Netflix (NFLX) earnings Q3 2025

Netflix’s Third-Quarter Earnings Miss Sparks Stock Decline

Netflix’s stock price took a hit in extended trading on Tuesday, falling around 7% after the company reported a third-quarter earnings miss. The streaming giant cited an ongoing dispute with Brazilian tax authorities as the primary reason for the weaker-than-estimated results. This unexpected expense, stemming from a 10% tax on certain payments made by Brazilian entities to operations outside the country, was not previously accounted for in Netflix’s forecast.

The company’s decision to charge the impact to its third quarter came after it became reasonably likely that Netflix would lose a legal challenge over whether it would be assessed the tax. According to Chief Financial Officer Spence Neumann, this tax is not specific to Netflix or streaming, and the company would have exceeded its operating income and operating margin forecast if not for this expense. Neumann also stated that this matter is not expected to have a material impact on Netflix’s results going forward.

Revenue Growth and Ad Sales

Despite the earnings miss, Netflix’s revenue for the third quarter rose 17%, in line with analyst expectations. This growth was driven by membership increases, pricing adjustments, and a surge in ad revenue. The company expects revenue to continue rising by 17% year over year in the fourth quarter, driven by the same trends. Netflix also reported its best ad sales quarter ever, with co-CEO Greg Peters noting that the company is on track to more than double ad revenue this year.

However, the company did not provide a figure for the size of its ad business, which may indicate that sustained revenue growth will continue to come from subscription fees. Netflix raised its prices in January, including the cost of its ad-supported tier, which may have contributed to the revenue growth.

Content Slate and Partnerships

Netflix’s fourth-quarter content slate includes several highly anticipated titles, such as the fifth and final season of “Stranger Things” and new seasons of “The Diplomat” and “Nobody Wants This.” The company is also still benefiting from the success of “KPop Demon Hunters,” which has become its most-watched film with over 325 million views. To capitalize on this success, Netflix is expanding the film’s consumer reach through a dual product partnership with toy companies Hasbro and Mattel, which will result in the release of “KPop Demon Hunters” dolls, plush, roleplay items, and themed games in spring 2026.

Additionally, Netflix is exploring incremental opportunities related to live experiences, publishing, beauty, lifestyle, food, and beverages tied to the film. “KPop Demon Hunters” will also be returning to theaters during the Halloween holiday weekend, further increasing its visibility and potential revenue streams.