The Walt Disney Company (DIS) Q1 2026 earnings summary

Executive summary

• Revenue increased 5% year-over-year to $26.0 billion in Q1 fiscal 2026, driven by growth in Experiences and Entertainment, with major releases like Zootopia 2 and Avatar: Fire and Ash boosting box office performance.

• Net income declined 6% to $2.4 billion, and diluted EPS fell to $1.34, impacted by lower Entertainment operating income and a higher effective tax rate.

• Streaming business saw improved profitability, with SVOD operating income up 72% to $450 million and margin at 8.4%, driven by content strength, technology enhancements, and successful bundling strategies.

• ESPN delivered record sports ratings, completed the acquisition of NFL Network and RedZone rights, and expanded its sports portfolio, though sports operating income declined 23% due to higher costs.

• Experiences segment achieved record revenue of $10.0 billion, with operating income up 6% to $3.3 billion, driven by higher theme park attendance, cruise launches, and guest spending.

Financial highlights

• Service revenues rose 5% to $23.2 billion, and product revenues grew 5% to $2.8 billion, mainly from parks and experiences.

• SVOD subscription revenue increased 11%, with operating income up 72% and margin at 8.4%.

• Cost of services increased 9% to $15.0 billion, reflecting higher programming, production, and park costs.

• Cash provided by operations dropped to $735 million from $3.2 billion, mainly due to higher tax payments and increased content spending; free cash flow was negative $2.3 billion.

• Interest expense, net, decreased 25% to $275 million due to lower average debt balances and higher capitalized interest.

Outlook and guidance

• No change to fiscal 2027 adjusted EPS growth guidance; double-digit revenue and adjusted EPS growth remain the target.

• Streaming business expected to achieve 10% margin this year, with continued operating leverage and investment in content and technology.

• Fiscal 2026 capital expenditures are expected to be approximately $9 billion, up from $8 billion in 2025, primarily for theme park and resort expansion.

• Content spend for fiscal 2026, including sports rights, is projected at $24 billion.

• The company targets $7 billion in share repurchases for fiscal 2026.