Disney exceeded first-quarter expectations, largely driven by the success of “Moana 2.” Originally planned as a streaming series, the animated sequel was instead released in theaters and surpassed box office predictions, setting a new record for Thanksgiving movie revenue.
For the period ending December 28, Disney reported earnings of $2.55 billion, or $1.40 per share, compared to $1.91 billion, or $1.04 per share, in the same period last year. After excluding one-time charges and benefits, earnings were $1.76 per share, beating Wall Street’s expectations by 32 cents.
Revenue for the quarter rose 5% to $24.69 billion, slightly exceeding analysts’ forecasts.
Disney’s Entertainment segment saw a 9% increase in revenue, with content sales and licensing revenue rising 34%, driven by the strong performance of “Moana 2.”
In their remarks, CEO Bob Iger and CFO Hugh Johnston highlighted that the success of the Moana franchise underscores the deep connection audiences have with Disney’s stories and characters. They also noted that the film’s success reinforces the company’s strategy of investing in well-loved intellectual property.
Disney’s direct-to-consumer division, which includes Disney+ and Hulu, reported an operating income of $293 million for the quarter, compared to an operating loss of $138 million the previous year. Revenue for the segment grew 9% to $6.07 billion.
Disney+ saw a 1% increase in paid subscribers in North America (U.S. and Canada), but a 2% decline internationally, excluding Disney+ HotStar. Overall, the streaming service experienced a slight 1% drop in total paid subscribers for the quarter, bringing the total number of Disney+ subscribers to 125 million, a small decrease compared to the same period last year.
Jesse Cohen, a senior analyst at Investing.com, stated that Disney’s earnings beat highlights the effectiveness of its cost-cutting efforts and strong performance in its parks and studios, which helped offset challenges in streaming. However, he pointed out the unexpected decline in Disney+ subscribers—the first drop since the service’s 2019 launch—raising concerns about market saturation and the impact of its pricing strategy.
Looking forward, Disney expects a modest decline in Disney+ subscribers for the second quarter compared to the first quarter. The company still anticipates high single-digit growth in adjusted earnings per share for fiscal 2025.
The Experiences division, which includes Disney’s theme parks, cruise line, merchandise, and video game licensing, reported stable operating income of $3.11 billion. Domestic parks saw a 5% drop in operating income, impacted by hurricanes that forced a closure at Walt Disney World and caused a cruise cancellation. However, international parks and experiences saw a 28% increase in operating income.
Shares dropped slightly before the market opened on Wednesday.