Disney’s Fiscal Fourth Quarter Earnings Soar
Profitability in Streaming Business Boosts Confidence
The Walt Disney Company (DIS) reported impressive fiscal fourth quarter earnings, exceeding Wall Street estimates and sending its stock soaring over 5% in premarket trading. The company’s direct-to-consumer (DTC) streaming business, comprising Disney+, Hulu, and ESPN+, played a significant role in this success, posting an operating income of $321 million for the three months ending September 28.
A Shift Towards Streaming
This marks a significant turnaround from the prior-year period, when the DTC business reported a loss of $387 million. The achievement of consistent profits in streaming is crucial for Disney and other media giants, as consumers increasingly opt for DTC services over traditional pay-TV packages. In response to this trend, Disney recently hiked the prices of its subscription plans, aiming to boost margins on its DTC offerings.
Strong Revenue Performance
Disney’s revenue for the quarter came in at $22.57 billion, surpassing consensus expectations of $22.47 billion. This represents a significant increase from the $21.24 billion reported in the year-ago period. The company’s adjusted earnings per share (EPS) of $1.14 also exceeded analyst estimates of $1.10.
CEO Succession and Industry Challenges
As Disney searches for a successor to current CEO Bob Iger, the company faces a changing industry landscape. The next CEO will need to navigate these challenges, including a potential slowdown in Disney’s theme parks business. Revenue for the parks division rose 1% year over year to $8.24 billion, but operating income fell short of expectations, primarily due to weak results overseas.
Bright Spots and Guidance
Despite these challenges, there were some bright spots, such as a 5% increase in domestic operating income compared to the prior-year period. Disney also provided guidance for fiscal 2025, expecting “high single-digit” adjusted EPS growth, beating estimates of a 4% uptick. The company targets $3 billion in stock repurchases and “dividend growth that tracks our earnings growth” in 2025.
A New Era for Disney
As Disney looks to the future, its ability to adapt to changing consumer habits and navigate industry challenges will be crucial to its success. With a strong DTC streaming business and a commitment to profitability, the company appears poised for continued growth and success.
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