Earnings Call Insights: The Walt Disney Company (DIS) Q4 2025
Management View
- CEO Robert Iger stated, “This was another year of great progress as we strengthened the company by leveraging the value of our creative and brand assets and continue to make meaningful progress in our direct-to-consumer businesses, resulting in strong earnings growth for the company.” Iger highlighted that adjusted EPS for fiscal 2025 was up 19% from fiscal 2024, and the company delivered a 19% compound annual growth rate in adjusted EPS over the past three fiscal years.
- For fiscal 2026, Iger announced, “We expect to deliver double-digit adjusted EPS growth compared to the prior year. The expected growth in earnings and cash flow enable us to continue investing in our businesses and to increase our return of capital to shareholders. We are targeting $7 billion in share repurchases in 2026, double the $3.5 billion we repurchased in fiscal 2025. We’re also pleased to announce that the Board has declared a cash dividend of $1.50 per share, a 50% increase over the $1 paid to shareholders in fiscal 2025.”
- Iger emphasized the performance of Disney’s film studios, noting, “Disney’s live-action Lilo & Stitch remains the highest grossing Hollywood film at the global box office this calendar year. The film achieved 14.3 million views during its first 5 days on Disney+, becoming the second biggest Disney live-action premiere on the platform ever. Retail sales for Stitch from our Consumer Products business also continues to grow, eclipsing $4 billion in fiscal 2025.”
- Iger pointed out, “Over the past 2 years, our studios have delivered 4 global franchise hits that have earned more than $1 billion each, while no other Hollywood studio has achieved a single one during the same period.”
- Iger also highlighted, “Our streaming business had another quarter of profit growth with operating income up 39% in Q4. For the full year, we hit $1.3 billion in operating income, up $1.2 billion from last year and $300 million ahead of our original guidance.”
- CFO Hugh Johnston said, “Because of the timing on tax payments, the reported number is closer to 7%, driven by a couple of things. #1, obviously, OI growth is quite strong. #2, we’ve been investing for a couple of years and we’ve now sort of leveled off in terms of those levels of investment. That’s something that we think you can look forward to in the out years, continued strong free cash flow growth from Disney, which obviously gives us a lot of flexibility in terms of the ability to return cash to shareholders, which was evidenced today by the doubling in the share repurchase and the 50% increase in the dividend. So we feel very good about the free cash flow growth going forward.”
Outlook
- Management projects double-digit adjusted EPS growth for fiscal 2026 compared to the prior year and targets $7 billion in share repurchases in 2026.
- The Board declared a cash dividend of $1.50 per share, a 50% increase over the $1 paid in fiscal 2025.
- No explicit changes to guidance from the previous quarter were provided, but management reiterated confidence in ongoing growth and capital returns.
Financial Results
- Adjusted EPS for fiscal 2025 was up 19% from fiscal 2024.
- For the full year, direct-to-consumer operating income was $1.3 billion, up $1.2 billion from last year and $300 million ahead of original guidance.
- Retail sales for Stitch from the Consumer Products business exceeded $4 billion in fiscal 2025.
- Experiences segment delivered record operating income for both Q4 and the full year, with Q4 up 13% and the full year up 8% compared to the prior year.
Q&A
- Benjamin Swinburne, Morgan Stanley: Asked about ESPN’s direct-to-consumer product adoption and engagement. Iger responded that the ESPN launch “has been a real success for a number of reasons,” attracting new users and high engagement with new features, noting “about 80% have signed up to what we call the trio bundle, which includes Disney+ and Hulu.”
- Steven Cahall, Wells Fargo: Asked about the studio slate and growth expectations. Iger stated, “We are very bullish on the slate ahead… including the Mandalorian, Toy Story 5, live-action Moana and then we’re going to finish the calendar year with Avengers: Doomsday.”
- Robert Fishman, MoffettNathanson: Asked about Disney+ evolving into a super app and DTC revenue growth. Iger described the rollout of significant technology and personalization changes, while Johnston affirmed aspirations for double-digit top-line growth in DTC.
- Jessica Reif Cohen, BofA Securities: Inquired about M&A and advertising. Johnston noted no plans for major M&A, expressed satisfaction with the current IP portfolio, and described improving advertising trends and expectations for advertising growth in 2026.
- Michael Morris, Guggenheim: Probed Experiences segment drivers and NBA rights. Johnston highlighted cruise as a key growth driver and stated bookings are up 3% for the first quarter and for the year.
- John Hodulik, UBS: Asked about domestic parks and cruise margins. Johnston said demand was in line with expectations, cruise utilization strong, and margins attractive but not disclosed.
- Kutgun Maral, Evercore ISI: Inquired about DTC cost structure and 53rd week impact. Johnston reiterated focus on revenue growth with some SG&A savings and deferred specifics on the 53rd week until Q4.
- David Karnovsky, JPMorgan: Asked about generative AI. Iger detailed productive conversations with AI companies for both protection of IP and creating engagement, and saw efficiency opportunities across Disney.
Sentiment Analysis
- Analysts expressed curiosity and cautious optimism, probing for clarity around adoption rates, cost structure, M&A intentions, and growth sustainability. Tone was neutral to slightly positive, with several questions on competitive positioning and technology investments.
- Management maintained a confident tone during both prepared remarks and Q&A, highlighting achievements and reiterating guidance. Phrases such as “we feel very good about the free cash flow growth going forward” and “we are very bullish on the slate ahead” signaled strong confidence. The defensiveness was minimal, with most answers direct and detailed.
- Compared to the previous quarter, there was a slight increase in confidence from management, particularly in capital return strategies and DTC profitability, while analysts maintained a similar level of constructive inquiry.
Quarter-over-Quarter Comparison
- The current quarter emphasized a substantial increase in capital returns, including a targeted $7 billion in share repurchases and a 50% increase in dividends for 2026, which were not highlighted in the previous quarter.
- Strategic focus shifted toward direct-to-consumer profitability, technological advancements (including AI), and expansion in Experiences, especially cruises.
- Analysts maintained focus on DTC growth, content slate strength, and Experiences segment performance, with additional questions on bundling and AI this quarter.
- Management’s tone grew more assertive in outlining growth plans and capital allocation, contrasting with the prior quarter’s emphasis on integration and strategic partnerships.
Risks and Concerns
- The ongoing carriage dispute with YouTube TV was mentioned, with Johnston stating, “we built a hedge into that with the expectation that these discussions could go for a little while.” Iger added, “our priority has always been to remain on their service without interruption… The deal that we have proposed is equal to or better than what other large distributors have already agreed to.”
- Management noted the importance of protecting IP in the context of generative AI and ongoing negotiations with AI companies.
- No major concerns were raised about demand in domestic parks or cruise, with demand characterized as strong and in line with expectations.
Final Takeaway
Disney closed fiscal 2025 with strong growth in adjusted EPS, profitability in direct-to-consumer, and record performance in Experiences, while setting ambitious targets for capital return in 2026. Management’s confidence was underscored by the success of new content, technological innovation, and disciplined expansion, with particular focus on leveraging its IP portfolio and deepening consumer engagement across platforms. The company’s emphasis on double-digit EPS growth and robust share repurchases signals a forward-looking approach to shareholder value creation.