What You Need To Know Ahead of Disney's Earnings Report Tuesday

UPDATE—May 6, 2024: This article has been updated to reflect more recent analyst estimates and share price information.

Disney (DIS) is set to report earnings Tuesday for its second quarter of fiscal 2024 before the opening bell, with investors likely to be watching for streaming subscriber growth as the company works toward profitability in its streaming business.

Analysts project Disney's revenue to be $22.08 billion for the second quarter of 2024, down from the previous quarter but up from $21.82 billion in the same period in 2023, according to estimates compiled by Visible Alpha.

Net income is expected to be $1.96 billion, a decline from the first quarter but up from $1.7 billion in the second quarter of 2023. Diluted earnings per share (EPS) are projected at $1.09, compared with 93 cents in the same period a year earlier.

Key Metric: Streaming Subscriber Numbers

Disney+ and Hulu subscriptions are expected to grow in the second quarter with early contributions from the company bundling its streaming offerings, Disney+, Hulu, and ESPN+.

Analysts project that Disney+ Core and Hulu subscribers will grow to 117.2 million and 50 million, respectively, according to estimates compiled by Visible Alpha. That would represent an increase from the 104.9 million and 48.1 million the company reported respectively for the services in the year-ago period.

"Disney bundling activity continues to rise: 26% of respondents have Disney+, Hulu, and ESPN+," according to a J.P. Morgan survey, with analysts saying it was "the highest mix thus far."

UBS analysts, who have said that Disney's streaming segment is "the biggest source of near-term upside," noted that "the consolidation of Hulu in the U.S. should also drive engagement and help streamline operations, boosting streaming margins."

The company could provide updates about its upcoming password-sharing crackdown as well, which could translate to higher subscriptions as Netflix (NFLX) experienced after implementing its own password crackdown.

Business Spotlight: The Path to Streaming Profitability

Subscriber growth could help Disney achieve profitability in its streaming business. The company has recorded narrowing losses in its streaming business, with Disney CEO Bob Iger reporting at Disney's annual shareholder meeting in April that the company is on track to reach profitability in its streaming segment by the end of the 2024 fiscal year.

Analysts project second-quarter operating income for Disney's direct-to-consumer entertainment segment to narrow to a $116.8 million loss from the prior quarter's $138 million loss and the year-ago quarter's $587 million loss, according to estimates compiled by Visible Alpha.

UBS analysts said that they expect "the Content segment to turn profitable with incrementally higher licensing revenues and improved box office with the new slate."

Disney shares have gained about 29% since the start of the year, at $116.47 as of Monday's close ahead of the company's earnings report Tuesday.