AI Earnings Predictions for Netflix Inc. (NFLX)

EX-99.1

2 ex991_q226.htm

EX-99.1

Document

Exhibit 99.1

July 16, 2026

Fellow shareholders,

•Our financial performance remains solid and we’re on track to meet our objectives for the year:

◦Q2 revenue grew 13% year over year (+12% on a FX-neutral basis1) to $12.6B, and operating margin was 33%. Both were in-line with our guidance.

◦For 2026, we’ve narrowed our forecasted revenue range to $51.0-$51.4B and continue to forecast an operating margin of 31.5%, both consistent with our prior guidance.

•We’re delivering increasing value to our members; engagement is healthy, reflecting the quality, quantity, and variety of our offering:

◦Harlan Coben’s I Will Find You is our most viewed new original series debut in 2026 and Swapped is on its way to becoming our second most viewed original animated film ever.

◦View hours grew +2% in H1’26 vs. +1.5% growth in 2025, despite the competitive impact of the Winter Olympics and the World Cup this year.

◦To better satisfy members, we’re continuing to expand the variety of our entertainment offering with video podcasts, creators like Danny Go! and Salish & Jordan Matter, and cloud TV games.

•The results of our recent price changes are consistent with prior changes and our expectations.

•We are leveraging AI to provide a more personalized, immersive and interactive experience for members, enhance ads capabilities for brands, and improve the quality of our series and films.

•The entertainment industry remains dynamic and competitive. We aim to stay ahead by executing against our three areas of focus: delivering more entertainment value, leveraging technology to improve every aspect of our service, and improving monetization.

Our summary results, and forecast for Q3, are below.

(in millions except per share data)Q2'25Q3'25Q4'25Q1'26Q2'26Q3'26 Forecast

Revenue$11,079 $11,510 $12,051 $12,250 $12,560 $12,860

Y/Y % Growth15.9 %17.2 %17.6 %16.2 %13.4 %11.7 %

Operating Income$3,775 $3,248 $2,957 $3,957 $4,193 $4,268

Operating Margin34.1 %28.2 %24.5 %32.3 %33.4 %33.2 %

Net Income$3,125 $2,547 $2,419 $5,283 $3,401 $3,452

Diluted EPS$0.72 $0.59 $0.56 $1.23 $0.80 $0.82

Net cash provided by operating activities$2,423 $2,825 $2,112 $5,290 $1,744

Free Cash Flow$2,267 $2,660 $1,872 $5,094 $1,525

Shares (FD)4,349 4,340 4,317 4,298 4,261

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

Q2 Results and Forecast

Q2 revenue of $12.6B was in-line with forecast and grew 13% year over year (+12% on a foreign exchange (F/X) neutral basis), driven primarily by membership growth, pricing and increased ad revenue. We delivered double digit revenue growth in all regions, surpassing the quarterly revenue mark of $4.0B in EMEA and $1.5B in both LATAM and APAC. In UCAN, Q2 revenue growth of 10% reflects only a partial quarter impact from our recent price change, which has gone well and as expected.

Operating income in Q2 was $4.2B, up 11% year over year, and operating margin was 33.4% versus 34.1% in Q2’25. Q2 operating income and margin were slightly ahead of forecast due to the timing of expenses. As we noted in previous letters, operating income in Q2 grew slower than revenue because our content amortization growth is higher in the first half of the year; we continue to expect content amortization to grow slower in the second half of the year and to increase ~10% for 2026. Diluted EPS for the quarter amounted to $0.80 vs. $0.72 in Q2’25 (+11% year over year), slightly above our forecast.

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.

For Q3, we expect revenue growth of 12% (or 11% F/X neutral) driven by growth in memberships, pricing, and ad revenue. We project an operating margin of 33.2% compared with 28.2% in the year ago quarter.

Our 2026 outlook is consistent with our prior forecast: we are narrowing our revenue forecast to $51.0-$51.4B, which represents 13%-14% growth (~12% F/X neutral), driven by growth in memberships and pricing, and a projected rough doubling of our ads revenue to approximately $3 billion. We continue to anticipate an operating margin of 31.5% for 2026 both on a reported basis and based on F/X rates as of January 1, 2026 vs. 29.5% in 2025. Our forecast implies annual operating income growth of 20%+ for 2026.

Our Focus

As we outlined in our last letter, we have three main areas of focus:

First, delivering more entertainment value.

We want to win the most valuable moments of truth and thrill our members. We’

EX-99.1

2 ex991_q126.htm

EX-99.1

Document

Exhibit 99.1

April 16, 2026

Fellow shareholders,

•Q1 revenue grew 16% year over year (+14% on a FX-neutral basis1) and operating income grew 18%. Both were ahead of our guidance due to slightly higher-than-planned subscription revenue. We continue to project 2026 revenue of $50.7-$51.7B and an operating margin of 31.5%.

•We have a clear strategy and strong conviction in our long runway of growth, with three areas of focus to achieve our goals:

◦Delivering more entertainment value to members: Our primary internal quality engagement metric hit an all time high in Q1 and we continue to expand our offering with video podcasts, our first regional live event — the World Baseball Classic, which broke viewing records in Japan — and, in early April, a new standalone gaming app for kids.

◦Leveraging technology to improve our service: We are continually expanding how we can leverage AI to improve the member experience, and in Q1 we acquired InterPositive to provide our creators with a broader set of GenAI tools. We are also redesigning our mobile experience, including the launch of vertical video at the end of the month.

