Netflix third-quarter profit jumps to 87 cents a share, but it trims its 2026 ad revenue outlook

Netflix grew third-quarter revenue 12% to $12.87 billion and widened its operating margin by more than six percentage points, but the streaming company now expects less advertising money this year than it previously forecast.

Diluted earnings rose 49% to $0.87 a share from $0.59 a year earlier, and net income climbed to $3.66 billion from $2.55 billion, according to the letter to shareholders filed with its 8-K on Tuesday. Operating income rose 37% to $4.46 billion, for an operating margin of 34.6% versus 28.2%.

Netflix said revenue was in line with its forecast, while margin came in ahead mainly because of the timing of expenses. Growth came mostly from subscription revenue, reflecting more memberships and higher prices, along with rising ad sales. The company said churn improved year over year both globally and in the U.S. and was better than it had forecast.

Ad outlook trimmed

For the full year, Netflix expects revenue of $51.1 billion, up 13%, which it said is 0.2% below the midpoint of its prior range. Subscription revenue has outperformed, but it now expects 2026 ad revenue of about $2.7 billion versus roughly $3 billion before, citing a slightly slower rollout of some ad product capabilities.

It still expects a 2026 operating margin of 31.5%, up from 29.5% in 2025. That includes about 30 basis points of cost tied to recently announced headcount reductions.

For the fourth quarter, Netflix forecasts revenue of $13.44 billion and an operating margin of 26.0%, including about 120 basis points of impact from the job cuts. Projected diluted EPS is $0.67.

Record buyback quarter

Netflix bought back 63.9 million shares for $4.8 billion in the quarter, which it called its largest quarter of repurchases ever, and has $22.3 billion left under its authorizations. Free cash flow was $2.88 billion, up from $2.66 billion.

The company lowered its 2026 free cash flow forecast to about $12.0 billion from $12.5 billion, mainly because of a real estate transaction it expects to close in the fourth quarter. It ended the quarter with $15.3 billion of gross debt and $8.2 billion in cash and cash equivalents.

Netflix also said it will bring its advertising tier to 15 new countries in 2027, starting with a first group in March.

By the numbers

• Revenue: $12.87 billion, up 11.8%
• Diluted EPS: $0.87, vs. $0.59
• Operating margin: 34.6%, vs. 28.2%
• 2026 revenue outlook: $51.1 billion
• 2026 ad revenue outlook: about $2.7 billion, down from about $3 billion
• Q3 buybacks: 63.9 million shares for $4.8 billion

Sources

1. Netflix, Inc., Form 8-K (Item 2.02) with Exhibit 99.1 Letter to Shareholders, filed Oct. 20, 2026, accession 0001065280-26-000290

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