Brazil Tax Ruling Forces $619 Million Charge as Netflix Misses Q3 Targets

Overview

• Netflix reported Q3 revenue of $11.51 billion, diluted EPS of $5.87 and a 28% operating margin, falling short of analyst and internal margin expectations.
• The $619 million provision, recorded as cost of revenue, covers periods from 2022 through Q3 2025 (about 20% tied to 2025) and cut Q3 operating margin by more than five percentage points.
• Shares fell after the release, reducing Netflix’s market value by roughly $33 billion, according to a consultancy estimate.
• Management kept fourth‑quarter guidance around $11.96 billion in revenue and $5.45 in diluted EPS and said it does not expect a material ongoing impact from the Brazilian matter.
• Netflix linked the charge to Brazil’s 10% Cide‑Tecnologia levy after an STF ruling with general repercussion expanded its scope; tax lawyers warn the precedent heightens legal uncertainty for other multinational firms operating in Brazil.