Key Takeaways
- Disney’s Q3 results were strong, with revenue up 7% to $25.2 billion, net income at $2.63 billion, and streaming (Disney+ and Hulu) revenue up 11% as operating income for the division more than doubled to $712 million.
- Starting in fiscal 2027, Disney will shift most of its consumer products business into Disney Entertainment so merchandise is developed and monetized closer to the studios creating hit franchises like Toy Story, Star Wars, Marvel, and Pixar.
- The company is leaning into AI via its J.A.R.V.I.S. platform for Imagineers and banking on franchise power—despite some box office underperformers like The Mandalorian and Grogu and live-action Moana—as Toy Story 5, Star Wars streaming, and related merch drive massive engagement and sales.
Disney's latest earnings report shows the entertainment giant is still finding new ways to cash in on its biggest franchises. The company posted another profitable quarter for Disney+ and Hulu, announced a major restructuring of its consumer products business, and revealed how artificial intelligence is becoming part of its long-term strategy—all while leaning heavily on franchises like Toy Story and Star Wars.
Per The Wall Street Journal, for the quarter ending June 27, Disney reported $25.2 billion in revenue and $2.63 billion in net income. Net income was down from $5.26 billion a year earlier, when results included a one-time Hulu tax benefit, while adjusted earnings per share rose 28% to $2.06.
Revenue climbed 7% year over year, while total segment operating income jumped 21% to $5.6 billion. Streaming remained one of the company's biggest success stories. Revenue from Disney+ and Hulu increased 11% to $5.53 billion, while operating income for the streaming division more than doubled to $712 million, up from $329 million a year earlier. Subscription revenue rose 15% to $4.7 billion, with advertising revenue also ticking up 3%.
Disney also announced a notable behind-the-scenes shake-up. Beginning in fiscal 2027, much of its consumer products business will move from Disney Experiences into Disney Entertainment, putting merchandise sales closer to the studios that create the films and series driving demand.
"We believe this shift will have strategic and operational benefits by bringing the monetization of our IP through consumer products closer to the studios that create that IP," CEO Josh D’Amaro and Chief Financial Officer Hugh Johnston wrote in a letter to shareholders.
They added that the change will better reflect the value generated by Disney's entertainment business.
The company is also expanding its use of AI. According to D'Amaro, Disney has rolled out its proprietary J.A.R.V.I.S. platform to more than 2,000 Imagineers, who are using it to access decades of company knowledge, test attractions digitally before construction, and improve the guest planning experience.
"We use it first and foremost to enhance a creative process that will always be human-centered, artist-driven, and creator-led," D'Amaro said.
The results build on a year in which Disney's flagship franchises continued to dominate across multiple platforms. Earlier this year, the company revealed that May 4, 2025—Star Wars Day—became the biggest streaming day of 2025 on Disney+.
Meanwhile, Toy Story 5 crossed the $1 billion mark at the global box office, while the franchise surpassed 2 billion hours streamed on Disney+ and its merchandise helped deliver Disney’s strongest quarter of year-over-year consumer-products revenue growth in 20 quarters.
Not every release hit its target. Disney acknowledged that Star Wars: The Mandalorian and Grogu and the live-action Moana underperformed at the box office. Even so, executives emphasized that Disney's interconnected model—where theatrical releases, streaming, merchandise, parks, and consumer products all reinforce one another—continues to pay off.
"Our strong fiscal Q3 results and reiterated full-year outlook reinforce our confidence that we are uniquely well positioned," D’Amaro and Johnston wrote. "Decades of IP investment have built deep fan connections that translate into strong financial results."
