Walt Disney (DIS)·Q1 2026 Earnings Summary

Disney Beats on Revenue and EPS as Streaming Profits Surge, Stock Jumps 4%

February 2, 2026 · by Fintool AI Agent

Disney delivered a double beat in Q1 FY2026, topping both revenue and earnings estimates while streaming profits surged 72% year-over-year. The stock jumped 4.3% in after-hours trading to $117.70 as investors cheered the sustained streaming profitability and strong theatrical performance from Zootopia 2 and Avatar: Fire and Ash.

Did Disney Beat Earnings?

Yes — Disney beat on both revenue and adjusted EPS, extending its streak to 10 consecutive quarters of earnings beats.

Revenue grew 5% year-over-year to $26.0 billion, driven by 7% growth in Entertainment and 6% growth in the Experiences segment. Adjusted EPS of $1.63 beat estimates by $0.06, though it declined 7% from $1.76 in the prior-year quarter due to higher programming costs and the temporary YouTube TV carriage suspension.

What Changed From Last Quarter?

Streaming profitability accelerated while segment operating income declined due to timing factors.

The decline in total segment operating income (-9% YoY) was driven by:

• Entertainment: OI down 35% to $1.1B due to higher programming and marketing costs
• Sports (ESPN): OI down 23% to $191M, impacted by $110M headwind from YouTube TV suspension
• Experiences: OI up 6% to $3.3B, a record quarterly result

How Did Streaming Perform?

SVOD operating income surged 72% to $450 million, with margin expanding to 8.4%.

Disney's streaming video-on-demand services (Disney+, Hulu SVOD, and legacy Disney+ Hotstar) continue to show strong progress toward sustainable profitability:

Management guided SVOD operating margin to reach 10% for full-year FY2026 and expects Q2 FY2026 SVOD operating income of approximately $500 million, up $200 million year-over-year.

How Did the Stock React?

DIS jumped 4.3% in after-hours trading, adding approximately $9 billion in market cap.

The positive reaction reflects investor relief at the earnings beat, streaming profitability trajectory, and strong theatrical performance. The stock had been trading near its 50-day moving average of $110.04 heading into earnings.

What Did Management Guide?

Disney maintained its FY2026 outlook for double-digit adjusted EPS growth with stronger performance weighted to the second half.

Q2 FY2026 Guidance

Full-Year FY2026 Guidance

Note: FY2026 includes a 53rd week in Q4. Guidance metrics exclude the benefit of the additional week.

What Drove Segment Performance?

Entertainment ($11.6B revenue, +7% YoY)

Operating income declined 35% to $1.1 billion despite revenue growth, driven by:

Positives:

• Strong theatrical releases: Zootopia 2, Avatar: Fire and Ash, Predator: Badlands, Tron: Ares
• Higher subscription fees (+13% at SVOD) from rate increases and subscriber growth
• Fubo Transaction consolidation adding vMVPD revenue

Headwinds:

• Higher production cost amortization from theatrical distribution
• Increased marketing spend for significant theatrical releases
• Star India deconsolidation impacted YoY comparisons

Sports — ESPN ($4.9B revenue, +1% YoY)

Operating income fell 23% to $191 million due to:

• YouTube TV suspension: ~$110 million adverse impact to segment OI
• Higher programming costs from contractual rate increases and new sports rights
• Advertising revenue growth of 10% partially offset headwinds

Q1 Ratings Highlights:

• ESPN's most-watched college football regular season since 2011
• ABC achieved its best college football season since 2006
• Monday Night Football delivered its second-highest viewership in 20 years
• Third most-watched NBA regular season ever

NFL Network Acquisition: Disney closed its transaction with the NFL to acquire NFL Network and other media assets, including the linear rights to RedZone. This sets up ESPN's first Super Bowl in the upcoming season.

Experiences ($10.0B revenue, +6% YoY) — Record Quarter

The segment delivered record quarterly revenue and strong operating income growth:

Key drivers:

• Domestic park attendance up 1% (benefited from Hurricane Milton comparison)
• Per capita guest spending up 4%
• Disney Cruise Line expansion: Disney Treasure (Dec 2024) and Disney Destiny (Nov 2025)

CEO Commentary

"We are pleased with the start to our fiscal year, and our achievements reflect the tremendous progress we've made. We delivered strong box office performance in calendar year 2025 with billion-dollar hits like Zootopia 2 and Avatar: Fire and Ash, franchises that generate value across many of our businesses. As we continue to manage our company for the future, I am incredibly proud of all that we've accomplished over the past three years."

— Robert A. Iger, Chief Executive Officer

On the value of Disney's IP in light of the Warner Bros. Discovery takeover battle:

"The battle for control of Warner Bros. Discovery, I think, should emphasize or cause investors to appreciate the tremendous value of our assets, particularly our IP, and include, obviously, all of our brands and our franchises. And also, let's not forget ESPN... We have a great hand. I don't really feel that we have a need to buy more IP. We're just going to continue to create our own."

— Robert A. Iger, Chief Executive Officer

Cash Flow and Capital Allocation

Cash from operations declined significantly due to timing of tax payments:

The weak cash flow was driven by:

• Payment of U.S. federal and California state income tax liabilities for FY2025 and a portion of FY2024
• Tax payments related to 2025 California wildfire disaster relief deferrals
• Higher content spending at Entertainment and Sports

Management expects $19 billion in cash from operations for full-year FY2026, which includes $1.7 billion in deferred taxes from prior fiscal years.

