Netflix posted third-quarter revenue of $12.87 billion, matching Wall Street forecasts, yet the company confronts a deepening content crisis that has already cost 1,000 employees their jobs.
Revenue climbed 11.8% from the same period last year, a sharp deceleration from the 17% growth rate recorded a year earlier. That marks the slowest expansion in three years. Net income reached $3.66 billion, or 87 cents per share, surpassing analyst estimates of 82 cents. Operating margin landed at 34.6%, ahead of the 33.2% projection.
Meanwhile, the fourth-quarter outlook disappointed investors. Management guided for $13.4 billion in revenue, representing 11.5% growth, below the $13.5 billion Wall Street anticipated.
Advertising revenue also took a hit. Netflix now expects roughly $2.7 billion in ad sales for full-year 2026, down from its earlier $3 billion forecast. The company attributed the shortfall to slower-than-planned deployment of certain ad product features.
The turbulence extends beyond financials. After watching per-member engagement decline steadily, especially in the U.S., Netflix eliminated about 6% of its workforce last week. As a result, chief content officer Bela Bajaria exited, with veteran television executive Peter Rice stepping in. Head of film Dan Lin and his deputy Doug Belgrad also departed, alongside director of original series Carolina Garcia.
In their shareholder letter, co-CEOs Ted Sarandos and Greg Peters acknowledged the layoffs but offered no explanation for the content leadership overhaul. They did frame the restructuring as essential for aggressive investment in high-impact areas.
Engagement data underscores the pressure. Jefferies analysts estimate average monthly viewing per member globally dropped from 66 hours in early 2023 to roughly 49 hours by mid-2026.
Looking ahead, Netflix plans to launch its ad-supported tier across 15 new countries in 2027, starting with nine European markets plus Colombia, Peru, and New Zealand in March.
