Netflix Q3 revenue rises 12 per cent to $12.87bn as operating income jumps 37 per cent

LOS ANGELES: Price hikes have done little to dampen the world’s appetite for streaming. Netflix has delivered another strong quarter, with revenue rising 12 per cent year-on-year to $12.874 billion in the third quarter of 2026, even as the company lowered its full-year advertising revenue outlook because of a slower-than-expected rollout of ad-tech capabilities.

The streaming giant’s revenue increased from $11.510 billion in the year-ago quarter, while operating income surged 37 per cent to $4.459 billion. Operating margin widened to 34.6 per cent from 28.2 per cent in Q3 2025, reflecting stronger operating performance.

Diluted earnings per share rose 49 per cent to $0.87, compared with $0.59 a year earlier. Net income climbed to $3.664 billion from $2.547 billion, supported by revenue growth and the timing of operating expenses.

Despite the strong quarterly performance, Netflix has lowered its full-year 2026 advertising revenue forecast to approximately $2.7 billion from its earlier estimate of $3 billion. The company attributed the revision to a slower-than-expected rollout of ad-tech product capabilities, even as subscriber growth and subscription revenue exceeded internal expectations.

The company now expects full-year revenue of $51.1 billion, representing 13 per cent year-on-year growth. Its advertising business remains a key growth opportunity, with Netflix planning to expand its ad-supported tier into 15 additional markets in 2027.

The expansion is scheduled to begin in March across nine European, Middle Eastern and African markets, as well as Colombia, Peru and New Zealand. Netflix is also widening programmatic access through global connected TV marketplace deals and partnerships with MercadoLibre in Latin America and Adform in Europe, the Middle East and Africa.

Netflix’s results underline the growing importance of local-language programming to its global strategy. Non-English content now accounts for more than a third of total viewing, compared with less than 10 per cent a decade ago.

Several regional titles delivered strong viewing figures during the quarter. Japan’s Plastic Beauty recorded 12 million views, putting it on track to become the country’s most-viewed Netflix series. Denmark’s The Secret Woman drew 47 million views, while Mexico’s Facing El Chapo registered 58 million. Dutch title The Perfect Lie accumulated 17 million views.

In the US and Canada, The Last House led with 91 million views, followed by Death of the Pastor’s Wife with 45 million, The Idaho Murders: College Nightmare with 38 million and Why Did I Get Married Again with 36 million.

India also emerged as a bright spot. Viewing hours in the country rose 24 per cent year-on-year, while revenue increased approximately 18 per cent on a foreign exchange-neutral basis. The performance was driven by daily reality show Lock Upp and a transaction-based loyalty bundle with Flipkart.

Netflix recorded revenue growth across all four of its reported regions during the quarter.

• United States and Canada (UCAN): $5.628 billion, up 11 per cent year-on-year.
• Europe, Middle East and Africa (EMEA): $4.107 billion, up 11 per cent, or 9 per cent on a foreign exchange-neutral basis.
• Latin America (LATAM): $1.603 billion, up 17 per cent, or 12 per cent on a foreign exchange-neutral basis.
• Asia-Pacific (APAC): $1.537 billion, up 12 per cent, or 15 per cent on a foreign exchange-neutral basis.

Netflix generated $3.162 billion in net cash from operating activities during Q3, compared with $2.825 billion in the same period last year. Free cash flow stood at $2.884 billion.

The company trimmed its full-year free cash flow forecast to approximately $12 billion from $12.5 billion, citing the expected completion of a real estate transaction in the fourth quarter.

Netflix also completed its largest quarterly share repurchase programme to date, buying back 63.9 million shares for $4.8 billion. It had $22.3 billion remaining under its share repurchase authorisation at the end of the period.

Total debt stood at $15.132 billion, while cash and cash equivalents amounted to $8.194 billion, leaving net debt of $7.114 billion.

For the fourth quarter, Netflix expects revenue of $13.442 billion, up 12 per cent year-on-year, and operating income of $3.5 billion. The company is targeting an operating margin of 26 per cent for the quarter.

The forecast includes an approximately 120-basis-point impact from recently announced corporate headcount reductions intended to help the company restructure for faster innovation. For the full year, Netflix expects an operating margin of 31.5 per cent, compared with 29.5 per cent in 2025, with the organisational changes expected to have a modest impact on the annual figure.

The company is also preparing a high-profile entertainment and sports line-up for the end of the year. Upcoming releases include Quentin Tarantino’s The Further Mis-Adventures of Cliff Booth, starring Brad Pitt; The Murder of JonBenét Ramsey, featuring Melissa McCarthy and Clive Owen; and the series finale of Emily in Paris.

Live programming will include a boxing showdown between Tyson Fury and Anthony Joshua, an NFL game on Thanksgiving Eve featuring a U2 halftime show, and a Christmas Day doubleheader.

With revenue and margins improving, Netflix is entering the final quarter with strong momentum. Its challenge will be to turn that performance into sustained advertising growth while continuing to invest in local stories, technology and live programming.