October 25, 2026·27 min read
Netflix, Inc. (NFLX), Financial Analysis
Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.
Figures are read from the Forms 10-K for FY2021 to FY2025, the Forms 10-Q for Q1 2025 to Q3 2026, the Forms 8-K with all their exhibits, incl. the quarterly shareholder letters (Ex 99.1), the WBD merger agreements (Ex 2.1) and credit agreements (Ex 10.1 to 10.3), the Forms 425 deal materials, the proxy statement of 2026 and the Form 8-K Item 5.07 vote results, Schedules 13G and Forms 3, 4 and 144 on the record for central index key 1065280, together with the comparable filings of six peers. Accession numbers for every filing used appear in the Sources appendix. Market prices are closing prices of 23 October 2026.
Revenue Q3 2026
$12.9bn
+11.8% on Q3 2025
Operating margin Q3 2026
34.6%
Q3 2025 28.2% incl. $619m Brazil tax charge
Free cash flow TTM
$11.4bn
22.9% of revenue
Buybacks 9M 2026
$10.7bn
diluted shares (3.3%) year on year
Market value
$270bn
P/E TTM 19.0x; 22.4x excluding fee
Key findings
- Q3 2026 revenue $12.9bn, +11.8% (+11% F/X neutral), against +17.2% in Q3 2025; Q4 2026 guidance $13.4bn, +11.5%.
- Q3 2026 operating income $4.5bn, +37%; margin 34.6% against 28.2% in Q3 2025, which carried a $619m Brazil tax charge. FY2026 margin guidance 31.5%.
- Advertising guidance cut to about $2.7bn for FY2026 from about $3bn; ad revenue rose $864m in 9M 2026. Ad tier extends to 15 more countries from March 2027.
- TTM EPS $3.46 includes the $2.8bn Warner Bros. Discovery termination fee received in Q1 2026; excluding it, TTM EPS is about $2.94.
- Capital returns: $10.7bn of buybacks in 9M 2026, 130.3m shares; $22.3bn authorization remaining; FY2026 FCF guidance about $12.0bn.
- Shares closed at $65.78, 43.6% below the 52 week high of $116.73. Base case (11% revenue CAGR, 35% margin, 22x P/E) implies $115 in three years; best case $181, worst case $58.
1 Revenue & Business Model
- One operating segment, streaming. Revenue comes from membership fees and advertising; DVD revenue ended in 2023. Membership counts and revenue per membership stopped being reported in 2025; revenue and operating margin are the stated primary metrics.
- Revenue FY2021 $29.7bn to FY2025 $45.2bn, a 11.1% CAGR; TTM Q3 2026 $49.7bn. FY2026 guidance $51.1bn, +13%.
- Q3 2026 by region: UCAN $5.6bn (43.7%), EMEA $4.1bn (31.9%), LATAM $1.6bn (12.4%), APAC $1.5bn (11.9%). F/X neutral growth slowed in every region between Q4 2025 and Q3 2026.
- Advertising: over $1.5bn in FY2025, guided to about $2.7bn in FY2026, about 5% of revenue; the ad plan took over 60% of Q1 2026 sign ups in ad markets.
- Memberships: 301.6m paid memberships at FY2024; the company passed 325m during Q4 2025. Plan prices ranged from $1 to $37 per month equivalent at FY2025.
- Content: amortization $16.4bn in FY2025; cash content spend $17.7bn, 1.08x amortization (guided about 1.1x in FY2026). Content obligations $25.2bn at 30 Sep 2026, of which $19.6bn off balance sheet.
- Currency: 56% of FY2025 revenue in currencies other than the US dollar, against 31% of operating expenses.
Table 1.1 Content economics, FY2021 to FY2025
| Measure | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Content amortization ($bn) | 12.2 | 14.0 | 14.2 | 15.3 | 16.4 |
| Cash content spend ($bn) | 17.5 | 16.7 | 13.1 | 17.0 | 17.7 |
| Cash spend to amortization (x) | 1.43 | 1.19 | 0.93 | 1.11 | 1.08 |
| Licensed content amortization ($bn) | 8.1 | 7.7 | 7.1 | 7.7 | 8.7 |
| Produced content amortization ($bn) | 4.2 | 6.3 | 7.1 | 7.6 | 7.7 |
| Content assets, net ($bn) | 30.9 | 32.7 | 31.7 | 32.5 | 32.8 |
Table 1.2 Regional revenue growth year on year
| Region | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| UCAN, reported (%) | 17 | 18 | 14 | 10 | 11 |
| UCAN, F/X neutral (%) | 17 | 18 | 14 | 10 | 11 |
| EMEA, reported (%) | 18 | 18 | 17 | 14 | 11 |
| EMEA, F/X neutral (%) | 15 | 15 | 12 | 11 | 9 |
| LATAM, reported (%) | 10 | 15 | 19 | 21 | 17 |
| LATAM, F/X neutral (%) | 20 | 20 | 18 | 16 | 12 |
| APAC, reported (%) | 21 | 17 | 20 | 16 | 12 |
| APAC, F/X neutral (%) | 20 | 19 | 19 | 18 | 15 |
2 Financial Analysis & Ratios
- Operating margin rose from 17.8% in FY2022 to 29.5% in FY2025 and 31.3% TTM; revenue grew faster than content amortization (FY2025 +7.3% against revenue +15.9%).
- Q3 2026 net income $3.7bn, +43.9%; diluted EPS $0.87 against $0.59. Q1 2026 net income of $5.3bn includes the $2.8bn termination fee in interest and other income.
- Free cash flow FY2025 $9.5bn and TTM $11.4bn; FY2021 FCF was ($0.1bn) when cash content spend was 1.43x amortization.
- Debt $15.1bn and cash $8.2bn at 30 Sep 2026; net debt $7.1bn on the company definition. $1bn of 5.250% notes due 2036 issued in July 2026 refinance the $1bn 4.375% notes due November 2026.
