Netflix Cuts 1,000 Jobs as Ad Sales Target Slips and Revenue Growth Slows

Netflix reported solid Q3 numbers on October 20 and then spent the rest of the earnings call explaining why none of it was quite good enough.

The company posted Q3 revenue of $12.87 billion, up 11.8% year over year, matching Wall Street's consensus to within $5 million, according to figures reviewed by MarketBeat. Diluted earnings per share of $0.87 beat the $0.82 consensus, rising from $0.59 in the same period a year ago. Operating margin came in at 34.6%, ahead of the 33.2% the company had forecast in its Q2 letter to shareholders, per the Netflix 8-K filed with the SEC.

That's where the good news ended for investors. The stock fell on guidance that trimmed both the revenue and advertising outlooks. As reported by Variety, Q3 revenue growth of 11.8% was the slowest the company has posted in three years, compared with 17% top-line growth a year earlier. For the fourth quarter, Netflix guided to $13.4 billion in revenue, or 12% year-over-year growth. Full-year revenue guidance tightened to $51.1 billion, which Deadline noted is at the low end of the $50.7 billion to $51.7 billion range the company set at the start of 2026 and slightly below the analyst consensus.

The advertising shortfall is the sharper problem. Netflix now projects full-year ad revenue of $2.7 billion, down from an earlier target of $3 billion, according to Deadline's earnings coverage. The company had told investors entering 2026 that ad revenue would roughly double from 2025's $1.5 billion. At $2.7 billion it would clear that bar, but not by the margin the Street had priced in.

The restructuring that preceded the earnings report added its own weight. On October 14, co-CEOs Ted Sarandos and Greg Peters sent an internal memo announcing roughly 1,000 job cuts, or about 6% of the company's global workforce, as confirmed by TechCrunch. The product, tech, legal, and HR departments absorbed most of the reductions. According to Netflix's most recent annual filing, the company had about 16,000 full-time employees at the end of 2025, making this the largest single reduction in the company's history, bigger than the two 2022 rounds combined, per Final Round AI's analysis of the WARN filings.

The content leadership overhaul ran alongside the headcount cut. According to Variety, chief content officer Bela Bajaria was ousted, as was film unit head Dan Lin. Bajaria's replacement is Peter Rice, a veteran of Disney and 21st Century Fox. No replacement for Lin has been named.

On the earnings call, co-CEO Greg Peters called the job cuts a "hard trade-off" in service of long-term growth, per Gizmodo's call coverage. Sarandos was more pointed on domestic performance: "We do need better execution in the U.S.," he said, adding that the U.S. market "is just not growing as fast as it could."

Analysts at Jefferies, cited by Variety, estimated that Netflix's average monthly viewing time per member globally fell from 66 hours in the first half of 2023 to about 49 hours in the first half of 2026, a figure that management did not directly address on the call.

The Q4 operating margin forecast of 26% includes roughly 120 basis points of drag from the restructuring costs, per the Netflix 8-K. Strip that out and the underlying margin trajectory stays intact, but investors now have to weigh a slower ad ramp, a thinning content leadership bench, and a domestic engagement number that the company's own CEO has conceded needs work.

Sources cited:
- Netflix 8-K (Q3 2026), SEC filing (https://www.sec.gov/Archives/edgar/data/0001065280/000106528026000290/ex991_q326.htm)
- MarketBeat, Netflix Q3 2026 Earnings Results (https://www.marketbeat.com/earnings/reports/2026-10-20-netflix-inc-stock/)
- Variety, Netflix Q3 2026 Earnings: Streamer to Miss Ad Sales Target (https://variety.com/2026/tv/news/netflix-q3-2026-earnings-wall-street-layoffs-exec-firings-1236917438/)
- Deadline, Netflix Q3 2026 Earnings: Stock Drops on Lowered Guidance (https://deadline.com/2026/10/netflix-q3-2026-earnings-layoffs-streaming-1237168825/)
- TechCrunch, Netflix to lay off 1,000 staff (https://techcrunch.com/2026/10/14/netflix-to-lay-off-1000-staff-amid-intensifying-competition-for-user-attention/)
- Variety, Why Netflix Made Layoffs and Ousted Its Top Content Exec (https://variety.com/2026/tv/news/why-netflix-made-layoffs-1236913767/)
- Gizmodo, Netflix Promises To 'Do Better' (https://gizmodo.com/netflix-promises-to-do-better-2000828357)
- Final Round AI, Netflix Layoffs: 1,000 Jobs Cut in Biggest Round Since 2022 (https://www.finalroundai.com/blog/netflix-layoffs)