10-QPeriod: Q1 FY2026

NETFLIX INC Quarterly Report for Q1 Ended Mar 31, 2026

Filed April 17, 2026For Securities:NFLX

Summary

Netflix, Inc. reported strong financial performance for the first quarter of 2026, with revenues increasing by 16% year-over-year to $12.25 billion. This growth was driven by increased memberships, price adjustments, and rising advertising revenue across all major regions, particularly in Asia-Pacific and EMEA. The company achieved a significant boost in net income, up 83% to $5.28 billion, largely attributable to a substantial $2.8 billion termination fee received in connection with the termination of an agreement with Warner Bros. Discovery (WBD). This one-time event significantly impacted profitability, alongside an 18% increase in operating income. Operationally, the company saw its operating margin improve slightly to 32.3%, despite faster growth in operating expenses (cost of revenues, sales & marketing, technology & development, and general & administrative) compared to revenue growth. Content amortization increased by $395 million, and sales and marketing expenses rose by 22%, driven by increased marketing spend and headcount for advertising sales. The company maintained a robust liquidity position, with cash, cash equivalents, restricted cash, and short-term investments growing by 36% to $12.3 billion. Netflix also continued its capital return program, repurchasing $1.3 billion of common stock in the quarter, with $6.8 billion remaining under its authorized repurchase program.

Financial Highlights

51 data points
Beta

Revenue

$12.25B

51.9% Gross Margin

Net Income

$5.28B

43.1% Net Margin

EPS (Diluted)

$1.23

Total Assets

$61.02B

Cash & Equivalents

$12.27B

Free Cash Flow

$5.09B

Financial Statements
Beta
Revenue$12.25B
Cost of Revenue$5.89B
Gross Profit$6.36B
R&D Expenses$959.70M
Operating Income$3.96B
Net Income$5.28B
EPS (Basic)$1.25
EPS (Diluted)$1.23
Shares Outstanding (Basic)4.22B
Shares Outstanding (Diluted)4.30B

Key Highlights

  • 1Revenue increased 16% year-over-year to $12.25 billion, driven by membership growth, price increases, and advertising revenue.
  • 2Net income surged 83% to $5.28 billion, significantly boosted by a $2.8 billion termination fee from the WBD agreement.
  • 3Operating income grew 18% to $3.96 billion, with operating margin improving to 32.3%.
  • 4Constant currency revenue growth was 14%, indicating underlying business strength despite foreign exchange impacts.
  • 5Cash, cash equivalents, and short-term investments increased by 36% to $12.3 billion, reflecting strong operating cash flow and the WBD termination fee.
  • 6The company repurchased $1.3 billion of common stock during the quarter, underscoring its commitment to returning capital to shareholders.
  • 7Content obligations, a significant future commitment, stand at $24.14 billion, with $11.78 billion due within the next 12 months.

Frequently Asked Questions

The primary driver of the substantial 83% increase in net income to $5.28 billion was a one-time $2.8 billion termination fee received in connection with the termination of Netflix's agreement with Warner Bros. Discovery (WBD) concerning its streaming and studio businesses.

While reported revenues grew 16%, constant currency revenue growth was 14%. This indicates that foreign currency fluctuations had a modest negative impact, as a weakening of foreign currencies relative to the U.S. dollar would typically decrease reported foreign revenue when translated back to USD. The company also utilizes hedging strategies to mitigate these fluctuations.

Netflix has an active share repurchase program. In the first quarter of 2026, the company repurchased $1.3 billion of its common stock. As of March 31, 2026, there was $6.8 billion remaining under its authorized repurchase programs, indicating a continued commitment to returning capital to shareholders.

Netflix faces significant material cash requirements, primarily related to content, debt, and lease obligations. As of March 31, 2026, content obligations totaled $24.14 billion (with $11.78 billion due in the next 12 months), debt obligations amounted to $17.93 billion (with $1.69 billion due within 12 months), and operating lease obligations were $2.77 billion (with $486 million due within 12 months). The company also anticipates significant, though not yet quantified, obligations for future content titles.