Netflix’s quarterly earnings forecast falls short of Wall Street targets, shares tumble

Company expects $12.86-billion in revenue from July through September and diluted earnings per share of 82 cents

Netflix NFLX-Q offered third-quarter revenue and earnings projections on Thursday that hovered below Wall Street targets and said it would reduce the amount of information it discloses on viewing hours as the streaming video pioneer seeks new avenues of growth. Shares were down 8% in post market trading. The company said it expected US$12.86-billion in revenue from July through September and diluted earnings per share of 82 cents.

Analysts had forecast US$13-billion in revenue and diluted EPS of 84 cents, according to LSEG. Netflix also said it would cut its biannual release of a viewing-hours report to once a year starting in January 2027 “to keep the focus on our primary financial metrics – revenue and operating profit.” It stopped publishing quarterly subscriber numbers in 2025.

For the just-ended quarter, revenue and EPS were roughly in line with analyst estimates. Earnings per share came in at 80 cents for the three-month period, which featured hits including crime drama “I Will Find You” and animated feature “Swapped.” Revenue totalled US$12.56-billion.

“Our financial performance remains solid and we’re on track to meet our objectives for the year,” the company said in its quarterly letter to shareholders. Netflix is facing competition from all corners of the entertainment industry, from traditional media companies such as Walt Disney to YouTube, a growing presence in living rooms, and mobile viewing on apps such as TikTok. Prior to the earnings report, the streaming giant had shed over a fifth of its value as investors worried about how the company would boost revenue and gain new customers.

In April, Netflix said it had more than 325 million paying members and still had room to increase that number. The company is building an advertising business and offering video games, two initiatives still in the early stages. It repeated an earlier forecast that ad revenue would reach US$3-billion by the end of the year.

The company is counting on its growing number of live events, including an expanded NFL slate, to draw more advertising dollars. Netflix said engagement, or the amount of time people spend watching the service, was “healthy.” Viewing hours grew by 2 per cent in the first half of the year, compared with 1.5 per cent a year ago.