Disney stock ( DIS ) popped on Thursday after the company reported fiscal fourth quarter earnings per share and revenue that topped Wall Street estimates and its direct-to-consumer business built on recent momentum and swung to a profit.
Strong guidance for the next two years also fueled investor optimism, sending shares up over 10% in early trading following the results. The stock pared gains to close up around 6%.
The media and experiences giant reported Q4 adjusted earnings of $1.14 per share, above the $1.10 expected by analysts polled by Bloomberg and higher than the $0.82 Disney reported in the prior-year period.
Revenue came in at $22.57 billion, outstripping consensus expectations for $22.47 billion as well as the $21.24 billion reported in the year-ago period.
Disney's direct-to-consumer (DTC) streaming business — which includes Disney+, Hulu, and ESPN+ — posted operating income of $321 million for the three months ending Sept. 28. That compares to a loss of $387 million in the prior-year period.
Analysts polled by Bloomberg had expected DTC operating income to come in around $203 million after the company reached its first quarter of streaming profitability in its Q3 results.
Achieving consistent profits in streaming is critical for Disney and other media giants amid a growing shift by consumers to DTC services from traditional pay-TV packages.
In mid-October, the company hiked the price of its various subscription plans, highlighting a trend that has gained traction over the past year . With such moves, media companies are attempting to boost margins on direct-to-consumer (DTC) offerings in the face of rising declines in linear television.
Disney said Thursday that it expects DTC operating income of approximately $875 million in fiscal 2025.
On the earnings call, Disney CFO Hugh Johnston noted gains in streaming serve as a "natural hedge" against struggling linear networks, which saw revenue fall 6%, while operating income for the segment plunged 38% compared to the prior-year period.
Management warned linear networks are expected to continue to decline as more consumers abandon their cable packages.
The entertainment giant's results come as it searches for a successor to current CEO Bob Iger to help it navigate a changing industry. A recent report from the Wall Street Journal said the pool of candidates is expanding, as the executive is set to leave Disney for a second time by the end of 2026.
Last month, Disney said it plans to announce its next CEO in early 2026, with current Disney board member and former Morgan Stanley ( MS ) CEO James Gorman leading the charge. He will serve as the company's new chairman of the board, effective Jan. 2, 2025.
Among the investor concerns Iger's successor will inherit is a potential slowdown in Disney's theme parks business.
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Revenue for the parks division came in slightly ahead of estimates, rising 1% year over year to reach $8.24 billion.
Operating income, however, fell short of expectations of $2.31 billion to hit $1.66 billion in the quarter, a 6% drop compared to the prior year.
This was primarily driven by weak results overseas performance, with international operating income plummeting 32% year over year. The company cited a decline in attendance and a decrease in guest spending amid the Paris Olympics and a typhoon in Shanghai .
In one bright spot, domestic operating income rose 5% compared to the prior-year period, reversing the declines seen in the third quarter. The company estimated that Hurricanes Helene and Milton would register a hit of about $130 million for the current quarter, while the Disney cruise line pre-launches will tack on an additional $90 million.
Beyond the first quarter, though, the company said operating income at the parks will grow between 6% and 8% for the full year 2025, "weighed to the second half of the year." The launch of the new Disney Treasure cruise ship line should help aid those results.
Johnston added on the earnings call he expects a "gradual strengthening in the consumer" and that the company feels "positively" about continued domestic growth next year.
Overall, Disney said it expects "high single-digit" adjusted EPS growth in 2025, beating estimates of a 4% uptick, and that earnings growth should reach double digits in 2026 and continue through 2027.
In 2025, the company is also targeting $3 billion in stock repurchases and "dividend growth that tracks our earnings growth."
Alexandra Canal @allie_canal , LinkedIn,
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