Disney (DIS) on Thursday reported fiscal fourth-quarter earnings per share and revenue that topped Wall Street estimates, as its direct-to-consumer business built on recent momentum and turned a profit.
Strong expectations for the next two years also fueled investor optimism, sending shares up more than 10% in early trading after the results.
The media and experiences giant reported fourth-quarter adjusted earnings of $1.14 per share, above the $1.10 expected by analysts polled by Bloomberg. It was also higher than the $0.82 Disney reported in the same period last year.
Revenue came in at $22.57 billion, surpassing consensus expectations of $22.47 billion and the $21.24 billion reported in the same period last year.
Disney’s direct-to-consumer (DTC) streaming business – which includes Disney+, Hulu and ESPN+ – posted operating income of $321 million for the three months ended September 28. That compares with a loss of $387 million in the year-earlier period. .
Analysts polled by Bloomberg had expected DTC’s operating income to be around $203 million after the company achieved its first quarter of streaming profitability in its third-quarter results.
Achieving consistent profits in streaming is critical for Disney and other media giants amid a growing consumer shift to DTC services from traditional pay-TV packages.
In mid-October, the company raised the price of its various subscription plans, highlighting a trend that has gained momentum over the past year. With such moves, media companies are looking to boost margins on direct-to-consumer (DTC) offerings in light of mounting declines in linear television.
Disney said Thursday it expects DTC operating income of about $875 million in fiscal 2025.
During the earnings call, Disney CFO Hugh Johnston noted that profits in streaming serve as a “natural hedge” against struggling linear networks, which saw revenue decline 6%, while operating income for the segment fell 38% compared to the prior period year.
Management warned that linear networks are expected to continue to decline as more consumers abandon their cable packages.
The entertainment giant’s results come as the company looks for a successor to current CEO Bob Iger to navigate a changing industry. A recent report from the Wall Street Journal says the pool of candidates is expanding as the executive is set to leave Disney for a second time at the end of 2026.
Last month, Disney said it plans to announce its next CEO in early 2026, with current Disney board member and former Morgan Stanley (MS) CEO James Gorman taking the reins. He will serve as the company’s new chairman of the board of directors effective January 2, 2025.
One of the concerns of investors who Iger’s successor will inherit is a possible slowdown in Disney’s theme park business.
The parks division’s revenue was slightly ahead of expectations, rising 1% year over year to $8.24 billion.
However, operating income fell short of expectations of $2.31 billion, coming in at $1.66 billion in the quarter, down 6% from the previous year.
This was mainly driven by weak results abroad, with international operating profit down 32% year on year. The company cited a decline in visitors and guest spending during the Paris Olympics and a typhoon in Shanghai.
In one bright spot, domestic corporate revenue rose 5% compared to the same period last year, reversing declines from the third quarter. The company estimates that Hurricanes Helene and Milton will register a hit of about $130 million for the current quarter, while the pre-launches of the Disney cruise lines will bring in another $90 million.
After the first quarter, however, the company said operating revenues at the parks will grow 6% to 8% for full-year 2025, “weighted by the second half of the year.” The launch of the new Disney Treasure cruise ship line should help further these results.
Johnston added during the earnings call that he expects “gradual consumer strengthening” and that the company is “positive” about continued domestic growth next year.
Overall, Disney said it expects “high single-digit” adjusted EPS growth through 2025, beating estimates of a 4% increase, and that earnings growth should reach double digits in 2026 and continue through by 2027.
By 2025, the company is also targeting $3 billion in share buybacks and “dividend growth that follows our earnings growth.”
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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