Netflix disappoints with Q3 2025 results. Shares drop over 5% in after-hours trading!

Netflix has released its financial results for the third quarter of 2025, which unfortunately disappointed the market. The company’s revenue came in at $11.51 billion, marking a year-over-year increase of approximately 17% and in line with analysts’ expectations. However, net profit reached $2.5 billion, falling short of the forecasted $3.01 billion. The biggest disappointment was earnings per share, which dropped to $5.87 compared to the expected $7.00. This is a clear signal that the company's operating margin and profitability have come under pressure, which led to a moderate decline in the stock price following the report. As a result, Netflix shares are down about 5% in after-hours trading at the time of writing, reflecting investors’ negative reaction to the financial results and the associated risks.

One of the main negative factors affecting the results was a tax dispute in Brazil. Netflix had to account for a one-time tax charge exceeding $600 million, which significantly reduced the operating margin to 28%. Additionally, operating costs are growing faster than revenue, indicating that despite the company's expanding scale, cost pressures are becoming increasingly evident. The impact of the Brazilian tax dispute also serves as a stark reminder of the significant regulatory risks that could adversely affect the company’s financial performance in the future.

Although Netflix did not disclose specific figures, available signals and commentary related to the U.S. market – the company’s key region – suggest that user growth may have been slower than expected. This may indicate increasing consumer caution, especially in mature markets where macroeconomic factors like inflation and economic uncertainty are limiting spending on streaming services.

On the other hand, Netflix recorded strong growth in European and Asian markets, along with rapid development in its advertising segment, which for the first time began generating meaningful revenue. Despite the challenges, the company met important strategic goals for 2025. In the third quarter, Netflix unveiled a rich catalog of new content, including the second season of Wednesday, the cooking show Bon Appétit, the Korean drama Your Majesty, and the sequel Happy Gilmore 2. The film KPop Demon Hunters became a massive hit, breaking records as the most-watched title in the platform's history.

The advertising segment had a record-breaking quarter in terms of sales, and Netflix doubled its advertising spending in the United States. Another major success was the broadcast of the boxing match between Canelo and Crawford, which became the most-watched men’s championship bout of the 21st century.

Netflix aims to finish the year with strong momentum. Plans include the premiere of the final season of Stranger Things, new series The Diplomat and Nobody Wants This, as well as productions by Guillermo del Toro, Kathryn Bigelow, and Rian Johnson. The company also plans to expand its live event offerings, including NFL games during the holiday season and another major boxing event, this time between Jake Paul and Tank Davis.

The company forecasts Q4 revenue at around $11.96 billion, slightly above the market consensus of $11.90 billion. Projected earnings per share are set at $5.45. This may suggest that Netflix intends to close the year with positive momentum, supported by a strong content slate and the growth of live programming.

Netflix’s Q3 2025 results show a company facing significant operational and market challenges. Rising costs, tax-related risks, and a slowdown in subscriber growth in key markets may impact the company’s valuation in the coming months. Nevertheless, the success of the advertising segment, strong content offerings, and the expansion of live events provide grounds for cautious optimism. Investors will undoubtedly be watching closely to see whether Netflix can maintain user engagement and execute its ambitious growth plans in an increasingly competitive market environment.