• We delivered our Q3 forecast and expect to deliver on our full year 2026
• We delivered our Q3 forecast and expect to deliver on our full year 2026 guidance.
◦ Q3 revenue grew 12% year over year (11% on a F/X neutral basis 1 ) to $12.9B, consistent with our forecast. Operating margin was 34.6%, up from 28.2% in Q3’25 and ahead of our forecast primarily due to the timing of expenses.
◦ For 2026, we expect revenue of $51.1B (+13% year over year) and an operating margin of 31.5%.
• The core of our service is delivering differentiated, exclusive, professionally produced series, films and live events. Q3 highlights include The Last House , Facing El Chapo , Death of the Pastor’s Wife , our NFL Game from Melbourne, and a very successful slate in India.
• We’ll continue to expand our entertainment offering through licensing and new ways to bring more third-party content to our service, like our TF1 partnership in France. Our audience, which is approaching one billion people, and our best- in-class product capabilities, make us great partners for studios, networks and creative talent.
• Member response to our 2026 price changes is consistent with prior adjustments and our expectations, an indicator that our engagement - which encompasses quantity, quality and variety of viewing - remains healthy and that we continue to deliver strong value to members.
• We’ll close out 2026 with an exciting slate including The Further Mis- Adventures of Cliff Booth , limited series The Murder of JonBenét Ramsey , starring Melissa McCarthy and Clive Owen, new seasons of The Diplomat , Nobody Wants This and Lupin , the series finale of Emily in Paris , three NFL games on Thanksgiving Eve and Christmas Day, and the Tyson Fury vs. Anthony Joshua fight.
1 Excluding the year over year effect of foreign exchange rate movements and the impact of hedging gains/losses realized as revenues. Assumes foreign exchange rates remained constant with foreign exchange rates from each of the corresponding months of the prior-year period.
Revenue in Q3 grew 12% year over year (+11% on a foreign exchange (F/X) neutral basis), and was in-line with our forecast. In Q3, revenue growth was driven primarily by subscription revenue, reflecting increases in memberships and pricing, growth in advertising revenue and a favorable impact from F/X rates, net of hedging. Membership growth benefited from continued, healthy retention in every region; globally and in the US, churn improved year-over-year and was better than forecast.
Q3’26 operating income totaled $4.5B (+37% year over year) and operating margin of 34.6% was up versus 28.2% in Q3’25. Both Q3 operating income and margin were ahead of forecast due primarily to the timing of expenses and the slight upside in revenue. As a result, diluted EPS for the quarter amounted to $0.87 vs. $0.59 in Q3’25 (+49% year over year).
As a reminder, the guidance we provide is our actual internal forecast at the time we report and we strive for accuracy. Our primary financial metrics are revenue for growth and operating margin for profitability. Our goal is to sustain healthy revenue growth, expand operating profit and margin, and deliver growing free cash flow.
In Q4, we expect revenue of $13.4 billion, which represents year over year growth of 12% (or 11% F/X neutral) driven by growth in memberships, pricing, and ad revenue. We project a Q4 operating margin of 26.0% which includes ~120 basis points negative impact associated with our recently announced headcount reductions, and compares with 24.5% in the year ago quarter. These organizational changes enable us to continue to aggressively invest in high impact areas to improve our service, and drive growth and innovation.
Our guidance for Q4 means that for the full year 2026 we expect revenue of $51.1B, or growth of 13% (+12% on a F/X neutral basis). This is 0.2% below the mid-point of our prior 2026 revenue forecast range - while subscription revenue growth has outperformed our expectations, we currently expect 2026 ad revenue of ~$2.7B vs. approximately $3B previously (due to slightly slower than expected rollout of some ad product capabilities). We anticipate an operating margin of 31.5% for 2026 (31.4% based on F/X rates as of January 1, 2026) vs. 29.5% in 2025. Our updated 2026 margin guidance includes ~30 basis points negative impact associated with our Q4 headcount reductions. Our forecast implies annual operating income growth of 20%+ for 2026.
Our mission is to entertain the world while building a wildly successful business. Our strategy is simple: invest in differentiated, exclusive, professionally-produced entertainment like Netflix originals that spark conversation, bring in more members, and make us a “must-have” service. We pair these originals, which anchor our service, with a broad, complementary selection of third-party programming, a great discovery experience, and leading global distribution. Together, this fuels engagement (quality, quantity, and variety of viewing) and, in turn, revenue and profit. The core of our service is streaming TV, film and live events, monetized via subscription and advertising. It represents the vast majority of our spending and nearly all of our revenue, and is the engine of our business for which we see a long runway of growth.
To successfully execute this strategy, we focus on three priorities: 1) delivering more entertainment value to our members, 2) leveraging technology to improve all aspects of our service, and 3) improving our monetization. These priorities work in concert to drive acquisition and retention, create member value that lets us occasionally raise prices, and increase advertiser demand. We reinvest returns in our business so we can win more moments of truth and fund the next wave of entertainment. Done well,
this makes our service the one where members go first to look for entertainment and the last service they would cancel, with industry-leading retention and continued member and ARM 2 growth.
With intense competition and an explosion of content competing for consumer attention, strategic clarity and excellent execution are critical. In Q3, we delivered well across all three priorities, but we see room to do even better with focused, continuous improvement.
In Q3, we had a variety of hits from around the world that members loved. Plastic Beauty * (12M views 3 ) is on track to be our most-viewed series ever in Japan; The Secret Woman * (47M) is trending to be our most-viewed Danish title ever; Facing El Chapo * (58M) is pacing to be our second most-viewed Mexican title globally; and The Perfect Lie * (17M) is on track to become our most- viewed series out of the Netherlands. Non-English viewing has grown from under 10% of total viewing a decade ago to more than a third today. These hits reflect our decade-long commitment to creating content around the world that resonates locally, and has the potential to travel globally.
