Netflix disclosed third quarter financial results on Tuesday, posting $12.9 billion in revenue and $3.664 billion in profit, alongside earnings per share of 87 cents. These figures exceeded both analyst expectations and the company’s own prior guidance, which had projected $12.86 billion in revenue and 82 cents in EPS. Despite beating estimates, the stock declined following the announcement and continued falling in after-hours trading to reach a new 52-week low.
Revenue growth decelerated to 11.8 percent in the third quarter, a concerning sign for a company historically accustomed to stronger expansion. Netflix has now guided for 11.5 percent growth in the fourth quarter, signaling continued moderation. The company’s full-year advertising revenue projection has also been reduced to $2.7 billion from a prior forecast of $3 billion, indicating headwinds in that business segment. For Q4, Netflix is forecasting $13.442 billion in revenue, $2.787 billion in net income, and 67 cents in EPS.
The company addressed investor concerns about viewing hour growth in its shareholder letter, asserting that member engagement remains healthy and that price increases are tracking consistent with historical patterns. Netflix said it intends to accelerate view hour growth by focusing on content strategy. Top-performing titles in the third quarter included “The Last House” with 91 million views in the U.S. and Canada, “Death of the Pastor’s Wife” with 45 million views, and “A Toxic Love Story” with 43 million views in Europe, the Middle East and Africa.
Netflix conducted its largest workforce reduction in years, eliminating approximately 6 percent of staff, with noted departures including chief content officer Bela Bajaria and film head Dan Lin. Associated severance costs will be recognized in the fourth quarter. The layoffs followed comments by co-CEO Ted Sarandos earlier in the period expressing dissatisfaction with the company’s growth trajectory.
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