Netflix is cutting its 2026 ad revenue forecast to $2.7 billion from $3 billion

Netflix $NFLX lowered its 2026 advertising revenue forecast to about $2.7 billion from about $3 billion on Tuesday, pointing to ad features that are reaching the market more slowly than it had expected.

Netflix stock slid roughly 4% in after-hours trading on Tuesday. The decline narrowed as investors reviewed the full results, according to Deadline.

The company made the change in its third-quarter shareholder letter, which it filed with the SEC. Third-quarter revenue rose 12% to $12.87 billion. Net income was $3.66 billion, or 87 cents per diluted share, compared with 59 cents a year earlier. Operating margin was 34.6%, up from 28.2%, which the company attributed mainly to the timing of expenses.

Earnings per share beat the 82 cents analysts expected, and revenue matched the $12.87 billion estimate, according to CNBC.

Netflix expects 2026 revenue of $51.1 billion, up 13% from 2025. That is 0.2% below the midpoint of its prior forecast range. The company said subscription revenue growth has outperformed its expectations. It forecast a 2026 operating margin of 31.5%.

For the fourth quarter, Netflix expects revenue of $13.4 billion, with a larger member base, higher prices and increased advertising sales fueling the gain. It projects a 26.0% operating margin, including roughly 120 basis points of drag from its headcount reductions.

Netflix said it will bring its advertising tier to 15 additional markets during 2027. The first launches are set for March 2027 in nine countries in Europe, the Middle East and Africa, along with Colombia, Peru and New Zealand. In the third quarter, the company extended programmatic access through global connected-TV marketplace deals and secured new partnerships with MercadoLibre in Latin America and Adform in Europe, the Middle East and Africa.

The ad forecast cut follows Netflix's decision last week to eliminate about 6% of its global workforce, or around 1,000 jobs, amid slowing growth and weaker viewer engagement. Netflix stock has fallen more than 40% over the past 12 months.

Viewing trends also drew attention in the shareholder letter. "We know there's some investor concern about our view hours growth," the company said. It added that members have reacted to the 2026 price hikes much as they did to earlier increases, and in line with what the company had anticipated. The company said it seeks to accelerate view hours growth.