: Death of the Pastor's Wife* (45M), The Idaho Murders: College Nightmare* (38M), My Life With The Walter Boys S3* (29M), Little House on the Prairie (29M), The Last House* (91M) and Why Did I Get Married Again* (36M)
: The Gentlemen S2* (33M) and A Toxic Love Story* (43M) from the UK, Elite Force* (25M) from France, Blood Sacrifice* (23M) from Sweden
: My Daughter's Father* (23M) from Mexico and Nando Between Two Worlds - A Sintonia Film * (18M) from Brazil
Complementing our Netflix originals, we continue to expand our entertainment offering through licensing and bringing more third-party content to our service in new ways. Our broad distribution (we’re serving an audience approaching one billion people) and industry leading monetization make us great partners for studios, networks and creative talent. For example, we partnered with Take-Two to unveil a sneak peek of the highly anticipated Grand Theft Auto VI 5 in August. And we recently secured a new licensing deal with Disney 6 which brings a variety of current and library series and films to our service for our members to enjoy, including all five Ice Age films which reached our global weekly Top 10 list and are building consumer awareness in advance of Disney’s theatrical release of Ice Age: Boiling Point in February 2027.
3 A view is defined as hours viewed divided by runtime for each title. Views for a title are based on the first 91 days since the release of each episode (less than 91 days denoted with an asterisk and data is from launch date through October 18, 2026). We publish our top titles based on views each week at Netflix Top 10 4 .
5 https://www.ign.com/articles/gta-6-just-blew-me-away-im-so-glad-i-avoided-the- leaks
6 https://variety.com/2026/tv/news/disney-licenses-titles-netflix-ice-age- movies-will-trent-percy-jackson-and-the-olympians-felicity-1236897256/
Our investment in our product capabilities, including our new TV UI, enables us to seamlessly integrate and merchandise more third party content to Netflix members. This summer we launched our partnership with TF1, a leading French broadcaster. This partnership enables us to provide our French members with even more highly local series, film, news and sports programming, all within a frictionless choosing and viewing experience that complements our French slate and global programming. We’re pleased with the TF1 partnership and the early metrics indicate that it’s generating incremental viewing in France.
We also continue to invest in our ad tech stack (Netflix Ads Suite). In Q3, we extended programmatic access through globally-available CTV marketplace deals, and secured new partnerships with MercadoLibre in LATAM and AdForm in EMEA. We are also expanding capabilities to in-DSP measurement including reach, frequency, and attribution. Also, we will introduce our advertising tier to 15 new countries in 2027. The first tranche of new market launches will happen in March 2027: nine countries in EMEA 7 , Colombia, Peru and New Zealand (a new addition from our previous announcement).
We know there’s some investor concern about our view hours growth. Member response to our 2026 price increases is consistent with prior price changes and our expectations, an indicator that our engagement - which encompasses quantity, quality and variety of viewing - remains healthy and that we continue to deliver strong value to members. But we do seek to accelerate growth in view hours as well, and we’re confident we’ll do that by relentlessly focusing and executing against the aforementioned strategy.
That confidence comes from seeing strong results when we execute well on our core strategy – our business in India in Q3 is an example. We delivered a great slate led by Lock Upp , our first daily reality series, which drove the most viewing of any title on Netflix in India ever 8 , the new scripted series Musafir Cafe * (9M) and the hit series Operation Safed Sagar * (11M). As a result, view hours in India grew 24% year over year, while view hours per member grew low-to-mid single digits in the quarter. Combined with our first transaction-based loyalty bundle with Flipkart, we achieved our largest quarter ever of paid net additions in India and grew Q3 revenue in India ~18% year over year on a F/X neutral basis.
• We’ll have new series including, from the US, the critically acclaimed East of Eden and The Diplomat S4 , The Body , The Murder of JonBenét Ramsey , The Hunting Wives S2, and the sixth and final season of Emily in Paris , as well as Below from Canada, Pride and Prejudice from the UK, Lupin: Part 4 from France, and The Empress S3 from Germany.
• Our film releases feature The Further Mis-Adventures of Cliff Booth , starring Brad Pitt, directed by David Fincher, and written by Quentin Tarantino; Animals , starring Ben Affleck and Kerry Washington; Bad Day , starring Cameron Diaz; Steps , our new animated film featuring Ali Wong, Stephanie Hsu, and Amanda Seyfried; animated film Ray Gunn , starring Scarlett Johansson and Sam Rockwell and directed by Brad Bird; and Spain’s La Bola Negra and South Korea’s Possible Love , both of which have secured official selections as their countries’ submissions for Best International Feature Film category at the Academy Awards.
• And we have our biggest quarterly live slate to date with the NFL’s inaugural Thanksgiving Eve game (with a halftime performance by U2) and a Christmas Day doubleheader, plus the Tyson Fury vs. Anthony Joshua boxing match.
Net cash generated from operating activities was $3.2B vs. $2.8B in the prior year period. Free cash flow (FCF) 9 in Q3’26 totaled $2.9B vs. $2.7B in Q3’25. We have adjusted our expected 2026 FCF forecast to approximately $12.0B (vs. our prior projection of $12.5B) due primarily to the expected closing of a real estate transaction in Q4. We continue to expect an annual cash content spend to amortization ratio of ~1.1x.
Our capital allocation approach is unchanged. We prioritize reinvestment in the business, both organically and through selective M&A, while maintaining a healthy balance sheet and ample liquidity, then returning excess cash to shareholders via repurchases. In Q3, we bought back 63.9 million shares for $4.8B, our largest quarter ever of stock repurchases, and we currently have $22.3B of capacity left in our remaining authorizations. We ended Q3 with gross debt of $15.3B and cash and cash equivalents of $8.2B. Gross debt was ~$1B higher than the end of Q2, reflecting a $1B bond deal we completed during the quarter in order to fund our upcoming $1B debt maturity in Q4.
