Netflix profit rises 44% as ad forecast falls to $2.7 billion

Netflix’s third-quarter net income rose about 44% year over year to $3.664 billion, while its operating margin increased to 34.6%. The company reported the results Oct. 20 and lowered its 2026 advertising-revenue forecast by about $300 million, to roughly $2.7 billion.

The advertising cut came alongside continued growth in the company’s broader outlook: Netflix forecast $51.1 billion in revenue for 2026, up 13% from 2025. That forecast is 0.2% below the midpoint of its previous guidance range, not a reduction of $300 million in the overall revenue outlook.

Profit and margin outpaced revenue growth i

Revenue grew 11.8% from the same quarter a year earlier, slower than the 17.2% growth reported in the third quarter of 2025. Net income rose by about 44%, and the operating margin—the share of revenue remaining after operating expenses—increased 6.4 percentage points. The figures show that profit grew faster than revenue, even as revenue growth eased.

Diluted earnings per share of 87 cents topped the 82-cent estimate compiled by FactSet and reported by The Associated Press. The earnings figure compares profit with the number of shares, while operating margin shows how much revenue remains after operating expenses; neither measure changes the fact that the company’s revenue growth rate was lower than a year earlier.

Ad forecast falls, while full-year outlook holds near prior range i

Netflix attributed the lower advertising forecast to a slightly slower-than-expected rollout of some advertising-product capabilities. The revised estimate of about $2.7 billion is roughly 10% below the previous estimate of about $3 billion. It is a forecast for 2026 advertising revenue, not revenue already earned; Netflix did not assign a specific share of the reduction to individual capabilities.

Why does the lower ad estimate not mean the same-sized cut to total revenue? Netflix said subscription-revenue growth had exceeded its expectations, and its overall 2026 revenue forecast remains $51.1 billion. The company expects a 31.5% operating margin for 2026, compared with 29.5% in 2025. Both are annual forecasts, not completed results.

For the fourth quarter, Netflix forecast revenue of $13.442 billion and an operating margin of 26%. The company said that margin forecast includes an approximately 120-basis-point negative impact associated with recently announced headcount reductions; 120 basis points equals 1.2 percentage points. The Associated Press also reported an eMarketer analyst’s concern about the lower advertising estimate, an attributed assessment rather than evidence of a broader consensus.