Netflix Warns of Disappointing Q4 Revenue As Growth Questions Remain

Netflix posted revenue of $12.87 billion and a profit of 87 cents per share, compared to Wall Street estimates of $12.87 billion in revenue and a profit of 82 cents per share, per Yahoo Finance. But the streamer narrowed its 2026 revenue forecast to $51.1 billion, a 13% increase over the prior year but the lower end of its previous guidance. The latest quarterly results come days after the company laid off 6% of its workforce and fired its Chief Content Officer Bela Bajaria and film chief Dan Lin. Netflix’s third-quarter revenue grew 11.8% to $12.87 billion, in line with Wall Street expectations, as the streamer posted a stronger-than-expected profit of $3.7 billion, or 87 cents per share, boosted by subscriptions, advertising and pricing changes. But shares fell over 4% in after-hours trading on Tuesday after the company narrowed its full-year revenue forecast to $51.1 billion, a 13% increase over the prior year but the lower end of its previous guidance. For the fourth quarter, revenue is also expected to grow 11.5% to $13.4 billion, down from the prior year period’s 17.6% increase, with a profit of $2.8 billion, or 67 cents per share. The latest quarterly results come days after the streamer fired its Chief Content Officer Bela Bajaria and film chief Dan Lin, as well as 6% of its total workforce, as it struggles to grow engagement on the platform — its largest cuts since 2022. Former Disney and Fox executive Peter Rice has been brought in to replace Bajaria. In the first half of 2026, Netflix’s engagement growth grew just 2%. In July, the company said it would shift from a bi-annual to annual publication of its engagement reports starting in 2027 as it looks to focus on revenue and operating profit. “We know there’s some investor concern about our view hours growth. Member response to our 2026 price changes is consistent with prior adjustments and our expectations, an indicator that our engagement – which encompasses quantity, quality and variety of viewing – remains healthy and that we continue to deliver strong value to members,” the company wrote in its quarterly shareholder on Tuesday. Costs associated with the layoffs are expected to weigh on its fourth-quarter operating margin, which is projected to fall to 26%, though that is up from a 24.5% margin in the year ago quarter. The company said that the organizational changes would allow it to “aggressively invest in high impact areas” to improve the service and “drive growth and innovation.” In order to boost engagement, Netflix has expanded its live events and sports rights, added gaming, podcasts and content from French broadcaster TF1 to its programming lineup and continues to scale its ad-supported tier. It also has updated its homepage, revamped its mobile app with a vertical video feed to help subscribers discover and sample content faster and plans to spend a total of $20 billion on content in 2026. On the M&A front, Netflix’s $83 billion deal to acquire Warner Bros. Discovery’s streaming and studio assets collapsed earlier this year after it declined to match a rival bid from David Ellison’s Paramount Skydance. However, it acquired Ben Affleck’s AI startup InterPositive as it looks to leverage the technology to help boost growth. In 2026, GenAI workflows have been used in roughly 300 of Netflix’s titles, with the largest concentration of work in post-production. More to come…