AI Takeaway
Disney reported Q2 FY2026 revenue of $25.2B (+6.5% YoY), but net income fell sharply to $2.2B (-31.4% YoY), reflecting higher costs and non-operating headwinds even as operating income grew modestly to $4.6B.
Revenue
$25.17B
++6.55% YoY
EPS (Basic)
$1.27
-29.83% YoY
Operating Income
$4.6B
++3.76% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue rose 6.5% YoY to $25.2B in Q2 FY2026, up from $23.6B in Q2 FY2025, indicating broad-based demand across Disney's entertainment and experiences businesses.
Source: Source: 10-Q Income Statement
Operating income grew 3.8% YoY to $4.6B, but operating margin compressed slightly from 18.8% to 18.3%, suggesting cost growth is outpacing revenue growth. Net income dropped 31.4% to $2.2B, pointing to significant non-operating charges or tax/interest headwinds below the operating line.
Source: Source: 10-Q Income Statement & Key Ratios
SG&A expenses increased 2.3% YoY to $4.1B, though the pace of growth was slower than revenue, suggesting some operating leverage is being achieved on the selling and administrative cost base.
Source: Source: 10-Q Income Statement
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Upgrade to unlockNet income fell 31.4% YoY to $2.2B even as revenue grew 6.5%, implying significant non-operating costs such as interest expense, impairments, or tax items are weighing on profitability. This divergence between operating and net income performance is a key concern for investors assessing earnings quality.
Source: Source: 10-Q Income Statement
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Upgrade to unlockReported EPS of $1.57 versus the $1.50 analyst consensus — a +4.4% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $25.17B | $23.62B | +6.55% |
Operating Income | $4.6B | $4.44B | +3.76% |
Net Income | $2.25B | $3.27B | -31.39% |
EPS (Basic) | $1.27 | $1.81 | -29.83% |
EPS (Diluted) | $1.27 | $1.81 | -29.83% |
SG&A Expense | $4.07B | $3.98B | +2.31% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $205.22B | $195.83B | +4.79% |
Current Assets | $24.6B | $22.73B | +8.20% |
Current Liabilities | $36.22B | $34.03B | +6.45% |
Stockholders' Equity | $108.71B | $104.34B | +4.19% |
Cash & Equivalents | $5.68B | $5.85B | -2.90% |
Long-Term Debt | $38.47B | $36.44B | +5.56% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $7.65B | $9.96B | -23.19% |
Investing Cash FlowYTD | $-5.47B | $-4.47B | -22.27% |
Financing Cash FlowYTD | $-2.16B | $-5.55B | +61.07% |
Share BuybacksYTD | $5.5B | $1.78B | +208.12% |
D&A | $1.41B | $1.32B | +6.12% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 18.3% | 18.8% | -0.49% |
Net Margin | 8.9% | — | — |
ROE | 2.1% | — | — |
ROA | 1.1% | — | — |
Current Ratio | $0.679 | — | — |
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Disney's Q2 FY2026 revenue of $25.2B (+6.5% YoY) and operating income of $4.6B (+3.8% YoY) showed solid top-line and operational growth. However, net income fell sharply to $2.2B (-31.4% YoY) and EPS came in at $1.27 vs. $1.81 a year ago, which may have disappointed investors focused on bottom-line results.
Despite revenue growing 6.5% to $25.2B and operating income rising 3.8% to $4.6B, Disney's net income dropped 31.4% to $2.2B, suggesting significant non-operating charges — such as higher interest expense on $38.5B of long-term debt, tax items, or one-time write-downs — weighed heavily on the bottom line. The gap between operating margin (18.3%) and net margin (8.9%) underscores this below-the-line pressure.
The headline takeaways are: revenue grew solidly to $25.2B (+6.5%), but net income fell sharply to $2.2B (-31.4%) and EPS dropped to $1.27 from $1.81. Disney also aggressively bought back $5.5B in stock YTD (vs. $1.8B a year ago), while YTD operating cash flow declined 23.2% to $7.6B, raising questions about cash generation sustainability.
Disney's financial health shows mixed signals: total assets grew 4.8% to $205.2B and stockholders' equity rose to $108.7B, but the current ratio of 0.68 indicates short-term liquidity pressure with current liabilities of $36.2B exceeding current assets of $24.6B. Long-term debt also rose 5.6% to $38.5B, and YTD operating cash flow declined 23.2%, warranting close monitoring.
Disney spent $5.5B on share buybacks on a fiscal year-to-date basis through Q2 FY2026, more than triple the $1.8B repurchased in the same period of the prior year — a 208.1% increase. This aggressive capital return program signals management confidence but also raises questions given the 23.2% YoY decline in YTD operating cash flow.