- Disney shares rose about 4% in premarket trading after Q3 earnings beat estimates
- Q3 adjusted EPS was $2.06, surpassing analyst expectations of $1.86
- Revenue for the quarter was $25.25 billion, slightly below the expected $25.4 billion
The Walt Disney Company shares jumped around 4% in premarket trading on Wednesday after the company reported better-than-expected fiscal third-quarter earnings, helped by strong performances from its parks and streaming businesses.
Disney also raised its fiscal 2026 share repurchase target to at least $9 billion from the earlier target of $8 billion.
Disney reported adjusted earnings per share of $2.06, beating Wall Street's estimate of $1.86, according to LSEG. Revenue came in at $25.25 billion, slightly below analysts' expectation of $25.4 billion.
The company reported a 7% year-on-year increase in quarterly revenue, although net income declined sharply because the year-ago quarter included significant one-time tax benefits linked to Disney's acquisition of Comcast's Hulu stake.
Disney Q3 Earnings Beat Estimates
For the fiscal third quarter ended June 27, Disney reported net income of $2.64 billion, or $1.51 per share, compared with $5.26 billion, or $2.92 per share, in the year-ago period.
The year-ago results benefited from one-time items, primarily tax benefits related to Disney's purchase of Comcast's remaining stake in Hulu.
Excluding one-time items, including restructuring-related costs, Disney's adjusted EPS rose to $2.06 from $1.61 a year earlier.
While earnings exceeded expectations, revenue narrowly missed estimates. The mixed performance nevertheless reflected continued momentum in two of Disney's key growth areas: its experiences business and entertainment streaming operations.
Parks And Cruises Business Drives Growth
Disney's experiences segment, which includes its global theme parks and cruise operations, generated $9.97 billion in revenue, up 10% from the same quarter last year.
The growth comes as consumers face greater economic uncertainty and rising travel costs, conditions that have affected some competing theme park operators.
Hugh Johnston, Disney's CFO, told CNBC that the company's US parks were performing strongly. Attendance at domestic parks increased 3%, while per-capita spending rose 4%.
Johnston particularly highlighted strong attendance at Walt Disney World in Orlando, saying Disney's performance differed from that of some competitors in the region and from traffic trends reported at Orlando International Airport.
The comments come after Comcast's NBCUniversal reported weaker attendance at its Orlando theme parks for its fiscal quarter. The company attributed the decline partly to weaker consumer sentiment and higher travel costs.
Rising oil prices and uncertainty linked to the US-Israel conflict with Iran have also added pressure on consumers.
Also Read: Pixar Hit Hardest As Company Cuts Hundreds Of Jobs Across Entertainment Divisions
Disney+ And Hulu Lift Streaming Revenue
Disney's entertainment streaming business, primarily comprising Disney+ and Hulu, continued to grow during the quarter.
Revenue from the streaming business increased 11% to $5.53 billion, supported by growth in streaming customers, higher prices and increased advertising revenue.
The broader entertainment segment, which includes streaming, traditional television networks and theatrical releases, posted a 6% increase in revenue to $11.35 billion.
Disney also benefited from the theatrical performance of Toy Story 5. The animated film has crossed $1 billion at the global box office, providing an additional boost to the entertainment business.
Disney has stopped providing some financial details that it previously disclosed for the segment. The company no longer gives a quarterly breakdown of revenue and operating income for its linear television networks and has also stopped reporting quarterly streaming subscriber numbers.
ESPN And Sports Business Revenue Rises 4%
Disney's sports segment, led primarily by ESPN, also delivered growth during the quarter.
Revenue increased 4% to $4.5 billion, driven largely by higher subscription and affiliate fees along with advertising revenue.
ESPN launched its own direct-to-consumer streaming service nearly a year ago as Disney continues to expand its sports offering beyond traditional pay-TV distribution.
Sports rights remain a significant cost for media companies, but Disney pointed to strong television ratings during the NBA and NHL postseasons as a positive development.
Johnston said viewership for the NBA and NHL Finals increased by more than 100%, describing the figures as levels not seen in roughly 25 to 30 years.
Disney Raises Share Buyback Target To $9 Billion
Alongside its quarterly results, Disney increased its target for fiscal 2026 share repurchases to at least $9 billion, compared with its previous target of $8 billion.
The higher buyback target is supported partly by Disney's sale of its 50% stake in A+E Global Media to Hearst, a transaction that Disney said would provide approximately $1.2 billion in cash.
Disney also disclosed that it received approximately $100 million in tariff refunds related to levies imposed by the Trump administration on trading partners and subsequent reversals.
Also Read: Disney Plans To Cut Up To 1,000 Jobs Under New CEO Josh D'Amaro: Report
Disney To Shift Consumer Products Business
Disney also announced a change to its reporting and business structure.
Beginning in the company's fiscal first quarter of 2027, much of its consumer products business will move from the experiences segment to the entertainment unit.
Disney said the move would provide strategic and operational benefits by bringing together the studios that develop its intellectual property with the merchandise business that monetises that intellectual property.
The restructuring reflects Disney's broader strategy of using its entertainment franchises across multiple businesses, including films, streaming, theme parks and consumer products.
Disney Signs Global TikTok Deal
Disney separately announced a global agreement with TikTok that will bring a broad collection of curated Disney-related, fan-created content from the social media platform to Disney.
The partnership comes as major media companies compete for younger audiences who increasingly spend time on short-form video platforms such as TikTok and YouTube.
For Disney, the deal provides another avenue to extend engagement with its intellectual property beyond its traditional film, television, streaming and theme park businesses.
Also Read: Disney To Pay Comcast $439 Million More For Its Hulu Stake
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
