Netflix Shares Slide as Revenue Growth Slows to a Three-Year Low and Ad Sales Forecast Is Cut

LOS GATOS, Calif., Oct. 21 (TodayViralUSA) — Netflix shares fell after the streaming giant reported its slowest quarterly revenue growth in three years, issued a holiday-quarter forecast below Wall Street’s expectations and cut its full-year advertising target, just a week after laying off about 1,000 employees.

Revenue for the three months ended Sept. 30 rose 11.8% from a year earlier to $12.87 billion, in line with analyst estimates compiled by LSEG. A year ago, Netflix was growing at about 17%. Net income climbed to $3.66 billion, or 87 cents a share, from $2.55 billion, beating the 82-cent consensus.

Margins up, outlook softer

Operating income jumped 37% to about $4.5 billion, lifting the operating margin to 34.6% from 28.2% a year earlier. The company said the margin beat its own forecast mainly because of the timing of expenses.

For the fourth quarter, Netflix projected revenue of $13.4 billion, up 11.5%, slightly below what analysts had expected. It now sees 2026 advertising revenue of about $2.7 billion, down from roughly $3 billion previously, citing a “slightly slower than expected rollout of some ad product capabilities.” Full-year revenue guidance stands at $51.1 billion.

Shake-up at the top of content

The results follow a restructuring in which Netflix cut about 6% of its workforce and replaced chief content officer Bela Bajaria with veteran entertainment executive Peter Rice. Film chief Dan Lin was also among the senior executives pushed out. The company said job cuts would shave about 120 basis points off its fourth-quarter margin.

Investors have grown uneasy about viewing time. Analysts at Jefferies estimate average monthly viewing per member fell from 66 hours in the first half of 2023 to about 49 hours in the first half of this year. In its shareholder letter, management acknowledged “investor concern about our view hours growth” and said it aims to speed up engagement.

Co-CEO Ted Sarandos praised Bajaria on the earnings call but said, “I know that we could do better.” Netflix also plans to launch its ad-supported tier in 15 more countries in 2027, starting in March.