Netflix, Inc.
NFLX · Nasdaq
Next quarter
Reports Oct 20, 2026.
Consensus is $0.82 EPS for Sep 2026 across 11 estimates, ranging $0.81 to $0.83.
NFLX Jun 2026
- 1.27%
- -7.26%
- $0.79
- $0.80
- —
- $12.56B
Reported results
- $12.56B
- 51.93%
- $4.19B
- 33.38%
- $3.40B
- $0.80
Highlights
- Revenue: Q2 revenue was $12.56 billion, up 13% year over year and 2.5% from Q1; results were in line with company guidance and diluted EPS of $0.80 exceeded the $0.79 consensus by 1.27%.
- Profitability: Operating income rose 11% year over year to $4.19 billion, while operating margin was 33.4%, down from 34.1% a year ago but up from 32.3% in Q1.
- Earnings comparison: Net income increased 9% year over year to $3.40 billion but fell 36% sequentially from $5.28 billion, which included the $2.8 billion Warner Bros. termination fee; diluted EPS declined to $0.80 from $1.23 in Q1.
- Global growth: Revenue grew in every region, led by LATAM at 21%, APAC at 16%, EMEA at 14% and UCAN at 10%; total constant-currency growth was 12%.
- Engagement: Members watched more than 97 billion hours in the first half, up 2% year over year versus 1.5% growth in 2025, despite competition from the Winter Olympics and World Cup.
- Advertising: Netflix remains on track to roughly double advertising revenue to approximately $3 billion in 2026, supported by live programming, AI-powered ad tools and broader programmatic access.
- Cash returns: Free cash flow was $1.53 billion, down from $2.27 billion a year ago, while Netflix repurchased $4.7 billion of stock in Q2 and ended the quarter with $27.1 billion of remaining authorization.
- Outlook: Netflix narrowed its 2026 revenue forecast to $51.0-$51.4 billion, maintained its 31.5% operating-margin target and forecast Q3 revenue of $12.86 billion, up 12% year over year, with a 33.2% margin.
Analysis
Netflix’s Q2 was a solid operating quarter rather than an earnings-driven one-off. Revenue of $12.56 billion grew 13% year over year, was in line with company guidance and increased 2.5% from Q1. Diluted EPS of $0.80 modestly exceeded the $0.79 consensus, while operating income rose 11% year over year to $4.19 billion. Operating margin of 33.4% was below 34.1% a year ago but above 32.3% in Q1. Net income rose 9% year over year to $3.40 billion, though it fell sharply from Q1’s $5.28 billion because the prior quarter included a $2.8 billion Warner Bros. termination fee.
The print was defined by broad-based international growth, healthy engagement and continued monetization investment. LATAM, APAC and EMEA grew revenue 21%, 16% and 14%, respectively, while UCAN grew 10% with only a partial contribution from price increases. First-half viewing hours exceeded 97 billion, up 2% despite major sports competition. Netflix also maintained its ambition to generate approximately $3 billion of advertising revenue in 2026 and kept its full-year revenue and margin targets intact. The principal financial pressure was cash conversion: Q2 free cash flow fell 33% year over year to $1.53 billion as content payments and working capital absorbed cash, even as the company accelerated buybacks.
Financial performance
Netflix delivered growth broadly consistent with its plan, but expense growth kept operating leverage from fully matching revenue growth. Cost of revenues increased 13% to $6.04 billion, including a $479 million increase in content amortization. Technology and development expense rose 22% to $1.01 billion and sales and marketing increased 16% to $824 million, contributing to the year-over-year margin decline.
- Revenue was $12.56 billion versus $11.08 billion in Q2 2025 and $12.25 billion in Q1 2026.
- Operating income was $4.19 billion versus $3.77 billion a year ago and $3.96 billion in Q1.
- Net income was $3.40 billion versus $3.13 billion a year ago and $5.28 billion in Q1; the sequential comparison is distorted by the $2.8 billion Warner Bros. termination fee recognized in Q1.
- The effective tax rate was 16%, up from 14% a year ago, while diluted shares declined to 4.26 billion from 4.35 billion.
Global revenue growth
Growth remained geographically diversified, with every region delivering double-digit reported revenue growth except UCAN, which still grew 10%. Currency was a meaningful contributor in EMEA and LATAM: constant-currency growth was 11% and 16%, respectively, compared with reported growth of 14% and 21%.
- UCAN revenue rose 10% to $5.43 billion; management said Q2 reflected only a partial-quarter impact from recent price changes.
- EMEA revenue increased 14% to $4.03 billion and surpassed the $4 billion quarterly mark.
- LATAM revenue grew 21% to $1.58 billion, or 16% on a constant-currency basis.
- APAC revenue grew 16% to $1.51 billion, or 18% on a constant-currency basis.
Engagement and content
Netflix emphasized that engagement is holding up on quality, variety and quantity, not merely total hours. Members watched more than 97 billion hours in the first half of 2026, with non-English content accounting for more than one-third of viewing. The company is also broadening the service beyond series and films through live programming, video podcasts, creators and games.
- First-half view hours rose 2% year over year, ahead of the 1.5% growth recorded in 2025 despite the Winter Olympics and World Cup.
- I Will Find You reached 87 million views and was Netflix’s biggest new original series debut of 2026 so far.
- Swapped reached 137 million views and was tracking to become Netflix’s second-most-viewed original animated film.
- Cloud gaming remains small but is showing early traction: Netflix Playground daily players grew threefold since its April launch, while kids mobile-game engagement increased 600% year over year.
Advertising and monetization
Advertising remains a central growth initiative alongside pricing. Netflix expects advertising revenue to roughly double to approximately $3 billion in 2026. Its advertising infrastructure is moving toward greater automation and self-service, which management believes can expand the addressable buyer base and improve the value of existing inventory.
- Netflix expanded AI-powered tools across ad planning, creative production, campaign management, optimization and reporting.
- Programmatic access to Pause Ads and live inventory is expected to broaden access beyond larger advertisers.
- U.S. upfront negotiations were in advanced stages, with commitments expected to close in the following weeks.
- Price changes in markets including the U.S., Mexico and Spain were described as performing in line with prior changes and expectations.
Cash flow and capital allocation
Cash generation was weaker in the quarter even as profitability increased, reflecting higher content payments and working-capital outflows. Netflix nevertheless maintained its full-year free-cash-flow target and stepped up shareholder returns.
- Operating cash flow was $1.74 billion versus $2.42 billion a year ago, and free cash flow was $1.53 billion versus $2.27 billion.
- Netflix continues to forecast approximately $12.5 billion of free cash flow for 2026 and a cash content spend-to-amortization ratio of approximately 1.1 times.
- The company repurchased $4.7 billion of stock in Q2, its largest quarterly repurchase, and had $27.1 billion of authorization remaining.
- Gross debt was $14.4 billion and cash and cash equivalents were $9.1 billion at quarter-end; approximately $1 billion of debt matures later in 2026 and is expected to be refinanced.
