Netflix Q1 revenue and earnings surpass expectations, yet shares drop

Netflix surpassed Wall Street predictions for earnings and revenue in the first quarter, yet the streaming company's stock still dropped in after-hours trading on Thursday.

Revenue increased by 16% compared to last year, reaching $12.25 billion, while diluted earnings per share nearly doubled from last year, hitting $1.23.

Wall Street analysts had forecasted earnings of 76 cents per share and total revenue of $12.18 billion.

Despite the positive results, Netflix shares – which have gone up 15% in 2026 so far – declined by up to 10% in after-hours trading.

This pattern of strong financials followed by a decrease in share price has been noticed before in numerous quarters.

One reason for the dip could be the announcement about Reed Hastings, communicated with the earnings.

The company co-founder and former longstanding CEO, is leaving the company’s board of directors later this year, the company confirmed in its quarterly letter to shareholders.

Hastings' departure, who has been focusing on philanthropy, a new real estate project in a ski area, and joining the board of a leading AI company Anthropic since stepping down as CEO in 2023, signifies a pivotal moment.

It concludes nearly three decades of evolution for the executive at Netflix, from its humble beginnings sending DVDs from a shabby old bank location to a global disruptor in the entertainment industry.

Another concern for investors is a predicted 1.5% drop in operating margins during the April-to-June timeframe.

Even though the company had indicated this decline, seeing it in writing might have prompted some shareholders to sell.

Operating margin was a bit over 32% for the quarter and is expected to remain at that level for the entire year. The company stated in the letter that its full-year outlook remains unchanged.

According to the letter, “slightly higher-than-expected subscription revenue” drove the revenue increase.

Subscription figures, which used to send the stock soaring each quarter (with the exception of a notable slump in 2022), are not regularly shared by Netflix anymore.

The company did mention in their January fourth-quarter earnings report that it ended 2025 with more than 325 million subscribers worldwide.

Netflix highlighted the World Baseball Classic in the letter. The event attracted 31.4 million viewers in Japan, becoming the company’s most-watched title there.

It also initiated the highest single-day subscription sign-ups in Japan, which led all of Netflix’s over 190 operational countries in contributing to subscriber growth for the quarter.