Key Points:
- Disney surpassed Wall Street expectations with $25.2 billion in total revenue and $1.57 in adjusted earnings per share.
- The entertainment division saw revenue climb 10% to $11.72 billion, driven by a 13% jump in the digital streaming business.
- The company canceled a planned financial investment in OpenAI after the tech startup suddenly shut down its video generator.
- Executives project a 12% earnings growth in 2026 and plan to spend at least $8 billion on share repurchases.
Disney delivered a powerful financial performance in its fiscal second quarter. The impressive results marked a highly successful start for new Chief Executive Officer Josh D’Amaro, who officially took control of the company on March 18. Disney reported adjusted earnings per share of $1.57, easily beating Wall Street forecasts of $1.51. Total revenue climbed 7% to reach $25.2 billion, clearing the $24.8 billion expectation set by financial analysts. Investors loved the news, pushing Disney stock up 6% during midday trading on Wednesday.
Total operating income for the entertainment giant hit $4.6 billion this quarter. This represents a solid increase from the $4.4 billion the company earned during the same period one year ago. However, the experiences division told a slightly different story. This massive unit includes the theme parks and cruise lines, which D’Amaro personally ran before his promotion to the top job. Revenue for the experiences group dropped to $9.5 billion, falling from a record high of $10 billion in the first quarter.
A slight dip in domestic theme park attendance drove this revenue decline. Disney reported a 1% decrease in the number of visitors to its parks in the United States. Despite lower foot traffic, those who did visit spent significantly more. Customer spending on admission tickets, food, and souvenirs increased by 5% during the quarter. This higher spending helped offset the lower daily crowd levels at properties like Disney World and Disneyland.
Rising travel costs remain a concern for vacationers across the country. Gasoline prices recently surpassed $4.50 per gallon this week, according to data from AAA. Despite this jump at the pump, Disney Chief Financial Officer Hugh Johnston reassured investors about future vacations. He stated that the company has not noticed any change in consumer behavior or bookings due to the higher fuel prices. Families continue to plan their Disney trips just as they did before gas prices spiked.
Johnston did add a word of caution regarding the broader economy. He noted that the company remains mindful of the macroeconomic uncertainty everyday consumers currently face. He admitted the Disney brand is not completely immune to economic impacts, especially if fuel prices continue to climb higher. Yet, current demand for the domestic theme parks remains remarkably strong. Executives expect park attendance actually to improve in the third quarter compared to last year. They believe crowds will grow as the company moves past a recent slump in international tourists and faces new competition from the opening of Epic Universe.
Looking further ahead, Disney leaders laid out highly optimistic financial targets for the coming years. The company expects third-quarter operating income to hit roughly $5.3 billion. For the full year of 2026, executives project an adjusted earnings growth of 12%. During that same year, the company plans to reward investors by executing at least $8 billion in share repurchases. Disney also expects to deliver double-digit adjusted earnings growth again in 2027.
The sports broadcasting side of the business experienced some minor turbulence. Disney reported a 5% drop in operating income for its sports unit compared to the previous year. Executives blamed this decline on higher sports broadcasting rights and increased marketing costs. However, overall revenue for the sports unit still rose 2% year over year to reach $4.61 billion. A lucrative new broadcasting deal with the National Football League, announced earlier in January, helped boost these top-line numbers. Johnston called the sports network an important contributor to the overall distribution portfolio.
The traditional entertainment division provided some of the brightest spots in the quarterly report. Revenue across the film studio and television networks rose 10% to hit $11.72 billion. The streaming business proved especially powerful within this unit. Disney reported that revenue from its streaming platforms jumped a massive 13%. This proves that recent price increases and aggressive subscriber acquisition strategies are paying off for the digital platform.
During his first earnings call as chief executive, D’Amaro outlined a clear long-term strategy for the media empire. His plan relies on three main pillars: investing heavily in proven intellectual property, reaching more global consumers, and using advanced technologies to tell better stories and increase financial returns. He pointed to the massive success of “Zootopia 2” as a perfect example of this strategy working. The animated sequel generated $1.9 billion at the global box office and racked up more than 1 billion streaming hours on Disney+.
Finally, the company addressed a major shift in its technology partnerships. Disney executives announced they will completely abandon their planned financial investment in OpenAI. In December, Disney reached a unique deal with the artificial intelligence startup. The original plan allowed Disney to generate short promotional videos featuring classic characters using Sora, a new video-generation tool built by the startup.
That entire project fell apart when OpenAI recently decided to shut down the Sora program. Disney stated clearly that because the startup opted to close the tool, the entertainment company will not proceed with its planned financial investment. However, Disney leaders noted that they will continue to explore other potential commercial opportunities with OpenAI and similar technology firms.
