Ticker: DIS

Quarter: Q4 2025

Date: 2025-11-13 08:30:00

Operator: And welcome to The Walt Disney Company Fourth Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that today's event is being recorded. I would now like to turn the conference over to Carlos Gomez, Executive Vice President, Treasurer, and Head of Investor Relations. Please go ahead. Good morning. It's my pleasure to welcome everyone to The Walt Disney Company's fourth quarter 2025 Earnings Call.

Carlos A. Gomez: Our press release, Form 10-Ks, and management's posted prepared remarks were issued earlier this morning and are available on our website at www.disney.com/investors. Today's call is being webcast, and a replay and transcript will be made available on our website after the call. Before we begin, please take note of our cautionary statements regarding forward-looking statements on our Investor Relations website. Today's call may include forward-looking statements that we make pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including regarding the company's future business plans, prospects, and financial performance, are not historical in nature and are based on management's assumptions regarding the future and are subject to risks and uncertainties. Including, among other factors, economic, geopolitical, operating, and industry conditions, competition, execution risks, the market for advertising, our future financial performance, and legal and regulatory developments. Refer to our subsequent Form 10-Qs, 10-Ks, and other filings with the SEC for more information concerning factors and risks that could cause results to differ from those in the forward-looking statements. A reconciliation of certain non-GAAP measures referred to on this call to the most comparable GAAP measures can be found on our Investor Relations website. Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we will be happy to take your questions. So with that, I will now turn the call over to Bob.

