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9h ago

Netflix Misses Earnings on Brazil Tax Charge Despite Record Revenue as Shares Slide

Management signaled slightly stronger Q4 guidance alongside accelerating ad sales.

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FILE - This Aug. 13, 2020 photo shows a logo for Netflix on a remote control in Portland, Ore. (AP Photo/Jenny Kane, File)
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The Netflix logo is shown on one of their Hollywood buildings in Los Angeles, California, U.S., July 12, 2023. REUTERS/Mike Blake

Overview

  • Revenue rose 17.2% to $11.51 billion in Q3, but diluted EPS came in at $5.87 versus about $6.97 expected after a roughly $619 million expense tied to a Brazilian tax dispute cut operating margin to 28%.
  • Netflix said the Brazil matter was not in its forecast and is not expected to have a material impact on future results.
  • The company guided Q4 revenue to $11.96 billion with EPS of $5.45, a touch ahead of Wall Street estimates, with a slate that includes the final season of Stranger Things and two NFL games on Christmas Day.
  • Advertising posted its best quarter to date, and Netflix said it remains on track to more than double ad revenue in 2025 as it tests new AI-driven ad formats.
  • Shares fell about 5%–7% in after-hours trading following the earnings miss, even as viewership strength from hits like KPop Demon Hunters, Wednesday Season 2, and the Canelo vs. Crawford bout supported top-line growth.