Shares of Netflix fell around 5% after the company posted a third-quarter earnings miss after the closing bell Tuesday.

The streamer cited an ongoing dispute with Brazilian tax authorities for the weaker-than-estimated results.

“Operating margin of 28% was below our guidance of 31.5% due to an expense related to an ongoing dispute with Brazilian tax authorities that was not in our forecast,” the company said in a shareholder letter. “Absent this expense, we would have exceeded our Q3’25 operating margin forecast. We don’t expect this matter to have a material impact on future results.”

Revenue for the quarter rose 17%, in line with analyst expectations. Netflix said the growth was driven by membership gains, pricing adjustments and increased ad revenue. For the fourth quarter, Netflix expects revenue to rise 17% year over year as those trends continue.

Here’s how the company did, compared with estimates from analysts polled by LSEG:

• Earnings per share:  $5.87 vs. $6.97, according to LSEG
• Revenue: $11.51 billion vs. $11.51 billion, according to LSEG

Netflix reported net income of $2.55 billion, or $5.87 per share, up from $2.36 billion, or $5.40, in the same quarter a year prior.

For the full-year, Netflix is predicting $45.1 billion in revenue, a 16% jump from the year prior, and in line with previous expectations of revenue growth of between 15% and 16%.

The company did alter its operating margin forecast for the year, stating that it now expects it to be 29% instead of the prior projection of 30%. Netflix cited the impact of the Brazilian tax matter for that change.

The company said it posted its best ad sales quarter ever during the quarter, with co-CEO Greg Peters noting that Netflix is on track to more than double ad revenue this year.

“Netflix had its best ad sales quarter to date, but still did not provide a figure for how large the ad business is,” said Ross Benes, senior analyst at EMarketer, in a statement. “This gives the impression that the sustained revenue growth achieved this quarter, and forecasted for next quarter, will predominantly continue to come from subscription fees.”

Netflix raised its prices in January, including the cost of its ad-supported tier.

But analysts are questioning if Netflix’s price-hiking power could be nearing its short-term peak. The company is expected to address questions during its earnings conference call Tuesday.

The streamer’s fourth-quarter slate of content contains a number of alluring titles, from the fifth and final season of “Strangers Things” and new seasons of “The Diplomat” and “Nobody Wants This” to Guillermo del Toro’s “Frankenstein” and Rian Johnson’s “Wake Up Dead Man: A Knives out Mystery.”

Netflix is also still riding the coattails of “KPop Demon Hunters,” which was released on the platform back in June. The animated film has become Netflix’s most-watched film with more than 325 million views on the platform.

Netflix announced Tuesday it’s expanding the animated film’s consumer reach with a dual products partnership with leading toy companies Hasbro and Mattel. “KPop Demon Hunters” dolls, plush, roleplay items and themed games will be available at retail in spring 2026. 

The company also noted that it is looking into incremental opportunities related to live experiences, publishing, beauty and lifestyle as well as food and beverages related to the film. “KPop Demon Hunters” is also returning to theaters once again during the Halloween holiday weekend.

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