Q4 2025 The Walt Disney Co Earnings Call
Assistance. Please signal a conference specialist by pressing the star keep all of those in a row.
After todays presentation, there will be an opportunity to ask questions.
Speaker #1: I'll take you higher. I'll take you higher. 'Cause we can't be tamed. Baby, I'll take you higher. I'll take you higher. I'll take you higher.
I'll ask a question you May press Star then one on your telephone keypad and to withdraw your question. Please press Star then two.
Please note that today's event is being recorded.
I would now like to turn the conference over to Carlos Galvez.
The Vice President Treasurer, and head of Investor Relations. Please go ahead.
Speaker #3: Good day. And welcome to the Walt Disney Co Q4, 2025 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Good morning, It's my pleasure to welcome everyone to the Walt Disney Company's fourth quarter 2025 earnings call. Our press release Form 10-K, and management posted prepared remarks were issued earlier. This morning and are available on our website at www Dot Disney Dot com forward slash investors.
Speaker #3: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad and two withdraw your question.
Today's call is being webcast and a replay and transcript will be made available on our website after the call.
Speaker #3: then two. Please note that Please press star today's event is being recorded. I would now like to turn the conference over to Carlos Gomez, Executive Investor Relations.
Carlos Gomez: Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we'll be happy to take your questions. With that, I will now turn the call over to Bob.
Before we begin please take note of our cautionary statements regarding forward looking statements on our Investor Relations website.
Speaker #3: Vice President, Treasurer and Head of Please go ahead.
Today's call May include forward looking statements that we make pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Speaker #4: Good morning. It's my pleasure to welcome everyone to the Walt Disney Co Q4, 2025 earnings call. Our press release, form 10-K, and management posted prepared remarks were issued earlier this morning, and are available on our website at www.disney.com/investors.
These forward looking statements, including regarding the company's future business plans prospects and financial performance are not historical in nature and are based on management's assumptions regarding the future and are subject to risks and uncertainties, including among other factors economic geopolitical operating and industry conditions.
Bob Iger: Thank you, Carlos, and good morning, everyone. This was another year of great progress as we strengthened the company by leveraging the value of our creative and brand assets, and continued to make meaningful progress in our direct-to-consumer businesses, resulting in strong earnings growth for the company. Adjusted EPS for fiscal 2025 was up 19% from fiscal 2024. Over the past three fiscal years, we have delivered a 19% compound annual growth rate in adjusted EPS. Our strategy and portfolio of complementary businesses, coupled with a strong balance sheet, enable us to continue to grow adjusted EPS and free cash flow over time. For fiscal 2026, we expect to deliver double-digit adjusted EPS growth compared to the prior year. The expected growth in earnings and cash flow enable us to continue investing in our businesses, and to increase our return of capital to shareholders.
Speaker #4: a replay and transcript will be made available on Today's call is being webcast, and our website after the call. Before we begin, please take note of our cautionary statements regarding forward-looking statements on our investor relations website.
Competition execution risks the market for advertising or future financial performance and legal and regulatory developments.
Speaker #4: Today's call may include forward-looking statements that we make pursuant to the safe harbor provisions of the private securities litigation reform act of 1995. These forward-looking statements, including regarding plans, prospects, and financial the company's future business performance, are not historical in nature and are based future and are subject to on management's assumptions regarding the risks and uncertainties, including among other factors, economic, geopolitical, operating and industry conditions, competition, execution risks, the market for advertising, our future financial performance, and legal and regulatory developments.
<unk> to our Investor Relations website, the press release issued today and the risks and uncertainties described in our Form 10-K, subsequent form 10, Qs and other filings with the SEC for more information concerning factors and risks that could cause results to differ from those in the forward looking statements.
A reconciliation of certain non-GAAP measures referred to on this call to the most comparable GAAP measures can be found on our Investor Relations website.
Joining me. This morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer.
Speaker #4: Refer to our investor relations website, the press release issued today, and the risks and uncertainties described in our form 10-K, subsequent form 10-Qs, and other filings with the SEC for factors and risks that could cause results to differ from those in the forward-looking statements.
Bob Iger: We are targeting $7 billion in share repurchases in 2026, double the $3.5 billion we repurchased in fiscal 2025. We're also pleased to announce that the board has declared a cash dividend of $1.50 per share, a 50% increase over the dollar paid to shareholders in fiscal 2025. Before we take your questions, I'd like to touch on a few highlights from the quarter. First, our film studios. This summer's box office once again demonstrated the global and cross-generational appeal of our storytelling and IP. To date, Disney's live-action Lilo & Stitch remains the highest-grossing Hollywood film at the global box office this calendar year, and its success has extended across our interconnected businesses and consumer touchpoints. The film achieved 14.3 million views during its first five days on Disney+, becoming the second biggest Disney live-action premiere on the platform ever.
Following introductory remarks from Bob we will be happy to take your questions. So with that I will now turn the call over to Bob.
Thank you Carlos and good morning, everyone.
This was another year of great progress as we've strengthened the company by leveraging the value of our creative and brand assets and continue to make meaningful progress in our direct to consumer businesses, resulting in strong earnings growth for the company.
Speaker #4: A reconciliation of certain non-GAAP measures referred to on this call to the most comparable GAAP measures can be found on our investor relations more information concerning website.
Speaker #4: Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we will be happy to take your questions.
Adjusted EPS for fiscal 2025 was up 19% from fiscal 2024 and.
And over the past three fiscal years, we have delivered a 19% compound annual growth rate in adjusted EPS.
Speaker #4: So with that, I will now turn the call over to
Speaker #4: Bob, thank you. Carlos, and good morning.
Speaker #5: everyone. This was another year of great progress as we strengthen the company by leveraging the assets and continue to make meaningful value of our creative and brand progress in our direct-to-consumer businesses.
Our strategy and portfolio of complementary businesses, coupled with a strong balance sheet enable us to continue to grow adjusted EPS and free cash flow over time.
For fiscal 2026, we expect to deliver double digit adjusted EPS growth compared to the prior year.
Speaker #5: in strong earnings growth for the company. Adjusted EPS for fiscal 2025 was up 19% from fiscal Resulting 2024. And over the past three fiscal years, we have delivered a 19% compound annual growth rate in adjusted EPS.
The expected growth in earnings and cash flow enable us to continue investing in our businesses and to increase our return of capital to shareholders.
Bob Iger: Retail sales for Stitch from our consumer products business also continues to grow, eclipsing $4 billion in fiscal 2025. The popularity of this global phenomenon underscores the franchise's enduring strength, and the effectiveness of our strategy to invest in popular stories and characters. Over the past two years, our studios have delivered four global franchise hits that have earned more than $1 billion each, while no other Hollywood studio has achieved a single one during the same period. Additionally, with the strong opening of Predator: Badlands, the biggest opening in the franchise's nearly 40-year history, the Walt Disney Studios has now crossed the $4 billion mark at the global box office for the fourth consecutive year. Heading into the holiday season, we're excited to bring audiences Zootopia 2, and Avatar: Fire and Ash.
We are targeting 7 billion in share repurchases in 2026 double the $3 5 billion, we repurchased in fiscal 2025.
Speaker #5: Our strategy and portfolio of complementary businesses coupled with a strong balance sheet enable us to continue to grow adjusted EPS and free cash flow over time.
We're also pleased to announce that the board has declared a cash dividend of $1 50 per share.
Speaker #5: For fiscal 2026, we expect to deliver growth compared to the prior double-digit adjusted EPS year. The expected growth in earnings and cash flow enable us to continue investing in our businesses and to increase our return of capital to targeting $7 billion in share repurchases in 2026, double the $3.5 billion we 2025.
A 50% increase over the $1 paid to shareholders in fiscal 2025.
Before we take your questions I'd like to touch on a few highlights from the quarter.
First our film studios.
This summers box office once again demonstrated the global and cross generational appeal of our storytelling and IP.
To date, Disney's live action, Leila and stitch remains the highest grossing Hollywood film at the global box office this calendar year.
Speaker #5: We're also pleased to announce that the board has declared a cash dividend of $1.50 per share. A 50% increase over the dollar paid to shareholders in fiscal shareholders. repurchased in fiscal 2025.
Speaker #5: We're also pleased to announce that the board has declared a cash dividend of $1.50 per share. A 50% increase over the dollar paid to shareholders in fiscal shareholders.
And its success has extended across our interconnected businesses and consumer touch points.
Bob Iger: Looking ahead, next year's slate includes numerous highly anticipated titles such as The Devil Wears Prada 2, The Mandalorian and Grogu, Toy Story 5, the live-action Moana, and Avengers: Doomsday. We saw strong viewership of our television content in Q4, fueled by series such as Alien Earth, FX's biggest premiere ever on Disney+ and Hulu, Season 2 of High Potential, the number one original broadcast series across all platforms among adults 18 to 49, the Korean global hit Tempest, and Season 34 of ABC's Dancing with the Stars, which made history as the only fall show to increase its overall audience for six straight weeks following a season premiere, something that's never been achieved by any show since Nielsen began electronic measurement in 1991.
The film achieved $14 3 million views during its first five days on Disney plus becoming the second biggest Disney live action Premier on the platform ever.
Speaker #5: our film studios. This summer's box office once again demonstrated the global and cross-generational appeal of our storytelling and IP. To date, Disney's live-action "Lilo and We are Stitch" remains the highest-grossing Hollywood film at the global box office this calendar year.
Retail sales for stitch from our consumer products business also continues to grow eclipsing $4 billion in fiscal 2025.
The popularity of this global phenomenon underscores the franchise's enduring strength and the effectiveness of our strategy to invest in popular stories and characters.
Speaker #5: And its success has extended across our interconnected businesses and consumer touchpoints. The film achieved five days on Disney+, $14.3 million views during its first becoming the second biggest Disney live-action premiere on the platform ever.
Over the past two years, our studios have delivered four global franchise hits that have earned more than $1 billion. Each while no. Other Hollywood studio has achieved a single one during the same period.
Speaker #5: "Stitch" from our consumer products Retail sales for business also continues to grow, eclipsing $4 billion in 2025. The popularity of this global phenomenon underscores the franchise's enduring strength and the effectiveness of our stories and characters.
Additionally, with the strong opening of predator Badlands the biggest opening in the franchise's nearly 40 year history. The Walt Disney Studios has now crossed the $4 billion Mark at the global box office for the fourth consecutive year.
Bob Iger: We have more highly anticipated titles to come over the next few months, including new seasons of Paradise, The Secret Lives of Mormon Wives, Percy Jackson and the Olympians, American Idol, and the revival of the comedy Scrubs. We're also excited to bring viewers Taylor Swift's end-of-an-era docuseries, as well as the concert film Taylor Swift: The Eras Tour: The Final Show. At our entertainment segment, our streaming business had another quarter of profit growth, with operating income up 39% in Q4. For the full year, we hit $1.3 billion in operating income, up $1.2 billion from last year, and $300 million ahead of our original guidance. That is a significant achievement when you consider that just three years ago, our DTC business was running a $4 billion operating loss.
