Disney reported solid Q2 fiscal 2026 results, with revenue and operating income ahead of prior guidance, mainly due to stronger-than-expected revenue growth.
Key financials
Disney’s Q2 revenue rose 7% to $25.2 billion, up from $23.6 billion a year earlier. Income before taxes increased 9% to $3.4 billion, while total segment operating income grew 4% to $4.6 billion. Reported diluted EPS fell 30% to $1.27, but adjusted EPS increased 8% to $1.57.
Segment performance
The Entertainment segment grew revenue 10% to $11.7 billion and operating income 6% to $1.3 billion. Streaming was a major highlight: Entertainment SVOD revenue rose 13%, and SVOD operating income jumped 88% to $582 million, giving Disney its first double-digit SVOD operating margin in the quarter.
Sports revenue increased 2% to $4.6 billion, but operating income declined 5% to $652 million. Growth in subscription and affiliate fees, helped by the NFL transaction, was offset by higher rights costs, lower advertising revenue, and the absence of UFC pay-per-view revenue.
Experiences remained Disney’s strongest profit contributor. Revenue rose 7% to $9.5 billion, and operating income increased 5% to $2.6 billion, both Q2 records. Growth was supported by higher guest spending at domestic parks and more cruise passenger days following Disney Cruise Line expansion.
Strategic highlights
Disney emphasized its long-term strategy around intellectual property, streaming engagement, sports, parks, cruise expansion, games, and AI. The company pointed to strong franchise performance from Zootopia 2, future releases such as Toy Story 5, The Mandalorian & Grogu, and live-action Moana, plus physical expansions including Disney Adventure and World of Frozen.
Outlook
For fiscal 2026, Disney expects adjusted EPS growth of about 12% excluding the 53rd week, or about 16% including it. It also plans at least $8 billion in share repurchases. For Q3, Disney expects total segment operating income of around $5.3 billion, while noting strong current demand at domestic parks but cautioning about macroeconomic uncertainty.
Bottom line
Disney’s quarter showed healthy top-line growth, improving streaming profitability, and strong parks/cruise performance. The main pressures were lower reported EPS, higher content and sports rights costs, and weaker free cash flow for the six-month period due to tax payments and increased investment in parks and cruise expansion.