- Returns: ROE 50.4% TTM. Equity rose from $26.6bn at FY2025 to $29.3bn at 30 Sep 2026; TTM buybacks $12.9bn against TTM net income $14.8bn.
- Effective tax rate 14% in FY2025 and 17% in 9M 2026.
Table 2.1 Income statement, cash flow and balance sheet summary ($bn unless stated)
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|---|
| Revenue | 29.7 | 31.6 | 33.7 | 39.0 | 45.2 | 49.7 |
| Gross profit | 12.4 | 12.4 | 14.0 | 18.0 | 21.9 | 25.2 |
| Research and development | 2.3 | 2.7 | 2.7 | 2.9 | 3.4 | 3.9 |
| Selling, general and administrative | 3.9 | 4.1 | 4.4 | 4.6 | 5.2 | 5.8 |
| Operating income | 6.2 | 5.6 | 7.0 | 10.4 | 13.3 | 15.6 |
| Net income | 5.1 | 4.5 | 5.4 | 8.7 | 11.0 | 14.8 |
| Diluted EPS ($) | 1.12 | 0.99 | 1.20 | 1.98 | 2.53 | 3.46 |
| Operating cash flow | 0.4 | 2.0 | 7.3 | 7.4 | 10.1 | 12.3 |
| Capital expenditure | (0.5) | (0.4) | (0.3) | (0.4) | (0.7) | (0.9) |
| Free cash flow | (0.1) | 1.6 | 6.9 | 6.9 | 9.5 | 11.4 |
| Stock based compensation | 0.4 | 0.6 | 0.3 | 0.3 | 0.4 | 0.5 |
| Cash and investments | 6.0 | 6.1 | 7.1 | 9.6 | 9.1 | 8.2 |
| Total debt | 15.4 | 14.4 | 14.5 | 15.6 | 14.5 | 15.1 |
| Total equity | 15.8 | 20.8 | 20.6 | 24.7 | 26.6 | 29.3 |
Per share data restated for the 10 for 1 stock split of 14 Nov 2025. Gross profit equals revenue less cost of revenues. R&D is technology and development.
Table 2.2 What changed, Q3 2026 against Q3 2025
| Metric | Q3 2025 | Q3 2026 | Change |
|---|---|---|---|
| Revenue ($bn) | 11.51 | 12.87 | 11.8% |
| Gross profit ($bn) | 5.35 | 6.80 | 27.1% |
| Operating income ($bn) | 3.25 | 4.46 | 37.3% |
| Net income ($bn) | 2.55 | 3.66 | 43.9% |
| Diluted EPS ($) | 0.59 | 0.87 | 47.5% |
| Operating cash flow ($bn) | 2.83 | 3.16 | 11.9% |
| Free cash flow ($bn) | 2.66 | 2.88 | 8.4% |
| Operating margin (%) | 28.2 | 34.6 | 6.4 pts |
| Net margin (%) | 22.1 | 28.5 | 6.3 pts |
Table 2.3 Ratio analysis
| Ratio | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|---|
| Growth and margins | ||||||
| Revenue growth (%) | n/a | 6.5 | 6.7 | 15.6 | 15.9 | n/a |
| Gross margin (%) | 41.6 | 39.4 | 41.5 | 46.1 | 48.5 | 50.7 |
| Operating margin (%) | 20.9 | 17.8 | 20.6 | 26.7 | 29.5 | 31.3 |
| Net margin (%) | 17.2 | 14.2 | 16.0 | 22.3 | 24.3 | 29.7 |
| FCF margin (%) | (0.4) | 5.1 | 20.5 | 17.7 | 20.9 | 22.9 |
| Cost and investment intensity | ||||||
| R&D (%) revenue | 7.7 | 8.6 | 7.9 | 7.5 | 7.5 | 7.8 |
| SBC (%) revenue | 1.4 | 1.8 | 1.0 | 0.7 | 0.8 | 1.1 |
| Capex (%) revenue | 1.8 | 1.3 | 1.0 | 1.1 | 1.5 | 1.9 |
| Effective tax rate (%) | 12.4 | 14.7 | 12.9 | 12.6 | 13.7 | 16.6 |
| Returns | ||||||
| ROE (%) | 32.3 | 24.5 | 26.1 | 38.4 | 42.8 | 50.4 |
| ROA (%) | 11.5 | 9.6 | 11.1 | 17.0 | 20.1 | 25.2 |
| ROIC (%) | 21.5 | 16.5 | 21.6 | 29.6 | 35.9 | 35.9 |
| Asset turnover (x) | 0.67 | 0.65 | 0.69 | 0.73 | 0.81 | 0.85 |
| Liquidity and leverage | ||||||
| Current ratio (x) | 0.95 | 1.17 | 1.12 | 1.22 | 1.19 | 1.07 |
| Debt to equity (x) | 0.97 | 0.69 | 0.71 | 0.63 | 0.54 | 0.52 |
| Net cash ($bn) | (9.4) | (8.3) | (7.4) | (6.0) | (5.4) | (6.9) |
| Efficiency and cash quality | ||||||
| FCF to net income (x) | (0.03) | 0.36 | 1.28 | 0.79 | 0.86 | 0.77 |
| Shareholder returns (%) FCF | n/a | n/a | 87 | 90 | 96 | 113 |
Table 2.4 Valuation snapshot at $65.78 per share, 23 Oct 2026
| Measure | Value |
|---|---|
| Market cap ($bn) | 270.1 |
| Enterprise value ($bn) | 277.0 |
| P/E (TTM) (x) | 19.0 |
| EV/Sales (TTM) (x) | 5.6 |
| EV/EBITDA (TTM) (x) | 17.4 |
| FCF yield (%) | 4.2 |
| Price/Book (x) | 9.2 |
3 MD&A & Management Commentary
Latest earnings call and results release
- Q3 2026 (20 Oct 2026): revenue $12.87bn, +12%, in line with the company forecast; diluted EPS $0.87 against $0.82 consensus; Q4 EPS guidance $0.67 against about $0.73 consensus.
