NFLX earnings analysis
What we found in NFLX's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Netflix delivered solid Q2 growth, with revenue up 13% to $12.560B and operating income up 11% to $4.193B; every geographic region grew at least 10%. Gross margin was approximately 52.0%, roughly flat year over year, while operating margin expanded sequentially to 33.4% but declined 0.7 points year over year as technology and marketing spending grew faster than revenue. The principal offset is cash flow: operating cash flow declined 28% to $1.744B amid higher content payments and working-capital pressure, although liquidity remained strong at $9.131B.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 13% year over year
- Q2 revenue rose $1.481B, or 13% year over year, to $12.560B; constant-currency revenue growth was 12%. Revenue increased sequentially from $12.250B in Q1 2026.
- Operating income exceeded $4.1B
- Operating income increased $418M, or 11%, to $4.193B. Operating margin was 33.4%, up 1.1 percentage points from 32.3% in Q1 2026, though down 0.7 points from 34.1% a year ago.
- EPS increased 11% from prior year
- Net income increased $276M, or 9%, to $3.401B, and diluted EPS was $0.80 versus $0.72 in Q2 2025. EPS declined from $1.23 in Q1 2026, whose results included the WBD-transaction termination fee.
- All regions delivered double-digit growth
- All geographic regions expanded: LATAM grew fastest at 21% to $1.584B, followed by APAC at 16% to $1.510B, EMEA at 14% to $4.034B, and UCAN at 10% to $5.432B.
- Liquidity remained substantial
- Cash and short-term investments increased $64M from year-end to $9.131B, while net debt declined $154M to $14.309B. The company also had no borrowings under either its $3B revolver or $3B commercial-paper program.
- Share repurchases remained aggressive
- Netflix repurchased 66.432M shares for $5.9B in the first six months, and $27.1B remained under authorization at June 30 after an additional $25B authorization in April 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Quarterly cash conversion weakened
- Quarterly operating cash flow fell $679M, or 28%, to $1.744B, driven primarily by a $1.059B increase in content-asset payments and $620M of unfavorable working-capital changes. Free cash flow is not explicitly disclosed in the 10-Q.
- Expense growth pressured margin
- Technology and development expense rose 22% to $1.008B and sales and marketing increased 16% to $824M, faster than 13% revenue growth; management identifies these expenses as the primary cause of the 0.7-point year-over-year operating-margin decline to 33.4%.
- Large content and debt commitments
- Known contractual obligations totaled $45.435B, including $25.107B of content obligations and $17.584B of debt obligations. Payments due within 12 months total $15.595B, and unknown future-title obligations could be approximately $1B to $4B over the next three years.
- FX and floating-rate exposure
- Foreign-currency revenue accounted for 57% of first-half revenue. A 1% increase in SOFR would raise annual interest expense by approximately $14M on $1.4B of swapped debt, while a 10% adverse FX move would reduce pre-tax income by approximately $55M after hedges.
- No risk-factor updates disclosed
- Item 1A states there were no material changes from risk factors in the 2025 Form 10-K; consequently, the filing identifies 0 new or revised risk-factor disclosures.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.8
- Gross margin
- 52.0%
- Operating margin
- 33.4%
- Segment
- UCAN: $5.432B revenue, +10% YoY
- Segment
- EMEA: $4.034B revenue, +14% YoY
- Segment
- LATAM: $1.584B revenue, +21% YoY
- Segment
- APAC: $1.510B revenue, +16% YoY
What they said about what is next.
The 10-Q provides no explicit quantitative revenue or EPS outlook. Management states that cash flows from operations, available funds and financing access are expected to be sufficient for cash needs over the next 12 months and beyond.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 17, 2026
- Netflix reported Q1 revenue of $12,249,757,000, up $1,706,956,000 (≈16.2%) versus Q1 2025, with gross margin expanding to 51.9% and operating margin to 32.3%. Net income rose to $5,282,791,000 and diluted EPS was $1.23;…
- 10-K · January 23, 2026
- Netflix’s 2025 results show continued topline expansion with quarterly revenues peaking at $12.05B in 2025Q4 and full-year revenue of $45.18B (sum of quarters). Free cash flow improved materially to $9.46B in 2025 (sum…
- 10-Q · October 22, 2025
- Netflix reported Q3 revenue of $11,510,307 (in thousands) and diluted EPS of $5.87 for the three months ended September 30, 2025. Revenue, operating income and net income all rose vs. the year-ago quarter, but gross and…
- 10-Q · July 18, 2025
- Netflix reported strong Q2 results with revenue of $11,079,166 (in thousands), up versus both the prior quarter and prior year, and materially higher margins and EPS. Operating cash flow and free cash flow remained…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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