SAN FRANCISCO – The Walt Disney Co. on Wednesday posted stronger-than-expected earnings for the final three months of 2023, boosted by cost cuts and growing revenue from its theme parks business.
CEO Bob Iger said the company is on track to make its streaming services profitable. Helping on this front could be upcoming programming such as Taylor Swift's “The Eras Tour (Taylor's Version)” making its streaming debut on Disney+ in March. Disney also announced a sequel to “Moana” coming to theaters this November. And it plans to launch a stand-alone ESPN streaming service in 2025 — different from the sports streaming platform it plans to launch this fall in a joint venture with Fox and Warner Bros. Discovery.
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Disney earned $1.91 billion, or $1.04 per share, in its fiscal first quarter. That’s up 49% from $1.28 billion, or 70 cents per share, in the same period a year earlier. Excluding one-time accounting items, the company earned $1.22 per share in the latest quarter.
Revenue was $23.55 billion, roughly the same as last year's $23.51 billion.
Analysts, on average, were expecting earnings of 99 cents per share on revenue of $23.7 billion, according to a poll by FactSet.
Disney said it is making “significant cost reductions” and reduced its selling, general and other operations expenses by $500 million in the latest quarter. The company cut thousands of jobs in 2023.
The quarter's results will strengthen Iger’s hand as he tries to guide the company to streaming profitability, said Insider Intelligence analyst Paul Verna. He added that Disney's goal of making its streaming business profitable by the end of the year “bodes well for Disney’s stock to break out of a years-long slump, and for Iger’s ability to fend off pressure from activist investors who are looking to reshuffle the board and influence succession planning.”
Disney said it lost 1.3 million core subscribers to its Disney+ streaming service during the quarter, but it made more money from each subscriber due to price hikes for the service. It expects to add up to 6 million subscribers in the current quarter.
The company based in Burbank, California, said its theme parks business saw record revenue and operating income during the quarter.
“Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences," Iger said in a statement.
Disney also announced it is paying $1.5 billion for a stake in “Fortnite” maker Epic Games, working with the game developer to create a “games and entertainment universe” that will feature games, shows and characters from Disney, Pixar, Marvel, Star Wars, Avatar and more.
“This marks Disney’s biggest entry ever into the world of games and offers significant opportunities for growth and expansion,” Iger said.
The company also plans to buy back up to $3 billion of its stock in fiscal 2024 and declared a cash dividend of 45 cents per share payable to shareholders in July.
Shares of Disney jumped 7% in extended trading after the results came out.