- Headcount: about 1,000 roles, about 6% of staff, cut the week before results; Q4 2026 margin guidance of 26.0% includes about 120 bp of related cost.
- Advertising: FY2026 ad revenue about $2.7bn against about $3bn guided in July; management said it was behind its target because ad product rollouts were slower; ad revenue still grows more than 80% in 2026.
- Churn improved year on year globally and in the US; 2026 price changes in the US, Mexico and Spain performed in line with expectations.
- India: view hours +24%, revenue about +18% F/X neutral, largest quarter of paid net additions in India.
- Buybacks: 63.9m shares for $4.8bn in Q3 2026, the largest quarter on record.
- 2027: no guidance yet; stated objectives are double digit revenue growth, margin expansion and higher FCF, with guidance due in January 2027.
- Q2 2026 call (16 Jul 2026): FY2026 revenue range narrowed to $51.0bn to $51.4bn; addressable market sized at about $670bn with about 7% share; under 45% penetration of about 800m broadband households; view hours +2% in H1 2026.
Table 3.1 Company outlook as filed or stated on the call
| Item | Outlook | Source |
|---|---|---|
| FY2026 revenue | $51.1bn, +13% (+12% F/X neutral) | Q3 2026 letter, 8-K Ex 99.1 |
| FY2026 operating margin | 31.5%, incl. about 30 bp from Q4 headcount reductions | Q3 2026 letter |
| FY2026 advertising revenue | about $2.7bn (prior about $3bn) | Q3 2026 letter |
| FY2026 free cash flow | about $12.0bn (prior about $12.5bn), lower on an expected Q4 real estate transaction | Q3 2026 letter |
| FY2026 cash content spend to amortization | about 1.1x | Q3 2026 letter |
| Q4 2026 revenue | $13.44bn, +11.5% | Q3 2026 letter |
| Q4 2026 operating margin | 26.0%, incl. about 120 bp headcount reduction cost (Q4 2025: 24.5%) | Q3 2026 letter |
| Q4 2026 diluted EPS | $0.67; net income $2.79bn | Q3 2026 letter |
Management and CFO commentary
- CFO Spence Neumann, WBD deal call (5 Dec 2025, Form 425): funding of $10.3bn cash, $50.0bn acquisition debt and $11.7bn stock; at least $2bn to $3bn of annual cost savings by year three; accretive to GAAP EPS by year two; leverage back under rating agency targets within two years.
- CFO, Q4 2025 letter and interview (20 Jan 2026): FY2025 FCF $9.5bn against a $9bn forecast as a $0.7bn Brazil tax deposit moved into 2026; 2026 margin target 31.5%, about 2 points of expansion incl. about 0.5 point of M&A cost; ad revenue to roughly double to about $3bn; buybacks paused for the WBD deal.
- CFO, Q1 2026 (16 Apr 2026): FCF guidance raised to about $12.5bn after the $2.8bn termination fee; buybacks resumed; about $275m of M&A cost in 2026 guidance; churn lower year on year in every region.
- CFO, Q2 and Q3 2026 letters: record buybacks of $4.7bn and $4.8bn; FY2026 FCF lowered to about $12.0bn on an expected Q4 real estate transaction; $1bn 2026 maturity refinanced.
- Co CEOs Ted Sarandos and Greg Peters: WBD described as a rare opportunity in December 2025 and as an accelerant only at the right price in April 2026, when Netflix declined to raise its offer; Q3 2026 letter addresses investor concern over view hours growth and frames headcount cuts as funding investment in priority areas.
Table 3.2 Management statements in their own words
| Speaker | Date and source | Statement |
|---|---|---|
| Spence Neumann, CFO | 5 Dec 2025, WBD deal call (Form 425) | “We expect proforma leverage to be elevated at closing” |
| Netflix management, shareholder letter | 16 Apr 2026, 8-K Ex 99.1 | “Warner Bros. would have been a nice accelerant for our strategy” |
| Netflix management, shareholder letter | 20 Oct 2026, 8-K Ex 99.1 | “We know there's some investor concern about our view hours growth.” |
Table 3.3 Key disclosures from the latest Form 10-K and Form 10-Q
| Item | Disclosure |
|---|---|
| 10-K FY2025, Item 1A new | Two new risk factors on the Warner Bros. Discovery transaction, including a $5.8bn Netflix termination fee in certain regulatory cases and up to $42.2bn of bridge commitments; both lapsed when WBD terminated on 27 Feb 2026. |
| 10-K FY2025, Item 1A changed | Competition risk adds generative AI; reputation risk names advertisements; cybersecurity risk adds open source software and generative AI; net neutrality risk cites network usage fee proposals. |
| 10-K FY2025, Item 7 | Cost of revenues +$2.2bn: content amortization +$1.1bn and other cost of revenues +$1.1bn, including Brazil non income tax assessments ($619m charge in Q3 2025). |
| 10-K FY2025, liquidity | Contractual obligations $45.0bn: content $24.0bn ($11.5bn within 12 months), debt principal and interest $18.1bn, operating leases $2.9bn; unknown future title obligations estimated at $1bn to $4bn over three years. |
| 10-K FY2025, Item 7A | A 10% weaker US dollar would lower accumulated other comprehensive income on revenue hedges by about $2.3bn before tax. |
| 10-K FY2025, debt note | Senior notes $14.5bn at par across twelve tranches due 2026 to 2054, incl. EUR 4.7bn; $3bn revolver to April 2029 undrawn; covenant EBITDA to interest at least 3.0x. |
| 10-Q Q3 2026, MD&A | Revenue +$1.4bn year on year: subscription +$1.06bn, advertising +$0.26bn, F/X net of hedging +$0.10bn. Technology and development +21% on higher personnel costs. |
| 10-Q Q3 2026, cash flow | 9M 2026 operating cash flow $10.2bn, +27%, incl. the $2.8bn fee and $729m of non routine Brazil tax payments; InterPositive acquired in March 2026 for about $587m. |
| 10-Q Q3 2026, risk factors | No material change from the FY2025 Form 10-K; no material litigation listed. |
4 Sector & Competitor Analysis
- Sector: streaming video, studios and ad supported video. Netflix estimates about 5% of global TV viewing and about 9.0% of US TV time in December 2025, while linear TV held over 40% of US TV screen time.
