Fiscal 2026 outlook:
DIS to acquire platform ($4.9B)
EPS beat consensus by 0.18
full-year outlook reinforce our confidence that we are uniquely well positioned. Decades of IP investment have built deep fan con
#1prepared remarks
EX-99.1 2 fy2026_q3xerxex991.htm EARNINGS RELEASE
#2prepared remarks
August 5, 2026 To Our Shareholders and the Broader Investment Community, Our strong fiscal Q3 results and reiterated full-year outlook reinforce our confidence that we are uniquely well positioned. Decades of IP investment have built deep fan connections that translate into strong financial results. Our accelerating global guests growth at Experiences, Toy Story 5 's theatrical and consumer products success, and strong ESPN viewership gains all helped expand our consumer reach this quarter. Together, our results show a unique ability to engage consumers at scale, both digitally and physically, even amid macro uncertainty. Revenues increased 7% for the third quarter to $25.2 billion from $23.7 billion in Q3 fiscal 2025. Income before income taxes increased 14% to $3.6 billion from $3.2 billion in Q3 fiscal 2025. Total segment operating income (1) modestly exceeded our prior guidance. Total segment operating income increased 21% to $5.6 billion from $4.6 billion in Q3 fiscal 2025. Diluted earnings per share (EPS) decreased to $1.51 from $2.92 in Q3 fiscal 2025. Adjusted EPS (1) increased to $2.06 from $1.61 in Q3 fiscal 2025. Fiscal 2026 outlook: • We continue to expect fiscal …
#3prepared remarks
(1) Total segment operating income, diluted EPS excluding certain items (also referred to as adjusted EPS), Entertainment SVOD operating income (also referred to as SVOD operating income), SVOD operating margin and free cash flow are non-GAAP financial measures. The most comparable GAAP measures are income before income taxes, diluted EPS, Entertainment segment operating income, Entertainment segment operating margin and cash provided by operations. See the discussion on pages 23 through 27 for how we define and calculate these measures, a reconciliation thereof to the most directly comparable GAAP measures and as applicable, why the Company is not providing the forward-looking quantitative reconciliation thereof to the most comparable GAAP measures. 1
#4prepared remarks
SUMMARIZED FINANCIAL RESULTS The following table summarizes third quarter results for fiscal 2026 and 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended | | | | Nine Months Ended | | | ($ in millions, except per share amounts) | June 27, 2026 | | June 28, 2025 | | Change | | June 27, 2026 | | June 28, 2025 | | Change | Revenues | $ | 25,248 | | | $ | 23,650 | | | 7 % | | $ | 76,397 | | | $ | 71,961 | | | 6 % | Income before income taxes | $ | 3,645 | | | $ | 3,211 | | | 14 % | | $ | 10,705 | | | $ | 9,958 | | | 8 % | Total segment operating income (1) | $ | 5,555 | | | $ | 4,575 | | | 21 % | | $ | 14,758 | | | $ | 14,071 | | | 5 % | | | | | | | | | | | | | Diluted EPS | $ | 1.51 | | | $ | 2.92 | | | (48) % | | $ | 4.12 | | | $ | 6.12 | | | (33) % | Diluted EPS excluding certain items (1) | $ | 2.06 | | | $ | 1.61 | | | 28 % | | $ | 5.25 | | | $ | 4.82 | | | 9 % | Cash provided by operations | $ | 4,866 | | | $ | 3,669 | | | 33 % | | $ | 12,515 | | | $ | 13,627 | | | (8) % | Free cash flow (1) | $ | 3,072 | | | $ | 1,889 | | | 63 % | | $ | 5,735 | | | $ | 7,519 | | | (24) % |
#5prepared remarks
(1) Total segment operating income, diluted EPS excluding certain items and free cash flow are non-GAAP financial measures. The most comparable GAAP measures are income before income taxes, diluted EPS and cash provided by operations, respectively. See the discussion on pages 23 through 27 for how we define and calculate these measures and a reconciliation thereof to the most directly comparable GAAP measures. SUMMARIZED SEGMENT FINANCIAL RESULTS The following table summarizes third quarter segment revenue and operating income for fiscal 2026 and 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended | | | | Nine Months Ended | | | ($ in millions) | June 27, 2026 | | June 28, 2025 | | Change | | June 27, 2026 | | June 28, 2025 | | Change | Revenues: | | | | | | | | | | | | Entertainment | $ | 11,345 | | | $ | 10,704 | | | 6 % | | $ | 34,669 | | | $ | 32,258 | | | 7 % | Sports | 4,500 | | | 4,308 | | | 4 % | | 14,018 | | | 13,692 | | | 2 % | Experiences | 9,968 | | | 9,086 | | | 10 % | | 29,461 | | | 27,390 | | | 8 % | Eliminations (1) | (565) | | | (448) | | | (26) % | | (1,751) | | | (1,379) | | | (27) % | Total revenues | $…
