Entertainment conglomerate Walt Disney (DIS -0.50%) reported fourth quarter and fiscal 2024 earnings on Thursday, Nov. 14, which topped analyst consensus estimates on both top and bottom lines. Revenue in Q4 jumped 6% to $22.6 billion, propelled by gains in its Direct-to-Consumer (DTC) segment and a stable performance from its parks. Adjusted EPS did even better, rising 39% to $1.14 and topping estimates of $1.11.
Despite the growth, income before income taxes declined by 6% year over year to $948 million, influenced by higher restructuring and impairment charges. Analysts had anticipated a robust quarter, and while Disney beat expectations, the decrease in operating income tempered the overall performance.
| Metric | Q4 2024 | Analyst Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Total revenue | $22.6 billion | $22.5 billion | $21.2 billion | 6% |
| Income before taxes | $948 million | N/A | $1.01 billion | (5.9%) |
| Adjusted EPS | $1.14 | $1.11 | $0.82 | 39% |
| Entertainment Segment operating income | $1.07 billion | N/A | $236 million | 352% |
| Direct-to-Consumer operating income (loss) | $253 million | N/A | ($420 million) | N/A |
Source: Walt Disney. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Understanding Disney's Core Business
The Walt Disney Company is a global entertainment powerhouse spanning multiple segments, including film studios, television networks, theme parks, resorts, cruise lines, and streaming services. Disney has cemented its reputation through a vast repository of intellectual properties like Marvel, Star Wars, and Pixar, drawing millions worldwide to its offerings. Its business is heavily reliant on continued consumer appeal through its Direct-to-Consumer services, robust theme park experiences, and captivating content production.
In recent years, Disney has focused on expanding its digital footprint amid changing consumer viewing habits. The core strategy involves boosting its streaming platforms -- Disney+, Hulu, and ESPN+ -- which are crucial for growth. Theme parks remain a vital and profitable segment, driven by attractions and consumer products that echo its brand ethos.
Quarterly Developments and Achievements
In Q4 2024, Disney's DTC operations thrived, reporting a 15% increase in revenue to $5.8 billion. This uptick was supported by subscriber growth and enhanced advertising revenues. Disney+ alone saw its subscriber base grow by 4.4 million, now totaling 122.7 million. This growth underscores the strength of Disney's streaming strategy, as the demand for digital content remains high. Operating income for the overall segment was $321 million, a dramatic turnaround from a loss in the previous year.
The Parks, Experiences & Consumer Products segment displayed mixed results. While revenue improved slightly (up 1%) to $8.24 billion, operating income slid by 6% year over year to $1.7 billion. The decline stemmed from higher operating expenses, despite increased guest spending at domestic parks. Conversely, international parks grappled with reduced attendance and escalating costs, dampening broader segment profitability.
Meanwhile, Disney's Entertainment Content and IP Management segment set new records. Films like Inside Out 2 and Deadpool & Wolverine drove substantial gains in box office revenue, boosting the segment's operating income. However, the Sports segment experienced a 5% decline in operating income due to rising costs and lower ESPN domestic income, despite resilient advertising growth.
Significant restructuring and impairment charges, amounting to $1.54 billion, also weighed on the quarter's profitability. Nonetheless, these financial adjustments highlight ongoing strategic realignment to bolster future growth trajectories. Despite these temporary setbacks, Disney continues to showcase the value of its diverse media and theme park offerings.
Looking Ahead
Disney took guidance a step further with this report and gave extremely detailed 2025 expectations as well as basic guidance for both fiscal 2026 and fiscal 2027. For fiscal 2025, Disney's management forecast high-single-digit growth in adjusted EPS, hinting at an optimistic outlook. The company plans to invest $8 billion in capital expenditures, emphasizing strategic investment in content and theme parks. The focus remains on enhancing its streaming reach and building blockbuster content that aligns with consumer preferences. Furthermore, management anticipates improved operating incomes in both the Entertainment and Sports segments in the coming quarters. In fiscal 2026 and 2027, Disney expects "double digit" adjusted EPS growth in both years.
Investors should continue to monitor the trajectory of Disney's streaming services and its ability to manage costs within the Parks segment. Notable shifts in international markets and potential regulatory pressures warrant attention. As Disney navigates evolving consumer landscapes, it aims to leverage its multifaceted brand to expand its digital and physical entertainment sectors globally.
