Netflix reported slower growth in revenue and profit for the third quarter, further fueling concerns among investors about the company’s ability to sustain its expansion. Following the earnings announcement on Thursday, Netflix shares dropped more than 8% in after-hours trading.
The streaming giant forecasted an 11.7% increase in revenue for the third quarter, marking its smallest year-over-year growth rate since late 2023. This contrasted with the company’s second-quarter results, which showed revenue of $12.56 billion, a 13% rise compared to the same period last year. Net income for the quarter increased nearly 9% to $3.4 billion, aligning with analyst expectations.
Netflix attributed its recent financial gains partly to price hikes and growth in advertising revenue. The company reported that viewers streamed more than 97 billion hours of content during the first half of 2026, representing modest increases of 1.5% from the latter half of 2025 and 1.9% compared to the first half of 2025. Executives highlighted ongoing efforts to boost viewer engagement as a critical strategy for reducing subscriber cancellations and maintaining customer satisfaction.
According to research firm Antenna, Netflix experienced a June churn rate of 2.11%, the lowest in the streaming industry, demonstrating strong subscriber retention. The company pointed to successful recent releases such as Harlan Coben’s “I Will Find You” and the second season of “Beef” as contributing factors to engagement and subscriber growth.
Netflix also announced it would shift its “What We Watched” report—which tracks viewer hours—from a biannual to an annual publication. Since early 2025, Netflix has ceased reporting quarterly subscriber totals but recently introduced free trial offers in select markets for users who have never subscribed to the service.
Looking ahead, Netflix executives have explored adding live channels to continuously stream curated content, alongside potential bundling partnerships with other streaming platforms. The company has also expanded into video podcasts and continues to pursue live sports and events, which it projects will account for about 5% of its content budget this year.
Despite these initiatives, Netflix’s operating margin declined to 33.4% in the second quarter from 34.1% a year earlier, though it exceeded the company’s forecast of 32.6%. Free cash flow decreased to $1.53 billion from $2.27 billion in the prior year period, influenced in part by tax payments related to terminating its Warner Bros. Discovery acquisition bid.
Netflix narrowed its full-year revenue guidance to between $51 billion and $51.4 billion, compared with a previous forecast range of $50.7 billion to $51.7 billion. The company’s recent stock decline, which began amid its attempt to acquire Warner Bros. Discovery’s studio and streaming assets, reflects investor apprehension about its ability to maintain robust growth amid increasing competition in the streaming market.