Netflix Lays Off 1,000 Staff as Q3 Growth Hits Three-Year Low

Netflix laid off about 1,000 employees last week — roughly 6% of its workforce — as third-quarter revenue growth slowed to its lowest rate in three years. The streamer posted Q3 2026 revenue of $12.87 billion, up 11.8% year over year, down from 17% growth a year earlier.

Net income came in at $3.66 billion, versus $2.55 billion a year ago, translating to earnings of 87 cents per share. Wall Street had expected $12.87 billion in revenue and 82 cents per share, per LSEG Data & Analytics. Operating margin reached 34.6%, ahead of the expected 33.2%. A beat, then. Not much of a celebration.

What did the purge hit?

The restructuring swept out the top of Netflix's content operation. The company ousted chief content officer Bela Bajaria, installing veteran TV executive Peter Rice in her place, and dismissed head of film Dan Lin, his top lieutenant Doug Belgrad, and director of original series Carolina Garcia.

In their Q3 letter to shareholders, co-CEOs Ted Sarandos and Greg Peters addressed the layoffs but did not explain why they overhauled content leadership. "These organizational changes enable us to continue to aggressively invest in high impact areas to improve our service, and drive growth and innovation," the executives wrote — echoing language from an internal memo about the job cuts.

How much will the layoffs cost?

Netflix projects a Q4 operating margin of 26.0%, which includes a 120 basis point (1.2 percentage point) negative impact from layoff costs. That would still be up from 24.5% a year earlier. The company also guided Q4 revenue to $13.4 billion, an 11.5% increase — below Wall Street's prior expectation of $13.5 billion.

The advertising business took a haircut too. Netflix now expects full-year 2026 ad revenue of about $2.7 billion, down from its previous $3 billion forecast. The company blamed a "slightly slower than expected rollout of some ad product capabilities."

Why is engagement the worry?

Per-subscriber viewing has drifted downward, particularly in the U.S. According to estimates by analysts at Jefferies, 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. Netflix's own "What We Watched" report, released in July 2026, showed aggregate global hours viewed up just 2% year over year.

"We know there's some investor concern about our view hours growth," the executives wrote. "Member response to our 2026 price increases is consistent with prior price changes and our expectations, an indicator that our engagement — which encompasses quantity, quality and variety of viewing — remains healthy and that we continue to deliver strong value to members. But we do seek to accelerate growth in view hours as well, and we're confident we'll do that by relentlessly focusing and executing against the aforementioned strategy."

Netflix will also change its disclosure rhythm: starting in 2027, it will publish the viewing report annually in the first quarter. "The goal of separating the publication of the report from our earnings results is to keep the focus on our primary financial metrics — revenue and operating profit," the company said.

What comes next?

Netflix plans to launch its ad-supported tier in 15 new countries in 2027. The first tranche arrives in March 2027: nine European markets (Austria, Belgium, Denmark, Ireland, the Netherlands, Norway, Poland, Sweden and Switzerland), plus Colombia, Peru and New Zealand. The new ad markets and the restructured content leadership will now have to answer the question the layoffs left unaddressed — how Netflix intends to make people watch more.