Walt Disney Co.
However, revenue increased 5% year-over-year (Y/Y) to $25.98 billion, topping the $25.74 billion analyst forecast.
Segment Revenue and Operating Income Overview
Revenue for the Entertainment segment, which encompasses traditional TV networks, DTC streaming, and films, saw a 7% Y/Y increase to $11.61 billion.
The Sports segment, primarily consisting of ESPN, saw revenue growth of 1% Y/Y to $4.91 billion.
Disney's Experiences segment, which includes theme parks and consumer products, proved to be a strong performer, with revenue climbing 6% Y/Y to $10.01 billion.
Consolidated operating income for the quarter declined 9% Y/Y to $4.60 billion.
This was led by the Experiences segment's $3.31 billion, followed by the Entertainment segment's $1.10 billion and the Sports segment's $191 million.
Disney's quarterly operating cash flow was down 77% Y/Y to $735 million.
The company used $2.28 billion in free cash flow during the quarter, driven by investments in parks, resorts, and other property.
Disney remains on track to accomplish its share repurchase target of $7 billion in fiscal 2026.
Disney beat Wall Street expectations in its fiscal first quarter as strength in its parks, resorts, and cruises lifted results, with CFO Hugh Johnston telling CNBC that the Experiences unit topped $10 billion in quarterly revenue for the first time.
Disney grew domestic theme-park revenue to $6.91 billion and international parks revenue to $1.75 billion, both up 7% year over year; Johnston said attendance rose at domestic parks even as "international visitation was softer."
He also told CNBC that "turbocharging the parks, bringing streaming to profitability and double-digit margins, and improving the theatrical business" puts Disney in a stronger position going forward, while the company warned Experiences operating income growth could stay "modest" next quarter due to international visitation headwinds, pre-launch cruise costs, and pre-opening costs for the "World of Frozen" expansion at Disneyland Paris.
Disney executives said that they did not see any real need to purchase more intellectual property (IP).
Disney's board prepares to decide on a successor to CEO Bob Iger, with the company having said it plans to name a new leader this quarter.
Iger said on the earnings call that Sora clips will be added to Disney+ sometime in fiscal 2026. He said AI will support productivity and noted that Disney's business footprint has never been as broad as it is today.
Iger added that the company is much better in shape than it was three years ago and said he is bullish on the business. The company also said ESPN delivered the third most-watched NBA season in the first quarter.
Reflecting on the progress made since returning to the helm, Iger said, "The good news is that the company is in much better shape today than it was three years ago because we have done a lot of fixing."
Q1 Outlook
For second-quarter fiscal 2026, Disney expects its Entertainment segment to deliver about $500 million in operating income from its direct-to-consumer streaming (DTC SVOD) business. The company anticipates a $200 million increase in segment operating income.
Disney expects a decline of $100 million in operating income for the Sports segment during the quarter.
In the Experiences segment for the quarter, Disney expects a modest segment operating income growth, due to international visitation headwinds at its domestic parks, pre-launch costs for the Disney Adventure at Disney Cruise Line, and pre-opening costs for World of Frozen at Disneyland Paris.
2026 Outlook
For the full fiscal year 2026, Disney reiterated double-digit operating income growth in its Entertainment division compared to fiscal 2025, with most of the gains expected in the second half of the year.
It also reaffirmed a 10% operating margin for its DTC SVOD business.
The company reiterated the Sports segment growth outlook of low single-digit operating income growth.
Disney continues to expect high single-digit operating income growth for its Experiences segment, again weighted toward the back half of the year.
For fiscal 2026, Disney reiterated plans to generate $19 billion in operating cash flow and double-digit adjusted EPS growth versus fiscal 2025.
DIS Price Action: Walt Disney shares were down 5.94% at $106.10 at the time of publication on Monday, according to Benzinga Pro data.
