Walt Disney Co (NYSE:DIS, ETR:WDP) beat expectations for revenue and earnings for the past quarter, but said a decline in subscribers for its Disney+ service is expected to continue in the current quarter.
The film and streaming giant had 124.6 million Disney+ subscribers at the end of December, down 0.7 million over the preceding three months.
However, this was not as bad as the 1.4 million decline that Wall Street analysts had expected, per a poll by Bloomberg.
Revenue of $24.7 billion for the group's first fiscal quarter was up 5% compared to the same period a year earlier, and marginally beat the average analyst forecast of $24.57 billion.
Adjusted earnings per share of $1.76 were up 44% year-on-year earlier and also ahead of the $1.42 consensus estimate.
In the results statement, CEO Bob Iger said: "Our results this quarter demonstrate Disney’s creative and financial strength as we advanced the strategic initiatives set in motion over the past two years."
He said "outstanding box office performance" from the company's studios, including Moana 2, Inside Out 2, Deadpool & Wolverine being the top three movies of 2024, helped the Entertainment segment increase operating income $0.8 billion to $1.7 billion.
The Experiences segment saw flat income of $3.1 billion, reflecting the $120 million impact of Hurricanes Milton and Helene plus pre-opening expenses of $75 million in the quarter driven by the launch of the Disney Treasure cruise ship.
"Overall, this quarter proved to be a strong start to the fiscal year, and we remain confident in our strategy for continued growth," Iger said.
For the quarter ahead, a "modest decline" in Disney+ subscribers compared to the first quarter is expected, with Sports profit guidance adversely impacted by around $100 million due to the sporting calendar and about $50 million from exiting the Venu Sports joint venture, while Experiences sees another $40 million of pre-opening expenses from cruises.
For the whole fiscal year, EPS growth is expected to be at a "high-single digit", while around $15 billion in cash was guided to be provided by operations.
Analyst Adam Vettese at eToro said it was "a healthy-looking set of results for Walt Disney's first quarter, but investors will likely have concerns about where Disney+ subscriber numbers are headed".
He added: "The company has made further advances in its strategic shift from linear media networks to streaming, incorporating access to ESPN from Disney+, but the drop in international paid subscribers to Disney+ may be a small red flag for investors."
The guidance of a "modest decline" in Q2, he said, creates a "worry that if a back-to-back quarterly decline does materialise, it could be an indication of the start of a trend or at least the suggestion of a ceiling for where Disney can realistically go with price rises".
Shares of Disney were moderately lower on Wednesday morning, down 1.7% in New York.
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