Disney (DIS) earnings in the fourth quarter of 2024

disney reported its fiscal fourth-quarter earnings on Thursday, narrowly beating analyst estimates, as streaming growth helped boost its entertainment segment.

The growth and profitability of the streaming business, combined with a blockbuster summer at the box office and increased investments in the company’s theme park business, come at a time of upheaval in the media industry. Disney has been restructuring the Mouse House under returning CEO Bob Iger, who is whipping the company into shape before handing it over to a successor in early 2026.

Company executives on Thursday touted 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 its 2025, 2026 and 2027 fiscal years.

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

“I think the fact that we’ve had such a strong ’24’ overall has been an important part of the guidance we’re getting,” Chief Financial Officer Hugh Johnston said in an interview Thursday with CNBC’s “Squawk Box.” “If you think about the big initiatives we’ve invested in, putting creativity back at the heart of the business, and on top of that, we said we wanted to improve profitability and we’re clearly doing that substantially.”

Disney shares rose more than 9% 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
• Revenue: $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 impairment charges, Disney reported earnings per share of $1.14. Disney’s overall revenue increased 6% to $22.57 billion compared to the same prior fiscal quarter.

The segment’s total operating income increased 23% to $3.66 billion compared to the same period in 2023.

Revenue from the entertainment segment, which includes traditional television 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” this summer became the highest-grossing animated film of all time, surpassing Disney’s “Frozen II” at the box office. Meanwhile, “Deadpool & Wolverine” became the highest-grossing R-rated film of all time, surpassing Warner Bros. Discovery’s “Joker.”

Movies added $316 million to earnings for the entertainment segment during the quarter. Overall, the entertainment segment posted profits of nearly $1.1 billion.

Disney became the first movie studio to surpass $4 billion globally in 2024, executives said in a statement Thursday, adding that they are encouraged by the holiday season’s momentum with the upcoming releases of “Moana 2.” ” and “Mufasa: The Lion King.” “

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

Five years since the launch of Disney+, the streaming service has avoided annual losses of $4 billion in fiscal 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 the statement that they are confident that streaming “will be a significant growth area” for Disney.

Disney also joined its peers, including Warner Bros. Discovery, netflix, Comcast and Paramount Global in adding streaming subscribers during the most recent quarter.

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

Average revenue per user for domestic Disney+ customers fell from $7.74 to $7.70 as the company had a larger mix of customers on its cheapest tier, with advertising and wholesale deals.

Company executives said more than half of new Disney+ subscribers in the U.S. are choosing the cheapest ad-supported tier, adding that 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 advertising revenue increased 14% due to Disney+, and executives expect it to be a driver of streaming revenue going forward.

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

Full-year earnings in the entertainment streaming business, which excludes ESPN+, are expected to see an increase of approximately $875 million compared to the previous fiscal year and to increase by a double-digit percentage in its fiscal 2026.

Meanwhile, the company’s traditional TV networks business continued to decline in the latest quarter as consumers abandon pay-TV packages in favor of streaming. Network revenue fell 6% to $2.46 billion. Segment profits fell 38% to $498 million.

Revenue from Disney’s sports segment, primarily comprised of ESPN, was flat. ESPN’s profits fell 6% due in part to higher programming costs associated with college football rights, as well as fewer customers in the cable package.

Disney’s experiences segment, which includes theme parks and consumer products, posted revenue growth of 1% to $8.24 billion.

Theme parks have recently seen a slowdown, particularly in the US, following the post-Covid surge in attendance. Companies have warned that the pause will carry over to future quarters. Comcast recently reported that revenue from its Universal theme parks declined during the most recent quarter due to lower attendance.

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

However, operating income at international parks fell 32% due to a decline in attendance and guest spending, as well as increased costs.

Disney executives noted that the experiences business reported record revenue and profits for the full fiscal year, “despite some industry challenges that emerged in the second half of the fiscal year.” Even so, they remain confident in their future with the expansion of their cruise line and the incorporation of their theme parks.

Disney’s experiences segment is expected to see 6% to 8% profit growth in the next fiscal year compared to the previous year. Disney noted that the fiscal first quarter will see a $130 million hit due to the impact of Hurricanes Helene and Milton, as well as a $90 million hit from pre-launch costs for Disney Cruise Line.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC, and is a co-owner of Hulu.