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Netflix cuts 2026 ad forecast to $2.7 billion as Q3 revenue growth slows
Third-quarter revenue rose 11.8% to $12.87 billion and profit beat expectations, but Netflix lowered its annual advertising outlook from about $3 billion after some ad-product capabilities rolled out more slowly than planned.
Netflix lowered its 2026 advertising-revenue forecast to about $2.7 billion from roughly $3 billion after reporting third-quarter revenue of $12.87 billion, up 11.8% from a year earlier. The company said some advertising-product capabilities rolled out slightly more slowly than expected.
Quarterly net income reached $3.66 billion, or 87 cents per diluted share. The results beat the 82-cent analyst estimate cited by Reuters and AP, but management’s fourth-quarter profit forecast came in below Wall Street expectations and the shares fell in after-hours trading.
The advertising forecast fell by about $300 million
Netflix now expects approximately $2.7 billion in 2026 advertising revenue, down from its previous estimate of about $3 billion. The company attributed the change to a slightly slower-than-expected rollout of some advertising-product capabilities. Subscription revenue, by contrast, outperformed its expectations, leaving the full-year revenue forecast at $51.1 billion—0.2% below the midpoint of the prior range.
Revenue grew, but at the slowest pace in nearly three years
Third-quarter revenue was $12.874 billion, up 11.8% year over year and in line with the company’s forecast. Reuters described that as the slowest growth rate in nearly three years. Netflix said subscription growth, advertising revenue and favorable foreign-exchange effects all contributed, while retention improved year over year in every region.
Profit beat estimates while the Q4 outlook disappointed
Net income rose to $3.664 billion from $2.547 billion a year earlier. Diluted earnings per share increased to 87 cents from 59 cents, ahead of the 82-cent consensus cited by Reuters and AP. For the fourth quarter, Netflix forecast $13.442 billion in revenue, $2.787 billion in net income and 67 cents in diluted EPS; Reuters said the profit and EPS forecasts were below analyst expectations.
Margins improved, with a restructuring cost ahead
Operating income reached $4.459 billion and the operating margin widened to 34.6% from 28.2% a year earlier. Netflix expects a 26.0% fourth-quarter operating margin, including an estimated 120-basis-point negative effect from recently announced headcount reductions. The company still projects a 31.5% operating margin for full-year 2026.
What the update does—and does not—show
The quarter shows that Netflix remained highly profitable while growth decelerated and the advertising buildout missed its earlier annual target. It does not establish that advertising revenue declined year over year, nor does the reduced forecast mean the subscription business missed plan. The figures are company forecasts and reported results, not investment recommendations or guarantees of future performance.