9 Defined as cash provided by (used in) operating activities less purchases of property and equipment.
F/X Neutral revenue growth excludes the year over year effect of foreign exchange rate movements and the impact of hedging gains/losses realized as revenues. Assumes foreign exchange rates remained constant with foreign exchange rates from each of the corresponding months of the prior-year period.
Our live video interview will be on youtube/netflixir 11 at 1:45pm PT today. Co- CEOs Greg Peters and Ted Sarandos, CFO Spence Neumann and VP of Finance & Capital Markets Spencer Wang, will all be on the video to answer questions submitted by sellside analysts.
IR Contact: Corporate Communications Contact: Lowell Singer Kelly Pakula VP, Investor Relations VP, Global Corporate Communications 818 434-2141 415 254-4462
This shareholder letter and its attachments include reference to the non-GAAP financial measures of F/X neutral revenue and adjusted operating profit and margin, free cash flow and net debt. Management believes that free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make strategic acquisitions and investments and for certain other activities like stock repurchases. Management believes that F/X neutral revenue and adjusted operating profit and margin allow investors to compare our projected results to our actual results absent year-over-year and intra-year currency fluctuations. Management believes net debt is a useful measure of the company's liquidity, capital structure, and leverage. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, net income, operating income (profit), operating margin, diluted earnings per share and net cash provided by (used in) operating activities, or other financial measures prepared in accordance with GAAP. Reconciliation to the GAAP equivalent of these non-GAAP measures are contained in tabular form on the attached unaudited financial statements. We are not able to reconcile forward-looking non-GAAP financial measures because we are unable to predict without unreasonable effort the exact amount or timing of the reconciling items, including property and equipment, and the impact of changes in currency exchange rates. The variability of these items could have a significant impact on our future GAAP financial results.
This shareholder letter contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding our expected results for the fiscal quarter and fiscal year ending December 31, 2026; priorities for 2026; adoption and growth of streaming entertainment; growth strategy and outlook; market opportunity; competitive landscape and position; expectations regarding series, films, games, live programming and video podcasts and title performance; partnerships, licensing and third-party content; engagement and view hours; slate strength; pricing and plans strategy; ad-supported tier and its prospects, including new market launches; advertising, including our ad-tech platform; product strategy; impact of organizational changes, including headcount reductions; impact of foreign exchange rates and hedging activities; stock repurchases; advertising revenue; revenue and revenue growth; membership growth, retention and ARM growth; operating income, operating margin, net income, earnings per share, capital allocation, debt repayment, closing of a real estate transaction, free cash flow, content spend and content amortization. The forward-looking statements in this letter are subject to risks and uncertainties that could cause actual results and events to differ, including, without limitation: our ability to attract new members and engage and retain existing members; our ability to compete effectively, including for consumer engagement with different modes of entertainment; failing to improve the variety and quality of entertainment offerings; adoption of the ads plan and paid sharing; maintenance and expansion of device platforms for streaming; fluctuations in consumer usage of our service; service disruptions; production risks; macroeconomic conditions; content slate and timing of content releases. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in our filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K, filed with the SEC on January 23, 2026. The Company provides internal forecast numbers. Investors should anticipate that actual performance will vary from these forecast numbers based on risks and uncertainties discussed above and in our Annual Report on Form 10-K. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this shareholder letter.
* Share and per share amounts have been retroactively adjusted to reflect the ten-for-one forward stock split which was effected on November 14, 2025.
* Total streaming content obligations are comprised of content liabilities included in "Current content liabilities" and "Non-current content liabilities" on the Consolidated Balance Sheets and obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for recognition.
The tables below provide a non-GAAP reconciliation of reported and constant currency revenue growth by region for the quarters ended September 30, 2025, December 31, 2025, March 31, 2026, June 30, 2026 and September 30, 2026. The regions presented in the tables below include United States and Canada ("UCAN"), Europe, Middle East, and Africa ("EMEA"), Latin America ("LATAM"), and Asia- Pacific ("APAC").
To provide additional transparency around our operating margin, we disclose each quarter our year-to-date (YTD) operating margin based on F/X rates at the beginning of each year. This will allow investors to see how our operating margin is tracking against our target (which was set in January of 2026 based on F/X rates at that time), absent intra-year fluctuations in F/X.
* Based on F/X rates at the beginning of each year including our F/X hedges at that time. Note: Excludes F/X impact on content amortization, as titles are amortized at a historical blended rate based on timing of spend. YTD 2026 through September 30, 2026.
Full text with the tables
Exhibit 99.1
October 20, 2026
Fellow shareholders,
• We delivered our Q3 forecast and expect to deliver on our full year 2026
guidance.
◦ Q3 revenue grew 12% year over year (11% on a F/X neutral basis 1 ) to $12.9B,
consistent with our forecast. Operating margin was 34.6%, up from 28.2% in Q3’25
and ahead of our forecast primarily due to the timing of expenses.
◦ For 2026, we expect revenue of $51.1B (+13% year over year) and an operating
margin of 31.5%.
• The core of our service is delivering differentiated, exclusive,
professionally produced series, films and live events. Q3 highlights include The
Last House , Facing El Chapo , Death of the Pastor’s Wife , our NFL Game from
Melbourne, and a very successful slate in India.
• We’ll continue to expand our entertainment offering through licensing and new
ways to bring more third-party content to our service, like our TF1 partnership
in France. Our audience, which is approaching one billion people, and our best-
in-class product capabilities, make us great partners for studios, networks and
creative talent.
• Member response to our 2026 price changes is consistent with prior adjustments
and our expectations, an indicator that our engagement - which encompasses
quantity, quality and variety of viewing - remains healthy and that we continue
to deliver strong value to members.
• We’ll close out 2026 with an exciting slate including The Further Mis-
Adventures of Cliff Booth , limited series The Murder of JonBenét Ramsey ,
starring Melissa McCarthy and Clive Owen, new seasons of The Diplomat , Nobody
Wants This and Lupin , the series finale of Emily in Paris , three NFL games on
Thanksgiving Eve and Christmas Day, and the Tyson Fury vs. Anthony Joshua fight.