- Consolidation: Paramount Skydance agreed in February 2026 to buy Warner Bros. Discovery for $31 per share in cash (about $110bn enterprise value) after WBD ended its $27.75 per share agreement with Netflix; WBD deregistered on 16 Oct 2026.
- Margin: NFLX TTM operating margin 31.3% against Alphabet 33.1%, Disney 18.4%, Spotify 14.6%, Roku 5.2%, Paramount Skydance 3.7% and WBD (3.5%).
- Growth: NFLX 14.7% TTM against Alphabet 23.1%, Roku 22.1%, Spotify 14.0%, Disney 6.2%, Paramount Skydance 1.6% and WBD (6.3%).
- Valuation: NFLX 5.6x EV/Sales and 19.0x P/E, against Disney 2.4x and 22.6x, Spotify 5.3x, Roku 4.0x and Alphabet 8.5x and 16.1x.
- Competition for sports and events: YouTube carries the Oscars from 2029; Amazon carries Thursday Night Football and NBA games. Live is about 5% of Netflix 2026 content spend and about 1% of view hours.
Table 4.1 Peer comparison, latest reported trailing twelve months
| Company | Revenue TTM ($bn) | Revenue growth (%) | Gross margin (%) | Operating margin (%) | Net margin (%) | FCF margin (%) | ROE (%) | Net cash ($bn) | Market value ($bn) | EV/Sales (x) | P/E TTM (x) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| NFLX | 49.7 | 14.7 | 50.7 | 31.3 | 29.7 | 22.9 | 50.4 | (6.9) | 270 | 5.6 | 19.0 |
| DIS | 98.9 | 6.2 | n/a | 18.4 | 8.7 | 8.4 | 7.8 | (40.9) | 194 | 2.4 | 22.6 |
| WBD | 36.1 | (6.3) | n/a | (3.5) | (8.8) | 6.0 | (9.6) | (28.7) | n/a | n/a | n/a |
| SPOT | 20.7 | 14.0 | 32.8 | 14.6 | n/a | 18.0 | n/a | 10.7 | 120 | 5.3 | n/a |
| ROKU | 5.2 | 22.1 | 45.5 | 5.2 | 6.8 | 13.6 | 12.6 | 2.6 | 24 | 4.0 | 66.4 |
| GOOGL | 445.9 | 23.1 | 60.9 | 33.1 | 54.8 | 11.9 | 38.1 | 142.3 | 3,928 | 8.5 | 16.1 |
| PSKY | 29.1 | 1.6 | n/a | 3.7 | (2.1) | 1.6 | (5.3) | (12.9) | n/a | n/a | n/a |
Disney TTM to June 2026; Spotify IFRS converted at $1.142 per EUR; WBD TTM to June 2026 and no market data after its acquisition; no market data for Paramount Skydance. Alphabet net income includes large non operating gains. NFLX net income includes the $2.8bn termination fee.
5 Material Events & Contracts
- Sixteen Forms 8-K in twelve months. Five relate to the Warner Bros. Discovery agreement, its amendment to all cash, its financing and its termination.
- WBD timeline: agreement on 4 Dec 2025 at $27.75 per share (equity value about $72.0bn); amended to all cash on 19 Jan 2026 with $42.2bn bridge commitments; terminated on 27 Feb 2026; $2.8bn fee received in Q1 2026.
- Capital returns: an additional $25bn buyback authorization on 22 Apr 2026.
- Board: Reed Hastings left the board at the 2026 meeting; Jay Hoag became Chairman and the lead independent director role ended; Anne Sweeney resigned on 26 Jul 2026.
