Netflix announced its third-quarter 2025 earnings on Tuesday, highlighting its financial results following its decision to stop regularly reporting subscriber data earlier this year.
The streamer reported adjusted earnings per share of $5.87 (below Wall Street targets and Netflix’s own guidance) and revenue of $11.51 billion, which was in line with expectations. Analysts expect Netflix to report third-quarter revenue of $11.51 billion and earnings per share of $6.97, according to research firm LSEG Data & Analytics.
Netflix explained the earnings miss in a letter to shareholders on Tuesday, writing: “Operating margin of 28% was below our guidance of 31.5% due to charges related to a dispute with Brazilian tax authorities that were not included in our forecast. Without this charge, we would have exceeded our operating margin forecast for the third quarter of 2025. We do not expect this matter to have a material impact on our future results.”
Netflix’s stock price fell as much as 6% in after-hours trading following the earnings release.
In a letter detailing its third-quarter results, Netflix said it “recorded its best quarter of ad sales ever, doubling its advance contracts in the U.S.,” and that it is “on track to more than double its ad revenue in 2025 (though still on a relatively small base).”
Netflix said it was “testing new ad formats using AI in the fourth quarter to generate the most relevant ad creative and placements for our members and rapidly develop media plans.” These advances will allow us to test, iterate, and innovate on dozens of ad formats by 2026.
In July, Netflix raised its full-year 2025 revenue forecast to a range of $44.8 billion to $45.2 billion, representing 15% to 16% year-over-year growth. The company on Tuesday announced full-year 2025 sales guidance of $45.1 billion (growth rate of 16%, 17% on a currency-neutral basis), in line with prior expectations. Netflix currently projects operating margins of 29% in 2025 (compared to prior expectations of a reported operating margin of 30%) due to the impact of the Brazilian tax dispute.
Netflix now expects to end 2025 with free cash flow of approximately $9 billion (plus or minus “hundreds of millions”), up from previous expectations of $8 billion to $8.5 billion. The distributor said the new forecast “reflects the timing of cash payments and lower content spending.”
Netflix’s biggest win so far in the third quarter was the sudden success of the animated musical “KPop Demon Hunters.” It sustained the fandom through the current fourth quarter and continues to be a driver of Netflix viewership and box office revenue.
Ahead of Tuesday’s earnings call, Netflix announced it would re-release “KPop Demon Hunters” in theaters following an impressive first theatrical release this summer. This was prompted by the film’s growth in streaming charts after its June 20 platform debut. The streamer has also set up potentially lucrative merchandise deals with both Mattel and Hasbro for toys, dolls, games and more across the franchise.
In addition to “KPop Demon Hunters,” Netflix attributed its third-quarter performance to viewership of “Wednesdays,” Season 2, “Bon Appétit,” Korea’s “Her Majesty,” “Happy Gilmore 2,” and the Canelo-Crawford boxing match, which was the most-watched men’s championship fight of the century.
Netflix has suspended its practice of reporting total subscribers starting in the first quarter of 2025 (January to March). That means the last time Netflix publicly confirmed its overall subscriber numbers was back in January, when it reported that it would have 301.6 million paid streaming subscribers worldwide by the end of 2024.
Instead of subscriber numbers, Netflix is now focusing on revenue as its main metric for growth. Netflix said third-quarter sales were up 17% in the U.S. and Canada, 18% in Europe, the Middle East and Africa, 10% in Latin America and 21% in Asia Pacific.
Netflix is currently in its fourth quarter, which runs from October to December. During this period, Netflix will release the fifth and final season of Stranger Things, new seasons of The Diplomat and Nobody Wants This, Guillermo del Toro’s Frankenstein, Kathryn Bigelow’s In addition to broadcasting Rian Johnson’s “Wake Up Deadman: Knives Out Mystery,” it will also broadcast live events such as the NFL Christmas Day game and Jake Paul vs. Tank Davis. boxing match.
For the fourth quarter, Netflix expects revenue of $11.96 billion (up 16.7% year over year), EPS of $5.45 and estimated operating margin of 23.9%.
(Top photo: Netflix’s “KPop Demon Hunters”)
