Netflix shares NFLX fell around 4% in after-hours trading on Tuesday after the streaming company reported third-quarter earnings that exceeded analysts’ expectations but forecast slower revenue growth for the fourth consecutive quarter.
The company reported revenue of $12.9 billion for the quarter, up 12% from a year earlier and in line with Wall Street expectations.
Earnings reached 87 cents per share, beating analysts’ estimates of 82 cents. Net income increased approximately 43.5% year over year to $3.66 billion.
However, Netflix forecast fourth-quarter revenue of $13.4 billion, below analysts’ expectations.
The company also projected full-year 2026 revenue of $51.1 billion, representing 13% growth and slightly below the midpoint of its previous forecast range of 13% to 14%.
The outlook comes as Netflix faces questions about viewer engagement, advertising growth and the quality of its programming.
Netflix forecasts slower revenue growth as advertising disappoints
Netflix’s revenue growth has slowed from 17.6% in the fourth quarter of last year to a projected 11.5% in the final three months of 2026.
The company attributed the advertising shortfall partly to a slower-than-expected rollout of some products for advertisers.
Netflix now expects advertising revenue of $2.7 billion this year, compared with its previous projection of approximately $3 billion.
The company said subscription revenue growth had exceeded its expectations.
The company’s operating margin improved to 34.6% in the third quarter from 28.2% a year earlier.
Free cash flow also increased to $2.9 billion from $2.66 billion in the same period last year.
Despite these improvements, investors remain focused on Netflix’s ability to sustain growth.
The company said in its shareholder letter that it recognised investor concerns about viewing hours but remained confident it could accelerate growth in time spent watching its content.
Netflix is expanding into live sports, podcasts and video games while adding third-party film and television programming.
The company is also seeking to increase engagement as competition for viewers intensifies across streaming platforms and other digital entertainment services.
Leadership changes follow concerns over programming quality
Netflix has made significant changes to its workforce and leadership as it seeks to improve its content offering.
Over the past week, the company cut approximately 6% of its workforce, or around 1,000 positions, and removed Chief Content Officer Bela Bajaria and film chief Dan Lin from their roles.
The company appointed Peter Rice, a veteran film and television executive who previously held senior positions at Walt Disney and 21st Century Fox, to replace Bajaria.
The changes follow growing concerns that Netflix has struggled to deliver major television and film hits capable of attracting widespread attention.
Its Emmy Awards haul fell to a 10-year low in 2026, while viewing activity has shown signs of slowing.
Netflix remains a leading global streaming platform, with more than 325 million subscribers.
However, ratings tracker Nielsen puts its share of US television viewing at 7.8%, compared with approximately 14% for YouTube.
According to figures cited by The Wall Street Journal, Netflix viewers watched only 2% more programming in the first half of 2026 than a year earlier.
Stock faces pressure as investors reassess growth prospects
Netflix shares have faced sustained pressure following the company’s unsuccessful bid to acquire Warner Bros. Discovery’s film and television studios and HBO Max.
The stock has fallen approximately 25% this year and more than 40% over the past year, according to the supplied reports.
Investor attention is increasingly centred on the company’s ability to increase viewing hours and generate growth without a major acquisition.
Netflix’s customer retention remains relatively strong. Research firm Antenna estimated that its subscription churn rate was around 2% in September, unchanged from August and the lowest in the industry.
The company also said customer responses to price increases this year were in line with expectations, indicating that engagement remained healthy.
Nevertheless, the weaker advertising outlook and slowing revenue growth have added to concerns about its near-term performance.
Netflix’s improving margins and cash flow provide some support, but investors will be watching whether its content strategy and new entertainment offerings can translate into stronger viewing activity and sustained growth.
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