Our summary results, and forecast for Q4, are below.
(in
mi…
ex…
per
sh… Q4…
da… Q3'… Q4… Q1'… Q2… Q3'… Fo…
──────────────────────────────────────────────────────────────────────────────
R… $ 11,… $ 12… $ 12,… $ 12… $ 12,… $ 13…
Y…
% 17.2 % 17… % 16.2 % 13… % 11.8 % 11… %
G…
O… $ 3,2… $ 2,… $ 3,9… $ 4,… $ 4,4… $ 3,…
I…
O… 28.2 % 24… % 32.3 % 33… % 34.6 % 26… %
M…
N… $ 2,5… $ 2,… $ 5,2… $ 3,… $ 3,6… $ 2,…
I…
D… $ 0.59 $ 0.… $ 1.23 $ 0.… $ 0.87 $ 0.…
E…
N…
c…
p… $ 2,8… $ 2,… $ 5,2… $ 1,… $ 3,1…
by
o…
a…
F…
C… $ 2,6… $ 1,… $ 5,0… $ 1,… $ 2,8…
F…
S… 4,3… 4,… 4,2… 4,… 4,1…
(…
__________________________________
1 Excluding the year over year effect of foreign exchange rate movements and the
impact of hedging gains/losses realized as revenues. Assumes foreign exchange
rates remained constant with foreign exchange rates from each of the
corresponding months of the prior-year period.
1
Q3 Results and Forecast
Revenue in Q3 grew 12% year over year (+11% on a foreign exchange (F/X) neutral
basis), and was in-line with our forecast. In Q3, revenue growth was driven
primarily by subscription revenue, reflecting increases in memberships and
pricing, growth in advertising revenue and a favorable impact from F/X rates,
net of hedging. Membership growth benefited from continued, healthy retention in
every region; globally and in the US, churn improved year-over-year and was
better than forecast.
Q3’26 operating income totaled $4.5B (+37% year over year) and operating margin
of 34.6% was up versus 28.2% in Q3’25. Both Q3 operating income and margin were
ahead of forecast due primarily to the timing of expenses and the slight upside
in revenue. As a result, diluted EPS for the quarter amounted to $0.87 vs. $0.59
in Q3’25 (+49% year over year).
As a reminder, the guidance we provide is our actual internal forecast at the
time we report and we strive for accuracy. Our primary financial metrics are
revenue for growth and operating margin for profitability. Our goal is to
sustain healthy revenue growth, expand operating profit and margin, and deliver
growing free cash flow.
In Q4, we expect revenue of $13.4 billion, which represents year over year
growth of 12% (or 11% F/X neutral) driven by growth in memberships, pricing, and
ad revenue. We project a Q4 operating margin of 26.0% which includes ~120 basis
points negative impact associated with our recently announced headcount
reductions, and compares with 24.5% in the year ago quarter. These
organizational changes enable us to continue to aggressively invest in high
impact areas to improve our service, and drive growth and innovation.
Our guidance for Q4 means that for the full year 2026 we expect revenue of
$51.1B, or growth of 13% (+12% on a F/X neutral basis). This is 0.2% below the
mid-point of our prior 2026 revenue forecast range - while subscription revenue
growth has outperformed our expectations, we currently expect 2026 ad revenue of
~$2.7B vs. approximately $3B previously (due to slightly slower than expected
rollout of some ad product capabilities). We anticipate an operating margin of
31.5% for 2026 (31.4% based on F/X rates as of January 1, 2026) vs. 29.5% in
2025. Our updated 2026 margin guidance includes ~30 basis points negative impact
associated with our Q4 headcount reductions. Our forecast implies annual
operating income growth of 20%+ for 2026.
Our Focus
Our mission is to entertain the world while building a wildly successful
business. Our strategy is simple: invest in differentiated, exclusive,
professionally-produced entertainment like Netflix originals that spark
conversation, bring in more members, and make us a “must-have” service. We pair
these originals, which anchor our service, with a broad, complementary selection
of third-party programming, a great discovery experience, and leading global
distribution. Together, this fuels engagement (quality, quantity, and variety of
viewing) and, in turn, revenue and profit. The core of our service is streaming
TV, film and live events, monetized via subscription and advertising. It
represents the vast majority of our spending and nearly all of our revenue, and
is the engine of our business for which we see a long runway of growth.
To successfully execute this strategy, we focus on three priorities: 1)
delivering more entertainment value to our members, 2) leveraging technology to
improve all aspects of our service, and 3) improving our monetization. These
priorities work in concert to drive acquisition and retention, create member
value that lets us occasionally raise prices, and increase advertiser demand. We
reinvest returns in our business so we can win more moments of truth and fund
the next wave of entertainment. Done well,
2
this makes our service the one where members go first to look for entertainment
and the last service they would cancel, with industry-leading retention and
continued member and ARM 2 growth.
With intense competition and an explosion of content competing for consumer
attention, strategic clarity and excellent execution are critical. In Q3, we
delivered well across all three priorities, but we see room to do even better
with focused, continuous improvement.
In Q3, we had a variety of hits from around the world that members loved.
Plastic Beauty * (12M views 3 ) is on track to be our most-viewed series ever in
Japan; The Secret Woman * (47M) is trending to be our most-viewed Danish title
ever; Facing El Chapo * (58M) is pacing to be our second most-viewed Mexican
title globally; and The Perfect Lie * (17M) is on track to become our most-
viewed series out of the Netherlands. Non-English viewing has grown from under
10% of total viewing a decade ago to more than a third today. These hits reflect
our decade-long commitment to creating content around the world that resonates
locally, and has the potential to travel globally.
