After more than three decades, Jessie, Buzz Lightyear and Woody are still moneymakers for Walt Disney Co., as “Toy Story 5” ticket sales and merchandise helped power the company’s fiscal third-quarter earnings.
On Wednesday, the Burbank media and entertainment giant reported revenue of $25.2 billion for the three-month period that ended June 27, up 7% from the prior year. Net income totaled $2.6 billion, a drop of nearly 50% compared with the same period in 2025 because of a tax benefit last year, while operating income exceeded previous guidance and rose 21% to $5.6 billion.
Earnings per share, excluding certain items, were $2.06, a 28% improvement from $1.61 a year earlier.
The company beat analysts’ expectations for earnings per share and operating income but came in below estimates for net income and slightly under predictions for revenue, according to FactSet.
Before the earnings call, Disney announced a partnership with TikTok in which fan-created vertical videos that utilize Disney assets could appear on both the social media platform and Disney+. The videos will augment the streaming service’s Verts vertical video feed, which is intended to help boost user engagement and reduce churn.
Despite the “continued macroeconomic uncertainty,” Disney is “on track to finish the year strong,” Chief Executive Josh D’Amaro said on a Wednesday morning earnings call with analysts.
“Today, we find ourselves in an environment where consumers have more options than ever for their time,” he said. “And yet our results show they keep choosing to spend their time with Disney.”
Investors liked what they heard; Disney shares closed Wednesday at $101.76, up 3.6%.
The toys are back in town — and making money
Disney and Pixar’s “Toy Story 5” opened in the final days of the quarter and has since crossed $1 billion in global box office receipts, giving the company’s entertainment division a lift that helped offset a theatrical stumble from Disney and Lucasfilm’s “Star Wars: The Mandalorian and Grogu,” which opened over Memorial Day weekend.
Entertainment revenue was reported at $11.3 billion, a 6% jump compared with 2025, while operating income totaled $1.7 billion, up 64% from last year. Disney-owned 20th Century Studios’ “The Devil Wears Prada 2” also contributed to a strong quarter in theaters with more than $691 million at the worldwide box office, nearly $471 million of which came from international ticket sales.
“Toy Story 5” also boosted merchandise sales, which are housed under Disney’s experiences division, to their strongest quarter of year-over-year growth in 20 quarters. Toys and licensing tied to a Pixar release start selling well before the movie reaches theaters.
Disney’s entertainment streaming business was another point of growth in its third fiscal quarter; revenue totaled $5.5 billion, up 11% compared with last year, with much of that coming from higher rates and more subscribers, the company said. Operating income for the streaming business was $712 million, compared with $329 million a year earlier.
Parks and cruise attendance is up, but international visitors remain an issue
Attendance across Disney’s theme parks, cruise line and Aulani resort and spa in Hawaii was up 4% in the quarter, with visitation at its U.S.-based theme parks 3% higher than in the previous year’s quarter, the company said.
Disney noted that Walt Disney World in Florida had a “standout” quarter with “healthy core attendance increases” from domestic visitors and annual passholders, as well as summer promotions and new experiences that helped fuel interest.
The company did continue to “face headwinds” from international attendance at U.S.-based parks but said that trend has “moderated” relative to the effect seen in the fiscal second quarter.
Disney’s experiences division reported nearly $10 billion in revenue, an increase of 10% compared with the prior year. Its operating income totaled $3 billion, up 20%. Four percentage points of that growth came from a $100-million tariff refund that quarter, which reversed tariff payments made earlier in the fiscal year, the company said.
High ratings for sports
It was the most-watched fiscal third quarter since 2016 across ABC, ESPN and ESPN2, powered by the NBA and NHL playoffs.
Disney’s sports division, which includes ESPN, reported revenue of $4.5 billion, a 4% increase compared with the previous year. Operating income totaled $858 million, a 17% slide from 2025, driven largely by higher programming costs tied to the timing of new rights deals, as well as fewer games in the early rounds of the NBA playoffs due to four-game sweeps.
ESPN acquired NFL Network and RedZone from the league in late January, and the channels have been dark on Comcast’s Xfinity systems since April 30, when the carriage agreement expired and the two sides failed to reach new terms.
On the horizon
As expected, Disney told investors it has agreed to sell its 50% stake in A+E Global Media for about $1.2 billion in cash to an affiliate of current co-owner Hearst Corp. The company said it plans to use the funds, as well as the cash intended for its now-canceled investment deal with OpenAI, to repurchase additional Disney shares, upping its target for fiscal 2026 repurchases to at least $9 billion.
Disney is also considering a free, ad-supported streaming channel for consumers that would enable the company to target more price-sensitive consumers, accelerate ad revenue growth and perhaps eventually drive Disney+ subscribers, D’Amaro said.
D’Amaro reiterated the goal for Disney+ to be the company’s “digital centerpiece,” though he offered few new details about how that will work, other than a more top-line view that the platform will bring together movies, shows, games, merchandise and other experiences “while offering increased personalization, exclusivity, and benefits for subscribers.” More details will come next spring.
