Research Reports

Key takeaways

Revenue grew 16.2% to $12.2B as membership expansion and pricing drove gains across regions.

Gross profit rose 20.5% to $6.4B, lifting gross margin to 51.9% since revenue outpaced cost of revenues growth.

Operating income increased 18.2% to $4.0B with operating margin expanding to 32.3%, as revenue growth exceeded cost of revenues rise despite faster G&A, marketing, and tech spending.

Net income surged 82.8% to $5.3B primarily from $2.8B Warner Bros. termination fee in interest/other income.

Diluted EPS declined to $1.23 from $6.61 due to higher share count.

Free cash flow reached $5.1B, reflecting strong operating cash of $5.3B minus $0.2B capex.

Full analysis

Netflix's Q1 2026 results showcased robust revenue growth and transformative profitability, primarily driven by a $2.8 billion termination fee from Warner Bros. that elevated net income to $5.3 billion, up 82.8% year-over-year. Revenue increased 16.2% to $12.2 billion from $10.5 billion, fueled by membership growth, pricing actions, and advertising revenue across global regions. This momentum enabled gross profit to climb 20.5% to $6.4 billion, expanding the gross margin to 51.9% because revenue growth outpaced the rise in cost of revenues, which include content amortization, streaming delivery, and other operating costs.

Overall, the quarter highlights Netflix's ability to leverage strategic partnerships and pricing discipline for margin gains, while the one-time fee amplified financial outcomes, positioning the company to sustain growth amid competitive streaming dynamics.

NFLX · Netflix, Inc.

Summary

Key takeaways

Full analysis