Q3'26
Filed Oct 20, 2026Q3 revenue grew 12% year over year to $12.9B, operating margin reached 34.6%, and Netflix maintained its full-year 2026 revenue and operating-margin outlook.
Revenue was in line with forecast, operating income and margin exceeded forecast due primarily to expense timing and slight revenue upside, and Q3 free cash flow rose to $2.9B from $2.7B in the prior-year period.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, Q3'26GAAP | $12.87B | – | 11.8% |
| Revenue growth, Q3'26, F/X neutralnon-GAAP | 11% | – | 11% |
| Cost of revenues, Q3'26GAAP | 6.08B | – | – |
| Sales and marketing, Q3'26GAAP | 837.1M | – | – |
| Technology and development, Q3'26GAAP | 1.03B | – | – |
| General and administrative, Q3'26GAAP | 466.4M | – | – |
| Operating income, Q3'26GAAP | $4.46B | – | +37% year over year |
| Operating margin, Q3'26GAAP | 34.6% | – | – |
| Interest expense, Q3'26GAAP | −$184.7M | – | – |
| Interest and other income (expense), Q3'26GAAP | $43.01M | – | – |
| Income before income taxes, Q3'26GAAP | $4.32B | – | – |
| Provision for income taxes, Q3'26GAAP | −$653.0M | – | – |
| Net income, Q3'26GAAP | $3.66B | – | – |
| Diluted EPS, Q3'26GAAP | $0.87 | – | +49% year over year |
| Basic EPS, Q3'26GAAP | $0.89 | – | – |
| Weighted-average diluted shares, Q3'26GAAP | 4.20B | – | – |
| Net cash provided by operating activities, Q3'26GAAP | $3.16B | – | – |
| Free cash flow, Q3'26non-GAAP | $2.88B | – | – |
| Revenue, nine months ended September 30, 2026GAAP | $37.68B | – | – |
| Operating income, nine months ended September 30, 2026GAAP | $12.61B | – | – |
| Net income, nine months ended September 30, 2026GAAP | $12.35B | – | – |
| Diluted EPS, nine months ended September 30, 2026GAAP | $2.90 | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $10.20B | – | – |
| Free cash flow, nine months ended September 30, 2026non-GAAP | $9.50B | – | – |
| YTD operating margin through September 30, 2026GAAP | 33.5% | – | – |
| YTD adjusted operating margin through September 30, 2026non-GAAP | 33.3% | – | – |
| Net debt as of September 30, 2026non-GAAP | $7.11B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| UCANRegional driver was not separately disclosed. | $5.63B | – | 11% |
| EMEARegional driver was not separately disclosed. | $4.11B | – | 11% |
| LATAMRegional driver was not separately disclosed. | $1.60B | – | 17% |
| APACRegional driver was not separately disclosed. | $1.54B | – | 12% |
Q4'26 and full year 2026 outlook
- RevenueQ4'26: $13,442 (in millions); full year 2026: $51.1B
- NoteQ4'26 Y/Y revenue growth: 11.5%
- NoteQ4'26 revenue growth: 12% (or 11% F/X neutral)
- NoteQ4'26 operating income: $3,500 (in millions)
- NoteQ4'26 operating margin: 26.0%
- NoteQ4'26 net income: $2,787 (in millions)
- NoteQ4'26 diluted EPS: $0.67
- NoteQ4'26 includes ~120 basis points negative impact associated with recently announced headcount reductions.
- NoteFull year 2026 revenue growth: +13% year over year (+12% on a F/X neutral basis).
- NoteFull year 2026 operating margin: 31.5% (31.4% based on F/X rates as of January 1, 2026).
- NoteUpdated 2026 margin guidance includes ~30 basis points negative impact associated with Q4 headcount reductions.
- NoteForecast implies annual operating income growth of 20%+ for 2026.
- NoteExpected 2026 free cash flow: approximately $12.0B.
- NoteExpected annual cash content spend to amortization ratio: ~1.1x.
Capital returns
- In Q3, Netflix bought back 63.9 million shares for $4.8B.
- Repurchases of common stock were $(4,796,725) (in thousands) in Q3'26 and $(10,781,716) (in thousands) in the nine months ended September 30, 2026.
- Netflix currently has $22.3B of capacity left in its remaining authorizations.
What drove it
- Q3 revenue growth was driven primarily by subscription revenue, reflecting increases in memberships and pricing, advertising revenue growth, and a favorable impact from F/X rates, net of hedging.
- Membership growth benefited from healthy retention in every region; globally and in the US, churn improved year over year and was better than forecast.
- Q3 operating income and operating margin were ahead of forecast primarily due to expense timing and slight revenue upside.
- In India, view hours grew 24% year over year, view hours per member grew low-to-mid single digits, and Q3 revenue grew ~18% year over year on a F/X neutral basis.
