Netflix Q3 Earnings Beat, but Revenue Growth Slows

Netflix, Inc. (NFLX) reported third-quarter fiscal 2026 results on Tuesday, October 20, 2026, after the market close, and beat on earnings: $0.87 per share against a consensus estimate of $0.82. The market mostly shrugged off the beat. Revenue growth slowed to 11.8%, and Reuters ran the headline "Netflix co-CEO Sarandos says 'we could do better' after weak forecast" the same night.

So here's the tension. On profitability, this is one of the best quarters in the company's recent filings. But the stock is trading on the top line, and it came into the report already down 44.5% over the past year.

How did Netflix stock react to the earnings report?

Badly, at least early on. Netflix closed at $68.69 on October 20, 2026, before the report. By 12:35 p.m. ET on Wednesday, October 21, 2026, it had recovered some ground to $65.17, but that's still down 5.1%. We don't have the closing reaction yet, so the final verdict on the day isn't in.

The worst of it came earlier. In pre-market trading at 9:29 a.m. ET, the stock was at $64.15, down 6.6%.

Look at where that leaves the shares. The lowest close of the past 12 months was $67.06 on October 2, 2026, so the midday price is below it. The highest close was $124.14 on October 21, 2025, exactly a year ago. The stock has nearly halved in a year, and a nickel EPS beat wasn't going to change that conversation.

Analysts are adjusting too. MarketBeat reported on October 21 that JPMorgan lowered its price target, and The Hollywood Reporter ran "Netflix Stock and Price Targets Drop as Wall Street Debates If the Streamer Can Flip the Script."

Did Netflix beat earnings estimates in Q3?

Yes. According to the company's quarterly results, diluted EPS was $0.87 against the $0.82 consensus, a beat of $0.05 per share, or 6.1%. That's four straight quarters at or above the consensus in Chart Equity's data, and it's a bigger surprise than the July quarter delivered.

Report date	EPS actual	Consensus	Surprise
January 20, 2026	$0.56	$0.55	+1.4%
April 16, 2026	$1.23	$0.76	+61.2%
July 16, 2026	$0.80	$0.79	+1.8%
October 20, 2026	$0.87	$0.82	+6.1%

April is the outlier, and the summary financials don't explain it. Set it aside and the pattern is small, steady beats of 1% to 2%, so this quarter's 6.1% stands out. If you want a refresher on what that per-share figure captures, our guide to earnings per share and how to use it walks through it.

What changed versus a year ago?

Margins, mostly. Revenue rose 11.8% to $12.87 billion, a solid gain, but profits grew much faster because the business kept more of each dollar it brought in. Operating margin widened from 28.2% to 34.6% compared with Q3 FY2025. That's why net income grew almost four times faster than sales did over the same stretch.

Operating income tells the same story: it climbed to $4.46 billion from $3.25 billion over the same stretch.

Metric	Q3 FY2025	Q2 FY2026	Q3 FY2026
Revenue	$11.51 billion	$12.56 billion	$12.87 billion
Gross margin	46.4%	51.9%	52.8%
Operating margin	28.2%	33.4%	34.6%
Net income	$2.55 billion	$3.40 billion	$3.66 billion
Diluted EPS	$0.59	$0.80	$0.87

It starts with gross margin, which went from 46.4% to 52.8% in a year. Put simply, each dollar of revenue now keeps about 53 cents after cost of revenue, up from about 46 cents. That's a big improvement in what every subscriber dollar returns.

Here's the catch. Margin expansion works like a lever, and a lever has a ceiling. Revenue only grew 2.5% from Q2 to Q3, so most of the earnings gain this year came from squeezing more out of each dollar, not from adding many more dollars. As you look at the revenue trend below, pay attention to how steep the climb is in recent years. The market is asking whether that slope can hold.

Is Netflix's revenue growth slowing?

Yes, and that's what the market latched onto. Q3 revenue grew 11.8% year over year. Per its annual income statements, Netflix grew revenue 15.6% in FY2024 and 15.9% in FY2025, so this quarter is a clear step down from the pace of the last two years. The WSJ framed it the same way: "Netflix Revenue Growth Slows as It Overhauls Programming Units."

The year-by-year path is the real story. Revenue went from $29.70 billion in FY2021 to $45.18 billion in FY2025, an 11.1% compound annual rate. But that average hides a dip and a rebound: growth slowed sharply in the middle of that run before it reaccelerated to the mid-teens, which is what makes the recent momentum stand out.

