Netflix is profitable and still growing. Why did a massive round get fired and their top content manager removed?

In 2025, Netflix sees a 16% increase in revenue, net profit of $11 billion to $46.6 billion. Revenue growth is expected to moderate this year, forecasting a 13-14% increase, while the streamer aims to increase operating margin by 200 basis points to 31.5%. It has a healthy balance sheet, with [...]

So why did Netflix, which is still making its fair share of changes, lay off about 1,000 employees this week — its biggest cut to date? Related Stories Bradley Whitford Brings Back 'The West Wing' as a 'Limited Series' Inside James Bond Omega Show From 007's Toothbrush to His Passport and Tiny Car Bombs

Companies often make layoffs in crisis situations, such as when they face a short-term revenue shortfall and simply cannot meet payroll. Not so here. But Netflix is facing a major pain point. Popular in Variety

In particular, investors are concerned about slowing growth in the US/Canada region – which has raised questions about its long-term growth trajectory. For the second quarter of 2026, Netflix's UCAN revenue fell to 10% from 14% in the previous quarter (in part due to recent price increases). The company also posted third-quarter earnings guidance that fell short of analysts' expectations. Shares of Netflix have fallen 20% since last year on fears that the streamer's days of double-digit profits are over.

Several industry sources told Variety that they think Bajaria is a victim of Netflix's larger problems. But content is the main engine of Netflix's financial power. As Variety's analysis of Bajaria's departure noted, Netflix hasn't produced a "culturally defining hit in the vein of Stranger Things" in a long time.

Back to the all-important UCAN region: Total viewing hours in the U.S. and Canada fell in the second quarter, according to BMO Capital Markets analyst Brian Pitts. Netflix's breakup with Bajaria and the hiring of Rice "suggest to us that the engagement trend may have moderated in 3Q16," Pitts said in a research note on Friday. The change in content leadership prompted the Wall Street firm to cut Netflix's third-quarter and fourth-quarter revenue estimates by about 1 percent, as well as cut its 2027 revenue forecast by 1.5 percent. BMO's model "does not conservatively assume UCAN's revenue acceleration" through 2029, Pitts added.

In a memo to employees Thursday about the executive changes, Netflix CEO Ted Sarandos appeared to acknowledge that the company needs a stronger content portfolio in the US/Canada region. Sarandos wrote that he "sees an opportunity to take our page to the next level, especially at UCAN where we have a huge impact on creating big, buzzing songs that our members love and drive conversation around the world."

And what about the installment of 1000 employees who are fired? In a company-wide memo to employees, Sarandos and CEO Greg Peters said the job cuts are part of providing the means to "invest aggressively in high-impact areas to improve our services and further drive growth and innovation."

Note that Netflix is not alone in distributing pink slips. Disney - also profitable - has made three rounds of layoffs in different parts of the business in 2026. Unlike Netflix, Disney is battling the ongoing decline of linear television. But echoing Netflix's explanation for its RIF, CEO Josh Damaro and CFO Hugh Johnston told The Street they are looking to cut costs, including through layoffs, to "create additional capacity to invest in growth."

When it reports third-quarter earnings next Tuesday, Oct. 20, Netflix execs are sure to be asked for more details on the restructuring (and their decision to replace Bajaria with Rice). Merger of Paramount and Warner Bros. Discovery.