Netflix saw its profits continue to surge in the third quarter, though margins missed the company’s own guidance due to an unusual dispute with tax authorities in Brazil. The company said that were it not for the Brazil matter, it would have beat its forecast, and that it does not expect it to have a material impact on future results.
The streaming giant reported total revenues of $11.5 billion, operating income of $3.2 billion and a margin of 28.2 percent, all up double digits from a year ago.
Netflix is no longer releasing its subscriber figures, choosing instead to put its focus on revenue and income, as it experiments with different revenue models like advertising and with the price of subscriptions in different markets remaining somewhat variable.
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“We recorded our best ad sales quarter ever. We’re now on track to more than double ad revenue this year,” Netflix co-CEO Greg Peters told analysts during an after-market call. He added the company doubled its U.S. Upfront commitments stretching into 2026, and Netflix is driving additional growth in programmatic advertising sales as the streamer offered more ways to buy advertising and measure outcomes.
“We’re getting our legs underneath us, we’re making a good pace, but we’ve got a lot ahead of us to do and, quite frankly, we expect we’re going to be able to move more quickly than other streamers,” Peters added.
Co-CEO Ted Sarandos also underlined innovation at Netflix to drive growth: “As a company, we’ve always embraced change. We thrive on competition pushing us to improve the service even faster for our members.”
The Netflix results in Q3 continue a trend that the company saw in Q2, with revenue and profits soaring despite the tough competitive environment, underscoring the platform’s dominance in the space.
It also highlighted a return to performance on its engagement, noting that Q3 was its “highest quarterly view share ever in the U.S. and U.K.” Looking ahead, Netflix is guiding toward revenue growth of 17 percent in the quarter, reflecting improvements in pricing, membership ads and ad revenue. Full year revenue is guiding toward $45.1 billion, in line with expectations, and a margin of 29 percent (down from 30 percent) reflecting the Brazilian tax matter.
Coming in to the quarter, Wall Street was hoping to get more clarity from Netflix on the opportunities and risks associated with artificial intelligence, though it also expected executives to take a victory lap on KPop Demon Hunters. Sarandos said the animated film about a K pop girl group was the streaming giant’s biggest movie hit and “proves our ability to create breakthrough hits and move the culture today.”
That segued to Sarandos touting Netflix on Tuesday touting wide-ranging deals with both Mattel and Hasbro for toys, games, collectibles and other products based on the KPop Demon Hunters franchise.
The company in commentary accompanying its latest financial results reported its advertising business is on track to double in 2025 (albeit of of a small base) and the company is projecting continued growth there. “In Q4, we are using AI to test new ad formats, to generate the most relevant ad creative and placement for members, and for faster development of media plans,” the company wrote in its letter. “With these advancements, we’ll be able to test, iterate and innovate on dozens of ad formats by 2026.”
Peters also discussed Netflix and Spotify recently announcing a partnership to bring a select number of podcasts from Spotify Studios and The Ringer to Netflix’s platform. “We see this as the opportunity to integrate high quality video podcasts that broadens the Netflix offering beyond all the incredible films and series that Ted just mentioned,” he said after Sarandos earlier outlined upcoming movies and TV series on the company’s content slate.
On the sports front, Sarandos said Netflix remained focused on big live events, which includes the recent live super middleweight championship bout between Terence Crawford and Canelo Álvarez that attracted over 41 million viewers. “We’re not currently focused on the big season packages in terms of global versus local,” he added about interest in acquiring full season, big league packages when rights come available.
