The Disney magic continues to enchant fans and investors alike, as The Walt Disney Co. outperformed Wall Street expectations by turning a profit in its streaming business a quarter earlier than anticipated. In its fiscal Q3, Disney reported a robust revenue of $23.2 billion, with an income of $3.1 billion and earnings per share standing at $1.43—each surpassing analyst predictions.

A major driver of this success was Disney’s entertainment division, which saw its profits soar due to enhancements in direct-to-consumer offerings and a strong performance by “Inside Out 2.” The entertainment sector generated $10.6 billion in revenues, marking a 4 percent increase from the previous year, while its income skyrocketed to $1.2 billion, more than doubling year-over-year.

Disney’s direct-to-consumer (DTC) streaming services, including Disney+, Hulu, and ESPN+, played a pivotal role in this financial success. The DTC division achieved revenue of $6.4 billion, with an income of $47 million—an impressive turnaround from last year’s losses of over half a billion dollars. This milestone was achieved earlier than expected, and Disney forecasts further margin improvements in the coming fiscal quarter.

However, it wasn’t all pixie dust and happily ever afters. Disney’s experiences division, which includes its famed theme parks and cruise lines, reported a “softer” third quarter. With $8.4 billion in revenue—up 2 percent from last year—the division’s operating income dropped by 3 percent to $2.2 billion. Disney CEO Bob Iger noted that the Paris Olympics are anticipated to impact Disneyland Paris attendance negatively.

On the brighter side, Disney+ saw a rise in subscribers, reaching 118.3 million, while Hulu’s subscribers grew by 2 percent to 46.7 million. ESPN, primarily hosting Disney’s sports content, also saw revenue increases but faced a dip in operating income due to higher production costs and a decline in pay-TV subscribers.

Despite the mixed results, Iger remains optimistic. “Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports, and Experiences businesses,” he said, expressing confidence in Disney’s future growth driven by its diverse and powerful assets.

What are your thoughts on Disney’s performance this quarter? Share your insights and join the conversation in the comments below!

Source: Alex Weprin