Disney lifts profit outlook after delivering solid parks, streaming results
Disney (DIS) reported fiscal second quarter earnings on Wednesday that beat expectations on both the top and bottom lines, driven by a rebound in its domestic parks business and strong performance in its streaming unit.
The company also raised its full-year profit forecast to $5.75, an increase of 16% compared to fiscal 2024 and a beat compared to analyst expectations of $5.44. The stock jumped as much as 8% in early pre-market trade.
Disney+ added 1.4 million subscribers in the quarter, a beat compared to the 1.25 million subscriber loss analysts polled by Bloomberg had expected. The company reported a drop of 700,00 paying users in Q1 as a result of expected user churn on the back of recent price hikes.
In the midst of those price increases, along with other initiatives like password sharing crackdowns, the company's direct-to-consumer (DTC) streaming unit — which includes Disney+ and Hulu — posted a profit of $336 million. That's up from $47 million one year ago and also ahead of analyst expectations.
It marked the fourth straight quarter of profitability for the streaming business.
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Achieving consistent profits in streaming is critical for Disney and other media giants as more consumers shift to DTC services from traditional pay-TV packages. The company has a streaming profit target of approximately $875 million in fiscal 2025.
Overall, revenue of $23.62 billion beat expectations of $23.05 billion in the quarter and represented a 7% increase from the prior-year period.
Adjusted earnings per share of $1.45 came in ahead of the $1.20 analysts polled by Bloomberg had expected. Earnings increased 20% from a year ago.
Domestic parks soar as international lags
Disney saw an increase in guest spending at its theme parks in its fiscal second quarter. (AP Photo/John Raoux, File)
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Disney's parks business is expected to face continued pressure from broader economic uncertainties and intensifying competition, particularly with the upcoming launch of NBCUniversal's Epic Universe, which could draw visitors away from Disney's Florida attractions.
But that didn't weigh on domestic profits in the second quarter.
The company posted a 13% rise in operating income at its domestic parks, aided by an uptick in theme park attendance and the successful launch of the Disney Treasure cruise ship. This was a stark rebound compared to the 5% decline in domestic operating income the company reported in Q1.
Disney also saw an increase in guest spending at the parks, bucking fears of a consumer and tourism pullback in the US. This was offset by the higher costs needed to expand the cruise line, with two more ships set to launch later this year.
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