#6prepared remarks
(1) Reflects fees paid by (a) the entertainment vMVPD services to the sports and entertainment linear networks for the right to air the networks on the Hulu Live TV and Fubo services and (b) the Entertainment segment to the Sports segment to program certain sports content on ABC Network and Disney+. The increase in eliminations for the quarter and nine-month period was due to the Fubo and NFL Transactions (refer to page 18). (2) Total segment operating income is a non-GAAP financial measure. The most comparable GAAP measure is income before income taxes. See the discussion on pages 23 through 27 for how we define and calculate this measure and a reconciliation thereof to the most directly comparable GAAP measure. 2
#7prepared remarks
OUR STRATEGY Results in the quarter reflect our continued execution across our three strategic pillars: 1. Investing in IP and creativity that breaks through, builds connections, and endures 2. Using advanced technologies to power our storytelling and increase monetization and returns 3. Reaching more consumers in more seamless, engaging ways around the world with a One Disney operating model INVESTING IN IP We had a solid quarter creatively, highlighted by the June 19 theatrical release of Toy Story 5 . The Toy Story franchise is an example of a uniquely Disney asset, one we continue to invest in, and one that delights audiences old and new, while generating value across our entire company. Toy Story 5 has already surpassed $1 billion in global box office, bringing the franchise's lifetime global box office to more than $4 billion. This film's value also extends well beyond the theatrical window. Its release further lifted the franchise on Disney+, which has over two billion hours streamed, while Toy Story merchandise helped deliver our strongest quarter of year-over-year growth in Consumer Products revenue in 20 quarters. And as our fans know well, Toy Story has a presenc…
#8creating
marketplace of sports,
#9prepared remarks
IMPROVING MONETIZATION AND RETURNS We want to grow annual revenue, operating income, and adjusted EPS consistently over time. In the fiscal third quarter, total revenue grew 7%, led by 11% revenue growth at our domestic parks and experiences, including the expanding Disney Cruise Line portfolio. Total Parks & Experiences revenue increased 10%, driven by roughly 6% volume and 3% rate across the global portfolio. We were pleased with 4% per capita spending growth at our domestic parks, reflecting the value our fans see in the parks experience and our decades of investment. We recorded approximately $100 million in a tariff refund this quarter, reversing out tariff payments earlier in the fiscal year. While we may receive additional refunds in the coming quarters, their dollar amounts are expected to be insignificant. Disney Experiences segment operating income growth was 20%, with the tariff refund representing roughly four points of that growth. There was no impact on Experiences segment revenues.
#10prepared remarks
Toy Story 5 and Star Wars: The Mandalorian and Grogu merchandise sales contributed to 7% growth in Consumer Products revenues when compared to the prior-year quarter. Strength at our domestic parks, Disney Cruise Line, Consumer Products, and Disneyland Paris helped offset softness at our Asia parks, which we expect to continue in fiscal Q4. Our Entertainment SVOD (1) revenue growth of 11% reflects subscription revenue growth of 15% relative to the prior-year quarter, driven by both rate and volume, with foreign exchange representing approximately 1%. Entertainment SVOD advertising revenues were up 3%, reflecting the impact of continued marketplace supply growth, which created a softer overall demand environment relative to fiscal Q2. Entertainment SVOD operating margin was 13% in fiscal Q3, benefiting, in part, from the timing of marketing and programming spend. We continue to expect double-digit Entertainment SVOD operating margin for full-year fiscal 2026, excluding the impact of the 53rd week.
