Netflix shares fell more than 5% on Tuesday after its latest earnings report failed to ease investor concerns about slowing audience engagement, intensifying competition and the outlook for revenue growth. The streaming company is also reportedly planning to cut around 1,000 jobs, equivalent to about 6% of its workforce.
The California-based company reported revenue of $12.87 billion for the third quarter ended in September, alongside net income of $3.7 billion. Both figures exceeded investor expectations, according to FactSet, but the results did little to reassure shareholders about the company’s longer-term growth prospects.
Netflix acknowledged concerns about the amount of time subscribers spend watching its content, a key measure of audience engagement. In a letter to investors, the company said it was confident it could accelerate growth in viewing hours.
The company did not disclose total viewing hours for the latest quarter. It reported that viewing time in India rose 24% from the same period a year earlier. In July, Netflix said subscribers had watched 97 billion hours of content during the first half of the year, up 2% from the first six months of 2025. It stopped reporting subscriber numbers in early 2025.
John Belton, a portfolio manager at Gabelli Funds, told AFP that Netflix had underperformed significantly over the previous six to 12 months. He cited concerns about weaker engagement, slower revenue growth, a less favourable outlook for profit margins and recent changes in content leadership.
Co-chief executive Ted Sarandos acknowledged that the company needed to improve its performance in the United States, even as its business continued to expand across Latin America, Europe and Asia.
“Our content around the world is largely working,” Sarandos told analysts, while noting that the US business was not growing as quickly as the company wanted.
Netflix is also facing reported workforce reductions and changes among its senior content executives. The Hollywood Reporter reported that seven senior employees involved in television deals and content were among those affected by recent changes.
The company has appointed former Disney executive Peter Rice as its new content chief, replacing Bela Bajaria, who oversaw major productions including Stranger Things, Bridgerton and Squid Game. Sarandos said Rice’s experience managing relationships with creative talent would be important in a competitive entertainment market.
To attract and retain viewers, Netflix has expanded beyond films and television series into live sports, gaming and shorter-form content. Its live programming includes agreements involving the NFL and WWE, while the company has also pursued major sporting events.
However, competition remains intense. Nielsen data showed Netflix accounted for 7.8% of US television streaming viewership in July, compared with 14.2% for YouTube.
Netflix also acknowledged that advertising revenue growth was running behind its ambitious target for the year. Co-chief executive Greg Peters said the advertising business was still expanding and that new advertising formats could support future growth.
Despite the challenges, Sarandos said most company spending and nearly all revenue remained focused on films and television, which he described as offering substantial room for future growth.
