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Disney

Three pillars: IP, technology, and One Disney, Fiscal 2026 and 2027

Decades of IP investment have built deep fan connections that translate into strong financial results
Josh D’Amaro and Hugh Johnston, Disney’s CEO and CFO, in the letter for the third quarter of fiscal 2026

Three pillars: IP, technology, and One Disney

Disney’s revenue grew 7% to $25.2 billion in the quarter to June 2026, with Experiences up 10%, Toy Story 5 past $1 billion at the box office, and streaming operating income more than doubling. Its plan is three pillars, IP, technology, and reach, and it expects adjusted EPS growth of about 12% in fiscal 2026 and double-digit growth in fiscal 2027, with at least $9 billion of share repurchases.

I

Invest in IP and creativity

  1. 1.Franchises. Invest in IP and creativity that breaks through, builds connections, and endures, as with the Toy Story franchise.
  2. 2.Local originals. Roughly triple the number of local original series on Disney+ over the next three years, to bring in new international users and reduce churn.
  3. 3.Sports. Build ESPN’s “marketplace of sports” into a single destination for fans, with the NFL, MLB, FOX One, and the CW.

Toy Story 5 passed $1 billion at the global box office, and the franchise has passed $4 billion in all.

Consumer Products revenue rose 7%, its strongest year-over-year growth in 20 quarters, on Toy Story 5 and Star Wars merchandise.

Star Wars: The Mandalorian and Grogu and the live-action Moana underperformed box office expectations.

Experiences revenue rose 10% in the quarter

Revenue reached $10.0 billion in the quarter to June 2026, with about 6% of the growth from volume and 3% from higher spending per guest. Resorts and vacations grew fastest, up 17%, as two new cruise ships came into their first full quarter.

Theme park admissions
$3.25bn +9%

5% from higher ticket revenue per guest, 3% from attendance

Resorts and vacations
$2.77bn +17%

10% from more cruise passenger days, 2% each from room rates and occupied nights

Merchandise, food, and beverage
$2.28bn +7%

4% from volume, 3% from guest spending

Merchandise licensing and retail
$1.06bn +8%

10% from merchandise licensing, less 2% from currency

Parks licensing and other
$0.61bn +2%

Total $9.97 billion, from $9.09 billion a year earlier. The growth rates are worked out from the revenue.

$3.3bn$2.8bn$2.3bn$1.1bn$0.6bn

The dark tick on each spoke is where that line stood a year earlier.

Streaming operating income more than doubled

Disney’s subscription streaming revenue, Disney+ and Hulu, grew 11% to $5.5 billion in the quarter to June 2026, and its operating income rose to $712 million, a margin of 13%. It expects a double-digit margin for the full year. Each frame is $100 million.

Third quarter of fiscal 2025Revenue $4.97bn · costs $4.64bn · operating income $329m, 6.6%
Third quarter of fiscal 2026Revenue $5.53bn · costs $4.82bn · operating income $712m, 12.9%
  • Costs
  • Operating income

Subscription revenue grew 15% and advertising revenue 3%. Operating income in the third quarter benefited in part from the timing of marketing and programming spend. The margin of a year earlier is worked out from the operating income and revenue reported.

Disney guides Entertainment to double-digit growth for the year

After nine months Experiences’ operating income is up 10%, Entertainment’s up 3%, and Sports’ down 14%. Disney guides Entertainment to double-digit growth for the full year, Sports to mid-single-digit growth, and Experiences to the high end of high-single-digit, all before the 53rd week.

−20%−10%0%+10%+20%Entertainment$4.12bn in nine monthsdouble-digit growth+3%Sports$1.70bn in nine monthsmid-single-digit growth−14%Experiences$8.94bn in nine monthsthe high end of high-single-digit growth+10%

The bands interpret Disney’s guidance as 10% or more, around 4 to 6%, and about 8 to 10%. Disney expects total segment operating income of about $4.9 billion in the fourth quarter, including about $600 million from the 53rd week, which is why the nine months trail the year’s guidance.

Fiscal 2026 has 53 weeks

Disney’s fiscal year ends on the Saturday nearest 30 September. It guides adjusted EPS growth of about 12% without the extra week and about 16% with it. The week adds about $600 million of segment operating income, and 1.5 to 2% to revenue.

+0%

adjusted EPS growth guided for fiscal 2026, with the 53rd week

Cash provided by operations

at least$19bn

Capital expenditures

about$9bn

Share repurchases

at least$9bn

Guidance for fiscal 2026. The share repurchases include the $1.2 billion from selling its 50% of A+E Global Media.

  1. Say where the plan fell short.

    Disney’s letter says both Star Wars: The Mandalorian and Grogu and the live-action Moana underperformed at the box office, and that Sports operating income fell 17% against a guide of about 14%, with the causes given: short playoff series and a carriage dispute. We recommend naming a miss and its cause in the same document as the wins, so the good news is believed.

  2. Guide each part of the business with a word you can check.

    For fiscal 2026 Disney guides Entertainment to double-digit growth, Sports to mid-single-digit, and Experiences to the high end of high-single-digit, all excluding the 53rd week. We recommend a plain range for each part of a plan, and stating the special case, here a 53rd week worth about $600 million, that would otherwise distort it.

  3. Move a business to where its value shows.

    Disney will shift much of Consumer Products from Experiences to Entertainment from fiscal 2027, so that the return on characters is shown next to the studios that make them, and its segments compare better with peers. We recommend asking of every reporting line whether it sits with the team that earns it.

Sources

  1. 1. The Walt Disney Company (2026). Earnings release and letter to shareholders, fiscal third quarter 2026. Form 8-K exhibit 99.1, 5 August 2026. sec.gov

Headwater is not connected with The Walt Disney Company. Disney, Pixar, Marvel, Star Wars, ESPN, Hulu, and Disney+ are trade marks of their owners. Updated 28 September 2026.

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