Disney has released its first earnings report under the leadership of CEO Josh D’Amaro, and the results are promising for his initial appearance on Wall Street.
The entertainment giant reported revenues of $25.17 billion for the three months ending March 28, marking a 7% increase during Disney’s second fiscal quarter of 2026. However, net income dropped 31% to $2.25 billion, mainly due to increased taxes. Adjusted earnings per share rose 8% to $1.57, surpassing analysts’ expectations of $24.85 billion in revenue and $1.50 earnings per share.
Disney+ and Hulu saw a 13% increase in revenue to $5.49 billion, with their operating income surging 88% to $582 million. This growth was attributed to price increases from fall 2025. For the first time, the streaming business achieved an operating margin exceeding 10%, reaching 10.6%, and Disney aims to maintain at least 10% for the entirety of fiscal 2026. Subscriber numbers for these services are no longer disclosed by Disney.
D’Amaro, who previously oversaw Disney’s theme parks, assumed the role of CEO on March 18 following Bob Iger’s departure. D’Amaro has maintained the strategic path set during Iger’s leadership.
In a letter to shareholders, D’Amaro and CFO Hugh Johnston emphasized their focus on executing Disney’s long-term growth strategy. They noted strong quarterly results driven by creative and operational momentum and forecasted growth acceleration in the latter half of the fiscal year.
Referring to the recent layoffs of 1,000 employees, the executives explained the restructuring of marketing efforts to enhance efficiency and effectiveness in spending.
Looking ahead, Disney projects total segment operating income of approximately $5.3 billion for the June 2026 quarter, a 16% year-over-year increase. They anticipate a 12% rise in adjusted EPS for fiscal 2026, excluding the contribution of the 53rd week in the fiscal year, which is expected to account for 4% of adjusted EPS.
Disney also plans to repurchase at least $8 billion worth of shares by the end of fiscal 2026 in September.
On the cinematic front, upcoming releases like “The Mandalorian & Grogu,” “Toy Story 5,” and the live-action “Moana” were highlighted. These franchise films are seen as key assets enhancing Disney’s intellectual property, which in turn fuels their streaming, consumer products, experiences, and games businesses.
The release of “Zootopia 2” on Disney+ in March illustrates the value generated across platforms when Disney’s stories connect with audiences. The animated film, alongside its predecessor, has surpassed 1 billion hours streamed and generated $1.9 billion at the global box office. The characters also engage fans through theme parks, cruise ships, and retail.
Recent streaming debuts included “Predator: Badlands,” Disney+’s “Hannah Montana 20th Anniversary,” Hulu’s “Paradise” Season 2, and FX’s “Love Story: John F. Kennedy Jr. and Carolyn Bessette.” Upcoming releases will feature “Avatar: Fire and Ash,” Pixar’s “Hoppers,” and the final season of “The Bear” on Disney+ and Hulu.
Disney’s entertainment segment benefited from acquiring a 70% stake in live TV streaming platform Fubo, which was integrated with Hulu’s live TV business. This acquisition resulted in a 4% revenue increase for the segment, though expenses also rose by 4%.
Excluding ad revenue from Disney+ and Hulu, advertising revenue for the entertainment segment experienced a 2% year-over-year decline.
ESPN’s revenue grew 6% to $4.61 billion, but operating income fell 5% to $652 million due to decreased ad sales from fewer NBA games. Revenue gains were driven by increased subscription and affiliate fees, partially countered by a decline in subscribers. Disney’s agreement with the NFL, granting the league a 10% ownership stake in ESPN valued at $3 billion, contributed 3% to the sports segment’s revenue growth.
For the upcoming June quarter, Disney anticipates a 14% decline in ESPN’s operating income due to increased programming expenses and new rights agreements.
The Disney Experiences segment, which includes theme parks, cruises, and consumer products, reported record revenues of $9.5 billion (up 7%) and operating income of $2.6 billion (up 5%) for fiscal Q2. The demand at domestic parks and resorts remains strong, though executives are aware of the current economic uncertainties faced by consumers.
Attendance at domestic parks decreased by 1% at the start of the year, reflecting reduced international visitors. However, the company expects improved attendance year-over-year in the June quarter.
In a letter to shareholders, D’Amaro and Johnston highlighted the strategic importance of gaming for engaging younger audiences, particularly through a partnership with Epic Games. Disney characters rank among the top favorites within the Fortnite universe, with “The Simpsons” on Fortnite achieving 780 million hours played by over 80 million unique players.
The executives also addressed OpenAI’s sudden closure of Sora, which led Disney to cancel a planned $1 billion investment in the AI company. This investment was intended to enable users to create AI animations featuring Disney characters.
Disney remains open to exploring commercial opportunities with OpenAI and other partners, according to D’Amaro and Johnston.
“We see advanced technologies, including AI, as a significant long-term opportunity,” they stated. “We foresee AI applications across five areas of our business: content creation and production, monetization, workforce productivity, guest and consumer experiences, and enterprise operations. Our commitment is to ensure AI complements human creativity while respecting creators and safeguarding our intellectual property.”