Robert A. Iger: Thank you, Carlos, and good morning, everyone. This was another year of great progress as we strengthened the company by leveraging the value of our creative and brand assets and continued to make meaningful progress in our direct-to-consumer businesses, resulting in strong earnings growth for the company. Adjusted EPS for fiscal 2025 was up 19% from fiscal 2024. And over the past three fiscal years, we have delivered a 19% compound annual growth rate in adjusted EPS. Our strategy and portfolio of complementary businesses, coupled with a strong balance sheet, enable us to continue to grow adjusted EPS and free cash flow over time. For fiscal 2026, we expect to deliver double-digit adjusted EPS growth compared to the prior year. The expected growth in earnings and cash flow enables us to continue investing in our businesses and to increase our return of capital to shareholders. We are targeting $7 billion in share repurchases in 2026, double the $3.5 billion we repurchased in fiscal 2025. We are also pleased to announce that the board has declared a cash dividend of $1.5 per share, a 50% increase over the dollar paid to shareholders in fiscal 2025. Before we take your questions, I'd like to touch on a few highlights from the quarter. First, our film studios. This summer's box office once again demonstrated the global and cross-generational appeal of our storytelling and IP. To date, Disney's live-action Lilo and Stitch remains the highest-grossing Hollywood film at the global box office this calendar year. And its success has extended across our interconnected businesses and consumer touchpoints. The film achieved 14.3 million views during its first five days on Disney Plus, becoming the second biggest Disney live-action premiere on the platform ever. Retail sales for Stitch from our consumer products business also continue to grow, eclipsing $4 billion in fiscal 2025. The popularity of this global phenomenon underscores the franchise's enduring strength and characters and the effectiveness of our strategy to invest in popular stories. Over the past two years, our studios have delivered four global franchise hits that have earned more than $1 billion each, while no other Hollywood studio has achieved a single one during the same period. Additionally, with a strong opening of Predator: Badlands, the biggest opening in the franchise's nearly forty-year history, the Walt Disney Studios has now crossed the $4 billion mark at the global box office for the fourth consecutive year. Heading into the holiday season, we're excited to bring audiences Zootopia 2 and Avatar: Fire and Ash. Looking ahead, next year's slate includes numerous highly anticipated titles such as The Devil Wears Prada 2, The Mandalorian and Grogu, Toy Story 5, the live-action Moana, and Avengers: Doomsday. We saw strong viewership of our television content in Q4, fueled by series such as Alien Earth, FX's biggest premiere ever on Disney Plus and Hulu, season two of High Potential, the number one original broadcast series across all platforms among adults 18 to 49. The Korean global hit Tempest and season 34 of ABC's Dancing With the Stars, which made history as the only fall show to increase its overall audience for six straight weeks following a season premiere. Something that's never been achieved by any show since Nielsen began electronic measurement in 1991. And we have more highly anticipated titles to come over the next few months, including new seasons of Paradise, The Secret Lives of Mormon Wives, Percy Jackson and the Olympians, American Idol, and the revival of the comedy Scrubs. We're also excited to bring viewers Taylor Swift's End of an Era docuseries as well as the concert film Taylor Swift: The Era's Tour, The Final Show. In our entertainment segment, our streaming business had another quarter of profit growth, with operating income up 39% in Q4. For the full year, we hit $1.3 billion in operating income, up $1.2 billion from last year and $300 million ahead of our original guidance. That is a significant achievement when you consider that just three years ago, our DTC business was running a $4 billion operating loss. As we continue to build DTC into a core growth engine, we're rolling out a more unified experience to better serve our consumers and unlock new value. In October, Hulu became our global general entertainment brand. And we continue to work to consolidate all of our entertainment content domestically within a single app, which will simplify the user experience, highlight the full value of our bundles, and unlock global marketing efforts. We're also expanding our international reach by investing strategically in our own originals and working with local studios to license content that brings more high-quality local storytelling to the platform. Taking a disciplined approach to the markets we are prioritizing, we have confidence in our long-term strategy. Turning to sports, we ushered in a new era with the launch of ESPN's full direct-to-consumer service and enhanced ESPN app. Making ESPN's full suite of networks and services available directly for the first time. We're thrilled by the response from fans so far, especially to the upgraded ESPN app, which now includes features such as multi-view, SportsCenter for You, catch up to live, and tools like live game stats, betting, fantasy sports, and commerce integration. Viewership of our industry-leading portfolio of live sports also remains robust, with ratings across ESPN networks, including ESPN on ABC, finishing the quarter up 25% over the prior year quarter. In our Experiences segment, we delivered a record operating income for both Q4 and the full year, with operating income up 13% for the fourth quarter compared to the prior year and up 8% for the full year. We're looking forward to two new cruise ships joining our fleet in the coming months. Disney Destiny, which sets sail next week, and the Disney Adventure, which will become our first ship home-ported in Asia when it launches in March. This will bring our fleet to a total of eight cruise ships, and in the spring, we're excited to open a world of Frozen at Disneyland Paris. With expansion projects underway at every one of our theme parks, five additional cruise ships scheduled for launch beyond fiscal 2026, and a new theme park planned for Abu Dhabi, the strategic investments we are making now will help ensure our offerings remain best in class and appeal to audiences worldwide well into the future. Overall, this quarter caps another strong fiscal year for the company. We continue to execute across our strategic priorities as we build for the future, deliver the very best in entertainment, and create value for shareholders. And with that, Hugh and I will be happy to take your questions.

Carlos A. Gomez: Thanks, Bob. As we transition to Q&A, I ask that you please try to limit yourself to one question in order to help get to as many analysts as possible today. And with that, Rocco, we're ready to take the first question.

Operator: Yes, sir. Our first question today comes from Ben Swinburne at Morgan Stanley. Please go ahead.

Benjamin Daniel Swinburne: Thank you. Good morning. Bob, I think we've been talking about ESPN going direct to consumer for, I don't know, it feels like a decade or so now. And you've got the product in the market. I know it's not been a ton of time, but I'm wondering if you could share a little bit about what you've learned so far in terms of adoption, engagement, anything interesting in terms of what kind of packages people are attracted to and, really, the question is, does this product kinda change the outlook in any meaningful way for the business? As you look out over the longer term? And I just want to ask you on the cash from operations guidance that you provided with the $1.7 billion cash tax swing. If I sort of adjust for that, I'm getting kind of underlying growth of well over 20%. So is there anything else we should be thinking about? Maybe it's the one big beautiful bill, tax benefits, or anything else in the cash outlook that suggests such a strong cash flow year in 2026? Thanks so much.