Heading into the holiday season, we're excited to bring audiences zootopia, too and avatar fire and ash looked.
Speaker #5: Over the past two years, our studios have delivered four global franchise hits that have earned more than $1 billion each. strategy to invest in popular has achieved a single one during the same period.
Looking ahead next year's slate includes numerous highly anticipated titles, such as the Devil wares product too.
Amanda Lorean and <unk>.
Toy story five.
Speaker #5: Additionally, with a strong opening of "Predator: Badlands," the biggest opening in the franchise's nearly Studios has now crossed the $4 billion mark at the global box 40-year history, the Walt Disney office for the fourth consecutive year.
The live action Moana and Avengers Doomsday.
We saw strong viewership of our TV content in Q4 fueled by series such as alien Earth FX is biggest premier ever on Disney plus and Hulu season, two of high potential the number one original broadcast series across all platforms. Among adults 18 to 49.
Speaker #5: holiday season, we're excited to bring Heading into the 2 and Avatar: Fire and Ash. Looking ahead, next year's slate includes numerous highly anticipated titles such as "The Devil Wears Prada 2," "The Mandalorian and Grogu," "Toy Story audiences Zootopia Doomsday." We saw strong viewership of our television content in Q4, fueled by series such as "Alien Earth," "FX's biggest premiere ever on Disney+ and Hulu," "Season 2 of High Potential," the number one original broadcast series, across all platforms, among adults 18 to 49.
Korean global hit Tempest, and seasoned 34 of Abc's dancing with the stars, which made history as the only full show to increase its overall audience for six straight weeks. Following a season premiere something thats never been achieved by any show since Nielsen began electronic measurement and $19 nine.
Bob Iger: As we continue to build DTC into a core growth engine, we're rolling out a more unified app experience to better serve our consumers and unlock new value. In October, Hulu became our global general entertainment brand, and we continue to work to consolidate all of our entertainment content domestically within a single app, which will simplify the user experience, highlight the full value of our bundles, and unlock global marketing efforts. We're also expanding our international reach by investing strategically in our own originals, and working with local studios to license content that brings more high-quality local storytelling to the platform. We're taking a disciplined approach to the markets we are prioritizing, and we have confidence in our long-term strategy.
One.
And we have more highly anticipated titles to come over the next few months, including new seasons of Paradise.
The secret lives of Mormon wives, Percy Jackson, and the Olympians American Idol and the revival of the Companys scrubbed.
Speaker #5: The Korean global hit "Tempest," and "Season 34 of ABC's Dancing with the Stars," which made history as the only full show to increase its overall audience for six straight weeks following a season premiere.
We're also excited to bring viewers Taylor Swift's end of an era <unk> series as well as the concert film Taylor Swift the eras tour the final show.
Speaker #5: Something that's never been achieved by any show since Nielsen began electronic measurement in 1991. And we have more highly anticipated titles to come over the next few months, including new seasons of "Paradise," "The Secret Lives of Mormon Wives," "Percy Jackson and the Olympians," "American Idol," and the revival of the comedy "Scrubs." We're also excited to bring viewers Taylor Swift's "End of an Era" docuseries as well as the concert film "Taylor Swift: The Eras Tour," the final show.
In our entertainment segment, our streaming business had another quarter of profit growth with operating income up 39% in Q4.
Bob Iger: Turning to sports, we ushered in a new era with the launch of ESPN's full direct-to-consumer service and enhanced ESPN app, making ESPN's full suite of networks and services available directly for the first time. We're thrilled by the response from fans so far, especially to the upgraded ESPN app, which now includes features such as Multiview, SportsCenter for You, Catch Up to Live, and tools like Live Game Stats, Betting, Fantasy Sports, and Commerce Integration. Viewership of our industry-leading portfolio of live sports also remains robust, with ratings across ESPN networks, including ESPN on ABC, finishing the quarter up 25% over the prior year quarter. At our experiences segment, we delivered a record operating income for both Q4 and the full year, with operating income up 13% for the fourth quarter compared to the prior year and up 8% for the full year.
For the full year, we hit $1 3 billion and operating income up $1 2 billion from last year and $300 million ahead of our original guidance.
That is a significant achievement when you consider that just three years ago, our DTC business was running a $4 billion operating loss.
As we continue to build DTC into a core growth engine, we are rolling out a more unified app experience to better serve our consumers and unlock new value.
Speaker #5: At our entertainment segment, our streaming business had another quarter of profit growth, with operating income up 39% in Q4. For the full year, we hit $1.3 billion in operating income, up $1.2 billion from last year, and $300 million ahead of our original guidance.
Tober, Hulu became our global General Entertainment brand and we continue to work to consolidate all of our entertainment content domestically within a single App, which will simplify the user experience highlight the full value of our bundles and unlock global marketing efforts.
Speaker #5: That is a significant achievement when you consider that just three years ago, our DTC business was running a $4 billion operating loss. As we continue to build DTC into a core growth engine, we're rolling out a more unified app experience to better serve our consumers and unlock new value.
We're also expanding our international reach by investing strategically in our own originals and working with local studios to licensed content that brings more high quality local storytelling to the platform.
Bob Iger: We're looking forward to two new cruise ships joining our fleet in the coming months: the Disney Destiny, which sets sail next week, and the Disney Adventure, which will become our first ship homeported in Asia when it launches in March. This will bring our fleet to a total of eight cruise ships, and in the spring, we're excited to open a World of Frozen at Disneyland Paris. With expansion projects underway at every one of our theme parks, five additional cruise ships scheduled for launch beyond fiscal 2026, and a new theme park planned for Abu Dhabi, the strategic investments we are making now will help ensure our offerings remain best in class, and appeal to audiences worldwide well into the future. Overall, this quarter caps another strong fiscal year for the company.
We're taking a disciplined approach to the markets. We are prioritizing and we have confidence in our long term strategy.
Speaker #5: In October, Hulu became our global general entertainment brand. We continue to work to consolidate all of our entertainment content domestically within a single app, which will simplify the user experience, highlight the full value of our bundles, and unlock global marketing efforts.
Turning to sports, we ushered in a new era with the launch of Espn's full direct to consumer service and enhanced ESPN App, making espns full suite of networks and services available directly for the first time.
Speaker #5: We're also expanding our international reach by investing strategically in our own originals and working with local studios to license content that brings more high-quality local storytelling to the platform.
We're thrilled by the response from fans, so far especially to the upgraded ESPN App, which now includes features such as multi view sports center for you catch up to live and tools like live game stats betting fantasy sports and Commerce integration.
Speaker #5: We're taking a discipline approach to the markets we are prioritizing and we have confidence in our long-term strategy. Turning to sports, we ushered in a new era with the launch of ESPN's full direct-to-consumer service and enhanced ESPN app.
Viewership of our industry, leading portfolio of live sports also remains robust with ratings across ESPN networks, including ESPN and ABC, finishing the quarter up 25% over the prior year quarter.
Bob Iger: We continue to execute across our strategic priorities as we build for the future, deliver the very best in entertainment, and create value for shareholders. With that, Hugh and I will be happy to take your questions.
Speaker #5: Making ESPN's full suite of networks and services available directly for the first time. We're thrilled by the response from fans so far, especially to the upgraded ESPN app, which now includes features such as multi-view, sports center for you, catch-up to live, and tools like live game stats, betting, fantasy sports, and commerce integration.
And our experiences segment, we delivered a record operating income for both Q4 and the full year with operating income up 13% for the fourth quarter compared to the prior year and up 8% for the full year.
Carlos Gomez: Thanks, Bob. As we transition to Q&A, we ask that you please try to limit yourselves to one question in order to help get to as many analysts as possible today. With that, Rocco, we're ready to take the first question.
We're looking forward to two new cruise ships, joining our fleet in the coming months, the Disney Destiny, which set sale next week and the Disney Adventure, which will become our first ship home ported in Asia when it launches in March.
Operator: Yes, sir. Our first question today comes from Ben Swinburne at Morgan Stanley. Please go ahead.
Speaker #5: Viewership of our industry-leading portfolio of live sports also remains robust, with ratings across ESPN networks, including ESPN on ABC, finishing the quarter up 25% over the prior quarter.
Ben Swinburne: Thank you. Good morning. Bob, I think we've been talking about ESPN going direct-to-consumer for, I don't know, it feels like a decade or so now, and you've got the product in the market. I know it's not been a ton of time, but I'm wondering if you could share a little bit about what you've learned so far in terms of adoption, engagement, anything interesting in terms of what kind of packages people are attracted to. Really, the question is, does this product kind of change the outlook in any meaningful way for the business as you look out over the longer term? I just wanted to ask Hugh on the cash from operations guidance that you provided with the $1.7 billion cash tax swing. If I sort of adjust for that, I'm getting kind of underlying growth of well over 20%.
This will bring our fleet to a total of eight cruise ships and in the spring. We're excited to open a world of frozen at Disneyland Paris with expansion projects underway at every one of our theme parks five additional cruise ships scheduled for launch beyond fiscal 'twenty, six and a new theme Park plan for Abu Dhabi, the strategic investments.
Speaker #5: And our experiences segment, we delivered a record operating income for both Q4 and the full year, with operating income up 13% for the fourth quarter compared to the prior year.
Speaker #5: And up 8% for the full year. We're looking forward to two new cruise ships joining our fleet in the coming months. The Disney Destiny, which set sail next week, and the Disney Adventure, which will become our first ship home-ported in Asia when it launches in March.
We are making now will help ensure our offerings remain best in class and appeal to audiences worldwide well into the future.
Overall this quarter capped another strong fiscal year for the company, we continue to execute across our strategic priorities as we build for the future deliver the very best in entertainment and create value for shareholders and with that you and I will be happy to take your questions.
Speaker #5: This will bring our fleet to a total of eight cruise ships. And in the spring, we're excited to open a world of frozen at Disneyland Paris.
Ben Swinburne: Is there anything else we should be thinking about? Maybe it's the one big beautiful bill, tax benefits, or anything else in the cash outlook that suggests such a strong cash flow year in 2026? Thanks so much.
Speaker #5: With expansion projects underway at every one of our theme parks, five additional cruise ships scheduled for launch beyond fiscal 26, and a new theme park planned for Abu Dhabi, the strategic investments we are making now will help ensure our offerings remain best in class and appeal to audiences worldwide well into the future.
Thanks, Bob as we transition to Q&A, we ask that you. Please try to limit yourself to one question in order to help get to as many analysts as possible today and with that Rocco, we're ready to take the first question.
