According to CNBC, Netflix reported third-quarter earnings of $5.87 per share on October 21, 2025. This figure fell short of analyst expectations of $6.97 per share. The streaming company posted revenue of $11.51 billion for the quarter ending September 30. This met analyst forecasts and represented a 17% increase compared to the same period last year.

The company attributed the earnings miss to an unexpected expense. Netflix incurred a $619 million charge related to a dispute with Brazilian tax authorities. This expense reduced the operating margin by more than five percentage points. Without this charge, Netflix would have exceeded its operating income forecast.

Shares fell approximately 7% in after-hours trading following the announcement. The company's operating margin reached 28% for the quarter. This was below the company's own guidance of 31.5%.

Why This Financial Performance Matters

Netflix's revenue growth came from multiple sources during the third quarter. Variety reports that revenue increased 17% in the United States and Canada. The Europe, Middle East, and Africa region saw 18% growth. Latin America posted 10% growth while Asia-Pacific territories jumped 21%.

The company recorded its best ad sales quarter ever during this period. Netflix doubled its advertising commitments in the United States upfront market. The company remains on track to more than double its ads revenue in 2025.

Netflix raised its full-year revenue forecast to $45.1 billion. This represents 16% growth compared to 2024. The company also increased its free cash flow projection to approximately $9 billion. This exceeds the prior forecast of $8 billion to $8.5 billion.

Advertising Business Transforms Streaming Economics

Netflix's advertising tier continues to reshape the company's business model. The streaming service now reaches 94 million monthly active users globally through its ad-supported plan. According to Mordor Intelligence, the media streaming market is projected to reach $201.5 billion by 2030. Hybrid monetization combining subscriptions and advertising now drives competitive differentiation.

Netflix completed its rollout of an in-house ad technology platform in 2025. This gives the company full control over campaign targeting and measurement. The advertising business operates at high margins compared to subscription revenue alone.

The broader streaming industry faces content cost pressures. Netflix's content spending reached $18 billion in 2025. Platforms must balance exclusive content investments with profitability requirements. Traditional financial institutions observe streaming companies shifting from subscriber growth to revenue optimization strategies.

Further Reading

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