Walt Disney Co (NYSE:DIS, XETRA:WDP) shares fell more than 6% on Monday after the company issued weaker-than-expected fiscal second quarter guidance, overshadowing a modest beat for the fiscal first quarter.
Disney guided to only modest operating income growth in Experiences, citing international visitation headwinds at domestic parks, pre-launch costs for the Disney Adventure cruise ship, and pre-opening expenses for the World of Frozen attraction at Disneyland Paris.
In Entertainment, operating income is expected to be roughly flat year over year, even as streaming profits are projected to rise to around $500 million.
Disney also reiterated expectations for double-digit fiscal 2026 EPS growth, weighted toward the second half of the year, while highlighting rising costs related to sports rights, park expansions, and cruise investments as near-term headwinds.
For fiscal Q1, the quarter ended December 27, 2025, Disney reported adjusted earnings of $1.63 per share, above Wall Street expectations of roughly $1.57. This marked a decline from $1.76 in the year-ago period.
Revenue was about $26 billion, up 5% year-over-year and above the consensus $25.7 billion.
In the Entertainment segment, revenue increased 7% year over year, but operating income fell $0.6 billion to $1.1 billion as higher programming, production, and marketing costs outweighed gains in subscription and affiliate fees and theatrical revenue.
Subscription video-on-demand revenue rose 11%, and SVOD operating income increased $189 million to $450 million, resulting in an operating margin of 8.4%. Advertising revenue declined 6% from a year earlier.
The Sports segment posted operating income of $191 million, down $56 million from a year earlier, as higher programming and production costs and lower subscription and affiliate fees offset a 10% increase in advertising revenue. Disney said a temporary suspension of YouTube TV carriage had an adverse impact of about $110 million on segment operating income.
Experiences delivered record quarterly revenue of $10 billion and operating income of $3.3 billion. Domestic parks and experiences operating income grew 8%, with attendance up 1% and per-capita spending up 4%.
Bank of America analysts described the first-quarter results as a “solid start to the fiscal year,” noting that revenue, operating income, and EPS all came in above their expectations.
The analysts also mentioned press reports suggesting Josh D’Amaro may be announced shortly as Disney’s next CEO, writing that succession “has been an overhang on the shares recently” and that a leadership announcement could be positively received.
The analysts maintained a ‘Buy’ rating and $140 price target on Disney, citing drivers including profitability growth in direct-to-consumer, a reacceleration in the parks segment, and multiyear sports initiatives cementing ESPN’s role as a premium platform.