Walt Disney (DIS 0.09%) reported robust fiscal fourth-quarter and solid full-year 2018 results after the market close on Thursday. 

For the quarter, the entertainment giant's revenue increased 12% year over year, GAAP earnings per share soared 37%, and EPS adjusted for one-time factors rocketed 38% higher. As has been the case all year, strength in the studio entertainment and parks segments drove growth.

Shares were up 1.9% in after-hours trading on Thursday. We can attribute the market's reaction to revenue and earnings coming in better than what many investors were likely expecting.

Exterior view of Cinderella's Castle at Walt Disney World in Florida with the sun setting or rising in the background.

Image source: Disney.

 Disney's key quarterly numbers


Fiscal Q4 2018

Fiscal Q4 2017

Year-Over-Year Change


$14.31 billion

$12.78 billion


Segment operating income

$3.29 billion

$2.81 billion


Net income

$2.32 billion

$1.75 billion


GAAP earnings per share (EPS)




Adjusted EPS




Data source: Disney. GAAP = generally accepted accounting principles.

For the quarter, cash generated from operations increased 8% year over year to $3.85 billion, and free cash flow (FCF) edged down 1% to $2.65 billion. Both numbers, particularly free cash flow, can fluctuate considerably from quarter to quarter.

For the full fiscal year, revenue grew 8% year over year to $59.43 billion, segment operating income increased 6% to $15.71 billion, net income soared 40% to $12.60 billion, GAAP EPS surged 47% to $8.36, and adjusted EPS jumped 24% to $7.08. Also for the year, cash generated from operations rose 16% to $14.30 billion and FCF grew 13% to $9.83 billion. As they did in the quarter, earnings for the year got a notable boost from a lower effective tax rate due to U.S. corporate tax reform. 

Disney doesn't provide guidance. For some context (though long-term investors shouldn't place too much emphasis on Wall Street's near-term estimates), for the fourth quarter, analysts were looking for adjusted EPS of $1.34 on revenue of $13.73 billion. So the company comfortably beat both top- and bottom-line expectations. 

Here's how the three largest segments performed:

Media networks: Strength in broadcasting offset declining cable profits


Fiscal Q4 2018

Year-Over-Year Change


$5.96 billion


Operating income

$1.53 billion


Data source: Disney.

Growth in operating income, though modest, at Disney's largest segment surely came as a pleasant surprise to many investors. This metric has been under pressure for a few years due to a declining number of cable subscribers as consumers increasingly favor video steaming options.

Here's how the two businesses within this segment performed: 


Fiscal Q4 2018

Year-Over-Year Change

Cable networks revenue

$4.13 billion


Cable networks operating income

$1.16 billion


Broadcast networks revenue

$1.83 billion


Broadcast networks operating income

$379 million


Equity in the income of investees

($10 million)

N/A -- Down $20 million from $10 million in Q4 2017

Data source: Disney.

Cable's decline in profits was due to a loss at BAMTech, as Disney continues to invest significantly in this video streaming technology platform. BAMTech's loss was partially offset by profit increases at the Disney Channels and Freeform. Results at ESPN were approximately flat with the year-ago quarter, which isn't a bad showing given the challenges presented by the changing consumer media environment. Affiliate revenue grew due to contractual rate increases, but it was partially offset by a decline in subscribers. 

Broadcasting's increase in operating income was due to "higher program sales and affiliate revenue growth driven by contractual rate increases," according to the earnings release. Results got a boost from the sales of two Marvel series and Black-ish in the quarter compared to one Marvel series in the year-ago period.

On the earnings call, Disney CEO Bob Iger talked about the company's newish direct-to-consumer streaming business. Regarding ESPN+, which launched about six months ago, he said "[m]ore than 1 million users have already subscribed, and we continue to see impressive growth." He also revealed the name of the company's broader streaming service that's slated to launch in late 2019: Disney+. It will offer "a rich array of original Disney, Pixar, Marvel, Star Wars and National Geographic content along with unprecedented access to our incredible library of film and television content, including all of our new theatrical releases, starting with the 2019 slate," Iger added. 

Iger also talked about the company's pending massive acquisition of Twenty-First Century Fox's entertainment assets. He said Disney just received European Union (EU) regulatory approval this week, and remains "optimistic about securing the necessary approvals from the territories that remain." He also noted the company is optimistic the transaction will close "meaningfully earlier" than the up to one-year estimate the company provided last June.

Parks and resorts: Old reliable keeps on chugging 


Fiscal Q4 2018

Year-Over-Year Change


$5.07 billion


Operating income

$829 million


Data source: Disney.

Operating income growth at parks and resorts was driven by increased profit at the company's domestic operations compared with the year-ago quarter, which was negatively impacted by Hurricane Irma. Higher domestic profits were largely due to increased guest spending and attendance, partially offset by increased costs.

Operating income at the international operations was approximately flat year over year. Growth at Disneyland Paris and Hong Kong Disneyland Resort was offset by a drop at Shanghai Disney Resort, which was due to lower average ticket prices, partially offset by increased attendance.

Studio entertainment: Incredibles 2 and Ant-Man and the Wasp walloped Cars 3


Fiscal Q4 2018

Year-Over-Year Change


$2.15 billion


Operating income

$596 million


Data source: Disney.

Studio's growth in operating income was primarily driven by increased profits from movie releases, though also by higher home entertainment sales and lower film cost impairments. 

Combined, Pixar's Incredibles 2 (released about two weeks before the start of the fiscal fourth quarter) and Marvel's Ant-Man and the Wasp (released during the quarter) performed better at the box office than Pixar's Cars 3, released soon before the start of the year-ago period. Home entertainment growth was led by Marvel's Avengers: Infinity War.

Looking ahead 

Disney ended a solid fiscal 2018 with a great quarter. 

Major catalysts for growth in fiscal 2019 include the pending acquisition of Twenty-First Century Fox's entertainment assets and a continued powerful movie lineup. It seems probable that the launch of the Disney+ streaming service will occur in early fiscal 2020, rather than late fiscal 2019.