Key Risks and Concerns

1. Segment OI Decline: Total segment operating income fell 9% despite 5% revenue growth, indicating margin pressure from content and rights costs

2. ESPN Headwinds: YouTube TV carriage dispute cost $110M in Q1; sports rights costs continue to escalate

3. Tax Timing: Q1 cash flow impacted by accelerated tax payments; FY2026 guidance includes $1.7B of deferred taxes

4. International Visitation: Management flagged international visitation headwinds at domestic parks for Q2

5. CEO Succession: The earnings report comes against the backdrop of a succession race to select Disney's next CEO when Bob Iger retires

Q&A Highlights

On Walt Disney World bookings: "Walt Disney World had a very good quarter, obviously benefited from the overlap of the hurricane, but in addition to that, saw strong attendance performance as well as strong pricing performance. As far as bookings for the full year, bookings are up 5% for the full year, weighted more toward the back half." — Hugh Johnston, CFO

On the unified streaming app: "We are hard at work on the technology front to create the one-app experience, even though consumers will always be able to buy Disney+ or Hulu on its own. By and large, we believe the great majority of consumers will buy both, and it will be a fully integrated experience. I would guess that that would be coming sometime at the end of the calendar year." — Bob Iger

On the Sora/OpenAI deal: "What the deal actually covers is a license agreement between ourselves and OpenAI to enable people to prompt Sora to create 30-second videos of about 250 of our characters that do not include a human voice or face. And that's a 3-year agreement that we are getting paid for... It jump-starts our ability to have short-form video on Disney+." — Bob Iger

On ESPN subscriber losses slowing: The 4% decline from fewer subscribers reflects a meaningful improvement from the 7-8% declines in prior periods, driven by the launch of ESPN Unlimited.

On segment disclosure changes: "The reality of it is we manage the entertainment business as a single entity. The notion of talking about linear networks separate from streaming, separate from theatrical, I think, really creates a lot of complexity that's just not reflective of the reality." — Hugh Johnston

On CEO succession: "The company is in much better shape today than it was three years ago because we have done a lot of fixing. But we've also put in place a number of opportunities... So they'll be handed, I think, a good hand in terms of the strength of the company, a number of opportunities to grow, and also the exploitation that in a world that changes, you also have to continue to change and evolve as well." — Bob Iger

On streaming operating leverage: "At one point, a few years ago, in fact, we were losing $1 billion a quarter. That number improved substantially... In terms of the quarter, we delivered 12% revenue growth and about a little over 50% earnings growth. So from that perspective, we are driving a lot of operating leverage out of the business." — Hugh Johnston

Theatrical Slate and Content Pipeline

Calendar 2025 Box Office Performance: Disney generated more than $6.5 billion at the global box office in calendar year 2025, making it the third biggest year ever and the ninth year as #1 at the global box office over the past decade.

• Zootopia 2: Became Hollywood's highest-grossing animated film ever at $1.7B+, one of the top 10 highest-grossing films of all time
• Avatar: Fire and Ash: Crossed $1 billion, joined Zootopia 2 and Lilo & Stitch for three $1B titles in 2025
• Franchise Value: 37 billion-dollar films have come from Disney studios out of 60 industry-wide—four times more than any other studio

Upcoming FY2026 Releases: The Devil Wears Prada 2, The Mandalorian and Grogu, Toy Story 5, live-action Moana, and Avengers: Doomsday

Streaming Lift from Theatrical: Zootopia 2 and Avatar: Fire and Ash will hit Disney+ between now and the end of the fiscal year. First streams for prior Zootopia and Avatar movies approached 1 million first streams, with almost 200 million hours consumed.

Forward Catalysts

• Q2 FY2026 Earnings: Expected early May 2026
• Disney Adventure: New Disney Cruise Line ship launching next month—first ship home-ported in Asia
• World of Frozen: Opening at Disneyland Paris next month—nearly doubling the size of the second park
• Unified App Experience: Disney+ and Hulu integration expected by end of calendar 2026
• Sora-Generated Content: AI-generated short-form videos expected "sometime in fiscal 2026"
• Abu Dhabi Theme Park: Development ongoing in a strategically located market
• CEO Succession Announcement: Expected before Iger's retirement
• ESPN Super Bowl: ESPN's first Super Bowl in the upcoming NFL season

The Bottom Line

Disney delivered a solid beat in Q1 FY2026, with streaming profitability continuing its impressive trajectory and the Experiences segment posting record results. While segment operating income declined 9% due to higher content costs and the ESPN carriage dispute, the underlying trends in streaming and parks remain healthy. Management's confidence in double-digit EPS growth for FY2026 and the path to 10% SVOD margins provides a clear roadmap for continued profitability improvement. The 4.3% after-hours pop suggests investors are comfortable with the setup heading into the back half of the fiscal year.

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Related: Disney Company Profile | Q1 FY2026 Earnings Call Transcript | Q4 FY2025 Earnings

Data sourced from Disney Q1 FY2026 8-K filing and press release.