Summary
Netflix presented its financial results for the third quarter of 2025 this Tuesday (10/21). Even with good revenue, operating profit was below expectations. And the reason, according to the company, is Brazil: an unforeseen expense of US$619 million related to a tax dispute in the country. The amount is equivalent to R$3.34 billion in direct conversion.
The value, which was not in the guidance (the forecast of results), made the operating profit close at US$ 3.24 billion (around R$ 17 billion). In the official statement to shareholders, Netflix explains that, without this expense, it would have exceeded the profit target it set itself. The impact would have reduced the quarter’s operating margin by more than five percentage points.
In an interview with analysts, Spencer Neumann, Netflix’s financial director, explained that the cost refers to the CIDE (Contribution for Intervention in the Economic Domain), a federal tax created to finance technological development in the country.
Understand the expense coming from Brazil
In the balance sheet, the amount was recorded as “revenue cost”. According to Netflix, it refers to an “ongoing dispute with Brazilian tax authorities” over “certain non-income tax assessments.” The company detailed that the amount covers a retroactive period, from 2022 to the third quarter of 2025.
According to Bloombergthe final operating profit number was around US$400 million (R$2.1 billion) below what market analysts had projected. Clarifying the financial results to analysts, Neumann described CIDE as a “cost of doing business in Brazil” and not a common revenue tax.
The tax is levied at around 10% on certain amounts paid by Brazilian companies and entities outside Brazil. In the case of Netflix, payment is made by Netflix Brazil to the North American parent company for the services that allow the platform to operate in the country.
Neumann stated that he was optimistic about the process that challenged the application of CIDE to services that do not involve “technology transfer”. Netflix would have won in a lower court in 2022 over non-payment of tax.
However, the CFO considers that the decision of the Federal Supreme Court (STF), handed down in August this year, expanded the legal understanding of the scope of CIDE and Netflix began to record this expense.
“CIDE is something unique, we don’t have anything like it in any other country where we operate”, stated the executive. He also reinforced the message of the statement: “We do not believe this matter will have a material impact on our results going forward.”
Revenue and engagement on the rise
Apart from the impact of the tax issue, Netflix’s numbers were positive. Global revenue grew 17% compared to the previous year, reaching US$11.5 billion, a result in line with the company’s projections.
The company also highlighted the success of its releases in the period, including the second season of He beat methe film The Fresh Prince of Bel-Air 2 and the South Korean feature film K-pop warriorswhich became the most popular film in the platform’s history. The report also cites the boxing fight between Canelo Álvarez and Terence Crawford as a ratings success.
In the statement, Netflix also responded to market concerns about competition with free platforms such as YouTube. The company highlights that it achieved its “highest quarterly TV audience share ever in the US and UK”. It is worth remembering that the company will begin showing live television channels starting next year, in a partnership in France.
Netflix eyes the competition
On the same day that the financial statement was revealed, the name of Netflix appeared as a possible interest in purchasing part of Warner Bros. Discovery (WBD), controller of HBO Max streaming. The acquisition would be in partnership with Paramount Skydance — owned by multibillionaire David Ellison, son of the owner of Oracle — and Comcast (owner of the Universal film studio).
However, hours after WBD’s announcement that it was officially considering market offers, Netflix CEO Ted Sarandos reinforced that the company remains uninterested in acquiring traditional media outlets.
The focus, according to the CEO, remains on organic growth and the development of the platform’s own technology, including the incorporation of generative artificial intelligence.
Source: https://tecnoblog.net/noticias/netflix-perdeu-us-619-milhoes-em-disputa-tributaria-no-brasil/
