Netflix earnings: third quarter 2026

The quarter in brief

Netflix's sales grew 11.8% from a year earlier to $12.87 billion in the third quarter of 2026.¹ Profit grew far faster. Operating profit, the profit from running the business before interest and tax, rose about 37% to $4.46 billion because costs grew more slowly than sales.¹

The company also trimmed its full-year sales outlook slightly, and put the shortfall down to advertising.¹

The figures, as the company printed them

Against what analysts expected

Earnings per share are net income divided by the number of shares. They came to $0.87 for the quarter.¹ On average, the 13 analysts who published a forecast had expected $0.82, so the result was $0.05 above what they had looked for.² That gap came mostly from the business itself: operating profit was strong, and a smaller number of shares added a little more.¹

What the company expects

Netflix now expects sales of $51.1 billion for 2026. That would be 13% more than last year, or 12% with the effect of currency moves stripped out.¹ The figure is 0.2% below the middle of the range it had given before, so it is a small cut rather than a reaffirmation.¹

The cut is concentrated in advertising. Netflix now expects about $2.7 billion of advertising sales this year, down from the roughly $3 billion it expected earlier. It blames a slightly slower rollout of some of its advertising tools.¹

For the fourth quarter alone, it expects sales of $13.4 billion, up 12% on a year earlier, or 11% without currency effects. It expects that growth to come from three sources: more members, higher prices and more advertising.¹ Reaching that figure would mean holding growth near the third quarter's pace rather than slowing further.

On profit, Netflix expects 31.5 cents of every dollar of sales to be left as operating profit in 2026, against 29.5 cents in 2025.¹ That figure already absorbs a cost of about 0.3 cents per dollar from job cuts in the fourth quarter. The company says it points to operating profit growth of 20% or more for the year.¹

On cash, it now expects free cash flow of about $12.0 billion for the year, down from $12.5 billion. Free cash flow is the cash left after running the business and investing in it. Netflix puts the cut mainly down to a property deal it expects to complete in the fourth quarter.¹ It still expects to spend about 1.1 dollars in cash on content for every dollar of content cost it writes off against profit this year.¹

Looking further out, Netflix plans to launch its cheaper plan with advertising in 15 more countries in 2027. The first group starts in March 2027 with nine countries in Europe, the Middle East and Africa, plus Colombia, Peru and New Zealand.¹

The strong points

Behind the profit rise is a wider margin. Netflix kept 34.6 cents of every dollar of sales as operating profit, the highest share of the five quarters shown and 6.4 cents more than a year earlier.¹ For a company that spends heavily on shows, films and now live sport, this is the clearest sign that its costs are growing more slowly than its sales. Each additional dollar of sales is now adding more to profit than it used to.

Net income, the profit after everything, was $3.66 billion, up about 44% from a year ago.¹ Earnings per share rose about 47%, a little faster because there are fewer shares, and were also up from $0.80 in the second quarter.¹ Shareholders are getting a larger slice of a profit that is itself growing quickly.

This summer Netflix began carrying another company's channels for the first time. A partnership with the French broadcaster TF1 brings TF1's channels, news and sport into the Netflix service, and Netflix says early numbers show it is adding viewing in France.¹ Netflix says it will keep adding programming from other companies.¹ That is a real change for a service built mostly on its own productions and on shows it licenses. If it works, Netflix could become the place viewers go for other broadcasters' programmes as well as its own.

The weak points

Sales growth slowed to 11.8% from 17.2% a year earlier, the slowest pace in the five quarters shown. The pace has eased in each of the last three quarters, and sales rose only about 2.5% from the second quarter.¹ The slowdown appears in all four of Netflix's regions rather than in just one. In Latin America, for example, growth with currency effects removed fell to 12% from 20% a year earlier.¹ Netflix is still growing at double-digit rates. But its strong profit gains increasingly depend on keeping costs in check rather than on sales racing ahead.

The smaller advertising outlook matters more than its size suggests. Advertising is the newer source of income that Netflix has been building up alongside subscriptions, the part meant to add fresh growth on top of the old.¹ A shortfall there lands just as overall sales growth is slowing, which leaves less to make up the difference.

Free cash flow rose only about 8%, to $2.88 billion, while net income rose about 44%. Free cash flow equalled about 79% of net income, against about 105% a year earlier.¹ Part of the reason is content. Netflix spent $5.2 billion adding to its library of shows and films in the quarter, while only $4.2 billion of content cost was written off against profit.¹ Spending on property and equipment also rose about 69% to $279 million.¹ Profit spreads the cost of a show over several years, but the cash goes out up front. For now, reported profit is running ahead of the money actually coming in.

What to watch

The open question is whether the advertising shortfall is a delay or a sign of weaker demand. Two things will tell them apart before any results do. The first is the deals advertisers sign for next year, which commit money in advance. The second is whether the delayed tools actually go live. If commitments grow strongly once the tools are in place, this year's gap was a matter of timing. If they stay weak even after the tools arrive, advertisers are less eager to spend with Netflix than it hoped.

The March 2027 launch is an early, concrete test. Uptake there will show whether viewers choose the cheaper plan with ads, and whether advertisers follow them into new markets.

On cash, the gap would show signs of closing if Netflix's cash spending on new content drew closer to the content cost it writes off against profit. Free cash flow catching up with net income would confirm it.

Our verdict on the quarter

In all, a strong report. Profit rose far faster than sales and came in above what analysts had expected.¹² Netflix is also trying something new by carrying other broadcasters' channels. But sales growth keeps slowing, the company now expects less from advertising this year, and cash is lagging behind profit. Those three weaknesses keep it from being a very strong report.

Notes

1. Netflix's results release, 20 October 2026: sec.gov. ↩
2. Nasdaq's earnings calendar, 21 October 2026: nasdaq.com. ↩