To end what CEO Bob Iger called a “pivotal and successful year,” Disney had a strong Q4.
Shares of Walt Disney (NYSE:DIS) were on the move Thursday after the media and entertainment giant reported strong fiscal Q4 results to end what CEO Robert Iger called a “pivotal and successful year.”
On the top line, Disney saw revenue rise 6% in the quarter, buoyed by blockbuster results at the box office and robust gains in its streaming business. Revenue rose to $22.6 billion, ahead of the consensus estimate of $22.4 billion.
Net income clocked in at $460 million, or 25 cents per share, which was up 79% year-over-year. On an adjusted basis, excluding certain items, earnings were up 39% to $1.14 per share, which topped estimates of $1.10 per share.
Disney stock was moving higher on the results, up some 9% in early trading to around $112 per share.
Best quarter in history for movies
Disney’s fiscal fourth quarter earnings were driven by not one, but two huge summer blockbusters that set box office records. “Inside Out 2” generated nearly $1.7 billion in box office revenue worldwide, making it the eighth highest grossing film ever and the highest grossing animated film of all-time.
And “Deadpool & Wolverine” was not far behind grossing $1.34 billion worldwide, making it the 20th best-selling movie of all-time and the No. 1 top grossing R rated film ever.
These two movies spurred a 39% revenue increase in Disney’s Content Sales and Licensing business to $2.58 billion and drove operating income to $316 million, up from a $149 million loss in Q3 of 2023.
“In Q4 we saw one of the best quarters in the history of our film studio, improved profitability in our streaming businesses, a record-breaking 60 Emmy Awards for the company, the continued power of live sports, and the unveiling of an impressive collection of new projects coming to our Experiences segment,” Iger said in the earnings release.
The Content Sales and Licensing business falls under Disney’s Entertainment segment, which also includes its Direct-to-Consumer arm, or its streaming services. DTC revenue rose 15% to $5.8 billion, with operating income hitting $253 million, up from a $420 million net loss in the same quarter a year ago.
Disney ended Q4 with 174 million Disney+ Core and Hulu subscriptions, and more than 120 million Disney+ Core paid subscribers, up 4.4 million from the prior quarter. This led to higher subscription and advertising revenue.
The combined streaming business, when you include ESPN+, reported $6.3 billion in revenue in quarter, up 13% year-over-year, with operating income climbing to $321 million, from a $387 million loss a year ago.
The gains in DTC and Content Sales were offset somewhat by a 6% decline in its Linear Networks business to $2.46 billion. Overall, revenue for the Entertainment division rose 14% to $10.8 billion. Operating income within this division rose about 366% to $1.1 billion.
Theme parks a mixed bag
Its other two major businesses had decent quarters as well, with revenue from Experiences, which includes its theme parks and cruise lines, among others, rising 1% to $8.2 billion. However, while domestic parks and experiences revenue rose 3% to $5.5 billion, the international side fell 5% to $1.58 billion.
Experiences is typically the cash cow for Disney, as operating income was $1.66 billion in the quarter, but that’s down 6% year-over-year due to a 32% income decline in the international segment. International parks were hurt by lower attendance, a decrease in guest spending, and higher costs.
But for the full year, Experiences posted record revenue of $34.2 billion and record operating income of $9.3 billion.
Finally, the Sports division reported flat revenue at $3.9 billion and a 5% drop in operating income to $929 million.
Outlook for 2025 – and beyond
Disney heads into its fiscal 2025 with some momentum, particularly in its now profitable streaming business.
In its outlook, it calls for high-single digit adjusted EPS growth in 2025, with double-digit operating income growth in Entertainment weighted in the first half of the year, 13% operating income growth in Sports, and 6% to 8% operating income growth in Experiences, weighted to the back half of 2025. Q1 earnings in Experiences will be hurt by the recent hurricanes.
It also anticipates $15 billion in cash from operations, $8 billion in capital expenditures, and $3 billion in share repurchases in fiscal 2025.
Disney also projects double digit adjusted EPS growth in both fiscal 2026 and 2027. The guidance was higher than expected among some Wall Street analysts, including JPMorgan Chase.
Disney stock rose 9% on Thursday to around $112 per share and is up 23% YTD. It has a consensus price target of $114 per share, suggesting a 2% increase over the next 12 months. Its P/E ratio has dropped to 39, but is still a bit high.
