Netflix released its third quarter 2025 financial results, showing revenue of $11.51 billion. This represents a 17% increase compared to the same period last year and matches the company's own forecast.
The streaming service reported an operating margin of 28% for the quarter. This figure fell short of the 31.5% margin that had been previously guided. Company management attributed the difference to a non-recurring legal adjustment related to a tax dispute in Brazil.
Netflix explained that the margin shortfall stemmed from an expense tied to a Brazilian tax known as the Contribution for Intervention in the Economic Domain (CIDE). The company had previously believed certain payments made by its Brazilian entity to Netflix U.S. were not subject to this tax, a position supported by a 2022 lower-court ruling.
In August, Brazil's Supreme Court issued a ruling in an unrelated case that broadened the interpretation of transactions subject to the CIDE tax. Following this decision, Netflix reassessed its legal position and recorded an expense covering the period from 2022 through the third quarter of 2025.
Management emphasized that without this one-time charge, operating income and margins would have exceeded guidance. They stated that roughly 80% of the charge relates to prior years and that the issue is not expected to materially affect future results.
During the quarter, Netflix achieved its highest-ever viewing share in the United States and the United Kingdom. According to Nielsen and BARB data, the platform captured 8.6% of total viewing in the U.S. and 9.4% in the U.K.
Viewing share has increased by 15% in the U.S. and 22% in the U.K. since the end of 2022. Total viewing hours also accelerated in the third quarter compared to the first half of the year.
Netflix's advertising business delivered its strongest quarter to date in Q3 2025. The company reported record ad sales and a doubling of U.S. upfront commitments. Management noted accelerating growth in programmatic advertising.
Upfront commitments secured during the quarter will start contributing to revenue in late 2025 and continue into 2026. The company has rolled out its proprietary ad tech stack, expanding available formats and improving measurement capabilities.
Looking ahead, Netflix expects fourth-quarter 2025 revenue growth of 17% and an operating margin of 23.9%. For the full year, revenue is projected at $45.1 billion with a 29% operating margin. The company stated that the margin revision is directly linked to the Brazilian tax issue.