Netflix’s Second-Quarter Report: What Happened and Why It Matters

What Is Netflix Telling Us?

Netflix is a big company that lets people watch movies and shows on the internet (we call this "streaming"). On Thursday, Netflix shared how much money it made and how much profit it got from April to June (this is called the second quarter).

The money numbers were about the same as what money experts (called analysts) guessed they would be. Wall Street (a fancy way to say "investors and banks") is watching two things very closely:

• How many ads Netflix shows
• How much time people spend watching

People Are Watching a Lot

Netflix said watching its shows is "healthy" (meaning people are still interested). Live events (like sports or shows happening right now) are a big reason people sign up. In the first 6 months of this year, members watched more than 97 billion hours of stuff!

Why does this matter? Because some people said viewership goes down after a show’s first season. So, Netflix now pays more attention to this "engagement" number (how much people watch).

Important Point: Engagement = how much time viewers spend watching Netflix content.

Netflix Will Share Less Often

Netflix has a report called "What We Watched" that shows what people are watching. After sharing the report for the first half of 2026, Netflix will only share it once a year starting in 2027 (in the first 3 months of the year).

They said in their letter to shareholders: "The goal of separating the publication of the report from our earnings results is to keep the focus on our primary financial metrics – revenue and operating profit."

In simple words: they want people to look at money made and profit, not just viewing hours.

How Did Netflix Do vs. Guesses?

Here is the scorecard for the period ending June 30, compared to what analysts (from a group called LSEG) thought:

• Earnings per share: 80 cents vs. 79 cents estimated
• Revenue: $12.56 billion vs. $12.59 billion estimated

Netflix made $12.56 billion in revenue. That is 13% more than last year, but just a tiny bit less than experts guessed. The growth came from:

• More members
• Higher prices
• More ad money

Price Goes Up, Profit Goes Up

Earlier this year, Netflix made all its plans cost more money. On Thursday, they said this worked like they thought it would (just like past price increases).

Net income (the money left after costs) for the second quarter was:

• $3.40 billion, or 80 cents per share
• Last year same time: $3.13 billion, or 72 cents per share

So, they made more profit than last year.

What About the Future?

Netflix thinks:

1. Third-quarter revenue will grow 12%
2. The 2026 full-year guess is still similar to before
3. They are narrowing the 2026 revenue range to $51 billion–$51.4 billion (before it was $50.7B–$51.7B)

Ads Are a Big Deal

Because most people who want Netflix already have it, getting new subscribers is harder. So, ads are now a key way to make money.

Netflix still thinks its ad money will roughly double compared to last year, reaching $3 billion.

They are in "advanced stages" of talking to advertisers in the U.S. (this is part of something called Upfront negotiations). Deals should finish in a few weeks. Live sports like the Women’s World Cup, NFL games, MLB, and WWE are very popular with advertisers.

Live Events: Popular but Small

Netflix says live events are some of their best shows this year. In fact, live events were part of 6 of the top 10 days when most new people signed up (in the last 5 years).

But here is a weird fact:

• Live programming is over 5% of what Netflix spends on content
• But only about 1% of total watching time

Netflix only started live shows in 2023. Before that, they only had recorded shows and movies. Since 2023, they bought more sports rights.

Important Point: Live events bring in new sign-ups but are watched less than regular shows.

The Competition and Buying Other Companies

Netflix says the entertainment world is "dynamic and competitive" (always changing and full of rivals).

Late last year, Netflix tried to buy Warner Bros. Discovery’s film and streaming business but walked away. This made people wonder if Netflix wants to buy other companies.

Netflix said on Thursday their plan has not changed:

• They will reinvest in the business (grow from inside and maybe buy selectively)
• Keep a healthy balance sheet (enough money and not too much debt)
• Before the WBD try, Netflix said it was "a builder, not a buyer"

Summary

Netflix’s second-quarter money results matched expert guesses. People are watching a lot (97B+ hours), but Netflix will report viewing data only once a year from 2027 to keep focus on revenue and profit. Revenue grew 13% to $12.56B, profit rose, and ads are expected to double to $3B. Live events help sign-ups but are a small part of watch time. Netflix is still careful about buying other companies and prefers building its own stuff.

FAQ

1. What does "engagement" mean for Netflix?
It means how much time viewers spend watching Netflix shows and movies.

2. Why is Netflix publishing the "What We Watched" report less often?
They want investors to focus on money metrics like revenue and profit instead of just viewership numbers.

3. How much ad revenue does Netflix expect in 2026?
They expect to roughly double last year’s ad money to about $3 billion.

4. Did Netflix buy Warner Bros. Discovery?
No, they tried late last year but walked away from the deal.

5. Are live events a big part of what people watch?
They help get new subscribers (6 of top 10 sign-up days) but are only about 1% of total viewing hours.