- Disney reported revenue of $25.2 billion on adjusted earnings earnings of $1.57 per share.
- Wall Street expected revenue of $24.9 billion on earnings of $1.50 per share, per estimates compiled by Yahoo Finance.
- CEO Josh D’Amaro laid out a three-pillar strategy that centers on investing in IP, reaching and engaging consumers in more seamless ways and leveraging technology, including AI, to power storytelling
{ “symbols”: [ {“proName”: “NYSE:DIS”, “title”: “Disney”}, {“proName”: “NASDAQ:CMCSA”, “title”: “Comcast”}, {“proName”: “NASDAQ:WBD”, “title”: “Warner Bros.”}, {“proName”: “NYSE:SONY”, “title”: “Sony”}, {“proName”: “NASDAQ:PSKY”, “title”: “Paramount”}, {“proName”: “NYSE:LION”, “title”: “Lionsgate”}, {“proName”: “NYSE:IMAX”, “title”: “IMAX”}, {“proName”: “NASDAQ:NFLX”, “title”: “Netflix”}, {“proName”: “NYSE:AMC”, “title”: “AMC Entertainment”}, {“proName”: “NASDAQ:ROKU”, “title”: “Roku”}, {“proName”: “NASDAQ:FOXA”, “title”: “Fox Corp”} ], “showSymbolLogo”: true, “colorTheme”: “light”, “isTransparent”: false, “displayMode”: “adaptive”, “locale”: “en” }
Disney’s new CEO Josh D’Amaro wants to make a strong first impression with Wall Street.
In D’Amaro’s first earnings report as CEO, he laid out a three-pillar strategy that will focus on investing in IP that “breaks through, builds connections, and endures,” reaching consumers around the world in “more seamless, engaging ways” and using advanced technologies, including AI, to power storytelling and increase monetization and returns.
“We believe Disney is uniquely positioned in the global entertainment industry with meaningful growth opportunities,” he said. “We compete in a dynamic marketplace, which requires us to navigate rapid technological change and business model transitions. Even so, we believe Disney has enduring structural advantages that enable us to drive long-term value for our shareholders in the years ahead.”
D’Amaro has already had a busy first month and a half since taking the reins of Disney, having dealt with the implosion of the company’s AI partnership with OpenAI and layoffs at key partner and investment Epic Games — on his very first week. In the last few weeks, he’s dealt with a renewed spat between President Donald Trump and late-night TV host Jimmy Kimmel, which Disney has stayed largely silent on. At the same time, D’Amaro has been trying to refocus on the company’s priorities, including turning Disney+ into the company’s “digital centerpiece.”
{ “symbols”: [[“NYSE:DIS|3M”]], “width”: “100%”, “height”: “400”, “locale”: “en”, “colorTheme”: “light”, “isTransparent”: false, “showChart”: true, “scalePosition”: “right”, “scaleMode”: “Normal” }
The new details come as Disney reported revenue climbed 7% year over year to $25.2 billion and operating profit increased 4% to $4.6 billion in its fiscal second quarter, primarily driven by growth in its theme parks and streaming businesses, but weighed down by higher sports rights fees and marketing costs. Net income came in at $2.25 billion, or $1.57 per share on an adjusted basis.
Looking ahead, the company forecast earnings per share growth of 12% in fiscal 2026 and is targeting at least $8 billion in share repurchases. For the third quarter, total operating income is expected to come in at approximately $5.3 billion. It also anticipates double-digit growth in adjusted earnings per share in fiscal 2027.
Disney-Epic Games partnership still ‘central’
Disney said its $1.5 billion stake in “Fortnite” creator Epic Games would be central to its strategy to grow reach and engagement, but acknowledged that its games unit is not a significant revenue driver yet.
The companies are collaborating on a new universe that will offer consumers the ability to play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more. Disney also touted the popularity of its characters in Fortnite, noting that “The Simpsons” collaboration saw 780 million hours played by over 80 million unique players following its launch in November.
But in March, Epic Games said it would cut $500 million in costs and lay off over 1,000 employees amid a downturn in Fortnite engagement. At the time, President Adam Sussman told TheWrap that the vision for the new universe with Disney is “unchanged” and that he’s “excited by our progress.”
Disney touts AI opportunity
D’Amaro also said that Disney’s storytelling would be underpinned by the evolution of technology. Specifically, the letter cites opportunities for AI to play a role across five areas: content creation and production, monetization, workforce productivity, guest and consumer experiences and enterprise operations.
In March, Disney’s $1 billion licensing partnership with OpenAI was scrapped after the latter shut down its Sora video app. The company said it continues to explore “potential commercial opportunities” with OpenAI and others.
