Before the market opened on Wednesday, Walt Disney (NYSE: DIS) released its fiscal third-quarter results for the 2026 financial year, marking the second quarterly report under CEO Josh D'Amaro. The company posted adjusted earnings per share that significantly exceeded expectations, fueled by continued improvements in the profitability of its experiences business and streaming operations.

The strong performance of the experiences segment, which includes theme parks and cruise lines, alongside the global box office success of Toy Story 5 surpassing $1 billion, served as the dual growth engines for the quarter. Concurrently, Disney announced the sale of its 50% stake in A+E Global Media for $1.2 billion and raised its fiscal 2026 share buyback target from $8 billion to $9 billion. Following the earnings release, Disney's stock price jumped over 4% in pre-market trading.

Key Financial Metrics: EPS Beats by 11%

For the fiscal third quarter ended June 27, 2026, Walt Disney reported revenue of $25.25 billion, a 7% year-over-year increase, slightly below the market consensus of $25.39 billion. Adjusted earnings per share came in at $2.06, exceeding the analyst estimate of $1.86 by 10.8%. On a GAAP basis, net income attributable to shareholders was $2.638 billion, a 49.87% decrease year-over-year, with diluted EPS of $1.51. The divergence between profit and EPS figures was primarily due to one-time items and a high base of comparison from the prior year. Total segment operating income reached $5.555 billion, up 21% year-over-year and above the consensus estimate of $5.24 billion. Operating cash flow stood at $4.866 billion, a 33% increase, while free cash flow was $3.072 billion, rising 63% year-over-year.

Guidance: Full-Year EPS Growth of 12%, Q4 Operating Income Around $4.9 Billion

Walt Disney reaffirmed its full-year fiscal 2026 guidance, projecting adjusted EPS growth of approximately 12%, excluding the 53rd week. Including the 53rd week, growth is expected to be around 16%. The company also anticipates double-digit adjusted EPS growth in fiscal 2027. For the fiscal fourth quarter, Disney expects total segment operating income to be approximately $4.9 billion, in line with analyst expectations.

Experiences Business: U.S. Park Attendance Up 3%, Orlando "Particularly Strong"

The experiences segment, which encompasses six global theme parks, Disney Cruise Line, merchandise, and game licensing, delivered robust performance this quarter, acting as a key profit driver. Segment revenue reached $9.97 billion, representing a 10% year-over-year increase, while operating income climbed 20% to $3.02 billion. Operating profit from domestic U.S. parks rose 27% year-over-year, while international parks and experiences profit declined 13%. Disney noted in its earnings report that the Walt Disney World Resort in Orlando performed "particularly strongly" during the quarter. Domestic park attendance grew 3% year-over-year, and total global guest count increased by 4%. Per-capita spending on tickets, food, and beverages rose 3% year-over-year. This performance starkly contrasts with rival Comcast's Universal Studios Resorts, which experienced a slowdown in demand in June, partly attributed to rising gasoline prices. Universal's second-quarter theme park revenue rose only 2.7% to $2.4 billion, with a decline in June attendance. Disney expects visitor numbers to maintain growth momentum in the current quarter as booking volumes continue to rise.

Entertainment Business: Streaming Profit Doubles, Toy Story 5 Crosses $1 Billion Globally

The entertainment segment, which includes the film studio, Disney+ streaming, and traditional television, generated revenue of $11.35 billion in the quarter, up 6% year-over-year. Operating income surged 64% to $1.68 billion. Streaming was the standout performer within the entertainment division. The combined profit from Disney+ and Hulu reached $712 million, more than double the $329 million reported in the same quarter last year. Entertainment SVOD (subscription video-on-demand) revenue rose 11% year-over-year to $5.53 billion, driven by a 15% increase in subscription revenue and a 3% rise in advertising revenue. Walt Disney stated that the entertainment SVOD operating margin is expected to remain in the double digits for the full fiscal year 2026. In film, Toy Story 5 surpassed $1 billion in global box office, bringing the franchise's cumulative global gross to over $4 billion. The film has also accumulated over 2 billion hours of viewing time on Disney+. While The Devil Wears Prada 2 performed well in international markets, the box office for Star Wars: The Mandalorian & Grogu and the live-action Moana fell short of expectations. Walt Disney cautioned that the lower-than-expected box office for the live-action Moana and a weaker-than-anticipated advertising environment for its U.S. streaming platforms will impact the current quarter's results.

Sports Business: NBA Finals Boost Revenue, Rights Costs Pressure Profits

The sports segment, centered around ESPN, posted revenue of $4.5 billion, a 4% increase year-over-year. Ratings for the NBA and NHL playoffs on ABC and ESPN saw significant surges. However, due to the timing of sports rights payments, operating income for the sports segment declined 17% year-over-year to $858 million. The rising cost of NBA rights was a primary factor pressuring profitability.

Strategic Adjustments: Sale of A+E Stake, Buyback Target Raised to $9 Billion

Walt Disney announced the sale of its 50% stake in A+E Global Media to joint venture partner Hearst Communications for $1.2 billion. A+E owns brands like Lifetime and History Channel. The company plans to use the proceeds from this sale for share repurchases, raising its fiscal 2026 stock buyback target from $8 billion to at least $9 billion. CEO Josh D'Amaro stated in the earnings release, "We believe our stock is undervalued, and we have continued to increase our share repurchase activity this quarter." Disney also announced that, starting from the first quarter of fiscal 2027, it will transfer its consumer products business from the experiences segment to the entertainment segment, aiming to "integrate the studios that create IP with the merchandise that monetizes it." Regarding AI applications, Disney stated, "AI is not just about efficiency. We are first and foremost using it to enhance the creative process, which will always remain human-centered, artist-driven, and creator-led."

TikTok Partnership: Bringing Vertical Creator Content to Disney+ for the First Time

Walt Disney and TikTok simultaneously announced a new agreement that allows TikTok creators to use characters and scenes from Disney films and TV shows in their short-form videos. This is the first agreement of its kind between TikTok and a traditional media company. The companies stated that a pilot program will launch in the U.S. in the coming months, with plans to expand to other markets. The financial terms of the deal were not disclosed. Under the agreement, select videos will be featured on a new "Verts" tab within Disney+, aimed at attracting younger users who prefer vertical video content. TikTok will provide creators with access to hundreds of Disney films and series assets from brands like Pixar, Marvel, Star Wars, and FX. The pilot program will commence in the U.S. in the coming months, designed to "bring a curated selection of the vast amount of Disney-themed fan-created content on TikTok into the Disney platform." This move comes as media companies compete for streaming service subscribers, particularly among younger generations who spend significant time on platforms like YouTube and TikTok. Beyond providing new content for Disney+, the partnership with TikTok also helps the company attract a wider audience to its streaming service. According to TikTok data, users on the platform shared an average of 6.5 million film and TV-related posts daily last year. A survey indicated that nearly half of the respondents said they watched a film or TV series after discovering related content on TikTok. Disney's Chief Marketing and Brand Officer, Asad Ayaz, commented, "The best storytellers are first fans. This partnership builds a new bridge between the stories we tell and the creativity they inspire."