Summary
Netflix fell short of Wall Street’s earnings expectations for the first time in six quarters, citing a $619 million expense linked to an ongoing tax dispute in Brazil. Despite strong revenue growth, the setback triggered a 6% drop in the company’s shares during extended trading.
Los Gatos, California, October 25, 2025 — Netflix reported lower-than-expected earnings for its latest quarter, ending its six-quarter streak of surpassing analyst forecasts. The streaming giant attributed the shortfall to an unexpected $619 million charge related to a tax dispute in Brazil.
The company earned $2.5 billion, or $5.87 per share, in the July–September quarter — up 8% from the same period last year but below analysts’ projections of $6.96 per share. Revenue climbed 17% year-over-year to $11.5 billion, matching forecasts compiled by FactSet Research.
While Netflix highlighted strong engagement driven by its diverse slate of series and films, investor sentiment remained cautious. The company’s stock dropped about 6% in after-hours trading following the announcement.
Analyst reactions were mixed. Thomas Monteiro of Investing.com warned that Netflix may be using the tax expense to obscure slowing subscriber and advertising growth. However, Zacks analyst Jeremy Mullin described the company’s fundamentals as “solid,” noting steady long-term momentum.
Netflix no longer discloses subscriber totals, but the 17% revenue increase suggests continued global growth from its 302 million base at the end of last year. Co-CEOs Ted Sarandos and Greg Peters stated that the platform’s total global audience — including shared households — is approaching one billion viewers.
The company continues to expand its portfolio beyond scripted content, investing in live sports, video games, and soon, video podcasts through a collaboration with Spotify. Analysts also speculate that Netflix could pursue assets from Warner Bros. Discovery, which has hinted at selling portions of its media holdings.
Netflix’s advertising-supported tier, introduced three years ago, is another emerging revenue stream. Although its ad business remains relatively small, projections from S&P suggest it could generate $1.1 billion this year, accounting for roughly 2% of total revenue.
Analysts warn that Netflix must balance diversification with focus. “If the company goes too broad to become all things entertainment, it risks diluting its core,” cautioned Mike Proulx of Forrester Research.