#11prepared remarks
(1) Disney+, Hulu subscription video-on-demand and Disney+ Hotstar (through November 14, 2024) streaming services (excluding Hulu Live TV and Fubo vMVPD services) are collectively referred to as “Entertainment SVOD” or “SVOD.” 5
#12prepared remarks
Entertainment segment subscription and affiliate fees increased 12% versus the prior-year quarter, with the Fubo transaction and foreign exchange representing approximately 4% and 1%, respectively. Sports segment subscription and affiliate fees increased 8% versus the prior-year quarter, with the NFL transaction representing approximately 4%. These revenue growth rates reflect the successful monetization evolution our company is executing as we scale our streaming platforms. Our Sports segment operating income decline of 17% versus the prior-year quarter was modestly steeper than our prior guidance of approximately 14%. Contributing to the lower-than-expected operating income were four-game sweeps in early rounds of the NBA Playoffs and the impact of a network carriage dispute. We see emerging technologies as a significant opportunity for our company to drive returns, one that builds on our legacy of innovating at the intersection of creativity and breakthrough technology. We've been developing AI and machine learning capabilities for decades, and we're actively investing in groundbreaking teams that have always pushed the boundaries of storytelling across Industrial Light & Mag…
#13prepared remarks
Below, we provide historical trending for global guests (1) . As a reminder, this metric combines attendance at our domestic and international parks with passenger cruise days. We feel this provides a lens into our increasingly global and diversified Experiences businesses, and aligns more closely with our investment initiatives around the world.
#14prepared remarks
(1) In addition to revenue, costs, and operating income, management uses the metric global guests to analyze trends and evaluate the overall performance of our theme parks and cruise businesses, and we believe this metric is useful to investors in analyzing the businesses. 7
#15prepared remarks
Our Experiences segment operating margin for the nine-month period ended June 27, 2026 of approximately 30% reflects, in part, the healthy cumulative results we're generating from our investments. We expect our future capital projects, over their lifetimes, to deliver double-digit returns.
#16prepared remarks
Turning from the physical to the digital, our ambition is for Disney+ to become the digital centerpiece of The Walt Disney Company. This long-term strategy rests on two pillars: making the streaming experience the best in the world and connecting Disney's services into a single ecosystem. In the short-term, we are focused on continuing to improve foundational elements of our service and believe we have the opportunity to increase engagement and retention. We also believe we can bring more value to our subscribers by better leveraging sports in the U.S., completing the integration of Hulu and Disney+, and investing in international programming. Long-term, we aim to evolve Disney+ into a comprehensive membership ecosystem. By integrating high-value, always-on benefits with our storytelling, we can reach more fans, deepen engagement, and increase subscriber retention. These product enhancements will also allow us to further segment the market, increasing our addressable opportunity over time. We expect to begin introducing elements of this vision in Spring 2027. We believe our product and technology improvements are contributing to engagement growth, with much of this year's lift c…
#17prepared remarks
Turning to Sports, this was an unforgettable quarter for fans, anchored by the NBA and NHL postseasons on ABC and ESPN. Ratings more than doubled for both championship series compared to the prior year (1) , with the 2026 NBA and NHL playoffs finishing as the most-viewed ever on our networks (2) . That audience strength extended beyond the NBA and NHL, with aggregate sports consumption on ESPN networks up healthy double digits overall in the key P18-49 demo (3) . This was the most-watched fiscal Q3 for ESPN, ESPN2, and ESPN on ABC since 2016, a remarkable sign of ESPN's relevance today given the continued fragmentation of media and the proliferation of sports content across TV and streaming. And through the lens of digital and social engagement, ESPN recorded its best month ever in June, reaching nearly 230 million unique fans and over 80% of the U.S. internet population (4) .
