first. Earnings per share nevertheless increased sharply, supported by a higher operating margin.
Operating margin expanded by 640 basis points, or 6.4 percentage points, from a year earlier to 34.6%. The improvement largely reflected the timing of expenses, making it important to distinguish the quarter’s profitability from management’s expectations for the rest of the year.
The share-price decline followed the earnings release, but the available figures do not establish how much of the move reflected revenue guidance, advertising expectations or other factors. No share price or percentage decline was provided.
| Item | Details |
|---|---|
| United States and Canada revenue growth | 11% in Q3 2026, versus 10% in Q2. |
| Europe, Middle East and Africa revenue growth | 11% in Q3 2026, versus 14% in Q2. |
| Latin America revenue growth | 17% in Q3 2026, versus 21% in Q2. |
| Asia-Pacific revenue growth | 12% in Q3 2026, versus 16% in Q2. |
Advertising forecast falls as capabilities expand
Netflix lowered its full-year 2026 advertising revenue forecast by $300 million, or 10%, citing delays in product rollouts and partner integrations. Management still expects advertising revenue to grow about 80% for the year, but acknowledged that progress has lagged its original targets.
Netflix’s October 20 advertising tools update describes conversion-data onboarding, audience targeting and measurement integrations. It says advertisers will be able to use The Trade Desk audiences across Netflix ads starting in November, while some measurement capabilities remain forthcoming.
Those tools help explain the operational work behind the advertising expansion. The product update does not, however, quantify rollout delays or substantiate the revised revenue forecast.
Engagement and regional growth show a mixed picture
Management described U.S. engagement as solid while acknowledging room to improve content execution and viewer growth. The U.S. programming slate had not performed as strongly as desired.
There were more encouraging retention signals: churn improved year over year both globally and in the United States, and responses to recent price increases were consistent with previous adjustments.
Regional revenue growth was uneven, with the United States and Canada accelerating while the other reported regions slowed. India stood out operationally, with viewing hours up 24% year over year and record quarterly paid net additions.
Fourth-quarter outlook points to further moderation
Netflix forecast fourth-quarter revenue of $13.44 billion, representing 11.5% year-over-year growth and falling short of expectations. It also projected earnings per share of $0.67.
The company expects a fourth-quarter operating margin of 26.0%, compared with 24.5% a year earlier. Its full-year 2026 margin forecast is 31.5%, against 29.5% in 2025.
Management aims to sustain double-digit revenue growth through membership expansion, pricing and advertising. It did not provide a specific 2027 growth forecast, leaving no quantified outlook for whether growth will stabilize or accelerate after the expected 13% increase in 2026.
Conclusion
Netflix earnings growth remained strong, but expense timing and a lower advertising forecast complicate the picture. Fourth-quarter results will provide the next test of the company’s revenue and margin guidance, alongside the advertising audience expansion scheduled for November.
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