04:50 PM EDT, 10/21/2025 (MT Newswires) -- Netflix's ( NFLX ) third-quarter earnings trailed Wall Street's estimates as the streaming giant booked a tax expense related to an ongoing dispute with Brazilian authorities.

Per-share earnings climbed to $5.87 from $5.40 a year earlier, but fell well short of the GAAP consensus on FactSet for $6.96. Revenue increased 17% year-over-year to $11.51 billion, in line with the Street's view.

Shares were down 5.5% in after-hours trade.

Operating margin declined to 28% from 30% in the year-ago period, missing the company's own guidance because of a $619 million tax expense related to an ongoing dispute in Brazil, Netflix ( NFLX ) said in a letter to shareholders. The expense covers periods from 2022 through the third quarter of 2025.

The cumulative impact of this expense reduced third-quarter operating margin by more than five percentage points.

"Absent this expense, we would have exceeded our (third-quarter) operating margin forecast, and we don't expect this matter to have a material impact on our results in the future," the company said.

Membership growth, price adjustments and higher ad revenue helped buoy the top line, the streamer said. Netflix ( NFLX ) no longer reports quarterly paid membership data.

BofA Securities last week expected Netflix's ( NFLX ) quarterly results to largely meet the company's guidance.

Netflix ( NFLX ) has recently underperformed the market, which BofA attributed to competitive threats stemming from a potential merger between Paramount Skydance ( PSKY ) and Warner Bros. Discovery ( WBD ) , as well as from AI players like OpenAI's Sora.

"While a potential (Paramount-Warner Bros.) merger would create a big, well-capitalized streaming competitor, there is no guarantee a deal will materialize," BofA said. "Further, Netflix's ( NFLX ) scale should protect the company's dominance in video streaming in the near to mid term."

Warner Bros. said on Tuesday that the media and entertainment giant is open to a potential sale as it initiated a review of strategic alternatives after receiving interest from "multiple parties."

Netflix ( NFLX ) expects 2025 revenue of $45.1 billion, compared with the prior outlook that called for $44.8 billion to $45.2 billion. The consensus estimate is for $45.04 billion.

The company projects fourth-quarter revenue rising 17% year-over-year to $11.96 billion, higher than analysts' $11.89 billion estimate. EPS is pegged at $5.45, versus the consensus view of $5.43.