Netflix Q3 revenue up 17% to $11.5 bn, plans to test new ad formats in Q4

Netflix reported a 17% year-on-year rise in revenue for the third quarter of 2025, in line with expectations, but its operating margin fell short of projections after the streaming giant incurred a one-off charge linked to an ongoing tax dispute in Brazil.

Operating income stood at $3.2 billion, with a margin of 28.2%, below its 31.5% guidance. The company said the shortfall was due to a $619 million expense related to “certain non-income tax assessments” by Brazilian authorities, covering periods from 2022 through Q3 2025. Without this charge, Netflix said it would have exceeded its margin forecast. The expense reduced quarterly profitability by over five percentage points.

Net income rose to $2.55 billion, or $5.87 per share, up 9% from the same period last year but about $1 below internal forecasts, again due to the tax issue. Netflix noted it does not expect the matter to have a material impact on future results.

Revenue reached $11.51 billion, compared to $9.82 billion in Q3 2024, driven by subscriber growth, pricing adjustments, and an expanding advertising business. Engagement also remained strong, with the company recording its highest-ever quarterly viewing share in both the US and UK, up 15% and 22% respectively since Q4 2022, according to Nielsen and Barb.

Regionally, revenue grew 17% in the US and Canada, 18% in EMEA, 10% in Latin America, and 21% in Asia-Pacific.

Netflix’s content slate for the quarter featured hits such as Wednesday Season 2, Bon Appétit, Your Majesty from South Korea, Happy Gilmore 2, and KPop Demon Hunters, which became the streamer’s most-watched film ever with 325 million views, The Ba***ds of Bollywood with 9 million views.

The company also highlighted a record quarter for its advertising division, having doubled upfront commitments in the US. Netflix now expects ad revenue to more than double in 2025. It has begun integrating Amazon’s DSP globally and Japan’s AJA DSP into its programmatic offerings to improve ad targeting and performance.

In Q4, the platform is using AI to test new ad formats, to generate the most relevant ad creative and placement for members, and for faster development of media plans. With these advancements, Netflix says it will be able to test, iterate, and innovate on dozens of ad formats by 2026.

Looking ahead, Netflix forecast Q4 revenue of $11.96 billion, representing 16.7% year-on-year growth, and an operating margin of 23.9%, a two-point improvement from last year. For the full year, the company expects $45.1 billion in revenue and a 29% operating margin, slightly below its prior estimate due to the Brazilian tax expense.