Netflix posted its most profitable operating quarter in recent years. The Q3 2026 results, released October 20, showed revenue of $12.9 billion, up 12 percent year over year. Operating income reached $4.46 billion, a 37 percent increase from Q3 2025. Operating margin came in at 34.6 percent, ahead of the company's own forecast and up from 28.2 percent a year earlier. Net income was $3.66 billion.
The sharper number was a cut. Full-year 2026 advertising revenue guidance was trimmed from approximately $3 billion to $2.7 billion, according to Netflix's Q3 2026 shareholder letter. The company attributed the reduction to a slightly slower rollout of certain ad product capabilities. The ad tier has been Netflix's main growth lever for the past two years, making any slip in its trajectory a signal worth watching.
Netflix said its audience is approaching one billion people, with churn improving year over year both globally and in the United States. For Q4, the company projected revenue of $13.4 billion and an operating margin of 26.0 percent. That figure includes approximately 120 basis points of negative impact from recent headcount reductions. Full-year 2026 revenue is now projected at $51.1 billion with a 31.5 percent operating margin.
The company also lowered its full-year free cash flow forecast to approximately $12 billion from $12.5 billion, citing a real estate transaction expected to close in Q4. Netflix is investing approximately $1 billion in a 292-acre production campus at Fort Monmouth, New Jersey, with 12 soundstages totaling nearly 500,000 square feet. The first phase is due in summer 2027.