Management commentary
Our financial performance remains solid and we’re on track to meet our objectives for the year:
Results
8Q2 revenue grew 13% year over year (+12% on a FX-neutral basis 1 ) to $12.6B, and operating margin was 33%.
Both were in-line with our guidance.
Outlook
1For 2026, we’ve narrowed our forecasted revenue range to $51.0-$51.4B and continue to forecast an operating margin of 31.5%, both consistent with our prior guidance.Guidance lowered
Management commentary
We’re delivering increasing value to our members; engagement is healthy, reflecting the quality, quantity, and variety of our offering:
Results
Harlan Coben’s I Will Find You is our most viewed new original series debut in 2026 and Swapped is on its way to becoming our second most viewed original animated film ever.
4View hours grew +2% in H1’26 vs. +1.5% growth in 2025, despite the competitive impact of the Winter Olympics and the World Cup this year.
Management commentary
To better satisfy members, we’re continuing to expand the variety of our entertainment offering with video podcasts, creators like Danny Go! and Salish & Jordan Matter, and cloud TV games.
The results of our recent price changes are consistent with prior changes and our expectations.
We are leveraging AI to provide a more personalized, immersive and interactive experience for members, enhance ads capabilities for brands, and improve the quality of our series and films.
The entertainment industry remains dynamic and competitive.
We aim to stay ahead by executing against our three areas of focus: delivering more entertainment value, leveraging technology to improve every aspect of our service, and improving monetization.
Outlook
Our summary results, and forecast for Q3, are below.
Results
Q2 Results and Forecast
Q2 revenue of $12.6B was in-line with forecast and grew 13% year over year (+12% on a foreign exchange (F/X) neutral basis), driven primarily by membership growth, pricing and increased ad revenue.
3We delivered double digit revenue growth in all regions, surpassing the quarterly revenue mark of $4.0B in EMEA and $1.5B in both LATAM and APAC.
5In UCAN, Q2 revenue growth of 10% reflects only a partial quarter impact from our recent price change, which has gone well and as expected.
Operating income in Q2 was $4.2B, up 11% year over year, and operating margin was 33.4% versus 34.1% in Q2’25.
Q2 operating income and margin were slightly ahead of forecast due to the timing of expenses.
7As we noted in previous letters, operating income in Q2 grew slower than revenue because our content amortization growth is higher in the first half of the year; we continue to expect content amortization to grow slower in the second half of the year and to increase ~10% for 2026.Guidance reaffirmed
Diluted EPS for the quarter amounted to $0.80 vs. $0.72 in Q2’25 (+11% year over year), slightly above our forecast.
Outlook
For Q3, we expect revenue growth of 12% (or 11% F/X neutral) driven by growth in memberships, pricing, and ad revenue.
We project an operating margin of 33.2% compared with 28.2% in the year ago quarter.
2Our 2026 outlook is consistent with our prior forecast: we are narrowing our revenue forecast to $51.0-$51.4B, which represents 13%-14% growth (~12% F/X neutral), driven by growth in memberships and pricing, and a projected rough doubling of our ads revenue to approximately $3 billion.Guidance lowered
6We continue to anticipate an operating margin of 31.5% for 2026 both on a reported basis and based on F/X rates as of January 1, 2026 vs. 29.5% in 2025.Guidance reaffirmed
Our forecast implies annual operating income growth of 20%+ for 2026.
Management commentary
Our Focus
As we outlined in our last letter, we have three main areas of focus:
First, delivering more entertainment value.
We want to win the most valuable moments of truth and thrill our members.
We’ve used “engagement” as a shorthand for the value we deliver members.
But, as we’ve developed an increasingly sophisticated understanding of how consumers ascribe value to our service, we know not all hours are equal.
Time spent is just one aspect of strong engagement - quality and variety also matter.
The key is to improve across all of those dimensions: quality, variety, and quantity.
Quality is defined by how much our members enjoy and love a title.
We work every day to raise the bar on our core series and film offering, which we have successfully done since we launched streaming in 2007.
Animation is a good example of how patient and focused execution can pay off.
We started original animation in 2018, kept improving, and last year produced a true breakout global phenomenon with KPop Demon Hunters .
It became our first title to surpass over 52 consecutive weeks in the Global
Top 10.
We built on that momentum in Q2 with Swapped * (137M views 2 ) which is loved by our members and on its way to becoming our second most viewed 4 original animated film ever.
In addition to a high-quality slate, we also need a wide variety of programming because we serve a massive audience (approaching 1B people) with broad and diverse tastes, moods and needs.
Different types of content impact our business differently – some drive more acquisition, some primarily aid retention, and some make the service feel indispensable.
For example, in 2026, we expect live programming to account for just over 5% of our content spend but only ~1% of view hours.
Yet, live event programming accounted for six of the top 10 new member sign-up days over the last five years (and we've only been doing live events since 2023).
