Instant Reaction: Netflix Says Tax Dispute Hurt Solid Quarter

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4.5 • 49 Ratings

🗓️ 21 October 2025

⏱️ 25 minutes

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Summary

Netflix said a tax dispute with Brazil cut into third-quarter earnings, marring results that otherwise fell in line with Wall Street estimates.

The world’s most valuable entertainment company posted quarterly operating income of $3.24 billion, according to a statement Tuesday, about $400 million below its own forecast and analysts’ estimates. The company’s outlook for the current quarter is largely in line with Wall Street projections.

Netflix had to pay about $619 million to settle a multiyear tax dispute with Brazilian authorities going back to 2022. The company had identified the potential risk in previous filings – but not in its earnings guidance — and said it would have beaten forecasts if not for the expense. Future payments will be smaller.“We don’t expect this matter to have a material impact on future results,” the company said.
For instant reaction and analysis, Bloomberg Businessweek hosts Carol Massar and Tim Stenovec speak with:

Bloomberg News Media and Entertainment Editor Felix Gillette
Mark Douglas, President & CEO of MNTN
Bloomberg Intelligence Senior Media Analyst Geetha Ranganathan

See omnystudio.com/listener for privacy information.

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0:49.9	Shares of Netflix down to the company forecast revenue for the full year. The guidance met the average analyst estimate, but operating margin of 28% came in below Netflix's
1:00.1	guidance of 31.5%. That was due, the company says, to an expense related to an ongoing
1:05.6	dispute with Brazilian tax authorities that was not in our forecast. Is that what has investors not so happy? I don't know. It feels like a one-off, but I don't know. They say it's a one-off. The company says that, you know, we don't expect, what did they say? In the press release, they say, we do not expect this matter to have a material impact on future results. Yeah, all right, got it. But investors are sending the stock down about 6%. Keep in mind, the stock has had quite a run this year, as we mentioned, up almost 40% here in 2025. So investors maybe expect a lot out of it. Let's bring in Felix Gillette. He is the man who knows about media. He's Bloomberg News, Media, Entertainment Editor. He's also the author of It's Not TV, The Spectacular Rise, Revolution, and Future of HBO, which, yes, we're going to be talking about HBO in just a minute. He does join us here in the Bloomberg Interactive Brokers Studio. Going through the results here, look, as Lucas pointed out earlier, this is a $500 billion company. Expectations are high. Everybody kind of looks to it. Is the
2:03.0	reaction that we're seeing because of this one-off from the Brazilian tax authorities?
2:06.4	It seems that way, although, again, it's a crazy time in Hollywood. You know, taking a step back,
2:11.4	there is competition coming from everywhere, YouTube, Twitch, AI, new AI services. But, you know, if you take a breath, you look at
	...

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