Disney Q4 Earnings: Domestic Parks See Growth, International Faces Hurdles

Disney's latest fourth quarter earnings report released this morning reflects mixed results across its business segments. Overall, the company saw a 6% revenue boost in Q4, reaching $22.6 billion, and a 3% increase for the fiscal year, with annual revenues at $91.4 billion. Earnings per share for Q4 surged by 79%, driven largely by robust growth in domestic parks, streaming profits, and a strong film lineup. However, despite a 23% increase in total segment operating income for Q4, challenges in international parks and experiences—largely due to decreased attendance and rising costs—highlighted an uneven performance.

"This was a pivotal and successful year for The Walt Disney Company, and thanks to the significant progress we've made, we have emerged from a period of considerable challenges and disruption well positioned for growth and optimistic about our future," said Robert A. Iger, Chief Executive Officer, The Walt Disney Company. "Our solid performance in the fiscal fourth quarter reflected the success of our strategic efforts to improve quality, innovation, efficiency, and value creation. In Q4 we saw one of the best quarters in the history of our film studio, improved profitability in our streaming businesses, a record-breaking 60 Emmy Awards for the company, the continued power of live sports, and the unveiling of an impressive collection of new projects coming to our Experiences segment. As a result of our strategies and our focus on managing our businesses for both the near- and long-term, we are differentiating ourselves from traditional competitors, leveraging the deepest and broadest set of entertainment assets in the industry to drive attractive returns and further advance our goals."

Financial Results for the Quarter and Full Year

Revenues increased 6% for Q4 to $22.6 billion from $21.2 billion in the prior-year quarter, and 3% for the year to $91.4 billion from $88.9 billion in the prior year.

Income before income taxes declined 6% to $0.9 billion in Q4 from $1.0 billion in the prior-year quarter and increased 59% for the year to $7.6 billion from $4.8 billion in the prior year.

The Experiences segment had record revenue and operating income for the full year. In Q4, Experiences revenue increased $0.1 billion, or 1%, and operating income of $1.7 billion was a decline of $0.1 billion, or 6% compared to the prior-year quarter. Domestic Parks & Experiences operating income increased in Q4, on comparable attendance to the prior-year quarter, driven by higher guest spending, partially offset by higher expenses and costs related to new guest offerings driven by Disney Cruise Line. International Parks & Experiences operating income declined in Q4.

Domestic Parks and Experiences Performance

Operating income for Disney's domestic parks and experiences increased, driven by:

• Higher guest spending, with increases in per capita spending at both theme parks and on cruises.
• Reduced sales of Disney Vacation Club units.
• Increased costs, primarily from inflation, new guest offerings, technology upgrades, and operations support. These were slightly offset by lower depreciation costs compared to last year's quarter, following the closure of Star Wars: Galactic Starcruiser.

International Parks and Experiences

Operating income at Disney's international parks and experiences declined compared to the same quarter last year, due to:

• Lower attendance, leading to reduced volume.
• Higher costs from new guest offerings and increased depreciation.
• A drop in per capita guest spending at theme parks, partly balanced by higher per-room spending at resorts.

We expect to hear more from Disney CEO Bob Iger during an earnings call later this morning.