AI Takeaway
Netflix's Q2 FY2026 revenue grew 13% year-over-year to $12.56B and net income rose 9% to $3.40B, but operating margin slipped 0.7 points to 33.4% as technology & development and sales & marketing expenses outpaced revenue growth, while operating cash flow fell 28% due to higher content spending and record share buybacks of $4.7B.
Revenue
$12.56B
++13.37% YoY
EPS (Basic)
$0.81
++9.46% YoY
Operating Income
$4.19B
++11.07% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Q2 FY2026 revenue rose 13% YoY to $12,559,938 thousand (12% on a constant currency basis), driven by membership growth, price increases, and increased advertising revenue. All four regions grew double digits: UCAN +10%, EMEA +14%, LATAM +21%, and APAC +16% year-over-year.
Source: 10-Q Item 2 MD&A
Operating margin declined approximately one percentage point to 33.4% from 34.1% in the prior-year quarter, primarily driven by technology and development expenses (+22% YoY to $1,007,675 thousand) and sales and marketing expenses (+16% YoY to $823,838 thousand) growing faster than revenue.
Source: 10-Q Item 2 MD&A
In the first quarter of 2026, Netflix received a $2.8 billion termination fee following the termination of the Amended and Restated Merger Agreement with WBD, which drove a 3,108% YoY increase in six-month interest and other income to $2,903,827 thousand and contributed to a 35% increase in six-month operating cash flow to $7,034,017 thousand.
Source: 10-Q Item 2 MD&A
During the six months ended June 30, 2026, Netflix repurchased 66,431,786 shares for an aggregate $5.9 billion, and in April 2026 the Board authorized an additional $25 billion repurchase program, leaving $27.1 billion available as of June 30, 2026.
Source: 10-Q Item 2 MD&A
The effective tax rate increased to 16% in Q2 FY2026 from 14% in the prior-year quarter (and to 18% from 12% for the six-month period), primarily due to lower excess tax benefits on stock-based compensation and a lower foreign-derived income deduction relative to income growth.
Source: 10-Q Item 2 MD&A
Cost of revenues increased 13% YoY to $6,036,965 thousand, largely due to a $479 million increase in content amortization, while technology and development (+22%) and sales & marketing (+16%) expenses grew faster than the 13% revenue growth, compressing operating margin by 0.7 points to 33.4%.
Source: 10-Q Item 2 MD&A
Net cash provided by operating activities fell 28% YoY to $1,743,812 thousand in Q2 FY2026, driven by a $1,059 million increase in payments for content assets and unfavorable working capital changes, including non-routine tax assessment payments in Brazil.
Source: 10-Q Item 2 MD&A
Netflix has total contractual obligations of $45.4 billion, including $25.1 billion in content obligations and $17.6 billion in debt (principal and interest), with $15.6 billion due within the next 12 months, requiring continued significant cash outlays for content investment.
Source: 10-Q Item 2 MD&A
The company's Euro-denominated Senior Notes and foreign currency cash/content liability positions create volatility in interest and other income, evidenced by a non-cash gain of $9 million versus a $55 million loss in remeasurement between comparable periods, plus a $180 million unfavorable hedging impact on six-month revenue.
Source: 10-Q Item 2 MD&A
The effective tax rate rose to 16% in Q2 FY2026 from 14% a year earlier, and to 18% from 12% for the six-month period, driven by lower stock-based compensation tax benefits and reduced foreign-derived income deductions, which could continue to pressure net income growth.
Source: 10-Q Item 2 MD&A
Reported EPS of $0.80 versus the $0.80 analyst consensus — a -0.5% miss for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $12.56B | $11.08B | +13.37% |
Cost of Revenue | $6.04B | $5.33B | +13.36% |
Operating Income | $4.19B | $3.77B | +11.07% |
Net Income | $3.4B | $3.13B | +8.83% |
EPS (Basic) | $0.81 | $0.74 | +9.46% |
EPS (Diluted) | $0.80 | $0.72 | +11.11% |
R&D Expense | $1.01B | $824.68M | +22.19% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $58.45B | $53.1B | +10.08% |
Current Assets | $13.85B | $11.99B | +15.51% |
Total Liabilities | $28.3B | $28.15B | +0.54% |
Current Liabilities | $12.13B | $8.94B | +35.70% |
Stockholders' Equity | $30.15B | $24.95B | +20.84% |
Cash & Equivalents | $9.1B | $8.18B | +11.27% |
Long-Term Debt | $11.83B | $14.45B | -18.18% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $1.74B | $2.42B | -28.04% |
Investing Cash Flow | $-218.64M | $768.68M | -128.44% |
Financing Cash Flow | $-4.67B | $-2.5B | -86.57% |
Share Buybacks | $4.71B | $1.65B | +184.97% |
D&A | $100.53M | $80.01M | +25.64% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 33.4% | 34.1% | -0.69% |
Net Margin | 27.1% | — | — |
ROE | 11.3% | — | — |
ROA | 5.8% | — | — |
Current Ratio | $1.142 | — | — |
Debt to Equity | $0.939 | — | — |
Netflix delivered a strong Q1 2026 with revenue up 16.2% YoY to $12.25B, net income surging 82.8% to $5.28B, and operating cash flow nearly doubling to $5.29B, reflecting robust subscriber monetization and expanding margins.
Netflix delivered a record-breaking fiscal year 2025 with revenue of $45.2B (+15.9% YoY), operating income surging 27.9% to $13.3B, and net income climbing 26.1% to $11.0B, reflecting strong margin expansion and robust cash generation.
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The filing does not disclose analyst consensus estimates, so a beat/miss cannot be confirmed from this 10-Q. However, Netflix reported revenue of $12,559,938 thousand (up 13.4% YoY) and diluted EPS of $0.80 (up 11.1% YoY), reflecting continued growth.
Revenue grew 13% YoY to $12.56B driven by membership growth, price increases, and advertising, while operating margin slipped 0.7 points to 33.4% due to faster growth in technology/development (+22%) and marketing (+16%) expenses. Net income rose 9% to $3.40B, and the company continued aggressive share buybacks totaling $4.7B in the quarter.
All four regions posted double-digit growth: UCAN revenue rose 10% to $5,431,667 thousand, EMEA grew 14% to $4,033,515 thousand, LATAM grew 21% to $1,584,290 thousand, and APAC grew 16% to $1,510,466 thousand, per the 10-Q MD&A.
The filing (via MD&A) points to cost growth in content amortization, technology/development, and marketing outpacing revenue, a 28% YoY decline in quarterly operating cash flow, and $45.4 billion in total contractual obligations including $25.1 billion in content commitments. There were also non-routine tax assessment payments in Brazil affecting working capital.
Netflix's balance sheet shows total assets of $58.45B (up 10.1% YoY) and stockholders' equity of $30.15B (up 20.8% YoY), with a current ratio of 1.14 and debt-to-equity of 0.94. The company also holds $9.10B in cash and continues large-scale share buybacks, having repurchased $5.9B in stock during the first half of 2026 with $27.1B still authorized.