Disney (DIS) Q4 2024 Earnings

disney reported fourth-quarter results on Thursday, narrowly beating analyst expectations as streaming growth helped drive the entertainment sector.

The growth and profitability of the streaming business, combined with a summer box office smash and further investment in the company’s theme park business, comes at a time of turmoil across the media industry. Disney is reorganizing the Mouse House under returning CEO Bob Iger, shaping the company before handing it over to his successor in early 2026.

Company executives on Thursday touted Disney’s significant progress over the past year, saying they are “confident in the long-term outlook for the business” and issuing guidance that includes fiscal years 2025, 2026 and 2027.

During Disney’s fiscal year 2025, the company is expected to see high single-digit adjusted earnings growth compared to the previous fiscal year. The company is expected to deliver double-digit adjusted EPS growth in both fiscal 2026 and fiscal 2027.

“The fact that we had a very strong year overall was an important part of the guidance that we’re getting,” Chief Financial Officer Hugh Johnston said in an interview Thursday on CNBC’s “Squawk Box.” I think so,” he said. “If you think about the large-scale initiatives that we’ve invested in, we’ve said that we want to bring creativity back to the heart of the company and, in addition, drive profitability, and we’re clearly doing that in a substantive way. Masu.”

Disney shares rose more than 9% in early trading.

Here’s how Disney reported compared to Wall Street’s expectations, according to LSEG:

Earnings per share: $1.14 adjusted vs. $1.10 expected Sales: $22.57 billion vs. $22.45 billion expected

Disney’s net income increased to $460 million, or 25 cents per share, from $264 million, or 14 cents per share, in the same period last year. Adjusted for one-time items such as restructuring and impairment charges, Disney reported earnings per share of $1.14. Overall Disney revenue increased 6% compared to the previous fiscal quarter to $22.57 billion.

Overall segment operating income increased 23% compared to the same period in 2023 to $3.66 billion.

Revenue from the entertainment segment, which includes traditional television networks, direct-to-consumer streaming and movies, rose 14% from a year earlier to $10.83 billion due to a strong summer box office.

Disney Pixar’s “Inside Head 2” surpassed Disney’s “Frozen 2” this summer, becoming the highest-grossing animated film in history. Meanwhile, “Deadpool & Wolverine” became the highest-grossing R-rated movie of all time, surpassing Warner Bros. Discovery’s “Joker.”

The film increased Entertainment segment profits by $316 million in the quarter. Overall, the entertainment division reported a profit of approximately $1.1 billion.

Disney has become the first film studio to surpass $4 billion worldwide in 2024, executives said in a Thursday release, with upcoming films “Moana 2” and “Mufasa: The Lion King” He added that he is encouraged by the momentum heading into the holiday season with the release of “. ”

Disney expects double-digit operating income growth for its entertainment division in fiscal 2025.

Five years after the launch of Disney+, the streaming service recently staved off $4 billion in annual losses through fiscal year 2022 and is now profitable.

Disney’s integrated streaming business, which includes Disney+, Hulu and ESPN+, had an operating profit of $321 million in the September period, compared with a loss of $387 million in the same period a year earlier.

Company executives said in a release that they believe streaming “will be a key growth area” for Disney.

Disney has also joined its peers. Warner Bros. Discovery, Netflix, comcast and paramount global We added streaming subscribers in the most recent quarter.

Disney+ core subscribers (excluding Disney+ Hotstar in India and other regional countries) increased by 4.4 million, or 4%, to 122.7 million. Hulu’s subscriber count increased 2% to 52 million.

Average revenue per user for domestic Disney+ customers decreased from $7.74 to $7.70 due to a higher proportion of customers in the company’s cheaper ad-supported tiers and wholesale services.

Company executives said more than half of new Disney+ subscribers in the U.S. opted for the cheaper ad-supported tier, adding that this “bodes well for the future.” Media companies have focused on advertising as a way to increase the profitability of their streaming businesses.

During the fiscal fourth quarter, Disney’s streaming entertainment ad revenue increased 14% thanks to Disney+, and executives expect this to be the driver of streaming revenue going forward.

However, due to price increases and the end of recent promotional offers, Disney+ Core expects a “moderate decline” in the number of Disney+ Core subscribers in the first quarter of 2025 compared to the previous quarter.

Full-year earnings for the entertainment streaming business, excluding ESPN+, increased by approximately $875 million year-over-year and are expected to increase by double-digit percentages in fiscal 2026.

Meanwhile, the company’s traditional TV network business continued to decline in the latest quarter as consumers moved away from pay-TV bundles in favor of streaming. Network revenue fell 6% to $2.46 billion. The division’s profits fell 38% to $498 million.

Revenue from Disney’s sports division, which primarily consists of ESPN, was flat. ESPN’s profits fell 6% due to higher programming costs related to U.S. college football rights and a decline in cable bundle customers.

Revenue from Disney’s Experiences division, which includes theme parks and consumer products, rose 1% to $8.24 billion.

Theme park momentum has slowed recently, especially in the United States, due to a surge in attendance following the coronavirus outbreak. Companies are warning that this lull will carry over into coming quarters. Comcast recently reported that Universal theme park revenue declined in the most recent quarter due to lower attendance.

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

However, International Park’s operating income decreased 32% due to lower attendance and guest spending, as well as higher expenses.

Disney executives noted that the Experiences business reported record fiscal year sales and profits “despite several industry challenges that surfaced in the second half of the fiscal year.” Still, he’s confident about the company’s future, which includes expanding its cruise line and adding a theme park.

Disney’s Experiences division is expected to grow profits by 6% to 8% next fiscal year compared to the previous year. Disney expects to take a $130 million hit in the fiscal first quarter from hurricanes Helen and Milton, as well as a $90 million impact from pre-launch costs for Disney Cruise Line. he pointed out.

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