Disney Profits in Q3 as Streaming Business Turns Profitable for First Time

The Walt Disney Co. saw a profitable third quarter as its streaming business began to see financial gains for the first time, coupled with the strong performance of the movie “Inside Out 2” in theaters.

For the quarter ending June 29, Disney reported earnings of $2.62 billion, equivalent to $1.43 per share. This is a significant turnaround from last year, during which the company faced a loss of $460 million, or 25 cents per share.

Excluding one-time gains, earnings stood at $1.39 per share, surpassing the $1.20 per share anticipated by analysts polled by Zacks Investment Research.

The Burbank, California-based company saw its revenue increase by 4% to $23.16 billion, exceeding Wall Street’s prediction of $22.91 billion.

The entertainment segment’s operating income almost tripled, reaching $1.2 billion. This was driven by improved performances in both direct-to-consumer services and content sales/licensing and Other segments.

Disney revealed on Wednesday that its direct-to-consumer business, which encompasses Disney+ and Hulu, recorded a quarterly operating loss of $19 million. Although this is a loss, it’s a marked improvement from last year’s $505 million loss. Revenue in this sector rose by 15% to $5.81 billion.

The content sales/licensing and Other segments reported $254 million in operating income, bolstered by the strong showing of “Inside Out 2” in cinemas.

Disney now expects full-year adjusted earnings per share to grow by 30%.

In April, Disney shareholders reaffirmed their support for CEO Bob Iger, rejecting moves by activist investor Nelson Peltz to gain seats on the company’s board. This decision came as Iger works to reinvigorate the company following a challenging period.

In June, Disney sought to dismiss its lawsuit against Florida Governor Ron DeSantis after the governor’s appointees approved a deal related to the development of Walt Disney World over the next two decades. This development brought an end to the conflict between Disney and the state government.

According to the 15-year agreement, Disney committed to investing $17 billion into Disney World over the next 20 years. Concurrently, the district agreed to undertake infrastructure improvements at the theme park resort’s property.