Netflix shares fall after earnings miss despite 17% revenue rise, record ad sales
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The news: Netflix shares fell more than 6% in after-hours trading after third-quarter earnings missed expectations, partly due to a one-time tax charge tied to a dispute with Brazilian authorities.
The numbers: The company reported net income and operating margin below its forecasts, saying it would have exceeded its own guidance if not for the roughly USD619 million ($954 million) expense.
The one-off charge reduced third-quarter operating income to USD3.24 billion and trimmed earnings per share to USD5.87, below Wall Street estimates.
Revenue rose 17%, in line with expectations, helped by membership growth, price increases and what Netflix called its strongest quarter ever for advertising.
Netflix’s share price had risen nearly 40% year-to-date before dropping over 6% after the results.
The company said the Brazil matter would not have a material impact on future results but lowered its full-year operating margin forecast.
Hit titles including KPop Demon Hunters, which became its most-watched movie ever, and a live boxing match between Canelo Alvarez and Terence Crawford, that attracted more than 41 million viewers helped drive engagement.
Netflix said it has good momentum heading into the fourth quarter and flagged a stronger programming slate and continued growth in its advertising business. It also reiterated interest in potential acquisitions, with Bloomberg reporting the company has explored buying assets from Warner Bros Discovery.
The sources: Netflix, Bloomberg, The Wall Street Journal
