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Walt Disney (DIS) put the finishing touches on a banner year for its theatrical business as its latest blockbuster hit, Moana 2, highlighted a solid 1Q25 earnings report that featured a 44% jump in adjusted EPS to $1.76. Also significantly contributing to the strong earnings growth was the DTC business, which continued its upward trajectory for profitability mainly due to price increases for the Disney+ and Hulu streaming services. However, DIS shares are acting a bit "Frozen" today despite the healthy earnings growth in Q1, likely because the company chose not to raise its FY25 EPS guidance, instead opting to reaffirm its outlook of high-single-digit growth.

• Like last quarter, the film studio business stole the show in Q1 as Moana 2 followed in the footsteps of Inside Out 2 and Deadpool & Wolverine, becoming a blockbuster hit that fueled a 34% jump in revenue to $2.2 bln for the Content Sales/Licensing unit. In turn, the business also swung to profitability this quarter, generating operating income of $312 mln compared to $(224) mln in the year-earlier quarter. 
• Meanwhile, the DTC unit, which is also part of the Experiences segment, has completely turned the corner after piling up substantial losses in the 2020-2023 timeframe as DIS went all in on growing the Disney+ subscriber base. Following last quarter's swing to profitability, DTC built upon that momentum with operating income improving by $431 mln on a yr/yr basis to $293 mln. Higher ARPU of 5% for Disney+ and 4% for Hulu (Live TV + SVOD) resulting from price increases was the key behind the gains. 
• Encouragingly, those price increases didn't generate as much churn as anticipated. Disney+ shed about 700,000 subscribers versus Q4 to end the quarter with 124.6 mln total subscribers, beating analysts' expectations. However, DIS did guide for a modest decline in Disney+ subscribers for Q2, creating some unease that a negative trend could be forming.
• Turning to the theme park business, the results were better-than-feared following a disappointing Q4 in which operating income declined by 6% in the Experiences segment. A slowdown at the international theme parks, sluggish consumer spending trends, and the impact from Hurricanes Helene and Milton on Walt Disney World and cruises, painted an ominous picture. Demand held up quite well, though, as Experiences revenue edged higher by 3% to $9.4 bln with operating income flat at $3.1 bln. That looks more impressive when considering that theme parks took a $120 mln hit from the hurricanes.
• Lastly, DIS also disclosed that Disney+ will become the home to all of the company's streaming products -- including sports and ESPN. This coming fall, a new ESPN streaming product will become available on Disney+, taking the place of the company's previous plan of launching a new sports streaming joint venture with Fox (FOX) and Warner Bros Discovery (WBD) called Venu.

Overall, it was another solid quarter for DIS as its improving profitability took center stage, but the company's decision to maintain its FY25 EPS guidance rather than increase it is a source of disappointment today.