Netflix (NFLX) Q1 2026 Earnings

Netflix Shares fell 9% in extended trading Thursday after the streaming giant released its first-quarter earnings report and announced a major change in management.

The company beat Wall Street expectations for revenue, reporting $12.25 billion for the first quarter, higher than the $12.18 billion expected by analysts polled by LSEG and 16% higher than the $10.54 billion it reported in the same quarter last year.

Thursday saw the release of the company’s first earnings report since withdrawing from its proposed acquisition of… Warner Bros. Discovery Broadcast and film originals in February.

Netflix reported net income of $5.28 billion, or $1.23 per share, nearly double the $2.89 billion, or 66 cents per share, it reported during the same period last year. The company cited higher-than-expected operating income and the $2.8 billion severance fee it received after the WBD deal fell through.

Reported earnings per share were not comparable to analysts’ expectations of 76 cents due to the impact of termination fees.

However, Netflix maintained its previous full-year guidance for revenue between $50.7 billion and $51.7 billion.

The company said it expects second-quarter revenue to increase by 13% and reiterated its previous warning that content spending will be weighted in the first half of the year due to the timing of title launches. Netflix added that it expects the second quarter to see the highest year-over-year growth rate for content fires in 2026, before declining in the second half of the year.

Although the proposed deal for WBD assets has been dropped, this potential deal will still impact Netflix’s finances this year. Netflix Chief Financial Officer Spencer Newman said Thursday that while some initially planned costs related to the deal will not “fully materialize,” some costs that were scheduled to be moved to 2027 will now be moved to 2026. He added that the company “remains in the ballpark … of the total we would have expected for total M&A-related expenses in the year.”

On Thursday, Netflix also announced that Reed Hastings, Netflix co-founder and current chairman, will leave the board in June when his term ends.

Hastings steps down as CEO in 2023. Greg Peters, who served as chief operating officer, will take over as co-CEO alongside Ted Sarandos.

“Netflix has changed my life in so many ways, and my favorite memory of all was January 2016, when we enabled almost the entire planet to enjoy our services,” Hastings said in a shareholder letter sent by the company on Thursday. Hastings will now focus on philanthropy and other activities, according to the letter.

One analyst on Thursday questioned whether Hastings’ departure was related to the proposed WBD deal.

Sarandos shot that down, adding that Hastings was “a big advocate for this deal. He championed it with the board. The board was unanimous.”

Netflix confirmed Thursday that it is on track to reach $3 billion in ad revenue in 2026, which would represent a doubling year over year, with this latest revenue streak showing growth.

The company first introduced its cheaper, ad-supported tier in 2022, and has since emphasized this avenue to expand revenue — even as it raises subscription prices and cracks down on password sharing in an attempt to boost subscriber numbers.

In January, Netflix said it had reached 325 million global paid subscribers. Netflix no longer provides quarterly updates to its membership numbers.

“Slightly higher than planned subscription revenue” helped drive an 18% jump in operating income during the first quarter, it said Thursday.

Netflix announced last month that it would raise prices again across all of its streaming plans.

“The recent price changes have gone well, reflecting the strong value we provide to members,” the company said in a shareholder letter on Thursday.

Co-CEO Peters said on Thursday’s call that a price increase was always part of the company’s plan for this year. While Peters said the rollout of price changes is still ongoing, everything so far is consistent with what Netflix has previously seen as a result of price changes — like members dropping memberships or switching to cheaper price plans.

“We’re looking to deliver more and more value to our members…invest the revenue that we’ve successfully generated, and sometimes, as we’ve added more value, we ask our members to contribute more so we can parlay that into delivering more entertainment value to them,” Peters said.

Its expansion into video audio streaming, as well as its offering of the World Series Baseball Classic, helped its “core internal engagement metric of quality” reach a new record in the first quarter, the company said Thursday.

Live sports have become a big part of Netflix’s platform, and co-CEO Sarandos said Thursday that the company is currently in discussions with the NFL to “expand the relationship.” Although Netflix doesn’t have a typical NFL package, it has been streaming NFL games on Christmas Day for the past few years.

Correction: This story has been updated after LSEG corrected its assessment of Netflix’s earnings. Reported EPS cannot be compared to analyst estimates due to the impact of WBD’s termination fees.