Netflix Q3 2026: Profits Up, Ad Hopes Trimmed

Revenue rose 12 per cent and margins jumped, but Netflix cut its 2026 ad revenue forecast and promised a busier live slate to keep viewers watching.

By Jeff Cameron October 22, 2026 4 min read

Photo: Jan Thijs/Netflix

Trailer: East of Eden. Cast, where to watch and more on the title page.

Netflix had a profitable summer and a more cautious autumn. In its third-quarter 2026 shareholder letter, published 20 October, the company reported revenue of US$12.9 billion, up 12 per cent year over year, and an operating margin of 34.6 per cent, up from 28.2 per cent a year earlier. In the same letter it lowered its 2026 advertising forecast and its free cash flow target.

For viewers, the takeaways are smaller but real: the ad-supported plan is heading to 15 more countries in 2027, price increases this year have not driven people away by Netflix’s account, and the company is leaning on live sport to lift viewing through the holidays.

The numbers

Netflix reported operating income of US$4.46 billion for the quarter, up 37 per cent, and net income of US$3.66 billion, compared with US$2.55 billion in the third quarter of 2025. Diluted earnings per share were US$0.87, up from US$0.59. The company said the margin beat came mainly from the timing of expenses, plus slightly higher revenue.

A partially submerged house in a misty lake with three people in a small boat, from Below — In pictures 2

A young woman in a brown jacket on a dock near trucks and boats, from Below — In pictures 2

The UCAN region, which Netflix defines as the United States and Canada, brought in US$5.63 billion, up 11 per cent. EMEA grew 11 per cent to US$4.11 billion, Latin America 17 per cent to US$1.60 billion and Asia-Pacific 12 per cent to US$1.54 billion.

For the fourth quarter, Netflix forecasts revenue of US$13.4 billion and an operating margin of 26 per cent, a figure it says includes about 120 basis points of cost tied to recently announced headcount reductions. Full-year 2026 revenue is now forecast at US$51.1 billion, up 13 per cent, with an operating margin of 31.5 per cent. Free cash flow guidance drops to about US$12 billion from US$12.5 billion, which the company attributes mainly to a real estate transaction expected to close in the fourth quarter.

Ads: slower than planned

The sharpest revision is on advertising. “We currently expect 2026 ad revenue of ~$2.7B vs. approximately $3B previously,” the letter says, citing a “slightly slower than expected rollout of some ad product capabilities.”

Netflix still plans to grow the ad business by geography. The letter says the ad tier will launch in 15 new countries in 2027, starting in March with nine EMEA countries plus Colombia, Peru and New Zealand. Netflix named the nine at its UK upfront in September: Austria, Belgium, Denmark, Ireland, the Netherlands, Norway, Poland, Sweden and Switzerland. New Zealand, the letter notes, is a new addition.

Prices, churn and view hours

“Member response to our 2026 price increases is consistent with prior price changes and our expectations,” the letter says. Netflix reports that churn improved year over year globally and in the US, and came in better than its own forecast. It does not disclose subscriber totals or plan prices.

The company also addresses a soft spot directly: “We know there’s some investor concern about our view hours growth.” Netflix says it aims to accelerate that growth.

What is on deck

The fourth-quarter slate in the letter includes East of Eden, The Diplomat season four, Emily in Paris (its final season), Pride and Prejudice, Lupin: Part 4 and Canada’s Below, plus the film The Further Mis-Adventures of Cliff Booth. Netflix also calls this its “biggest quarterly live slate to date,” with the NFL’s first Thanksgiving Eve game, a Christmas Day doubleheader and the Tyson Fury vs. Anthony Joshua fight.

On the licensing side, Netflix says a new deal with Disney brings current and library titles, including all five Ice Age films, which reached its global weekly Top 10.

The letter also points to partnerships beyond its own slate. Netflix says it partnered with Take-Two to unveil a sneak peek of Grand Theft Auto VI in August, and that its TF1 partnership in France, launched this summer, is generating incremental viewing there, according to early metrics.

What it means for you

Netflix’s ad business is growing more slowly than it planned, but the ad-supported plan is still expanding: 15 more countries next year, including New Zealand in March 2027.
If your Netflix bill went up this year, Netflix says the response to its 2026 price increases was in line with expectations, and that churn improved year over year.
Live sport is now central to Netflix’s holiday strategy, so the NFL games and the Fury vs. Joshua bout will sit alongside Emily in Paris and The Diplomat on the home screen.
Canadian viewers have a homegrown title in the mix: Below, filmed in Newfoundland, is streaming now.