Netflix posted first‑quarter 2026 results with revenue of $12.25 billion, up 16% from the $10.54 billion reported in Q1 2025. Earnings per share rose to $1.23, beating the consensus estimate of $0.78–$0.79 by $0.44–$0.45, a 56–58% beat.
Operating income reached $4.0 billion, a 28% increase from $3.0 billion in Q1 2025, and the operating margin expanded to 32.3%, up from 31.7% year‑over‑year. The margin lift reflects higher revenue mix and scale, offsetting modest cost growth.
Management reiterated its full‑year guidance, projecting revenue between $50.7 billion and $51.7 billion and an operating margin of 31.5%. For the next quarter, the company forecast revenue of $12.57 billion and EPS of $0.78, slightly below analyst expectations. Advertising revenue is expected to double to $3 billion in 2026, underscoring the growing importance of the ad‑supported tier.
Co‑founder and chairman Reed Hastings announced he will not seek re‑election to the board when his term expires in June, marking a significant leadership transition for the streaming giant.
Management emphasized confidence in the guidance, with Co‑CEO Gregory Peters stating, 'We are maintaining our guidance and strong outlook for organic growth that we established for 2026.' He also noted, 'We ended last year with more than 325 million paid members.' CFO Spencer Neumann explained the decision to walk away from the Warner Bros. deal, saying, 'We said from the beginning that the WB deal was a nice‑to‑have, not a need‑to‑have... The most important benefit of this entire exercise was that we tested our investment discipline. When the cost of this deal grew beyond the net value to our business and to our shareholders, we were willing to put emotion and ego aside and walk away.' The EPS beat was largely driven by a $2.8 billion termination fee from the abandoned Warner Bros. acquisition, which was recorded as interest and other income. Excluding that one‑time gain, the EPS would have fallen below expectations. Revenue growth was supported by membership gains, higher subscription prices, and a surge in advertising revenue, while the operating margin expansion was a result of higher mix and operational leverage.
Investors reacted to the softer Q2 guidance and the leadership change, with after‑hours trading showing a decline. Analysts noted that the market was focused on the sustainability of earnings growth and the impact of the one‑time fee, rather than the headline beat.
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