Results
Quantity of engagement is also important and, as detailed in our bi-annual What We Watched 5 report, in the first half of 2026, our members watched more than 97 billion hours, up 2% year over year.
This was slightly faster than the 1.5% growth in 2025, despite the competitive impact of the Winter Olympics and the World Cup this year.
Non-English content again drove more than a third of all viewing this half, with standout titles from Korea, Japan, Spain, and India.
Management commentary
Our Q2 slate delivered a host of titles that our members loved and were broadly viewed, including Harlan Coben’s I Will Find You * (87M views) - our biggest new original series debut in 2026 so far, Legends * from the UK (20M views), K-drama Teach You a Lesson * (55M views) - which is on track to become our second-most viewed Korean show globally 6 , Berlin and The Lady with an Ermine * (28M views) from Spain, The Polygamist * (24M views) from South Africa, Flunked * (11M views) from France, and Rosario Tijeras S5* (6M views) from Mexico.
We also continued to strengthen our film slate, delivering hits across multiple genres, like action with Apex * (131M views) starring Charlize Theron, rom-coms with Office Romance * (63M views) featuring Jennifer Lopez and Voicemails for Isabelle * (71M views), drama with the Emmy nominated feature, Remarkably Bright Creatures * (53M views) starring Sally Field, and documentaries with Maternal Instinct * (54M views) and The Crash * (67M views).
Beyond series and films, we continually evolve and expand our entertainment offering to better meet the needs of members and strengthen our engagement.
For instance, approximately half of our viewing occurs in the evening, but our recently launched video podcasts over-index on viewing during the day and on mobile devices, an indicator that this engagement is incremental.
We recently added Jay Shetty’s On Purpose and Allegedly , as well as announced podcasts featuring Kate Hudson and Oliver Hudson, Lele Pons and Martha Stewart through our partnership with iHeartMedia.
We have a history of working with the most talented storytellers from around the world and, increasingly, that includes top creators from open content platforms.
We’ve had success with creators including Danny Go!, Ms. Rachel, Mark Rober, and Salish & Jordan Matter, and recently announced collaborations with the Stokes Twins, Alan Chikin Chow, Nick DiGiovanni, and Mythical.
Ms. Rachel has spent 27 weeks in the Global Top 10 since debuting on Netflix last year and, more recently, Salish & Jordan Matter and Danny Go! have spent eight and seven weeks, respectively, in the Global Top 10 since coming to Netflix in April.
We also announced partnerships 7 with leading publishers including Condé Nast, Hearst, and People, to bring their lifestyle content to members in the US and several other countries beginning in August.
Results
6 Based on expected 91 day views (behind Squid Game).
Corporate events
To deepen our local programming in France, last month we launched a partnership with leading local French broadcaster TF1.
Netflix members in France are now able to experience TF1 programming as part of their subscription at no additional cost.
This fully integrated experience includes TF1’s linear channels as well as TF1+’s on-demand content, including a wide array of scripted, unscripted and major live sports programming.
While still early, we’re pleased with the initial performance.
Our French members are discovering and engaging with this content (with view hours of TF1 content growing each week), a TF1 title, Secret Story has already reached our Top 10 list in France, and we’re gratified to see our partner 8 is also seeing strong early results.
Management commentary
Our cloud-based TV games are gaining traction.
In June, we had our two most successful cloud game debuts, with the releases of FIFA World Cup: Launch Edition and Unhinged .
And Netflix Playground, our app for kids games, has experienced 3x growth in daily players since its launch in April, and has fueled growth in our kids mobile games engagement, which is up 600% year over year 9 .
While off a small base, these early signals give us increasing confidence that we are building a foundation with exciting future growth potential.
Overall, our engagement remains healthy and as with all things we do, we’re working hard to improve every day.
We have an exciting Q3 slate including new films like 72 HOURS with Kevin Hart, The Last House with Greta Lee & Wagner Moura, The Whisper Man with Robert DeNiro, and Call My Agent! from France, and series such as The Hawk with Will Ferrell, the fifth and final season of Outer Banks , Little House on the Prairie , the fourth installment of Ryan Murphy’s anthology series, Monster: The Lizzie Borden Story , The Gentlemen S2 from the UK, The East Palace from Korea, The Doll from Poland, and Lovesick from Mexico.
We’ll continue to build out our live programming – we have two Major League Baseball events ( Home Run Derby and Field of Dreams game) in Q3, as well as the Tyson Fury vs. Anthony Joshua fight later this year.
We also recently announced an expanded agreement with the NFL, securing a premium slate of games that includes a week-one matchup in Q3, as well as a Thanksgiving Eve game and NFL Christmas Gameday in Q4, and a final week contest in Q1 of next year.
Second, leveraging technology to improve every aspect of our service and our business.
To support our growing content offering, we continue to evolve our product to create more personalized, immersive, and interactive experiences for our members.
We are leveraging LLMs to improve title discovery and to better understand member preferences.
We’re also enhancing search for our members with new voice search functionality and AI-powered natural language search.
