Media and entertainment conglomerate Disney (NYSE:DIS) saw strong momentum in its entertainment direct-to-consumer segment and in the theme parks business, which helped it deliver a profit beat in the third quarter and raise forecasts for the year, but slightly weaker operating metrics for streaming platforms offset that outperformance.

Shares of the company were down 2% in premarket trading on the NYSE on Wednesday.

In Q3, total Disney+ subscribers were up 1% from Q2 at 127.8M, slightly below the 127.97M estimate. Total Hulu subscribers were up 1% sequentially at 55.5M and managed to eke past the estimate of 55.18M.

Total Disney+ average monthly revenue per paid subscriber increased to $7.86 (est. $7.43) from $7.77 in Q2.

Average monthly revenue per paid subscriber for Hulu SVOD increased to $12.40 (est. $12.83) from $12.36 in Q2. Average monthly revenue per paid subscriber for Hulu Live TV + SVOD increased to $100.27 (est. $100.69) from $99.94.

In the entertainment segment, revenue was up 1%. Within that, linear networks declined by 15%, DTC grew by 6%, and content sales/licensing and others surged 7%.

“While streaming gains subscribers at a moderate pace, Disney continues to cannibalize its results due to the decline in legacy TV,” Seeking Alpha analyst Luca Socci said in his early reaction to the report.

The sports business saw a 5% decline in revenue growth, which included domestic ESPN gains of just 1%, and international ESPN was up only 2%. ESPN+’s average monthly revenue per paid subscriber decreased from $6.58 to 6.40 due to lower advertising revenue.

“The sports segment will be the one to watch closely in the next few quarters as ESPN launches its DTC streaming service,” Socci said.

Revenue from parks and experiences saw a growth of 8%, where domestic was up 10%, international rose 6%, and consumer products were up 3%.

“Disney seems forced to invest heavily in park expansion plans and streaming capex, which also limits share buybacks. After all, Experiences seems the true cash cow right now, as long as consumers can afford it,” Socci said.

Net income for the three months ended June 28 was $5.26B, or $2.92 per share, compared to $2.62B, or $1.44 per share, for the same period last year.

Total operating income rose 8.3% to $4.58B and beat the estimate of $4.47B.

On an adjusted per-share basis, the company earned $1.61, above the average analyst estimate of $1.46.

Revenue rose 2.1% to $23.65B but was below the $23.68B estimate.

For the full year, the company expects adjusted earnings per share of $5.85, raised from the prior guidance of $5.75. The consensus estimate for adj. EPS is $5.77.

They also expect operating income in the entertainment DTC segment of $1.3B (est. $1.22B) and continue to see growth in double-digit percentages for it in 2025 (est. +24.2%).

For the current quarter, the company expects a modest increase in Disney+ subscribers compared to Q4 last year (est. 1.6% growth).

“I think Disney must be assessed through two lenses: on one hand, the company has to keep improving its operating income and profitability metrics; on the other, we will have to understand the returns it targets from its upcoming investments, which will probably pressure its FCF for some time,” Socci said in his concluding remarks.

Media and entertainment conglomerate Disney (NYSE:DIS) saw strong momentum in its entertainment direct-to-consumer segment and in the theme parks business, which helped it deliver a profit beat in the third quarter and raise forecasts for the year, but slightly weaker operating metrics for streaming platforms offset that outperformance.

Shares of the company were down 2% in premarket trading on the NYSE on Wednesday.

In Q3, total Disney+ subscribers were up 1% from Q2 at 127.8M, slightly below the 127.97M estimate. Total Hulu subscribers were up 1% sequentially at 55.5M and managed to eke past the estimate of 55.18M.

Total Disney+ average monthly revenue per paid subscriber increased to $7.86 (est. $7.43) from $7.77 in Q2.

Average monthly revenue per paid subscriber for Hulu SVOD increased to $12.40 (est. $12.83) from $12.36 in Q2. Average monthly revenue per paid subscriber for Hulu Live TV + SVOD increased to $100.27 (est. $100.69) from $99.94.

In the entertainment segment, revenue was up 1%. Within that, linear networks declined by 15%, DTC grew by 6%, and content sales/licensing and others surged 7%.

“While streaming gains subscribers at a moderate pace, Disney continues to cannibalize its results due to the decline in legacy TV,” Seeking Alpha analyst Luca Socci said in his early reaction to the report.

The sports business saw a 5% decline in revenue growth, which included domestic ESPN gains of just 1%, and international ESPN was up only 2%. ESPN+’s average monthly revenue per paid subscriber decreased from $6.58 to 6.40 due to lower advertising revenue.

“The sports segment will be the one to watch closely in the next few quarters as ESPN launches its DTC streaming service,” Socci said.

Revenue from parks and experiences saw a growth of 8%, where domestic was up 10%, international rose 6%, and consumer products were up 3%.

“Disney seems forced to invest heavily in park expansion plans and streaming capex, which also limits share buybacks. After all, Experiences seems the true cash cow right now, as long as consumers can afford it,” Socci said.

Net income for the three months ended June 28 was $5.26B, or $2.92 per share, compared to $2.62B, or $1.44 per share, for the same period last year.

Total operating income rose 8.3% to $4.58B and beat the estimate of $4.47B.

On an adjusted per-share basis, the company earned $1.61, above the average analyst estimate of $1.46.

Revenue rose 2.1% to $23.65B but was below the $23.68B estimate.

For the full year, the company expects adjusted earnings per share of $5.85, raised from the prior guidance of $5.75. The consensus estimate for adj. EPS is $5.77.

They also expect operating income in the entertainment DTC segment of $1.3B (est. $1.22B) and continue to see growth in double-digit percentages for it in 2025 (est. +24.2%).

For the current quarter, the company expects a modest increase in Disney+ subscribers compared to Q4 last year (est. 1.6% growth).

“I think Disney must be assessed through two lenses: on one hand, the company has to keep improving its operating income and profitability metrics; on the other, we will have to understand the returns it targets from its upcoming investments, which will probably pressure its FCF for some time,” Socci said in his concluding remarks.