Disney (DIS) reported first quarter earnings on Wednesday that beat expectations as the media and entertainment giant reported a profit in its streaming segment while its parks business faced setbacks in the midst of two back-to-back hurricanes and greater cruise ship investments.
Disney+ subscribers also fell by 700,000 in the quarter as a result of expected user churn amid recent price increases. The company hiked the price of its various subscription plans in mid-October.
On the heels of price hikes, its direct-to-consumer (DTC) streaming business — which includes Disney+, Hulu — swung to a profit of $293 million from a loss of $138 million one year ago, ahead of analyst expectations. It marked the third straight quarter of profitability for the streaming business.
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 said it continues to expect streaming profits of approximately $875 million in fiscal 2025.
Shares bounced around in early trading but were down about 1% shortly after the opening bell.
Analysts polled by Bloomberg had expected Disney+ subscribers to decline by 1.41 million. The company had reported a loss of 600,000 Disney+ subscribers in the year-ago period. For the current quarter, the company said it expects another "modest decline" in Disney+ subscribers compared to Q1.
On the earnings call, Disney CEO Bob Iger said he's "very pleased" with subscribers across its various streaming services, especially in the face of higher prices. Management expects users to grow throughout the rest of the year.
In a separate interview with chof360 Finance, Disney CFO Hugh Johnston suggested the company will continue to raise prices, noting "the value that's delivered in streaming, even compared to cable right now, is so strong."
Revenue of $24.70 billion beat expectations of $24.57 billion in the quarter and represented a 5% increase from the prior-year period.
Adjusted earnings per share of $1.76 came in ahead of the $1.42 analysts polled by Bloomberg had expected. Earnings increased 44% from a year ago.
For full-year 2025, Disney reaffirmed guidance of high-single digit EPS growth compared to fiscal 2024. Estimates are calling for an 8.1% increase year over year.
On the call, Johnston said "the results were certainly in excess of expectations" but cautioned it's too early to adjust guidance given greater macro uncertainties. That being said, the executive added, "We're certainly not a management team that's afraid of over-delivering if, in fact, that is where the business takes us."
Story Continues
Across its various segments, the company saw mixed results, highlighted by a 5% decline in operating income for the company's domestic parks and experiences segment. This reflected a "9 percentage-point adverse impact to year-over-year growth due to the hurricanes and cruise pre-opening expenses," the company said in the release.
Disney estimated in November that Hurricanes Helene and Milton would register a hit of about $130 million in the quarter, while the Disney cruise line pre-launches would tack on an additional $90 million.
Johnston said Wednesday the latest cruise launch, the Disney Treasure, is "off to a spectacular start" and has consistently sold out.
The company maintained its prior guidance that operating income at the parks and experiences division will improve beyond the first quarter, estimating growth between 6% and 8% for full-year 2025.
Outside of parks, operating income at Disney entertainment increased 95% year over year as the company enjoyed a string of theatrical hits at the box office, including "Mufasa" and "Moana 2."
Iger briefly addressed the demise of Venu Sports, a sports streaming service that was supposed to launch from Disney's ESPN, Warner Bros. Discovery (WBD), and Fox (FOXA). It was ultimately abandoned due to increased regulatory and antitrust concerns.
"After the decision was made and we started to implement the launch of Venu, the emergence of these skinnier bundles surfaced and Venu basically looked redundant to us," Iger said.
Shortly before the announcement of Venu's dismantlement, Disney announced it would merge its Hulu+ Live TV business with internet sports bundler Fubo TV. The combined entity will be majority-owned by Disney, with the deal expected to close in the next 12 to 18 months. Iger said the move allows the company to "enhance" the Hulu+ Live TV experience.
Disney's results come as it searches for a successor to current CEO Bob Iger to help it navigate a changing industry. The company is set to announce a new chief in early 2026.
Alexandra Canal is a Senior Reporter at chof360 Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from chof360 Finance
