Disney Beats Q1 Estimates as Parks Cross $10B Milestone
Q1 FY26 revenue hits $26B with EPS of $1.63. Theme parks post first-ever $10B quarter while streaming remains profitable. CEO succession vote expected this week.
Disney delivered a clean beat Monday morning, topping estimates on both revenue and earnings while its theme parks segment crossed $10 billion in quarterly revenue for the first time. The results exceeded the expectations we outlined heading into the print.
The company posted adjusted earnings of $1.63 per share, above the $1.57 consensus. Revenue came in at $26 billion, up 5% year-over-year and ahead of the $25.6 billion analysts expected. Shares rose 2% in pre-market trading.
The Parks Story
The Experiences division—parks, resorts, cruises—continues to be Disney's most reliable cash machine.
Domestic theme parks generated $6.91 billion in revenue, up 7% from a year ago. International parks added another $1.75 billion, also climbing 7%. Combined with cruises and consumer products, the segment crossed the $10 billion quarterly threshold for the first time in company history.
That milestone matters. Parks profitability has subsidized Disney's streaming transition for years. The segment's continued strength gives management runway to invest in content and ESPN's standalone streaming launch later this year.
Pricing power remains intact despite Universal's Epic Universe opening in Orlando last year. Disney has responded with new attractions and price increases, and the numbers suggest guests aren't trading down.
Streaming Stays Profitable
Disney's direct-to-consumer business has now strung together multiple profitable quarters—a far cry from the $4 billion annual losses posted just three years ago.
Streaming revenue climbed 11% to $5.35 billion during fiscal Q1. Management guided for roughly $500 million in streaming operating income for Q2, suggesting the profitability trend holds.
The Entertainment segment overall saw revenue grow 7% to $11.61 billion, though operating profit fell 35% to $1.1 billion. That decline reflects higher content costs and the ongoing erosion of linear TV—expected but worth watching.
Disney+ had 154 million paid subscribers as of last quarter. Any subscriber growth acceleration in Q2 would give bulls ammunition to argue the streaming turnaround has more room to run.
Box Office Bounce
Content sales jumped 22% to $1.94 billion, driven by strong theatrical performance from "Zootopia 2," "Avatar: Fire and Ash," "Predator: Badlands," and "Tron: Ares."
The box office has been kind to Disney lately. After struggling through 2023-2024 with underperforming releases, the studio has found its footing with sequels to proven franchises. "Zootopia 2" alone has grossed over $800 million worldwide.
For a company that built its empire on theatrical releases, the return to box office form is significant. It validates the franchise strategy and generates content that eventually flows to Disney+, extending the value chain. The studio joins Apple and Meta in posting strong quarters this earnings season.
CEO Succession Watch
Perhaps the most anticipated announcement didn't come from the earnings call itself.
Disney's board is meeting this week and is expected to vote on a successor to CEO Bob Iger. The company previously said it would name the next CEO in fiscal Q1—that deadline is now.
Iger returned from retirement in late 2022 to stabilize the company. He's overseen the streaming profitability turnaround, navigated activist pressure from Trian and Blackwells, and refocused the studio on fewer, bigger releases. The board wants continuity without creating a power vacuum.
Internal candidates include Disney Entertainment co-chairmen Dana Walden and Alan Bergman, plus ESPN chief Jimmy Pitaro. External candidates have been floated but seem less likely given Disney's culture of promoting from within.
Forward Look
Management reiterated full-year guidance: double-digit adjusted EPS growth, $19 billion in operating cash flow, and $7 billion in stock repurchases on track.
For fiscal Q2, streaming operating income should hit $500 million. Parks are expected to maintain high single-digit operating income growth despite tougher comps from an exceptional 2025.
The ESP+ standalone streaming launch remains the wildcard. Disney is betting it can transition ESPN from cable bundle economics to direct-to-consumer without destroying affiliate revenue in the process. The NBA rights deal signed in 2025 is expensive. Whether ESPN can monetize streaming effectively will determine if that investment pays off.
Shares trade around 18x forward earnings—reasonable for Disney's asset quality but not cheap given execution risks ahead. This quarter won't change anyone's fundamental view. Bulls see a company executing on its turnaround. Bears see linear TV erosion and parks competition as eventual headwinds.
Both groups got numbers that support their narratives. The CEO succession decision will matter more than this earnings beat.
For more coverage of this earnings season, follow our reporting as Amazon, Alphabet, and AMD report later this week.