Netflix shares fell nearly 9 percent in after-hours trading on July 17 after the streaming giant forecast third-quarter revenue and earnings below Wall Street expectations.
The company, led by CEOs Ted Sarandos and Greg Peters, said on July 16 it expected $12.86 billion in revenue from July through September and diluted earnings per share (EPS) of 82 cents.
Analysts had forecast $13 billion in revenue and diluted EPS of 84 cents, according to LSEG.
Netflix is working to grow by building advertising, live events, and video games.
“We expect to deliver another strong year with, as we saw, as you see in the guide, 13 percent to 14 percent top-line growth for the full year,” Netflix Chief Financial Officer Spencer Adam Neumann said.
“We’re entertaining an audience approaching 1 billion people with still lots of room to grow into our addressable market on every measure. We’re under 45 percent penetrated into addressable households around the world. It’s roughly 800 million addressable households.”
He added that Netflix estimates “that we’re only about 5 percent of TV view share globally.”
The company’s share price has dropped by more than 20 percent year to date as of July 17.
Third-quarter projections “appear to reflect a combination of management caution and a naturally maturing growth profile, rather than any sudden deterioration in the business,” PP Foresight analyst Paolo Pescatore said.
He added that they would “reinforce the view that Netflix remains strong but is entering a steadier phase of growth with considerably less room for error given the always-high expectations.”
Netflix said it would cut its twice-yearly release of a viewing-hours report to once a year starting in January 2027 “to keep the focus on our primary financial metrics — revenue and operating profit.”
It stopped publishing quarterly subscriber numbers, which were a key metric for streaming services for years, in 2025.
For the just-ended quarter, Netflix revenue and EPS were roughly in line with analyst estimates.
Earnings per share came in at 80 cents for the three-month period, which featured hits including crime drama “I Will Find You” and animated feature “Swapped.”
Revenue totaled $12.56 billion.
“Our financial performance remains solid and we’re on track to meet our objectives for the year,” the company said in its quarterly letter to shareholders.
Netflix is facing competition from companies such as Disney.
On May 6, Walt Disney Company CEO Josh D'Amaro laid out his strategy for the entertainment company.
“Our focus remains consistent—improve the consumer experience, deepen engagement, and continue building a healthy and more durable growth business,” D'Amaro said during the company’s first-quarter earnings call, his first with him at the helm.
D'Amaro succeeded Bob Iger as Disney CEO in mid-March. The entertainment giant reported adjusted earnings per share of $1.57 and revenue of $25.2 billion for January through March.
Analysts, on average, had expected adjusted EPS of $1.49 and revenue of $24.78 billion, LSEG said in May.
At the entertainment unit, operating income rose by 6 percent to $1.34 billion.
The boost came partly from higher subscription and advertising revenue from streaming services, including Disney+. Movie box-office hits “Zootopia 2” and “Avatar: Fire and Ash,” released last year, continued to contribute during the quarter.
Disney CFO Hugh Johnston said investors should think of Disney’s television networks, including ESPN, as brands with studios that produce content, such as “The Bear,” that can be distributed broadly and monetized.
He said streaming now generates double the revenue of the company’s traditional television business, which is getting “smaller and smaller every quarter.”
