As a new era dawns for Disney (DIS 0.12%), shareholders are left with the same nagging question: Will the stock ever do the company justice? An investment in the House of Mouse has been dead money going back more than a decade. Disney's new CEO, Josh D'Amaro, represents another opportunity for the company to live up to its promise and put some of the magic back into the stock.
With that as a backdrop, investors were watching closely for Disney's first outing under the new chief executive, and the results and accompanying commentary gave shareholders reason to hope anew.
Image source: Disney
The magic is back
For the company's fiscal 2026 second quarter (ended March 28), Disney reported revenue of $25.2 billion, up 7% year over year. This drove operating income that climbed 4% to $4.6 billion, fueling adjusted earnings per share (EPS) that rose 8% to $1.57.
For context, analysts' consensus estimates called for revenue of $24.87 and EPS of $1.49, so Disney not only surpassed its own guidance but also exceeded Wall Street's expectations.
Disney saw growth across each of its major operating segments. Entertainment revenue increased 10%, driven primarily by subscription fees that jumped 14%. The biggest contributor to the segment's impressive results was strength from Disney+ and Hulu, as streaming profits surged 88%.
During the earnings call, D'Amaro said that Disney+ would become the "digital centerpiece" that connects the company's stories, films, experiences, and games, as it moves beyond a traditional streaming service. Moreover, he said that Disney+ would become the "primary relationship between Disney and its fans, the place where everything comes together."
To that end, the company is leaning into the integration between Disney+ and Hulu, which is already benefiting retention. Disney is also working to improve recommendations and add short-form content as part of a multi-pronged effort to enhance the customer experience and reduce churn.
NYSE: DIS
Key Data Points
Revenue for the experiences segment grew 7% year over year -- delivering fiscal Q2 records -- fueled by strong theme park and resort attendance. Globally, guest growth was 2%, though domestic attendance slipped 1%. Despite macro headwinds, Disney reported ongoing consumer resilience. Visitors were spending more, which drove higher merchandise and food-and-beverage sales at the parks, buoying the results.
Revenue from the sports segment edged 2% higher, though operating income slipped 5%. Late last month, D'Amaro decided to quash a proposed spin-off of ESPN and instead focus on increasing profitability in the sports segment.
Highlighting the results, he explained that ESPN and live sports were earlier in the streaming monetization cycle. Disney expects the sports segment to grow operating income by mid-single digits in 2026, though programming expenses will weigh on third-quarter results.
What the future holds
Taking a step back, D'Amaro laid out three strategic pillars that he believes will ensure future success:
- Investing in intellectual property and creativity
- Reaching more consumers and increasing engagement
- Deploying technology to "power" storytelling and boost monetization
He used Zootopia 2 as an example of how strong storytelling comes together and resonates across the entire company. The highly successful sequel grossed $1.9 billion at the box office and became China's highest-grossing foreign film ever. It also fueled more than 1 billion streaming hours viewed, its characters captivated fans at Disney's theme parks and on its cruise ships, and fueled strong merchandise sales. This will be the template for future success.
For the full fiscal year, Disney is guiding for revenue growth of 12%, or 16% including the impact of an extra week in the fiscal year.
As a longtime Disney shareholder, I'm encouraged by the results, and I'm watching closely to see if D'Amaro can deliver on Disney's promise. There's still a lot of work to do, but I believe he's off to a good start.
