As investors fret that Netflix‘s viewer-engagement metrics are flagging, the streaming giant reported earnings for the second quarter of 2026 that were in line with Wall Street forecasts. But it issued weaker-than-expected guidance for Q3, driving the stock price down.

Netflix reported Q2 revenue of $12.56 billion, up 13.4% year over year, and net income of $3.4 billion (translating to 80 cents per share). On average, Wall Street analysts expected $12.59 billion and earnings per share of 79 cents, according to LSEG Data & Analytics. Operating margin for Q2 came in at 33.4%, down from 34.1% in the year-earlier period.

For Q3, Netflix said it expects revenue growth of 11.7% to $12.86 billion — undershooting analyst estimates, which had pegged the number at around $13 billion. The streamer projected an operating margin of 33.2% for the September 2026 quarter (vs. 28.2% in the year ago quarter).

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Shares of Netflix dropped as much as 9% in after-hours trading Thursday to their lowest levels in more than a year.

The company said that viewing hours grew 2% in the first half of 2026 — an improvement over the 1.5% growth in the comparable period in 2025, “despite the competitive impact of the Winter Olympics and the World Cup this year.” On Thursday, Netflix released its “What We Watched” report for the first half of 2026, which it has released twice yearly. Going forward, Netflix “will shift to publishing this report annually in the first quarter, beginning in 2027.”

Per the company’s letter to shareholders: “The goal of separating the publication of the report from our earnings results is to keep the focus on our primary financial metrics -– revenue and operating profit. With this change, we will still report industry-leading title-by-title and total view hours data (including our weekly Top 10 lists for movies and series in more than 90 countries).”

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“Overall, our engagement remains healthy and as with all things we do, we’re working hard to improve every day,” Netflix said.

The company said its ads business is still on track to deliver approximately $3 billion in revenue in 2026. Netflix said its U.S. upfront negotiations are in “advanced stages, and we expect commitments to close in the next few weeks.” It said there has been strong interest in its live programming lineup, including the 2027 FIFA Women’s World Cup, an expanded NFL slate, WWE and MLB events.

On the live-programming front, Netflix said that this year live programming is expected to account for just over 5% of its content spend — but only about 1% of view hours. That said, live event programming accounted for six of the top 10 new member sign-up days over the last five years (and, Netflix noted, it only began streaming live events since 2023).

The Q2 results reflect recent price increases at Netflix, including for its three plans in the U.S., marking its second price hike in a little over a year. The company said the results of the recent price changes “are consistent with prior changes and our expectations.”

For full-year 2026, Netflix narrowed its projected revenue range to $51.0 billion-$51.4 billion (which is within its previous range) and kept its expected operating margin unchanged at 31.5%.

Meanwhile, on April 22, Netflix’s board authorized the repurchase of an additional $25 billion of common stock, in a bid to boost the share price. CFO Spence Neumann said Netflix bought back about $4.7 billion of its own stock in the quarter, its largest quarter of share repurchases, and the company currently has $27.1 billion left in its remaining buyback authorizations.

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Pictured above (l. to r.): Louis Partridge as Tewkesbury, Millie Bobby Brown as Enola Holmes, Himesh Patel as Dr. Watson in Netflix’s “Enola Homes 3”