Key Financial Data
- Q1 Revenue: $12.25 billion (+16% year-over)
- Operating income: $3.96 billion (+18%)
- Net income: $5.28 billion (+83%)
- Free cash flow: $5.09 billion (+91%)
- Read more Q1 2026 media earnings coverage
Netflix kicked off the media earnings season with a report that showed a modest increase in overall revenue as the company benefitted from its crackdown on password sharing, the continued build-out of its advertising business and price increases on customers.
The streaming company reported revenue of $12.25 billion in the first quarter, up 16 percent compard to last year, while operating income rose 18 percent to $4 billion. Operating margin improved to 32.3 percent, compared with 31.7 percent in the same period last year, exceeding the company’s prior guidance.
Net income more than doubled to $5.28 billion, boosted in part by a $2.8 billion termination fee tied to its failed acquisition of Warner Bros Discovery (WBD), which fell apart earlier this year amid a bidding war with Paramount Global.
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Advertising continues to be a key growth driver. Netflix said its ad-supported tier now accounts for more than 60 percent of new sign-ups in markets where the plan is available. The company expects advertising revenue to reach approximately $3 billion in 2026, roughly double the prior year, and noted it now works with more than 4,000 advertisers, up 70 percent compared to last year.
The company also highlighted ongoing investments in content and product innovation as central to its strategy. During the quarter, Netflix expanded into new formats including video podcasts and live programming, with more than 70 live events streamed in Q1. Its first regional live event, the World Baseball Classic in Japan, drew 31.4 million viewers and contributed to the country becoming its largest source of subscriber growth during the quarter.
Netflix continues to lean into technology and artificial intelligence to enhance its platform. The company said it is rolling out a redesigned mobile experience featuring a vertical video discovery feed and recently acquired InterPositive, a filmmaking technology company focused on generative AI tools for creators.
Despite intensifying competition from companies like Amazon, Disney and Apple, Netflix said it remains focused on improving engagement, expanding monetization and maintaining its position as a “must-have” global entertainment service.
For the second quarter, Netflix expects revenue of $12.57 billion, reflecting projected growth of 13 percent year over year, and an operating margin of 32.6 percent, slightly below the 34.1 percent reported in the prior-year quarter due to higher content amortization tied to the timing of releases.
The company maintained its full-year 2026 outlook, projecting total revenue between $50.7 billion and $51.7 billion, representing growth of 12 percent to 14 percent. It also reaffirmed its operating margin target of 31.5 percent for the year, up from 29.5 percent in 2025.
Separately, in its letter to investors on Thursday, Netflix said its founder and former CEO Reed Hastings intends to leave its board of directors in June by not seeking re-election to the position. He plans to focus on personal philanthropy and other pursuits once he departs, the company affirmed.
Shares of Netflix fell around 9 percent in after-hours trading as the broader market reacted to news of Hastings’ impending departure.