Bob Iger: Ben, I'll take the first part of your question. The ESPN launch has been a real success for a number of reasons. First of all, what we set about to do was to attract basically new users, people who had either been subscribers to the multichannel linear bundle or people who had not but wanted to engage more with ESPN. We've done extremely well in that regard, signing up essentially new users. The other thing we wanted to do was we wanted to give people who wanted to stay in the multichannel linear bundle a chance to use the app and to engage with us more deeply, because the app has so many more features than the linear channels do. The authentication rate of people who are already subscribers has been very, very encouraging.
Yes, Sir our first question today comes from Ben Swinburne with Morgan Stanley. Please go ahead.
Speaker #5: Overall, this quarter caps another strong fiscal year for the company. We continue to execute across our strategic priorities as we build for the future, deliver the very best in entertainment, and create value for shareholders.
Thank you good morning.
I think we've been talking about ESPN going direct to consumer for it feels like a decade or so now and <unk> got the product in the market I know it has not been a ton of time, but I'm wondering if you could share a little bit about what you've learned so far in terms of adoption engagement anything interesting in terms of what kind of packages people are.
Speaker #5: And with that, Hugh and I will be happy to take your questions.
Speaker #2: Bob. As we transition to Q&A, we ask that you please try to limit yourselves Thanks, to one question in order to help get to as many analysts as possible today.
Speaker #2: And with that, Rocco, we're ready to take the first
Attracted to and and really the question is does this product kind of change the outlook in any meaningful way for the business as you look out over the longer term.
Speaker #2: question. Yes, sir.
Speaker #3: Our first question today comes from Ben Swinburne at Morgan Stanley. Please go
Speaker #3: ahead. Thank you, good
And I just wanted to ask you on the cash from operations guidance that you provided with the with the $1 $7 billion cash tax swing, if I sort of adjust for that I am getting kind of underlying growth of well over 20%. So is there anything else, we should be thinking about maybe it's the.
Speaker #4: morning. Bob, I think we've been talking about ESPN going direct-to-consumer for, I don't know, it feels like a decade or so now. And you've got the product in the market.
Bob Iger: Third, we ended up signing up a substantial number of subscribers to what we call the ultra product or the ultimate ESPN product, which is essentially mostly attracting core nevers, people who want to engage with sports, but maybe they do not want to engage as deeply as those that get linear channels or those that have subscribed to the main app. It has been very successful in that regard. We are encouraged that people have found all the new features and are using them, particularly the SportsCenter for You, and what we call Verts, which is essentially just vertical sports highlights. The algorithm seems to be working as well. I know it is working for me, where if you watch certain videos on ESPN, and particularly if you click like, then your feed is populated by sports news and sports highlights that you are more interested in.
Speaker #4: I know it's not been a ton of time, but I'm wondering if you could share a little bit about what you've learned so far in terms of adoption, engagement, anything interesting in terms of what kind of packages people are attracted to, and really the question is, does this any meaningful way for the business as you look out over the longer term?
One big beautiful bill tax benefits or anything else in the in the cash outlook suggest such a strong cash flow year in 2026. Thanks, so much.
I'll bet I'll take the first part of your question. The ESPN launch has been a real success for a number of reasons first of all what we set about to do was to attract basically new users people, who had either been subscribers to their multichannel linear bundle or.
Speaker #4: on the cash from operations And I just wanted to ask Hugh guidance that you provided, with product kind of change the outlook in the $1.7 adjust for that, I'm getting kind of underlying growth of well over 20%.
Speaker #4: So is there anything else we should be thinking about, maybe it's the one big beautiful bill, tax benefits, or anything else in the cash billion cash tax swing.
People, who had not but wanted to engage more with ESPN and we've done extremely well in that regard signing up essentially new users. The other thing. We wanted to do is we wanted to give people who wanted to stay in the multichannel linear bundle a chance to use the app and to engage with us more deeply because the app has so many more.
Speaker #4: flow year in 2026? Thanks so
Bob Iger: I guess in almost every way you look at it, it has worked. It's also working for advertisers because obviously there's real value in the data that we provide advertisers on the direct-to-consumer platform. We're attracting both more advertising and new advertisers to the service. As we look ahead, we believe that we've created a product that is very, very consumer-friendly, very advertiser-friendly, and actually works both for the traditional distribution ecosystem and for what I'll call the DTC ecosystem, if there is such a thing. We're very, very encouraged. I think it's a very positive step for the future of ESPN because while nothing necessarily provides future-proof concepts or circumstances for a business that is constantly changing, this certainly is a step in the direction of solidifying ESPN's future going forward.
Speaker #2: real success for a number of reasons. First of all, what we've said about to do was to attract basically new users, people who had either been subscribers to
Features than the linear channels do and the authentication rate of people who are already subscribers has been very very encouraging.
Third we ended up signing up a substantial number of subscribers to the what we call the ultra product.
Speaker #2: had not, but wanted to engage more with the ESPN. And we've done extremely well in that regard, signing up essentially new users. The other thing we wanted to do was we wanted to give people who wanted to stay in the multi-channel linear bundle a chance to use the If I sort of Ben, I'll take the first part of your app and to engage with us more deeply because the app has so many more features than the linear channels do.
Ultimate won.
ESPN product, which is essentially.
Mostly attracting cord nevers people, who want to engage with sports, but maybe they want to they don't want to engage as deeply as those who get linear channels are those that have subscribed to the main app. So it's been very successful in that regard. We're encouraged that people have found all of the new features and are using them, particularly the sports center for you.
Speaker #2: And the authentication rate of people who are already subscribers has been very, very encouraging. Third, we ended up signing up a substantial number of subscribers to what we call the ultra product or the ultimate ESPN product, which is essentially mostly attracting cordnevers, people who want to engage to engage as deeply as those that get linear channels or those that have with sports but maybe they want to they don't want subscribed to the main app.
And what we call <unk>, which is essentially just vertical sports highlights and the algorithm seems to be working as well I know, it's working for me, where if you watch certain videos on ESPN and particularly if you click like then your feet is populated by sports news and sports highlights that you are more.
Bob Iger: The last thing that I'll say is the great thing about the app is the incredible variety of sports that you can access on it. Where the linear channels provide obviously live sports and studio programming, more what I'll call along the lines of the traditional sports television, the new app gives users a chance to engage with thousands and thousands more sports events over the year. I think that's not only a sports fan's delight, but I think overall it's about as consumer-friendly as it gets.
Interested in.
So I guess in almost every way you look at it is work that is also working for advertisers because obviously there is real value in the data that we provide advertisers on the direct to consumer platform and so we're attracting both more advertising and new advertisers to the service and as we look ahead, we believe that we've created.
Speaker #2: So it's been very successful in that regard. We're encouraged that people have found all the new features and are using them, particularly the sports center for you and what we call Verts, which is essentially just vertical sports highlights.
Speaker #2: And the algorithm seems to be working as well. I know it's working for me, where if you watch certain videos on ESPN and particularly if you click like, then your feed is populated by that you are more interested sports news and sports highlights in.
Hugh Johnston: Okay, Ben. Yeah, I'll take the question on cash flow. You're right. If you adjust for tax, we're up about 28% year over year. Because of the timing on tax payments, the reported number is closer to 7%, driven by a couple of things. Number one, obviously OI growth is quite strong. Number two, we've been investing for a couple of years, and we've now sort of leveled off in terms of those levels of investment. That's something that we think you can look forward to in the out years, continued strong free cash flow growth from Disney, which obviously gives us a lot of flexibility in terms of the ability to return cash to shareholders, which was evidenced today by the doubling in the share repurchase, and the 50% increase in the dividend. We feel very good about the free cash flow growth going forward.
A product that is very very consumer friendly very advertiser friendly and actually works both for the traditional distribution ecosystem and four.
What I'll call the DTC ecosystem. If there is such a thing. So we're very very encouraged I think it's a very positive step for the future of ESPN, because nothing necessarily provides future proof.
Speaker #2: So I guess in almost every way you look at it, it has worked. It's also working for advertisers because obviously there's real value in the data that we provide advertisers on the direct-to-consumer platform.
Speaker #2: And so we're attracting both more advertising and new advertisers to the service. And as we look ahead, we believe that we've created a product that is very, very consumer-friendly, very advertiser-friendly, and actually traditional distribution ecosystem and for what I'll call the DTC ecosystem, works both for the if there is such a thing.
Concepts or circumstances for a business that is.
Instantly changing but this certainly is a step in the direction of <unk>.
Solidifying espn's future going forward. The last thing I'll say is the great thing about the App is the incredible variety of sports that you can access on it. So we're the linear channels provide obviously live sports and studio programming more what I'll call along the lines of the traditional sports television.
Speaker #2: So we're very, very encouraged I think it's a very positive step for the future while nothing necessarily of ESPN because provides future-proof concepts or circumstances for a business that is constantly changing, this certainly is a step in the direction of solidifying ESPN's future going forward.
The new App gives users a chance to engage with.
Ben Swinburne: Thank you.
And thousands more sports events over the year and I think thats not only a sports fans July but I think overall, it's about as consumer friendly as it gets.
Bob Iger: The next question, Carlos.
Carlos Gomez: Thanks, Ben.
Bob Iger: Before we take the next question.
Carlos Gomez: Go ahead.
Bob Iger: Yeah, go ahead. Before we take the next question, Carlos, I just want to add something to the question that Ben Swinburne asked about ESPN. One of the things that we're also very encouraged by is the fact that of the subscribers that have signed up to the new app, a substantial number of them, about 80%, have signed up to what we call the Trio Bundle, which includes Disney+ and Hulu.
Speaker #2: The last thing that I'll say is the great thing about the app is it's incredible variety of sports that you can access on it.
Okay, Brian Yes, I'll take the question on cash flow you are right. If you adjust for tax were up about 28% year over year.
Speaker #2: So where the linear channels provide obviously live sports and studio programming, more of what I'll call along the lines of the traditional sports television, the new app gives users a chance to engage with thousands and thousands more sports events over the year.
Because of the timing on tax payments.
The reported number is closer to seven 7% driven.
Driven by a couple of things number one obviously oi growth.
<unk> is quite strong number too.
Carlos Gomez: Thanks, Bob. Thanks, Ben. Operator, next question, please.
Speaker #2: And I think that's not only a sports fan's delight, but I think overall it's about its consumer-friendly as it gets.
We've been investing for a couple of years and we've now sort of leveled off in terms of those love those levels of investment.
Operator: Our next question comes from Stephen Cahill with Wells Fargo. Please go ahead.
That's something that we think you can look forward to in the out years.
Carlos Gomez: Thank you. Just on content, you had a pretty strong last couple of years in general entertainment. Bob, you talked about some of the things like Alien Earth and FX that have done really well. As we look into this year for the studio, I mean, it's a big slate with Avatar and Moana. You're off to a little bit stronger or softer start, I think, implied in the guide for the first quarter. I was wondering if you could just talk a little bit about what kind of growth you think you can do at the studio this year or over the next couple of years. Then, Hugh, just a tactical one.
Speaker #1: I'll take the question on cash flow. Okay, Ben. Yeah, and You're right. If you adjust for tax, we're up about 28% year over year.
