Netflix shares fell over 8% after it posted lukewarm second-quarter earnings results on Thursday afternoon.
The leading paid streamer was roughly in line with Wall Street’s expectations for both revenue and earnings per share, which were based on modest guidance last quarter that had spooked investors.
Netflix’s stock had fallen 31% in the three months since its first-quarter report.
Revenue rose 13.4% to $12.56 billion, just below estimates for $12.58 billion, while earnings per share came in at $0.80 per share, versus analysts’ expectations of $0.79 per share, according to Bloomberg.
Engagement was up slightly in the first half of the year, with global viewing hours rising 2% to 97 billion hours. Netflix generated 96 billion hours in the last six months of 2025 and about 95 billion hours in the first half of last year.
Netflix said it’s shifting its twice-yearly engagement reports to publish once a year, starting after the first quarter of 2027.
“Engagement is not just the quantity of view hours, but also refers to the quality and variety of our offering,” Netflix said in its second-quarter shareholder letter.
“The goal of separating the publication of the report from our earnings results is to keep the focus on our primary financial metrics — revenue and operating profit,” the company said.
Investors are increasingly focused on Netflix’s ability to keep growing engagement, especially since the streaming giant has already leaned on growth levers like price hikes and password-sharing crackdowns.
Netflix has been searching for ways to become more like YouTube, which leads all streaming services in viewing on US TVs. These efforts have included investing in video podcasts, adding a short-form video feed, and bringing three-minute videos about cooking and travel to its platform.
“Maintaining that attention has gotten tougher as consumers increasingly get their video fix from short-form platforms,” Forrester research director Mike Proulx said ahead of Netflix’s report.
Netflix likely recognizes that its biggest competitors aren’t rival paid streaming services but free apps like YouTube, TikTok, and Instagram.
Proulx said it’s an open question, though, “whether consumers actually want Netflix to become more like YouTube.”
“Netflix’s success was built on differentiated, must-watch programming,” Proulx said. “As streaming services add more content formats, they risk diluting what differentiates them.”
Viewership matters to Wall Street because it’s a strong signal of how much Netflix subscribers value the service, since habitual viewers are more willing to accept price hikes and less likely to cancel.
Some analysts say engagement concerns are overblown, given that Netflix is far ahead of its paid peers in monthly viewership on US TVs, according to Nielsen, and has an industry-low cancellation rate of 2%, per subscription analytics firm Antenna.
Morgan Stanley media analysts, led by Sean Diffley, wrote in a recent report that “investors are overly focused on the headline hours number,” adding that it “does not correlate nearly as much to revenue growth as many fear.”
