Netflix cut its full-year 2026 advertising revenue estimate to about $2.7 billion and forecast slower fourth-quarter growth, putting execution of its ad business alongside subscriptions in focus.
Netflix shares were down 4.25% at $65.77 at 2:49 p.m. EDT Wednesday, Oct. 21, StockAnalysis data showed. The snapshot came a day after the company announced its results.
Netflix’s Oct. 20 shareholder letter put revenue for the quarter ended Sept. 30 at $12.874 billion, up 11.8% from $11.510 billion a year earlier and in line with its forecast. Operating income rose 37% to $4.459 billion. Diluted earnings per share were 87 cents, up from 59 cents; the Associated Press reported that FactSet analysts had expected 82 cents.
For the fourth quarter, Netflix projected revenue of $13.442 billion, equivalent to 11.5% growth from a year earlier. That would be slower than the 17.6% increase recorded in the fourth quarter of 2025. The Associated Press reported that FactSet analysts expected $13.5 billion in fourth-quarter revenue.
The company lowered its 2026 advertising estimate from about $3 billion, saying the rollout of some ad-product capabilities had been slightly slower than expected. Netflix said subscription revenue growth exceeded its expectations. Membership and pricing changes led the quarter’s revenue growth, with advertising and favorable foreign-exchange effects also contributing.
Netflix said its churn, or subscriber cancellation rate, improved from a year earlier both globally and in the United States, and was better than forecast. Co-CEO Greg Peters said in the company’s Oct. 20 earnings interview that U.S. “engagement is solid,” but added, “we know that we can do better.”
Netflix projected a fourth-quarter operating margin of 26%, including an approximately 120-basis-point negative impact from recently announced headcount reductions. The next indicator will be the company’s fourth-quarter results and how revenue and advertising performance compare with its forecasts.
