Disney hits combined streaming profit of $134 million for 2024

Disney shares jumped more than 5% premarket Thursday after its streaming business, seen as key to its future success, finished 2024 strong, with a combined profit of $321 million for its fourth fiscal quarter and $134 million for the full year. . That compares to losses of $387 million in the year-ago period and a whopping $2.6 billion loss in the 2023 fiscal year.

The company’s total revenue increased 13% to $6.3 billion for the quarter and 14% to $24.94 billion for the year.

Disney also boasted one of the best quarters in history for its film studio, driven by “Inside Out 2” and “Deadpool & Wolverine.” But overall results were weighed down by a sharp decline in profits from its linear entertainment networks as well as falling revenues in its sports and experience segments, particularly internationally.

The entertainment giant’s streaming business finished the year with 236.2 million subscribers across Disney+, Hulu and ESPN+, up nearly 3% from 229.8 million in the third quarter of 2024.

Here are the main results:

Net income: $460 million, an increase of 77% from $260 million the previous year. For the full year, net profit was $4.97 billion, more than double 2023’s $2.35 billion.

Diluted earnings per share: 25 cents, up 79% from 14 cents. Excluding certain items, EPS rose 39% to $1.14, higher than the $1.09 per share expected by analysts surveyed by Zacks Investment Research. For the full year, diluted EPS more than doubled to $2.72 and increased 32% to $4.97 when excluding certain items.

Income: $22.6 billion, up 6% and in line with Zacks estimates. For the full year, revenue increased 3% to $91.4 billion.

Operating result: $3.66 billion, up 23% from $2.98 billion. For the full year, it rose 21% to $15.6 billion.

Disney+ subscribers: Disney added 4.8 million Disney+ subscribers during the quarter, or 1%, for a total of 158.6 million.

“This has been a pivotal and successful year for The Walt Disney Company, and with the significant progress we have made, we have emerged from a period of considerable challenge and disruption, well-positioned for growth and optimistic about our future.” , said Disney CEO Bob. Iger said in a statement.

Total cash generated from operations increased 15% to $5.5 billion in the quarter and 42% to $13.97 billion for the year, while free cash flow grew 18% to $4.03 billion and 75% to $8.6 billion. During the quarter, Disney recorded $1.54 billion in restructuring and impairment charges, including a $584 million writedown on its linear entertainment networks, $328 million on its retail assets, 210 million on Star India, $187 million on content, $165 million in equity stakes and $69 million in severance.

Disney Entertainment

Disney’s Entertainment segment, which includes Disney+, Hulu and the company’s linear entertainment networks, saw revenue increase 14% to $10.83 billion and operating income of $1.1 billion dollars, more than quadrupling its profit of $236 million a year ago. The increase in operating profit was driven by improved DTC and content sales, licensing and other results, which were partially offset by a decline in its linear networks.

Linear networks saw revenue fall 6% year-over-year to $2.46 billion and operating profit fell 38% to $489 million.

Domestic linear revenue fell 5% year over year to $2 billion and operating profit fell 34% to $347 million. Operating profit decreased due to higher marketing costs, primarily due to an increase in the number of season premieres during the quarter, reflecting the impact of Hollywood strikes during the period. previous year, as well as the decline in affiliate revenues due to the reduction in the number of subscribers, including the impact of the non-renewal of transport of certain networks by an affiliated company. It was also impacted by a decline in advertising revenue due to a decline in impressions and average audience.

Disney’s international linear networks have struggled. Overseas revenue fell 12% to $464 million and operating profit fell 54% to $52 million. The company said operating profit was affected by lower affiliate revenue, primarily due to lower effective rates, fewer subscribers and higher marketing costs.

Entertainment DTC revenue increased 15% to $5.78 billion. The segment saw 14% growth in advertising revenue during the quarter, contributing $253 million to operating income, compared to a loss of $420 million last year. Growth in subscription revenue resulting from price increases and subscriber additions led to the improvement in operating income.

Disney+ recorded a total of 158.6 million subscribers, compared to a total of 153.8 million in the previous quarter. Disney+ Core subscribers increased 4% to 122.7 million, including 56 million domestically and 66.7 million internationally. Disney+ Hotstar grew 1% to 35.5 million subscribers.

