- Netflix posted revenue of $12.56 billion on earnings of 80 cents per share, compared to Wall Street’s forecast of $12.58 billion in revenue on earnings of 79 cents per share, per Yahoo Finance.
- The streamer narrowed its 2026 revenue forecast to $51 billion to $51.4 billion and continues to expect ad revenue will double year over year to $3 billion
- Shares of the streamer are fell over 8% in after-hours trading on Thursday as executives pushed back against concerns around future growth
Netflix’s second-quarter results were in line with Wall Street expectations as the streamer posted a $3.4 billion profit and revenue grew 13% to $12.6 billion, driven by higher pricing, ad revenue and subscriber growth.
But shares of the streamer tumbled over 8% in after-hours trading on Thursday as executives fended off investors’ concerns around its future growth following the collapse of its $83 billion bid for Warner Bros. Discovery’s studio and streaming assets earlier this year.
The company, which last disclosed a total of 325 million subscribers globally, touted double digit revenue growth in all regions, surpassing the quarterly revenue mark of $4 billion in the Europe, Middle East and Africa region and $1.5 billion in Latin America and the Asia-Pacific region. In the U.S., the company saw revenue growth of 10% during the quarter, which reflected only a partial impact from its increase on all U.S. plans in March.
But on the engagement front, Netflix noted that members watched more than 97 billion hours in the first half of 2026, up just 2% year over year but slightly faster than the 1.5% growth in 2025 despite the competitive impact of the Winter Olympics and the World Cup.
“There is not a linear relationship between view hours and revenue and profit because all hours are not created equal. All hours don’t provide the same kind of value to the business,” Netflix co-CEO Greg Peters told analysts. “We remain focused on continuing to grow that number and better understanding how we are doing at delivering member value. Member love is critical to our business.”
When asked directly about a fall off in viewership for the second seasons of several of its shows, Netflix co-CEO Ted Sarandos argued that it has “actually slightly improved this year relative to last year” and that they are “performing well within our bands of expectation.” Sarandos added that the trend is common in Hollywood and that there are no plans to change its release strategy.
Looking ahead, Netflix narrowed its forecasted revenue range to $51 billion to $51.4 billion in 2026 and continues to expect an operating margin of 31.5% for the full year. It also continues to expect that ad revenue will double year over year to $3 billion. For the third quarter, it anticipates revenue growth of 11.7% to $12.86 billion; net income of $3.45 billion, or 82 cents per share; operating income of $4.3 billion and an operating margin of 33.2%.
The company also said it will shift from a bi-annual to annual publication of its engagement reports starting in 2027 to “keep the focus” on its “primary financial metrics” – revenue and operating profit. The company noted it would continue to report title-by-title and total view hours data, including its weekly Top 10 lists for movies and series in more than 90 countries.
Netflix fights back against engagement concerns
When it comes to evaluating engagement, Netflix executives said they look at the quality of their members’ experience, the variety of their offering and the quantity of their titles. They declined to elaborate on specifics surrounding the quality metric.
In order to help boost engagement, Netflix has expanded its live events and sports rights, added podcasts and content from French broadcaster TF1 to its programming lineup and continues to scale its ad-supported tier, which reaches more than 250 million monthly active viewers globally and will expand to 15 additional countries.
Executives reiterated that Netflix will see a 10% increase in content spend to $20 billion for 2026. Live events, which accounted for six out of top 10 new member sign-up days for the past five years, are expected to account for 5% of its content budget in 2026, but only 1% of view hours.
The company also updated its homepage, revamped its mobile app with a vertical video feed known as “Clips” to help subscribers discover and sample content faster and continues to expand the titles available on Netflix Playground, a new games offering aimed at children ages 8 and under that his tripled its growth in daily players since launching in April and has boosted kids’ engagement by 600% year over year.
Additionally, the company is leveraging AI to provide a more personalized, immersive and interactive experience for members and enhance ads capabilities for brands. In 2026, GenAI workflows have been used in roughly 300 of Netflix’s titles, with the largest concentration of work in post-production.
Netflix execs reiterate builder vs buyer approach on M&A
While Sarandos previously said that the WBD bidding war helped “build our M&A muscle,” the company has been quick to distance itself from reporting that it is interested in acquiring Lionsgate.
An individual familiar with the matter also previously told TheWrap Netflix has never had discussions with anyone about an Imax acquisition despite the premium large format technology company exploring a potential sale.
However, it continues to see M&A as a tool to help boost its growth, with the company acquiring Ben Affleck’s InterPositive earlier this year to expand its suite of AI-powered tools for filmmakers. It also is among a number of suitors that have expressed initial interest in a potential acquisition of Letterboxd.
“As we’ve said, we’re primarily builders, not buyers, and that remains the case today. So others will speculate about our intent here because they have their own reasons for that,” he said. “But our track record is clear that we have a very high bar to do any big M&A.”
Could Netflix launch a free ad-supported streaming platform?
When asked about launching a free, ad-supported streaming platform, executives said that the company would consider it, but has “no near-term plans” to launch anything.
“A free offering could make sense in some markets, but we have to be thoughtful about cannibalization of paid tiers. We’ve got to ensure that we’ve got the right offering, the right differentiation of that offering,” Netflix co-CEO Greg Peters told analysts. “It’s probably also worth noting that having an effective scaled ads business in any country for such an offering is clearly an important enabling factor to make those economics work.”
However, Peters confirmed that Netflix is testing free trials for non-rejoining new members in a number of countries.
“Obviously, we’ll see how they perform, and then we’ll react appropriately,” he added.
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