- Netflix stated that non-English viewing has grown from under 10% of total viewing a decade ago to more than a third today.
Concerns
- Netflix expects 2026 ad revenue of ~$2.7B versus approximately $3B previously, due to a slightly slower than expected rollout of some ad product capabilities.
- The Q4 operating-margin forecast includes ~120 basis points of negative impact from recently announced headcount reductions.
- Netflix stated that there is investor concern about view hours growth and that it seeks to accelerate growth in view hours.
- Expected 2026 free cash flow was adjusted to approximately $12.0B from the prior projection of $12.5B, due primarily to the expected closing of a real estate transaction in Q4.
What to watch
- Q4 membership, pricing and advertising revenue growth, which are cited as the drivers of the $13.4 billion Q4 revenue forecast.
- Execution of ad product capabilities and the planned introduction of the advertising tier to 15 new countries in 2027.
- Q4 headcount-reduction costs and their stated ~120 basis-point impact on Q4 operating margin.
- The Q4 content and live slate, including NFL games and the Tyson Fury vs. Anthony Joshua boxing match.
- The expected closing of the real estate transaction in Q4 and its effect on 2026 free cash flow.
Balance sheet and cash flow
- Cash and cash equivalents were $8,194,275 (in thousands) as of September 30, 2026, versus $9,033,681 (in thousands) as of December 31, 2025.
- Gross debt was $15.3B at the end of Q3.
- Total debt was $15,132,394 (in thousands) as of September 30, 2026.
- Short-term debt was $2,474,796 (in thousands) and long-term debt was $12,657,598 (in thousands) as of September 30, 2026.
- Total streaming content obligations were $25,222,800 (in thousands) as of September 30, 2026, versus $24,039,228 (in thousands) as of December 31, 2025.
- Proceeds from issuance of debt were $992,550 (in thousands) in Q3'26.
- Purchases of property and equipment were $(278,766) (in thousands) in Q3'26 and $(693,540) (in thousands) in the nine months ended September 30, 2026.
Analysis
Netflix reported Q3'26 revenue of $12,874,176 (in thousands), up 11.8% from $11,510,307 (in thousands) in Q3'25 and in line with its forecast. The company said growth was driven primarily by subscription revenue from membership and pricing increases, advertising revenue growth, and favorable F/X rates net of hedging. Retention was healthy in every region, while global and US churn improved year over year and performed better than forecast. All four reported regions delivered year-over-year revenue growth, led by LATAM at 17%, with UCAN and EMEA each at 11% and APAC at 12%.
Profitability expanded sharply. Operating income was $4,458,600 (in thousands), up from $3,248,247 (in thousands), and operating margin was 34.6% versus 28.2%. Netflix attributed the outperformance against its forecast primarily to the timing of expenses and slight revenue upside. Net income was $3,663,927 (in thousands), compared with $2,546,916 (in thousands), while diluted EPS rose to $0.87 from $0.59. The nine-month operating margin was 33.5%, and the non-GAAP adjusted operating margin based on F/X rates at the beginning of 2026 was 33.3%.
Cash generation also increased. Net cash provided by operating activities was $3,162,279 (in thousands), compared with $2,825,174 (in thousands) in the prior-year quarter, and non-GAAP free cash flow was $2,883,513 (in thousands), compared with $2,660,455 (in thousands). Netflix repurchased 63.9 million shares for $4.8B, described as its largest quarter ever of stock repurchases, and retained $22.3B of remaining authorization capacity. The company ended Q3 with $8,194,275 (in thousands) of cash and cash equivalents and $15.3B of gross debt after completing a $1B bond deal to fund an upcoming $1B Q4 debt maturity.
For Q4, Netflix forecasts revenue of $13,442 (in millions), 11.5% year-over-year growth, and a 26.0% operating margin. The Q4 margin forecast includes ~120 basis points of negative impact from headcount reductions. Netflix maintained its full-year revenue expectation of $51.1B and its 31.5% operating-margin outlook, but reduced expected 2026 free cash flow to approximately $12.0B from $12.5B due primarily to the expected closing of a real estate transaction in Q4. It also now expects 2026 ad revenue of ~$2.7B versus approximately $3B previously because some ad product capabilities are rolling out slightly more slowly than expected.
Not in the filing
stated, not guessed- GAAP gross margin
- Non-GAAP EPS
- Q3 membership count and paid net additions
- Q3 advertising revenue
- Q3 average revenue per membership
- Q3 tax rate
- Dividend amount or dividend policy
- Prior-quarter percentage changes for total revenue, operating income, net income, EPS, cash flow and regional revenue
- Previous-release outlook section required for formal actual-versus-prior-guidance comparison
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.