What I'm watching for in Netflix's earnings report

"Q3 2025 delivered a jarring reality check. Revenue hit $11.51 billion, matching consensus exactly, but EPS came in at $5.87 versus the $6.97 estimate. That 15.8% miss broke a four-quarter beat streak and stemmed largely from a $619 million Brazilian tax dispute that crushed operating margin by more than 5 percentage points. Management framed it as a one-time hit, but the damage to sentiment was real. Shares have drifted lower ever since, falling from around $1,100 in early November to current levels near $90."

"Three Things That Will Move the Stock I'll be watching subscriber additions first. International markets need to carry the load as US growth decelerates. Management guided to 17% revenue growth for Q4, but that number means nothing if net adds disappoint or if churn ticks higher. The NFL games and Stranger Things finale should have driven sign-ups, but you need to see whether those viewers stick around or cancel after binging."

"Second is advertising revenue momentum. This has been the bull thesis for two years, and it needs to show real inflection now. If ad revenue growth accelerates meaningfully and management signals confidence in scaling that business, it validates the idea that Netflix can layer a second revenue stream onto subscriptions without cannibalizing the core. If it's still early innings with vague optimism, the market will lose patience."

Netflix reports Q4 2025 earnings on January 20 after the bell. Q3 2025 produced a 15.8% EPS miss driven largely by a $619 million Brazilian tax dispute that reduced operating margin over five percentage points. Shares fell from about $1,100 in early November to near $90. Recent positives include massive NFL Christmas viewership, the final Stranger Things season, and an $83 billion bid for Warner Bros. Discovery, signaling M&A ambitions. Key near-term drivers are international subscriber additions, advertising revenue acceleration, and 2026 guidance and outlook. Revenue guidance of 17% for Q4 depends on net adds, churn, and ad monetization.

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