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DisneyNetflix reports Q2 2026 earnings this Thursday
Netflix reports Q2 2026 earnings this Thursday (July 17) after market close. Here's the analytical setup:
What the Numbers Say Heading In
| Quarter | Revenue | Revenue YoY | Net Income | Op. Income |
|---|---|---|---|---|
| Q2 2024 | $9.56B | — | $2.15B | $2.60B |
| Q3 2024 | $9.82B | — | $2.36B | $2.91B |
| Q4 2024 | $10.25B | — | $1.87B | $2.27B |
| Q1 2025 | $10.54B | +12.5% | $2.89B | $3.35B |
| Q2 2025 | $11.08B | +15.9% | $3.13B | $3.77B |
| Q3 2025 | $11.51B | +17.2% | $2.55B | ~$3.24B |
| Q4 2025 | $12.05B | +17.6% | $2.42B | $2.96B |
| Q1 2026 | $12.25B | +16.2% | $5.28B* | $3.96B |
*Q1 2026 net income was inflated by a ~$2.8B one-time restructuring gain. Operating income of $3.96B is the more meaningful figure.
Key Things to Watch
1. Revenue growth deceleration
Analysts expect ~13.5% YoY revenue growth for Q2 2026, a continued slowdown from the 16-17% pace in mid-2025. This has been the main bear narrative — the acceleration phase may be behind them.
2. Margin expansion vs. pricing scrutiny
Operating income has consistently grown faster than revenue (cost of revenue grew only ~12% in Q1 vs. 16% revenue growth), showing strong operating leverage. However, Netflix's 29% price hike over the past year is drawing antitrust attention from US regulators, which could weigh on future pricing power.
3. Valuation is historically compressed
Metric | Current | 5-Year Median |
| PE (FY2026E) | 23.2x | 42.4x |
| PB | 10.0x | 12.6x |
| PS | 6.6x | 7.8x |
At 23x forward earnings with mid-teens revenue growth, NFLX is trading well below its own historical norms. The stock at $73.53 has clearly been under pressure.
4. Analyst positioning is mixed
Morgan Stanley cut its target to $90 (Buy), Barclays cut to $85 (Hold). Evercore ISI flags Netflix as a "beat-and-raise" candidate — depressed sentiment but strong fundamentals, positioning it for a potential re-rating if results surprise.
The Tension
The bull case rests on continued margin expansion from ad-tier monetization and operating leverage — Netflix has been consistently growing operating income faster than revenue. The bear case is that revenue growth is decelerating, pricing power faces regulatory headwinds, and the recent misses on EPS guidance have eroded confidence. The compressed valuation suggests the market has already priced in a fair amount of caution.
What matters most Thursday will likely be forward guidance more than backward-looking numbers — specifically Q3 revenue growth expectations and whether the ad tier continues to scale.
$Netflix(NFLX.US)
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