Table 5.1 Forms 8-K filed in the last twelve months
| Date | Items | Event |
|---|---|---|
| 30 Oct 2025 | 8.01, 9.01 | Board approved a 10 for 1 forward stock split for holders of record on 10 Nov 2025. |
| 4 Nov 2025 | 5.02, 9.01 | Executive severance plan amended from 1 Jan 2026: 2x salary plus target bonus outside a change in control; retirement vesting added for the co CEOs, CFO and Chief Legal Officer. |
| 14 Nov 2025 | 5.03, 9.01 | Charter amendment raised authorized common stock from 4.99bn to 49.9bn shares with the split. |
| 5 Dec 2025 | 1.01, 7.01, 9.01 | Agreement to acquire WBD Streaming and Studios at $23.25 cash plus $4.50 in stock per WBD share; equity value about $72.0bn; $59bn bridge commitment; WBD break fee $2.8bn, Netflix regulatory break fee $5.8bn. |
| 5 Dec 2025 | 9.01 | Form 8-K/A refiling the merger agreement exhibit. |
| 22 Dec 2025 | 1.01, 2.03, 9.01 | $5bn revolving credit facility and $20bn delayed draw term loan; bridge commitments reduced to $34bn. |
| 20 Jan 2026 | 1.01, 7.01, 9.01 | Amended WBD agreement at $27.75 per share in cash; bridge commitments raised to $42.2bn. |
| 20 Jan 2026 | 2.02, 9.01 | Q4 2025 results: revenue $12.05bn (+17.6%), operating margin 24.5%, EPS $0.56; FY2026 guidance $50.7bn to $51.7bn; buybacks paused for the WBD deal. |
| 27 Feb 2026 | 1.02 | WBD terminated the agreement to sign with Paramount Skydance; Netflix waived its match right; $2.8bn termination fee paid to Netflix; all financing commitments ended. |
| 16 Apr 2026 | 2.02, 5.02, 9.01 | Q1 2026 results: revenue $12.25bn (+16.2%), margin 32.3%, EPS $1.23 incl. fee; FCF guidance raised to about $12.5bn; Reed Hastings not standing for reelection. |
| 22 Apr 2026 | 8.01 | Additional $25bn share repurchase authorization. |
| 5 Jun 2026 | 5.07, 8.01 | Annual meeting of 4 Jun 2026: 12 directors elected, auditor ratified, say on pay approved, four shareholder proposals not approved; Jay Hoag named Chairman. |
| 16 Jul 2026 | 2.02, 9.01 | Q2 2026 results: revenue $12.56bn (+13.4%), margin 33.4%, EPS $0.80; FY2026 revenue range narrowed to $51.0bn to $51.4bn. |
| 22 Jul 2026 | 8.01, 9.01 | Issued $1bn 5.250% senior notes due 2036 to repay $1bn 4.375% notes due November 2026. |
| 30 Jul 2026 | 5.02 | Director Anne Sweeney resigned effective 26 Jul 2026. |
| 20 Oct 2026 | 2.02, 9.01 | Q3 2026 results: revenue $12.87bn (+11.8%), margin 34.6%, EPS $0.87; FY2026 ad revenue guidance about $2.7bn; FCF guidance about $12.0bn; Q4 margin guidance 26.0%. |
Table 5.2 Material contracts and financing arrangements
| Contract | Terms |
|---|---|
| Senior notes | $15.3bn at par at 30 Sep 2026 across tranches due to 2054, incl. euro notes; $1bn 5.250% notes due 2036 issued July 2026. |
| Revolving credit and commercial paper | $3bn revolver to April 2029 and $3bn commercial paper program, both unused; WBD related $5bn revolver and $20bn term loan terminated. |
| Content obligations | $25.2bn at 30 Sep 2026, of which $19.6bn not on the balance sheet. |
| Licensing | New Disney licensing agreement and TF1 channel integration in France live since June 2026. |
6 Ownership, Voting Power & Annual Meeting
- One class of common stock, one vote per share; no controlling holder. Directors and officers held 1.24% including options at 6 Apr 2026.
- 2026 annual meeting (4 Jun 2026): quorum 85.6%; all 12 directors elected with 90.8% to 98.5% of votes cast; say on pay 83.4%; written consent proposal 44.6%.
- Insiders, 12 months: no open market purchases; sales about $402.5m. Reed Hastings sold about $309.0m after option exercises, mostly under 10b5-1 plans; co CEOs Greg Peters about $17.7m and Ted Sarandos about $14.4m.
Table 6.1 Annual meeting vote results, 4 Jun 2026
| Proposal | For (bn votes) | Against (bn votes) | Abstain (bn votes) | For as % of votes cast | Result |
|---|---|---|---|---|---|
| Elect Richard Barton | 2.891 | 0.294 | 0.007 | 90.8 | Elected |
| Elect Mathias Dopfner | 3.096 | 0.088 | 0.008 | 97.2 | Elected |
| Elect Jay Hoag | 2.963 | 0.221 | 0.008 | 93.1 | Elected |
| Elect Leslie Kilgore | 3.023 | 0.162 | 0.007 | 94.9 | Elected |
| Elect Strive Masiyiwa | 3.066 | 0.116 | 0.009 | 96.4 | Elected |
| Elect Ann Mather | 2.974 | 0.210 | 0.008 | 93.4 | Elected |
| Elect Elinor Mertz | 2.904 | 0.280 | 0.007 | 91.2 | Elected |
| Elect Greg Peters | 3.136 | 0.048 | 0.007 | 98.5 | Elected |
| Elect Susan Rice | 3.036 | 0.121 | 0.034 | 96.2 | Elected |
| Elect Ted Sarandos | 3.136 | 0.048 | 0.007 | 98.5 | Elected |
| Elect Brad Smith | 3.053 | 0.131 | 0.007 | 95.9 | Elected |
| Elect Anne Sweeney | 3.063 | 0.121 | 0.007 | 96.2 | Elected (resigned Jul 26, 2026) |
| Ratify Ernst & Young LLP for FY2026 | 3.484 | 0.117 | 0.004 | 96.8 | Approved |
| Advisory vote on executive compensation | 2.661 | 0.517 | 0.013 | 83.7 | Approved |
| Shareholder proposal: right to act by written consent | 1.418 | 1.760 | 0.013 | 44.6 | Not approved |
| Shareholder proposal: ESG ROI report | 0.033 | 3.133 | 0.026 | 1.0 | Not approved |
| Shareholder proposal: report on politicized brand misalignment | 0.031 | 3.133 | 0.028 | 1.0 | Not approved |
| Shareholder proposal: adopt cumulative voting | 0.095 | 3.077 | 0.019 | 3.0 | Not approved |
For as % of votes cast excludes abstentions and broker non votes.
Remarks at the 4 Jun 2026 annual meeting
- The virtual meeting was procedural: no business, financial or strategy remarks by management and no live shareholder questions are recorded; the co CEOs, the CFO and eight directors attended.
- Proponents presented four shareholder proposals (written consent, ESG spending report, brand report, cumulative voting); the cumulative voting proponent cited the terminated WBD deal.
- After the meeting Jay Hoag became Chairman as Reed Hastings left the board, and the lead independent director role ended.
