Netflix stock falls after Q3 earnings miss estimates, operating profit takes a hit

Core Insights - Netflix reported third quarter earnings that missed analyst expectations on both revenue and profit, resulting in an over 8% decline in share price [1] - Revenue for the quarter was $11.51 billion, slightly below Bloomberg consensus estimates of $11.52 billion and the company's own guidance of $11.53 billion, compared to $9.82 billion in the same quarter last year [1] - Earnings per share were $5.87, missing analyst expectations of $6.94 and the company's forecast of $6.87, but still above the $5.40 reported a year ago [2] Revenue and Earnings Guidance - For the current quarter, Netflix forecasts revenue of $11.96 billion, exceeding Wall Street expectations of $11.90 billion, with earnings expected at $5.45 per share, higher than analyst estimates of $5.42 [2] - For full-year 2025, Netflix expects revenue of $45.1 billion, at the upper end of its previous forecast range of $44.8 billion to $45.2 billion [3] Operating Margin - The company reported an operating margin of 28%, below its forecast of 31.5%, due to unexpected expenses related to a dispute with Brazilian tax authorities [3] - Netflix now forecasts a 2025 operating margin of 29%, slightly down from the prior expectation of 30% due to the tax matter [4] Content Performance - Engagement remains healthy, driven by a strong content slate, including the Canelo vs. Crawford fight, which attracted over 41 million global viewers [5] - The animated film "KPop Demon Hunters" became Netflix's most-viewed film of all time with 325 million views, highlighting the platform's ability to create hits from lesser-known intellectual properties [6] Advertising Business Outlook - Netflix is increasingly confident in its advertising business, with ad revenue expected to more than double in 2025 from a small base, following a US upfront that saw commitments more than double year over year [7]