Walt Disney Company (The)

welcome to the walt disney company first quarter 2026 financial results conference call my name is lauren and i will be your moderator today after today's presentation there will be opportunity to ask questions if you would like to ask a question then please press star followed by one on your telephone keypad please note that today's event is being recorded i would now like to turn the call over to Carlos Gomez, Executive Vice President, Treasurer, and Head of Investor Relations. Please go ahead.

Good morning. It's my pleasure to welcome everyone to the Walt Disney Company's first quarter 2026 earnings call. Our press release form 10Q and management's posted prepared remarks were issued earlier this morning and are available on our website at www.disney.com forward slash investors. Today's call is being webcast and the replay and transcript will be made available on our website after the call. Before we begin, please take note of our cautionary statement regarding forward-looking statements on our IR websites. 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 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, competition, execution risks, the market for advertising, our future financial performance, and legal and regulatory developments. 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 more information regarding 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. 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. We are pleased with the start of our fiscal year, and our achievements reflect the tremendous progress we've made. Beginning with our entertainment segment, our film studios generated more than $6.5 billion at the global box office, in calendar year 2025, making this our third biggest year ever, and our ninth year as number one at the global box office over the past decade. Avatar Fire and Ash became our latest release to cross the $1 billion threshold, joining Zootopia 2 and Lilo and Stitch to mark $3 billion titles in 2025. Zootopia II also became Hollywood's highest-grossing animated film ever and one of the top 10 highest-grossing films of all time, earning more than $1.7 billion and firmly establishing itself as a popular new franchise. This builds on a rich legacy of both creative and box office success for Disney. To date, $37 billion films have come from our studios out of the 60 films that it hit this mark industry-wide. That's four times more than any other studio. Great storytelling generates value across our interconnected businesses, with hits like Zootopia II lifting viewership of related titles on Disney+, and fueling global interest in our parks and consumer products. The film also became the highest-grossing foreign film of all time in China, where the franchise is an important driver of attendance at Shanghai Disneyland with our Zootopia theme land, one of the most popular areas of the park. Looking ahead to our upcoming slate, we are excited about numerous titles coming to theaters this year, including The Devil Wears Prada 2, The Mandalorian and Grogu, Toy Story 5, the live action Moana, and Avengers Doomsday. Turning to streaming, our performance in the quarter reflects the strength of our content and continued technology improvements. We're seeing encouraging results from our investment in local content as we continue our focus on international growth. We're also rolling out product enhancements to elevate the user experience on Disney+, and we're layering in additional ways to engage audiences by developing new vertical and short-form experiences, with plans to introduce a curated slate of SOAR-generated content on Disney+, following our recently announced licensing agreement with OpenAI. We also took a major step forward with the launch of ESPN Unlimited, and while still early days, we're pleased with the adoption and engagement we've seen with the new app. ESPN is the industry leader in sports, offering fans the most compelling portfolio of live sports, studio shows, and original content with multiple ways to watch. And in Q1, ESPN delivered outstanding ratings across our portfolio of live sports. Highlights include ESPN's most watched college football regular season since 2011, with ABC achieving its best college football season since 2006. Monday Night Football delivered its second highest viewership in 20 years. And season to date, ESPN has delivered its third most watched NBA regular season ever. We also just closed our transaction with the NFL to acquire NFL Network and other media assets, including the linear rights to the league's popular Red Zone channel, further bolstering ESPN's offering with an even richer content experience for football fans. Turning to our experiences segment, we had a solid start to the fiscal year with quarterly revenue exceeding $10 billion for the first time. We have expansion projects underway at every one of our theme parks, and next month, we're excited to welcome guests to the new world of Frozen at the completely reimagined Disney Adventure World at Disneyland Paris. This milestone marks the beginning of a bold new era for Disneyland Paris, nearly doubling the size of the second park. At Disney Cruise Line, we recently launched the Disney Destiny, which has received outstanding reviews from guests. We're also preparing for the launch of the Disney Adventure next month, which will be our first ship home-ported in Asia, bringing immersive Disney storytelling to more people globally than ever before. Overall, our results this quarter reflect our hard work and strategic investments across each of our priorities, and I'm incredibly proud of all that we've accomplished over the past three years to set Disney on the path of continued growth. and I'm inspired and energized by the opportunities ahead for this wonderful company. With that, we will be happy to take your questions.