Netflix Warns of Disappointing Q4 Revenue As Growth Questions Remain

On Tuesday, Netflix announced fourth-quarter revenue projections that fell below Wall Street expectations. The streaming giant reported revenue of $12.87 billion, matching analyst estimates, and strong profit of 87 cents per share. However, Netflix revised its 2026 revenue forecast to $51.1 billion, a 13% increase from the previous year, but at the lower end of its previous guidance.

Fourth-quarter revenue growth was projected at 11.5%, slowing from the 17.6% growth in the prior year period. Additionally, ad revenue for the year is now expected to be $2.7 billion, down from the previous $3 billion guidance. The adjusted outlook overshadowed a solid third-quarter profit of $3.7 billion, or 87 cents per share, driven by subscription growth, ad revenue, and pricing changes.

Netflix's latest quarterly results came days after the company laid off 6% of its workforce and dismissed its Chief Content Officer Bela Bajaria and film chief Dan Lin amid struggles to boost engagement. The layoffs, the largest since 2022, are expected to negatively impact Q4 operating margin, which is now projected at 26%. In response, Netflix has expanded live events, sports rights, gaming, podcasts, and content from TF1, a French broadcaster, among other partnerships.

The company plans to spend $20 billion on content in 2026, with former Disney and Fox executive Peter Rice joining as the new head of content strategy.