Overview
- The company reported Q2 results that were profitable but softer than hoped, with $12.56 billion in revenue, $0.80 earnings per share and a 33.4% operating margin, and it guided Q3 revenue to $12.86 billion in the update released July 16–17.
- Investors sold the stock after the guidance, driving shares down roughly 7–8% after the report and about 26% year‑to‑date as the market re‑prices Netflix from a high‑growth tech multiple to a more ordinary media valuation.
- Netflix said it will move its detailed 'What We Watched' viewing‑hours report to an annual cadence beginning in 2027, a disclosure change that critics say will make it harder to track user engagement trends.
- Management is prioritizing monetization over rapid subscriber expansion by targeting about $3 billion in ad revenue for 2026, expanding live events and executing large buybacks, including a record $4.7 billion repurchase in Q2 and roughly $27 billion of authorization remaining.
- Free cash flow fell to about $1.525 billion in Q2, partly because Netflix received a $2.8 billion termination fee from the failed Warner Bros. Discovery pursuit, and the next tests for the company will be whether ad growth, live programming and quarterly results reverse the slowing revenue trajectory.