#18prepared remarks
(1) Includes viewership of TNT Sports’ coverage of the Stanley Cup Finals in 2025. (2) Nielsen Media Research (L+SD), Big Data + Panel, P2+ Viewers. (3) Nielsen Media Research (L+SD), Big Data + Panel, Total Sports Minutes by Network Group, All Sports Codes, 3/29/26-6/27/26, Includes Sustainers. (4) Comscore Media Metrix - Total Audience (Desktop P2+ and Mobile 18+), June 2026, U.S. 9
#19prepared remarks
CAPITAL ALLOCATION AND OTHER MATTERS We believe our shares are undervalued and we continued to lean into share repurchases during the quarter. In addition, our strategy of simplifying the company and exiting non-core assets has resulted in an agreement to sell our 50% stake in A+E Global Media to an affiliate of co-owner Hearst Corporation. We plan to use the approximately $1.2 billion in cash proceeds to repurchase additional Disney shares and now expect full year fiscal 2026 share repurchases to be at least $9 billion. Additionally, we intend to shift much of our Consumer Products business from our Experiences segment to our Entertainment segment, beginning in Q1 of fiscal 2027. We believe this shift will have strategic and operational benefits by bringing the monetization of our IP through consumer products closer to the studios that create that IP. Additionally, we believe this presentation will better reflect the returns our Entertainment segment is generating from the content it produces and make our Entertainment segment more comparable to peer reporting methodologies. We remain highly focused on reducing costs across the enterprise to create incremental capacity to inve…
#20prepared remarks
FORM 10-Q AND WEBCAST INFORMATION Please review this release in conjunction with our Form 10-Q, which can be found on our website at www.disney.com/investors. The Walt Disney Company will host a live Webcast today, August 5, 2026, at 8:30 AM EDT/5:30 AM PDT. To access the Webcast go to www.disney.com/investors . The Webcast replay will also be available on the site. 11
#21prepared remarks
DISCUSSION OF THIRD QUARTER SEGMENT RESULTS
#22prepared remarks
Entertainment Operating results for Entertainment were as follows: | | | | | | | | | | | | | | | | | | | Quarter Ended | | Change | (in millions) | June 27, 2026 | | June 28, 2025 | | Revenues | | | | | | Subscription and affiliate fees | $ | 7,545 | | | $ | 6,765 | | | 12 % | Advertising | 1,625 | | | 1,641 | | | (1) % | Content sales | 1,596 | | | 1,698 | | | (6) % | Other | 579 | | | 600 | | | (4) % | Total revenues | 11,345 | | | 10,704 | | | 6 % | Operating expenses | (7,238) | | | (7,098) | | | (2) % | Selling, general, administrative and other | (2,301) | | | (2,488) | | | 8 % | Depreciation and amortization | (218) | | | (198) | | | (10) % | Total costs and expenses | (9,757) | | | (9,784) | | | — % | Equity in the income of investees | 92 | | | 102 | | | (10) % | | | | | | | Operating Income | $ | 1,680 | | | $ | 1,022 | | | 64 % |
#23prepared remarks
Revenues - Subscription and affiliate fees Growth in subscription and affiliate fees was due to increases of 4% from the Fubo Transaction, 3% from higher effective rates, 3% from more subscribers and 1% from a favorable foreign exchange impact. Revenues - Advertising The decrease in advertising revenue was attributable to a decrease of 4% from lower rates, partially offset by increases of 1% from more impressions and 1% from the Fubo Transaction. Revenues - Content sales Lower content sales revenue was due to a decrease of 8% from TV/VOD and home entertainment distribution revenue . Revenues - Other The decrease in other revenue was attributable to the impact of our foreign exchange hedging program, partially offset by revenue increases including from higher intersegment allocations of revenues from the Experiences segment reflecting an increase in merchandise licensing royalties. 12
#24prepared remarks
Operating Expenses | | | | | | | | | | | | | | | | | | | Quarter Ended | | Change | (in millions) | June 27, 2026 | | June 28, 2025 | | Programming and production costs | $ | (5,819) | | | $ | (5,772) | | | (1) % | Other operating expenses | (1,419) | | | (1,326) | | | (7) % | | $ | (7,238) | | | $ | (7,098) | | | (2) % |
#25prepared remarks
Programming and production costs reflected increases of 4% from the Fubo Transaction and 2% from our streaming services, which were largely offset by decreases of 3% from lower film cost impairments and 2% from linear networks. The increase in other operating expenses was attributable to higher technology and distribution costs. Selling, general, administrative and other Selling, general, administrative and other costs decreased $187 million, to $2,301 million from $2,488 million, driven by lower marketing costs, partially offset by the Fubo Transaction. Depreciation and amortization Depreciation and amortization increased $20 million, to $218 million from $198 million, due to investments in technology. Equity in the Income of Investees Income from equity investees decreased $10 million, to $92 million from $102 million, due to lower income from A+E attributable to a decrease in advertising revenue. Operating Income from Entertainment Segment operating income increased $658 million, to $1,680 million from $1,022 million, due to an increase in subscription and affiliate fees. 13