The slow patch was FY2022 and FY2023, when growth came in at 6.5% and 6.7%.

So 11.8% isn't weak by Netflix's long-run standards. It's actually a touch above the four-year average. It's only weak next to the mid-teens pace the stock was priced on a year ago. Our guide to what to look for in revenue growth explains why the direction of the trend often moves a stock more than the level.

Is Netflix stock cheap after the drop?

It's a lot cheaper than it was. As of the close on Tuesday, October 20, 2026, Netflix traded at 18.9x trailing earnings and 17.3x forward earnings, with a market cap of $272.12 billion. Those are multiples for a mature compounder, not a high-growth story.

The cash flow supports the earnings. Free cash flow was $9.46 billion in FY2025, a 20.9% margin, and the trailing free cash flow yield is 4.2%. Netflix spent $9.13 billion on buybacks that year, close to all of its free cash flow.

That's why diluted shares fell from 4.55 billion in FY2021 to 4.32 billion in FY2025. Debt looks manageable: total debt was $15.13 billion in the latest quarter against $8.22 billion of cash. For context on the multiple, compare Netflix's P/E with other large-cap tech names below and see whether it sits at the cheap end or the expensive end of the group.

Analysts' average target is $90.75 across 45 analysts, with a range from $57.00 to $126.00. A range that wide means the Street hasn't agreed on what growth rate to pay for. Our explainer on why the P/E ratio matters covers why a low multiple can stay low when growth is slowing. The free Stock Audit on NFLX scores growth, profitability, balance sheet and valuation side by side.

What's next for Netflix stock?

The next report is scheduled for Tuesday, January 19, 2027, according to the Yahoo Finance earnings calendar. Analysts' average estimate for the December quarter is $0.70 in EPS on $13.40 billion of revenue. That EPS bar sits below this quarter's $0.87, so the revenue line will probably get more scrutiny than the bottom line.

First, watch revenue. Hitting $13.40 billion would mean about 4.1% growth over Q3's $12.87 billion. That would show whether the slowdown to 11.8% leveled off or kept going. If you followed our earnings week preview, this is the number that changed the conversation.

Second, watch operating margin, now 34.6%. Margins have done the heavy lifting this year. If they flatten while growth keeps slowing, the earnings growth behind even an 18.9x multiple gets harder to defend.

Third, watch the closing reaction and the $64.10 52-week low. A stock that keeps setting new lows after a beat is telling you the market cares more about growth than about the quarter's profit.

Frequently Asked Questions

When does Netflix report earnings next?

Netflix's next report is listed for Tuesday, January 19, 2027, on the Yahoo Finance earnings calendar. Calendar dates like this can be estimates until the company confirms them, so check closer to the date. That report will cover the quarter ending December 31, 2026, the last quarter of fiscal 2026, so it will also complete the full-year picture.

Does Netflix pay a dividend?

No. Netflix's dividend yield is 0.00%, and its cash flow statements show no dividends paid in any year from FY2021 through FY2025. Instead, it returns cash through share buybacks: $6.05 billion in FY2023, $6.26 billion in FY2024 and $9.13 billion in FY2025. Buybacks reduce the share count, which lifts earnings per share even when net income is flat.

Why did Netflix stock fall even though it beat earnings?

Investors focused on growth rather than the EPS beat. Revenue growth slowed and Reuters reported a weak forecast. Yahoo Finance also ran "Netflix has 2 problems behind the stock slide, and they aren't YouTube, co-CEO Ted Sarandos says" on October 21. When a stock has fallen 44.5% in a year, a small earnings beat rarely outweighs worries about where the top line is heading.

What do analysts think of Netflix stock?

Most analysts are still positive. Thirty-four rate it Buy or Strong Buy, 14 rate it Hold and 2 rate it Sell or Strong Sell. Their average price target of $90.75 is 32.1% above the $68.69 close on October 20, 2026. Targets are being revised after the report, though, so that average may move in the coming days.

How profitable is Netflix compared with its revenue?

Very profitable. Its trailing 12-month net margin is 29.7%, so roughly 30 cents of every revenue dollar becomes profit. Return on equity is 50.4% and return on invested capital is 26.6%, which means the business earns strong returns on the money put into it. In FY2021 the net margin was 17.2%.