Disney stock (DIS) popped on Thursday after the company reported fiscal fourth quarter earnings per share and revenue that topped Wall Street estimates and its direct-to-consumer business built on recent momentum and swung to a profit.

Strong guidance for the next two years also fueled investor optimism, sending shares up over 10% in early trading following the results. The stock pared gains to close up around 6%.

The media and experiences giant reported Q4 adjusted earnings of $1.14 per share, above the $1.10 expected by analysts polled by Bloomberg and higher than the $0.82 Disney reported in the prior-year period.

Revenue came in at $22.57 billion, outstripping consensus expectations for $22.47 billion as well as the $21.24 billion reported in the year-ago period.

Disney's direct-to-consumer (DTC) streaming business — which includes Disney+, Hulu, and ESPN+ — posted operating income of $321 million for the three months ending Sept. 28. That compares to a loss of $387 million in the prior-year period.

Analysts polled by Bloomberg had expected DTC operating income to come in around $203 million after the company reached its first quarter of streaming profitability in its Q3 results.

On the earnings call, Iger may have accidentally revealed that about 37% of all Disney+ subscribers in the US are choosing the company's cheaper ad tier, compared to 30% globally. He also said 60% of all new subscribers are opting for ads.

Shortly after revealing the figures, Iger was heard on a hot mic saying he wasn't sure if he was supposed to disclose the ad-supported numbers.

Achieving consistent profits in streaming is critical for Disney and other media giants amid a growing shift by consumers to DTC services from traditional pay-TV packages.

In mid-October, the company hiked the price of its various subscription plans, highlighting a trend that has gained traction over the past year. With such moves, media companies are attempting to boost margins on direct-to-consumer (DTC) offerings in the face of rising declines in linear television.

Disney said Thursday that it expects DTC operating income of approximately $875 million in fiscal 2025.

On the earnings call, Disney CFO Hugh Johnston noted gains in streaming serve as a "natural hedge" against struggling linear networks, which saw revenue fall 6%, while operating income for the segment plunged 38% compared to the prior-year period.

Management warned linear networks are expected to continue to decline as more consumers abandon their cable packages.

The entertainment giant's results come as it searches for a successor to current CEO Bob Iger to help it navigate a changing industry. A recent report from the Wall Street Journal said the pool of candidates is expanding, as the executive is set to leave Disney for a second time by the end of 2026.