Netflix Q3 Earnings Miss Due To $619M Brazilian Tax Dispute

Netflix reported a strong third quarter with record revenue of $11.5 billion, driven by popular Korean-themed content and robust growth in its ad-supported tier, which saw its best ad sales quarter ever. However, the company's operating income and margins fell short of expectations due to a $619 million expense related to an ongoing tax dispute with Brazilian authorities. Despite this setback, Netflix's revenue growth continued across all regions, with North America and Asia-Pacific leading the way. The company forecasted fourth-quarter revenue slightly above Wall Street estimates and expects continued momentum with the release of the final season of "Stranger Things" and live NFL games. Netflix's shares dropped following the earnings report, reflecting investor concerns over the unexpected tax expense. Management stated they do not anticipate the Brazilian tax issue to have a material impact on future results, and the company is focusing on expanding revenue streams through advertising and video games amid fierce competition from rivals like YouTube, Amazon Prime Video, and Disney+.