Continued strong free cash flow growth from from Disney, which obviously gives us a lot of flexibility in terms of the ability to return cash to shareholders, which was evidenced today by their the doubling in the share repurchase and the 50% increase in the dividend. So we feel very good about the free cash flow growth going forward.
Speaker #1: Because of the timing on tax payments, the reported number is closer to 7%. Driven by a couple of things. Number one, obviously, OI growth is quite strong.
Speaker #1: Number two, we've been investing for a couple of years, and we've now sort of leveled off in terms of those levels of investment. That's something that we think you can look forward to in the out years.
Thank you next question Carlos.
Thanks Pat.
Question.
Carlos Gomez: Given the ongoing carriage dispute with YouTubeTV, have you provisioned anything in the EPS guidance for a sustained blackout, or is the economic impact actually more minimal because you think those folks would resubscribe elsewhere, including maybe the ESPN app? Thank you.
Go ahead.
Go ahead.
Speaker #1: Continued strong free cash flow growth from Disney, which obviously gives us a lot of flexibility in terms of the ability to return cash to shareholders.
Before we take the next question Carlos I, just wanted to add something to the question that Ben Swinburne asked about ESPN.
One of the things that we're also very encouraged by is the fact that of the subscribers that have signed up to the new app.
Speaker #1: Which was evidenced today by the doubling in the share repurchase and the 50% increase in the dividend. So we feel very good about the free cash flow growth going forward.
Bob Iger: Hugh, I'll take the first part of the question. Stephen, thank you. We're very encouraged by the studio slate that is coming up. In fact, we have a premiere of Zootopia 2 tonight. That is our Thanksgiving release. We finish the calendar year with Avatar: Fire and Ash. Obviously, we have very, very high hopes for that. If you look at the slate for the rest of the year, it's about as strong as it's been in a while, maybe stronger than it's been in a while, including The Mandalorian, Toy Story 5, a live-action Moana, and we're going to finish the calendar year with Avengers: Doomsday. We are very bullish on the slate ahead.
A substantial number of them about 80% have signed up to what we call. The trio bundle, which includes Disney plus and Hulu.
Speaker #1: forward.
Speaker #3: Thank you. The next
Speaker #2: question, Carlos. Before we take the next
Thanks, Bob and Thanks, Ben Operator next question please.
Speaker #4: Thanks, Ben.
Speaker #2: question.
Our next question comes from Steven Cahall with Wells Fargo. Please go ahead.
Speaker #4: Go
Speaker #2: Before we take the Yeah, go ahead.
Thank you so just just on content.
Speaker #2: next question, Carlos, I just want to add something Go ahead. to the question that Ben Swinburne asked about ESPN. One of the things that we're also very encouraged by is the fact that of the subscribers that have signed up to the new app, a substantial number of them, about 80%, have signed up to what we call the trio bundle, which includes Disney+ and
Pretty strong last couple of years in General Entertainment, Bob you talked about some of the things like alien Earth and FX that have done really well.
Look into this year for the studio.
With avatar and Moana youre off to a little bit stronger our softer start I think implied in the guide.
Bob Iger: As we look at the slate well into 2027 and into 2028, we feel that we've got similar strength to the strength that I just described for fiscal and calendar year 2026. Obviously, not every film works. We know that. We've been around long enough to understand that. If you look back at the year and you look at the fact that we've already crossed substantial global box office level, we feel that we had some real strength, $2 billion films in the fiscal year, the biggest film of the year, fiscal 2025 and calendar 2025 to date, which was Lilo & Stitch, which also had tremendous, tremendous consumption when it went on the platform. We feel good about the direction of the studio, both the current slate, the slate that's coming up, and what it looks like in the future.
Speaker #2: Hulu. Thanks, Bob.
For the first quarter. So I was wondering if you could just talk a little bit about what kind of growth. You think you can do at the studio this year or over the next couple of years and then you just a tactical one given the ongoing carriage dispute with Youtube TV have you provisioned anything in the EPS guidance for a sustained blackout or the economic impact actually more.
Speaker #4: And thanks, Ben. Operator, next question, please.
Speaker #5: Cahill with Wells Fargo. Please go ahead. Our next question comes from Stephen.
Speaker #6: Thank you. So just on content, you had a pretty strong last couple of years in general entertainment, Bob. You talked about some of the things like Alien Earth and FX that have done really well.
Minimal because you think those folks with <unk>.
We subscribe elsewhere, including maybe the ESPN app. Thank you.
Speaker #6: As we look into this year for the studio, I mean, it's a big slate with Avatar and Moana. You're off to a little bit stronger or softer start, I think, implied in the guide.
I'll take the first part of the question.
Stephen Thank you.
Speaker #6: For the first quarter. So I was wondering if you could just talk a little bit about what kind of growth you think you can do at the studio this year or over the next couple of years.
We're very encouraged by the studio slate that is coming up that we are a premier zootopia, two tonight that as our Thanksgiving release, and then we finished the calendar year with Avatar fire at Ash, obviously, we have very very high hopes for that and if you look at the slate for the rest of the year, it's about as strong as.
Speaker #6: And then Hugh, just a tactical one, given the ongoing carriage dispute with YouTube TV, have you provisioned anything in the EPS guidance for a sustained blackout?
Hugh Johnston: Right. Stephen, just to add to Bob's comments, in terms of Q1, that's more about what we're overlapping rather than the slate for the year itself. The timing of the overlap, particularly with Avatar coming at the very end of Q1, is what's driving the guide that we shared with you all. As it relates to the discussions with YouTube, obviously, I'm not going to comment much on ongoing negotiations that are live right now. The only thing I would say is in terms of our guidance, we built a hedge into that with the expectation that these discussions could go for a little while. In terms of the dollar impacts, keep in mind there's two pieces to it. There's the piece that we're not getting paid for, and then the piece that we're picking up by virtue of subscribers moving elsewhere.
Speaker #6: Or is the economic impact actually more minimal because you think those folks would resubscribe elsewhere, including maybe the ESPN app? Thank
It's been in a while maybe stronger than it's been in a while including the Amanda Laurean Toy story five are live action Moana and then we're going to finish the calendar year with Avengers Dooms day. So we are very bullish on the slate ahead, whereas we look at the slate well into 'twenty seven and into 28, we feel that we've got similar strength of the <unk>.
Speaker #6: You, Hugh, I'll take the first part of the...
Speaker #2: question. Stephen, thank you. We're very encouraged by the studio slate that is coming up. In fact, we have a premiere of Zootopia 2 tonight.
Speaker #2: That is our Thanksgiving release. And then we finish the calendar year with Avatar: Fire and Ash. Obviously, we have very high hopes for that.
With that I, just described for fiscal and calendar year 2006, obviously not every film works. We've seen we know that we've been around long enough to understand that but if you look back at the year and you look at the fact that.
Speaker #2: And if you look at the slate for the rest of the year, it's about as strong as it's been in a while. Maybe stronger than it's been in a while, including the Mandalorian, Toy Story 5, a live-action Moana, and then we're going to finish the calendar year with Avengers: Doomsday.
We've already crossed.
The substantial.
The box at the global box office level.
We feel that we had some real strength 2 billion films in the fiscal year. The biggest film over the year fiscal 2025 and calendar 2025 to date.
Speaker #2: So we are very bullish on the slate ahead. As we look at the slate well into 2027 and into 2028, we feel that we've got similar strength to the strength that I just described for fiscal and calendar year 2026.
Hugh Johnston: I don't want to comment because it is a live negotiation right now.
<unk>.
Was leila and stitch, which also had tremendous tremendous consumption when it went on the platform.
Speaker #2: Obviously, not every film works. We've seen, we know that. We've been around long enough to understand that. But if you look back at the year and you look to the fact that we've already crossed a substantial global box office level, we feel that we had some real strength.
Carlos Gomez: Thanks, Steve. Operator, next question, please.
So we feel we feel good about the direction of the studio both the current slate slate, that's coming up and what it looks like in the future.
Operator: Absolutely. Next question comes from Robert Fishman at MoffettNathanson. Please go ahead.
Robert Fishman: Good morning, everyone. Bob, as we think about Disney+ as a portal to all things Disney, can you talk about the future roadmap and how subscribers will be able to use Disney+ as a super app for not only Hulu and ESPN you started to talk about, but also engage with your parks and other assets? Hugh, do you see a path ahead for sustained double-digit DTC revenue growth through a combination of subscriber engagement and advertising increases? Thank you.
Alright, and Steven just to add to Bobs comments.
In terms of Q1.
It's more about what we're overlapping rather than than the slate for the year itself, just the timing of the overlap, particularly with with avatar coming.
Speaker #2: $2 billion films in the fiscal year, the biggest film of the year fiscal. 2025 and calendar 2025 to date. Which was Lilo and Stitch, which also had tremendous, tremendous consumption when it went on the platform.
At the very end of Q1 is whats driving that the guide that we shared with you all.
As it relates to.
Discussions with Youtube, obviously, I'm not going to comment much on ongoing negotiations that are alive right now.
Speaker #2: So we feel good about the direction of the studio, both the current slate that's coming up and what it looks like in the future.
Bob Iger: Thanks, Robert. First of all, regarding Disney+, we're in the midst of rolling out the biggest and the most significant changes from a product perspective, from a technology perspective, since we launched the service in 2019. We're really encouraged because it's enabling greater personalization, resulting in a product that's just more dynamic, more engaging, and basically it's working. As I mentioned in my remarks, we've turned Hulu into a global general entertainment brand, which we think is going to create more awareness and basically create closer alignment with our US product. As we look ahead, these things are obviously all designed to create a one-app experience. We also see, particularly with the deployment of AI, the opportunity to use Disney+, as you suggested, as a portal to all things Disney. There's clearly an opportunity for commerce.
The only thing I would say is in terms of our guidance, we built a hedge into that.
Speaker #1: Right. And Stephen, just to add to Bob's comments, in terms of Q1, that's more about what we're overlapping rather than the slate for the year itself.
With the expectation that these discussions could go for a little while.
Speaker #1: Just the timing of the overlap, particularly with Avatar coming. At the very end of Q1 is what's driving the guide that we shared with you all.
In terms of the dollar impacts keep in mind, there's two pieces to it there is the piece that we're not getting paid for and then the piece that we're picking up by virtue of subscribers moving elsewhere, so but beyond that I don't want to comment because it is alive negotiation right now.
Speaker #1: As it relates to the discussions with YouTube, obviously, I'm not going to comment much on ongoing negotiations that are live right now. The only thing I would say is in terms of our guidance, we built a hedge into that with the expectation that these discussions could go for a little while.
Thanks, Steve Operator next question please.
Absolutely next question comes from Robert Fishman Moffett Nathan Sam. Please go ahead.
Good morning, everyone.