◦Improving monetization: Our recent price changes have gone well, reflecting the strong value we provide members and our advertising revenue remains on track to reach $3B in 2026, up 2x year-over-year.

•The entertainment business remains extraordinarily dynamic and competitive. We’re in a strong position and are working hard to build on our advantages. Over the years, we’ve learned that the best thing we can do is to stay focused and improve faster than the competition.

Our summary results, and forecast for Q2, are below.

(in millions except per share data)Q1'25Q2'25Q3'25Q4'25Q1'26Q2'26 Forecast

Revenue$10,543 $11,079 $11,510 $12,051 $12,250 $12,574

Y/Y % Growth12.5 %15.9 %17.2 %17.6 %16.2 %13.5 %

Operating Income$3,347 $3,775 $3,248 $2,957 $3,957 $4,105

Operating Margin31.7 %34.1 %28.2 %24.5 %32.3 %32.6 %

Net Income$2,890 $3,125 $2,547 $2,419 $5,283 $3,327

Diluted EPS$0.66 $0.72 $0.59 $0.56 $1.23 $0.78

Net cash provided by operating activities$2,789 $2,423 $2,825 $2,112 $5,290

Free Cash Flow$2,661 $2,267 $2,660 $1,872 $5,094

Shares (FD)4,370 4,349 4,340 4,317 4,298

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

Q1 Results and Forecast

Revenue in Q1 grew 16% year over year (+14% on a foreign exchange (F/X) neutral basis), driven primarily by membership growth, higher pricing, and increased ad revenue. Revenue was slightly above our forecast due to higher than forecasted membership growth and favorable F/X movements net of hedging.

Operating income in Q1 was $4.0B, up 18% year over year, and operating margin of 32.3% was up versus 31.7% in Q1’25. Both operating income and margin were slightly above our forecast owing to higher-than-forecasted revenue.

Diluted EPS for the quarter amounted to $1.23 vs. $0.66 in Q1’25 (+86% year over year), above our forecast of $0.76, driven by higher-than-projected operating income and the $2.8B termination fee related to the Warner Bros. transaction, which was recognized in “interest and other income.”

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.

Our full year 2026 guidance is unchanged: we forecast 2026 revenue of $50.7B-$51.7B, which represents 12%-14% growth (11%-13% F/X neutral), driven by continued healthy membership growth, pricing and a projected rough doubling of our ads revenue. Similarly, we’re still targeting an operating margin of 31.5% for 2026 based on F/X rates as of January 1, 2026 vs. 29.5% in 2025.

For Q2, we expect revenue growth of 13% (or 12% F/X neutral). As we noted in last quarter’s letter, growth in content amortization will be first-half weighted due to the timing of title launches. We expect Q2 to have the highest year-over-year content amortization growth rate in 2026, before decelerating to mid-to-high single digit growth in the second half of the year. As a result, we forecast Q2 operating margin of 32.6% compared with 34.1% in the year ago quarter. We expect year-over-year operating margin growth in Q3 and Q4 in order to deliver our 2026 margin target.

Our Focus

Our mission remains ambitious and unchanged: to entertain the world. No other entertainment company has tried to program at this scale, for this many tastes, cultures, and languages. Warner Bros. would have been a nice accelerant for our strategy, but only at the r

nflx-20260120NETFLIX INC0001065280false00010652802026-01-202026-01-20

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 20, 2026

NETFLIX, INC.

(Exact name of registrant as specified in its charter)

Delaware001-3572777-0467272 (State or other jurisdiction of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

121 Albright Way, Los Gatos, California 95032 (Address of principal executive offices)(Zip Code)

(408) 540-3700 (Registrant’s telephone number, including area code) (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: Title of each classTrading Symbol(s)Name of each exchange on which registered Common stock, par value $0.001 per shareNFLXNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition. On January 20, 2026, Netflix, Inc. (the “Company”) announced its financial results for the quarter ended December 31, 2025. The Letter to Shareholders, which is attached hereto as Exhibit 99.1 and is incorporated herein by reference, includes reference to the non-GAAP financial information. A reconciliation to the GAAP equivalent of non-GAAP measures is contained in tabular form in Exhibit 99.1. 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. The information contained in this Item 2.02 and the accompanying Exhibit 99.1 are “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits. (d)   Exhibits

Exhibit NumberDescription of Exhibit 99.1 Letter to Shareholders dated January 20, 2026

104Cover Page Interactive Data File (embedded within the Inline XBRL document)

Important Information and Where to Find It

In connection with the proposed transaction between Netflix, Inc. ("Netflix") and Warner Bros. Discovery, Inc. ("WBD"), WBD filed a preliminary proxy statement on Schedule 14A (the “Proxy Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) on January 20, 2026. The preliminary Proxy Statement is not final and may be amended, and the definitive Proxy Statement (if and when available) will be mailed to stockholders of WBD. WBD also intends to file a registration statement for the newly formed subsidiary of WBD (“Discovery Global”) that will be spun off from WBD prior to the closing of the proposed transaction. Each of Netflix and WBD may also file with or furnish to the SEC other relevant documents regarding the proposed transaction. This communication is not a substitute for the Proxy Statement or any other document that Netflix or WBD may file with the SEC or mail to WBD’s stockholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF NETFLIX AND WBD ARE URGED TO READ THE PROXY STATEMENT, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH TH