Netflix made more money in the summer quarter, but its latest forecast gave investors a reason to worry about what comes next.
The streaming company reported $12.87 billion in revenue for the three months ending September 30, up 11.8% from a year earlier. Profit also climbed: Netflix earned $3.66 billion, or 87 cents a share. Yet after the results were released on October 20, the company’s shares fell in after-hours trading as attention shifted to a weaker-than-expected profit forecast and a cut to its advertising target.
For viewers, the numbers may seem distant from the shows and films they watch. For Netflix, they point to a familiar challenge: keeping the service worth paying for while finding new ways to make money from its huge audience.
The fourth-quarter forecast is the sticking point
Netflix expects revenue of $13.44 billion in the current quarter, with earnings of 67 cents per share. That earnings forecast came in below analysts’ expectations, according to Reuters. The company’s projected operating margin also falls to 26%, from 34.6% in the September quarter.
Quarterly margins can move around because of the timing of spending, so one weaker forecast does not automatically mean the business is in trouble. Still, investors had expected more, and the guidance gave them less confidence about the near term.
Netflix has lowered its advertising target
The other notable change is advertising. Netflix now expects to bring in about $2.7 billion from ads in 2026, down from its earlier target of roughly $3 billion. The company said some advertising products were taking longer than expected to roll out.
That matters because advertising is meant to become a bigger source of income alongside subscriptions. Netflix has been expanding the technology and partnerships behind its ad-supported plan, but it still needs to turn that work into revenue at the pace it had planned.
It is also fighting for people’s time
Netflix is competing with other streaming services, but the battle for attention goes well beyond television. YouTube, TikTok and other online platforms are all competing for the hours people have available. A large catalogue helps, but viewers still need a reason to open Netflix instead of choosing something else.
In its letter to shareholders, Netflix said it would continue to focus on series, films and live events, while also licensing more programming from other companies. Its year-end line-up includes new seasons of The Diplomat, Nobody Wants This and Lupin, as well as live sports and other events.
Those releases could help keep subscribers engaged, but a list of upcoming titles is not a guarantee of stronger viewing. The real test is whether people watch regularly—and feel the service is worth its price between big premieres.
What the results actually tell us
It would be wrong to call this a bad quarter across the board. Revenue rose, net income increased to $3.66 billion from $2.55 billion a year earlier, and Netflix’s operating margin improved compared with the same period last year. The company also maintained its full-year revenue outlook of $51.1 billion.
But the slower pace of revenue growth, a lower advertising target and a cautious earnings forecast show why investors are asking what will drive the next stage of growth. Netflix needs its content strategy to keep viewers coming back—and its advertising business to deliver more consistently.
The next few months should make the picture clearer. For now, Netflix remains a highly profitable streaming business, but its latest results show that keeping growth moving is becoming a tougher job.
Sources
- Netflix’s Q3 2026 shareholder letter, published October 20, 2026
- Reuters’ report on Netflix’s fourth-quarter forecast
Figures are based on Netflix’s October 20, 2026 results and outlook. Forecasts are estimates, not final results.
