Disney (DIS) announced on Tuesday that a significant portion of its streaming division generated revenue for the first time, surpassing analyst expectations in the company’s fiscal second quarter profits per share. In contrast to a loss of $587 million during the same period last year, the company’s direct-to-consumer (DTC) entertainment segment—which includes Disney+ and Hulu—posted operational profitability of $47 million. That’s not to say that Disney’s streaming services were entirely successful.

The entire direct-to-consumer losses, including ESPN+, came to $18 million as opposed to the $659 million loss recorded during the same period last year. Disney anticipates that by this year’s fourth quarter, streaming will be fully profitable. Pre-market trading saw a decline in shares as investors processed the news.

Disney has had difficulties in the last year, such as a slowing growth in its theme parks division, a falling linear TV business, and difficulties with streaming profitability. However, investors have become more optimistic in recent months due to CEO Bob Iger’s new turnaround plan. The business recently emerged victorious in a well-known proxy battle against activist investor Nelson Peltz.
The business announced Q2 adjusted earnings of $1.21 per share, which beat analysts’ estimates of $1.10 by Bloomberg and exceeded Disney’s Q2 2023 earnings of $0.93.

Additionally, it increased its forecast for adjusted earnings growth to 25% for the entire year from 20% previously. Disney did, however, suffer after combining its Star India division with Reliance Industries, disclosing an impairment charge exceeding $2 billion. Revenue of $22.1 billion was recorded, above the $21.82 billion the business posted during the same time last year and matching consensus estimates.

The business did issue a warning, stating that losses from its Indian brand Disney+ Hotstar will cause DTC performance in the entertainment division to be “softer” in the third quarter.