Netflix Q2 revenue rose 13%. A Q3 forecast of 11.7% growth and decelerating trends sent shares down 9% after hours. Advertising revenue on track to double to $3B.
Netflix (NFLX stock page) shares fell 9% in after-hours trading Thursday. The company reported second-quarter revenue that met expectations. Guidance for the third quarter pointed to slower growth.
Revenue rose 13% year over year to $12.6 billion, in line with management's forecast. Earnings per share came in at $0.80, up 11% from a year earlier. Operating margin was 33.4%, down slightly from 34.1% in the same quarter last year, reflecting faster content amortization in the first half. Netflix still expects full-year operating margin of 31.5%, up from 29.5% in 2025.
The deceleration is the headline. Year-over-year revenue growth has slowed each quarter this year: 17.6% in Q4 2025, then 16.2% in Q1, and 13.4% in Q2. The company forecast Q3 growth of 11.7%. Full-year revenue guidance was narrowed to a range of $51.0 billion to $51.4 billion, or 13% to 14% growth.
Advertising is the most visible growth driver. Netflix management said it remains on track to roughly double advertising revenue this year to about $3 billion, or about 6% of expected 2026 revenue. Live programming plays a key role. The company said live events have accounted for six of its top 10 days for new member sign-ups over the past five years, even though live content makes up just over 5% of content spend. An expanded NFL agreement adds a week-one game, a Thanksgiving Eve game, and a Christmas game this year.
Shareholders are also getting cash back. Netflix repurchased $4.7 billion of its own stock in the second quarter, the largest quarterly buyback in its history. The company has $27.1 billion remaining on its repurchase authorizations.
After the after-hours drop, the stock traded at about $68, down 47% from its 52-week high of $127.75. At roughly 21 times forward earnings, the valuation is well below the multiples that demanded hypergrowth in prior years. The question is whether the growth rate stabilizes. Netflix's own forecast shows the deceleration continuing into Q3.
AlphaScala's Alpha Score rates NFLX at 49 out of 100, a Mixed reading that reflects steady revenue growth and expanding margins against slowing momentum.
Netflix management highlighted the NFL deal and advertising growth as key drivers for the second half.
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