Netflix reported second-quarter revenue of $12.56 billion, slightly below analyst expectations, with earnings per share coming in at 80 cents, marginally exceeding estimates. The company’s revenue growth was driven by increases in membership, subscription price hikes implemented earlier in the year, and higher advertising revenue. Net income reached $3.4 billion, up from $3.13 billion in the same period last year. Despite results aligning closely with forecasts, Netflix shares dropped over 7% in after-hours trading on investor concerns over the company’s future outlook.

The streaming giant projected third-quarter revenue growth of 12% and narrowed its full-year 2026 revenue forecast to a range between $51 billion and $51.4 billion. Netflix emphasized that engagement with its content remains strong, highlighting live events as major attractions that helped boost member watch hours, which totaled more than 97 billion in the first half of the year. Co-CEO Ted Sarandos noted that viewership for second seasons of series has not materially declined compared to first seasons, addressing prior reports suggesting significant drops.

Netflix announced it will reduce the frequency of its “What We Watched” reports, which provide detailed engagement insights, shifting to an annual release starting in 2027. The company aims to separate these reports from its quarterly earnings announcements to maintain focus on financial performance such as revenue and operating profit. Live sports and events, which Netflix only began investing in during 2023, have become an important area of growth, with advertising revenue on track to double year-over-year to $3 billion, supported by recent deals involving NFL games, the Women’s World Cup, and other key sports properties.

Looking ahead, Netflix reiterated its ongoing evaluation of pricing and plan structures, including the potential introduction of a free tier in select markets, though no immediate plans exist to launch such an offering. The company remains committed to organic growth and selective acquisitions rather than large-scale deals, despite previously exploring the possibility of acquiring Warner Bros. Discovery’s assets. CFO Spencer Neumann reaffirmed Netflix’s strategy to prioritize reinvestment in the business with disciplined capital allocation, maintaining a strong balance sheet amid a competitive entertainment landscape.