Netflix held its Q3 earning call yesterday and cited an ongoing dispute with Brazilian tax authorities for the quarter’s lower-than-estimated results, showing an unexpected $619 million expense tied to the legal dispute — which is likely that Netflix will lose.
Netflix reported third-quarter net income of $2.55 billion, while analysts had expected $3.0 billion.
The tax dispute involves a 10 percent tax on payments made by Brazilian companies to foreign entities — in this specific case, payments to distribute the Netflix’s platform in Brazil.
Chief financial officer Spence Neumann said: “Absent this expense, we would have exceeded our Q325 operating income and operating margin forecast, and we don’t expect this matter to have a have a material impact on our results going forward.”
Revenue for Netflix’s third quarter rose 17 percent from the year prior, in line with expectations of revenue growth.
Netflix’s Q3 earnings came after Warner Bros Discovery announced it may sell all or part of its business. Analysts speculated that Netflix may join the interested parties looking to acquire WBD assets.
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