Amusement parks and blockbuster movies helped Disney exceed market expectations

A sharp rise in revenue from Disney’s entertainment division—driven in part by the box-office success of the fifth installment of the “Toy Story” animated film series—along with the resilience of its theme park business, helped the company significantly increase its quarterly profit. The entertainment giant’s financial results exceeded analysts’ forecasts, according to the company’s report. Disney shares, which had struggled throughout the year, rose 2.5%.

Adjusted earnings per share in the third fiscal quarter jumped 28% to $2.06, exceeding the Bloomberg consensus estimate by nearly 11%. Quarterly operating profit rose 21% to $5.56 billion—also exceeding Wall Street expectations. Disney has beaten earnings forecasts for the second consecutive quarter—ever since Josh D’Amaro replaced Bob Iger as CEO in March, Bloomberg notes.

The company's revenue rose 7% to $25.2 billion, falling slightly short of analysts' estimates, according to FactSet.

The main driver was the entertainment division, which includes film studios and the Disney+ streaming service. Its profit jumped 64% last quarter. This was driven by growth in subscription revenue and double-digit margins in the online video segment. Disney’s streaming service is a key focus for D’Amaro, who has repeatedly stated that he intends to turn the service into the company’s “primary digital showcase,” according to The Wall Street Journal.

Streaming results helped offset a mixed quarter at the box office, Bloomberg explains. The films *The Devil Wears Prada 2* and *Toy Story 5* became box office hits. The latest installment in Pixar’s animated series has grossed over $1 billion worldwide since its June 19 release. The company emphasized that it has been a powerful driver not only for box office revenue but also for sales of related merchandise.

However, the film *Star Wars: The Mandalorian and Grogu* disappointed both Disney executives and audiences. In addition, the company warned that the weak opening of the live-action adaptation of the animated film “Moana” would negatively impact this quarter’s results.

Earnings for the Disney Experiences division, which encompasses theme parks and cruise lines, increased by 20% year-over-year thanks to high visitor traffic and growth in average guest spending at U.S. locations. The report specifically notes that Walt Disney World in Orlando posted “outstanding results.” Although international visitor numbers remain low, the company is more than offsetting this decline with domestic demand. Disney forecasts that this momentum will continue amid consistently high booking levels.

These results stand in stark contrast to those of Disney’s main competitor in Orlando—Universal theme parks, the report notes. Last month, Universal’s management reported a decline in attendance, attributing it in part to rising gas prices.

The company announced that it is considering launching free, ad-supported channels on its streaming service and also plans to add more sports content, with the aim of making the platform the centerpiece of its business. D'Amaro did not rule out integrating third-party streaming services with Disney+, noting the success of Warner Bros. Discovery's partnership with HBO Max.

The company also announced a new partnership with TikTok. Under the agreement, subscribers to the video platform will be able to create content based on the media giant’s library of franchises and intellectual property, the WSJ notes. User-generated videos will be posted on both TikTok and Disney+.

The media giant reported that it is currently focused on strict cost-cutting measures—it is reducing its workforce and administrative expenses—and that this program is only halfway complete.

In addition, Disney confirmed the sale of its 50 percent stake in the A+E Global Media television network to its joint venture partner, Hearst Communications. The deal will bring the company $1.2 billion. The proceeds will be used for a share buyback, increasing the total buyback program for fiscal year 2026 to $9 billion. This marks the second time Disney has increased the buyback program this fiscal year.

According to MarketWatch, the vast majority of analysts view Disney’s outlook positively: the company has 30 “buy” recommendations out of 33. Only one analyst advises selling the company’s stock. Since the beginning of the year, Disney’s stock price has fallen by about 12%.

It is noteworthy that Wells Fargo analyst Stephen Cahall stated in mid-July that Disney could increase its stock value by approximately 40% if it were to abandon its streaming business and focus on content licensing. The company’s extensive library, which includes classic animation, Pixar projects, and the Marvel and “Star Wars” cinematic universes, could become extremely profitable, Cahall believes. Wells Fargo predicts that competition among streaming services for top-tier projects will intensify, which will inevitably lead to an increase in the value of Disney’s intellectual property.

This article was AI-translated and verified by a human editor