#26prepared remarks
Supplemental SVOD detail The following table provides supplemental SVOD detail: | | | | | | | | | | | | | | | | | | | Quarter Ended | | Change | ($ in millions) | June 27, 2026 | | June 28, 2025 | | Revenues | | | | | | Subscription fees | $ | 4,715 | | $ | 4,116 | | 15 % | Advertising | 851 | | 830 | | 3 % | Other | (34) | | 26 | | nm | Total revenues | 5,532 | | 4,972 | | 11 % | Programming and production costs | (2,577) | | (2,481) | | (4) % | Other expenses (1) | (2,243) | | (2,162) | | (4) % | Total costs and expenses | (4,820) | | (4,643) | | (4) % | Entertainment SVOD operating income (2) | $ | 712 | | $ | 329 | | >100 % | | | | | | |
#27prepared remarks
(1) Includes other operating expenses, selling, general and administrative expenses and depreciation and amortization. (2) Entertainment SVOD operating income (also referred to as SVOD operating income) is a non-GAAP financial measure. The most comparable GAAP measure is Entertainment segment operating income. See the discussion on pages 23 through 27 for how we define and calculate this measure and a reconciliation thereof to the most directly comparable GAAP measure. Growth in subscription fees was attributable to increases of 9% from more subscribers, 3% from higher effective rates and 1% from a favorable foreign exchange impact. Higher advertising revenue was due to an increase of 8% from more impressions, partially offset by a decrease of 4% from lower rates. The decrease in other revenue was due to the impact of our foreign exchange hedging program.
#28prepared remarks
Sports Operating results for Sports were as follows: | | | | | | | | | | | | | | | | | | | Quarter Ended | | Change | (in millions) | June 27, 2026 | | June 28, 2025 | | Revenues | | | | | | Subscription and affiliate fees | $ | 3,142 | | | $ | 2,899 | | | 8 % | Advertising | 1,204 | | | 1,148 | | | 5 % | Other | 154 | | | 261 | | | (41) % | Total revenues | 4,500 | | | 4,308 | | | 4 % | Operating expenses | (3,304) | | | (3,008) | | | (10) % | Selling, general, administrative and other | (344) | | | (276) | | | (25) % | Depreciation and amortization | (29) | | | (13) | | | >(100) % | Total costs and expenses | (3,677) | | | (3,297) | | | (12) % | Equity in the income of investees | 35 | | | 26 | | | 35 % | Operating Income | $ | 858 | | | $ | 1,037 | | | (17) % |
#29prepared remarks
Revenues - Subscription and affiliate fees Growth in subscription and affiliate fees reflected increases of 5% from higher effective rates and 4% from the NFL Transaction. Revenues - Advertising Advertising revenue growth was due to higher impressions. Revenues - Other The decrease in other revenue was primarily due to the comparison to Ultimate Fighting Championship (UFC) pay-per-view revenue in the prior-year quarter. Our UFC rights expired in December 2025. Operating expenses | | | | | | | | | | | | | | | | | | | Quarter Ended | | Change | (in millions) | June 27, 2026 | | June 28, 2025 | | Programming and production costs | $ | (3,050) | | $ | (2,762) | | (10) % | Other operating expenses | (254) | | (246) | | (3) % | | $ | (3,304) | | $ | (3,008) | | (10) % |
#30prepared remarks
Programming and production costs increased in the current quarter compared to the prior-year quarter primarily due to contractual rate increases, costs for new sports rights and an impact from the timing of rights costs recognition as a result of the NBA contract renewal. These increases were partially offset by the absence of certain rights costs compared to the prior-year quarter, primarily for UFC content. The NBA contract renewal resulted in a shift of costs from the first half of the year to the third quarter. Selling, general, administrative and other Selling, general, administrative and other costs increased $68 million, to $344 million from $276 million, primarily due to higher sales and marketing costs. Depreciation and amortization Depreciation and amortization increased $16 million, to $29 million from $13 million, due to investments in technology. Operating Income from Sports Segment operating income decreased $179 million, to $858 million from $1,037 million, as an increase in subscription and affiliate fees was more than offset by higher programming and production costs. 15