Overview
- Netflix disclosed on July 1, 2026 that first‑quarter revenue was $12.25 billion and operating income was $3.96 billion, pushing operating margins to 32.3%.
- Free cash flow nearly doubled to $5.1 billion in Q1, a figure boosted by a $2.8 billion termination fee from the unwound Warner Bros. Discovery deal while underlying FCF margins exceed 20%.
- The ad‑supported plan now accounts for more than 60% of new sign‑ups in markets where it is offered and ad revenue is on track to reach about $3 billion in fiscal 2026 as Netflix adds live programming to sell more inventory.
- Shares have tumbled roughly 40–44% from last year’s peak to trade near 24x trailing earnings after investors reacted to Reed Hastings stepping back, conservative guidance, a 37% rise in early‑year content spend, and technical selling.
- Wall Street remains broadly positive with a strong buy consensus and an average price target near $114.80, and analysts project full‑year free cash flow of about $13.2 billion which would leave room for buybacks and further capital returns if cash generation holds.