Table 6.2 Holders above 5% listed in the 2026 proxy statement
| Holder | Shares (m) | Stake (%) | Basis |
|---|---|---|---|
| Vanguard Group | 364.4 | 8.65 | 13G/A of Feb 2024; 0.0% in 13G/A of 27 Mar 2026 after disaggregation |
| BlackRock | 309.0 | 7.34 | 13G/A of Jan 2024 |
| FMR | 222.8 | 5.29 | 13G/A of 7 Apr 2025 |
| Directors and officers (16 persons) | 52.4 | 1.24 | DEF 14A, 6 Apr 2026, incl. exercisable options |
7 Risk Factors
- The Q3 2026 Form 10-Q reports no material change in risk factors from the FY2025 Form 10-K. The FY2025 10-K added two WBD transaction risks, which lapsed on termination, and reworded four others.
Table 7.1 Risk factors disclosed in Item 1A, with changes in the FY2025 Form 10-K
| Risk | Disclosure and change |
|---|---|
| Competition | Changed: adds generative AI as a factor that could favour competitors; YouTube, Amazon and a combined Paramount and WBD compete for viewing time, rights and talent. |
| Advertising | Changed: reputation risk now names advertisements; FY2026 ad revenue guidance cut to about $2.7bn. |
| Content costs and obligations | Content obligations $25.2bn at 30 Sep 2026; unknown future title obligations estimated at $1bn to $4bn over three years. |
| Currency | 56% of FY2025 revenue outside the US dollar; a 10% weaker dollar lowers hedge AOCI by about $2.3bn. |
| Cybersecurity | Changed: adds open source software and generative AI as sources of exposure. |
| Network access | Changed: cites network usage fee proposals in the EU and US and the 2025 court ruling against FCC net neutrality rules. |
| Tax | Brazil non income tax charge $619m in Q3 2025; $729m of non routine Brazil payments in 9M 2026; gross unrecognized tax benefits $566m. |
| WBD transaction (new, lapsed) | Completion and financing risks added in the 10-K; ended with termination on 27 Feb 2026. |
8 Stock Price, Scenarios & Sensitivity
- NFLX closed at $65.78 on 23 Oct 2026, 43.6% below the 52 week high of $116.73 and 2.6% above the low of $64.10; shares fell almost 6% after hours on 20 Oct 2026.
- Valuation: 19.0x TTM P/E, or about 22.4x excluding the termination fee; 5.6x EV/Sales; FCF yield 4.2%.
- Consensus: revenue FY2027 $57.3bn and FY2028 $63.1bn; EPS FY2027 $3.83 and FY2028 $4.56.
- Scenario model: revenue grows from TTM Q3 2026 $49.7bn for three years; net interest of ($0.5bn) and a 15% tax rate; buybacks lower the share count; price equals FY2029 EPS times exit P/E.
Critical factors and core assumptions
Table 8.1 Critical factors behind the best case
| Factor | Current value | Best case requires | Evidence in filings and calls |
|---|---|---|---|
| Advertising revenue | FY2025 over $1.5bn; FY2026 guidance about $2.7bn | ad revenue doubles again in 2027 and reaches high single digit % of revenue by FY2029 | Q3 2026 letter; 10-Q Q3 2026 (+$864m in 9M 2026); 15 new ad tier countries in 2027 |
| Operating margin | FY2025 29.5%; FY2026 guidance 31.5% | about 2 points of expansion a year to 38% in FY2029 | 17.8% in FY2022 to 29.5% in FY2025 (10-K) |
| Revenue growth | Q3 2026 +11.8%; Q4 2026 guidance +11.5% | growth returns to about 14% a year | FY2025 +15.9%; F/X neutral growth slowed in every region in 2026 |
| Engagement and pricing | view hours +2% in H1 2026; churn lower year on year | view hours growth rises while annual price increases continue without higher churn | Q2 and Q3 2026 letters and calls |
| Share count | diluted shares 4.20bn in Q3 2026, (3.3%) year on year | FCF above $12bn a year funds a 4% annual share count reduction | $22.3bn authorization remaining (10-Q Q3 2026) |
| M&A and content cost | WBD agreement terminated; $2.8bn fee received | no large dilutive acquisition; content cost growth near 10% a year | 8-K 27 Feb 2026; Q2 2026 call |
- Revenue base TTM Q3 2026 $49.7bn; FY2026 guidance $51.1bn.
- Best case: 14% revenue CAGR to $73.7bn, 38% operating margin, 28x P/E, share count (12%).
- Base case: 11% revenue CAGR to $68.0bn (consensus FY2028 $63.1bn), 35% margin, 22x P/E, share count (8%).
- Worst case: 7% revenue CAGR to $60.9bn, 30% margin, 15x P/E, share count (4%).
- Tax rate 15% (FY2025 14%, 9M 2026 17%); net interest ($0.5bn) a year; no dividend.
Scenarios, three years forward
Table 8.2 Scenario analysis, TTM Q3 2026 to FY2029
| Measure | Worst case | Base case | Best case |
|---|---|---|---|
| Revenue CAGR, 3 years (%) | 7.0 | 11.0 | 14.0 |
| Revenue, FY2029 ($bn) | 60.9 | 68.0 | 73.7 |
| Operating margin, FY2029 (%) | 30.0 | 35.0 | 38.0 |
| Net income, FY2029 ($bn) | 15.1 | 19.8 | 23.4 |
| EPS, FY2029 ($) | 3.83 | 5.24 | 6.47 |
| Exit P/E (x) | 15.0 | 22.0 | 28.0 |
| Implied price ($) | 58 | 115 | 181 |
| Change against $65.78 (%) | (13) | 75 | 175 |
| Implied annual return (%) | (4.4) | 20.6 | 40.2 |
FY2029 means the four quarters to Q3 2029. Implied annual return excludes dividends; NFLX pays none.
