In Q3 2025, Netflix did not meet the earnings expectations and ended its six-quarter winning streak. The management said the main reason for weak profit was a $619 million tax charge related to a dispute in Brazil; however, they pointed out that the revenue growth was strong and its advertising sector was performing well.
Netflix reported a net profit of $2.5 billion, or $5.87 per share, below analyst forecasts of around $7 per share and the expected $3.01 billion in net income.
Revenue rose 17% year-over-year to $11.51 billion, meeting consensus estimates. The operating margin of the company decreased to 28% as a result of the continuous regulatory issues and the increased expenses.
Following the announcement, Netflix shares fell about 5%, reflecting investor concern over profitability pressures.
The results were mainly affected by the Brazilian tax dispute that forced Netflix to record a significant one-time expense. Although management termed the issue as a regulatory matter, highlighting the challenges of doing business in emerging markets suffering from complicated tax laws and enforcement.
Additionally, Netflix is experiencing greater production and distribution expenses as it continues to expand internationally. While revenues continue to grow strongly, expenses are increasing at an accelerated pace, indicating that margin sustainability may continue to be an issue through 2026.
While Netflix seemed to show slow user growth in North America, it had a strong performance in Europe and Asia, where new content and expanding its ad-supported tiers increased engagement.
The company's advertising sector generated record revenue, doubling its ad spend in the US, and marking a significant step toward diversifying its sources of income.
Despite financial headwinds, Netflix achieved key content milestones during the quarter. Popular titles such as Wednesday: Season 2, Bon Appétit, and the Korean hit Your Majesty drew strong global audiences, while animated film KPop Demon Hunters became the most-watched title in the platform’s history.
The streamer also made strides in live entertainment, including the Canelo vs. Crawford boxing match, the most-watched men’s championship bout of the century.
Also Read: What’s New on Netflix in October 2025: Full Movies & Series Guide
For the fourth quarter of 2025, Netflix expects revenue of $11.96 billion and earnings per share of $5.45, which is slightly higher than Wall Street expectations.
New shows coming up, including Stranger Things: Final Season, The Diplomat, and Guillermo del Toro's new projects, should help to bolster the momentum.