Netflix third quarter 2026 results: the streamer won’t miss its ad sales target for the year

Netflix’s third-quarter 2026 earnings met revenue expectations and slightly exceeded the bottom line. But the streamer faces an urgent need to refresh its lineup: Revenue growth during the period has slowed to its lowest rate in three years, and the company just laid off 1,000 employees as part of a restructuring effort to reposition itself.

Netflix reported third-quarter revenue of $12.87 billion, up 11.8% year-over-year. This compares to revenue growth of 17% a year ago. Net income was $3.66 billion (compared to $2.55 billion a year earlier), or 87 cents per share. The operating margin stood at 34.6% versus 33.2% expected.

Meanwhile, the company forecast fourth-quarter revenue of $13.4 billion, which would represent an increase of 11.5%. That’s below Wall Street’s previous expectations of $13.5 billion.

For all of 2026, the company now projects ad revenue of about $2.7 billion, up from previously forecasting $3 billion. Netflix blamed the drop in ad revenue on the “slightly slower-than-expected rollout of some ad product features.”

While Netflix has seen engagement per subscriber decline in recent quarters, particularly in the U.S., the company last week laid off about 1,000 employees, or about 6% of its workforce. The company ousted content director Bela Bajaria, bringing in TV veteran Peter Rice to replace her, along with film director Dan Lin and his top lieutenant, Doug Belgrad, as well as original series director Carolina Garcia.

In its third-quarter letter to shareholders, Netflix’s management team — led by co-CEOs Ted Sarandos and Greg Peters — discussed the layoffs but did not explain why it decided to shake up content management.

Netflix is ​​currently forecasting an operating margin of 26.0% in the fourth quarter, which includes a 120 basis point “negative impact” for costs associated with layoffs (but would be up from 24.5% in the year-ago quarter). “These organizational changes allow us to continue to invest aggressively in high-impact areas to improve our service and drive growth and innovation,” Netflix executives said, echoing language they used in an internal company memo about the job cuts.

For Netflix’s third quarter, Wall Street analysts on average expected revenue of $12.87 billion and earnings per share of 82 cents, according to LSEG Data & Analytics.

In July 2026, Netflix released its “What We Watched” viewing report for the first half of 2026, showing that global viewing hours increased 2% year-over-year in total, while engagement per user decreased. According to Jefferies analyst estimates, the average monthly Netflix viewing time per member worldwide fell from 66 hours in the first half of 2023 to around 49 hours in the first half of 2026.

Netflix previously announced that it would release the audience report annually in the first quarter, starting in 2027. “The goal of separating the release of the report from our results is to maintain focus on our key financial metrics – revenue and operating profit,” the company said.

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In 2027, Netflix plans to launch its ad-supported tier in 15 new countries. The first tranche of launches in new markets will take place in March 2027, covering nine countries in Europe (Austria, Belgium, Denmark, Ireland, Netherlands, Norway, Poland, Sweden and Switzerland), as well as Colombia, Peru and New Zealand.