Ad business doubles upfront commitments in the US, reflecting growing strength of Netflix’s hybrid streaming model.
Netflix reported a 17% year-on-year rise in revenue for the third quarter of 2025, reaching $11.51 billion, aligned with market expectations. However, profits took a hit following a one-time tax charge in Brazil, which pulled down the company’s operating margin.
Operating income stood at $3.2 billion, representing a 28.2% margin, lower than the projected 31.5%. The shortfall was attributed to a $619 million expense tied to non-income tax assessments from Brazilian authorities for the period spanning 2022 to Q3 2025. Netflix noted that without this charge, it would have exceeded its margin guidance.
Net income rose 9% year-on-year to $2.55 billion, or $5.87 per share, though it fell about $1 short of internal projections. The company said the Brazilian tax issue would not materially affect future earnings.
Growth was broad-based across regions – revenue increased 17% in the US and Canada, 18% in EMEA, 10% in Latin America, and 21% in Asia-Pacific. Subscriber additions, price revisions, and the rise of its ad-supported tier were key contributors.
The quarter also marked a milestone for Netflix’s advertising business, which doubled upfront ad commitments in the US. The company expects ad revenue to more than double in 2025, supported by enhanced targeting through integrations with Amazon’s DSP globally and Japan’s AJA DSP.
On the content front, global hits like Wednesday Season 2, Happy Gilmore 2, and KPop Demon Hunters-which became Netflix’s most-watched film ever with 325 million views-drove strong engagement.
Looking ahead, Netflix projects Q4 revenue of $11.96 billion, up 16.7% year-on-year, and a 23.9% operating margin, anticipating full-year revenue of $45.1 billion and a 29% margin, slightly trimmed by the Brazil tax expense.
