Netflix Revenue Rises 12% to $12.874 Billion as Growth Slows
Key Facts
Netflix reported revenue of $12.874 billion in the third quarter of 2026, up 12% from the same period a year earlier, its slowest growth in about three years, according to a company filing with the U.S. Securities and Exchange Commission. Growth slowed from 17.2% in the third quarter of 2025 and 16.2% in the first quarter of 2026, then 13.4% in the second quarter, according to the shareholder letter. Net income, by contrast, rose 44% to $3.664 billion from $2.547 billion a year earlier. Diluted earnings per share were $0.87, compared with $0.59 a year earlier, beating the FactSet analyst consensus of $0.82, according to the Associated Press. The results put slowing revenue growth alongside stronger earnings and operating margins, as investors focus on the company's ability to sustain growth.
Netflix attributed revenue growth mainly to a $1.057 billion increase in subscription revenue, reflecting higher memberships and prices, and a $256 million increase in advertising revenue compared with the third quarter of 2025. Foreign-exchange movements, after hedging, added a positive $101 million to the overall revenue increase. The company said member retention remained healthy across all regions during the quarter. Its year-over-year cancellation rate also improved globally and in the United States, and was better than expected, according to the shareholder letter. This suggests subscriptions and pricing continued to support revenue, while overall growth has slowed from one quarter to the next.
On profitability, operating margin rose to 34.6% in the third quarter from 28.2% a year earlier, an improvement of more than 6 percentage points, according to the company's explanation in its filing. Netflix attributed the gain to lower cost of revenue and revenue growing faster than some operating expenses. The company, however, expects an operating margin of 26.0% in the fourth quarter, compared with the third-quarter level, according to the shareholder letter. It also forecast fourth-quarter revenue of $13.442 billion, up 11.5% year over year. For 2026, it expects full-year revenue of $51.1 billion, an increase of 13%, and an operating margin of 31.5%.
The company cut its 2026 advertising revenue forecast to about $2.7 billion from nearly $3 billion previously. Netflix said in its shareholder letter that the revision reflected a slightly slower-than-expected rollout of some advertising product capabilities. Investing.com coverage cited the same figure on October 26, attributing the cut to the slower rollout of advertising product capabilities. The revision came as the company forecast revenue growth to slow for a fourth consecutive quarter, according to a Reuters report published via Investing.com. Co-CEO Ted Sarandos said before the results were announced that the company “is not growing as fast as I want,” adding that live programming could help accelerate growth. The comments link the challenge of speeding up revenue with the execution of the growth initiatives on which the company is betting.
Market pressure emerged quickly after the results and the cut to its advertising sales forecast: Netflix shares fell 4.1% to $65.90 in after-hours trading on October 20, according to the Associated Press. In afternoon trading on October 21, the stock was down about 5% after the company forecast slower revenue growth for a fourth consecutive quarter, according to a Reuters report via Investing.com. An analyst at Gabelli Funds said investors were concerned about weak engagement trends, slower revenue growth, slower margin expansion and changes in content leadership. A Reuters report said the stock had lost about a quarter of its value from the start of 2026 through October 21. On October 26, shares fell 3.0% in midday trading to $63.87, setting a new 52-week low, according to Investing.com. EL7 data showed the stock closed at $63.9 that day, below the closing price in every trading session from October 19 to 23.
The market pressure comes as the company makes changes to its content team and workforce. The Associated Press reported that Netflix announced plans in the week before the results to cut about 6% of its workforce, or roughly 1,000 jobs. The report added that Bela Bajaria would leave her role as chief content officer and Peter Rice would take over on October 26. The company had announced that third-quarter results and its business outlook would be released on October 20, 2026, followed by a live interview with management. With the outlook now released, attention turns to forecast fourth-quarter revenue of $13.442 billion and whether subscription and advertising growth will keep pace with the slowdown the company has outlined.