Netflix growth slows despite higher revenues
July 17, 2026 09.37 Europe/London By Julian Clover


Netflix reported higher second quarter revenues and profits, but investor attention has shifted to slowing growth, a weaker-than-expected outlook and the company’s decision to reduce the frequency of its viewing disclosures.

Revenue rose 13.4% year-on-year to $12.56 billion, broadly in line with Netflix’s guidance but slightly below Wall Street expectations. Operating income increased 11% to $4.19 billion, while net income rose to $3.4 billion. Operating margin was 33.4%.

For the third quarter, Netflix is forecasting revenue of $12.86 billion, representing growth of 11.7%. That would mark a further deceleration from 16.2% in Q1 and 13.4% in Q2. The company has narrowed its full-year revenue guidance to $51.0-$51.4 billion, implying growth of 13%-14%.

CFO Spence Neumann told analysts the company did not manage the business quarter by quarter, adding that Q3 would still be driven by “increases in memberships and pricing and higher ads revenue”. He said Netflix continued to see “healthy acquisition and retention trends” and that recent price increases were performing as expected.

Netflix no longer reports paid subscribers each quarter, but the earnings call referred to a global footprint of around 330 million subscription households. The company said membership growth remained one of the main revenue drivers, alongside pricing and advertising.

The company has previously asked not to be judged on the metric of subscriber numbers and arguably that’s now happening.

Shares fell after the results, with AP reporting a 7.2% decline in after-hours trading, as investors focused on the softer Q3 forecast and modest growth in viewing.

Netflix said members watched more than 97 billion hours in the first half of 2026, up 2% year-on-year, compared with 1.5% growth in 2025. However, the company will now publish its What We Watched report annually from 2027, rather than twice a year. Netflix said the move was intended to keep attention on its primary financial metrics of revenue and operating profit.

The company is also expanding beyond traditional series and films. It cited video podcasts, creator-led programming, live sport, games and its recent integration of TF1 programming in France as examples of a broader entertainment strategy. Live programming is expected to account for just over 5% of content spend this year, but only around 1% of viewing hours, though Netflix said live events had generated six of its 10 biggest new member sign-up days over the past five years.

Technology was another major theme. Netflix said it is using large language models to improve discovery and member preferences, alongside new voice search and AI-powered natural language search. Generative AI workflows have been used in around 300 titles in 2026, mostly in post-production.

Co-CEO Ted Sarandos said AI was helping productions deliver sequences more quickly and cheaply, but added: “Movies are being made by people who make movies. AI provides them with better tools to make them even better.”

Netflix also said cloud TV games were gaining traction. FIFA World Cup: Launch Edition and Unhinged were described as its two most successful cloud game launches, while monthly active players for cloud games have risen elevenfold since last October.

Sources: Netflix Q2 shareholder letter and earnings call transcript; [AP](https://apnews.com/article/6a02a255f...512d09eaa545); [Netflix investor relations](https://ir.netflix.net/ir-overview/profile/).