Disney (DIS) Beats Q4 EPS but Falls Short on Revenue

The Walt Disney Company (NYSE: DIS) released its fourth-quarter and full-year fiscal 2025 earnings report, showcasing a complex financial landscape. The quarter presented a mix of achievements and shortfalls, with the company’s performance in certain areas surpassing expectations while others fell short.

Mixed Q4: Strong EPS, Soft Revenue, and Segment Divergence

In the fourth quarter of fiscal 2025, Disney reported earnings per share (EPS) of $1.11, exceeding the expected $1.03, marking a positive surprise for investors. However, the company recorded revenue of $22.5 billion, slightly below the anticipated $22.85 billion. This discrepancy highlights a mixed performance where the company’s profitability outpaced revenue growth expectations. The EPS increase can be attributed to strategic cost management and operational efficiencies across various segments.

Comparing the current quarter to the same period last year, Disney’s revenue remained relatively flat, indicating challenges in achieving significant top-line growth. Despite this, income before income taxes more than doubled, rising from $0.9 billion in Q4 2024 to $2.0 billion in Q4 2025. This substantial increase reflects improved operational performance, particularly in areas like Direct-to-Consumer and Parks & Experiences.

Total segment operating income, however, decreased by 5% to $3.5 billion compared to $3.7 billion in the previous year’s fourth quarter. This decline was primarily driven by lower results in the Entertainment segment, which saw a 35% drop in operating income due to weaker performance in Content Sales/Licensing and Linear Networks. Despite these challenges, the Direct-to-Consumer segment experienced an 8% revenue increase, driven by subscriber growth and increased pricing.

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Disney Prepares for Heavy Investment and Moderation in Early 2026

Looking ahead, Disney’s guidance for fiscal 2026 suggests a strategic focus on growth and investment. The company anticipates double-digit percentage growth in adjusted EPS, driven by continued expansion in its Direct-to-Consumer services and strategic content investments. Disney plans to invest $24 billion across its Entertainment and Sports segments, reflecting its commitment to enhancing content offerings and expanding its market presence.

In the first quarter of fiscal 2026, Disney expects a challenging comparison due to a $400 million adverse impact on segment operating income from theatrical slate comparisons. Additionally, the company anticipates lower political advertising revenue, which could affect its Linear Networks segment. Despite these challenges, Disney remains optimistic about its long-term growth prospects, with expectations of high-single-digit percentage growth in the Experiences segment’s operating income.

The company is also planning significant capital expenditures, with $160 million allocated for pre-opening expenses related to new cruise ships and $120 million for dry dock expenses. These investments underscore Disney’s commitment to expanding its cruise line offerings and enhancing guest experiences. Furthermore, Disney aims to double its share repurchase target to $7 billion, reflecting confidence in its financial position and commitment to returning value to shareholders.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.