Netflix, Inc. Q2 2026 10-Q Summary
Business Context and Reporting Period
This summary covers Netflix, Inc.'s quarterly report (Form 10-Q) for the period ended June 30, 2026. Netflix operates as a global leader in entertainment services, offering TV series, films, games, and live programming. The company operates as a single segment, with financial performance assessed by consolidated operating margin and net income. As of June 30, 2026, there were approximately 4.16 billion shares of common stock outstanding.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Revenues | $12.56 billion | $11.08 billion | $24.81 billion | $21.62 billion |
| Operating Income | $4.19 billion | $3.77 billion | $8.15 billion | $7.12 billion |
| Operating Margin | 33.4% | 34.1% | 32.8% | 32.9% |
| Net Income | $3.40 billion | $3.13 billion | $8.68 billion | $6.02 billion |
| Diluted EPS | $0.80 | $0.72 | $2.03 | $1.38 |
| Operating Cash Flow | $1.74 billion | $2.42 billion | $7.03 billion | $5.21 billion |
| Cash & Equivalents | $9.10 billion (as of June 30, 2026) | |||
| Total Debt | $14.31 billion (as of June 30, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 13% in Q2 2026 and 15% YTD compared to 2025, driven by membership growth, price increases, and advertising revenue. Constant currency revenue growth was 12% for Q2 and 13% YTD.
- Unusual Item (WBD Termination Fee): Net income and "Interest and other income" were significantly boosted by a $2.8 billion termination fee received in Q1 2026 following the termination of the proposed merger with Warner Bros. Discovery (WBD). This non-recurring item accounts for the majority of the increase in YTD net income.
- Expense Increases: Operating margin decreased slightly (0.7 percentage points in Q2) as Technology & Development and Sales & Marketing expenses grew faster than revenue. Content amortization increased by $479 million in Q2 and $874 million YTD.
- Share Repurchases: The company repurchased $4.7 billion of stock in Q2 and $5.9 billion YTD. As of June 30, 2026, $27.1 billion remains available under the repurchase program.
- Acquisitions: Netflix completed an acquisition in March 2026 for approximately $587 million in cash.
Guidance, Outlook, and Risks
- Outlook: Management continues to focus on growing the business globally within operating margin targets. The company expects to continue significant investment in global content, particularly original programming.
- Liquidity: Cash flows from operations and available financing sources (including a $3 billion revolving credit facility and $3 billion commercial paper program) are deemed sufficient to meet needs for the next 12 months and beyond.
- Market Risks:
- Foreign Currency: 57% of revenue is denominated in non-U.S. currencies. A 10% strengthening of the U.S. dollar could negatively impact reported revenue.
- Interest Rates: The company has $1.4 billion of fixed-rate debt converted to floating-rate via swaps. A 1% increase in SOFR would increase annual interest expense by approximately $14 million.
- Content Obligations: Total content obligations are $25.1 billion, with $19.6 billion not yet reflected on the balance sheet as they do not meet recognition criteria. Unknown future title obligations are estimated to be significant ($1–4 billion over the next three years).
Investor Verification Checklist
- Verify the sustainability of revenue growth excluding the one-time $2.8 billion WBD termination fee.
- Monitor the trajectory of operating margins as Technology and Marketing expenses continue to outpace revenue growth.
- Review the impact of foreign exchange rates on future earnings, given the high exposure to non-U.S. currencies.
- Assess the pace of content amortization relative to new content investments to ensure future profitability.
- Track the utilization of the $27.1 billion remaining share repurchase authorization.