SHARPE
Reported results
- Q3 2026 revenue grew 12% year over year (11% on a F/X neutral basis) to $12.9B, consistent with forecast.
- Q3 2026 operating margin was 34.6%, up from 28.2% in Q3’25, ahead of forecast primarily due to timing of expenses.
- Q3 2026 diluted EPS was $0.87, up 49% year over year from $0.59 in Q3’25.
- Q3 2026 operating income totaled $4.5B, up 37% year over year from $3.2B in Q3’25.
- Non-GAAP free cash flow in Q3’26 was $2.9B compared to $2.7B in Q3’25.
- Full-year 2026 revenue expected to reach $51.1B with 13% year over year growth; operating margin expected at 31.5%; 2026 ad revenue expected at ~$2.7B (revised down from ~$3.0B).
Guidance
- Q4 2026 revenue forecast: $13.4B (12% YoY growth, or 11% F/X neutral).
- Q4 2026 operating margin forecast: 26.0%.
- Full-year 2026 revenue forecast: $51.1B (13% YoY growth, or 12% F/X neutral).
- Full-year 2026 operating margin forecast: 31.5% (31.4% based on F/X rates as of January 1, 2026).
- Full-year 2026 ad revenue forecast: ~$2.7B.
- Full-year 2026 free cash flow forecast adjusted to approximately $12.0B (vs. prior projection of $12.5B).
- Advertising tier to be introduced to 15 new countries in 2027, with first tranche of nine EMEA countries, Colombia, Peru and New Zealand launching in March 2027.
Notes
Q4 operating margin includes ~120 basis points negative impact from recently announced headcount reductions. Full-year 2026 operating margin includes ~30 basis points negative impact from Q4 headcount reductions. 2026 ad revenue guidance lowered due to slower-than-expected rollout of some ad product capabilities. Expected 2026 FCF forecast reduced primarily due to expected closing of a real estate transaction in Q4. Company maintains annual cash content spend to amortization ratio expectation of ~1.1x. In Q3, Netflix repurchased 63.9 million shares for $4.8B, described as largest quarter ever of stock repurchases; $22.3B capacity remains in authorizations.
Price and volatility reaction
The stock moved -5.3% on the print. No front-expiry chain was on file, so there is no straddle expected move.
| Measure | Value | Basis |
|---|---|---|
| Close before release | 68.69 | 2026-10-20 |
| Close after release | 65.04 | 2026-10-21 |
| Realised move | -5.3% | close to close |
Source
The figures above come from the earnings release the company filed with the SEC on 2026-10-20 (8-K, Item 2.02). Read the original filing on sec.gov.