A source familiar with the original agreement told TheWrap that alongside the licensing deal, Disney agreed to become a major customer of OpenAI, using its APIs to build new products, tools and experiences, including for Disney+, and deploying ChatGPT for its employees. Those deals are now being reevaluated.
While Disney has said human creativity would remain at the center of everything it does, the company notably laid off 1,000 employees across several divisions, including marketing and publicity, as well as Marvel and Disney Home Entertainment, in an effort to create a “more technologically-enabled workforce.”
Disney Entertainment enjoys a trio of hits
Disney’s Entertainment division, which is now unified under newly promoted Chief Creative Officer Dana Walden, grew revenue 1o% to $11.7 billion and profits rose 6% to $1.34 billion. Disney+ and Hulu’s combined profit grew 88% to $582 million, while the rest of the unit saw profits fall 20% to $754 million.
Total streaming revenue grew 13% year over year to $5.5 billion, driven by improved monetization from last year’s price increases and volume growth including the benefit of new international wholesale agreements. Total subscription and affiliate revenues grew 14% due to rate increases, while ad revenue grew nearly 5% due to higher impressions. Content sales grew 8%, reflecting the performance of “Avatar: Fire and Ash,” “Zootopia 2” and “Hoppers.” The entertainment segment also got a 4% revenue boost from its Fubo deal.
Disney is currently generating more in revenue from subscription and affiliate fees and advertising from its streaming business than it is from linear TV and expects that shift to continue over time.
Looking ahead, the company said its top priority would be increasing engagement on its streaming platforms, which has already seen a boost from the revamp its user interface and efforts to improve personalization. It also is encouraged by the “early momentum” with Verts on Disney+, its vertical short video format that launched in March.
Disney is on track to deliver a streaming operating margin of at least 10% for fiscal 2026.
Disney Sports a mixed bag
Disney’s sports business reported mixed results, with revenue climbing 2% to $4.61 billion, but profits falling 5% to $652 million. Weighing on the results were higher rights fees and marketing costs, as well as lower ad revenue due to fewer NBA games during the quarter and the comparison to last year’s 4 Nations Hockey tournament.
In January, the company closed its acquisition of the NFL Network, which contributed 3% of the 6% growth in ESPN subscription and affiliate fee revenue during the quarter. It also broadened its relationship with Major League Baseball and added CW Sports into the ESPN app for Unlimited plan subscribers. Additionally, ESPN App and DraftKings Sportsbook users can now link their accounts.
While acknowledging that ESPN’s direct-to-consumer business is still ramping up, the company said that revenue generated by digital subscribers during the quarter “more than offset the secular declines in the linear subscriber universe.”
Looking ahead, Disney plans to scale the ESPN streaming business through product improvements, adding content partners and distribution through direct and wholesale channels. It also said it was seeing strong demand for ad inventory for Super Bowl LXI in 2027.
Sports operating income is expected to decline 14% in the third quarter, driven by a double-digit percentage increase in programming expenses, including the timing of new rights agreements. When including the NFL transaction, sports operating income is expected to grow by mid-single digits in fiscal 2026, but will cut adjusted earnings per share by roughly 4 cents, due to the “increase in noncontrolling interest.”
Disney Experiences gets a boost
The Disney Experiences business saw record growth, with revenue increasing 7% to $9.49 billion and profits growing 5% to $2.62 billion, driven by increased guest spending at its domestic theme parks and experiences and increased passenger cruise days reflecting the launches of the Disney Adventure and Destiny ships.
Operating income growth was slightly impacted by pre-opening expenses from the new Disney Adventure cruise ship and the new theme park land World of Frozen. The unit also faced higher costs from inflation and the Disney Cruise Line fleet expansion.
Global guests, which includes domestic and international parks attendance along with passenger cruise days, grew 2% compared to the prior-year quarter. But attendance at domestic theme parks fell 1% year over year, in part due to “continued softness in international visitation.”
Looking ahead, Disney touted multiple expansions underway using a “capital-light model,” including bringing a new cruise ship to Japan and a theme park resort to Abu Dhabi. Disney said the strategic logic of the Abu Dhabi plans is unchanged.
While acknowledging the potential impact of heightened global macroeconomic uncertainty on consumers, Disney said demand at its domestic theme parks and resorts is “healthy” and that anticipates a year-over-year attendance improvement in the third quarter.
The post Disney Revenue Climbs 7% to $25.2 Billion in Q2, Boosted by Streaming, Theme Parks appeared first on TheWrap.
