Netflix Q1 revenue rises 16%, beats forecast on subscriber growth, pricing

Streaming giant Netflix reported a 16% year-on-year rise in revenue for the first quarter, exceeding its own forecast on the back of stronger-than-expected subscriber growth and higher pricing.

Operating income climbed 18% to $4.0 billion, with operating margin expanding to 32.3% from 31.7% a year earlier, the company said in its quarterly letter to shareholders.

Diluted earnings per share jumped 86% to $1.23, beating the company’s forecast of $0.76, aided by higher operating income and a $2.8 billion termination fee linked to a Warner Bros. transaction.

Netflix maintained its full-year 2026 revenue forecast of $50.7 billion to $51.7 billion, implying growth of 12-14%, and reiterated its operating margin target of 31.5%.

For the second quarter, the company expects revenue to grow 13% year-on-year, with operating margin at 32.6%, lower than the year-ago period due to higher content amortisation in the first half of the year.

The company said growth in the quarter was driven by “healthy membership gains, pricing and increased ad revenue,” adding that advertising income is on track to reach about $3 billion in 2026, roughly double from the previous year.

Netflix said its internal engagement metric reached an all-time high in the first quarter, supported by popular titles and expansion into new formats such as video podcasts and live events.

The company highlighted strong traction in live programming, including the World Baseball Classic in Japan, which drove record viewership and subscriber additions in the country.

The streaming platform said it remains focused on three key priorities: enhancing content and user engagement, leveraging technology including artificial intelligence, and improving monetisation through pricing and advertising.

It recently acquired filmmaking technology firm InterPositive to expand generative AI tools for creators and is rolling out a redesigned mobile experience featuring a vertical video feed.

It also pointed to growing momentum in its advertising business, which it expects to generate about $3 billion in revenue in 2026, roughly double from the previous year.

Netflix said its ad-supported plan accounted for more than 60% of sign-ups in markets where it is available, as it continues to scale its advertising business and attract new clients.

The company said it remains confident about its long-term growth prospects, noting it still accounts for only around 5% of global TV view share and has penetrated less than 45% of its addressable broadband market.

“Our goal is to sustain healthy revenue growth, expand operating profit and deliver growing free cash flow,” the company said.