tapebrief
DIS · Q1 2026

DIS · Q2 2026 Earnings

Cautious

Walt Disney Company (The)

Reported May 6, 2026

30-second summary

30-second take: Revenue grew 7% to $25.17B with adjusted EPS of $1.57 and Entertainment SVOD operating income of $582M at a 10.6% margin — Disney's first double-digit SVOD margin quarter, beating the ~$500M Q2 guide by ~$82M. Management raised the FY26 buyback to "at least $8B" (from $7B), quantified FY26 adjusted EPS growth at "approximately 12%" (16% with the 53rd week), and lifted FY26 Sports OI growth from low-single to mid-single digit — but the same Sports guide now carries a $0.03 NFL-transaction EPS dilution, and Q3 Sports segment OI is guided down ~14% YoY on a double-digit programming-expense increase. The H2-weighted thesis is intact on SVOD and Experiences; on Sports it's getting harder. Note: the Q2 release is signed by Josh D'Amaro as Chief Executive Officer and Hugh Johnston as CFO — a material leadership change from Bob Iger, who was CEO as recently as the Q1 FY26 call. The release frames this quarter as "an important moment of change for Disney" but does not provide further transition context.

Headline numbers

EPS

Q2 FY2026

$1.57

Revenue

Q2 FY2026

$25.17B

+7.0% YoY

Free cash flow

Q2 FY2026

$4.94B

Operating margin

Q2 FY2026

18.3%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$25.17B$23.65B+6.4%$26.00B-3.2%
EPS$1.57$1.61-2.5%$1.63-3.7%
Operating margin18.3%————
Free cash flow$4.94B$1.89B+161.6%$-2.28B+316.9%

Guidance

Disney raised FY2026 share repurchase target to at least $8B (from $7B), quantified adjusted EPS growth at approximately 12%

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Entertainment SVOD Operating IncomeQ2 FY2026Approximately $500 million$546 million+$46 million above guideBeat
Entertainment Segment Operating IncomeQ2 FY2026Comparable to Q2 fiscal 2025Comparable to Q2 fiscal 2025in-lineMet
Sports Segment Operating IncomeQ2 FY2026Decline of $100 million vs Q2 FY2025Decline of $100 million vs Q2 FY2025in-lineMet
Experiences Segment Operating IncomeQ2 FY2026Modest segment OI growthExperiences revenue $9.487B (+7% YoY)in-lineMet

New guidance

MetricPeriodGuideYoY
Total Segment Operating IncomeQ3 FY2026approximately $5.3 billion—
Sports Segment Operating IncomeQ3 FY2026decline by approximately 14% compared to prior-year quarter-14%
Domestic Parks AttendanceQ3 FY2026year-over-year improvement expected—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Entertainment SVOD Operating Margin
FY 2026
10%at least 10%+0.6 percentage points (Q2 actual 10.6% suggests full-year tracking above minimum)Raised
Sports Segment Operating Income
FY 2026
Low-single digit segment OI growth compared to fiscal 2025Mid-single digit percentage growth compared to fiscal 2025 (excluding 53rd week)Subtle shift from 'low-single' to 'mid-single' with NFL transaction $0.03 EPS dilution noted; net effect is modest uplift offset by NFL headwind.Lowered
Share Repurchases
FY 2026
$7 billionat least $8 billion+$1 billionRaised

Reaffirmed unchanged this quarter: Adjusted EPS Growth (excluding 53rd week) (approximately 12%)

Segment performance

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Entertainment$11.715B$10.704B+9.4%
Sports$4.609B$4.308B+7.0%
Experiences$9.487B$9.086B+4.4%
Entertainment SVOD Revenue$5.486 billion——

Platform metrics

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Entertainment SVOD Subscription Fees Growth16%——
Entertainment SVOD Advertising Growth12%——
Experiences Per Capita Spending Growth (Domestic Parks)5%——
Global Guests Growth2%——

Profitability

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Entertainment SVOD Operating Margin10.6%——
Total Segment Operating Income$4.603 billion$4.575 billion—
Cash Provided by Operations$6.914 billion (Q2)——

Management tone

The Q2 shareholder letter — signed by Josh D'Amaro as CEO and Hugh Johnston as CFO — opens by acknowledging "an important moment of change for Disney" while reiterating long-term strategy execution. The framing is one of continuity through transition.

One quarter ago the 10% FY26 SVOD margin was the target the company was building toward; this quarter it's the floor. The Q2 print of 10.6% was paired with management's language that they "delivered our first double-digit Entertainment SVOD operating margin in Q2 and remain on track to deliver at least 10% for the full fiscal year 2026." The shift from "10%" to "at least 10%" in the FY guide is small in print but large in meaning — it converts the FY26 SVOD margin guide from a ceiling into a starting line.

