Key facts
- Disney's June quarter revenue was $25.2 billion, up 7% year-over-year.
- Earnings per share were $2.06, a 28% increase from the prior year and above forecasts.
- The company will sell its 50% stake in A+E Global Media for an estimated $1.2 billion.
- Parks and experiences revenue reached nearly $10 billion, up 10%.
- Entertainment group revenue was $11.3 billion, a 6% increase.
- Disney expects fourth quarter segment operating income of $4.9 billion.
Disney reported its June quarter earnings, revealing that the success of its film 'Toy Story 5' extended beyond box office receipts to boost merchandise sales, increase engagement on its Disney+ streaming service, and draw more visitors to its theme parks.
CEO Josh D'Amaro, who assumed leadership in March, emphasized his strategy of investing in franchises like Toy Story to engage audiences beyond traditional theatrical releases. The company announced revenue of $25.2 billion for the quarter, a 7% increase from the previous year, though it fell short of Wall Street's $25.4 billion forecast. However, Disney's per-share earnings rose 28% to an adjusted $2.06, surpassing the expected $1.86 per share.
In a significant move, Disney intends to sell its 50% stake in A+E Global Media to co-owner Hearst Corporation for an estimated $1.2 billion in cash. These proceeds are earmarked for share repurchases, increasing the fiscal 2026 share repurchase target to at least $9 billion.
The Parks and experiences division saw revenue climb to nearly $10 billion, a 10% year-over-year increase, driven by a 4% rise in global theme park attendance and a 3% increase at domestic parks. This division's operating income grew 20% to $3 billion, partly due to a $100 million tariff refund received after the U.S. Supreme Court invalidated President Donald Trump's global tariffs. Analysts had previously expressed concerns about Disney's U.S. park attendance, citing similar softening trends at Comcast's Universal parks attributed to higher fuel prices and weaker consumer sentiment.
Disney's Entertainment group reported $11.3 billion in revenue, a 6% increase, bolstered by the performance of 'Toy Story' and a 15% rise in subscription fees for Disney+ and Hulu. Operating income for this segment surged 64% to nearly $1.7 billion. The Sports division generated $4.5 billion in revenue, but operating income fell 17% to $858 million, impacted by the early rounds of the NBA playoff games not featuring four-game sweeps as anticipated.
Looking ahead, Disney projects fourth quarter segment operating income of $4.9 billion, anticipating continued strong growth in its parks division. However, the company noted that the weak box office performance of the live-action adaptation of 'Moana' is expected to affect the entertainment segment's results.