Disney Earnings - May 2026
The Walt Disney Company
Streaming margins cross double digits at last.
New CEO Josh D'Amaro's first earnings delivers a beat on every line, the SVOD margin breaks the 10% threshold, and the buyback gets bumped to $8 billion.
The Walt Disney Company (NYSE: DIS) reported fiscal Q2 2026 results (quarter ended March 28, 2026) on May 6, 2026, posting revenue of $25.17 billion (+7% YoY, beating the $24.85B consensus by ~$320M) and adjusted EPS of $1.57 (+8%, topping the $1.49 estimate by $0.08). GAAP diluted EPS was $1.27 versus $1.81 a year earlier, a decline driven almost entirely by a one-time tax benefit in the prior-year comparison: not by operational deterioration. Total segment operating income grew 4% to $4.6 billion.
This was Josh D'Amaro's first earnings call as CEO, and the print supported a confident first impression. Streaming (Disney+ and Hulu) revenue accelerated to +13% YoY (versus +11% in Q1), operating income jumped 88% to $582 million, and the operating margin crossed the double-digit barrier for the first time at 10.6%. Experiences delivered Q2 records on both revenue ($9.49B, +7%) and operating income ($2.62B, +5%). Management raised the FY26 share repurchase target to at least $8 billion from a prior $7 billion target. The stock responded with a +6.92% intraday move to $107.42: its biggest one-day gain in over a year.
The narrative for Disney has shifted. The market spent two years questioning whether streaming could generate real profit dollars at scale; the Q2 FY26 print answers that with an 88% jump in SVOD operating income and the first-ever double-digit margin quarter. Pair that with record-quarter Experiences results, in-line Sports despite higher rights costs, and a $1B bump to the buyback target, and D'Amaro's first quarter sets a constructive tone. The stock had been down 10.95% YTD heading into the print; today's gain reverses roughly two-thirds of that drawdown. Wall Street targets ($125-$148 range) imply meaningful further upside, but the valuation re-rate from here will require execution on FY27 double-digit EPS growth and clean Sports rights cost control.
Headline KPIs at a Glance
Broad-based 7% growth, misleading GAAP optics.
Q2 FY2026 revenue of $25.17 billion grew 7% YoY, beating the $24.85B Wall Street consensus by ~$320 million. Growth was broad-based across all three reportable segments: Entertainment (+10%), Sports (+2%), and Experiences (+7%). The Entertainment segment benefited from the Fubo combination (which contributed approximately 4 percentage points to segment-level revenue growth) and continued momentum in direct-to-consumer.
How the beat looked against consensus
GAAP diluted EPS of $1.27 declined from $1.81 in the prior-year quarter, but the comparison is misleading: Q2 FY25 included a sizable one-time tax benefit. On an adjusted basis (which strips out comparability items including the tax benefit and ESPN's acquisition of the NFL Network and other media assets), EPS grew 8% to $1.57, beating the $1.49 consensus by $0.08.
Three engines, streaming inflects.
Entertainment: $11.7B (+10% YoY)
Entertainment revenue of $11.72 billion grew 10% with operating income up 6% to $1.34 billion. The streaming subset (Disney+ and Hulu) was the standout: revenue accelerated to +13% (from +11% in Q1) on price increases implemented in the fall of 2025 and operating income soared 88% to $582 million. This was the first quarter the entertainment streaming business reported an operating margin above 10% (10.6% specifically), and Disney reaffirmed its commitment to at least 10% for the full fiscal year.
Sports: $4.61B (+2% YoY)
Sports revenue grew 2% to $4.61 billion, but operating income declined 5% to $652 million, reflecting higher rights fees and marketing costs as well as lower ad revenue from fewer NBA games and the absence of last year's 4 Nations Hockey tournament comparable. ESPN's direct-to-consumer streaming app, launched in August 2025, was a bright spot, with digital subscription revenue more than offsetting the rights cost pressure on the segment's operating margin. Q3 Sports OI is guided to decline approximately 14% YoY, driven by a double-digit increase in programming expenses including the timing of new rights agreements; full-year FY26 Sports OI is still expected to grow mid-single-digits including the NFL transaction.
Experiences: $9.49B (+7% YoY)
Experiences delivered a fiscal Q2 record on both revenue ($9.49B, +7%) and operating income ($2.62B, +5%). Domestic park attendance was down 1% in the quarter, but per-capita spending at domestic parks rose 5%, driven by growth in admissions, food and beverage, and merchandise. Cruise capacity expansion and the Disney Adventure cruise (launched in March, based in Singapore) contributed to the record result. Disney confirmed that Abu Dhabi theme park plans remain on track, and management noted that bookings for the second half of the fiscal year are quite strong.
10.6% margin, 88% YoY OI growth.
Disney's streaming business has reached the inflection investors have been waiting for. SVOD operating income of $582 million in Q2 FY26 represents an 88% jump YoY and the fifth consecutive quarter of sequential improvement. The 10.6% operating margin is the first quarter in the segment's history above the double-digit threshold and represents a roughly 420 basis point expansion from the 6.4% margin reported in Q2 FY25.
Streaming operating income reaching consistent double-digit margins removes the largest single bear thesis on Disney shares: that the business model couldn't generate enough profit to offset linear TV declines. Q2 FY26 shows the reverse: total Entertainment OI grew 6% even as linear continued to shrink, because streaming incremental margin is more than absorbing the runoff. If sustained, this changes the multiple Disney can command versus Netflix and other pure streamers.
