Q1 FY2026 Earnings Report | Quarter Ended December 27, 2025
Total Revenue
$25,981M
↑ 5.2%
Segment Operating Income
$4,600M
↓ 9.1%
Diluted EPS
$1.34
↓ 4.3%
Adjusted EPS
$1.63
↓ 7.4%
Free Cash Flow
-$2,278M
↓ 408%
Cash from Operations
$735M
↓ 77.1%
Business Segment Performance
Revenue by Segment
Operating Income by Segment
Entertainment Segment
▼
Revenue
$11,609M
↑ 7.0%
Operating Income
$1,100M
↓ 35.4%
Operating Margin
9.5%
↓ 660 bps
Entertainment segment revenue grew 7% driven by strong theatrical performance and increased content licensing, though operating income declined due to higher programming costs and production investments. The Company is positioning for higher growth in the second half of FY2026 with a robust theatrical slate and strategic content initiatives.
Sports Segment
▼
Revenue
$4,909M
↑ 1.2%
Operating Income
$191M
↓ 22.7%
Operating Margin
3.9%
↓ 180 bps
Sports segment revenue was relatively flat with modest growth offset by higher operational costs. Operating income declined primarily due to increased production and content distribution expenses. The Company expects low-single digit operating income growth in FY2026 as it optimizes its sports portfolio.
Experiences Segment
▼
Revenue
$10,006M
↑ 6.3%
Operating Income
$3,309M
↑ 6.4%
Operating Margin
33.1%
↑ 50 bps
Experiences segment delivered strong performance with balanced growth across all sub-segments. Domestic Parks revenue grew 7% with solid demand, while International Parks benefited from robust international travel. Consumer Products remained stable. Operating income grew 6% with improved operational efficiency.
Experiences Segment Deep Dive
Experiences Revenue by Sub-Segment
Experiences Operating Income by Sub-Segment
Sub-Segment Summary
Sub-Segment
Q1 Revenue ($M)
Prior Revenue ($M)
% Change
Operating Income ($M)
OI Change
Domestic Parks
$6,910
$6,432
+7.4%
$2,149
+8.4%
International Parks
$1,753
$1,646
+6.5%
$428
+1.9%
Consumer Products
$1,343
$1,337
+0.5%
$732
+3.4%
Streaming (SVOD) Financial Performance
SVOD Revenue Breakdown
SVOD Operating Income & Margin Trend
SVOD Segment Analysis
▼
Subscription Fees
$4,424M
↑ 12.6%
Advertising Revenue
$922M
↑ 3.8%
Total SVOD Revenue
$5,346M
↑ 11.0%
Operating Income
$450M
↑ 72.4%
Operating Margin
8.4%
↑ 300 bps
Programming Costs
$2,636M
↑ 6.6%
The SVOD business demonstrated significant profitability improvement in Q1 FY2026, with operating margin expanding to 8.4% from 5.4% in the prior year. Strong subscription revenue growth of 12.6% was coupled with disciplined cost management, with programming costs growing at a slower rate than revenue. The Company is targeting a 10% operating margin for SVOD in FY2026, reflecting its path to sustainable profitability.
Cash Flow & Capital Allocation
Cash Flow Comparison
EPS Bridge Analysis
Cash Flow Summary
Cash Flow Metric
Q1 FY2026 ($M)
Q1 FY2025 ($M)
Change
Operating Cash Flow
$735
$3,205
↓ 77.1%
Capital Expenditures
$3,013
$2,466
↑ 22.2%
Free Cash Flow
-$2,278
$739
↓ 408.3%
Q1 FY2026 cash from operations declined significantly due to timing of payments and working capital dynamics, while capital expenditures increased to support strategic investments in theme parks and infrastructure. The Company expects operating cash flow to normalize and reach approximately $19 billion for the full fiscal year 2026.
Balance Sheet Highlights
Balance Sheet Item
Dec 27, 2025 ($M)
Sep 27, 2025 ($M)
Change
Total Assets
$202,089
$197,514
↑ 2.3%
Cash & Equivalents
$5,678
$5,695
↓ 0.3%
Total Debt (Borrowings)
$46,640
$42,026
↑ 11.0%
Total Equity
$114,008
$114,612
↓ 0.5%
EPS Analysis
EPS Bridge & Adjustments
▼
EPS Metric
Q1 FY2026
Q1 FY2025
YoY Change
Reported EPS (Diluted)
$1.34
$1.40
↓ 4.3%
Fubo Transaction Benefit
+$0.17
—
—
Acquisition Amortization
+$0.12
—
—
Adjusted EPS
$1.63
$1.76
↓ 7.4%
Adjusted EPS declined 7.4% year-over-year, reflecting the impact of higher operating expenses particularly in Entertainment and Sports segments, partially offset by the non-cash tax benefit from the Fubo transaction and acquisition amortization adjustments.
FY2026 Guidance & Outlook
Entertainment Segment
Double-digit operating income growth expected, weighted to H2 FY2026, driven by theatrical releases and strategic content initiatives
Sports Segment
Low-single digit operating income growth anticipated as the Company optimizes its sports portfolio and production efficiency
Experiences Segment
High-single digit operating income growth expected, weighted to H2, supported by continued domestic parks strength and international expansion
SVOD Operating Margin
Target of 10% operating margin for FY2026, reflecting disciplined cost management and sustainable profitability
Adjusted EPS Growth
Double-digit growth expected for full-year FY2026 Adjusted EPS
Operating Cash Flow
Approximately $19 billion expected for full-year FY2026
Share Repurchases
$7 billion target for FY2026 capital allocation to shareholder returns
Key Strategic Priorities
Streaming Profitability: Continue path to sustainable SVOD profitability with margin expansion toward 10% target
Content Excellence: Invest in premium content for theatrical and streaming platforms to drive entertainment segment growth
Parks Expansion: Support high-single digit operating income growth in Experiences through strategic capital investments
Cost Discipline: Drive operational efficiency while maintaining quality and guest experiences across all segments
Shareholder Returns: Execute $7 billion share repurchase program while maintaining financial flexibility