Disney returns to profit in third quarter as streaming business starts making money for first time
Walt Disney Co. posted another profitable third quarter as its combined streaming operations turned a profit for the first time and the film Inside Out 2 performed well in theaters.
For the period ended June 29, Disney earned $2.62 billion, or $1.43 per share. A year earlier, it lost $460 million, or 25 cents per share.
Excluding one-time gains, earnings were $1.39 per share, well above the $1.20 expected by analysts polled by Zacks Investment Research.
The Burbank, California-based company’s revenue rose 4 percent to $23.16 billion, beating Wall Street estimates of $22.91 billion.
Entertainment segment operating revenues nearly tripled to $1.2 billion, driven by improved performance in the direct-to-consumer, content sales/licensing and Other segments.
Disney said Wednesday that its direct-to-consumer business, which includes Disney+ and Hulu, reported a quarterly operating loss of $19 million, narrower than the $505 million loss a year earlier. Revenue rose 15% to $5.81 billion.
Content sales/licensing and other reported operating income of $254 million, driven by a strong performance of Inside Out 2 in theaters.
The combined streaming businesses, including Disney+, Hulu and ESPN+, were profitable for the first time thanks to a strong quarter for ESPN+ and a better-than-expected quarterly performance from its direct-to-consumer division.
Disney said in May that it expected the total streaming company to soften in the third quarter due to its platform in India, Disney+Hotstar. The company also said at the time that it expected its combined streaming businesses to be profitable in the fourth quarter, so the profitable quarter was a surprise.
Disney now expects full-year adjusted earnings per share to rise 30%.
In April, shareholders rejected activist investor Nelson’s efforts Peltz to secure a seat on the company’s board of directors and fully support Iger in his efforts to revive the company after a difficult period.
In June, Disney asked a federal appeals court to dismiss its lawsuit against Florida Gov. Ron DeSantis after his appointees approved a deal with the company how Walt Disney World will be developed over the next two decades, ending the last vestige of conflict between the two sides.
As part of the 15-year agreement, Disney agreed to invest $17 billion in Disney World over the next two decades, and the district also pledged to improve the theme park resort’s infrastructure.
Shares rose slightly before Wednesday’s opening bell.