Netflix Misses Q3 Targets After $619 Million Brazil Tax Charge

Overview

• Netflix recorded an unexpected $619 million expense tied to an ongoing tax dispute in Brazil, which it said caused the shortfall versus expectations.
• The charge covers periods from 2022 through the third quarter of 2025, was booked in cost of revenue, and reduced the quarter’s operating margin by more than five percentage points.
• Operating margin came in at 28% versus a 31.5% target, and the company said it would have exceeded its guidance absent the Brazil expense.
• Third-quarter revenue was $11.51 billion in line with estimates, with net income around $2.5–$2.55 billion and diluted EPS of $5.87 below analyst expectations near $6.96–$6.97.
• Netflix projected Q4 revenue of $11.96 billion and EPS of $5.45, noted no expected material impact from the Brazil matter going forward, and saw shares fall about 5.5% after hours as it highlighted strong content and more than 300 million subscribers.