Disney’s adjusted profits for the fourth quarter surpassed analysts’ forecasts, driven by robust performance in the entertainment sector and streaming services.
The company reported a profit of $460 million, translating to 25 cents per share, for the period ending on September 28. This marks an increase from the previous year’s earnings of $264 million, or 14 cents per share.
Excluding certain items, the adjusted earnings per share stood at $1.14, exceeding the anticipated $1.09 as predicted by analysts from Zacks Investment Research.
Following the announcement, Disney’s shares saw a rise of almost 7% prior to the market opening on Thursday.
Revenue for the quarter increased by 6% to reach $22.57 billion; however, it slightly fell short of Wall Street’s target of $22.59 billion.
The operating income within the entertainment division, encompassing both the movie studios and various television components, surged more than fourfold to $1.07 billion.
Disney’s direct-to-consumer segment, which includes Disney+ and Hulu, reported a quarterly operating profit of $253 million, a significant turnaround from the operating loss of $420 million recorded in the previous year.
Revenue for this division jumped 15% to $5.78 billion.
Collectively, the streaming services, which include Disney+, Hulu, and ESPN+, achieved profitability for the first time in this past quarter.
Disney attributed its success in the direct-to-consumer realm to increased subscription revenue stemming from higher retail pricing and a growing subscriber base.
Furthermore, the company noted an uptick in advertising revenue and a reduction in marketing expenses for Disney+.
“This was a pivotal and successful year for The Walt Disney Company. Thanks to our significant progress, we have navigated through a challenging period well-positioned for growth and remain optimistic about our future,” commented CEO Bob Iger in a statement.
On the other hand, the Experiences segment, which comprises six global theme parks, a cruise line, merchandise, and video game licensing, noted a 6% decline in operating income, amounting to $1.7 billion.
While there was an improvement in operating income at domestic parks and Experiences, it declined for international locations.
Disney had earlier anticipated a mid-single-digit decrease in fourth-quarter operating income for the Experiences segment due to moderating visitor numbers at domestic parks, cyclical downturns in China, and reduced attendance at Disneyland Paris influenced by the Olympics affecting travel patterns.
Looking ahead, Disney projects a high-single-digit growth in adjusted earnings per share for the fiscal year 2025, with anticipated double-digit growth for the years 2026 and 2027.
In a recent announcement, Disney revealed that it is bringing in Morgan Stanley executive James Gorman to serve as the new chairman starting early next year, as part of a broader corporate restructuring.
Gorman will take over on January 2, 2025, succeeding Mark Parker, who has opted to depart after a nine-year tenure on Disney’s board.
The search for a new CEO to replace Bob Iger is ongoing, who made his return to the company in 2022 after a period characterized by difficulties and declines in financial performance under his chosen successor, Bob Chapek.
Gorman noted in October that selecting the next CEO by 2026 would allow sufficient time for an effective transition before Iger’s contract concludes in December 2026.
Meanwhile, Disney is evaluating both internal and external candidates for this executive position.
In April, shareholders rebuffed attempts by activist investor Nelson Peltz to secure seats on the board, demonstrating strong support for Iger as he strives to revitalize the company following a tumultuous period.
Additionally, in June, Disney requested that a federal appellate court dismiss its lawsuit against Florida’s Governor Ron DeSantis after a consensus was reached regarding the future development of Walt Disney World over the next 20 years, thereby resolving the final points of contention.
As part of this 15-year arrangement, Disney committed to investing $17 billion into Disney World over the next two decades, while the district pledged improvements to the resort’s infrastructure.