The Q2 release frames ESPN as best positioned to serve fans across linear and DTC, with digital subscriber revenue more than offsetting linear declines, the closed NFL transaction (January 2026), the broadened MLB relationship, CW Sports added to the ESPN app for Unlimited subscribers, and an ESPN App/DraftKings Sportsbook account linkage. The release also flags first ESPN Super Bowl inventory (Super Bowl LXI, February 2027) and strong early advertiser demand.

Parks language continues to escalate. The Q2 release flags the launch of the Disney Adventure ship in March and the opening of World of Frozen at Disneyland Paris, with positive guest response, and points to capital-light expansion via a new cruise ship in Japan and a theme park resort in Abu Dhabi. Domestic parks attendance declined 1% in Q2 against the prior-year quarter (reflecting continued softness in international visitation), but management explicitly guided Q3 domestic parks attendance to improve versus Q2.

The IP-flywheel narrative graduated from aspiration to specific proof. The shareholder letter highlights Zootopia 2's $1.9B global box office, the franchise crossing 1 billion hours streamed on Disney+, Zootopia 2 becoming the highest-grossing foreign film of all time in China, and Zootopia land continuing to draw guests to Shanghai Disneyland — concrete cross-platform evidence rather than thematic framing.

The Sports guide is the place where confidence has not fully landed. The FY26 raise from low- to mid-single digit OI growth is real, but it comes paired with $0.03 of NFL-transaction EPS dilution and a Q3 guide of -14% segment OI on double-digit programming-expense growth. The release's framing does not acknowledge the tension between "Sports segment OI growth raised" and "Sports Q3 OI down 14%" — the H2 weighting needs to absorb a deeper Q3 hole than the prior framework implied.

One other tone shift worth flagging: on AI, the Q2 release states plainly that "OpenAI opted to shut down Sora, and as a result we will not proceed with our previously planned investment in the company." Management notes it continues to explore commercial opportunities with OpenAI and others, but the prior Sora-on-Disney+ initiative is no longer a live plan.

Recurring themes management leaned on this quarter:

Film franchise dominance and box office recoveryStreaming profitability and product enhancementParks revenue expansion and capacity increasesESPN multi-platform transformation and sports rights consolidationInternational growth and local content investmentAI-generated content integration and OpenAI partnership

Risks management surfaced:

Economic conditionsGeopolitical risksCompetitionAdvertising market volatilityExecution risks on major expansion projects

Q&A highlights

Robert Fishman · Moffett & Davidson

How do Warner Bros Discovery valuations impact Disney's IP monetization strategy, and what's driving Disney's 13% SVOD subscription revenue growth with breakdown between U.S./international and subscription vs advertising trends?

Disney's IP portfolio (including ESPN, brands, franchises, and $37B in movies over time) is extremely valuable and well-positioned. Fox acquisition in 2019 was well-timed and well-priced. Parks expansion (Frozen Land, Zootopia Land) demonstrates IP value beyond entertainment. SVOD growth driven by pricing, North American and international subscriber growth, and bundling (Duo, Trio, Max) with strong engagement.

$6 billion in movies last two years$37 billion in movies over timeZootopia 2 and Avatar: Fire and Ash drove enormous Disney+ lift with first streams and hours engagementSubscription revenue growth driven by pricing, geographic growth, and bundling

Stephen Cahill · Wells Fargo

Walt Disney World performance details, bookings pacing outlook, and guidance on fiscal 27 adjusted EPS growth and CapEx guidance?

Walt Disney World had strong quarter with good attendance and pricing despite hurricane overlap. Full-year bookings up 5% weighted toward back half. No change to fiscal 27 adjusted EPS guidance or CapEx outlook.

Walt Disney World showed strong attendance and pricing performanceFull-year bookings up 5%, weighted toward back halfNo update to fiscal 27 adjusted EPS growth guidanceNo change to CapEx guidance

Jessica Rice-Ehrlich · Bank of America

What growth opportunities can Iger's successor pursue similar to Monday Night Football to ESPN and Pixar acquisition, and how will NFL relationship evolve beyond 2030 opt-out?

Company is in better shape than three years ago with fixing completed and growth opportunities in place (experiences business expansion, high seas offerings). Successor will have good foundation and should continue evolving strategy. NFL opt-out in 2030; premature to speculate on future of that relationship.

Company reorganized when Iger returned, shifting accountability to streamingStreaming went from $4B loss annually to $1B+ profitExperiences business expanding at every location globallyNFL opt-out clause in agreement effective 2030

Thomas Yeh · Morgan Stanley

Progress on ESPN Unlimited signups and bundle uptake vs authenticated PTV, and Hulu integration timeline and key steps?

