Key Financial Data
- Q2 Total revenue: $12.56 billion (+13% year-over)
- Operating income: $4.19 billion (+11%)
- Net income: $3.40 billion (+9%)
- Free cash flow: $1.53 billion (-33%)
- Read more Q2 2026 media earnings coverage | Q1 2026 Netflix story
Netflix shares fell sharply Thursday after the streaming company narrowly missed Wall Street’s second-quarter revenue expectations, issued softer-than-expected guidance and announced it would reduce the frequency of its detailed viewership reports.
Netflix generated $12.56 billion in revenue during the quarter ending June 30, an increase of 13.4 percent from the prior year but slightly below the $12.59 billion expected by Wall Street analysts.
Net income rose to $3.4 billion, or 80 cents per share, during the year-earlier period. Earnings per share came in one cent above analyst expectations. Operating margin declined to 33.4 percent from 34.1 percent.
The company projected third-quarter revenue of $12.86 billion, representing growth of 11.7 percent but falling short of Wall Street’s roughly $13 billion forecast. Netflix shares dropped as much as 9 percent in after-hours trading, reaching their lowest level in more than a year.
For the full year, Netflix narrowed its revenue forecast to between $51 billion and $51.4 billion, compared with its earlier range of $50.7 billion to $51.7 billion. The company maintained its expected operating margin of 31.5 percent.
Stock Price
Netflix said members watched more than 97 billion hours of programming during the first half of 2026, an increase of 2 percent. The company described engagement as healthy despite competition from the Winter Olympics and World Cup.
The streamer stopped reporting firm subscriber counts last year, and said it will only release its biannual “What We Watched” report once per year, starting in 2027. Executives said the change is intended to keep investor attention on revenue and operating profit, but the move comes as Netflix faces intense scrutiny about audience declines when hit shows go on extended hiatus.
On Thursday, Netflix co-CEO Ted Sarandos has not seen a material deterioration in second-season viewing and added that performance has slightly improved from last year. He said some decline between seasons is common, particularly for programs that debut with unusually large audiences.
“Our season two fall off has actually slightly improved this year relative to last year, so no changes in release strategies,” Sarandos said on moderated conference call with investors following the company’s Q2 disclosure.
Advertising remains an important growth area: Netflix expects ad revenue to approximately double to $3 billion this year and said its U.S. upfront negotiations are in advanced stages.
