Netflix, Inc.
NFLX · NASDAQ-GS
Next quarter
Expected to report Jan 19, 2027 — estimated from last year’s reporting date.
Consensus is $0.67 EPS for Dec 2026 across 11 estimates, ranging $0.66 to $0.71.
NFLX Sep 2026
- 6.10%
- -5.31%
- $0.82
- $0.87
- —
- $12.87B
Reported results
- $12.87B
- 52.78%
- $4.46B
- 34.63%
- $3.66B
- $0.87
Highlights
- Earnings beat — Q3 diluted EPS was $0.87, 6.1% above the $0.82 consensus and up from $0.80 in Q2 and $0.59 a year ago.
- Revenue growth — Revenue rose 12% year over year to $12.87B, or 11% on an FX-neutral basis, in line with Netflix’s forecast; subscription growth reflected membership gains and pricing, with advertising also contributing.
- Margin expansion — Operating income increased 37% year over year to $4.46B and operating margin reached 34.6%, versus 28.2% a year ago and 33.4% in Q2; Netflix attributed the upside to expense timing and slightly higher revenue.
- 2026 guidance — Netflix expects revenue of $51.1B, up 13%, and an operating margin of 31.5%, versus 29.5% in 2025; the forecast implies operating income growth of more than 20%.
- Advertising outlook — Netflix now expects 2026 ad revenue of about $2.7B, below its previous estimate of about $3B because some ad-product capabilities are rolling out more slowly than expected.
- Cash generation — Q3 free cash flow was $2.88B, up from $1.53B in Q2 and $2.66B a year ago; the full-year FCF estimate was reduced to about $12.0B from $12.5B, primarily due to the expected timing of a real estate transaction.
- Retention and India — Churn improved year over year globally and in the U.S.; in India, view hours grew 24% and revenue rose about 18% year over year on an FX-neutral basis, with the largest quarterly paid net additions in the country.
- Share repurchases — Netflix repurchased 63.9 million shares for $4.8B in Q3, its largest quarter of buybacks, with $22.3B remaining under its authorization.
Analysis
Netflix delivered a solid Q3, with revenue of $12.87B growing 12% year over year (11% FX-neutral) and matching its forecast. Diluted EPS of $0.87 exceeded the $0.82 consensus by 6.1%, compared with $0.59 a year ago and $0.80 in Q2. Operating income rose 37% year over year to $4.46B, while the 34.6% margin expanded 6.4 percentage points from a year ago and 1.2 points sequentially. Netflix said margin and operating income were ahead of its forecast mainly because of expense timing, so the quarter’s profitability strength should be read alongside its lower Q4 margin outlook.
Growth continued to come from subscriptions, supported by membership gains and pricing, alongside advertising revenue growth. Retention remained healthy, with churn better than forecast, while Netflix pointed to India as an example of content and distribution execution. The forward view holds 2026 revenue guidance at $51.1B and operating margin at 31.5%, but ad revenue expectations fell to about $2.7B from roughly $3B previously as product rollout takes longer. Netflix also trimmed its 2026 free-cash-flow estimate to about $12.0B from $12.5B. Q4 revenue is forecast at $13.44B, up 12% year over year, with a 26.0% operating margin that includes an approximately 120-basis-point impact from headcount reductions.
Revenue and margins
- Revenue mix — Q3 revenue increased $1.36B year over year. Subscription revenue contributed $1.06B of the increase, reflecting membership growth and pricing, while advertising revenue added $256M; favorable FX, net of hedging, contributed $101M.
- Profitability — Operating income grew from $3.25B to $4.46B year over year. Cost of revenue declined 1% to $6.08B, or 47% of revenue versus 54% a year ago, partly because the prior-year period included a $619M Brazil non-income-tax assessment. Content amortization, by contrast, rose $233M.
- Quarterly comparison — Revenue rose from $12.56B in Q2 to $12.87B in Q3, and operating income increased from $4.19B to $4.46B. The margin moved from 33.4% to 34.6%; management cited expense timing and slight revenue upside as reasons results exceeded its internal forecast.
2026 and Q4 outlook
- Full-year targets — Netflix expects 2026 revenue of $51.1B, up 13% reported and 12% FX-neutral, with an operating margin of 31.5% versus 29.5% in 2025. The forecast implies operating income growth of more than 20%.
- Advertising revision — The company now expects about $2.7B of 2026 ad revenue, down from its previous estimate of about $3B, because the rollout of some ad-product capabilities is slightly slower than expected. Subscription revenue growth has exceeded expectations.
- Q4 forecast — Revenue is expected to be $13.44B, up 12% year over year (11% FX-neutral), and operating margin is forecast at 26.0%, compared with 24.5% a year ago. The margin forecast includes an approximately 120-basis-point negative impact from announced headcount reductions; the reductions are intended to support continued investment in priority areas.
Retention and content
- Member response — Netflix said responses to its 2026 price changes were consistent with prior adjustments and expectations. Churn improved year over year both globally and in the U.S., and was better than forecast; management described engagement as healthy while also seeking to accelerate view-hours growth.
- India execution — A strong local slate helped drive 24% year-over-year growth in view hours, with view hours per member up low-to-mid single digits. Together with a transaction-based loyalty bundle with Flipkart, Netflix recorded its largest quarterly paid net additions in India and about 18% FX-neutral revenue growth.
- Local hits and licensing — Netflix cited titles including The Last House, with 91M views, and Facing El Chapo, with 58M views, alongside strong programming across multiple regions. It is also expanding third-party programming: the TF1 partnership in France is generating incremental viewing, and a Disney licensing deal adds current and library titles.
Advertising expansion
- Ad technology — Netflix expanded programmatic access through globally available connected-TV marketplace deals, added partnerships with MercadoLibre in Latin America and AdForm in EMEA, and is building measurement capabilities for reach, frequency and attribution.
- Market rollout — The ad-supported tier is planned for 15 additional countries in 2027, with the first launches scheduled for March in nine EMEA countries, Colombia, Peru and New Zealand. The slower rollout of some product capabilities is the stated reason for lowering the 2026 ad-revenue estimate.
Cash and capital allocation
- Free cash flow — Q3 free cash flow was $2.88B, compared with $1.53B in Q2 and $2.66B in Q3 2025; operating cash flow was $3.16B. Netflix reduced its 2026 FCF outlook to about $12.0B from $12.5B, primarily because of the expected closing timing of a real estate transaction.
- Buybacks and balance sheet — The company repurchased 63.9M shares for $4.8B in Q3 and had $22.3B of authorization remaining. It ended the quarter with $8.2B of cash and cash equivalents and $15.3B of gross debt; a $1B bond issuance was intended to fund a $1B Q4 maturity.