Across the production lifecycle, from concept and pre-visualization through post and delivery, GenAI utilization by our creative partners is scaling quickly.
In 2026, GenAI workflows have been used in roughly 300 of our titles, with the largest concentration of work in post-production.
We are increasingly leveraging these tools to deliver higher quality output more quickly and at a lower cost than traditional methods.
In some cases, productions would have had to leave out key shots and sequences in the absence of GenAI technology.
For example, Glory (India), Brasil 70: A Saga do Tri (Brazil), and The American Experiment (US) utilized GenAI tools to create highly complex sequences (e.g., enhanced crowds, historical battle sequences, and worldbuilding establishing shots).
In our ads business, we continue to invest in developing a premium ad experience which delivers highly engaged and attentive audiences to advertisers.
In Q2, we expanded our AI-powered tools across the full advertising lifecycle, from planning and creative production to campaign management, optimization, and reporting.
We're also automating more of the workflow around how advertisers transact with us by extending programmatic access to Pause Ads and live inventory this summer.
This reduces the manual effort that has historically limited access for smaller buyers, opening Netflix to a broader range of advertisers over time.
These investments enhance the value of our existing inventory and lay the groundwork for the next phase of growth in our ads business.
Third, improving monetization.
Outlook
Building out our ads business continues to be a top priority and we remain on track to deliver approximately $3 billion in ads revenue in 2026.
Our US upfront negotiations are in advanced stages, and we expect commitments to close in the next few weeks.
We are seeing strong interest in our Live events lineup — Women's World Cup, an expanded NFL slate, WWE, MLB events and more — alongside continued demand for our unparalleled breadth of entertainment titles.
The growth in our ads business is being fueled by the strength and variety of our slate combined with our investments in AI powered tools and workflows, the Netflix Ads Suite and broader programmatic capabilities.
Management commentary
We offer a wide range of plans and feature sets at accessible price points to provide the best value for members.
As we expand and improve our entertainment offering, we occasionally adjust prices so that we can reinvest in our service.
Our first half price changes, in markets like the US, Mexico and Spain, have gone well with the impact consistent with prior price changes and our expectations.
We are constantly testing, assessing, and improving the membership lifecycle.
Over the years, investments in our product capabilities (e.g. TV and mobile UI) have given us greater flexibility to evaluate the best ways to attract and retain members in different markets.
We’ve tested a variety of methods, including a low cost first month in Japan to coincide with the WBC, and an “upgrade on us” offer in various countries around the world.
As part of this test and learn strategy, last week we began re-testing free trials for non-rejoining new members in a number of markets around the world (excluding the US and UK).
Engagement is important to our business.
But as discussed above, engagement is not just the quantity of view hours, but also refers to the quality and variety of our offering.
To make this clearer, we’re making a change to our view hours disclosure.
Corporate events
After today’s What We Watched report, which covers the first half of 2026, we will shift to publishing this report annually in the first quarter, beginning in 2027.
The goal of separating the publication of the report from our earnings results is to keep the focus on our primary financial metrics – revenue and operating profit.
With this change, we will still report industry-leading title-by-title and total view hours data (including our weekly Top 10 lists for movies and series in more than 90 countries).
Management commentary
Cash Flow and Capital Structure
Results
Net cash generated from operating activities was $1.7B vs $2.4B in the prior year period.
Free cash flow (FCF) 10 in Q2’26 totaled $1.5B vs. $2.3B in Q2’25.
This included higher cash tax payments due in part to the Warner Bros. termination fee.
For the full year, we continue to expect FCF of approximately $12.5B, and an annual cash content spend to amortization ratio of ~1.1x.Guidance reaffirmed
Capital return
Our capital allocation approach is unchanged.
We prioritize reinvestment in the business, both organically and through selective M&A, while maintaining a healthy balance sheet and ample liquidity, and then returning excess cash to shareholders via share repurchases.
In April, our Board of Directors authorized the repurchase of an additional $25B of our stock on top of the $6.8B of capacity we had remaining as of the end of Q1.
In Q2, we bought back $4.7B of stock, our largest quarter of share repurchases, and we currently have $27.1B of capacity left in our remaining authorizations.
We ended the quarter with gross debt of $14.4B and cash and cash equivalents of $9.1B.
We have $1B of debt maturing later this year, which we plan to refinance.
Management commentary
We recently published our 2025 Environmental, Social, and Governance (ESG) report 11 .
Key updates for 2025 include how we continue to decarbonize our operations, including the productions of our films, series and games; invest in our people and the next generation of talent around the world, while contributing to local economies; and maintain our corporate governance structure to support healthy growth and create long-term shareholder value.
Corporate events
During Q2, we launched The Netflix Effect 12 — a comprehensive look at the impact our films and series have had on economies, industries and culture over the last decade.
Netflix is deeply embedded and invested in the creative industries around the world, producing TV series and films in more than 50 countries, and contributing more than $325 billion in gross value to the global economy.
Results
Regional Breakdown
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