Netflix Posts $11 Billion Profit, Then Cuts 1,000 Jobs

Netflix earned $11 billion in net profit in 2025 on revenue of $46.6 billion — and this week it laid off roughly 1,000 employees anyway, its largest cutback to date.

The 6% reduction in force arrived alongside a more startling move: the exit of chief content officer Bela Bajaria, replaced by industry veteran Peter Rice, who previously held senior roles at Disney and 21st Century Fox. The shake-up, confirmed in a memo to staff on Thursday, has left the industry asking why a company with $9.1 billion in cash and manageable debt of $14.4 billion as of June 30 would cut this deep from a position of strength.

The answer, according to investors and analysts, lies in the U.S. and Canada. That is where Netflix's growth story is fraying.

Why did Netflix cut jobs while profitable?

Netflix expects revenue growth to cool this year. The company projects an increase of 13%-14%, down from last year's 16% pace, while targeting a 200-basis-point improvement in operating margin, to 31.5%. Those are not the numbers of a company in crisis. But the market is pricing in something slower.

In the second quarter of 2026, UCAN revenue growth decelerated from 14% the prior quarter to 10%, a slowdown partly attributed to recent price hikes. Netflix also issued third-quarter revenue guidance below analyst expectations. Shares are down 20% year-to-date on fears that the streamer's era of double-digit gains is ending.

The layoffs and the executive change signal an attempt to get ahead of that problem. Co-CEO Ted Sarandos and co-chief Greg Peters told staffers in a companywide memo that the job cuts free up resources to "invest aggressively in high-impact areas to improve our service and further drive growth and innovation."

Sarandos, in his Thursday memo on the leadership change, pointed directly at the content slate. He wrote that he sees "an opportunity to take our slate to the next level, especially in UCAN where we have an outsize impact in creating big, buzzy hits that our members love and drive conversation around the world."

What does Bajaria's exit signal?

Multiple industry sources told Variety they believe Bajaria is being made the scapegoat for Netflix's larger problems. Content, however, remains the engine of the company's financials — and by Variety's own analysis, Netflix has not produced a "culture-defining hit in the vein of 'Stranger Things' in quite some time."

BMO Capital Markets analyst Brian Pitz added a harder data point: total viewing hours in the U.S. and Canada declined in Q2. The decision to part ways with Bajaria and hire Rice "suggest[s] to us that engagement trends may have softened further in 3Q26E," Pitz wrote in a research note Friday.

BMO responded to the leadership change by lowering its revenue estimates for Netflix's third and fourth quarters by roughly 1% each, and cutting its 2027 revenue forecast by 1.5%. Pitz noted that BMO's model "conservatively does not assume a UCAN revenue acceleration" until 2029.

Is Netflix alone in cutting from a position of profit?

No. Disney, also profitable, has carried out three rounds of layoffs in 2026 across different parts of its business. Disney's challenge differs — it is wrestling with the ongoing deterioration of linear TV — but the rationale echoes Netflix's. CEO Josh D'Amaro and CFO Hugh Johnston have told Wall Street they aim to cut costs, including through layoffs, to "create incremental capacity to invest for growth."

The pattern now extends across the sector. David Ellison's newly formed Skydance, created through the merger of Paramount and Warner Bros. Discovery, is poised to cut thousands of staffers ahead of its first earnings report this season.

What happens next?

Netflix leadership will face detailed questions on the restructuring, and on the decision to swap Bajaria for Rice, when the company reports third-quarter earnings on Tuesday, October 20. That report opens a consequential earnings season for entertainment, one that will test whether Wall Street accepts the argument that profitable companies can cut their way to faster growth.