Walt Disney reported fourth-quarter earnings that surpassed Wall Street’s expectations, largely driven by the blockbuster success of Marvel’s latest summer hit, Deadpool & Wolverine.
The R-rated superhero film not only attracted global audiences with its unique approach but also provided Disney’s film division with a significant revenue boost.
Disney’s recent performance in theatres helped counteract the challenges faced by other divisions, notably the Experiences and Sports units.
With adjusted earnings per share (EPS) for the quarter ending in September reaching $1.14, beating analysts’ estimates of $1.10, Disney remains optimistic for the coming fiscal year.
Shares of the company surged over 10% in premarket trading on Thursday.
Film success drives Disney’s earnings
Disney’s revenue for the quarter hit $22.6 billion, slightly exceeding Wall Street’s forecast of $22.45 billion.
This financial upswing was fuelled by strong ticket sales for Deadpool & Wolverine, which grossed a remarkable $1.3 billion globally, marking the first R-rated Marvel film to capture such attention.
This success was complemented by the return of Hulu’s Emmy-nominated comedy Only Murders in the Building, which continued to draw substantial streaming viewership.
Disney’s Entertainment segment, encompassing film, television, and streaming, posted a 23% year-over-year operating income growth, reaching nearly $3.7 billion.
Disney+ subscribers climb
Disney+, the company’s flagship streaming service, saw subscriber growth of 4.4 million outside India, bringing its international subscriber base to over 122.7 million.
The streaming sector, which includes Disney+, Hulu, and ESPN+, delivered $321 million in operating profit for the quarter, reflecting the streaming units’ second consecutive quarter of profitability.
This momentum came partly from Disney’s intensified efforts to curb password-sharing, a strategy initiated in September to enhance revenue from its streaming audience.
Lower attendance affects theme park revenue
The Experiences segment, encompassing parks and consumer products, faced a 6% drop to $1.66 billion in operating income.
International parks were notably impacted, with a 32% decline in operating income, attributed to rising costs from new attractions and increased competition, especially in Paris, where the Olympics heightened alternative entertainment options.
Meanwhile, domestic parks remained relatively stable, yet attendance fluctuations impacted the overall theme park performance.
ESPN experiences challenges with rising production costs
Disney’s Sports segment, housing ESPN and Star India posted a 5% decline in operating income to $929 million.
ESPN faced increased programming and production expenses, especially around college football broadcasts.
These higher costs partially offset the growth from its broadcasting deals, leaving Disney’s sports media with lower-than-expected profitability.
Star India also felt the effects of local competition and heightened costs, affecting overall earnings within this unit.
Disney forecasts high single-digit EPS growth in 2025
Disney’s outlook for fiscal 2025 remains positive, projecting high single-digit growth in adjusted EPS despite anticipated capital expenditures of around $8 billion.
Disney announced plans for a $3 billion share buyback, aiming to provide long-term shareholder value and stabilize its stock.
In a strategic move to reinforce confidence, Disney also forecasted double-digit EPS growth through 2026 and 2027, underscoring the potential of its multi-year revenue strategies.
Returning CEO Bob Iger has focused on aggressive cost-cutting measures and streamlining Disney’s operations, especially within its Entertainment division.
Since resuming his role in November 2022, Iger has led initiatives to revitalize Disney’s film and television output, following a period of performance volatility.
Disney’s recent film success demonstrates the effectiveness of these strategies, positioning the company for sustained growth in its core revenue-driving sectors.
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