Sensitivity analysis
Table 8.3 Sensitivity of implied price to revenue CAGR and operating margin at 22x P/E
| Revenue CAGR \ Operating margin | 28% | 31% | 34% | 37% | 40% |
|---|---|---|---|---|---|
| 5% | $77 | $86 | $94 | $103 | $112 |
| 7% | $82 | $91 | $100 | $109 | $118 |
| 9% | $87 | $96 | $106 | $115 | $125 |
| 11% | $92 | $102 | $112 | $122 | $132 |
| 13% | $97 | $108 | $118 | $129 | $140 |
| 15% | $102 | $114 | $125 | $136 | $147 |
Cells show implied share price in year 3. Current price $65.78. Blue cells sit above the current price, red cells below.
Table 8.4 Sensitivity of implied price to exit P/E and operating margin at 11% revenue CAGR
| Exit P/E \ Operating margin | 28% | 31% | 34% | 37% | 40% |
|---|---|---|---|---|---|
| 14x | $58 | $65 | $71 | $78 | $84 |
| 18x | $75 | $83 | $92 | $100 | $108 |
| 22x | $92 | $102 | $112 | $122 | $132 |
| 26x | $108 | $120 | $132 | $144 | $156 |
| 30x | $125 | $139 | $153 | $167 | $180 |
Cells show implied share price in year 3. Current price $65.78. Blue cells sit above the current price, red cells below.
Disclaimer
This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 23 October 2026.
Sources
All company figures are read from SEC filings retrieved through the sec-api.io MCP server. Call statements are taken from the Q3 2026 and Q2 2026 video earnings interviews held by the company.
Table A.1 Filings used, with accession numbers
| Form | Period | Filed | Accession number |
|---|---|---|---|
| 10-Q | Q3 2026 | 21 Oct 2026 | 0001065280-26-000291 |
| 8-K Ex 99.1 | Q3 2026 shareholder letter | 20 Oct 2026 | 0001065280-26-000290 |
| 10-Q | Q2 2026 | 17 Jul 2026 | 0001065280-26-000212 |
| 8-K Ex 99.1 | Q2 2026 shareholder letter | 16 Jul 2026 | 0001065280-26-000211 |
| 10-Q | Q1 2026 | 17 Apr 2026 | 0001065280-26-000138 |
| 8-K Ex 99.1 | Q1 2026 shareholder letter | 16 Apr 2026 | 0001065280-26-000137 |
| 10-K | FY2025 | 23 Jan 2026 | 0001065280-26-000034 |
| 8-K Ex 99.1 | Q4 2025 shareholder letter | 20 Jan 2026 | 0001065280-26-000033 |
| 10-Q | Q3 2025 | 22 Oct 2025 | 0001065280-25-000406 |
| 10-Q | Q2 2025 | 18 Jul 2025 | 0001065280-25-000323 |
| 10-Q | Q1 2025 | 18 Apr 2025 | 0001065280-25-000176 |
| 10-K | FY2024 | 27 Jan 2025 | 0001065280-25-000044 |
| 10-K | FY2023 | 26 Jan 2024 | 0001065280-24-000030 |
| 10-K | FY2022 | 26 Jan 2023 | 0001065280-23-000035 |
| 8-K | WBD merger agreement | 5 Dec 2025 | 0001193125-25-308651 |
| 8-K | WBD financing facilities | 22 Dec 2025 | 0001193125-25-327462 |
| 8-K | Amended WBD merger agreement | 20 Jan 2026 | 0001193125-26-015951 |
| 8-K | WBD termination | 27 Feb 2026 | 0001193125-26-082247 |
| 8-K | 2026 annual meeting | 5 Jun 2026 | 0001065280-26-000189 |
| 8-K | Stock split | 30 Oct 2025 | 0001065280-25-000407 |
Table B.1 Exhibits to Forms 8-K filed in the last twelve months
| Filed | Exhibit | Document | Content |
|---|---|---|---|
| 30 Oct 2025 | EX-99.1 | Press release: ten for one stock split | Board approved a ten for one forward split via a charter amendment; Stated purpose: reset the share price to a range more accessible to employees in the stock option program |
| 4 Nov 2025 | EX-10.1 | Executive Officer Severance Plan, amended effective Jan 1, 2026 | Severance outside a change in control: 2x (base salary plus target bonus), plus pro rata bonus and an 18 month benefits (COBRA) payment; Severance within a change in control protection period (3 months before to 24 months after): 2x (base salary plus target bonus), pro rata bonus and a 24 month benefits payment |
| 4 Nov 2025 | EX-10.2 | Severance Plan amendment consent letter (form) | Form letter asking each executive officer to consent to the plan amendments effective Jan 1, 2026; Non change in control severance formula changes from 1x (salary plus target bonus plus target annual LTI) to 2x (salary plus target bonus) |
| 4 Nov 2025 | EX-10.3 | Award amendment consent letter (form) for RSUs and PSUs | RSUs and PSUs granted more than 12 months before retirement keep vesting on the normal schedule after a qualifying retirement; Qualifying termination outside a change in control now credits an extra 12 months of vesting plus pro rata vesting for the next tranche |
| 14 Nov 2025 | EX-3.1 | Certificate of amendment to the certificate of incorporation (stock split) | Authorized shares raised to 49,910,000,000: 49.9bn common and 10m preferred, par value $0.001; Each common share subdivided into ten shares at the effective time of 4:01 p.m. ET on Nov 14, 2025 |
| 5 Dec 2025 | EX-10.1 | Project Noble bridge commitment letter (Wells Fargo, BNP Paribas, HSBC) | 364 day senior unsecured bridge facility of $59.0bn, addressed to CFO Spencer Neumann; Commitments: BNP Paribas 35%, Wells Fargo 50% (33.898% WFBNA plus 16.102% WFSCI), HSBC entities 15% |
| 5 Dec 2025 | EX-2.1 | Agreement and Plan of Merger with Warner Bros. Discovery (Dec 4, 2025) | Netflix (via Nightingale Sub) to acquire WBD (through New Topco 25) after the spin of the Global Networks business (SpinCo); Per share cash amount $23.25 plus stock worth $4.50; collar: exchange ratio 0.0460 at or below a $97.91 Netflix VWAP and 0.0376 at or above $119.67; stock consideration percentage 16.22% |
