Netflix reported third-quarter revenue of $12.9 billion, in line with Wall Street expectations, but its fourth-quarter forecast came in below analysts’ estimates. The company expects revenue growth to slow for a fourth consecutive quarter, with weaker-than-planned advertising revenue contributing to the shortfall.
Fourth-quarter forecast falls short of estimates
Netflix expects revenue of $13.4 billion in the final three months of the year. That would be above the $12.9 billion reported for the third quarter, but below analysts’ previous forecast, shifting attention from the revenue total to the pace of growth.
The company projects fourth-quarter revenue growth of 11.5% year over year, compared with 17.6% in the same quarter last year. If the forecast holds, growth will have slowed for four consecutive quarters.
Advertising revenue expected to miss plan by $300 million
Netflix said advertising revenue is running below its expectations and is expected to leave revenue about $300 million short of plan. The company has not disclosed the total advertising revenue figure or detailed reasons for the gap, so the available information confirms only that the business has underperformed its internal forecast and is weighing on the overall outlook.
Advertising is a key variable in the fourth-quarter guidance. Its performance feeds directly into expectations for Netflix’s overall revenue growth. Third-quarter revenue met estimates, but that result did not change the company’s view that growth will ease in the current quarter.
Focus turns to the pace of growth
Netflix is a leading global online television service, with revenue shaped by both subscriptions and advertising. Its latest update showed third-quarter sales of $12.9 billion alongside a fourth-quarter forecast below analysts’ estimates and projected growth of 11.5%.
The company has not provided revenue guidance for subsequent quarters or detailed the composition of the advertising shortfall. Investors will be watching whether fourth-quarter results match the forecast and whether advertising revenue closes the gap with expectations.