Netflix Revenue Growth Slows as it Overhauls Programming Units

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Netflix reported its slowest revenue growth in years and said it was working to spur more viewing time as it cuts staff and overhauls its leadership team.

The streaming giant reported revenue of $12.9 billion, up 12% from the same period a year earlier. That is the company's lowest quarterly-revenue percentage growth in three years. Net income was $3.66 billion for the quarter, a roughly 43.5% increase from the same period last year.

Over the past week, Netflix has cut its workforce by about 6%, or around 1,000 positions, and parted ways with its content chief and the head of its film unit, an acknowledgment the company's programming was struggling.

Investors have been increasingly worried about Netflix's ability to grow since its failed bid last year for Warner Bros. Discovery's film and TV studios and HBO Max. Netflix's stock is down more than 40% over the past year.

"We know there's some investor concern about view hours growth," the company wrote in a letter to shareholders. Netflix said member responses to its price increases this year were in line with its expectations, calling that an indicator that engagement "remains healthy."

"But we do seek to accelerate growth in view hours as well, and we're confident we'll do that," the company said.

Netflix said that it expects full year revenue for 2026 to be $51.1 billion, up 13% year over year, or slightly below the midpoint of its prior forecast range. The company had previously said annual revenue was expected to increase 13% to 14%.

Netflix's subscriber churn -- the rate at which customers cancel their subscriptions -- is the lowest in the industry at around 2% for September, flat from August, according to research firm Antenna.

However, Netflix has recently struggled with Americans spending less time watching programming on the platform, The Wall Street Journal reported. Strong viewership is crucial to streamers because it signals that customers are satisfied and less likely to cancel their subscriptions, even after price hikes.

The company revised the 2026 revenue outlook partially due to slower than expected rollout of some of its products for advertisers. The company expects $2.7 billion in ad revenue this year, versus the roughly $3 billion it previously projected. Netflix said subscription revenue growth had outperformed its expectations.

Netflix released programming including its adaptation of "Little House on the Prairie" and the second season of "The Gentlemen" during the third quarter.

The company's operating margin expanded to 34.6% in the third quarter, from 28.2% a year earlier. Free cash flow grew to $2.9 billion in the third quarter, from $2.66 billion a year earlier.

 

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