Netflix earnings preview: Q1 2026

The preview

Expectations for Netflix Inc. (NASDAQ: NFLX) into Q1 have remained stable since October 2025. Visible Alpha consensus is expecting $12.2 billion in revenue for Q1 and $51.4 billion for FY 2026. Revenues are expected to be supported by continued new membership and monetization. Offering a range of pricing and plans combined with continuing growth in the ads business is expected to further increase monetization and engagement. Consensus expects the operating margin to be 32% in Q1 and to remain there for FY 2026, down from previous expectations of 33% due to assumptions around higher expenses.

The streaming giant expects to grow revenues by increasing engagement trends and reducing churn while offering a more diverse entertainment offering. Gaming and the growth of ads could be key drivers in 2026. According to consensus, analysts now expect the company to generate the 32% margin, on expected revenue of $51.4 billion and $16.4 billion in operating profit in FY 2026.

Netflix remains upbeat about the long-term opportunity for advertising, given the size of its user base. Based on three sources, Q1 2026 expectations for advertising revenues are projected to hit $598 million, suggesting strong expected growth in this emerging area of revenue generation. FY 2026 expectations are $3.2 billion for total advertising from three sources and $6.3 billion from ad-supported revenues in global streaming from nine sources. Currently, three sources project total advertising revenue for FY 2027 to expand to $5.3 billion and $9.9 billion for ad-supported revenues from nine sources.

Based on Visible Alpha consensus, the operating profit margin is expected to grow from 26.7% in FY 2024 to 34.0% in FY 2027, down from previous expectations of 35%. Currently, consensus estimates the operating margin now to be 37% by the end of FY 2028. However, there is significant debate among analysts with respect to FY 2026 and FY 2027 margin estimates, which have a range of 400 bps. The debate in the market seems to be around how much Netflix will ramp up operating expenses.

This margin growth is expected to take FY 2027 expected diluted EPS from $4.01/share or 26x FY 2027 P/E, lower than the 30x it traded at last summer. The current consensus target price has ticked down to $119 from the previous target of $130 or 12% upside from the current levels.