Netflix fell short of Wall Street analysts’ earnings expectations in the third quarter and said a dispute with Brazilian tax authorities kept operating margins from meeting its guidance.
Revenue came in on target during the June-to-September period, reaching $11.51 billion.
Earnings per share of $5.87 on a diluted basis came in more than a dollar shy of analysts’ consensus of $6.97.
In its quarterly letter to shareholders, the company said its operating margin of 28% undershot guidance of 31.5% “due to an expense related to an ongoing dispute with Brazilian tax authorities that was not in our forecast. Absent this expense, we would have exceeded our Q3’25 operating margin forecast. We don’t expect this matter to have a material impact on future results.”
Shares in Netflix slumped on the earnings miss in after-hours trading, falling as much as 7% before stabilizing a bit and remaining in the red. The stock had been on a tear, rising almost 40% in 2025 to date and recently trading above $1,200, close to its all-time high.
Wednesday‘s Season 2 premiere in September drove significant viewership to close out the quarter. The series racked up more than 7 billion viewing minutes during the month, according to Nielsen, more than twice the No. 2 title.
The Addams Family spinoff was a key part of Netflix’s pitch to advertisers in the upfront, and helped deliver the best ad revenue quarter in the company’s history. In the letter, the company said it remains on track to double ad revenue for the full year compared with 2024.