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Netflix shares fall after Q2 results and softer Q3 revenue outlook
The company projected Q3 revenue growth of 11.7% and said it expects operating margin to remain strong, even as free cash flow fell 33% to $1.525 billion in the quarter.
Netflix Inc shares fell more than 7% on Friday after the company reported Q2 results, with the stock closing at a new 6-month low of $68.95 on July 17, according to Yahoo Finance. The decline followed Thursday's earnings release and came as investors reacted to lower Q3 revenue growth expectations.
Netflix projected lower Q3 revenue growth than it posted in Q2, but it kept its 2026 outlook unchanged. The company’s Q3 revenue growth forecast was 11.7%, versus 13.4% Q2 revenue growth year over year, while its 2026 revenue forecast remained $51 billion to $51.4 billion, the same range cited in prior guidance, the outlet said.
The report also highlighted weaker free cash flow, driven by “extra payments” tied to Netflix’s withdrawn Warner Bros. Discovery bid. Free cash flow for the quarter came in at $1.525 billion, down 33% from last year’s $2.267 billion, and below the prior quarter adjusted free cash flow of $2.294 billion, Yahoo Finance noted.
While lower year over year, Netflix’s operating margins were higher than last quarter and above its own projections, with the outlook for Q3 operating margin forecast at 33.2% versus 28.2% last year, the outlet added. Yahoo Finance also cited that analysts’ revenue forecasts have dropped since the quarter, as it discussed changing expectations for the next few quarters.