Walt Disney Company has significantly raised its earnings growth forecast for the fiscal year on the back of a robust third quarter performance that exceeded market expectations. The media and entertainment titan announced that it has achieved profitability in its combined streaming businesses sooner than anticipated.
Looking ahead, the company is now projecting a 30% growth in adjusted earnings per share for fiscal 2024, up from its previous estimation of 25%. This new outlook aligns with analysts' consensus on Capital IQ, which anticipates a normalized EPS of $4.79 for the fiscal year. In the recent quarter ending June 29, Disney reported an impressive 35% year-over-year increase in adjusted EPS, reaching $1.39, comfortably surpassing the analysts' projections of $1.19.
Revenue for the quarter saw a growth of 4%, totaling $23.16 billion, which also exceeded the analysts’ forecast of $23.09 billion. Chief Executive Officer Robert Iger remarked on the strong performance, stating, "This was a strong quarter for Disney, driven by excellent results in our entertainment segment both at the box office and in direct-to-consumer.
We achieved profitability across our combined streaming businesses for the first time, and a quarter ahead of our previous guidance. Our collection of unique and powerful assets gives us confidence in our ability to drive continued earnings growth." Breaking down the entertainment segment, it saw a revenue increase of 4%, reaching $10.58 billion, fueled by a 15% surge in direct-to-consumer sales.
Notably, the number of core Disney+ subscribers rose by 1% sequentially to 118.3 million. In contrast, the user base for Disney+ Hotstar dipped by 1% to 35.5 million. Hulu experienced growth as well, with paid subscribers rising to 51.1 million, up from 50.2 million as of March 30. Furthermore, Disney recently announced price hikes for its Disney+, ESPN+, and Hulu subscription plans.
On the other hand, the experiences division reported a modest 2% increase in revenue to $8.39 billion, as both domestic and international parks and experiences saw gains. However, there were signs of moderating consumer demand towards the end of the quarter, leading to a 3% decline in operating income.
Disney attributed this decline to challenges faced by its domestic experiences operations, which may impact revenue growth in the upcoming quarters. They expect segment operating income for the current quarter to decline by mid-single digits annually. This forecast also considers the anticipated decrease in normal consumer travel to Disneyland Paris due to the upcoming 2024 Olympics and a softer consumer market in China.
Despite these challenges, Disney remains optimistic about profitability in its streaming operations in the fourth quarter, expecting entertainment direct-to-consumer segments and ESPN+ to become profitable. The company forecasts a modest increase in its core Disney+ subscriber base during this period.
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