Streaming business turned profitable through technology, content, and profitability focus. Bundled subscribers churn less; integrated Disney Plus/Hulu experience already reducing churn. Unified app experience with one-app integration expected end of calendar year. International content and technology improvements continue to drive growth.

Integrated Disney Plus and Hulu experience reducing churnBundle with ESPN also driving lower churnUnified one-app experience expected end of calendar yearConsumers can still purchase Disney Plus or Hulu separately

David Kolofsky · JPMorgan

OpenAI/Sora deal terms including character licensing, deployment on platforms, and potential impact on downstream programming demand?

Three-year license agreement with OpenAI enables creation of 30-second videos of 250 Disney characters (no human voice/face). Disney receives payment and can curate Sora-created videos on Disney+. Feature will jumpstart short-form video on platform. AI viewed as tool for creativity, productivity, and consumer connectivity; no expected impact on traditional programming demand.

Three-year paid license agreement with OpenAICovers 30-second videos of approximately 250 Disney charactersNo human voices or faces in AI-created videosCurated Sora content going to Disney+

Answers to last quarter's watch list

Q2 SVOD operating income vs. the $500M guide — SVOD OI came in at $582M against a ~$500M guide, an $82M beat and a 10.6% margin (the first double-digit print). The 10% FY26 margin guide is now a floor — management raised it to "at least 10%.".
Resolved positively
Q2 Sports segment OI delta vs. the -$100M guide — Sports OI came in at $652M vs $687M in Q2 FY25 (-$35M / -5%), better than the -$100M guide by ~$65M. But the Q3 follow-up guide of -14% YoY on double-digit programming-expense increases suggests the deepest pressure is still ahead, and the FY26 Sports OI raise to mid-single digit growth is layered with $0.03 of NFL-transaction EPS dilution. Status: Resolved mixed — Q2 beat, but forward trajectory more pressured
Domestic parks attendance growth vs. bookings color — Q2 global guests grew 2%, but domestic parks attendance declined 1% on continued international-visitation softness; per-capita spending +5%. Management guided Q3 attendance to improve YoY versus Q2. The booking strength remains a back-half story.
Continue monitoring
Reinstatement (or formal withdrawal) of the FY26 content investment number — The $24B FY26 content-investment figure withdrawn last quarter did not reappear in this quarter's framework. Disney has formalized the segment-disclosure simplification under the integrated-entertainment philosophy. Status: Resolved — disclosure permanently changed
Sora-on-Disney+ rollout milestones — Per the Q2 release, OpenAI has shut down Sora and Disney will not proceed with its previously planned investment in OpenAI. The Sora-on-Disney+ initiative is no longer a live plan; management says it continues to explore commercial opportunities with OpenAI and others. Status: Resolved — no longer proceeding
YouTube TV carriage status — The company didn't call out YouTube TV status on the print, and the Q1 ~$110M Sports hit was not repeated in Q2 commentary. The Q2 Sports OI beat vs guide suggests no ongoing carriage drag of that magnitude.
Continue monitoring

What to watch into next quarter

Q3 Sports segment OI vs. the -14% YoY guide — a print in-line or worse, combined with the NFL-transaction EPS dilution, would compress the "mid-single digit" FY Sports OI guide into the Q4 alone. Watch the absolute OI dollars and whether management quantifies the H2 Sports OI bridge.

Q3 total segment OI vs. the $5.3B guide — Q2 came in at $4.6B; the implied sequential step-up is meaningful and the bridge will reveal whether Experiences or Entertainment is doing the work.

Entertainment SVOD margin sustainability above 10% — Q2 hit 10.6%; watch whether Q3 holds the double-digit print and whether management gives any FY27 SVOD margin framing.

Buyback execution pace against the new $8B target — implied run-rate is $2B+ per quarter. Watch Q3 repurchases against pace and whether the elevated target is matched by execution.

Domestic parks attendance Q3 print vs. the YoY-improvement guide — Q2 domestic attendance was -1%; an inflection in Q3 would validate the back-half bookings strength.

NFL transaction structural detail — the $0.03 FY26 EPS dilution from NCI is disclosed but the upside case for the equity stake (programming cost trajectory, advertising/distribution monetization) was not framed quantitatively. Watch for further disclosure.

CEO transition execution — the Q2 release is signed by Josh D'Amaro as CEO alongside Hugh Johnston as CFO, a material change from Bob Iger's tenure that the release frames only as "an important moment of change." Watch for further context on the transition, any shifts in strategic priorities or capital allocation framing, and how the new leadership voice articulates the FY27 setup.

Sources

  1. Walt Disney Company Q2 FY2026 Press Release / Form 8-K Exhibit 99.1, May 6, 2026 — https://www.sec.gov/Archives/edgar/data/1744489/000174448926000036/fy2026_q2xprxex991.htm

Get the next brief, free.

We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.

This is not investment advice.