Netflix Q2 Revenue Rises 13% to $12.6B, Operating Margin 33%

What Netflix reported

Netflix is the largest subscription streaming service in the world, with an audience the company says is approaching one billion people. For the quarter that ended June 30, 2026, it reported revenue of $12.56 billion, up 13% from a year earlier, and operating income of $4.19 billion, up 11%. Net income was $3.40 billion, or $0.80 for each diluted share, after a 10-for-1 stock split late last year. Netflix no longer discloses how many subscribers it has, so revenue and operating margin are now the main measures of how the business is doing.

Netflix makes money by charging monthly subscriptions across a range of plans, including a cheaper tier that carries advertising, and it now sells commercials against that inventory. Because it stopped reporting subscriber counts in 2025, investors read its revenue growth and operating margin as the clearest signs of whether its spending on shows, films, and live events is paying off.

Why cash flow fell even as profit rose

Netflix earned more but generated less cash. Net cash from operating activities was $1.74 billion, down from $2.42 billion a year earlier, and free cash flow, the cash left after spending on property and equipment, was $1.53 billion, down from $2.27 billion. The company added $4.93 billion of new content to its library during the quarter and paid higher cash taxes, due in part to a termination fee related to Warner Bros. Netflix said operating profit grew more slowly than revenue because it books a larger share of its content costs in the first half of the year, a pattern it expects to reverse later in 2026. For the full year it still expects about $12.5 billion of free cash flow.

A record buyback and a narrower forecast

Netflix returned more cash to shareholders than in any prior quarter, repurchasing $4.7 billion of its own stock. It has $27.1 billion of buyback capacity left after its board approved an additional $25 billion in April. The company narrowed its 2026 revenue forecast to a range of $51.0 billion to $51.4 billion, growth of 13% to 14%, and held its operating margin target at 31.5% for the year, up from 29.5% in 2025. It expects advertising revenue to roughly double to about $3 billion in 2026, and is expanding into new formats such as video podcasts through a partnership with iHeartMedia. Netflix also said that, beginning in 2027, it will publish viewing-hours data once a year rather than alongside quarterly earnings, to keep attention on revenue and operating profit. As legacy media companies such as Walt Disney build up their own streaming services, Netflix is leaning on live events, advertising, and games to broaden its appeal.

What to watch

1. Whether Netflix meets its third-quarter guidance. The company projected revenue of $12.86 billion and an operating margin of 33.2%, up sharply from 28.2% a year earlier. Reaching that margin depends on how content and marketing costs fall across the second half. The next report will show whether the projected step up held.

2. How fast the advertising business scales. Netflix expects advertising revenue to roughly double to about $3 billion this year, and said its United States upfront sales talks are in advanced stages. Because advertising is still a small part of the total, the pace at which it grows will shape how much room Netflix has to keep lifting profit without relying only on price increases.

3. What the change in disclosure signals. From 2027, Netflix will report viewing-hours data only once a year. With subscriber counts already gone, investors will have fewer engagement measures between earnings, so revenue growth and operating margin will carry even more weight in judging whether its content spending is working.