Netflix's $8.7bn first-half profit includes a $2.8bn break-up fee from the failed Warner deal — and Q2 buybacks of $4.7bn were 2.7 times operating cash flow
Q2 2026 10-Q: revenue $12.56bn (+13%), operating margin 33.4%. The $2.8bn termination fee, paid by Paramount Skydance on Warner's behalf, sits in Q1 other income. Q2 cash spent on content rose 28% to $4.9bn and operating cash flow fell 28% to $1.7bn. Content obligations $25.1bn, of which $19.6bn is off the balance sheet
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Netflix Form 10-Q for Q2 2026: statement of operations, cash-flow statement, Note 6 'Acquisitions' (WBD termination, $2.8bn fee; March acquisition $587m), content obligations note, stockholders' equity note (repurchases, $25bn April 2026 authorization), MD&A other income and liquidity
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Netflix (NFLX) reported revenue of $12,559.9m for the second quarter of 2026, up 13% from a year earlier, and net income of $3,401.4m. First-half net income was $8,684.2m — and Note 6 of the 10-Q filed in August says $2.8bn of that is a termination fee from the cancelled acquisition of Warner Bros. Discovery. The cash-flow statement shows a quarter in which content spending and buybacks exceeded operating cash.
What happened
Netflix (NFLX) is the world's largest paid streaming service.
Its Q2 2026 quarterly report (10-Q) shows revenue of $12,559.9m, up 13% from $11,079.2m a year earlier, operating income of $4,192.6m (a 33.4% margin) and net income of $3,401.4m (+9%). First-half net income was $8,684.2m, up 44% from $6,015.8m.
According to Note 6, Netflix agreed on December 4, 2025 to acquire Warner Bros. Discovery's streaming and studios businesses (including HBO), but on February 27, 2026 WBD terminated the agreement in order to merge with Paramount Skydance. Paramount, on WBD's behalf, paid Netflix a $2.8bn termination fee, recorded in 'Interest and other income (expense)' in the first quarter. Most of the $2,670m increase in first-half net income is this one item.
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No. It was recorded in Q1 other income; Q2 interest and other income was $51.7m. Only the first-half total ($8,684m of net income) includes the $2.8bn. First-half growth excluding it is calculated in the subscriber section.
Why did operating cash flow fall?
MD&A points to higher cash spent on content. Additions to content assets were $4,928m in Q2, up 28% from $3,836m, and operating cash flow fell from $2,423m to $1,744m.
What company was acquired in March?
The 10-Q says only that a business combination with a total purchase price of approximately $587m in cash was completed in March 2026; it does not name the company.
Where can I verify these numbers?
On SEC EDGAR: Netflix's Q2 2026 Form 10-Q (accession 0001065280-26-000212), statement of operations, cash-flow statement, Note 6 acquisitions, the content obligations note and the equity note.
How aiSwingX™ wrote this
We read the filing on SEC EDGAR in full — statements, notes, MD&A. Press releases and news are not used as sources.
Every figure is reconciled to its location in the filing and to XBRL data. One mismatch means no publication.
An editor reviews before publication; any later change is recorded in the revision history.
Netflix Form 10-Q for Q2 2026: statement of operations, cash-flow statement, Note 6 'Acquisitions' (WBD termination, $2.8bn fee; March acquisition $587m), content obligations note, stockholders' equity note (repurchases, $25bn April 2026 authorization), MD&A other income and liquidity · SEC EDGAR · This article is not investment advice. Disclaimer
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aiSwingX™ analyzes US filings and reports them as news investors can read.
