Netflix Reports $12.874 Billion in Revenue as Growth Slows to Nearly Three-Year Low
Key Facts
Netflix reported revenue of $12.874 billion in the third quarter of 2026, up 11.8% year over year, while operating income was $4.459 billion. Revenue exceeded $11.510 billion in the same period of 2025, when it grew 17.2% year over year, the results showed. The company said in its shareholder letter that revenue growth came mainly from subscriptions. It attributed this to membership and price increases, alongside growth in advertising revenue and a favorable foreign-exchange impact. It added that subscriber retention improved year over year across all regions.
The operating margin rose to 34.6%, compared with 28.2% a year earlier, as operating income climbed from $3.248 billion to $4.459 billion. The Associated Press, meanwhile, described revenue growth as the slowest in nearly three years. The slowdown puts third-quarter growth at its lowest pace since then, despite higher revenue and operating income. Asia-Pacific revenue was $1.537 billion, up a reported 12% year over year. The company’s available figures did not say that India led regional growth or report a specific growth rate there.
Netflix’s plan to diversify revenue through advertising faces a revised outlook: the company cut its 2026 advertising revenue estimate to about $2.7 billion from about $3 billion previously. It attributed the change to a slower rollout of some advertising product capabilities than it had expected. The cut comes as subscriptions remain the main driver of revenue growth, according to the shareholder letter. Co-CEO Ted Sarandos said the company was “not growing as fast as I want.” He said live programming could help accelerate growth.
In the competition for viewing time, Reuters reported that YouTube commands nearly twice as much viewing time as Netflix in the United States, according to Nielsen data. The report said lower-cost creator videos compete with scripted productions made on bigger budgets. Netflix announced plans to cut about 6% of its workforce, or roughly 1,000 employees. The co-CEOs said carrying out the company’s mission requires “discipline in how we prioritize our people and resources.” They added that “our business is strong and growing, and we remain on track to meet our full-year outlook.”
The company also announced a change in content leadership: Chief Content Officer Bela Bajaria will leave the role, with Peter Rice set to take over beginning October 26. In after-hours trading following the results announcement on October 20, the stock fell $2.79, or 4.1%, to $65.90. The decline followed the results, amid the revised advertising revenue outlook and the announcement of job cuts. The company expects fourth-quarter revenue of $13.442 billion, up 11.5% year over year. It also expects net income of $2.787 billion and diluted earnings per share of $0.67.
For the full year, Netflix expects revenue of $51.1 billion in 2026, up 13%, and an operating margin of 31.5%. The company targets an operating margin of 26% in the fourth quarter, compared with 24.5% in the same period of the previous year. The estimate includes a negative impact of about 120 basis points related to the workforce reduction. The fourth-quarter content slate includes new titles and anticipated seasons, along with 3 NFL games over Thanksgiving and Christmas. It also includes the Tyson Fury versus Anthony Joshua fight, among the releases and events the company announced for the period.