Investors switched off Netflix Inc (NASDAQ:NFLX, ETR:NFC) on Wednesday after the streamer reported a mixed set of third-quarter results.
Ernings slightly missed Wall Street expectations for per-share profit, even as revenue and cash flow continued to grow, underscoring the streaming giant’s ongoing expansion amid rising content costs.
For the quarter ended September 30, Netflix’s revenue rose 17% year-on-year to $11.51 billion, just below analysts’ estimate of $11.52 billion.
Adjusted earnings per share came in at $5.87, missing the expected $6.94, though up 9% from a year earlier.
Free cash flow increased 21% to $2.66 billion.
The company said revenue growth was broad-based, with US and Canada up 17% to $5.07 billion, Europe, the Middle East and Africa (EMEA) up 18% to $3.7 billion, Latin America up 10% to $1.37 billion, and the Asia-Pacific region rising 21% to $1.37 billion. Operating income rose 12% to $3.25 billion, while operating margin slipped to 28.2%, down 1.8 percentage points from last year.
Netflix flagged a one-time expense linked to an ongoing dispute with Brazilian tax authorities as a factor weighing on margins. “Absent this, we would have exceeded our Q3 operating margin forecast,” the company said.
Looking ahead, Netflix provided fourth-quarter revenue guidance of $11.96 billion, slightly above the $11.9 billion expected, and EPS of $5.45, just above the $5.42 consensus. Operating income and margin were projected slightly below estimates at $2.86 billion and 23.9%, respectively.
For full-year 2025, Netflix expects revenue of $45.1 billion, operating margin around 29%, and free cash flow near $9 billion, up from prior guidance of $8 billion–$8.5 billion.
The company highlighted strong advertising performance, noting it recorded its best ad sales quarter ever and expects to more than double ad revenue in 2025. Netflix also cited an exciting Q4 content slate, including the final season of Stranger Things and multiple live events.
Shares fell almost 10% in early trading following the earnings release overnight.