Netflix reported third quarter 2026 earnings after the close on Tuesday, October 20, and the headline numbers cleared the bar. Diluted EPS came in at $0.87 against a consensus estimate of $0.82, while revenue of $12.874 billion grew 11.9 percent year over year and landed almost exactly on the $12.87 billion estimate. The stock still fell about 5 percent in after hours trading, slipping from a $68.70 close toward the mid $60s. The quarter was a beat. The guide was the story.
Profit quality carried the quarter
Operating income rose 37 percent to $4.459 billion, and the operating margin reached 34.6 percent, ahead of the 33.2 percent Netflix had guided to, helped by expense timing. Net income climbed 44 percent to $3.664 billion. The shareholder letter credited membership growth, pricing and advertising revenue for the top line, and said churn improved year over year. Two softer spots sat underneath: free cash flow of $2.884 billion came in below the roughly $3.2 billion expected, and Netflix bought back $4.8 billion of stock in the quarter.
Guidance is what the stock traded on
For the fourth quarter, Netflix guided revenue to $13.442 billion, just under the roughly $13.5 billion expected, with EPS of $0.67 against a $0.73 consensus and an operating margin of 26 percent, below the near 28 percent analysts had modeled. The margin outlook absorbs costs from the headcount reductions announced ahead of the report. Full year 2026 revenue was set at $51.1 billion, the low end of the prior range, with growth narrowed to 13 percent and the operating margin target held at 31.5 percent. Full year free cash flow was cut to about $12 billion from $12.5 billion, and the 2026 advertising revenue forecast was trimmed to about $2.7 billion from $3 billion on a slower ad product rollout.
Next up: Tesla and Meta on Wednesday
The season does not slow down. Tesla and Meta Platforms both report after the close on Wednesday, October 21, and both were previewed with Netflix in our Netflix and Tesla earnings preview. The bars are Tesla at $0.45 a share on $27.89 billion of revenue and Meta at $6.76 on $63.30 billion. The full slate sits in the Q3 2026 earnings calendar, and the mega-cap week preview covers Meta in depth. As with Netflix, watch the Form 4 filings that follow the print: an open market insider buy in the two weeks after a report is the loudest signal in our insider trading tracker.