The Walt Disney Company reported robust third-quarter results, with adjusted earnings per share (EPS) of $2.06, significantly exceeding the FactSet analyst consensus of $1.86 per share. This represents a substantial increase from the $1.61 per share reported in the prior year. Despite the earnings beat, revenue for the quarter rose 7% to $25.25 billion, narrowly missing Wall Street's expectation of $25.39 billion.
Key drivers for the profit growth were the Experiences and Direct-to-Consumer (SVOD) segments. Operating income for Experiences, which includes theme parks, climbed 20% to over $3 billion on nearly $10 billion in revenue. Domestic parks saw a 3% rise in attendance and a 4% increase in per-guest spending, bolstered by a $100 million tariff refund. The release of "Toy Story 5" also played a significant role, grossing over $1 billion at the box office and boosting merchandise sales and Disney+ activity.
The SVOD segment demonstrated strong profitability, with operating income more than doubling to $712 million on $5.5 billion in revenue, an 11% increase. This growth was attributed to a 15% rise in subscription fees, with 9% from new subscribers and 3% from higher rates. Advertising revenue also increased by 3%. Overall, Domestic Parks & Experiences and SVOD combined accounted for $821 million, or 83.8%, of the total $980 million increase in segment operating income, offsetting declines in Sports and International Parks.
Total segment operating income for Disney's fiscal third quarter jumped 21% to $5.6 billion, outperforming Wall Street forecasts. The company's free cash flow also saw a significant increase, rising by 63% to $3.072 billion. Shares of Disney initially responded positively, showing an increase of 3.3% in premarket trading.