Other successful Q3 titles include:
•
UCAN
: Death of the Pastor's Wife* (45M), The Idaho Murders: College Nightmare*
(38M), My Life With The Walter Boys S3* (29M), Little House on the Prairie
(29M), The Last House* (91M) and Why Did I Get Married Again* (36M)
•
EMEA
: The Gentlemen S2* (33M) and A Toxic Love Story* (43M) from the UK, Elite
Force* (25M) from France, Blood Sacrifice* (23M) from Sweden
•
LATAM
: My Daughter's Father* (23M) from Mexico and Nando Between Two Worlds - A
Sintonia Film * (18M) from Brazil
•
APAC
: The East Palace (21M) and Our Sticky Love* (22M) from Korea
Complementing our Netflix originals, we continue to expand our entertainment
offering through licensing and bringing more third-party content to our service
in new ways. Our broad distribution (we’re serving an audience approaching one
billion people) and industry leading monetization make us great partners for
studios, networks and creative talent. For example, we partnered with Take-Two
to unveil a sneak peek of the highly anticipated Grand Theft Auto VI 5 in
August. And we recently secured a new licensing deal with Disney 6 which brings
a variety of current and library series and films to our service for our members
to enjoy, including all five Ice Age films which reached our global weekly Top
10 list and are building consumer awareness in advance of Disney’s theatrical
release of Ice Age: Boiling Point in February 2027.
__________________________________
2 Average revenue per membership.
3 A view is defined as hours viewed divided by runtime for each title. Views for
a title are based on the first 91 days since the release of each episode (less
than 91 days denoted with an asterisk and data is from launch date through
October 18, 2026). We publish our top titles based on views each week at Netflix
Top 10 4 .
4 https://www.netflix.com/tudum/top10
5 https://www.ign.com/articles/gta-6-just-blew-me-away-im-so-glad-i-avoided-the-
leaks
6 https://variety.com/2026/tv/news/disney-licenses-titles-netflix-ice-age-
movies-will-trent-percy-jackson-and-the-olympians-felicity-1236897256/
3
Our investment in our product capabilities, including our new TV UI, enables us
to seamlessly integrate and merchandise more third party content to Netflix
members. This summer we launched our partnership with TF1, a leading French
broadcaster. This partnership enables us to provide our French members with even
more highly local series, film, news and sports programming, all within a
frictionless choosing and viewing experience that complements our French slate
and global programming. We’re pleased with the TF1 partnership and the early
metrics indicate that it’s generating incremental viewing in France.
We also continue to invest in our ad tech stack (Netflix Ads Suite). In Q3, we
extended programmatic access through globally-available CTV marketplace deals,
and secured new partnerships with MercadoLibre in LATAM and AdForm in EMEA. We
are also expanding capabilities to in-DSP measurement including reach,
frequency, and attribution. Also, we will introduce our advertising tier to 15
new countries in 2027. The first tranche of new market launches will happen in
March 2027: nine countries in EMEA 7 , Colombia, Peru and New Zealand (a new
addition from our previous announcement).
We know there’s some investor concern about our view hours growth. Member
response to our 2026 price increases is consistent with prior price changes and
our expectations, an indicator that our engagement - which encompasses quantity,
quality and variety of viewing - remains healthy and that we continue to deliver
strong value to members. But we do seek to accelerate growth in view hours as
well, and we’re confident we’ll do that by relentlessly focusing and executing
against the aforementioned strategy.
__________________________________
7 https://about.netflix.com/en/news/netflix-hosts-first-uk-upfront
4
That confidence comes from seeing strong results when we execute well on our
core strategy – our business in India in Q3 is an example. We delivered a great
slate led by Lock Upp , our first daily reality series, which drove the most
viewing of any title on Netflix in India ever 8 , the new scripted series
Musafir Cafe * (9M) and the hit series Operation Safed Sagar * (11M). As a
result, view hours in India grew 24% year over year, while view hours per member
grew low-to-mid single digits in the quarter. Combined with our first
transaction-based loyalty bundle with Flipkart, we achieved our largest quarter
ever of paid net additions in India and grew Q3 revenue in India ~18% year over
year on a F/X neutral basis.
To close out the year, our Q4 slate builds on the strategy outlined above:
• We’ll have new series including, from the US, the critically acclaimed East of
Eden and The Diplomat S4 , The Body , The Murder of JonBenét Ramsey , The
Hunting Wives S2, and the sixth and final season of Emily in Paris , as well as
Below from Canada, Pride and Prejudice from the UK, Lupin: Part 4 from France,
and The Empress S3 from Germany.
• Our film releases feature The Further Mis-Adventures of Cliff Booth , starring
Brad Pitt, directed by David Fincher, and written by Quentin Tarantino; Animals
, starring Ben Affleck and Kerry Washington; Bad Day , starring Cameron Diaz;
Steps , our new animated film featuring Ali Wong, Stephanie Hsu, and Amanda
Seyfried; animated film Ray Gunn , starring Scarlett Johansson and Sam Rockwell
and directed by Brad Bird; and Spain’s La Bola Negra and South Korea’s Possible
Love , both of which have secured official selections as their countries’
submissions for Best International Feature Film category at the Academy Awards.
• And we have our biggest quarterly live slate to date with the NFL’s inaugural
Thanksgiving Eve game (with a halftime performance by U2) and a Christmas Day
doubleheader, plus the Tyson Fury vs. Anthony Joshua boxing match.
Cash Flow and Capital Structure
Net cash generated from operating activities was $3.2B vs. $2.8B in the prior
year period. Free cash flow (FCF) 9 in Q3’26 totaled $2.9B vs. $2.7B in Q3’25.
We have adjusted our expected 2026 FCF forecast to approximately $12.0B (vs. our
prior projection of $12.5B) due primarily to the expected closing of a real
estate transaction in Q4. We continue to expect an annual cash content spend to
amortization ratio of ~1.1x.
