Netflix (NFLX) Q2 2026: $2.8B Q1 WBD Fee Inflates H1 Net Income, Q2 Margin Stalls

Netflix lost the fight for Warner Bros. Discovery and walked away with a $2.8 billion consolation check — and that check is doing almost all the work in the headline numbers. Six-month net income jumped 44.4% to $8.68 billion, but strip out the termination fee and pre-tax income grew 14.0%, essentially matching revenue. The number that matters more is the one the fee obscures: second-quarter operating margin fell to 33.4% from 34.1% a year earlier. That is the second year-over-year contraction in the last four quarters. The other one, in Q3 2025, had an identifiable one-off cause — a $619 million charge for Brazilian non-income tax (CIDE) assessments covering 2022 through Q3 2025, which Netflix disclosed in its Q3 2025 shareholder letter and said it does not expect to be material to future results. This one has no such alibi: management ties it to ongoing spending lines, and it lands after three consecutive years of annual margin expansion. For a company whose entire equity story since 2024 has been "grow revenue in the mid-teens and expand margin every year," the second half of that promise just paused.

Unless otherwise noted, all figures are from Netflix's Form 10-Q for the quarter ended June 30, 2026. Full-year figures are from Netflix's Annual Reports on Form 10-K.

1. Consolidated Balance Sheet

1-1. Principal asset movements

Netflix reports a highly condensed balance sheet. Receivables, inventory and intangibles are not disclosed as separate line items — they are aggregated into "other current assets" and "other non-current assets" — so item-level analysis is limited to what the filing presents.