Key Highlights
- Netflix shares declined approximately 9% in extended trading and early European sessions following second quarter projections that fell below analyst forecasts.
- First quarter performance exceeded expectations — $12.25B revenue versus $12.17B consensus, with adjusted EPS of $1.23 beating the $0.76 estimate.
- Second quarter revenue outlook of $12.57B fell short of the $12.64B analyst target; EPS forecast of $0.78 missed the $0.84 consensus.
- Company co-founder and chairman Reed Hastings announced plans to step down from the board when his current term concludes in June.
- The earnings release marks Netflix’s first quarterly report following the unsuccessful Warner Bros. Discovery acquisition attempt, which ultimately went to Paramount Skydance.
Netflix delivered impressive first quarter results, but investors focused their attention on the company’s forward-looking projections rather than its recent performance. Shares tumbled approximately 9% in after-hours and early European market activity after the streaming platform’s second quarter outlook came in significantly below analyst expectations.
First quarter revenue reached $12.25 billion, surpassing the $12.17 billion analyst consensus. The company’s adjusted earnings per share of $1.23 substantially exceeded the $0.76 Wall Street forecast. This represents a notable improvement from the $0.66 EPS recorded in the same quarter last year. These per-share metrics reflect the company’s 10-for-1 stock split executed in mid-November.
However, the forward guidance for the second quarter triggered the negative market reaction. The streaming service projected Q2 revenue of $12.57 billion, below the Street’s $12.64 billion expectation. The company’s EPS forecast of $0.78 also disappointed against the $0.84 consensus, while operating income guidance of $4.11 billion significantly undershot the $4.34 billion analyst target.
Co-CEO Greg Peters attempted to reassure investors during the earnings conference call. “Of course, it’s early in the year,” he noted. “There’s still plenty of time to go, plenty of work left to do.”
Bloomberg Intelligence analyst Geetha Ranganathan remained skeptical. “This was supposed to be them telling us why they’re going to do just fine without Warner Bros. Discovery,” she commented, “and I’m not so sure that this report necessarily does that.”
Reed Hastings to Leave Board
Alongside the financial results, Netflix announced that co-founder and chairman Reed Hastings will decline to stand for re-election when his current board position expires in June. Hastings played a pivotal role in evolving the company from its origins as a DVD rental service into the dominant streaming platform recognized worldwide.
The company has not yet disclosed succession plans or named a replacement for the departing chairman.
Impact of Warner Bros. Discovery Deal Collapse
These results represent Netflix’s first quarterly disclosure since abandoning its pursuit of Warner Bros. Discovery. Paramount Skydance emerged victorious in that acquisition contest and assumed responsibility for the deal termination fee. Warner Bros. shareholders are scheduled to vote on the $110 billion transaction in the coming week.
CFO Spencer Neumann assured investors that the collapsed acquisition would not significantly affect Netflix’s operating margin projections. “Some of our initially planned costs for the deal, they won’t fully materialize,” he explained, adding that certain expenses were accelerated into 2026.
BMO Research analyst Brian Pitz suggested prior to the earnings release that moving past the WBD transaction could allow investors to concentrate on Netflix’s fundamental business operations and its expanding advertising-supported subscription tier.
The streaming company also implemented subscription price increases in early 2026 — marking the second such adjustment in slightly more than twelve months. The ad-supported Standard plan increased by $1 to $8.99 monthly, while the Standard and Premium options rose by $2 to $19.99 and $26.99 respectively.
Bank of America analyst Jessica Reif Ehrlich characterized the price adjustments as a “validator of Netflix’s confidence in their underlying strength and durability.”
BMO’s Pitz calculated that these increases would contribute approximately $1.5 billion in additional revenue for 2026, accounting for 3.3% growth from pricing adjustments alone.
As of 0603 GMT Friday, Netflix’s Frankfurt-listed shares had declined 8.7%. The company’s New York-traded stock had gained roughly 15% year-to-date prior to the earnings announcement.
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