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The streaming service missed analyst expectations in its latest quarter, pointing to the shortfall mainly to a sizable tax dispute with Brazilian authorities.

The results ended Netflix's six-quarter run of exceeding profit expectations, notwithstanding growth in its ads segment. Netflix still posted a profit, but it was below anticipated.

The $619 Million Cost Explaining the Miss

Citing an unexpected cost of approximately $619 million linked to the Brazilian tax dispute, Netflix attributed its third-quarter profit miss. Meanwhile, it praised its diverse slate of films for keeping viewers interested and contributing to revenue that were in line with analyst forecasts.

Possible Expansion with Warner Bros.

The streaming service may have a future opportunity to strengthen its content library. This follows Warner Bros. Discovery stating it is considering selling a portion or all of its assets, such as HBO, DC Studios, and CNN. Analysts are already predicting that Netflix may join the potential buyers.

Investor Reaction and Stock Performance

The market were not satisfied by the explanation, as the company's shares dropped by about 5% in extended trading after the report.

Detailed Financial Results

• Net Profit: Reported $2.5 billion, or $5.87 per share earnings, marking an 8% rise from the same period last year.
• Total Sales: Climbed 17% from the previous year to $11.5 billion.
• Market Forecasts: Expected earnings of $6.96 per share on sales of $11.5 bn, per FactSet Research.

Management Shift From Subscriber Numbers

Delivering robust revenue growth has become more crucial for the company as management have steered investors away from focusing solely on quarterly user additions. In line with this, the streamer stopped reporting its user base at the end of last year.

This shift has been successful so far, with its share price increasing around 40% year-to-date. Nevertheless, the recent decline in after-hours activity signaled that some of this progress could be lost.

User Base Expansion Evidence

Even though the service no longer reveals specific subscriber numbers, the revenue growth in the latest period indicates that its worldwide audience has expanded from the approximately 302 million subscribers it reported at the end of last year.

This keeps Netflix as the clear leader in the streaming service sector, despite rivals like Amazon and Apple having deeper pockets keep broaden their programming selections.

Expansion Efforts

The company has held onto its top position by introducing more sports programming and gaming content to enhance its broad selection of scripted programming. This broadening initiative is scheduled to venture into podcast content from Spotify next year.