"The initial headline that hit newswires when Netflix reported certainly looked very bad. The company reported EPS of $5.87 versus Wall Street's expectations of $6.95 in EPS. Yet, as Netflix clarified in its shareholder letter, a big reason for that EPS shortfall was a tax dispute with Brazilian authorities. Overall, operating income appears on track, and expenses related to that tax dispute are a one-time figure."
"NFLX | Netflix Q3'25 Earnings Highlights: Adj. EPS: $5.87 [✅]; Misses Wall St Expectations of $6.95 Revenue: $11.51B (Est. $11.51B) [✅]; [UP] +17.2% YoY Adj. Gross Margin: 28.2% [⚠️]; [DOWN] -50 bps YoY Net Income: $2.55B [✅]; [UP] +8% YoY Operating Income: $3.25B (Est. $3.25B) [✅]; [UP] +12% YoY Free Cash Flow: $2.66B; [UP] +21% YoY Effective Tax Rate: 18.1% (vs. 12.6% YoY)"
Netflix reported Q3 adjusted EPS of $5.87, missing Wall Street's $6.95 estimate largely because of a one-time tax dispute with Brazilian authorities. Revenue reached $11.51 billion, up 17.2% year-over-year and in line with expectations. Operating income increased 12% to $3.25 billion, net income rose 8% to $2.55 billion, and free cash flow grew 21% to $2.66 billion. Adjusted gross margin declined by 50 basis points to 28.2%, and the effective tax rate increased to 18.1% from 12.6% year-over-year. Q4 revenue is guided to $11.96 billion with a projected 23.9% operating margin.
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