Disney (DIS) exceeded Wall Street’s Q4 2024 predictions, driven by significant improvements in its streaming division. The company is continuing to search for a successor to long-time CEO Bob Iger, and its stock saw an uptick early Thursday, reflecting investor optimism.
In Q4, Disney reported a 39% increase in adjusted earnings, reaching $1.14 per share, surpassing analysts’ expectations of a 34% increase to $1.10 per share. Revenue for the quarter climbed 6%, totaling $22.57 billion, ahead of the $22.48 billion analysts had predicted.
Streaming Success
A standout performance came from Disney’s direct-to-consumer (DTC) streaming services, which achieved $321 million in operating income, a sharp turnaround from a loss of $387 million the previous year. This growth came as streaming revenue rose by 13% to $6.3 billion. For the first time in Q3, Disney’s DTC streaming unit posted a profit of $47 million, exceeding expectations for Q4 profitability.
Subscriber numbers showed modest growth across Disney’s streaming platforms. Disney+ Core subscribers rose by 4%, reaching 122.7 million, while Disney+ Hotstar in India saw a 1% increase to 35.9 million. Hulu’s subscriber base grew by 2%, reaching 52 million.
Growth In Other Divisions
Breaking down Disney’s revenue by segment, the entertainment division saw a 14% year-over-year increase, bringing in $10.83 billion. Experiences, which include Disney’s theme parks, generated $8.4 billion, a 1% rise, while the sports segment remained flat at $3.9 billion.
Looking ahead, Disney’s guidance for 2025 suggests high-single-digit growth in adjusted earnings per share (EPS), with projections for double-digit growth in 2026. In terms of revenue, the company expects substantial gains in its entertainment business, with an $875 million increase in operating income from its direct-to-consumer streaming operations. However, Disney anticipates a slight decline in Disney+ Core subscribers in Q1.
Disney also provided growth expectations for its various segments. It expects a 13% rise in operating income from its sports division and between 6% to 8% growth in its experiences business. For 2026, the company anticipates double-digit growth in entertainment, single-digit growth in sports, and continued expansion in its experiences division.
Parks Concerns
While Disney’s streaming business is showing strength, there are ongoing concerns in its parks and experiences sector. Analysts suggest that the slowdown in consumer spending in Disney’s theme parks and experiences may continue for several more quarters. Parks and experiences comprise about 40% of Disney’s operating income in its consumer-focused segments.
To further innovate and stay ahead of the competition, Disney has launched the “Office of Technology Enablement,” aiming to integrate artificial intelligence (AI) and mixed reality into its business operations and consumer experiences. In addition, the company continues its ambitious $60 billion park expansion plan, which is set to roll out over the next decade.
Leadership Changes Ahead
On the leadership front, Disney is intensifying its search for a new CEO to succeed Bob Iger, who has agreed to remain in the role until at least 2026 to allow for a smoother transition. The company is now considering candidates from both within and outside of Disney. Among the internal names under consideration are Dana Walden, Alan Bergman, Josh D’Amaro, and Jimmy Pitaro. However, the company is also looking at potential external candidates, including Andrew Wilson, the CEO of Electronic Arts.
In other leadership news, James P. Gorman, Executive Chairman of Morgan Stanley, will take over as Disney’s new Chairman starting January 2, 2025, replacing Mark G. Parker.
Disney’s stock saw a notable 10.2% rise early Thursday, helping to lift the Dow Jones Industrial Average. The stock has surged approximately 12% this week, recovering more than 22% from its August low and rising nearly 14% year-to-date.
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