Netflix Net Income Jumps to $3.664 Billion as Revenue Grows 11.8%
Key Facts
Netflix said net income reached $3.664 billion in the third quarter of 2026, compared with $2.547 billion in the same period of 2025, while diluted earnings per share rose to $0.87 from $0.59. Revenue totaled $12.874 billion, up 11.8% year over year, compared with $11.510 billion a year earlier. However, revenue growth slowed from the 17.2% rate recorded in the third quarter of 2025. In its shareholder letter, the company said operating margin rose to 34.6% from 28.2% a year earlier. It added that the margin exceeded its forecast mainly because of the timing of expenses, while attributing revenue growth primarily to subscriptions.
Netflix said higher memberships and prices supported subscription revenue, alongside growth in advertising revenue and a positive foreign-exchange impact after hedging. In contrast, the company cut its 2026 advertising revenue forecast to about $2.7 billion from about $3 billion previously. It attributed the revision to a slight delay from expectations in rolling out some advertising product capabilities. The company said it will introduce its ad-supported plan in 15 new countries during 2027, with the first rollout beginning in March of that year. The rollout includes nine countries in Europe, the Middle East and Africa, as well as Colombia, Peru and New Zealand. The expansion into new markets comes as the company works to develop its advertising products after adjusting its annual forecast.
The quarterly results came as investors focused on growth rates and engagement with content. Before the results were announced, a Reuters report said investors were awaiting details of the company's plan to sustain growth amid intensifying competition and signs of softer engagement. The report quoted co-CEO Ted Sarandos as saying the company “is not growing as fast as I want.” In its shareholder letter, Netflix said member response to 2026 price changes was consistent with previous adjustments and its expectations. It added that cancellations improved year over year globally and in the United States, and were better than its forecast, while retention remained healthy across all regions.
Netflix shares fell in after-hours trading on the day results were announced, according to the Associated Press, dropping $2.79, or 4.1%, to $65.90. The agency linked the decline to the cut in the advertising sales forecast and concerns about slowing revenue growth, and quoted an analyst at Gabelli Funds as saying investors were concerned about softer engagement trends, slowing revenue growth and expanding margins. EL7 daily closing data show the stock closed at $69.85 on October 19, then at $68.69 on October 20, the day results were announced. On October 21, the closing price fell to $65.04, before reaching $67.05 on October 22 and $65.85 on October 23. The company also forecast fourth-quarter revenue of $13.442 billion, up 11.5% year over year, and an operating margin of 26.0%, compared with 24.5% in the corresponding quarter of 2025.
The company said its fourth-quarter operating margin forecast includes a negative impact of about 120 basis points related to the job cuts it announced. Before the results, Netflix had announced plans to cut about 6% of its workforce, or about 1,000 jobs, as part of organizational changes. For the full year, the company expects revenue of $51.1 billion in 2026, up 13% year over year, and an operating margin of 31.5%. It also plans to introduce its ad-supported plan in new markets starting in March 2027. Netflix said it aims to accelerate growth in viewing hours through continued focus and execution of its strategy, adding: “We are confident we will achieve this through relentless focus and execution of the strategy outlined above.”