Disney (DIS) Q4 2024 Earnings

Disney reported fiscal fourth-quarter earnings on Thursday, beating analysts’ estimates as streaming growth helped propel the entertainment segment.

The growth and profitability of the streaming business – combined with a blockbuster summer at the box office and further investment in the company’s theme park business – comes amid turmoil in the media industry. Disney has restructured House Mouse under the leadership of returning CEO Bob Iger, who created the company before handing it over to a successor in early 2026.

Company executives on Thursday cited Disney’s significant progress over the past year and said they are “confident in the long-term prospects for the business,” issuing guidance that includes fiscal 2025, 2026 and 2027.

During Disney’s fiscal 2025, the company expects high single-digit earnings growth compared to the previous fiscal year. The company expects adjusted EPS growth to double in fiscal 2026 and 2027.

“I think the fact that we have all 24 strong has been an important part of our guidance going forward,” Chief Financial Officer Hugh Johnston said in an interview Thursday with CNBC’s “Squawk Box.” “If you think about the big initiatives that we have invested in, putting creativity back in the center of the company, and on top of that, we said we want to increase profits and we are doing it clearly in an important way.”

Disney shares were up more than 10% in early trading.

Here’s what Disney reported compared to what Wall Street expected, according to LSEG

• Earnings per share: $1.14 adjusted vs $1.10 expected
• result: $22.57 billion vs $22.45 billion expected

Disney’s net income rose to $460 million, or 25 cents per share, from $264 million, or 14 cents per share, during the same quarter last year. Adjusting for one-time items, including restructuring and disruption charges, Disney reported earnings per share of $1.14.

Total segment operating revenue increased 23% to $3.66 billion compared to the same period in 2023.

Revenue for the entertainment segment — which includes traditional TV networks, direct-to-consumer streaming and movies — rose 14% year over year to $10.83 billion after a hot summer at the box office.

Disney Pixar’s “Inside Out 2” became the biggest animated film of all time this summer, surpassing Disney’s “Frozen II” at the box office. Meanwhile, “Deadpool & Wolverine” became the highest R-rated movie of all time, surpassing Warner Bros. Discovery’s “Joker.”

The film added $316 million in revenue to the entertainment segment during the quarter. Overall, the entertainment segment reported a profit of almost $1.1 billion.

Disney is set to become the first movie studio to cross $4 billion globally by 2024, executives said in a release Thursday, adding to their enthusiasm as momentum enters the holiday season with the releases of “Moana 2” and “Mufasa: The Lion King.”

Disney expects double-digit percentage growth in operating income for its entertainment segment for fiscal 2025.

Five years since Disney+ launched, the streaming service posted an annual loss of $4 billion in fiscal year 2022, and is now profitable.

Disney’s combined streaming business, which includes Disney+, Hulu and ESPN+, reported operating income of $321 million for the September period compared to a loss of $387 million during the same period last year.

Company executives said in a release that they believe streaming “will be a significant growth area” for Disney.

Disney also joined its friends, incl Warner Bros. Discovery, netflix, Comcast and Paramount Global added streaming subscribers during the most recent quarter.

Disney + Core subscribers – which excludes Disney + Hotstar in India and other countries in the region – increased by 4.4 million, or 4%, to 122.7 million. Hulu subscribers grew 2% to 52 million.

Average revenue per user for domestic Disney+ subscribers fell from $7.74 to $7.70, as the company had a higher mix of subscribers over lower-tier, ad-supported and wholesale offerings.

Company executives said more than half of new US Disney+ subscribers opted for the lower, ad-supported tier, adding this “bodes well for the future.” Media companies have focused on advertising as a measure to drive profitability in the streaming business.

During the fiscal fourth quarter, Disney’s streaming entertainment ad revenue grew 14% thanks to Disney+, and executives expect it to become a driver of streaming revenue.

However, they expect a “moderate decline” in Disney+ Core subscribers during the first quarter of fiscal 2025 compared to the previous quarter, due to higher prices and the end of new promotional offers.

Full-year profit in the entertainment streaming business, which does not include ESPN+, is expected to increase by about $875 million compared to the previous fiscal year and double the percentage in fiscal 2026.

Meanwhile the company’s traditional TV network business continued to decline in the latest quarter as consumers abandoned pay TV packages for streaming. Revenue for the network fell 6% to $2.46 billion. Profit for the segment fell 38% to $498 million.

Revenue for Disney’s sports division, particularly from ESPN, has been uneven. ESPN’s profit fell 6% due in part to higher programming costs related to US college football rights as well as fewer subscribers on cable bundles.

Disney’s experiences segment, which includes theme parks as well as consumer products, saw revenue grow 1% to $8.24 billion.

Recently, theme parks have experienced a slowdown, especially in the US, following post-Covid events. The company has warned that the pause will continue into the next quarter. Comcast recently reported Universal’s theme park revenue was down during its most recent quarter due to lower attendance.

Disney’s domestic park operating income rose 5% to $847 million, helped by higher guest spending at its parks and cruise lines.

Operating income at international parks, however, fell 32% due to lower visitor numbers and guest spending as well as increased costs.

Disney executives noted that the business experienced reporting record revenues and profits for the fiscal year, “despite some industry challenges that emerged in the second half of the fiscal year.” However, they remain confident in the future with cruise line expansion and additions to the theme park.

Disney’s experience segment is expected to grow revenue by only 6% to 8% in the coming fiscal year compared to the previous year. Disney noted its fiscal first quarter will take a $130 million hit due to the impact of Hurricanes Helene and Milton, as well as a $90 million impact from Disney Cruise Line’s pre-launch costs.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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