Netflix Buys Back $4.8 Billion in Stock, Posts Its Largest Quarterly Repurchase
Key Facts
Netflix repurchased 63.9 million shares for $4.8 billion in the third quarter of 2026, its largest buyback in a single quarter, according to the shareholder letter released with its results. The company maintained its stated approach to capital allocation, prioritizing investment in its business and maintaining liquidity before returning excess cash to shareholders through share repurchases. It said it had $22.3 billion available under existing buyback authorizations at the end of the quarter. The repurchase came as the company reported growth in revenue and earnings, but lowered two full-year financial estimates. The revisions concern free cash flow and advertising revenue, with the company citing a different reason for each.
Third-quarter revenue rose 12% year over year to $12.87 billion, compared with $11.51 billion a year earlier, according to the Associated Press. Netflix said subscriptions were the main driver of growth, with contributions from membership and price increases, as well as higher advertising revenue and a favorable impact from foreign exchange after hedging. The company said its global and U.S. churn rates improved year over year and came in better than expected, while member retention improved in every region. Net income was $3.66 billion, or 87 cents a share, up 44% from the year-earlier period. Operating margin rose to 34.6% from 28.2%, while diluted earnings per share increased to $0.87 from $0.59.
Free cash flow was $2.9 billion in the third quarter, compared with $2.7 billion in the same quarter of 2025, according to the shareholder letter. Netflix nevertheless lowered its 2026 forecast to about $12.0 billion from $12.5 billion. The company attributed the revision mainly to the expected closing of a real estate deal in the fourth quarter, linking the reduction to the timing of the transaction, it said. For advertising, the company expects revenue of about $2.7 billion this year, compared with a previous estimate of nearly $3 billion. It said the revision reflects a slight delay in rolling out some advertising product capabilities, despite continued revenue growth in the business.
For the full year, Netflix said it is targeting revenue of $51.1 billion in 2026, up 13%, and an operating margin of 31.5%, compared with 29.5% in 2025. It added that its revenue forecast is 0.2% below the midpoint of its previous guidance range, even as subscription revenue growth exceeded its expectations. Third-quarter operating income was $4.5 billion, up 37% year over year; the company said income and margin exceeded expectations mainly because of the timing of expenses and a slight revenue beat. Netflix also cited an approximately 30-basis-point negative impact on its 2026 margin from fourth-quarter job cuts. The week before the results, it announced plans to reduce its workforce by about 6%, or nearly 1,000 jobs, as part of broader organizational changes.
For the fourth quarter, the company expects revenue of $13.4 billion, up 12% year over year, or 11% on a currency-neutral basis, driven by growth in memberships, prices and advertising. It expects an operating margin of 26.0%, including an approximately 120-basis-point negative impact from job cuts. It also forecast net income of $2.79 billion and earnings per share of 67 cents, below analysts' average estimates of $3.07 billion and 73 cents, according to Reuters via MarketScreener. As it expands its advertising business, Netflix plans to make its ad-supported plan available in 15 new countries during 2027. The first wave begins in March 2027 and includes nine countries in Europe, the Middle East and Africa, as well as Colombia, Peru and New Zealand.
The strong quarterly figures came alongside a decline in the stock in after-hours trading following the results; it fell $2.79, or 4.1%, to $65.90, according to the Associated Press. The stock was down about 25% year to date through the close on Tuesday, October 20, 2026, the news agency reported. Ross Benes, an analyst at eMarketer, linked concerns to the lower advertising revenue estimate, saying it was “concerning at a time when Netflix is under pressure to find alternative sources of revenue to subscriptions.” The company, meanwhile, said its audience is approaching one billion people and its response to price changes in 2026 was consistent with previous adjustments and its expectations. It also said viewing hours in India rose 24% year over year during the quarter and revenue there grew about 18% on a currency-neutral basis.