Disney celebrates the mega-hit of "Inside Out 2" and warns of declining demand in theme parks.

The outstanding box office earnings of "Inside Out 2" have significantly boosted Disney's third-quarter results and renewed confidence in the Pixar animation studio. However, there are also cautionary notes regarding declining visitor demand in the company’s US theme parks. Since its release on June 14, "Inside Out 2" has grossed over $1.5 billion worldwide, making it the most successful animated film of all time. This impressive result, along with improvements in the streaming services Disney+ and Hulu, contributed to raising Disney's entertainment segment operating income to $1.2 billion in the third quarter of the fiscal year, compared to $408 million the previous year. Disney's diluted earnings per share were $1.39, significantly above Wall Street expectations of $1.19, and up from $1.03 the previous year. Revenue amounted to $23.2 billion, compared to $22.3 billion the prior year. The company also raised its annual forecast for adjusted earnings per share. The theme parks have acted as a growth engine for Disney since the end of pandemic restrictions. However, the company reported that both revenue and operating income were impacted by a "softening of consumer demand... which exceeded our previous expectations" toward the end of the June quarter. Consumer goods sales in the theme parks declined by 5 percent compared to the same period last year. In response, the company announced plans to “aggressively manage costs” in the parks. Disney CEO Bob Iger acknowledged that performance in the theme parks and cruise ships was "softer" in the quarter but praised the progress in the entertainment division, which had previously suffered from a lack of box office hits and losses in the streaming services. "This was a strong quarter for Disney, driven by excellent results in our entertainment segment both at the box office and in streaming," he said. Disney's three streaming services – Disney+, ESPN+, and Hulu – achieved a combined operating profit of $47 million in the quarter, compared to an operating loss of $512 million the previous year. After a lack of box office hits in 2022 and 2023 – including films from Pixar and Marvel – Iger last year called for a focus on quality over quantity. Marvel’s "Deadpool & Wolverine," released on July 26, has become a box office hit, grossing nearly $900 million before its third weekend.