Disney Posts Mixed Q1 Results as Streaming Profit Surges, Parks Shine
The Walt Disney Company (NYSE:DIS) reported financial results for its fiscal first quarter ended December 27, 2025, delivering a performance that narrowly surpassed Wall Street's top-line expectations but presented a complex picture of profitability across its diverse business segments. The market's initial reaction appears cautiously optimistic, with the stock trading higher in pre-market activity.
Earnings and Revenue Versus Estimates
For the quarter, Disney reported revenue of $26.0 billion, a 5% increase year-over-year, which slightly exceeded the analyst consensus estimate of approximately $25.96 billion. On the bottom line, the company's adjusted earnings per share (EPS) of $1.63 came in above the estimated $1.58.
- Reported Revenue: $26.0 billion
- Estimated Revenue: ~$25.96 billion
- Reported Adjusted EPS: $1.63
- Estimated Adjusted EPS: $1.58
While both metrics beat expectations, the year-over-year comparisons reveal underlying pressures. Adjusted EPS declined 7% from $1.76 in the prior-year quarter, and total segment operating income fell 9% to $4.6 billion.
Segment Performance: A Tale of Diverging Fortunes
The earnings release highlighted starkly different trajectories across Disney's three core segments.
- Experiences: This division was the clear standout, posting record quarterly revenue of $10.0 billion and operating income of $3.3 billion. Growth was driven by the domestic parks and cruise lines, with attendance up 1% and per capita spending increasing 4%.
- Entertainment: While revenue grew 7% to $11.6 billion, segment operating income dropped 35% to $1.1 billion. This decline was attributed to significantly higher programming, production, and marketing costs, which offset gains in subscription and theatrical revenue. A bright spot was the direct-to-consumer streaming (SVOD) business, where operating income surged 72% to $450 million.
- Sports: The segment faced headwinds, with operating income declining 23% to $191 million. A 10% rise in advertising revenue was more than negated by higher programming costs and lower affiliate fees, exacerbated by a temporary carriage suspension with YouTube TV.
Guidance and Market Outlook
Management provided detailed guidance for the coming quarters, which investors will compare to existing analyst forecasts. For the full 2026 fiscal year, Disney expects double-digit growth in adjusted EPS and high-single digit growth in Experiences operating income. Notably, the company anticipates its streaming services (SVOD) to achieve a 10% operating margin for the year.
For the immediate Q2 fiscal 2026, analyst estimates project revenue of approximately $25.3 billion and EPS of about $1.65. Disney's guidance suggests a mixed near-term picture:
- Entertainment segment operating income is expected to be comparable to the prior year, with streaming (SVOD) income projected to jump by approximately $200 million.
- Sports operating income is forecast to decline by about $100 million.
- Experiences is projected to see only modest operating income growth due to pre-opening costs for new attractions and cruise ships.
Market Reaction and Investor Takeaway
The pre-market stock price increase of over 3% suggests investors are focusing on the earnings beat and the strong, sustained profitability of the Parks and Experiences division. The impressive profit growth in the streaming business is likely being viewed as a positive sign that the company's massive investments in direct-to-consumer are beginning to yield tangible returns, even as the broader Entertainment segment remains under cost pressure.
The guidance for continued streaming profitability improvement and robust full-year EPS growth appears to be outweighing concerns about near-term margin compression in Sports and the significant capital expenditures, which led to negative free cash flow of $2.3 billion for the quarter. The company reaffirmed its commitment to returning capital to shareholders, stating it is on track to repurchase $7 billion of stock this fiscal year.
For a detailed look at upcoming earnings estimates and historical performance, you can review Disney's earnings data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendation, or an offer to buy or sell any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
