Netflix slides after Q3 profit miss on Brazil tax charge

Investing.com -- Netflix Inc reported quarterly earnings below Wall Street expectations on Tuesday after booking a charge tied to a tax dispute in Brazil, though the company said the matter will not have a material effect on future results. Shares fell 5.8% in afterhours trading.

Third-quarter earnings per share came in at $5.87, missing analysts’ estimates of $6.96, while revenue rose 17% from a year earlier to $11.51 billion which was in line with expectations.

Operating margin fell to 28% from 30% a year ago after the streaming giant recorded a $619 million expense linked to Brazilian non-income tax assessments covering 2022 through 2025.

Netflix said it would have exceeded its margin target without the charge and reaffirmed that the dispute is not expected to affect future performance.

The company projected fourth-quarter revenue of $11.96 billion, roughly in line with analysts’ forecasts, and earnings of $5.45 per share.

Netflix said revenue growth was driven by higher membership, pricing, and advertising income, with ad sales reaching their best quarter yet. Streaming company has stopped giving subscriber numbers in earnings report.

U.S. and U.K. engagement hit record levels, up 15% and 22% respectively from late 2022, said Netflix citing data from Nielsen and Barb.

The company forecast an operating margin of 23.9% in the fourth quarter, up two points from a year earlier, and maintained its full-year outlook for about 16% revenue growth and a 29% operating margin.

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