| 5 Dec 2025 | EX-99.1 | Joint press release: Netflix to acquire Warner Bros. | $27.75 per WBD share ($23.25 cash plus $4.50 in Netflix stock, 10% symmetrical collar); equity value about $72.0bn, enterprise value about $82.7bn; Discovery Global spin now expected in Q3 2026; deal expected to close in 12 to 18 months |
| 5 Dec 2025 | EX-2.1 | Merger agreement refiled with form of Separation and Distribution Agreement (8-K/A) | 8-K/A refiles the Dec 4, 2025 merger agreement to include an exhibit omitted from the original filing; it supersedes the earlier Exhibit 2.1; Added Exhibit A: agreed form of the Separation and Distribution Agreement between WBD and SpinCo (Global Networks), with exhibits for SpinCo charter and bylaws, tax matters and transition services |
| 22 Dec 2025 | EX-10.1 | Senior unsecured revolving credit agreement ($5bn, Dec 19, 2025) | $5.0bn revolving commitments; Wells Fargo Bank administrative agent; Wells Fargo Securities, BNP Paribas and HSBC joint lead arrangers; 11 documentation agents; Matures at the earliest of the third anniversary of the acquisition closing, termination of the WBD merger agreement, or five years after signing |
| 22 Dec 2025 | EX-10.2 | Senior unsecured delayed draw term loan agreement ($20bn, Dec 19, 2025) | $20.0bn of delayed draw commitments funded on the acquisition closing date, in two tranches; Tranche 1 matures 24 months and Tranche 2 matures 36 months after the acquisition closing |
| 20 Jan 2026 | EX-99.1 | Q4 2025 shareholder letter | Q4 2025 revenue $12.05bn (+17.6% y/y), operating income $2.96bn (+30%), margin 24.5%, diluted EPS $0.56 incl. ~$60m of WBD bridge financing costs in interest expense; FY2025 revenue $45.2bn (+16%), operating margin 29.5% (26.7% in 2024), ad revenue more than 2.5x to over $1.5bn; FCF $9.5bn vs $6.9bn |
| 20 Jan 2026 | EX-10.1 | Bridge facility incremental commitments agreement (Jan 19, 2026) | Bridge commitments were $59.0bn at signing, reduced to $34.0bn on Dec 19, 2025 after the revolver and term loan were signed; Incremental commitments of $8.2bn lift the bridge to $42.2bn: Wells Fargo $4.1bn, BNP Paribas $2.87bn, HSBC Bank plc $1.23bn |
| 20 Jan 2026 | EX-2.1 | Amended and restated merger agreement with WBD (Jan 19, 2026) | Per Share Merger Consideration changed to $27.75 all cash; collar and Netflix stock component removed; SpinCo Specified Amount (target net debt) schedule cut by $260m: $17.04bn at Jun 30, 2026 and $16.14bn at Dec 31, 2026 |
| 20 Jan 2026 | EX-99.1 | Joint press release: amendment to an all cash transaction | Consideration stays at $27.75 per WBD share, now all cash, plus Discovery Global shares for WBD holders; Financing from cash on hand, available credit facilities and committed financing; structure not subject to CFIUS review |
| 16 Apr 2026 | EX-99.1 | Q1 2026 shareholder letter | Q1 2026 revenue $12.25bn (+16.2%, +14% FX neutral), operating income $3.96bn (+18%), margin 32.3%; diluted EPS $1.23 incl. the $2.8bn WBD termination fee in interest and other income; FY2026 guide unchanged at $50.7bn to $51.7bn revenue and 31.5% margin; Q2 guide revenue $12.57bn, margin 32.6% (34.1% a year earlier) as content amortization growth peaks in Q2 |
| 16 Jul 2026 | EX-99.1 | Q2 2026 shareholder letter | Q2 2026 revenue $12.56bn (+13.4%, +12% FX neutral), operating income $4.19bn (+11%), margin 33.4% (34.1% a year earlier), diluted EPS $0.80; EMEA revenue above $4.0bn, LATAM and APAC each above $1.5bn; FY2026 revenue range narrowed to $51.0bn to $51.4bn; margin 31.5%; ad revenue about $3bn; implied operating income growth of 20% or more; Q3 guide revenue $12.86bn, margin 33.2% |
| 22 Jul 2026 | EX-1.1 | Underwriting agreement for $1bn 5.250% senior notes due 2036 | Representatives: BNP Paribas, Morgan Stanley, RBC Capital Markets and Wells Fargo; Goldman Sachs, HSBC and J.P. Morgan among book runners; Price to public 99.255%; underwriters buy at 98.855% of principal |
| 22 Jul 2026 | EX-4.2 | Second supplemental indenture: 5.250% senior notes due 2036 | $1.0bn of 5.250% senior notes maturing Aug 15, 2036, under the Jul 29, 2024 base indenture with Computershare Trust; Interest paid Feb 15 and Aug 15, starting Feb 15, 2027 |
| 22 Jul 2026 | EX-5.1 | Skadden legal opinion on the 2036 notes | Skadden, Arps, Slate, Meagher and Flom opines the notes are valid and binding obligations under New York law; Notes issued off the S-3ASR shelf (File No. 333-281071) filed Jul 29, 2024; prospectus supplement dated Jul 20, 2026 |
| 20 Oct 2026 | EX-99.1 | Q3 2026 shareholder letter | Q3 2026 revenue $12.87bn (+11.8%, +11% FX neutral), operating income $4.46bn (+37%), margin 34.6% vs 28.2%, diluted EPS $0.87 (+49%); churn improved y/y globally and in the US; Q4 2026 guide: revenue $13.44bn (+11.5%), operating margin 26.0% incl. ~120 bp from announced headcount reductions; EPS $0.67 |
