Dow Jones entertainment giant Disney cleared Q4 views early Thursday as streaming profitability jumped. Meanwhile, the House of Mouse continued its search for a replacement for CEO Bob Iger. DIS stock popped Thursday.
Disney reported a 39% increase in earnings to $1.14 per share adjusted. Revenue increased 6% to $22.57 billion.
FactSet expected a 34% increase in earnings to $1.10 per share on $22.48 billion in revenue.
The company's direct-to-consumer streaming business recorded $321 million in operating income for the quarter, compared to a loss of $387 million last year. Streaming revenue increased 13% to about $6.3 billion. Disney's DTC streaming business in Q3 posted a profit for the first time with $47 million in operating income, ahead of prior forecasts of achieving profitability in Q4.
Disney+ Core subscribers increased 4% to 122.7 million, while Disney+ Hotstar in India saw a 1% increase in subscribers to 35.9 million. Total Hulu subscribers rose 2% to 52 million.
By segment, entertainment revenue jumped 14% to $10.83 billion. Experiences revenue rose 1% to $8.4 billion. Sports revenue was flat year-over-year at $3.9 billion.
Disney guided high-single digit adjusted EPS growth for 2025, increasing to double-digit growth in 2026. The Dow giant expects double-digit growth for its entertainment business in 2025, with an $875 million increase in entertainment DTC operating income. However, Disney forecasts a modest decline in Disney+ Core subscribers for Q1.
The company guided 2025 sports operating income to increase 13%, with a 6% to 8% increase in experiences operating income.
For 2026, Disney expects double-digit growth for entertainment operating income, low single-digit growth for sports income, and high single-digit gains from experiences income.
The Dow Jones giant guided double-digit adjusted EPS growth for 2027.
Streaming Strength, Park Weakness
Piper Sandler in a mid-October research note also wrote that the consumer-related slowdown in Disney's parks and experiences business will likely persist for a few more quarters, with experiences and theme parks representing 40% of the segment's operating income. The firm has a neutral rating on DIS stock with a 95 price target.
Meanwhile, Disney is establishing a new division, the Office of Technology Enablement, to incorporate artificial intelligence and mixed reality into its business and consumer experiences, Reuters reported on Nov. 1. The Dow Jones company in mid-August also gave fans and investors a peek at its $60 billion park expansion rolling out over the next decade.
Succession Search Widens
Elsewhere, the Wall Street Journal reported Monday that Disney is exploring a wider field of candidates to succeed CEO Bob Iger. The company hopes to announce a successor in "early 2026."
Disney is now exploring candidates outside the House of Mouse, including Electronic Arts chief Andrew Wilson, the WSJ reported, citing unnamed sources.
In-house names reportedly under consideration include Dana Walden and Alan Bergman, cochairmen of the Disney Entertainment division; Josh D'Amaro, chairman of Disney Experiences; and Jimmy Pitaro, chairman of ESPN.
The Dow giant in late October announced that Morgan Stanley Executive Chairman James P. Gorman will take over as chairman starting Jan. 2. Gorman, who had already been chairing the Disney Board's Succession Planning Committee, will succeed Mark G. Parker.
The company in July 2023 extended Iger's contract through 2026 to allow more time to complete the succession search.
Disney Stock
Disney stock surged 6.2% Thursday, hauling the Dow Jones Industrial Average higher. A seven-day rally lifted shares back above their 200-day moving average on Wednesday.
Shares have jumped about 10% for the week.
DIS stock is up nearly 21% this year through Wednesday, after rebounding more than 30% from an August low.
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