Our capital allocation approach is unchanged. We prioritize reinvestment in the
business, both organically and through selective M&A, while maintaining a
healthy balance sheet and ample liquidity, then returning excess cash to
shareholders via repurchases. In Q3, we bought back 63.9 million shares for
$4.8B, our largest quarter ever of stock repurchases, and we currently have
$22.3B of capacity left in our remaining authorizations. We ended Q3 with gross
debt of $15.3B and cash and cash equivalents of $8.2B. Gross debt was ~$1B
higher than the end of Q2, reflecting a $1B bond deal we completed during the
quarter in order to fund our upcoming $1B debt maturity in Q4.
Reference
For quick reference, our past investor letters can be found here 10 .
__________________________________
8 Based on view hours in the first 91 days.
9 Defined as cash provided by (used in) operating activities less purchases of
property and equipment.
10 https://ir.netflix.net/financials/quarterly-earnings/default.aspx
5
Regional Breakdown
(in
mi…
UC… Q3'… Q4… Q1… Q2… Q3…
──────────────────────────────────────────────────────────────────────────────
Re… $ 5,0… $ 5,3… $ 5,2… $ 5,4… $ 5,6…
Y/Y
% 17 % 18 % 14 % 10 % 11 %
Gr…
F/X
Ne…
Y/Y 17 % 18 % 14 % 10 % 11 %
%
Gr…
EM…
Re… $ 3,6… $ 3,8… $ 3,9… $ 4,0… $ 4,1…
Y/Y
% 18 % 18 % 17 % 14 % 11 %
Gr…
F/X
Ne…
Y/Y 15 % 15 % 12 % 11 % 9 %
%
Gr…
LA…
Re… $ 1,3… $ 1,4… $ 1,4… $ 1,5… $ 1,6…
Y/Y
% 10 % 15 % 19 % 21 % 17 %
Gr…
F/X
Ne…
Y/Y 20 % 20 % 18 % 16 % 12 %
%
Gr…
AP…
Re… $ 1,3… $ 1,4… $ 1,5… $ 1,5… $ 1,5…
Y/Y
% 21 % 17 % 20 % 16 % 12 %
Gr…
F/X
Ne…
Y/Y 20 % 19 % 19 % 18 % 15 %
%
Gr…
F/X Neutral revenue growth excludes the year over year effect of foreign
exchange rate movements and the impact of hedging gains/losses realized as
revenues. Assumes foreign exchange rates remained constant with foreign exchange
rates from each of the corresponding months of the prior-year period.
6
October 20, 2026 Earnings Interview, 1:45pm PT
Our live video interview will be on youtube/netflixir 11 at 1:45pm PT today. Co-
CEOs Greg Peters and Ted Sarandos, CFO Spence Neumann and VP of Finance &
Capital Markets Spencer Wang, will all be on the video to answer questions
submitted by sellside analysts.
IR Contact: Corporate Communications Contact:
Lowell Singer Kelly Pakula
VP, Investor Relations VP, Global Corporate Communications
818 434-2141 415 254-4462
__________________________________
11 https://www.youtube.com/netflixir
7
Use of Non-GAAP Measures
This shareholder letter and its attachments include reference to the non-GAAP
financial measures of F/X neutral revenue and adjusted operating profit and
margin, free cash flow and net debt. Management believes that free cash flow is
an important liquidity metric because it measures, during a given period, the
amount of cash generated that is available to repay debt obligations, make
strategic acquisitions and investments and for certain other activities like
stock repurchases. Management believes that F/X neutral revenue and adjusted
operating profit and margin allow investors to compare our projected results to
our actual results absent year-over-year and intra-year currency fluctuations.
Management believes net debt is a useful measure of the company's liquidity,
capital structure, and leverage. However, these non-GAAP financial measures
should be considered in addition to, not as a substitute for or superior to, net
income, operating income (profit), operating margin, diluted earnings per share
and net cash provided by (used in) operating activities, or other financial
measures prepared in accordance with GAAP. Reconciliation to the GAAP equivalent
of these non-GAAP measures are contained in tabular form on the attached
unaudited financial statements. We are not able to reconcile forward-looking
non-GAAP financial measures because we are unable to predict without
unreasonable effort the exact amount or timing of the reconciling items,
including property and equipment, and the impact of changes in currency exchange
rates. The variability of these items could have a significant impact on our
future GAAP financial results.
Forward-Looking Statements
This shareholder letter contains certain forward-looking statements within the
meaning of the federal securities laws, including statements regarding our
expected results for the fiscal quarter and fiscal year ending December 31,
2026; priorities for 2026; adoption and growth of streaming entertainment;
growth strategy and outlook; market opportunity; competitive landscape and
position; expectations regarding series, films, games, live programming and
video podcasts and title performance; partnerships, licensing and third-party
content; engagement and view hours; slate strength; pricing and plans strategy;
ad-supported tier and its prospects, including new market launches; advertising,
including our ad-tech platform; product strategy; impact of organizational
changes, including headcount reductions; impact of foreign exchange rates and
hedging activities; stock repurchases; advertising revenue; revenue and revenue
growth; membership growth, retention and ARM growth; operating income, operating
margin, net income, earnings per share, capital allocation, debt repayment,
closing of a real estate transaction, free cash flow, content spend and content
amortization. The forward-looking statements in this letter are subject to risks
and uncertainties that could cause actual results and events to differ,
including, without limitation: our ability to attract new members and engage and
retain existing members; our ability to compete effectively, including for
consumer engagement with different modes of entertainment; failing to improve
the variety and quality of entertainment offerings; adoption of the ads plan and
paid sharing; maintenance and expansion of device platforms for streaming;
fluctuations in consumer usage of our service; service disruptions; production
risks; macroeconomic conditions; content slate and timing of content releases. A
detailed discussion of these and other risks and uncertainties that could cause
actual results and events to differ materially from such forward-looking
statements is included in our filings with the Securities and Exchange
Commission (“SEC”), including our Annual Report on Form 10-K, filed with the SEC
on January 23, 2026. The Company provides internal forecast numbers. Investors
should anticipate that actual performance will vary from these forecast numbers
based on risks and uncertainties discussed above and in our Annual Report on
Form 10-K. We undertake no obligation to update forward-looking statements to
reflect events or circumstances occurring after the date of this shareholder
letter.
