Netflix on Tuesday reported third-quarter profit that beat analysts’ estimates and revenue that was in line with Wall Street, which keeps an eye on the company’s engagement and advertising metrics.

Here’s how Netflix performed in the period ending September 30th compared to the forecasts of analysts surveyed by LSEG:

• Earnings per share: 87 cents versus an estimated 82 cents
• Revenue: $12.87 billion versus estimated $12.87 billion

The streamer’s revenue rose nearly 12% from a year ago, driven by membership growth and an increase in subscription prices that took effect in March, the company said. Netflix said the response to these price increases was consistent with previous changes and its expectations.

Net income for the quarter was $3.66 billion, or 87 cents per share, compared with $2.55 billion, or 59 cents per share, in the same period last year. Netflix said the jump in profit from last year was partly due to the timing of the spending.

The company expects fourth-quarter revenue to rise more than 11% to $13.44 billion, driven by growth in memberships, pricing and advertising revenue, it said.

The company cut its full-year 2026 forecast and now expects revenue of $51.1 billion, up 13% from last year. According to LSEG, this is at the low end of the range Netflix reported in its previous earnings report, between $51 billion and $51.4 billion, and below Wall Street’s expectations of $51.2 billion for the year.

Shares of Netflix fell about 6% in extended trading on Tuesday.

Samuel Boivin | Photo only | Getty Images

Wall Street and investors will be waiting for Netflix to provide additional details about the company’s strategy following recent organizational changes and headwinds such as stagnant viewership and growing competition from companies like YouTube.

“With intense competition and an explosion of content competing for consumers’ attention, strategic clarity and excellent execution are critical,” the company said in a letter to shareholders on Tuesday. “In the third quarter, we delivered strong results across all three priorities, but we see room for even greater performance through targeted, continuous improvement.”

Last week, Netflix announced that it would lay off about 6% of its employees, or about 1,000 workers, and that Bela Bajaria, chief content officer, was stepping down from the position.

The company said Tuesday that it expects fourth-quarter results to be impacted by workforce reductions, negatively impacting operating margin by about 120 basis points.

Former Disney executive Peter Rice has been named the new CCO, but it’s not yet clear how he will address concerns about viewership.

Netflix said in its letter to shareholders: “We recognize that there are concerns among investors about the growth of our viewership,” but added: “Engagement – which includes quantity, quality and diversity of viewers – remains healthy and … we continue to deliver high value to our members.”

The company wants to accelerate growth in these times and plans to do so with a three-pronged strategy: provide members with more entertainment value; use technology to improve all aspects of the Service; and improve monetization.

Advertising on Netflix

At the heart of Netflix’s value proposition is its cheaper, ad-supported tier. Still, the company on Tuesday lowered its full-year revenue forecast for its advertising business.

Netflix said it now expects advertising revenue of about $2.7 billion in 2026, down from the company’s previous forecast of about $3 billion. This lower forecast was due to a slower-than-expected rollout of some advertising product features, the company said.

“Our advertising business has delivered truly impressive growth since we launched, and we see a long path of continued growth ahead of us,” co-CEO Greg Peters said on the company’s earnings call. “We have set big growth goals for our advertising business this year. We have created an ambitious product roadmap that aligns with this strategy. And please note that the build we have undertaken to date is, in my opinion, the fastest buildout of a comparable ad stack in our industry, but we are currently slightly behind our ambitious annual target.”

Early Tuesday, Netflix announced new features for advertisers that it says will help better connect brands with the right audiences and measure the impact of their ads.