Bob as we think about Disney plus as a portal to all things Disney can you talk about the future roadmap and has subscribers will be able to use Disney plus is a super app for not only Hulu and ESPN that you start to talk about but also engage with your parks in other assets.
Speaker #1: In terms of the dollar impacts, keep in mind there's two pieces to it. There's the piece that we're not getting paid for, and then the piece that we're picking up by virtue of subscribers moving elsewhere.
Bob Iger: There's an opportunity to use it as an engagement engine for people who want to go to our theme parks, want to stay at our hotels, or want to enjoy our cruises, our cruise ships. Obviously, there's a huge opportunity for games. The investment that we made and the agreement that we reached with Epic Games, while that will largely be on their platform, gives us an opportunity to integrate a number of game-like features into Disney+. The other thing that we're really excited about that AI is going to give us the ability to do is to provide users of Disney+ with a much more engaged experience, including the ability for them to create user-generated content and to consume user-generated content, mostly short form, from others. A lot going on. We're pleased that the progress that we've already made from a technology perspective.
Speaker #1: So but beyond that, I don't want to comment because it is a live negotiation right now.
And then Hugh do you see a path ahead for sustained double digit DTC revenue growth.
Speaker #4: Thanks, Steve. Operator, next question, please.
Combination of subscriber engagement and advertising increases thank you.
Speaker #5: Absolutely. Next question comes from Robert Fishman at Moffett Nathanson. Please go ahead.
Speaker #5: ahead. Good
Thanks, Robert first of all regarding Disney plus we're in the midst of rolling out the biggest and the most significant changes from a product perspective from a technology perspective, since we launched the service in 2019, and we're really encouraged because.
Speaker #4: Good morning, everyone. Bob, as we think about Disney+ as a portal, to all things Disney, can you talk about the future roadmap and how subscribers will be able to use Disney+ as a super app for not only Hulu and ESPN that you started to talk about, but also engage with your parks and other assets?
Enabling greater personalization.
Speaker #4: And then Hugh, do you see a path ahead for sustained double-digit DTC revenue growth through a combination of subscriber engagement and advertising increases? Thank
<unk> is a product that's just more dynamic more engaging is basically is working and as I mentioned in my remarks, we've turn Hulu into our global General Entertainment brand, which we think is going to create more awareness and basically created closer alignment with our U S product. So as we look ahead. These things are obviously all designed to create a one.
Speaker #4: you. Thanks, Robert.
Speaker #2: First of all, regarding Disney+, we're in the midst of rolling out the biggest and the most significant changes from a product perspective, from a technology perspective, since we launched the service in 2019.
Bob Iger: We've made some great hires, by the way, in the last year in that regard, including Adam Smith, who's also brought in some real talent. The opportunity here, we think, is enormous in terms of increasing our engagement with Disney fans across the world.
<unk> experience, but we also see particularly with the deployment of AI the opportunity to use Disney plus as you suggested as a portal to all things Disney There's clearly an opportunity for commerce. There is an opportunity to use it as an engagement engine for people who want to go to our theme parks want to stay at our hotels.
Speaker #2: And we're really encouraged because it's enabling greater personalization, resulting in a product that's just more dynamic, more engaging, and it's basically working. And as I mentioned in my remarks, we've turned Hulu into a global general entertainment brand which we think is going to create more awareness and basically create closer alignment with our US product.
Hugh Johnston: Okay. Robert, regarding your question on DTC, a couple of comments. Number one, obviously, we guided you to the double-digit margins, as we've been talking about in the past and as was expected coming into the year. Number two, in no way are we going to get there through cost cutting. The way we're going to get there is through revenue growth and through driving operating leverage through the business. We didn't give a specific revenue guide, but our objective and our aspiration is very much to be growing the top line of that business by double digits, as we did on an apples-to-apples basis in Q4. That's what we're looking to do going forward, to grow the top line double digits.
<unk>.
Enjoy our cruises are cruise ships.
And obviously there is a huge opportunity for games and the investment that we made in the agreement that we reached with epic games, while that will largely be on.
Speaker #2: So as we look ahead, these things are obviously all designed to create a one-app experience, but we also see particularly with the deployment of AI, the opportunity to use Disney+ as you suggested as a portal to all things Disney.
Their platform gives us an opportunity to integrate a number of game like features into Disney plus the other thing that we're really excited about that AI is going to give us the ability to do is to revive is to provide users of Disney plus with a much more engaged experience, including the ability for them to create use.
Speaker #2: There's clearly an opportunity for commerce. There's an opportunity to use it as an engagement engine for people who want to go to our theme parks, want to stay at our hotels, or want to enjoy our cruises, our cruise ships.
<unk> generated content and to consume user generated content, mostly short form from others. So a lot going on we're pleased that the progress that we've already made from a technology perspective, we've made some great hires by the way in the last year in that regard.
Speaker #2: And obviously, there's a huge opportunity for games. And the investment that we made in the agreement that we reached with Epic Games, well, that will largely be on their platform, gives us an opportunity to integrate a number of game-like features into Disney+.
Hugh Johnston: As a reminder, and as we've discussed in the past, getting beyond 2026, we're certainly looking to gain margin in chunks, not in basis points, as we think beyond 2026 and into the future. We think this is a terrific business that's really going to be super strategic for the Walt Disney Company, and is going to be a growth driver for us for many years to come.
<unk>, Adam Smith, who has also brought in some real talent and the opportunity here. We think is enormous in terms of increasing our engagement with Disney fans across the world.
Speaker #2: The other thing that we're really excited about that AI is going to give us the ability to do is to provide users of Disney+ with a much more engaged experience, including the ability for them to create user-generated content and to consume user-generated content mostly short-form from others.
Carlos Gomez: Thanks, Robert. Operator, next question, please.
Yeah.
Okay and Robert regarding your question on DTC, a couple of comments.
Operator: Our next question today comes from Jessica Reeve Ehrlich with Bank of America Securities. Please go ahead.
One obviously, we guided you to the double digit margins as as we've been talking about in the past and as as was expected coming into coming into the year.
Robert Fishman: Thank you. A couple of things. One, you've grown content via both building and buying. Clearly, we're going to see M&A and media in the coming year with a lot of moving pieces across the industry, some companies being broken up. I'm just wondering, do you see any role for Disney? If not, any concern that you'll see a stronger competitor coming out of all of this? Secondly, on advertising, could you maybe go a little bit under the covers? There are a lot of things going on in DTC and Linear, both entertainment and sports. Could you give us some color on your outlook for fiscal 2026? Thanks.
Speaker #2: So a lot going on. We're pleased that the progress that we've already made from a technology perspective. We've made some great hires, by the way, in the last year in that regard.
Number two.
In no way are we going to get there through cost cutting the way, we're going to get there is through revenue growth and through driving operating leverage through the business.
Speaker #2: Including Adam Smith, who has also brought in some real talent. The opportunity here, we think, is enormous in terms of increasing our engagement with Disney fans across the world.
We didn't give a specific revenue guide, but our objective and our.
Our aspiration is very much to be growing the topline of that business by double digits. As we did on on an apples to apples basis. In Q4, that's what we're looking to do going forward is to grow the top line double digits and.
Speaker #1: Okay. And Robert, regarding your question on DTC, a couple of comments. Number one, obviously, we guided you to the double-digit margins as we've been talking about in the past and as was expected coming into the year.
Again, as a reminder, and as we've discussed in the past getting beyond 26, we're certainly looking to gain margin in chunks not in basis points as we think beyond 'twenty six and into the future.
Speaker #1: Number two, in no way are we going to get there through cost-cutting. The way we're going to get there is through revenue growth and through driving operating leverage through the business.
Bob Iger: First question, Hugh.
Hugh Johnston: Go ahead, Bob. Sorry.
Bob Iger: Go ahead.
Hugh Johnston: Jessica, on M&A, a couple of things. Number one, obviously, we don't comment on M&A specifically. That said, with what's happening in the industry right now, Bob and the team really built the IP portfolio that we have over the last decade, whether it was the Fox acquisition, Lucas, or Pixar. We actually feel like we've got a great portfolio, and we don't need to do anything. From that perspective, I think we'll let this play out. In terms of other competitors, we'll see how the various moves play out, but we like the hand that we have right now, so I wouldn't expect us to participate in making any significant moves. As it relates to the advertising side, what you saw for the year for us last year was advertising grew 5%. Sports was particularly strong. DTC, obviously, has had supply coming into the market.
We think this is a terrific business, that's really going to be super strategic for the Walt Disney Company and is going to be a growth driver for us for many years to come.
Speaker #1: We didn't give a specific revenue guide, but our objective and our aspiration is very much to be growing the top line of that business by double digits as we did on an apples-to-apples basis in Q4.
Okay, great. Thanks, Thank you Bret.
Operator next question please.
Speaker #1: That's what we're looking to do going forward, is to grow the top line double digits. And again, as a reminder and as we've discussed in the past, getting beyond 26, we're certainly looking to gain margin in chunks, not in basis points, as we think beyond 26 and into the future.
Our next question today comes from Jessica Reif Ehrlich with Bank of America Securities. Please go ahead.
Thank you.
I've got a couple of things one you've grown content via both building and buying and clearly if we're going to see M&A in media in the coming year with a lot of moving pieces across the industry.
Speaker #1: We think this is a terrific business that's really going to be super strategic for the Walt Disney Company and is going to be a growth driver for us for many years to come.
Thank you.
Some companies being broken up so.
I'm just wondering do you see any room for Disney and if not any concern that you'll see a stronger competitor coming out of all of that.
Speaker #4: Thanks, Robert. Operator, next question, please.
And then secondly on <unk>.
Speaker #5: Oh, the next question today comes from Jessica Reef Ehrlich with Bank of America Securities. Please go ahead.
On advertising could you maybe talk a little bit under the covers there are a lot of a lot of things going on in DTC and linear both entertainment and sports.
Speaker #6: Thank you. I got a couple of things. One, you've grown content via both building and buying. And clearly, if we're going to see M&A in media in the coming year, with a lot of moving pieces across the industry, some being just Disney?
Give us some color on your outlook for fiscal 'twenty.
Hugh Johnston: That said, we did see CPMs improve at Disney over the last two quarters. We feel like that's trending in the right direction. From a linear perspective, obviously, that's driven by what happens with subscribers. Going forward, we do expect advertising growth going into 2026 as well, despite the fact that we're overlapping political advertising in the first quarter of 2026.
First Jay.
<unk> you.
Go ahead, Bob Sorry go ahead.
So Jessica on M&A.
A couple of things number one obviously, we don't comment on M&A, specifically that said.
Speaker #6: And if not, any So I'm just wondering, do you see any role for some companies being broken up. concern that you'll see a stronger competitor coming out of all of this?
With what's happening in the industry right now.
Speaker #6: And then secondly, I was on advertising. Could you maybe go a little bit onto the covers? There are a lot of things going on in DTC and Linear, both entertainment and sports.
Bob.
