The streaming service Netflix released a profit forecast for the fourth quarter of 2026 that was below analysts’ expectations and lowered its annual ad-revenue forecast to roughly $2.7 billion. According to Netflix, this reflects slowing revenue growth, staff cuts and changes in leadership.
Quarterly results and forecast for the fourth quarter
In the third quarter, Netflix’s revenue rose 11.8% year on year — to $12.87 billion, in line with analysts’ forecasts but marking the slowest growth rate in almost three years. Earnings per share (EPS) for the quarter were 87 cents versus the expected 82 cents.
For the fourth quarter the company forecasts net income of $2.79 billion, or 67 cents per share, while analysts had expected $3.07 billion and 73 cents per share, respectively.
Cut to ad-revenue forecast and reasons
Netflix cut its ad-revenue forecast for 2026 from about $3 billion to around $2.7 billion, blaming a slower-than-expected rollout of certain advertising features. The ad tier is intended to be one way to diversify revenue for a service that has traditionally relied mainly on subscriptions.
The company also cited competition for viewers’ attention from platforms such as YouTube and TikTok and said it is expanding its content — video games, podcasts and live streaming — to increase viewing time and user retention.
Staff cuts and leadership changes
Shortly before publishing its financial forecast, Netflix announced cuts of about 6% of its staff, roughly one thousand employees. The company also changed the executives responsible for content production.
Former Disney and Fox executive Peter Rice is set to replace Bela Bajaria as chief content officer and will temporarily oversee film production following the leadership changes in that division. After the announcements, Netflix shares fell nearly 6% in after-hours trading.