8
Netflix, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)
Three Septe… June Septe… Nine Septe… Sept…
Mont… 30, 30, 30, Mont… 30, 30,
Ended 2026 2026 2025 Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Reve… $ 12,87… $ 12,5… $ 11,51… $ 37,68… $ 33,1…
Cost
of 6,079… 6,03… 6,164… 18,00… 16,7…
reve…
Sales
and 837,0… 823,… 786,2… 2,503… 2,18…
mark…
Tech…
and 1,033… 1,00… 853,5… 3,000… 2,50…
deve…
Gene…
and 466,3… 498,… 457,9… 1,567… 1,32…
admi…
Oper… 4,458… 4,19… 3,248… 12,60… 10,3…
inco…
Other
inco…
(exp…
Inte… -184,… -175… -175,… -622,… -542…
expe…
Inte…
and
other 43,006 51,6… 36,457 2,946… 126,…
inco…
(exp…
Inco…
befo… 4,316… 4,06… 3,109… 14,93… 9,95…
inco…
taxes
Prov…
for -652,… -667… -562,… -2,58… -1,3…
inco…
taxes
Net $ 3,663… $ 3,40… $ 2,546… $ 12,34… $ 8,56…
inco…
Earn…
per
shar…
Basic $ 0.89 $ 0.81 $ 0.60 $ 2.95 $ 2.01
Dilu… $ 0.87 $ 0.80 $ 0.59 $ 2.90 $ 1.97
Weig…
shar…
of
comm…
stock
outs…
Basic 4,134… 4,18… 4,244… 4,181… 4,25…
Dilu… 4,195… 4,26… 4,340… 4,251… 4,35…
* Share and per share amounts have been retroactively adjusted to reflect the
ten-for-one forward stock split which was effected on November 14, 2025.
9
Netflix, Inc.
Consolidated Balance Sheets
(in thousands)
As of
September 30, December 31,
2026 2025
──────────────────────────────────────────────────────────────────────────────
-unaudited
Assets
Current assets:
Cash and cash $ 8,194,275 $ 9,033,681
equivalents
Short-term 28,678 28,678
investments
Other current 4,999,384 3,957,832
assets
Total current 13,222,337 13,020,191
assets
Content assets, 34,605,477 32,778,392
net
Property and 2,560,619 2,004,350
equipment, net
Other non-current 8,293,521 7,794,060
assets
Total assets $ 58,681,954 $ 55,596,993
Liabilities and
Stockholders'
Equity
Current
liabilities:
Current content $ 3,885,069 $ 4,084,854
liabilities
Accounts payable 860,098 900,612
Accrued expenses
and other 3,301,264 3,220,869
liabilities
Deferred revenue 1,779,633 1,775,730
Short-term debt 2,474,796 998,865
Total current 12,300,860 10,980,930
liabilities
Non-current
content 1,723,034 1,579,476
liabilities
Long-term debt 12,657,598 13,463,971
Other non-current 2,714,209 2,957,128
liabilities
Total liabilities 29,395,701 28,981,505
Stockholders'
equity:
Common stock 7,898,264 7,286,410
Treasury stock at -33,232,809 -22,372,658
cost
Accumulated other
comprehensive -9,452 -580,382
loss
Retained earnings 54,630,250 42,282,118
Total
stockholders' 29,286,253 26,615,488
equity
Total liabilities
and stockholders' $ 58,681,954 $ 55,596,993
equity
Supplemental
Information
Total streaming
content $ 25,222,800 $ 24,039,228
obligations*
* Total streaming content obligations are comprised of content liabilities
included in "Current content liabilities" and "Non-current content liabilities"
on the Consolidated Balance Sheets and obligations that are not reflected on the
Consolidated Balance Sheets as they did not yet meet the criteria for
recognition.
10
Netflix, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Septe… June Septe… Nine Septe… Sept…
Mont… 30, 30, 30, Mont… 30, 30,
Ended 2026 2026 2025 Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Cash
flows
from
oper…
acti…
Net $ 3,663… $ 3,40… $ 2,546… $ 12,34… $ 8,56…
inco…
Adju…
to
reco…
net
inco…
to
net
cash
prov…
by
oper…
acti…
Addi…
to -5,15… -4,9… -4,65… -14,9… -12,…
cont…
asse…
Chan…
in 93,508 -181… 24,262 -43,0… -601…
cont…
liab…
Amor…
of 4,235… 4,31… 4,002… 12,76… 11,6…
cont…
asse…
Depr…
and
amor…
of 107,1… 100,… 87,326 306,2… 247,…
prop…
equi…
and
inta…
Stoc…
comp… 133,7… 131,… 80,986 405,4… 233,…
expe…
Fore…
curr…
reme…
loss -9,162 -8,8… -1,707 -28,0… 82,0…
(gai…
on
debt
Other
non-… 119,7… 141,… 142,2… 459,3… 377,…
items
Defe…
inco… 182,0… 81,2… 20,539 322,1… -279…
taxes
Chan…
in
oper…
asse…
and
liab…
Other
curr… -136,… 111,… -169,… -729,… -477…
asse…
Acco… 46,211 -157… 139,4… -111,… -125…
paya…
Accr…
expe…
and 85,509 -1,2… 707,1… 131,6… 746,…
other
liab…
Defe… -17,8… 54,0… -3,686 3,903 203,…
reve…
Other
non-…
asse… -181,… -63,… -97,5… -699,… -550…
and
liab…
Net
cash
prov… 3,162… 1,74… 2,825… 10,19… 8,03…
by
oper…
acti…
Cash
flows
from
inve…
acti…
Purc…
of
prop… -278,… -218… -164,… -693,… -448…
and
equi…
Acqu… — — — -585,… —
Purc…
of -52,5… — -3,850 -52,5… -161…
inve…
Proc…
from
matu…
and — — 176,2… — 1,90…
sales
of
inve…
Other
inve… — — 36,190 — —
acti…
Net
cash
prov…
by -331,… -218… 43,871 -1,33… 1,29…
(used
in)
inve…
acti…
Cash
flows
from
fina…
acti…
Proc…
from
issu… 992,5… — — 992,5… —
of
debt
Repa…
of — — — — -1,8…
debt
Proc…
from
issu… 74,674 59,9… 70,215 183,9… 590,…
of
comm…
stock
Repu…
of -4,79… -4,7… -1,85… -10,7… -7,0…
comm…
stock
Taxes
paid
rela…
to
net -5,165 -6,6… -6,196 -41,0… -40,…
share
sett…
of
equi…
awar…
Other
fina… -20,3… -8,5… 55,837 -9,185 62,1…
acti…
Net
cash
used -3,75… -4,6… -1,73… -9,65… -8,2…
in
fina…
acti…
Effe…
of
exch…
rate
chan…
on 18,995 -19,… -21,7… -50,4… 415,…
cash,
cash
equi…
and
rest…
cash
Net
incr…
(dec…
in
cash, -905,… -3,1… 1,110… -841,… 1,48…
cash
equi…
and
rest…
cash
Cash,
cash
equi…
and
rest… 9,102… 12,2… 8,180… 9,039… 7,80…
cash
at
begi…
of
peri…
Cash,
cash
equi…
and
rest… $ 8,197… $ 9,10… $ 9,290… $ 8,197… $ 9,29…
cash
at
end
of
peri…
11
Netflix, Inc.