And the team really built the IP portfolio that we have over the last decade, whether it was the Fox acquisition or Lucas or Pixar. So we actually feel like we've got a great portfolio and we don't need to do anything.
Speaker #6: give us some color on your outlook for fiscal Could you '26?
Carlos Gomez: Thanks, Jessica. Operator, next question, please.
Speaker #6: Thanks. First question,
Operator: Thank you. Our next question today comes from Michael Morris at Guggenheim. Please go ahead.
From that perspective I think.
Speaker #4: Go ahead, Bob. Sorry. Hugh.
Speaker #2: Go Go ahead.
We'll let this play out in terms of other competitors, we will see how the various moves play out, but we like the hand that we have right now so I wouldn't expect us to participate in making any significant moves.
Michael Morris: Thank you. Good morning, guys. I wanted to ask you first on the experiences business. Can you talk a little bit more about the drivers of the segment into fiscal 2026 in the context of that high single-digit operating income growth that you guided to? How is demand currently trending, and how much of the guided growth comes from revenue as opposed to margin expansion in the coming year? If I could ask one on the sports side, you talked about some of the content-driven cost pressure in the second and third quarters of the year. I would assume that comes from the NBA investment. Can you talk a bit about how the NBA investment is positive for you and will drive your growth over time? Thank you.
Speaker #4: So Jessica, on M&A, a couple of things. Number one, obviously, we don't comment on M&A specifically. That said, with what's happening in the industry right now, Bob and the team really built the IP portfolio that we have over the last decade, whether it was the Fox acquisition or Lucas or Pixar.
As it relates to the advertising side.
What you saw for the year for US last year was advertising grew 5% sports was particularly strong.
Speaker #4: So we actually feel like we've got a great portfolio, and we don't need to do anything. From that perspective, I think we'll let this play out.
DTC, obviously has had supply coming into.
And to the market that said, we did see cpm's improve at Disney over the last two quarters. So we feel like that's trending in the right direction.
Speaker #4: In terms of other competitors, we'll see how the various moves play out. But we like the hand that we have right now. So I wouldn't expect us to participate in making any significant moves.
Then.
From a linear perspective, obviously, that's driven by what happens with subscribers.
Hugh Johnston: Okay. Happy to jump in on both of those. In terms of the experiences business and drivers for 2026, obviously, we've made big investments in Cruise, and we're expecting Cruise to be a meaningful contributor to growth of experiences during the course of the year, particularly in the second half as we get past the launch costs and some of the dry docks that we have in the first half of the year. Number two, we're always going to have a combination of some pricing and some attendance growth. Certainly feel positive about that. With the slate that we have coming on the film side, consumer products ought to be a meaningful contributor as well.
Going forward, we do expect advertising growth going into going into 26 as well. Despite the fact that we're overlapping political advertising in the first quarter of 'twenty six.
Speaker #4: As it relates to the advertising side, what you saw for the year for us last year was advertising grew 5%. Sports was particularly strong.
Speaker #4: DTC, obviously, has had supply coming into the market. That said, we did see CPMs improve at Disney over the last two quarters. So we feel like that's trending in the right direction.
Thanks, Jessica Operator next question please.
Thank you. Our next question today comes from Michael Morris Guggenheim. Please go ahead.
Thank you good morning, guys.
I wanted to ask you first on the experiences business can you talk a little bit more about the drivers of the segment in fiscal 'twenty six.
Speaker #4: And then from a linear perspective, obviously, that's driven by what happens with subscribers. Going forward, we do expect advertising growth going into '26 as well.
The context of that high single digit operating income growth that you guided to so.
Speaker #4: Despite the fact that we're overlapping political advertising, in the first quarter, of '26, so. Thanks, Jessica. Operator, next question,
How is demand currently trending and how much of the guided growth comes from revenue as opposed to margin expansion in the coming year and if I could ask one on the sports side.
Hugh Johnston: As far as sports goes, from the perspective of the NBA, because of the timing of the rights costs, it does create a little bit of bumpiness during the course of the year. Again, the latter half is where we'll really see material growth in ESPN. In terms of NBA being a contributor, the NBA is obviously a phenomenal property. We were fortunate enough to get out in front of that and create an attractive deal both for the NBA and for ourselves. It obviously, like a lot of other live sports, attracts audience. In the case of the NBA, like the NFL, it attracts scale audience, which obviously is super attractive to advertisers, and therefore is strategically beneficial to us as well.
Speaker #4: please. Thank you.
You talked about some of the content driven cost pressure in the second and third quarters of the year I would assume that comes from the NBA investment can you talk a bit about how the NBA investment.
Speaker #5: Our next question today comes from Michael Morris at Guggenheim. Please go ahead.
Speaker #7: Thank you. Good morning, guys. I wanted to ask you first on the experiences business. Can you talk a little bit more about the drivers of the segment into fiscal '26 in the context of that high single-digit operating income growth that you guided to?
It's positive for you and will drive your growth over time. Thank you.
Okay.
Okay, Yes.
Happy happy to jump in on both of those.
Speaker #7: So how is demand currently trending, and how much of the guided growth comes from revenue as opposed to margin expansion in the coming year?
In terms of the experiences business and drivers for 426, obviously, we've made big investments in crews and we're expecting our crews to be a meaningful contributor to growth of experiences during the course of the year, particularly in the second half is as we get past the launch cost.
Speaker #7: And if I could ask one on the sports side, you talked about some of the content-driven cost pressure in the second and third quarters of the year.
Speaker #7: I would assume that comes from the NBA investment. Can you talk a bit about how the NBA investment is positive for you and will drive your growth over time?
Michael Morris: Thanks. If I could follow up, can you share anything about what you're seeing on the demand side currently domestically for the parks in terms of advanced bookings or per caps?
And some of the dry docks that we have in the first half of the year.
Speaker #7: Thank you.
Number two obviously, we are always going to have a combination of some pricing and some attendance growth.
Hugh Johnston: Yeah, yeah. Sorry, I forgot to answer that portion of your question. Bookings are up 3% in the first quarter, feel good about that. They're also up for the year, feel good about where demand is right now.
Speaker #4: Okay. Yeah, happy to jump in on both of those. In terms of the experiences business and drivers for '26, obviously, we've made big investments in crews and we're expecting crews to be a meaningful contributor to growth of experiences during the course of the year, particularly in the second half as we get past the launch costs and some of the dry docs that we have in the first half of the year.
So certainly feel positive about that and then obviously with the slate that we have coming on the film side consumer products ought to be a meaningful contributor as well as far as sports goes from the perspective of the NBA.
Michael Morris: Great. Thank you, Hugh.
Hugh Johnston: Yep.
Carlos Gomez: All right. Thanks, Mike. Operator, next question, please.
Operator: Thank you. Our next question comes from Kevin Venkateswar with Barclays. Please go ahead.
Because of the timing of the rights costs. It does create a little lumpiness during the course of the year again in the latter half is where we'll really see <unk>.
Kannan Venkateshwar: Thank you. Bob, any interest from you on becoming a broader bundler of streaming? You already have ESPN, Disney+, and Hulu bundled, and of course, you also have Fox One and HBO. It feels like there's an opportunity here for Disney to maybe emerge as a new form of bundler, which nobody in the industry appears to have attempted yet. Any thoughts on that would be great. Just to understand the impact of ESPN bundling on Disney+ and Hulu a little bit better, anything you can share with respect to maybe the churn benefits or any kind of subscriber acquisition cost tailwinds that you saw in the quarter, what you expect going forward potentially from that? Thank you.
Material growth.
Speaker #4: Number two, obviously, we're always going to have a combination of some pricing and some attendance growth. So certainly feel positive about that. And then obviously, with the slate that we have coming on the film side, consumer products ought to be a meaningful contributor as well.
And ESPN and then in terms of NBA being of.
The NBA is obviously a phenomenal property.
We were fortunate enough to get out in front of that in <unk>.
Create an attractive deal both for the NBA and for ourselves.
Speaker #4: As far as sports goes, from the perspective of the NBA, because of the timing of the rights costs, it does create a little bit of bumpiness during the course of the year.
It obviously like a lot of other live sports attracts audience and in the case of the NBA like the NFL attract scale audience.
Which obviously is super attractive to advertisers and therefore is strategically beneficial to us as well.
Speaker #4: Again, the latter half is where we'll really see material growth in ESPN. And then in terms of NBA being a contributor, the NBA is obviously a phenomenal property.
Thanks.
Good follow up.
Can you share anything about what youre seeing on the demand side currently domestically for the parks in terms of advanced bookings or our per caps.
Speaker #4: We were fortunate enough to get out in front of that and create an attractive deal both for the NBA and for ourselves. It obviously, like a lot of other live sports, attracts an audience and, in the case of the NBA, like the NFL, attracts a scaled audience.
Bob Iger: I'll answer both parts of your question. First of all, as it relates specifically to ESPN bundling, what we've found is that subscribers that bundle, either they bundle Disney+ and Hulu, or subscribers that bundle Disney+, Hulu, and ESPN, are healthier subscribers in the sense that the churn rates are lower than the subscriber that only subscribes to one app. I mentioned earlier the fact that about 80% of all the subscribers to the new ESPN service are actually buying the trio or the triple bundle. That's a very positive sign for us in terms of lowering churn into the future. We've also found that bundling with others, for instance, we've been bundling with Max in the United States, also has an effect of lowering churn.
Yes, yes, sorry, I forgot to answer that portion of your question.
Bookings are up 3% in the first quarter. So feel good about that and there are also up for the year. So.
Feel good about where demand is right now.
Great. Thank you Hugh.
Speaker #4: Which obviously is super attractive to advertisers and therefore is strategically beneficial to us as well.
Alright, Thanks, Mike Operator next question please.
Thank you and our next question comes from Kevin Van <unk> with Barclays. Please go ahead.
Speaker #7: Thanks. If I could follow up, can you share anything about what you're seeing on the demand side currently domestically for the parks in terms of advanced bookings
Thank you.
Well if any.
<unk>, becoming a broader bundle streaming you already have ESPN and Disney plus and Hulu bundle. Then of course, you also have Fox one and HBO.
Speaker #7: or per caps? Yeah,
Speaker #2: yeah. Sorry, I forgot to answer that portion of your question. Bookings are up 3% in the first quarter. So feel good about that. And they're also up for the year.
And it feels like there is an opportunity here.
Maybe emerge as a new form of Bundler.
Speaker #2: So feel good about where demand is right now.
Which nobody in the industry appears to have a damn good yet so any thoughts on that would be great.
Speaker #7: Great. Thank you,
Speaker #7: Great. Thank you,
Speaker #7: Hugh. Yep. All right.
Speaker #4: Thanks, Mike. Operator, next question, please.
And then just to understand the impact of ESPN bundling on Disney plus and home a little bit better.
