Disney has emerged from its fourth quarter with impressive results, buoyed significantly by its streaming successes. The company recently announced adjusted profits of $460 million, or 25 cents per share, for the period ending September 28, which is notable when compared to last year’s figures of $264 million, or 14 cents per share. These earnings outpaced analysts' expectations, leading to more than 9% leap in Disney’s share price before the markets opened on Thursday. Analysts had anticipated earnings of about $1.09 per share, making Disney's report a welcome surprise.
Disney’s revenue for this quarter climbed by 6%, reaching $22.57 billion, but just below Wall Street’s forecast of $22.59 billion. Still, the company showcased remarkable operating income improvements, especially within its entertainment division, where figures quadrupled to $1.07 billion. This growth was rooted largely in successful performances from popular franchises, including “Inside Out 2” and “Deadpool & Wolverine,” which contributed significantly to revenue through box office sales and content-related licensing.
Disney’s direct-to-consumer (DTC) business, which encompasses services such as Disney+ and Hulu, registered operating income of $253 million. This marks a substantial recovery from last year’s operating loss of $420 million, and revenue for this segment soared 15% to $5.78 billion. The strong turnaround for the DTC business indicates efficiency improvements and strategic pricing adjustments alongside growing subscriber numbers.
On the streaming front, Disney+ reported modest growth, with domestic subscriptions increasing by 2% and international memberships rising by 5%, not including Disney+ Hotstar. The company concluded the quarter with 174 million combined subscriptions from Disney+ Core and Hulu, which included more than 120 million paying subscribers for Disney+ Core — reflecting an increase of 4.4 million since the previous quarter. This bolstered optimism among executives and shareholders alike.
CEO Bob Iger voiced confidence during the earnings call, highlighting the lighthearted impact of blockbuster releases like “Inside Out 2” on streaming viewership. He noted how favorable movie performances tend to boost interest and viewership for previous titles available on Disney’s platforms. Industry analysts also echoed these sentiments, pointing out strong growth prospects driven by quality content, with one stating, "Disney’s very strong quarter... proves content is what matters most." Officials from Forrester praised the company's subscriber growth and profitability improvements, calling Disney’s streaming business model solid and sustainable.
Yet, it's not all smooth sailing for the entertainment giant. While its streaming division is thriving, Disney’s Experiences segment — responsible for the company’s theme parks, cruise lines, and merchandising — reported declining fortunes. Operating income dipped by 6% to $1.7 billion, attributed primarily to challenges stemming from international markets and the fluctuated consumer spending habits related to travel and leisure. Although domestic parks saw some improvement, the overall downturn remains on the minds of Disney’s leadership.
Despite the mixed signals from its different verticals, Disney remains optimistic about its future. The company anticipates high-single-digit adjusted earnings per share growth for the fiscal year 2025 and predicts double-digit growth for 2026 and 2027. This is buoyed by expansions and improvements across its divisions. "This was a pivotal and successful year for The Walt Disney Company," Iger commented, expressing hope for sustained growth following the challenges of previous years.
Shifts are also underway at the executive management level, with the company actively seeking Bob Iger's successor. Iger has announced his intention to stay onboard until at least 2026 to smooth the transition process. Also noteworthy is the impending arrival of James Gorman, who will step up as chairman early next year. Underlining this strategic reshuffle, Disney will name its new CEO as part of their efforts to stabilize leadership as they continue to reshape their future.
The resolution of tensions with Florida Governor Ron DeSantis was another significant recent development for Disney, which ended with a commitment from Disney to invest $17 billion over the next two decades at Walt Disney World. This move aims to assist the development of the area, reducing conflict and restoring goodwill similar to past relations with local government.
With this expansive plan set to roll out, Disney is gearing up for new growth opportunities within the theme park and interactive entertainment segments. The future looks promising for Disney as it navigates the dynamic media and entertainment landscapes with strong stories at its core and burgeoning financial health, highlighted by its notable fourth-quarter earnings performance.
