Netflix cuts advertising outlook and gives weak fourth-quarter profit forecast

Netflix issued weaker-than-expected fourth-quarter profit guidance after third-quarter revenue rose 11.8% to $12.87 billion, the slowest growth rate in nearly three years, Reuters reported.

The company forecast fourth-quarter net income of $2.79 billion and earnings per share of 67 cents, below analyst averages of $3.07 billion and 73 cents. Netflix also reduced its 2026 advertising forecast to roughly $2.7 billion from about $3 billion.

Co-CEO Ted Sarandos said, “I know that we could do better,” and said Netflix would focus on producing television and films that make the service essential. The company recently cut about 1,000 jobs and replaced its chief creative officer.

The Hollywood Reporter independently reported the same 67-cent EPS outlook and the reduced $2.7 billion advertising projection. Netflix said it plans to keep expanding licensed third-party content as it competes with YouTube and TikTok for viewers.

The guidance puts pressure on Netflix to convert audience scale into faster growth and more dependable advertising revenue. Its response combines cost and product choices: about 1,000 jobs were cut, creative leadership changed and licensed programming will continue. Investors will be watching execution and the economics of the advertising tier.

The forecast is also a test of management’s stated creative strategy. Sarandos said Netflix needed to make television and films that make the service essential, while the company plans to keep expanding licensed third-party content. That approach may help sustain viewing, but it also places continuing pressure on programming costs and on the ability of the advertising business to grow alongside subscriptions.

The cited analyst comparison matters because the shortfall is not only a revenue-growth issue: the projected $2.79 billion in net income and 67-cent EPS are both below consensus. The company’s next update will show whether the weaker outlook reflects a temporary timing issue or a broader need to reset expectations.

That reset would affect both investors and the company’s next programming decisions.

Image: Netflix official company assets.

Sources

• Reuters report
• The Hollywood Reporter
• Netflix investor-relations archive