Bob Iger: We've expressed the desire to do more bundling with other companies and have been in discussions on and off with other companies about doing just that. Typically, the opportunity to bundle definitely exists, and to bundle more exists. We also have proven that it works both for us in terms of our subscribers, and also for the subscribers that we attract for the bundling entity. If you were to ask the folks at Warner Bros. Discovery about the impact of the Max bundle on them, they would tell you that they've signed up a substantial number of subscribers thanks to the bundle with us.
Speaker #5: Thank you. And our next question comes from Conan Venkateshwar with Barclays. Please go ahead.
Anything you can share with respect to may.
Speaker #8: Thank you. Any interest from anyone becoming a broader bundler of streaming? You already have ESPN and Disney+ and Hulu bundled. And of course, you also have Fox One and HBO.
Maybe the churn benefits or any kind of subscriber acquisition costs deal wins that you saw.
In the quarter would you expect going forward potentially from that thank you.
So I'll answer both parts of your question.
Speaker #8: And it feels like there's an opportunity here for Disney to maybe emerge as a new form of bundler. Which nobody in the industry appears to have attempted yet.
First of all as it relates specifically to ESPN bundling.
What we found is that subscribers that bundle either the bundle Disney plus and Hulu or subscribers that bundle Disney plus Hulu and ESPN are healthier subscribers in the sense that the churn rates are lower than the subscriber that always subscribed to one app. So what I mentioned earlier, the fact that about eight.
Speaker #8: So any thoughts on that would be great. And then just to understand the impact of ESPN bundling on Disney+ and Hulu a little bit better, anything you can share with respect to maybe the churn benefits or any kind of subscriber acquisition cost tailwinds that you saw in the quarter?
Carlos Gomez: Thanks, Conan. Operator, next question, please.
Operator: Absolutely. Our next question today comes from John Hedelick with UBS. Please go ahead.
Speaker #8: What do you expect going forward potentially from that? Thank
The percent of all the subscribers to the new ESPN service are actually buying the trio or the triple bundle. That's a very positive sign for us in terms of lowering churn into the future. We've also found a bundling with others for instance, we've been bundling with Max in the United States also has a lower.
Speaker #8: you. So I'll
John Hodulik: Great. A quick follow-up on the parks business, then a question on cruises. It looks like domestic parks attendance was a little light in the fourth quarter. Is that driven by sort of competition, macro, or are there any other factors that may have accounted for that? On the cruise side, just comment on overall demand for the cruise business. Could you remind us, how do the margins in cruises compare to overall margins in the parks business? What should be the impact on that segment as that business grows as fast as it's slated to over the next several years?
Speaker #2: answer both parts of your question. First of all, as it relates specifically to ESPN bundling, what we found is that subscribers that bundled, either that bundled Disney+ and Hulu or subscribers that bundled Disney+, Hulu, and ESPN are healthier subscribers in the sense that the churn rates are lower than the subscriber that only subscribes to one app.
<unk>.
Lowering churn and we've expressed the desire to do more bundling with other companies and it had been in discussions on and off with other companies about doing just that so typically the the opportunity to bundle definitely exists and to bundle more exists.
Speaker #2: So what I mentioned earlier, the fact that about 80% of all the subscribers to the new ESPN service are actually buying the trio or the triple bundle, that's a very positive sign for us in terms of lowering churn into the future.
Hugh Johnston: Okay. In terms of the demand, demand was, I wouldn't characterize it as light. It basically came in in line with our expectations. We've talked about Epic in the past, in particular, as something that we knew was going to be a factor in domestic parks and, in fact, was very much in line with our expectations. If anything, it seems to be, in fact, impacting the rest of the competition down in Florida more than it's impacting us. From a consumer perspective, we certainly feel good about it. In terms of demand for cruise, very, very strong, despite the fact that we've added as much capacity as we have. Our utilization rates are in line with what we've seen in the past. We're filling all of that capacity as quickly as we can add it. Regarding margins, we don't really talk about specifics on cruise margins.
And we also have proven that it works both for US in terms of our subscribers and also for the subscribers that we attract for the bundling entity. If you were to ask.
Speaker #2: We've also found that bundling with others, for instance, we've been bundling with Max in the United States, also has a lower effect of lowering churn.
The folks at Warner Brothers discovery about the impact of the Max bundle on them. They would tell you that they've signed up a substantial number of subscribers. Thanks to the bundle with us.
Speaker #2: And we've expressed the desire to do more bundling with other companies and have been in discussions on and off with other companies about doing just that.
Okay.
Speaker #2: So typically, the opportunity to bundle definitely and to bundle more exists. And we also have proven that it works both for us in terms of our subscribers and also for the subscribers that we attract for the bundling entity.
Thanks, Kunal operator next question please.
Absolutely. Our next question today comes from John Hodulik with UBS. Please go ahead.
Great a quick.
Follow up on the on the parks business and then a question on cruises. It looks like domestic parks of tenants is it was a little light in the fourth quarter.
Speaker #2: If you were to ask the folks at Warner Brothers Discovery about the impact of the Max bundle on them, they would tell you that they've signed up a substantial number of subscribers thanks to the bundle with
Is that driven by sort of competition macro or are there any other factors that may have accounted for that and then on the.
On the crude side just comment on overall demand for the cruise business and could you remind us.
Speaker #2: us. Thanks,
How do the margins increase as compared to overall margins in the parts business and what should be the impact on that segment as that business grows as fast as its slated to over the next several years.
Hugh Johnston: That's not a disclosed item. Obviously, it's a very attractive business. We're capable of pricing it at a good level. The guest satisfaction scores are higher than basically anything else in the company, so the margins in that business, as you would imagine, are quite attractive.
Speaker #4: Conan. Operator, next question, please.
Speaker #5: Absolutely. Our next question today comes from John Hudelich with UBS. Please go ahead.
Speaker #4: Great. A quick a question on cruises. It looks like follow-up on the parks business and then domestic parks attendance was a little light in the fourth quarter.
Okay.
In terms of the.
The demand.
Demand was I wouldnt characterize it as light it basically came in in line with our expectations.
Speaker #4: Hugh, is that driven by sort of competition, macro, or are there any other factors that may have accounted for that? And then on the cruise side, just comment on overall demand for the cruise business.
Carlos Gomez: Thanks, John. Operator, next question, please.
Operator: Absolutely. Our next question today comes from Kutkin Meral with Evercore ISI. Please go ahead.
We've talked about epic in the past in particular.
It is something that we knew was going to be a factor in domestic parks and in fact was very much in line with our expectations.
Speaker #4: And could you remind us how do the margins in cruises compare to overall margins in the parks business and what should be the impact on that segment as that business grows as fast as it's slated to over the next several years?
John Hodulik: Good morning, and thanks for taking the questions. Two, if I could, first on direct-to-consumer, I was hoping you could share some of the puts and takes on the cost side in 2026, especially as you continue to invest in technology and programming. I didn't know if there were some maybe cost savings associated with integrating the tech stacks, for example, that we should be mindful of. Hugh, just a housekeeping one, if I could, around the 53rd week, thank you for providing clean guidance for the year and on an underlying basis. With that, can you help quantify the impacts of the extra week to this year? As we look to fiscal 2027, would the expectation be that you could grow EPS double digits again, even without adjusting for the 53rd week comp? Thank you.
Anything it seems to be in fact impacting the rest of the competition down in Florida.
That it's impacting us from a consumer perspective, we certainly feel.
Speaker #2: Okay. In terms of the demand, demand was, I wouldn't characterize it as light. It basically came in in line with our expectations. We've talked about Epic in the past, in particular, as something that we knew was going to be a factor in domestic parks.
Feel good about it.
In terms of demand for cruise.
Very very strong despite the fact that we've added as much capacity as we have.
Our utilization rates are in line with what we've seen in the past. So we're filling all of that capacity as quickly as we can add it.
Speaker #2: And in fact, was very much in line with our expectations. If anything, it seems to be, in fact, impacting the rest of the competition down in Florida.
Regarding margins, we don't really talk.
Specifics on cruise margins.
A disclosed item.
But obviously, it's a very attractive business.
Hugh Johnston: Yeah. First on DTC, it's really consistent with what we've talked about in the past. We expect to grow revenue at an attractive rate. As I mentioned earlier in the call, our aspiration is to be double digits in that business. In terms of the line items underneath, we'll obviously continue to invest at a reasonable level in content, leaning a bit more towards the international side as we identify opportunities in specific markets to grow the international business where we have a big opportunity. In addition to that, we'll be investing in product. The technology area will get some level of investment as well. Obviously, as we put the two businesses together, there are opportunities to do a bit of savings on SG&A.
Speaker #2: More that it's impacting us from a consumer perspective, we certainly feel good about it. In terms of demand for cruise, very, very strong despite the fact that we've added as much capacity as we have.
We're capable of pricing it at a good level. The guest satisfaction scores are higher than basically anything else in the company. So the margins in that business as you would imagine are quite attractive.
Okay. Thanks, John Operator next question please.
Speaker #2: Our utilization rates are in line with what we've seen in the past. So we're filling all of that capacity as quickly as we can add it.
Absolutely. Our next question today comes from <unk> with Evercore ISI. Please go ahead.
Speaker #2: Regarding margins, we don't really talk about specifics on cruise margins; that's not a disclosed item. But obviously, it's a very attractive business. We're capable of pricing it at a good level.
Sure.
Good morning, and thanks for taking the questions two if I could first time direct to consumer I was hoping you could share some of the puts and takes on the cost side in 2020, especially as you continue to invest in technology and programming that I didn't know if there is some maybe cost savings associated with integrating the tech stacks. For example that we should be mindful of and then Hugh.
Speaker #2: The guest satisfaction scores are higher than basically anything else in the company. So the margins in that business, as you would imagine, are quite attractive.
Just a housekeeping one if I could around the 50 <unk> week. Thank you for providing a clean guidance for the year and on an underlying basis with that can you help quantify the impact of the extra week this year and as we look to fiscal 2007.
Speaker #4: Thanks, John. Operator, next question, please.
Hugh Johnston: That said, I would expect P&L leverage, in other words, expenses growing less quickly than revenue across all of those items, which is how we drive the margin growth that we would expect to see. In terms of the 53rd week, again, I would expect us to figure out, as we get to Q4, what the 53rd week is worth. As we determine that, as we have in the past two times we've had the 53rd week, we would share something on that with investors, and we'd look to grow double digits off of that.
Speaker #5: Absolutely. Our next question today comes from Kutkan Mural with Evercore ISI. Please go
Speaker #5: ahead. Good morning and
Speaker #4: thanks for taking the questions. Two if I could. First, I'm direct to consumer. I was hoping you could share some of the puts and takes on the cost side in 2026, especially as you continue to invest in technology and programming that I didn't know if there was some maybe cost savings associated with integrating the tech stacks, for example, that we should be mindful of.
Patient B that you can grow EPS double digits again.
And then even without adjusting for the 50 <unk> week comp. Thank you.
