Netflix achieved a net profit of US$ 3.66 billion, corresponding to approximately R$ 19.8 billion, in the third quarter of 2026. This figure represents a 43.9% increase compared to the same period last year. Concurrently, the streaming platform's revenue grew to US$ 12.87 billion, equivalent to about R$ 69.5 billion, marking an annual increase of 11.8%.
Despite these positive financial results, the company faces obstacles in boosting its audience growth, notably in the United States and Canada markets. Recognizing this difficulty, coupled with a less optimistic projection for the next quarter and a decrease in expected advertising revenue, put pressure on the company's shares, which dropped more than 5% after trading closed on Tuesday (20).
The revenue growth recorded in the third quarter was the lowest in almost three years. In a communication directed at investors, Netflix admitted market apprehension regarding the evolution of viewing time on the platform, specifically in North America. The company stated in the document: 'We know there is some investor concern about the growth of our viewing hours.'
Ted Sarandos, Netflix Co-CEO, confirmed that the organization needs to improve its performance in the American market, although he dismissed the idea of a radical change in strategy. During the earnings call, he stated: 'There is no need for a fundamental change in strategy. We need better execution in the United States.'
Operating profit grows by 37%
In addition to the increase in net profit, Netflix registered a 37.3% growth in operating profit, reaching US$ 4.46 billion (approximately R$ 24.1 billion). The operating margin rose from 28.2% in the third quarter of 2025 to 34.6% in the current quarter. The company attributed this performance mainly to the increase in subscription revenue, price adjustments, and the expansion of advertising, in addition to gains from favorable currency variations. Part of the margin improvement was also credited to expense planning, which was below expectations during the period.
Free cash flow reached US$ 2.88 billion (about R$ 15.6 billion), surpassing the US$ 2.66 billion (about R$ 14.4 billion) recorded a year earlier. For the year 2026, Netflix projected revenue of US$ 51.1 billion (equivalent to about R$ 276 billion), representing an annual growth of 13%. The operating margin target for the year was set at 31.5%. However, the outlook for the fourth quarter signals a continuation of the slowdown, with expected revenue of US$ 13.44 billion (about R$ 72.6 billion), corresponding to an annual growth of approximately 11.5%.
Advertising revenue falls below expectations
Netflix also revised down its forecast for advertising revenue for 2026. The company now estimates earning about US$ 2.7 billion (approximately R$ 14.6 billion) from ads, compared to the previous estimate of US$ 3 billion (about R$ 16.2 billion). According to the company, this adjustment is due to slightly higher than expected delays in implementing certain advertising features and products.
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The revision of the advertising forecast represents a challenge for one of the business expansion areas. Netflix is seeking to increase the monetization of its ad-supported plan through new tools, expanding the advertiser base, and improving advertising technology.
Even with the forecast cut, the company reiterated that it plans to continue expanding advertising revenue in the coming years. The strategy includes increasing both the number of subscribers to the ad-supported plan and the ability to generate more revenue per user.
Netflix admits need for new hits
The concern regarding audience growth is intrinsically linked to the difficulty in sustaining a sequence of major hits. Although the platform has globally reaching productions, it faces the challenge of finding new phenomena capable of engaging the audience, replacing titles like Stranger Things and Round 6.
According to metrics released by Netflix itself, recent seasons of productions such as Treta, The Night Agent, and Avatar: The Last Airbender showed notable drops in viewership compared to their previous seasons. In the film segment, no summer American release managed to stand out as a major success comparable to last year's hits, such as K-pop Warriors and Home Alone 2. The company's main title for the quarter, The Last House, accumulated 91 million views but received negative reviews from both the press and the public.
Competition also puts pressure on the time users spend on the platform. Free services and social media, such as YouTube and TikTok, compete for viewers' attention, while Netflix tries to keep its content among the top entertainment options. Jesse Cohen, senior analyst at Investing.com, told The New York Times that the company faces an engagement problem and needs new hits to regain growth momentum.
Executives defend current strategy
Despite the identified difficulties, Netflix leaders maintained that the company's core strategy remains unchanged. Co-CEO Greg Peters assured that subscriber retention remains healthy in all regions and that the cancellation rate improved year-over-year, both globally and in the United States. Peters also highlighted positive results in international markets, citing India, South Korea, and Japan, where local productions continue to contribute to engagement, subscriber growth, and company revenue.
The company's intention is to maintain focus on series, films, and live events while expanding the offering of third-party licensed content. Planned initiatives include new seasons of well-known works, film releases, and sports broadcasts. However, the performance in the American market will remain under intense scrutiny. Netflix believes this region has potential for faster growth and expects to improve its ability to create content that attracts large audiences and has international resonance.
This pressure on results occurs within a context of internal restructuring. The previous week, the company announced the layoff of about a thousand employees, corresponding to approximately 6% of its workforce, and promoted Peter Rice, a former executive from Disney and Fox, to replace Bela Bajaria in content leadership. Dan Lin, head of the film division, also left the organization. These changes aim to improve execution and optimize content investment. For investors, however, the challenge goes beyond just cost control: Netflix needs to convert its production spending into greater audience, retention, and sustainable revenue growth.
