Netflix Earnings Report: What to Expect

Shares of Netflix dropped about 7% in after-hours trading following the company’s third-quarter earnings report. The streaming giant attributed the earnings miss to an ongoing disagreement with Brazilian tax authorities, impacting the results more than expected.

Netflix explained that the specific expense arose from a 10% tax on certain payments made by Brazilian entities to operations outside the country. This unexpected cost was not initially factored into their forecast. It was only after it seemed likely that Netflix would not win a legal dispute over the tax that they decided to include the impact in their third-quarter results.

Despite this setback, Netflix’s revenue for the quarter increased by 17%, meeting analyst predictions. The growth was driven by a rise in membership, adjustments in pricing, and an increase in ad revenue. The company highlighted that it had its best ad sales quarter ever during this period.

Looking ahead to the fourth quarter, Netflix anticipates a 17% year-over-year increase in revenue, thanks to continuous growth in memberships, pricing adjustments, and ad revenue. The company is projecting total revenue for the year to reach $45.1 billion, marking a 16% jump from the previous year.

While the Brazilian tax issue did impact Netflix’s operating margin forecast for the year, causing it to be revised to 29% from the initial projection of 30%, the company remains optimistic. In fact, Netflix’s Co-CEO Greg Peters mentioned that the company is set to more than double ad revenue this year.

Moreover, Netflix shared exciting content updates for the upcoming quarter, with anticipated releases like the fifth and final season of “Strangers Things” and new seasons of popular series like “The Diplomat” and “Nobody Wants This.” Additionally, viewers can look forward to Guillermo del Toro’s “Frankenstein” and Rian Johnson’s “Wake Up Dead Man: A Knives out Mystery.”

Notably, “KPop Demon Hunters,” an animated film released on Netflix in June, has become the platform’s most-watched film with over 325 million views. Netflix revealed plans to expand the film’s reach through a product partnership with Hasbro and Mattel, offering dolls, plush toys, roleplay items, and themed games in spring 2026.

In light of the success of “KPop Demon Hunters,” Netflix also hinted at exploring opportunities related to live experiences, publishing, beauty and lifestyle products, as well as food and beverages tied to the film. Additionally, the film is set to return to theaters during the Halloween holiday weekend.