Yes, first one on DTC.
It's really consistent with what we've talked about in the past so we expect to grow revenue.
Speaker #4: And then, Hugh, just a housekeeping one. If I could, around the 53rd week, thank you for providing a clean guidance for the year. And on an underlying basis, with that, can you help quantify the impacts of the extra week to this year?
An attractive rate as Ive mentioned earlier in the call. We our aspiration is to be double digits in that business.
In terms of then the line items underneath.
Carlos Gomez: All right, thanks, Kutkin. Operator, we have time for one more question.
We'll obviously continue to invest.
Speaker #4: And as we look to fiscal 27, would the expectation be that you could grow EPS double digits again, even without adjusting for the 53rd week comp?
At a reasonable level and content.
Operator: Thank you. Our final question today comes from David Karnovsky with JPMorgan. Please go ahead.
Leaning a bit more towards the international side as we identify opportunities.
John Hodulik: Hey, thank you. Bob, you noted generative AI earlier, but it sounded primarily as a use case within your apps. I'm wondering how you view the opportunity or risk to license out content or IP to some of the emerging video creation platforms. Just relatedly, as it pertains to production costs over time, what role do you see for generative AI to drive cost efficiencies in the business? Thanks.
Speaker #4: Thank you.
In specific markets to grow the international business, where we have a big opportunity.
Speaker #2: Yeah, first on DTC, it's really consistent with what we've talked about in the past. So we expect to grow revenue at an attractive rate.
In addition to that we'll be investing in product. So the technology area, we'll get some some level of investment as well.
Speaker #2: As I mentioned earlier in the call, our aspiration is to be double digits in that business. In terms of then the line items underneath, we'll obviously continue to invest at a reasonable level in content, leaning a bit more towards the international side as we identify opportunities in specific markets to grow the international business where we have a big opportunity.
And obviously as we put the two businesses together there is opportunities to do a bit.
Savings on SG&A that said I would expect P&L leverage in other words expenses growing less quickly than revenue.
Bob Iger: Very good question. We've been in some interesting conversations with some of the AI companies, and I would characterize some of them as quite productive conversations as well, seeking to not only protect the value of our IP and of our creative engines, but also to seek opportunities for us to use their technology to create more engagement with consumers. We feel encouraged by some of the discussions that we're having. It's obviously imperative for us to protect our IP using or with this new technology. We've been pretty engaged on that subject with a number of entities, and hopeful that ultimately we'll be able to reach some agreement, either the industry or the company on its own with some of these entities that would, in fact, reflect our need to protect the IP.
Cross all of those items, which is how we drive the.
The margin growth that.
We would expect to see.
In terms of the 50 <unk> week.
Speaker #2: In addition to that, we'll be investing in product. So the technology area will get some level of investment as well. And obviously, as we put the two businesses together, there's opportunities to do a bit of savings on SG&A.
Again, I would expect us to.
Figure out as we get to Q4, what the 50 <unk> week is worth and then as we determine that as we have in the past two times. We've had the 50 <unk> week, we would share something on that with investors and we'd look to grow double digits off of that.
Speaker #2: That said, I would expect P&L leverage, in other words, expenses growing less quickly than revenue, across all of those items which is how we drive the margin growth that we would expect to see.
Alright, Thanks, Scott gun.
Operator, we have time for one more question.
Thank you and our final question today comes from David Karnofsky with Jpmorgan. Please go ahead.
Speaker #2: In terms of the 53rd week, again, I would expect us to figure out as we get to Q4 what the 53rd week is worth.
Alright. Thank you Bobby noted generative AI earlier, but it sounded primarily as a use case within your apps and I'm wondering how you view the opportunity or risk to license our content, our IP to some of the emerging video creation platforms and then just relatedly as.
Speaker #2: And then as we determine that, as we have in the past two times, we've had the 53rd week, we would share something on that with investors and we'd look to grow double digits off of
Bob Iger: We also, as we look ahead, see opportunities in terms of efficiency and effectiveness by deploying AI, not just in the production process, but really across our company as we engage with our cast members, our employees, our guests, and our customers. There are opportunities, as Hugh talked about earlier, about what I'll call the office and creating efficiency there. There are great opportunities in terms of our collection of data and our mining of data. I'd say, above all else, there's phenomenal opportunities to deploy AI across our direct-to-consumer platforms, both to provide tools that make the platforms more dynamic and more sticky with consumers, but also to give consumers the opportunity to create on our platforms. I also, before we end the call, Carlos, I just want to say one thing because I know there was reference to where we are with YouTube.
As it pertains to production costs over time, what role you see for generative AI to drive cost efficiencies in the business.
Speaker #2: that. All right.
Speaker #4: Thanks, Kutkan. Operator, we have time for one more question.
Very good question, we've been in some interesting conversations with some of the AI companies and I would characterize some of them is quite productive conversations as well.
Speaker #5: Thank you. And our final question today comes from David Karnofsky with JPMorgan. Please go ahead.
Speaker #4: Hey, thank you. Bob, you noted generative AI earlier, but it sounded primarily as a use case within your apps. And I'm wondering how you view the opportunity or risk to license out content or IP to some of the emerging video creation platforms and then just relatedly, as it pertains to production costs over time, what role do you see for generative AI to drive cost efficiencies in the business?
Seeking to not only.
Protect the value of our IP and of our creative engines, but also seek opportunities for us to use their technology to create more engagement with consumers and we feel encouraged by some of the discussions that we're having it's obviously imperative for us to protect our IP.
Speaker #4: Thanks. Very good
Speaker #2: question. We've been in some interesting conversations with some of the AI companies, and I would characterize some of them as quite productive conversations as well.
With this new technology.
We've been pretty.
Engaged on that subject with a number of entities.
Bob Iger: I just want to end the call because we've been so engaged in this over the last few weeks by kind of giving an overall summary of just where things stand. First of all, obviously, we care deeply about our consumer, and our priority has always been to remain on their service without interruption, to close a deal on a timely basis so that interruption does not occur. The deal that we have proposed is equal to or better than what other large distributors have already agreed to. We're not trying to really break any new ground.
Im hopeful that ultimately we will be able to reach some agreement the industry or the company is.
Speaker #2: Seeking to not only protect the value of our IP and of our creative engines, but also to seek opportunities for us to use their technology to create more engagement with consumers.
On its own with some of these entities that would in fact reflect our need to protect the IP.
We also as we look ahead.
Speaker #2: And we feel encouraged by some of the discussions that we're having. It's obviously imperative for us to protect our IP using or with this new technology.
We see opportunities in terms of efficiency and effectiveness by deploying AI not just in the production process, but really across our company as we engage with our guests.
Speaker #2: And we've been pretty engaged on that subject with a number of entities. And I'm hopeful that ultimately we'll be able to reach some agreement, either the industry or the company as on its own, with some of these entities that would, in fact, reflect our need to protect the IP.
Cash members and our employees, but also our guests and our customers.
There are opportunities as you talked about earlier, but what I'll call the office and creating efficiency. There there are great opportunities in terms of our collection of data in our mining of data and I'd say above all else is phenomenal opportunities to deploy AI across our direct to consumer platforms both to provide.
Bob Iger: While we've been working tirelessly to close this deal and restore our channels to the platform, it's also imperative that we make sure that we agree to a deal that reflects the value that we deliver, which both YouTube, by the way, and Alphabet have told us is greater than the value of any other provider. We're not trying to break new ground. The offer that's on the table is commensurate with deals that we've already struck with distributors that are actually larger than they are. We're trying really hard, as I said, working tirelessly to close this deal. We're hopeful that we'll be able to do so on a timely enough basis to at least give consumers the opportunity to access our content over their platform.
Speaker #2: We also as we look ahead, we see opportunities in terms of efficiency and effectiveness by deploying AI, not just in the production process, but really across our company as we engage with our cast members and our employees, but also our guests and our customers.
<unk> that make the platforms more dynamic and more sticky with consumers, but also to give consumers the opportunity to create on our platforms.
I also before we end the call Carlos I, just wanted to say one thing.
Speaker #2: There are opportunities as Hugh talked about earlier about what I'll call the office and creating efficiency there. There are great opportunities in terms of our collection of data and our mining of data.
I know there was reference to where we are with Youtube and I just wanted to end the call because we've been so engaged in this over the last few weeks.
Speaker #2: And I'd say above all else, there's phenomenal opportunities to deploy AI across our direct-to-consumer platforms. Both to provide tools that make the platforms more dynamic and more sticky with consumers, but also to give consumers the opportunity to create on our platforms.
Kind of given an overall summary of just where things stand, but first of all.
Carlos Gomez: Thanks, Bob. Thanks to everyone for your questions. We wish you all a good day.
Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.
Obvious Lee we care deeply about our consumer and our priority has always been to remain on their service without interruption to close a deal on a timely basis, so that interruption does not occur.
The deal that we have proposed is equal to or better than what other large distributors have already agreed to so we're not trying to really break any new ground and while we have been working tirelessly to close this deal and restore our challenge to the platform. It's also imperative that we make sure that we agree to a deal that reflects the value that we deliver.
Speaker #2: I also, before we end the call, Carlos, I just want to say one thing because I know there was reference to where we are with YouTube.
Speaker #2: And I just want to end the call because we've been so engaged in this over the last few weeks. By kind of giving an overall summary of just where things stand.
Speaker #2: First of all, obviously, we care deeply about our consumer. And our priority has always been to remain on their service without interruption, to close a deal on a timely basis.
<unk>, which both Youtube by the way an alphabet have told us is greater than the value of any other provider. So we're not trying to break new ground.
Offer that's on the table is commensurate with deals that we've already struck with actually distributors that are larger than they are we're trying really hard as I said working tirelessly to close this deal and we're hope.
Speaker #2: So that interruption does not occur. The deal that we have proposed is equal to or better than what other large distributors have already agreed to.
Speaker #2: So we're not trying to really break any new ground. And while we've been working tirelessly to close this deal, and restore our channels to the platform, it's also imperative that we make sure that we agree to a deal that reflects the value that we deliver which both YouTube, by the way, and Alphabet have told us is greater than the value of any other provider.
<unk> that we'll be able to do so on a timely enough basis to at least give consumers the opportunity to access our content over their platform.
Yeah.
Thanks, Bob and thanks to everyone for your questions. We wish you all a good day.
Thank you that concludes today's conference call. We thank you all for attending today's presentation.
Speaker #2: new ground. The So we're not trying to break offer that's on the table is commensurate with deals that we've already struck with actually distributors that are larger than they are.
Now disconnect your lines and have a wonderful day.
Speaker #2: We're trying really hard. As I said, working tirelessly to close this deal. And we're hopeful that we'll be able to do so on a timely enough basis to at least give consumers the opportunity to access our content over their platform.
Speaker #4: Thanks, Bob. And thanks to everyone for your questions. We wish you all a good
Speaker #4: day. Thank
Speaker #5: you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.