Disney Beats Expectations with Profitable Streaming Segment Despite Park Setbacks

Key Points:

* Strong Financial Results: Revenue exceeded estimates at $24.70 billion, while adjusted earnings per share came in at $1.76, surpassing analysts' forecasts.
* Parks and Experiences Declines: Operating income in the domestic parks segment fell by 5% due to hurricanes and cruise ship investments.
* Disney+ Subscriber Base Shrinks: Subscribers decreased by 700,000, resulting from anticipated churn following price increases.
* Streaming Profitability: The direct-to-consumer (DTC) streaming business swung to a profit of $293 million, marking the third consecutive profitable quarter.
* Future Outlook: Disney anticipates modest declines in Disney+ subscribers in the upcoming quarter but remains confident in the long-term growth of its streaming segment.

Details:

Revenue and Earnings:
* Revenue rose 5% year-over-year to $24.70 billion, surpassing expectations of $24.57 billion.
* Adjusted earnings per share reached $1.76, notably higher than the anticipated $1.42.

Segment Performance:
* Domestic Parks and Experiences: Operating income declined by 5%, impacted by hurricanes and cruise ship pre-opening expenses.
* Entertainment: Operating income surged by 95% year-over-year, driven by successful box office releases.
* Streaming: The DTC streaming business turned a profit of $293 million, exceeding analyst expectations and continuing a streak of profitability.

Outlook:
* Disney maintains its guidance for high-single digit EPS growth in fiscal 2025.
* Parks operating income is projected to improve beyond the first quarter, with estimated growth between 6% and 8% for full-year 2025.
* Streaming profits are expected to reach approximately $875 million in fiscal 2025.

Additional Insights:

* Disney continues its search for a successor to CEO Bob Iger in early 2026.
* The company's results reflect the shifting consumer preference towards streaming services and the importance of profitability in the streaming space.
* Disney's performance highlights the challenges faced by media and entertainment giants in navigating industry changes.