Netflix Inc

Netflix reported Q3 2026 revenue of $12.87 billion, up 12% (11% constant currency), with operating income up 37% to $4.46 billion and a 34.6% operating margin versus 28.2%. Net income rose 44% to $3.66 billion, diluted EPS $0.87. The company repurchased $4.8 billion of stock in the quarter, issued $1 billion of new notes, and says no material changes to risk factors since the 2025 10-K.

1. 1.Q3 operating margin rose to 34.6% from 28.2%, helped by cost of revenues falling 1% to $6.08 billion because the prior-year quarter included a $619 million Brazil non-income tax expense.
2. 2.Share repurchases jumped to $4.8 billion in Q3 from $1.9 billion a year earlier ($10.7 billion over nine months), and the board added a $25 billion authorization in April 2026, leaving $22.3 billion available.
3. 3.Nine-month net income rose to $12.35 billion from $8.56 billion, including a $2.8 billion termination fee received in Q1 after Warner Bros. Discovery ended the WBD merger agreement in favor of Paramount Skydance.
4. 4.Advertising revenue grew $256 million in Q3 and $864 million over nine months, alongside subscription growth of $1,057 million in Q3 from higher memberships and pricing.
5. 5.Technology and development expense rose 21% to $1.03 billion in Q3, and stock-based compensation rose to $134 million from $81 million.
6. 6.Debt rose to $15.1 billion after a $1 billion 5.250% notes issuance in July 2026, with $2.4 billion of notes newly swapped to floating SOFR-based rates; short-term debt is now $2.5 billion.

1. 1.Content obligations total $25.2 billion ($11.8 billion due within a year), with significant additional unknown future title obligations estimated at roughly $1 billion to $4 billion over three years.
2. 2.Foreign currency exposure is large: non-USD currencies were 57% of revenue, and a weaker foreign currency versus the dollar could hurt revenue and operating income; nine-month revenue was helped by about $506 million of favorable FX.
3. 3.Interest rate exposure is new: the $2.4 billion of swapped debt means a 1% rise in SOFR would raise annual interest expense by about $24 million.
4. 4.Heavy buybacks and capex are reducing cash, which fell to $8.2 billion, while $3.2 billion of debt principal and interest comes due in the next 12 months and refinancing depends on market conditions.
5. 5.Non-income tax disputes continue, with $729 million of non-routine Brazil tax payments in the nine months, and the effective tax rate rose to 17% from 14% over nine months.
6. 6.Q1 earnings were boosted by a one-time $2.8 billion termination fee, so nine-month comparisons are not indicative of underlying growth.