Disney tops earnings expectations as “Moana 2” and streaming pump up profits

Shares of Disney started up 2% as the market opened but fell into the red shortly after, despite the company surpassing first-quarter earnings expectations. Revenue grew 5% to $24.7 billion, exceeding analyst estimates of $24.5 billion. Meanwhile, adjusted earnings per share came in at $1.76, well above Wall Street’s forecast of $1.45.

The results were largely fueled by Disney’s streaming business, which notched its second profitable quarter in a row. Direct-to-consumer operating income surged to $293 million, a strong turnaround from last year’s loss. Domestic Disney+ subscribers grew 1% to 56.8 million, while international subs dropped 2% to 67.8 million. Disney+ and Hulu added just under a million subscribers, bringing the total to 178 million. While ad revenue dipped slightly for the quarter, it rose 16% when excluding India’s Hotstar.

Meanwhile, Disney’s entertainment division nearly doubled its operating income to $1.7 billion, driven by licensing deals and the release of “Moana 2.” This year, Disney plans to roll out another slate of box office hopefuls, including “Avatar: Fire and Ash,” “The Fantastic Four: First Steps,” and a live-action “Snow White.”

Disney’s parks business also held steady, bringing in $3.1 billion for the quarter. Domestic park income slipped 5%, however, after facing $120 million in hurricane damage costs and $75 million for cruise expansions. Still, income from international parks surged 28%, helping soften the blow.

Looking ahead, Disney expects high single-digit adjusted EPS growth for the full year, driven by continued growth in its entertainment, sports, and parks divisions. On the downside, the company warned that Disney+ subscribers could see a slight decline in the second quarter.