Netflix wrapped its third quarter of 2026 with revenue of $12.87 billion, an 11.8 percent year-over-year increase, and earnings per share of $0.87 that beat the consensus estimate of $0.82, but the results failed to calm Wall Street's growth worries, TheWrap reported. Operating income jumped 37 percent to $4.46 billion, lifting the operating margin to 34.6 percent, yet shares tumbled about 6 percent in after-hours trading as investors focused on a softer outlook.
The company lowered its 2026 ad revenue forecast to $2.7 billion from $3 billion, citing a slower-than-expected rollout of certain advertising capabilities, and projected fourth-quarter revenue of $13.44 billion with EPS of $0.67, both below Wall Street's expectations, according to CNBC. Full-year revenue is now forecast at $51.1 billion, at the low end of previous guidance. Netflix also acknowledged concerns about slowing viewing-hour growth, even as it said customer retention remained healthy after spring price increases.
The weaker outlook comes days after Netflix laid off 6 percent of its workforce and fired Chief Content Officer Bela Bajaria and film chief Dan Lin, its largest cuts since 2022. TheWrap reports that growth challenges have been exacerbated by the collapse of its $83 billion deal to acquire Warner Bros. Discovery's streaming and studio assets earlier this year and by increased competition from YouTube.
There were bright spots: Latin America was the fastest-growing region at 17 percent, and in India, total viewing time rose 24 percent, driven by local originals. The streamer no longer reports regular subscriber updates, but at last word it had 325 million subscribers, and Morningstar maintained that the selloff has created an attractive entry point for long-term investors.
Results by region reflected broad strength. Revenue in the United States and Canada grew 11 percent to $5.63 billion, while Europe, the Middle East and Africa rose 11 percent to $4.11 billion. Latin America was the fastest-growing region, up 17 percent to $1.60 billion, and Asia-Pacific increased 12 percent to $1.54 billion, according to figures reported by Tickeron. Free cash flow reached $2.88 billion, and Morningstar maintained its $80 fair value estimate, arguing the selloff has created the best buying opportunity for Netflix shares in years.