Netflix reported third-quarter 2026 revenue of $12.874 billion on 20 October, an increase of 11.8 percent from $11.510 billion a year earlier, and said it expects to meet its full-year guidance. Operating income was $4.459 billion, up 37 percent, and the operating margin was 34.6 percent, compared with 28.2 percent in the third quarter of 2025. Net income was $3.664 billion and diluted earnings per share were $0.87, against $0.59 a year earlier, a rise of 49 percent. Free cash flow was $2.884 billion. For the full year, Netflix forecasts revenue of $51.1 billion, up 13 percent, and an operating margin of 31.5 percent, compared with 29.5 percent in 2025.
The case that the quarter was strong rests on profit and cash. Operating income beat the company’s own forecast, which Netflix attributed mainly to the timing of expenses and slightly higher revenue, and the margin gain of 6.4 percentage points over a year is large for a business of this size. The company said that churn improved year over year, both globally and in the United States, and was better than forecast, and that member response to its 2026 price changes was consistent with earlier adjustments. Diluted share count fell to 4,195 million from 4,340 million a year earlier, which helped earnings per share. The company’s forecast implies annual operating income growth of more than 20 percent for 2026.
The counter-argument is that growth is slowing and the advertising business is behind plan. Revenue growth has fallen from 17.2 percent in the third quarter of 2025 to 11.8 percent, and the fourth-quarter forecast is for 11.5 percent. Netflix now expects 2026 advertising revenue of about $2.7 billion, down from approximately $3 billion previously, because some advertising product capabilities are rolling out more slowly than expected, and it said its full-year revenue forecast is 0.2 percent below the midpoint of the earlier range. The fourth-quarter operating margin is forecast at 26.0 percent, which includes about 120 basis points of cost from headcount reductions the company has announced, and fourth-quarter operating income is forecast at $3.5 billion, compared with $4.459 billion in the third quarter.
The results matter because Netflix is one of the largest buyers of entertainment content in the world, and its margin shows how much more profitable streaming has become as subscription prices rise. The company said its audience is approaching one billion people, and it is adding third-party content, such as a partnership with TF1 in France, to its slate of originals. The slate for the rest of the year includes live events, such as three NFL games on Thanksgiving Eve and Christmas Day and a boxing match between Tyson Fury and Anthony Joshua. How much advertising grows will be the main test of whether growth can stay in double digits.
Netflix delivered higher profit and a larger margin, and it kept its full-year targets, but it is growing more slowly and has lowered its advertising goal. The fourth quarter, with its headcount cuts and a forecast margin of 26.0 percent, will show how much of the third quarter’s strength was timing.