Netflix announced its third-quarter 2025 earnings on Tuesday, shifting its focus to financial results following its earlier decision to discontinue regular reporting of subscriber data. The streaming giant reported adjusted earnings per share (EPS) of $5.87, which fell short of both Wall Street targets and Netflix’s own guidance. However, its revenue of $11.51 billion was in line with analyst expectations for the July-September quarter.

The company attributed the earnings miss in a letter to shareholders, explaining that an operating margin of 28% was below its 31.5% guidance due to an expense related to an ongoing dispute with Brazilian tax authorities that was not part of its forecast. Netflix stated that without this unexpected expense, it would have exceeded its Q3’25 operating margin forecast and does not anticipate this matter to materially impact future results. Despite this explanation, Netflix shares experienced a decline of up to 6% in after-hours trading following the announcement.

On a more positive note, Netflix highlighted a strong performance in its advertising business. The company recorded its “best ad sales quarter ever” and significantly doubled its commitments in the U.S. upfront market. It is now on track to more than double its ad revenue in 2025, albeit starting from a relatively small base. Looking ahead to Q4, Netflix plans to leverage AI to test new ad formats, aiming to generate the most relevant ad creative and placement for members and to facilitate faster development of media plans. These advancements are expected to enable testing and innovation on dozens of ad formats by 2026.

Netflix also provided updated full-year 2025 guidance, reaffirming its revenue forecast at $45.1 billion, representing 16% year-over-year growth (17% on an F/X neutral basis), which aligns with prior expectations. However, the projected 2025 operating margin was adjusted to 29% from an earlier 30% due to the impact of the Brazilian tax dispute. Furthermore, the company now expects to close out 2025 with approximately $9 billion in free cash flow, an increase from its prior forecast of $8 billion-$8.5 billion, a change attributed to the timing of cash payments and lower content spend.

A major highlight of Q3 was the sudden and sustained success of the animated musical “KPop Demon Hunters.” This film has continued to drive viewership and even box office sales into Q4. Following its impressive streaming chart growth after its June 20 debut, Netflix re-released “KPop Demon Hunters” in theaters and secured lucrative merchandise deals with Mattel and Hasbro for a range of toys, dolls, and games. Other key contributors to Q3 performance included viewership for “Wednesday” Season 2, “Bon Appétit,” the South Korean series “Your Majesty,” “Happy Gilmore 2,” and the highly successful Canelo vs. Crawford boxing match, which became the most-viewed men’s championship fight of this century.

As previously announced, Netflix ceased reporting total subscriber numbers beginning with Q1 2025. The last public confirmation of its overall subscriber count was at the end of 2024, when it reported 301.6 million global paid streaming members. In the absence of subscriber figures, Netflix now emphasizes revenue as its primary indicator of growth. The company reported robust Q3 revenue increases across all its regions: 17% in the U.S. and Canada, 18% in Europe, the Middle East and Africa, 10% in Latin America, and 21% in Asian-Pacific territories.

For the fourth quarter, which runs from October to December, Netflix projects revenue of $11.96 billion (up 16.7% year-over-year) and EPS of $5.45, with an estimated operating margin of 23.9%. The Q4 content slate includes highly anticipated releases such as the fifth and final season of “Stranger Things,” new seasons of “The Diplomat” and “Nobody Wants This,” major films like Guillermo del Toro’s “Frankenstein,” Kathryn Bigelow’s “A House of Dynamite,” and Rian Johnson’s “Wake Up Dead Man: A Knives Out Mystery.” Additionally, Netflix will air live events, including NFL Christmas Day games and a Jake Paul vs. Tank Davis boxing match.