Disney+’s national average revenue per user fell 1% to $7.70 due to a higher mix of ad-supported and wholesale subscribers, partially offset by higher ad revenue. International average revenue per user (ARPU), excluding Hotstar, increased 3% to $6.95, driven by higher pricing offset by a higher mix of ad-supported and wholesale subscribers. an unfavorable exchange rate impact. Hotstar’s ARPU fell 26% to 78 cents, due to lower advertising revenue.

Hulu’s total subscriber base grew 2% to 52 million, including 47.4 million SVOD-only subscribers and 4.6 million Hulu + Live TV subscribers. Hulu SVOD-only ARPU fell 1% to $12.54, primarily due to a higher mix of subscribers to multi-product offerings and lower advertising revenue, while ARPU of Hulu + Live TV held steady at $95.82.

Strong performances from “Inside Out 2” and “Deadpool & Wolverine” helped Disney post one of its best quarters in history in terms of content and licensing sales. Revenue rose 39% to $2.59 billion, and the division reported a profit of $316 million, compared with a loss of $149 million a year ago. The films also generated $316 million in operating profit for the segment.

Disney Sports

Disney’s Sports segment, which includes ESPN, ESPN+ and Star India, reported steady revenue growth of $3.9 billion, while operating profit fell 5% year-over-year on the other to $921 million during the quarter.

Linear ESPN saw revenue rise 1% to $3.86 billion, including $3.49 billion domestic and $364 million international, and a 6% decline in operating profit at $869 million, including $936 million in profit domestically and $40 million in loss internationally.

The decrease in operating results was driven by growth in subscription revenue resulting from increased pricing, increased programming and production costs due to increased college football rights and increased production costs.

The number of ESPN+ subscribers increased 3% from the previous quarter to 25.6 million, as the service’s ARPU fell 5% to $5.94 due to lower advertising revenue and greater diversity of subscribers to wholesale and multi-product offers. The service reported a profit of $68 million, compared to a profit of $33 million a year ago.

Disney Experiences

Disney’s Experiences segment, which includes its theme parks, hotels, Disney Cruise Line and consumer products, saw operating profit fall 6% year-over-year to $1.66 billion and business increase 1% to $8.2 billion.

Domestic parks and experiences revenue increased 3% to $5.52 billion, while international revenue fell 5% to $1.58 billion.

Domestic operating income rose 5% to $847 million, driven by higher per capita spending at its theme parks and cruise line, lower Disney Vacation Club unit sales and rising costs primarily due to inflation, new guest offerings, increased technology spending and higher operational support costs. This was partially offset by the comparison to the prior year quarter’s impairment related to the closure of Star Wars: Galactic Starcruiser.

International operating profit fell 32% to $299 million, due to lower attendance and higher costs related to new guest offerings, higher depreciation and lower revenues. per capita spending on theme parks. This was partially offset by increased spending per room at Disney resorts.

Consumer products revenue rose 2% to $1.14 billion, while operating profit rose 1% to $513 million.

Financial outlook

Looking ahead, Disney expects single-digit adjusted EPS growth for fiscal 2025 compared to fiscal 2024, with approximately $15 billion in cash, $8 billion in capital expenditures and 3 billion dollars in share buybacks.

The entertainment segment will post double-digit growth in operating profit, weighted in the first half. Entertainment DTC will bring in approximately $875 million compared to the previous year, which includes a negative impact of approximately $200 million on the India business. The sports sector will increase its operating profit by 13% for the financial year 2025, a decrease of 10% taking into account the commercial impact in India.

For Experiences, Disney forecasts growth of 6 to 8% in operating income, weighted to the second half. The first quarter will include a negative impact on segment operating income of $130 million due to Hurricanes Helene and Milton and $90 million due to Disney Cruise Line pre-launch costs.

In fiscal 2026, Disney expects double-digit EPS, Cash and Entertainment operating profit growth and 10% operating margin for its DTC Entertainment business, excluding Hulu+ Live TV. The Sports segment will see a low single-digit increase in operating profit, while Experiences will see a high single-digit increase.

For fiscal 2027, Disney expects double-digit adjusted EBITDA growth.