Netflix posted second-quarter revenue of $12.56 billion and earnings of 80 cents per share, roughly in line with estimates, but a soft third-quarter forecast and a pullback on viewership reporting sent shares down more than 8% after hours.
Netflix shares dropped more than 8% in after-hours trading Thursday after the streaming company posted second-quarter results roughly in line with analyst expectations but issued a forecast that left investors wanting more — and announced a reduction in how often it would share viewership data with the public.
The company reported revenue of $12.56 billion for the quarter ended June 30, up 13% year over year and just narrowly below the $12.59 billion analyst consensus compiled by LSEG. Earnings per share came in at 80 cents, compared with the 79-cent estimate. Net income rose to $3.40 billion, or 80 cents per share, from $3.13 billion, or 72 cents per share, in the same period a year earlier.
Netflix attributed the revenue gain to membership growth, pricing adjustments, and increased advertising income. Earlier this year, the company raised subscription prices across all its streaming plans, and it said Thursday those increases produced results consistent with prior changes and expectations.
For the third quarter, Netflix expects revenue to grow 12%. The company also narrowed its full-year 2026 revenue guidance to a range of $51 billion to $51.4 billion, tightening from a prior range of $50.7 billion to $51.7 billion.
Engagement drew heavy scrutiny from analysts during Thursday's earnings call, coming after reports of a viewership slowdown and declining second-season audiences for Netflix series. Co-CEO Ted Sarandos pushed back on those characterizations.
"Our season two fall off has actually slightly improved this year relative to last year, so no changes in release strategies," Sarandos said on the call.
Co-CEO Greg Peters added context on how Netflix weighs viewing hours against financial performance. "I'll start by saying there is not a linear relationship between viewing hours and revenue and profit, because all hours are not created equal," Peters said.
Despite those assurances, Netflix said it would reduce the frequency of its "What We Watched" viewership reports. Following Thursday's release — which covers the first half of 2026, during which members watched more than 97 billion hours of content — the company will shift to publishing the report annually in the first quarter beginning in 2027. Netflix said the goal is to keep its earnings disclosures focused on financial metrics such as revenue and operating profit.
Live events have emerged as a meaningful driver for the platform. Netflix said live programming accounted for six of the top 10 new-member sign-up days over the past five years, even as live content represents more than 5% of content spending but only about 1% of total viewing hours. Sports rights — including Women's World Cup matches, NFL games, MLB events, and WWE programming — have drawn advertising demand, reinforcing the company's push into its ad-supported tier.
Netflix said it still expects to roughly double its advertising revenue year over year to $3 billion. The company added that it is in "advanced stages" of discussions with U.S. advertisers as part of Upfront negotiations, with commitments expected to close in the coming weeks.
Peters also addressed the possibility of a free tier, saying it "could make sense in some markets" but that the company has "no near-term plans to launch something," citing concerns about cannibalization of paid tiers and the need for a scaled advertising business in any market where such an offering might work.
Netflix noted in its shareholder letter that the "entertainment industry remains dynamic and competitive." The company reiterated that its capital-allocation priorities remain reinvestment in the business — both organically and through selective acquisitions — while maintaining what it described as a healthy balance sheet. Executives declined to comment on M&A speculation during the call.
With advertising growth now central to the revenue story and live sports rights expanding, how Netflix manages the tension between transparency and narrative control over its engagement data may become as closely watched as the earnings figures themselves.
Marc Sabatini is a staff writer at TechEchelon covering enterprise software, cybersecurity, and the regulatory beats that shape both. He focuses on the deal flow and policy decisions that move markets.
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