Netflix shares fell as much as 9% in after-hours trading on Thursday, July 16, 2026, to their lowest levels in more than a year. The numbers behind the drop were not bad. The outlook was.
Variety reported that the streamer’s second-quarter results landed in line with Wall Street forecasts, while its guidance for the third quarter came in light. Investors were already worried that viewer engagement was flagging, and the guidance did nothing to settle that.
The quarter in numbers
Netflix reported second-quarter revenue of $12.56 billion, up 13.4% year over year, and net income of $3.4 billion, or 80 cents per share. Analysts surveyed by LSEG Data & Analytics had expected $12.59 billion and earnings per share of 79 cents. Operating margin was 33.4%, against 34.1% in the same quarter a year earlier.
For the third quarter, Netflix said it expects revenue growth of 11.7% to $12.86 billion. Analysts had been looking for around $13 billion. It projected an operating margin of 33.2% for the September 2026 quarter, compared with 28.2% a year ago.
For the full year, the company narrowed its revenue range to $51.0 billion-$51.4 billion, inside its earlier range, and left its operating margin target unchanged at 31.5%.
Engagement and a change in reporting
Viewing hours grew 2% in the first half of 2026, Netflix said, up from 1.5% growth in the same stretch of 2025, “despite the competitive impact of the Winter Olympics and the World Cup this year.” The company published its “What We Watched” report for the first half on Thursday, and said it will move to publishing that report once a year, in the first quarter, starting in 2027. Its reasoning, in the shareholder letter, was to keep attention on revenue and operating profit. It will still release title-by-title and total view hours data, along with weekly Top 10 lists in more than 90 countries.
“Overall, our engagement remains healthy and as with all things we do, we’re working hard to improve every day,” Netflix said.
Ads, live events and prices
The advertising business is still on track for approximately $3 billion in revenue in 2026, the company said, and its U.S. upfront negotiations are in “advanced stages,” with commitments expected to close in the next few weeks. Live programming should make up just over 5% of content spend this year but only about 1% of view hours. Even so, live events accounted for six of the top 10 new member sign-up days over the last five years, Netflix noted, and it only began streaming live events in 2023.
The quarter reflects recent price increases on its three U.S. plans, the second hike in a little over a year. Netflix said the results of those changes are consistent with prior ones and with its expectations.
Then there is the buyback. On April 22, the board authorized the repurchase of an additional $25 billion of common stock. CFO Spence Neumann said Netflix bought back about $4.7 billion of its own shares in the quarter, its largest quarter of repurchases, leaving $27.1 billion in remaining authorizations.
