Disney has “turned the corner” after a strong quarter, Iger says

Robert A. Iger has maintained for months that his turnaround plan for Disney worked. But clear evidence has remained largely elusive, and investors have been reluctant to buy in, as evidenced by the company's underperforming stock price and multiple activist proxy campaigns for board seats.

On Wednesday, Mr. Iger provided evidence.

Disney's earnings per share for the most recent quarter were $1.22, or 23 percent more than Wall Street expected. Breaking from a long practice of not providing earnings guidance, Disney says earnings per share for the full fiscal year would rise at least 20 percent compared to 2023, partly due to record highs in revenue, profit and operating margins on the theme. parks.

Mr. Iger, Disney's CEO, announced a $3 billion stock buyback plan, the first for the company since 2018, and a cash dividend of 45 cents per share, a 50 percent increase from the previous dividend, which came in January was paid out.

Disney's streaming service is expected to lose $400 million this quarter. Instead, losses were cut to $138 million as Mr. Iger reiterated that streaming would be profitable by the fall. The number of Disney+ subscribers fell by 1.3 million in the quarter, as expected given the monthly price increase. But Disney said the service is on track to add at least 5.5 million subscribers in the current quarter.

Some investors are concerned about Disney's ability to generate free cash flow, a measure of its financial health, at a time when its television business is being undermined by streaming services. However, Disney said it is on track to generate $8 billion in free cash flow this year, approaching pre-pandemic levels.

“Just a year ago, we outlined an ambitious plan to return the Walt Disney Company to a period of sustainable growth and shareholder value creation,” Mr. Iger said in a statement. “Our strong performance last quarter shows that we have turned the corner.”

The results come amid intense pressure on Disney from activist investors including Trian Fund Management, which is seeking multiple board seats as it pushes for streaming profitability and a clear CEO succession plan, something that has left Disney in disarray. Trian, founded by Nelson Peltz, cites Disney's low stock price as motivation, along with the poor box office results of Marvel, Lucasfilm and Disney Animation films.

Disney sees a revenge story: Mr. Peltz joins Ike Perlmutter, who was fired from an executive position at Disney, and Jay Rasulo, a former Disney executive who was passed over as CEO in 2015 and resigned. Disney has asked shareholders to reject Trian and another activist investor, Blackwells Capital, arguing that giving them board seats would slow the company's turnaround. (Mr. Peltz waged an unsuccessful campaign for a shake-up at Disney last year.)