Robert A. Iger: Ben, I'll take the first part of the question. The ESPN launch has been a real success for a number of reasons. First of all, what we set about to do was to attract basically new users, people who had either been subscribers to the multichannel linear bundle or people who had not but wanted to engage more with ESPN. And we've done extremely well in that regard, signing up essentially new users. The other thing we wanted to do is we wanted to give people who wanted to stay in the multichannel linear bundle a chance to use the app and to engage with us more deeply because the app has so many more features than the linear channels do. And the authentication rate of people who are already subscribers has been very, very encouraging. Third, we ended up signing up a substantial number of subscribers to what we call the ultra product or the ultimate ESPN product, which is essentially mostly attracting cord-nevers who want to engage with sports but maybe they don't want to engage as deeply as those that get linear channels or those that subscribe to the main app. So it's been very successful in that regard. We're encouraged that people have found all the new features and are using them, particularly the SportsCenter for You and what we call VERTS, which is essentially just vertical sports highlights. And the algorithm seems to be working as well. I know it's working for me where if you watch certain videos on the ESPN app and particularly if you click like, then your feed is populated by sports news and sports highlights that you are more interested in. So I guess in almost every way you look at it, it is worth it's also working for advertisers because obviously, there's real value in the data that we provide advertisers on the direct-to-consumer platform. And so we're attracting both more advertising and new advertisers to the service. And as we look ahead, we believe that we've created a product that is very, very consumer-friendly, very advertiser-friendly, and actually works both for the traditional distribution ecosystem and for what I'll call the DTC ecosystem if there is such a thing. So we're very, very encouraged. I think it's a very positive step for the future of ESPN because while nothing necessarily provides future-proof concepts or circumstances for a business that is constantly changing, this certainly is a step in the direction of solidifying ESPN's future going forward. The last thing that I'll say is the great thing about the app is this incredible variety of sports that you can access on it. So where the linear channels provide obviously, live sports and studio programming more along the lines of the traditional sports television, the new app gives users a chance to engage with thousands and thousands more sports events over the year. And I think that's not only a sports fan's delight, but I think overall it's about as consumer-friendly as it gets.

Hugh F. Johnston: Okay, Ben. Yeah. And I'll take the question on cash flow. You're right, if you adjust for tax we're up about 28% year over year. Because of the timing on tax payments, the reported number is closer to 7%. Driven by a couple of things. Number one, obviously, OI growth is quite strong. Number two, we've been investing for a couple of years and we've now sort of leveled off in terms of those levels of investment. That's something that we think you can look forward to in the out years. Continued strong free cash flow growth from Disney, which obviously gives us a lot of flexibility in terms of the ability to return cash to shareholders. Which was evidenced today by the doubling in the share repurchase and the 50% increase in the dividend. So we feel very good about the free cash flow growth going forward.

Carlos A. Gomez: Thank you. The next question, Carlos?

Robert A. Iger: Thanks, Ben. Before we take the next question, go ahead. Yeah. Go ahead. Before we take the next question, Carlos, I just want to add something to the question that Ben Swinburne asked about ESPN. One of the things that we're also very encouraged by is the fact that of the subscribers that have signed up to the new app, a substantial number of them, about 80%, have signed up to what we call the Trio bundle, which includes Disney Plus and Hulu.

Carlos A. Gomez: Thanks, Bob. And thanks, Ben. Operator, next question, please.

Operator: Our next question comes from Steven Cahall with Wells Fargo.

