Netflix reports strong earnings but shares drop 9% as co-founder Reed Hastings announces board exit
Earnings details
Netflix’s net income was $5.28 billion, or $1.23 per share, nearly doubling last year’s $2.89 billion, or 66 cents per share.
The earnings boost was attributed to higher-than-expected operating income and a $2.8 billion termination fee from the failed Warner Bros. Discovery acquisition.
Despite the positive results, Netflix maintained its revenue guidance between $50.7 billion and $51.7 billion for the full year.
The company projected a 13% increase in expected revenue for the second quarter, while noting that content spending will be higher in the first half of the year.
Netflix anticipates the second quarter will see the highest year-over-year content amortization growth rate in 2026, with a decline in the latter half.
Changes from the aborted WBD deal will still impact Netflix’s finances this year, according to CFO Spencer Neumann.
Some costs that were intended for 2027 will now be moved to 2026, but total M&A-related expenses are expected to remain in line with projections.
In governance news, co-founder and chairman Reed Hastings will leave the board in June, coinciding with the end of his term.
Hastings stepped down as CEO in 2023, with Greg Peters and Ted Sarandos now serving as co-CEOs.
Hastings stated in a shareholder letter that he will focus on philanthropy and other pursuits following his departure.
Leadership changes
Analysts speculated on whether Hastings’s exit was linked to the WBD deal, but Sarandos clarified Hastings strongly supported the transaction.
Netflix continues to adapt its strategy in a competitive streaming market while managing recent governance transitions.
