Netflix recorded its best-ever ad sales quarter
Netflix posted a strong third-quarter performance with revenue up 17% to $11.5 billion, fueled by global membership gains, ad sales growth, and subscription price hikes.
The company recorded its best-ever ad sales quarter and expects to more than double that revenue this year.
Net income rose 8% to $2.5 billion, below its $2.98 billion forecast, while its 28% operating margin missed expectations due to a $239 million tax dispute with Brazilian authorities. Without that one-time cost, Netflix said margins would have exceeded projections.
Shares fell up to 6% in after-hours trading on Tuesday but are up nearly 40% this year.
Netflix cut its 2025 operating margin target to 29% from 30% but maintained its revenue forecast. The company said it continues to benefit from the decline of traditional cable TV and the expanding demand for streaming services.
CEO Ted Sarandos recently mentioned that the OTT platform is “all in” for the use of generative AI to refine recommendations, marketing, and film production. It recently used AI in Argentina’s The Eternaut to create a collapsing building scene and in Happy Gilmore 2 to de-age characters.
Sarandos said AI will serve as a tool to make artists more efficient, not replace them.