Adjusted profit cleared the market’s bar, while revenue came in slightly short. Adjusted EPS was $2.06, ahead of the published consensus of roughly $1.86; revenue of $25.25 billion was modestly below the roughly $25.4 billion consensus. That makes this an earnings-led beat rather than a broad top-line surprise.
| Metric | Q3 FY26 | Q3 FY25 | Expectation / context |
|---|---|---|---|
| Revenue | $25.25B | $23.65B | ~$25.4B published consensus; modest miss (Financial Highlights) |
| Adjusted diluted EPS | $2.06 | $1.61 | ~$1.86 published consensus; clear beat (Adjusted EPS reconciliation) |
| Total segment operating income | $5.56B | $4.58B | Up 21%; modestly above Disney’s prior guidance (Financial Highlights) |
| Experiences operating income | $3.02B | $2.52B | Up 20%; includes about $100M of tariff refunds (Experiences results) |
| Entertainment SVOD operating income | $712M | $329M | Margin reached 12.9% (SVOD results) |
| Sports operating income | $858M | $1.04B | Down 17%, worse than prior guidance for an approximately 14% decline (Sports results) |
| Nine-month free cash flow | $5.74B | $7.52B | Down 24% as operating cash flow fell and parks investment rose (Free Cash Flow statement) |
Parks and streaming produced the operational upside—but part of the parks gain was non-recurring. Experiences operating income rose $501 million, supported by domestic parks, cruise capacity, and Consumer Products; roughly four percentage points of its 20% profit growth came from a $100 million tariff refund. Streaming profitability more than doubled to $712 million, with subscription revenue up 15%. Those are genuine strengths, but the tariff item means the Experiences growth rate somewhat overstates the underlying run rate. (Experiences results; SVOD results)
Sports was the clear weak point and missed Disney’s own setup. Segment operating income fell 17%, modestly worse than management’s prior expectation for about a 14% decline, as playoff sweeps reduced game volume and a carriage dispute hurt results. Higher sports-rights costs, including NBA contract timing, also pressured profit. This offsets some of the better Entertainment and Experiences performance. (Sports results)
The outlook was maintained rather than broadly raised, which limits the significance of the EPS beat. Disney now expects Experiences profit growth at the high end of its prior high-single-digit range, but kept its full-year expectations for mid-single-digit Sports growth and double-digit Entertainment growth. Q4 total segment operating income is expected at $4.9 billion, including about $600 million from the 53rd week; management also flagged weaker-than-expected *Moana* box office and softer domestic streaming advertising. In other words, the quarter beat estimates, but it did not produce a clean, across-the-board uplift to the forward picture. (Guidance and Outlook)
GAAP EPS looks weak for accounting reasons, not because the core quarter deteriorated. Reported diluted EPS fell to $1.51 from $2.92, chiefly because the prior-year quarter included a large Hulu-related tax benefit. This quarter also absorbed an $812 million impairment tied to the planned A+E Global Media sale. Adjusted EPS is the more comparable measure here. (Income Statement; Adjusted EPS reconciliation; A+E transaction discussion)
Capital returns increased, but cash generation remains a watch item. Disney raised expected FY26 share repurchases to at least $9 billion, aided by expected $1.2 billion cash proceeds from selling its A+E stake. Yet nine-month free cash flow was down $1.78 billion year over year, reflecting lower operating cash flow and higher parks investment. The buyback increase is supportive for per-share economics, but it does not erase softer year-to-date cash conversion. (Cash Flow statement; Free Cash Flow statement; A+E transaction discussion)
Read the original 8-K on SEC EDGAR ↗