Netflix Ad Revenue Growth Supports Third Quarter Outlook

Higher subscription prices and continued growth in advertising are expected to support Netflix's third-quarter financial performance, according to Wedbush's analysis published by Yahoo Finance on October 20, 2026. The brokerage forecasts revenue and earnings broadly in line with the company's guidance, while limited subscriber cancellations following price increases could help sustain revenue per member.

Wedbush projects Netflix will generate $12.865 billion in revenue and earnings of $0.83 per share for the third quarter. The revenue estimate is slightly below the analyst consensus of $12.88 billion but marginally above the company's guidance of $12.860 billion, while the earnings forecast exceeds both consensus and company guidance of $0.82 per share.

The brokerage's model assumes global subscriber growth of 5% year over year and 2.2 million net paid additions. However, it anticipates a decline of 500,000 subscribers across the United States and Canada, offset by modest gains in other markets.

Wedbush expects average revenue per member to increase from the previous quarter, supported by higher subscription prices, customer retention, and additional advertising spending. Improved advertising targeting and stable cost per thousand impressions, or CPMs, are also expected to contribute to the business.

The brokerage noted that Netflix continues to carry the lowest advertising load in the industry, leaving room to expand its advertising business. It also expects the company's advertising revenue to approximately double to $3 billion in 2026.

Wedbush's third-quarter subscriber survey found that cancellations remained limited following Netflix's March price increases. The company's ad-supported subscription tier also recorded the strongest stated intention to remain subscribed among the premium tiers for the second consecutive quarter.

These survey findings provide an additional measure of customer retention as Netflix adjusts subscription prices and expands its advertising-supported offering. The results suggest that the price increases have not been accompanied by a substantial increase in cancellations among the customers covered by the survey.

Netflix has told employees that it remains on track to meet its full-year 2026 financial guidance, according to the report. The company targets annual revenue of $51 billion to $51.4 billion, an operating margin of 31.5%, and approximately $12.5 billion in free cash flow.

Wedbush also expects content amortization costs to ease during the second half of 2026. Lower content amortization costs, alongside advertising growth and subscription revenue, form part of the brokerage's outlook for the company's financial performance.

The third-quarter estimates come as Netflix continues to develop advertising as a larger source of revenue alongside subscription fees. Wedbush's projections place the company's anticipated 2026 advertising revenue at approximately $3 billion, compared with a level roughly half that amount in the previous year.