LOS ANGELES, California: Netflix shares tumbled more than eight percent after the streaming giant forecast third-quarter revenue and earnings below Wall Street expectations, raising fresh questions about how it plans to sustain growth amid intensifying competition.

The company projected third-quarter revenue of US$12.86 billion and diluted earnings per share of 82 cents, missing analysts' forecasts of $13 billion in revenue and 84 cents per share, according to LSEG.

Netflix also said it would reduce the frequency of its viewing-hours reports from twice a year to once annually beginning in January 2027, saying it wanted investors to focus on its primary financial metrics of revenue and operating profit. The company stopped reporting quarterly subscriber numbers in 2025.

The weaker outlook overshadowed results for the just-ended quarter, when revenue of $12.56 billion and earnings per share of 80 cents were broadly in line with analysts' expectations.

After years of rapid subscriber growth, Netflix has been investing in advertising, live events and video games to diversify its business. The company's stock has lost about a fifth of its value this year as investors weigh how it will maintain its momentum.

Third-quarter projections "appear to reflect a combination of management caution and a naturally maturing growth profile, rather than any sudden deterioration in the business," PP Foresight analyst Paolo Pescatore said. He added that they would "reinforce the view that Netflix remains strong but is entering a steadier phase of growth with considerably less room for error given the always-high expectations."

"Our financial performance remains solid, and we're on track to meet our objectives for the year," Netflix said in its quarterly letter to shareholders.

The company reiterated its forecast that advertising revenue would reach $3 billion by the end of the year and said it was relying on its growing slate of live events, including expanded NFL programming, to attract more advertisers.

Co-CEO Greg Peters said Netflix was considering introducing a free, ad-supported tier in some markets but had no immediate plans to launch one.

Netflix also said viewing hours increased two percent in the first half of the year and that generative artificial intelligence is now used across about 300 titles, primarily in post-production.

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