Management cited both rate and volume as drivers of the 13% subscription revenue growth, supported by fall 2025 price increases and a benefit from new international wholesale agreements. Disney has also stopped reporting quarterly streaming subscriber counts (a change first implemented last quarter), aligning Disney's disclosure approach more closely with Netflix's emphasis on engagement and revenue rather than headline subs.
12% adjusted EPS growth, $8B buyback.
Disney provided incrementally positive guidance on three fronts. First, the company expects fiscal Q3 total segment operating income of approximately $5.3 billion, implying roughly 16% YoY growth. Second, management reaffirmed full-year FY26 adjusted EPS growth of approximately 12% (excluding the 53rd week) and approximately 16% including it. Third, management guided to continued double-digit adjusted EPS growth in fiscal 2027, providing a multi-year visibility anchor.
Capital return: buyback target raised
Disney raised its FY26 share repurchase target to at least $8 billion, up from the previously communicated $7 billion. The company has already repurchased approximately $5.5 billion of stock over the trailing six months, putting it on a credible path to the raised target. The board declared a $0.75 semi-annual dividend (effectively $1.50 annualized at the current cadence). Future contracted revenue stood at $17 billion.
Q1 FY26 operating cash flow was an unusually weak $0.7B (down from $3.2B the prior year) because of accelerated U.S. federal and California state tax payments tied to 2025 wildfire-relief deferrals, and Q1 FCF swung to negative $2.28B after $3.0B of capex on cruise-fleet expansion and parks. Q2 FY26 showed the snapback management was looking for: operating cash flow of $6.9B for the quarter (+2% YoY) and FCF of $4.94B (+1% YoY). The full-year FY26 OCF guide remains $19B, supportive of the raised $8B buyback target.
Biggest one-day gain in over a year.
DIS opened May 6 at $106.52 and traded as high as $109.14 intraday, settling at $107.42 (+6.92%) by early afternoon: a $190.4 billion market cap. The pre-print close (May 5) was $100.48, with shares having struggled YTD (down 10.95% entering the print) on concerns about Sports rights inflation and entertainment streaming profitability. Today's move recovers roughly two-thirds of the YTD drawdown.
Analyst sentiment
Analyst targets ranging from $125 (Needham, Buy) to $148 (Wells Fargo, Overweight) imply 16% to 38% upside from the current quote. Barclays carries a $130 Overweight rating. The 50-day moving average sits at $100.90 and the 200-day moving average at $106.65; today's move broke through both. The stock's 52-week range is $92.18 to $124.69: today's close at $107.42 puts shares roughly at the midpoint of that range.
Notably, Disney and Uber both reported strong consumer spend signals on the same morning, with multiple analysts highlighting that spending on travel, dining, parks, and rideshare remains resilient despite the macro overhang from the ongoing Iran-Israel conflict and elevated oil prices. CFO Hugh Johnston pointed to strong second-half bookings as evidence of underlying consumer health.
Sports inflation, linear runoff, CEO bedding-in.
Primary risks
- Sports rights inflation. Sports operating income declined 5% in Q2 on rising rights fees and marketing costs. Management expects mid-single-digit growth in Sports OI for FY26 including the NFL transaction, but the cost trajectory remains the largest near-term margin headwind.
- Linear TV decline. Cord-cutting continues to pressure the linear ad and affiliate base. Disney has explicitly said the linear earnings base is becoming smaller every quarter; the streaming margin inflection has to keep pace with the runoff.
- Park attendance softness. Domestic park attendance declined 1% in Q2 and Q3 carries international visitation headwinds plus pre-launch costs for the Disney Adventure cruise and pre-opening costs for World of Frozen at Disneyland Paris.
- CEO transition execution. Josh D'Amaro is one quarter into the role. Strong first impression today, but multi-year execution against a complex three-segment portfolio remains the open question. He has already initiated approximately 1,000 layoffs aimed at marketing consolidation.
- FCC license review and regulatory. Open FCC review of ABC TV station licenses creates uncertainty around the broadcast asset value within the portfolio.
Catalysts to watch
- Q3 FY26 print (early August). First test of the $5.3B Q3 segment OI guidance and the streaming margin sustainability above 10%.
- Disney Adventure cruise launch. Pre-opening costs hit Q3 but full launch is a meaningful capacity addition for FY27.
- Abu Dhabi theme park milestones. Disney confirmed plans remain on track. Investor day clarity on capex and timing would be a positive catalyst.
- FY27 EPS double-digit growth. Reaffirmed multi-year framework. If Q3 and Q4 results trend toward the high end of FY26 guidance, the FY27 setup looks increasingly credible.
A genuinely good quarter in a year that has tested patience. New CEO Josh D'Amaro delivered a clean beat on revenue and adjusted EPS, with streaming margins crossing the 10% threshold for the first time, Experiences hitting Q2 records, and capital return increased to at least $8B. The stock's 6.92% rally reverses two-thirds of the YTD drawdown but still leaves shares below both the analyst consensus targets and the 52-week high. With a Buy consensus and average targets implying ~25% upside, Disney looks reasonably positioned for further appreciation if streaming margins hold above 10% through the FY26 ramp.
Ready to Get Started? Create Your Customized Financial Game Plan.
Before we can build a plan to help you meet your financial goals, we’ll take the time to get to know you and your financial vision. In this short exercise, answer questions about yourself and your future objectives. Then, request a consultation so that together, we can build a plan to help you get there.
