Netflix’s Q2 Keeps The Slump Streaming

Netflix delivered solid second-quarter growth, but investors were in no mood to settle for another familiar episode. The streaming company reported second-quarter revenue of $12.56 billion, up 13.4% from a year earlier, while net income increased nearly 9% to $3.4 billion and diluted earnings rose 11% to $0.80 per share, edging past the $0.79 analysts expected. Revenue landed just below the $12.58 billion consensus, and shares were down about 9.8% at $67.09 in premarket trading Friday after closing Thursday at $74.35, as Wall Street skipped past the growth and zeroed in on an outlook that was weaker than expected.

The quarter itself showed that Netflix can still turn membership growth, higher prices and advertising expansion into a substantial revenue increase. The company expects advertising revenue to roughly double to approximately $3 billion this year, while its second-quarter operating margin reached 33.4%, compared with 34.1% a year earlier. Netflix narrowed its full-year revenue outlook to $51 billion to $51.4 billion from $50.7 billion to $51.7 billion, while maintaining its 31.5% operating-margin target. That left the midpoint of its revenue outlook unchanged. Faster content amortization growth kept the quarterly margin below last year’s level, although the result still exceeded Netflix’s own 32.6% forecast and operating income increased 11%.

The uncomfortable question remains whether Netflix is keeping viewers sufficiently engaged as competition for their attention widens. Members watched more than 97 billion hours during the first half, up 2% from a year earlier and slightly faster than the 1.5% growth recorded during 2025 despite competition from the Winter Olympics and World Cup. The company also said it will begin publishing its viewing report annually rather than twice a year, beginning in the first quarter of 2027. Netflix already stopped reporting quarterly subscriber totals in 2025, so investors are gradually receiving fewer periodic operating markers at the same time they are looking for clearer evidence that engagement can keep pace with price increases.

Netflix expects third-quarter revenue of $12.86 billion and diluted earnings of $0.82 per share, compared with Wall Street estimates of roughly $13 billion and $0.84. Those are hardly disastrous gaps, but the stock had already lost about one-fifth of its value this year before the report, leaving investors hungry for something more interesting than another quarter that merely stayed on schedule. Netflix’s business continues to grow. The stock needed a new hit, but the outlook landed closer to a rerun.

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