Netflix Q3 Revenue Meets Wall Street Estimates, Forecasts Q4 Slowdown and Says It Will Miss Ad Sales Target for the Year

Netflix‘s third-quarter 2026 earnings met revenue expectations and it slightly beat on the bottom line. But the streamer faces an urgent need to refresh its queue: Revenue growth in the period slowed, and the company just laid off 1,000 employees in a restructuring effort to reposition itself.

Netflix posted Q3 revenue of $12.87 billion, up 11.8% year-over-year. That’s compared with 17% top-line growth a year ago. Net income came in at $3.66 billion (versus $2.55 billion a year earlier), translating to earnings of 87 cents per share. Operating margin was 34.6% (versus 33.2% expected).

As Netflix has seen per-subscriber engagement drift downward in recent quarters, particularly in the U.S., the company last week laid off about 1,000 employees, about 6% of its workforce. The company ousted chief content officer Bela Bajaria, tapping veteran TV exec Peter Rice to replace her, and pink-slipped head of film Dan Lin and his top lieutenant, Doug Belgrad, as well as director of original series Carolina Garcia.

In their Q3 letter to shareholders, the Netflix management team — led by co-CEOs Ted Sarandos and Greg Peters — addressed the layoffs but did not explain why they decided to overhaul content leadership.

Netflix currently projects a Q4 operating margin of 26.0%, which includes a 120 basis point “negative impact” for costs associated with the layoffs (but would be up compared with 24.5% in the year-ago quarter). “These organizational changes enable us to continue to aggressively invest in high impact areas to improve our service, and drive growth and innovation,” the Netflix execs said, echoing language they used in an internal company memo about the job cuts.

For Netflix’s third quarter, Wall Street analysts on average expected $12.87 billion in revenue and earnings per share of 82 cents, per LSEG Data & Analytics.

In July 2026, Netflix released its “What We Watched” viewing report for the first half of 2026, showing global hours viewed increased 2% year over year in aggregate — while per-user engagement has shrunk. According to estimates by analysts at Jefferies, Netflix average monthly viewing time per member globally has fallen from 66 hours in the first half of 2023 to about 49 hours in the first half of 2026.

Netflix previously announced that it will shift to publishing the viewing report annually in the first quarter, beginning in 2027. “The goal of separating the publication of the report from our earnings results is to keep the focus on our primary financial metrics — revenue and operating profit,” the company said.

In their Q3 letter, the execs wrote, “We know there’s some investor concern about our view hours growth. Member response to our 2026 price increases is consistent with prior price changes and our expectations, an indicator that our engagement — which encompasses quantity, quality and variety of viewing — remains healthy and that we continue to deliver strong value to members. But we do seek to accelerate growth in view hours as well, and we’re confident we’ll do that by relentlessly focusing and executing against the aforementioned strategy.”