Non-GAAP Information
(unaudited)
(in thousands, except percentages)
Non-GAAP Free Cash Flow
Three Sept… June Sept… Nine Sept… Septe…
Months 30, 30, 30, Months 30, 30,
Ended 2026 2026 2025 Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Non…
free
cash
flow
rec…
Net
cash
pro… $ 3,16… $ 1,743… $ 2,82… $ 10,1… $ 8,037…
by
ope…
act…
Pur…
of
pro… -278… -218,… -164… -693… -448,…
and
equ…
Non…
free $ 2,88… $ 1,525… $ 2,66… $ 9,50… $ 7,588…
cash
flow
Non-GAAP Constant Currency Information
The tables below provide a non-GAAP reconciliation of reported and constant
currency revenue growth by region for the quarters ended September 30, 2025,
December 31, 2025, March 31, 2026, June 30, 2026 and September 30, 2026. The
regions presented in the tables below include United States and Canada ("UCAN"),
Europe, Middle East, and Africa ("EMEA"), Latin America ("LATAM"), and Asia-
Pacific ("APAC").
… … … … …
… … … … …
… … … … … …
──────────────────────────────────────────────────────────────────────────────
… …
… … … … …
… … … … … … … …
… … … … … … … …
… … …
… …
$ … $ … $ … $ … $ … $ … $ … … % …
… … … … … … … … % …
… … … … … … … … % …
… … … … … … … … % …
… … … … …
… … … … …
… … … … … …
──────────────────────────────────────────────────────────────────────────────
… …
… … … … …
… … … … … … … …
… … … … … … … …
… … …
… …
$ … $ … $ … $ … $ … $ … $ … … % …
… … … … … … … … % …
… … … … … … … … % …
… … … … … … … … % …
12
… … … … …
… … … … …
… … … … … …
──────────────────────────────────────────────────────────────────────────────
… …
… … … … …
… … … … … … … …
… … … … … … … …
… … …
… …
$ … $ … $ … $ … $ … $ … $ … … % …
… … … … … … … … % …
… … … … … … … … % …
… … … … … … … … % …
… … … … …
… … … … …
… … … … … …
──────────────────────────────────────────────────────────────────────────────
… …
… … … … …
… … … … … … … …
… … … … … … … …
… … …
… …
$ … $ … $ … $ … $ … $ … $ … … % …
… … … … … … … … % …
… … … … … … … … % …
… … … … … … … … % …
… … … … …
… … … … …
… … … … … …
──────────────────────────────────────────────────────────────────────────────
… …
… … … … …
… … … … … … … …
… … … … … … … …
… … …
… …
$ … $ … $ … $ … $ … $ … $ … … % …
… … … … … … … … % 9
… … … … … … … … % …
… … … … … … … … % …
$ … $ … $ … $ … $ … $ … $ … … % …
13
Non-GAAP F/X Neutral Operating Margin
To provide additional transparency around our operating margin, we disclose each
quarter our year-to-date (YTD) operating margin based on F/X rates at the
beginning of each year. This will allow investors to see how our operating
margin is tracking against our target (which was set in January of 2026 based on
F/X rates at that time), absent intra-year fluctuations in F/X.
As Reported YTD 2026
───────────────────────────────────────────────
Revenue $ 37,683,871
Operating Expenses 25,075,664
Operating Profit $ 12,608,207
Operating Margin 33.5 %
FX Impact
Revenue $ 113,354
Operating Expenses 17,790
Operating Profit $ 95,564
Adjusted*
Revenue $ 37,570,517
Operating Expenses 25,057,874
Operating Profit $ 12,512,643
Operating Margin 33.3 %
* Based on F/X rates at the beginning of each year including our F/X hedges at
that time. Note: Excludes F/X impact on content amortization, as titles are
amortized at a historical blended rate based on timing of spend. YTD 2026
through September 30, 2026.
Non-GAAP Net Debt
As of
September 30,
2026
──────────────────────────────────────────────────────────────────────────
Non-GAAP Net Debt reconciliation:
Total debt $ 15,132,394
Add: Debt issuance costs and original issue 59,251
discount
Add: Fair value hedging adjustment 145,158
Less: Cash and cash equivalents -8,194,275
Less: Short-term investments -28,678
Net debt $ 7,113,850
14