Quick Verdict: Netflix posted Q2 2026 EPS of $0.80 (vs. $0.79 estimate) and revenue of $12.56 billion, a hair below the $12.58 billion consensus. Despite the narrow beat, shares sank as much as 9% in after-hours trading Thursday after Q3 guidance came in below Wall Street’s expectations.
About Netflix, Inc.
Netflix, Inc. (NASDAQ: NFLX) is the world’s leading streaming entertainment company, founded in 1997 and headquartered in Los Gatos, California. The company produces and distributes original series, films, live sports, games, and video podcasts to nearly a billion people worldwide across UCAN, EMEA, LATAM, and APAC regions. Netflix trades at a trailing P/E of roughly 21-23x and a forward P/E near 19-21x based on consensus 2026 EPS estimates of $3.51, following the stock’s post-earnings pullback. Netflix pays no dividend, instead returning cash via buybacks — it repurchased a record $4.7 billion of stock in Q2 2026 alone.
Top Financial Highlights
- Total revenue reached $12.56 billion, up 13% year over year (12% on an FX-neutral basis)
- Net income was $3.40 billion, up from $3.13 billion in Q2 2025
- Diluted EPS came in at $0.80, versus $0.72 a year earlier, an 11% increase
- Operating income totaled $4.19 billion, up 11% year over year
- Operating margin was 33.4%, down slightly from 34.1% in Q2 2025
- Net cash from operating activities was $1.74 billion, down from $2.42 billion a year ago
- Free cash flow fell to $1.53 billion from $2.27 billion, partly due to higher cash taxes tied to the Warner Bros. termination fee.
- UCAN segment revenue was $5.43 billion, up 10% year over year
- EMEA segment revenue was $4.03 billion, up 14% year over year, crossing the $4 billion mark for the first time
- LATAM segment revenue hit $1.58 billion, up 21% year over year, the fastest-growing region
- APAC segment revenue reached $1.51 billion, up 16% year over year
- Cash and cash equivalents stood at $9.1 billion as of quarter-end, with gross debt of $14.4 billion
- The company repurchased $4.7 billion of stock in Q2, its largest buyback quarter ever, leaving $27.1 billion in remaining authorization
- Q3 2026 guidance calls for revenue of $12.86 billion (+11.7% YoY) and EPS of $0.82, both below Street estimates of ~$13 billion and $0.84.
- Full-year 2026 revenue outlook was narrowed to $51.0-$51.4 billion with operating margin guidance held at 31.5%
Beat or Miss?
| Metric | Reported | Estimated/Expected | Difference/Analysis |
| Revenue (Q2) | $12.56B | $12.58-12.59B consensus | Slight miss (~0.1-0.2%) |
| Diluted EPS (Q2) | $0.80 | $0.79 consensus | Beat by $0.01 (1.3%) |
| Operating margin (Q2) | 33.40% | 32.6% company guidance | Beat guidance by 0.8 pts |
| Free cash flow (Q2) | $1.53B | $2.27B (year-ago actual) | Down YoY, tax-driven |
| Q3 revenue guidance | $12.86B | ~$13B consensus | Missed by ~1.1% |
| Q3 EPS guidance | $0.82 | $0.84 consensus | Missed by ~2.4% |
What Leadership Is Saying?
Co-CEO Ted Sarandos addressed concerns about season-two viewership declines directly on the earnings call, stating engagement trends have actually improved:
“Our season two fall off has actually slightly improved this year relative to last year, so no changes in release strategies… you can pick any 5 data points to tell any story you want.” – Co-CEO Ted Sarandos
On capital allocation and M&A speculation, Sarandos reaffirmed the company’s growth philosophy:
“We are primarily builders, not buyers.”
CFO Spencer Neumann tempered expectations around future margin expansion pace, noting per Barron’s coverage of the call that while Netflix has expanded operating margins by roughly three percentage points annually in recent years, that trajectory won’t necessarily continue at the same clip going forward.
Historical Performance
| Category | Q2 2026 | Q2 2025 | Change (%) |
| Revenue | $12.56B | $11.08B | 13.40% |
| Net Income | $3.40B | $3.13B | 8.90% |
| Operating Income | $4.19B | $3.77B | 11.10% |
| Diluted EPS | $0.80 | $0.72 | 11.10% |
| Operating Margin | 33.40% | 34.10% | -0.7 pts |
Competitor Comparison
Direct like-for-like segment data for streaming peers (Disney+, Warner Bros. Discovery, Amazon Prime Video) for the same Q2 2026 period was not available in the sources reviewed for this article. Netflix remains the largest pure-play streamer by revenue and profitability, and unlike most peers, it is now solidly profitable on both an operating and net income basis, though its 13% revenue growth rate has decelerated from 16% in Q1 2026 and 16% in Q2 2025.
How the Market Reacted
Netflix shares tumbled as much as 9% in after-hours trading Thursday, hitting a fresh 52-week low and their lowest level since September 2024, despite the EPS beat. The stock had already fallen nearly 45% over the trailing year and was down roughly 21-24% year-to-date heading into the print.
Investors reacted primarily to the softer-than-expected Q3 guidance and Netflix’s decision to cut its “What We Watched” engagement report from a biannual to an annual disclosure, which several analysts said damaged near-term trust even though Wall Street’s consensus rating remained heavily skewed toward “buy” (roughly three-to-four buy ratings for every hold).
Multiple banks, including Goldman Sachs, JPMorgan, and Citigroup, trimmed price targets following the report while largely maintaining bullish long-term ratings.
