A global streaming entertainment service offering TV series, films, games, and live programming through monthly memberships. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it began as a DVD-by-mail rental business before growing into one of the world's largest streaming platforms. The name came from a brainstorm mixing words for "internet" and "movies" — net and flix.
Netflix Q2 FY2026 revenue rose 16.2% to $12.2B with net income up 82.8% on a $2.8B termination fee
more than doubled from the WBD deal breakup fee. rose 16.2% to $12.2B and rose 86.4% to $1.23 as a $2.8B lifted results, while held at 32.3% and rose 91.4% to $5.1B. The company sits with $12.3B cash and no pending acquisition, but is climbing.
Key takeaways
rose 82.8% to $5,282.8M, driven primarily by a $2.8B from the canceled Warner Bros. Discovery acquisition plus a $610M increase in .
rose 16.2% to $12.2B on membership growth, price increases, and higher advertising revenue; constant-currency growth was 14%.
expanded 0.6 points to 32.3% as growth outpaced cost of revenues, which rose 12% to $5.9B on a $395M increase.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 revenue rose 13% to $12.6B driven by membership growth, price increases, and higher ad revenue; operating margin dipped to 33.4%.
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Total grew 13% to $12.56B, with growth of 12%; all regions expanded, led by LATAM (+21% reported, +16% constant currency).
rose 91.4% to $5,094.1M and rose 89.7% to $5,290.2M, with cash and equivalents up 70.2% to $12.3B including the .
The company spent $1.3B on and reported of $24.1B with $11.8B due within 12 months.
rose 1.9 points to 51.9%, matching the prior Q2 2025 high, while 58% of was in non-USD currencies hedged via forwards and .
What changed
Q1 2026 flagged the $619M Brazil non-income tax assessment carried from Q3 2025; the Q2 filing does not report its resolution, and the rose to 16% from 14% in Q1.
Q1 2026 flagged Q2 against the $395M increase and $11.8B obligations due within 12 months; rose to $24.1B with $11.8B due, and increase was $395M in Q1 with Q2 not separately stated in the table.
Q1 2026 flagged pace after $1.3B spent versus $9.1B in 2025; the company spent $1.3B in Q1 and the Q2 filing does not add a quarterly figure beyond that.
The FY2025 10-K flagged the WBD acquisition closing and $59B facility drawdown; Q1 2026 reports the deal canceled with a $2.8B received, removing that debt risk.
of 32.3% in Q1 2026 compares to 34.1% in Q2 2025 and 28.2% in Q3 2025, sitting between the series high and the Brazil-accrual low.
What to watch
Q3 FY2026 against the $395M Q1 increase as stand at $24.1B with $11.8B due within 12 months.
Resolution of the $619M Brazil non-income tax assessment and its effect on the , now 16% versus 14% in Q1.
pace after $1.3B in Q1 versus $9.1B across 2025.
Constant-currency trend as 58% of revenue sits in non-USD currencies with hedging in place.
increased 11% to $4.19B, but declined 0.7pp to 33.4% as technology/development (+22%) and sales/marketing (+16%) expenses outpaced growth.
Cost of revenues rose 13% to $6.04B, driven by a $479M increase in ; as a percentage of , it remained flat at 48%.
grew 9% to $3.40B, aided by higher but partially offset by a $161M increase in income tax provision; rose to 16% from 14%.
for the six months reached $7.03B, boosted by a $2.8B termination fee from the WBD deal; the company repurchased $5.9B in stock and held $9.13B in cash and equivalents.
Content obligations totaled $25.1B, with $11.9B due in the next 12 months; the company expects significant future content investments, particularly in original programming.
Quantitative and Qualitative Disclosures About Market Risk
Netflix faces interest rate risk from $14.4B fixed-rate debt and $1.4B in swaps, plus significant foreign currency exposure from 57% non-USD revenue.
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As of June 30, 2026, Netflix had $14.4 billion in fixed-rate unsecured debt across twelve tranches maturing between 2026 and 2054, with fair value sensitive to interest rate and currency movements.
The company uses interest rate swaps on $1.4 billion notional to convert fixed-rate debt to floating, exposing it to SOFR variability; a 1% SOFR increase would raise annual by about $14 million.
Foreign currency risk is substantial: 57% of and 30% of operating expenses for the six months ended June 30, 2026 were in non-USD currencies, primarily the Euro, British pound, Brazilian real, Mexican peso, Canadian dollar, and Argentine peso.
would have been approximately $535 million lower for the six months ended June 30, 2026 than reported revenue of $24,810 million, indicating a negative translation impact from foreign exchange.
Netflix hedges forecasted with foreign exchange forward contracts designated as ; a 10% USD weakening would lower AOCI by about $2,490 million as of June 30, 2026, offsetting favorable revenue changes.
The company also hedges content licensing/production costs with (10% USD strengthening would lower AOCI by $311 million) and uses via Euro-denominated Senior Notes to protect foreign subsidiaries.
A 10% adverse exchange rate shift on monetary assets/liabilities would reduce pre-tax income by approximately $55 million as of June 30, 2026, after considering offsetting hedges.
The information set forth under Note 9 Commitments and Contingencies in the notes to the consolidated financial statements under the caption “Legal Proceedings” is incorporated herein by reference. 38 Table of Contents
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The information set forth under Note 9 Commitments and Contingencies in the notes to the consolidated financial statements under the caption “Legal Proceedings” is incorporated herein by reference.
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There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
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There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.