Walt Disney Q2 Earnings Call Highlights

Key Points

• Disney beat fiscal Q2 guidance, with revenue up 7% and total segment operating income up 4% year over year. Management said the company is focused on disciplined execution while building toward its next phase of growth.
• Streaming remains a major growth driver, as Disney+ and Hulu improvements helped lift retention and drive stronger engagement. Entertainment SVOD revenue growth accelerated to 13% from 11% in Q1, supported by both pricing and subscriber volume, plus double-digit advertising growth.
• Experiences outperformed expectations, posting 7% revenue growth and 5% operating income growth, both second-quarter records. Disney said domestic park headwinds should ease in coming quarters, while major investments in new ships and resort expansions continue globally.

Walt Disney NYSE: DIS executives said the company outperformed its fiscal second-quarter guidance, citing stronger-than-expected revenue growth and continued progress in streaming, parks, sports and technology initiatives.

On his first earnings call as chief executive officer, Josh D'Amaro said Disney grew revenue and total segment operating income by 7% and 4%, respectively, compared with the prior year. He said the company’s immediate focus is “disciplined execution” against priorities already communicated to investors, while also laying the groundwork for the company’s next phase of growth.

D'Amaro said those priorities include investing in creative storytelling, strengthening streaming through product and technology innovation, building ESPN’s direct-to-consumer business and delivering on growth plans at Disney Experiences.

Disney+ Positioned as Digital Centerpiece

D'Amaro said Disney is focused on improving the consumer experience, deepening engagement and building streaming into a “healthy and more durable growth business.” He said Entertainment SVOD revenue growth accelerated sequentially from 11% in the first quarter of fiscal 2026 to 13% in the second quarter, with subscription revenue growth driven by both rate and volume. Advertising revenue also grew by double digits from the prior-year period.

Executives emphasized churn reduction as a major opportunity. D'Amaro said the integrated Disney+ and Hulu experience is benefiting retention and that Disney+ has “meaningful opportunity for growth internationally,” supported by increased investment in local content.

In response to analyst questions, D'Amaro described Disney+ as becoming the company’s “immersive interactive digital centerpiece,” analogous to the role parks play as the physical centerpiece of Disney. He said Disney+ should become the primary relationship between Disney and its fans, bringing together entertainment, sports, experiences and other offerings.

“A fan who watches a Disney film, for example, or visits a park or plays a game and buys our merchandise, it's not just a subscriber,” D'Amaro said. “They're in a relationship with a company.”

D'Amaro said Disney remains selective but open to third-party distribution and content partnerships if they strengthen the Disney+ experience and deepen fan relationships. He also said Disney distinguishes between franchise intellectual property and general entertainment, with franchise and branded IP staying on Disney platforms while general entertainment library content can find audiences elsewhere.

Experiences Business Tops Expectations

Disney Experiences posted 7% revenue growth and 5% segment operating income growth in the quarter, which D'Amaro said were both ahead of expectations and represented second-quarter records. He said the business has been navigating known attendance headwinds but expects domestic park attendance trends to improve in the third quarter compared with the second quarter.

Chief Financial Officer Hugh Johnston said domestic parks attendance declined 1% in the second quarter, affected by international visitation and Epic-related headwinds. He said that excluding the international visitation impact alone, domestic parks attendance would have grown. Johnston also said global guests, a metric that aggregates domestic and international parks attendance with passenger cruise days, rose more than 2% in the quarter.

Johnston said international visitation and Epic-related headwinds are expected to ease in coming quarters as Disney begins to lap those impacts. He added that forward bookings are “very encouraging.”

D'Amaro highlighted several recent and planned investments, including the launch of the Disney Adventure cruise ship, Disney’s first ship home-ported in Asia, and the opening of World of Frozen at Disneyland Paris as part of the reimagined Disney Adventure World. He said the company has “more projects underway around the globe than at any time in our history.”

For 2026, D'Amaro said most forecasted Experiences capital spending includes a new ship and the ramp-up of major expansions at Walt Disney World, Disneyland and Shanghai Disney Resort. Over the next decade, he said the majority of Experiences capital expenditures are earmarked for capacity-expanding investments.

Content, Sports and Technology Remain Core Focus Areas

D'Amaro said creative excellence remains central to Disney’s strategy, citing recent and upcoming films and series as examples of the company’s focus on intellectual property. He said “Zootopia 2” generated $1.9 billion in global box office and that the franchise has surpassed 1 billion hours streamed on Disney+. He also pointed to Pixar’s “Hoppers” as original IP that has received strong critical reception.

Looking ahead, D'Amaro cited upcoming films including “The Mandalorian & Grogu,” “Toy Story 5,” the live-action “Moana” and “Avengers: Doomsday.” He said franchise films have the potential to move across platforms, experiences and products, deepening engagement over time.

On sports, D'Amaro said ESPN continues to build toward a stronger direct-to-consumer future, with app enhancements including multiview, Verts and SportsCenter for You. Johnston said Disney has not yet engaged with the NFL on early renewal conversations but remains open to discussions and expects to be in business with the league for years to come.

Technology was another recurring theme. D'Amaro said investors should expect more interactive entertainment for Disney+ subscribers and more personalized content feeds across streaming services. He described SportsCenter for You as an example of personalization already in use.

Asked about generative AI, D'Amaro said Disney sees AI as a long-term opportunity but is committed to keeping human creativity at the center and respecting creators and Disney’s intellectual property. He cited potential uses in content production efficiency, hyper-personalized recommendations, ad targeting and vacation planning. Johnston added that Disney is working on precision labor demand forecasting in theme parks to improve guest experience, employee experience and cost management.

Guidance and Portfolio Strategy

Johnston said Disney continues to expect 12% growth in adjusted earnings per share for fiscal 2026 and double-digit adjusted EPS growth for fiscal 2027, both excluding the impact of the 53rd week. He said the company has not seen changes in consumer behavior from elevated gas prices so far and is not currently seeing a material impact on the remainder of the fiscal year based on forward bookings.

Johnston said Sports operating income guidance now reflects a mid-single-digit increase, primarily due to the NFL Network transaction. He said second-quarter Sports operating income was slightly better than expected because revenue came in modestly ahead and programming fees were slightly below expectations.

Discussing Disney’s broader portfolio, Johnston said linear entertainment cable networks should be viewed as brands with studios that produce content distributed across multiple platforms. He said Disney Entertainment now generates more revenue from streaming than from linear, “more than double” in the most recent quarter, and that the linear earnings base is becoming smaller each quarter.

Johnston said Disney is always evaluating its brands, organizational structure and business priorities to deliver long-term shareholder value. If there is a compelling case for strategic alternatives involving non-core assets, he said investors can assume Disney has already reviewed it and will continue to do so as the marketplace evolves.

About Walt Disney NYSE: DIS

The Walt Disney Company NYSE: DIS, commonly known as Disney, is a diversified global entertainment and media conglomerate headquartered in Burbank, California. Founded in 1923 by Walt and Roy O. Disney, the company grew from an animation studio into a multi‑national entertainment enterprise known for iconic intellectual property and family‑oriented storytelling. Disney's operations span film and television production, streaming services, theme parks and resorts, consumer products, and live entertainment.

On the content side, Disney produces and distributes feature films and television programming through a portfolio of studios and labels that includes Walt Disney Pictures, Pixar, Marvel Studios, Lucasfilm and 20th Century Studios, along with broadcast and cable networks such as ABC, FX and National Geographic.

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