Netflix announced third-quarter 2025 earnings Tuesday, focusing on financial results following its decision to stop regularly reporting subscriber data earlier this year.
The streamer reported adjusted earnings per share of $5.87 — missing Wall Street targets and Netflix’s own guidance — on $11.51 billion in revenue, which was in line with expectations. Analysts forecast Netflix Q3 revenue coming in at $11.51 billion and earnings per share of $6.97 for the July-September quarter, according to research firm LSEG Data & Analytics.
Netflix explained the miss on earnings in a letter to shareholders Tuesday, writing: “Operating margin of 28% was below our guidance of 31.5% due to an expense related to an ongoing dispute with Brazilian tax authorities that was not in our forecast. Absent this expense, we would have exceeded our Q3’25 operating margin forecast. We don’t expect this matter to have a material impact on future results.”
Netflix shares fell as much as 6% in after-hours trading on the earnings miss.
In the letter detailing the Q3 results, Netflix said it “recorded our best ad sales quarter ever and doubled our commitments in the U.S. upfront,” and noted that it is “now on track to more than double our ads revenue in 2025 (still off a relatively small base).”
Netflix said that in Q4, it is using AI to test new ad formats “to generate the most relevant ad creative and placement for members, and for faster development of media plans. With these advancements, we’ll be able to test, iterate, and innovate on dozens of ad formats by 2026.”
In July, Netflix increased its revenue forecast for full-year 2025 to a range of $44.8 billion to $45.2 billion, representing 15%-16% year over year growth. On Tuesday, the company issued full-year 2025 guidance of $45.1 billion in revenue (16% growth, 17% on an F/X neutral basis), in-line with prior expectations. Netflix is now forecasting a 2025 operating margin of 29% (compared with its prior expectations for a 30% reported operating margin) because of the impact of the Brazilian tax dispute.
Netflix now expects to close out 2025 with free cash flow of approximately $9 billion (plus or minus “a few hundred million dollars”), up from the prior forecast of $8 billion-$8.5 billion. The new forecast “reflects the timing of cash payments and lower content spend,” according to the streamer.
During Q3, Netflix’s biggest achievement by far was the sudden success of animated musical “KPop Demon Hunters,” which has sustained its fandom through the current Q4 and continues to be a driver of viewership — and box office sales — for Netflix.
Ahead of its earnings presentation Tuesday, Netflix announced it would be re-releasing “KPop Demon Hunters” in theaters following the film’s impressive first theatrical run this summer, which was prompted by the movie’s streaming chart growth following its June 20 debut on the platform. The streamer has also set what’s sure to be a lucrative merch deal with both Mattel and Hasbro for toys, dolls, games and more across the franchise.
In addition to “KPop Demon Hunters,” Netflix says it attributes its Q3 performance to viewership for “Wednesday” Season 2, “Bon Appétit,” “Your Majesty” from South Korea, “Happy Gilmore 2,” and its Canelo vs. Crawford boxing match, which became the most-viewed men’s championship fight this century.
Netflix suspended its practice of reporting total subscriber numbers beginning with the first quarter of 2025, which ran January-March. That means the last time Netflix publicly confirmed its overall subscriber count was in back in January, when it reported it had reached 301.6 million global streaming paid members by the end of 2024.
In lieu of subscriber numbers, Netflix now focuses on revenue as its main indicator of growth. For Q3, Netflix says revenue was up 17% in the U.S. and Canada, rose 18% in Europe, the Middle East and Africa, climbed 10% in Latin America, and jumped 21% in Asian-Pacific territories.
Netflix is currently in its fourth quarter, which runs October-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 “A House of Dynamite,” Rian Johnson’s “Wake Up Dead Man: A Knives Out Mystery,” and air live events including the NFL Christmas Day games and the Jake Paul vs. Tank Davis boxing match.
For Q4, Netflix is projecting revenue of $11.96 billion (up 16.7% year over year) and EPS of $5.45 with an estimated operating margin of 23.9%.
(Pictured above: Netflix’s “KPop Demon Hunters”)
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