Netflix lowered its 2026 advertising-revenue forecast to about $2. 7 billion from roughly $3 billion after reporting third-quarter results that exceeded expectations but pointed to slower growth ahead. The company attributed the revision to a slower-than-expected rollout of some advertising-product capabilities.
The stronger quarter did not prevent a sharp market reaction. Netflix shares fell about 5% in the immediate response to the earnings update, with the reduced advertising outlook and a softer fourth-quarter forecast drawing investor attention. Netflix projects fourth-quarter revenue of $13. 4 billion, representing 12% year-over-year growth and slightly below the $13. 5 billion expectation cited in independent coverage. Its fourth-quarter operating-margin forecast is 26%, including an estimated 1. 2-percentage-point effect from recently announced headcount reductions.
The company said subscription revenue has outperformed its expectations, but advertising execution has lagged its earlier plan. It also said third-quarter growth was driven mainly by subscriptions, including membership gains and pricing, alongside advertising and favorable currency effects.
The results arrive as Netflix faces intensifying competition for viewers from Amazon, Disney, YouTube and TikTok. Netflix said the organizational changes are intended to support investment in areas it considers important for service improvement, growth and innovation.