Netflix reported second-quarter results that largely met Wall Street expectations, but the streaming giant’s softer-than-expected guidance for the coming quarter sent shares tumbling in after-hours trading. The company delivered $12.56 billion in revenue, up 13 percent year-over-year, nearly matching analyst forecasts of $12.59 billion, while earnings of 80 cents per share edged past the consensus estimate of 79 cents.
Despite the in-line quarterly performance, Netflix stock fell more than 8 percent in extended trading Thursday as investors focused on the company’s lukewarm outlook rather than the results themselves. The streaming giant projected third-quarter revenue of $12.86 billion with growth of 11.7 percent, falling short of Wall Street estimates that had anticipated approximately $13 billion. For the quarter, the company guided to earnings of 82 cents per share, below analyst estimates of 84 cents. This represents Netflix’s slowest revenue growth rate since the third quarter of 2023.
The disappointing guidance hit markets hard, pushing shares to their lowest level in more than a year. Netflix stock was down approximately 45 percent over the past 12 months leading into the earnings report, and the post-earnings decline extended those losses further.
Netflix attributed its second-quarter revenue growth to three main drivers: continued membership expansion, price increases implemented across its subscription tiers, and rising advertising revenue. The company raised subscription prices across all plans in the United States in March, marking its second increase in roughly 14 months. The price hikes have yielded results in line with historical patterns, the company noted. Revenue in the U.S. and Canada region grew 10 percent during the quarter, though this figure reflected only partial impact from the recent price change.
Operating income reached $4.2 billion in the quarter, up 11 percent year-over-year, though the operating margin of 33.4 percent slipped from 34.1 percent in the year-earlier period. For the full year 2026, Netflix narrowed its revenue guidance to a range of $51 billion to $51.4 billion, compared with the previous range of $50.7 billion to $51.7 billion, with the midpoint remaining unchanged at $51.2 billion. The company maintained its operating margin forecast at 31.5 percent for the year.
The company addressed growing investor concerns about viewer engagement, a persistent pain point since reports emerged that audiences tend to abandon series after the first season. Netflix said members watched more than 97 billion hours of content in the first half of 2026, an increase of 2 percent year-over-year, though this still lags earlier growth rates. The modest engagement growth came despite headwinds from the Winter Olympics and the World Cup.
Co-CEO Greg Peters pushed back against the focus on raw viewing hours, stating that “not all hours are created equal” and noting that quality and variety of content matter as much as total time spent. Co-CEO Ted Sarandos said the company has not observed “any material change” in second-season viewership compared to first seasons, claiming performance has “slightly improved this year relative to last year.”
In a move that some analysts interpreted as reducing transparency, Netflix announced it will scale back the frequency of its “What We Watched” reports, which track engagement metrics. Beginning in 2027, the company will publish these detailed viewership reports annually in the first quarter, down from twice annually. Netflix stated the change aims to keep investor focus on core financial metrics like revenue and operating profit.
The advertising business continues to be a bright spot in Netflix’s growth strategy. The company expects advertising revenue to reach approximately $3 billion in 2026, roughly doubling its 2025 levels. Netflix said its upfront negotiations with U.S. advertisers are in advanced stages, with commitments expected to close within weeks. The company said there has been strong advertiser interest in its expanding live programming slate, which includes the 2027 FIFA Women’s World Cup, expanded NFL coverage, WWE events, and Major League Baseball games.
Net income for the quarter totaled $3.4 billion, compared with $3.13 billion in the same period last year. Netflix also repurchased $4.7 billion of its own stock during the quarter, marking the largest quarterly repurchase in company history. The company has $27.1 billion remaining under its buyback authorization.
Free cash flow in the second quarter amounted to $1.5 billion, down from $2.3 billion in the same quarter last year, though Netflix attributed this to seasonal investment patterns rather than deteriorating fundamentals.
Despite beating earnings-per-share estimates and posting results broadly in line with expectations, Netflix failed to inspire market confidence. Investors instead fixated on the company’s inability to accelerate growth, with the third-quarter guidance signaling a continued deceleration from earlier in the year. The stock’s sharp decline underscored how exhausted patience has become among shareholders tracking the streaming giant’s transition from explosive subscriber growth to a more mature phase focused on pricing power and advertising monetization.