Walt Disney Co. (NYSE:DIS) shares fell Thursday after the company released its fiscal fourth-quarter 2025 results.
While adjusted earnings per share (EPS) surpassed analyst expectations, the company’s total revenue fell slightly short of projections.
For the quarter, Disney reported adjusted EPS of $1.11, beating the consensus estimate of $1.04.
Also Read: Disney Names Michael Moriarty CFO Of Experiences Division
However, revenue remained flat year-over-year (Y/Y) to $22.5 billion, slightly missing the $22.7 billion analyst forecast.
Direct-to-Consumer (DTC) Streaming Growth
The direct-to-consumer (DTC) streaming businesses, including Disney+ and Hulu, reached a combined operating income of $352 million on revenue of $6.25 billion, an increase of 8% Y/Y.
Disney added new streaming customers this quarter, helped by a fresh distribution deal with Charter Communications, Inc. (NASDAQ:CHTR), CFO Hugh Johnston told Reuters.
The company also saw strong engagement from the box office hit Lilo & Stitch, which drew 14.3 million Disney+ views within its first five days of release.
The quarter concluded with 196 million total Disney+ Core and Hulu subscriptions, a sequential increase of 12.4 million. Disney+ Core paid subscribers increased by 3.8 million to 132 million.
Segment Revenue and Operating Income Overview
Revenue for the Entertainment segment, which encompasses traditional TV networks, DTC streaming, and films, saw a 6% Y/Y decrease to $10.21 billion.
In contrast, the Sports segment, primarily consisting of ESPN, saw revenue growth of 2% Y/Y to $3.98 billion.
Disney’s Experiences segment, which includes theme parks and consumer products, proved to be a strong performer, with revenue climbing 6% Y/Y to $8.77 billion.
The company’s traditional Linear Networks business declined, with revenue falling 16% Y/Y to $2.06 billion.
Consolidated operating income for the quarter declined 5% Y/Y to $3.48 billion. This was led by the Experiences segment’s $1.88 billion, followed by the Sports segment’s $911 million and the Entertainment segment’s $691 million.
Disney’s quarterly operating cash flow was down 19% Y/Y to $4.47 billion, and free cash flow fell 37% Y/Y to $2.56 billion.
Disney doubled its share repurchases target to $7 billion compared to fiscal 2025.
The Board has declared a cash dividend of $1.50 per share, payable in two installments of $0.75 per share, payable on January 15, 2026 (record date December 15, 2025) and July 22, 2026 (record date June 30, 2026).
2026 Outlook
For first-quarter fiscal 2026, Disney expects its Entertainment segment to deliver about $375 million in operating income from its direct-to-consumer streaming (DTC SVOD) business.
The company anticipates a $400 million decline in segment operating income due to tough comparisons with last year’s theatrical slate.
Disney also projects $140 million less in political advertising revenue and an unfavorable comparison to $73 million in Star India operating income from the same quarter in fiscal 2025.
In the Experiences segment, Disney plans to incur $90 million in pre-opening costs tied to the Disney Destiny and Disney Adventure cruise ships and another $60 million in dry dock expenses during the quarter.
For the full fiscal year 2026, Disney targets double-digit operating income growth in its Entertainment division compared to fiscal 2025, with most of the gains expected in the second half of the year. It also projects a 10% operating margin for its DTC SVOD business.
The Sports segment is forecast to post low single-digit operating income growth, primarily driven by fourth-quarter performance due to the timing of rights expenses that will weigh on second-quarter and third-quarter results.
Disney expects high single-digit operating income growth for its Experiences segment, again weighted toward the back half of the year. The company anticipates $160 million in pre-opening expenses and $120 million in dry dock costs for its cruise operations.
For fiscal 2026, Disney plans to invest $24 billion in content across Entertainment and Sports, generate $19 billion in operating cash flow, and spend $9 billion on capital expenditures. It projects double-digit adjusted EPS growth versus fiscal 2025.
Looking ahead to fiscal 2027, Disney also expects double-digit adjusted EPS growth compared to fiscal 2026.
Price Actions: DIS stock was trading lower by 4.41% to $111.50 premarket at last check Thursday.
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