Steven Lee Cahall: So just on content, you had a pretty strong last couple of years in general entertainment. Bob, you talked about some of the things like Alien Earth and FX that have done really well. As we look into this year for the studio, I mean, it's a big slate with Avatar and Moana. You're off to a little bit stronger or softer start, I think, implied in the guide for the first quarter. So I was wondering if you could just talk a little bit about what kind of growth you think you can do at the studio this year or over the next couple of years? And then, Hugh, just a tactical one. Given the ongoing carriage dispute with YouTube TV, have you provisioned anything in the EPS guidance for a sustained blackout? Is the economic impact actually more minimal because you think those folks would resubscribe elsewhere, including maybe the ESPN app?

Robert A. Iger: Thank you. You all take the first part of the question, Steven. Thank you. We're very encouraged by the studio slate that is coming up. In fact, we have a premiere of Zootopia 2 tonight. That is our Thanksgiving release. And then we finish the calendar year with Avatar: Fire and Ash. Obviously, we have very, very high hopes for that. And if you look at the slate for the rest of the year, it's about as strong as it's been in a while. Maybe stronger than it's been in a while, The Mandalorian, Toy Story 5, a live-action Moana, and then we're gonna finish the calendar year with Avengers: Doomsday. So we are very bullish on the slate ahead. As we look at the slate well into '27 and into '28, we feel that we've got similar strength to the strength that I just described for fiscal and calendar year '26. Obviously, not every film works. We've seen we know that. We've been around long enough to understand that. But if you look back at the year and look at the fact that we've already crossed substantial global box office level. We know we feel that we had some real strength, $2 billion films in the fiscal year, the biggest film of the year fiscal 2025 and calendar 2025 to date, which you know, was Lilo and Stitch, which also had tremendous, tremendous consumption when it went on the platform. So we feel good about the direction of the studio, both the current slate, the slate that's coming up, and what it looks like in the future.

Hugh F. Johnston: Right. And Steven, just to add to Bob's comments, in terms of Q1, that's more about what we're overlapping rather than the slate for the year itself. Just the timing of the overlap particularly with Avatar coming at the very end of Q1 is what's driving the guide that we shared with you all. As it relates to the discussions with YouTube, obviously, I'm not gonna comment much on ongoing negotiations that are live right now. The only thing I would say is in terms of our guidance, we built a hedge into that with the expectation that these discussions could go for a little while. In terms of the dollar impacts, keep in mind there's two pieces to it. There's the piece that we're not getting paid for and then the piece that we're picking up by virtue of subscribers moving elsewhere. But beyond that, I don't wanna comment because it is a live negotiation right now. Thanks, Steve. Operator, next question please.

Operator: Absolutely. Next question comes from Robert Fishman at MoffettNathanson.

Robert S. Fishman: Bob, we think about Disney Plus as a portal to all things Disney. Can you talk about the future roadmap and how subscribers will be able to use Disney Plus as a super app for not only Hulu and ESPN that you start to talk about, but also engage with your parks and other assets? And then, Hugh, do you see a path ahead for sustained double-digit DTC revenue growth through a combination of subscriber engagement and advertising increases? Thank you.

Robert A. Iger: Thanks, Robert. First of all, regarding Disney Plus, we're in the midst of rolling out the biggest and the most significant changes from a product perspective, from a technology perspective since we launched the service in 2019. And we're really encouraged because enabling greater personalization resulting in a product that's just more dynamic, more engaging, and it's basically working. And as I mentioned in my remarks, we've turned Hulu into a global general entertainment brand, which we think is gonna create more awareness and basically create closer alignment with our US product. So as we look ahead, these things are obviously all designed to create a one-app experience. But we also see, particularly with the deployment of AI, the opportunity to use Disney Plus as you suggested as a portal to all things Disney. There's clearly an opportunity for commerce. There's an opportunity to use it as an engagement engine for people who want to go to our theme parks, want to stay at our hotels, or want to enjoy our cruises, our cruise ships, and obviously, there's a huge opportunity for games. And the investment that we made and the agreement that we reached with Epic Games, while that will largely be on their platform, gives us an opportunity to integrate a number of game-like features into Disney Plus. The other thing that we're really excited about that AI is going to give us the ability to do is to provide users of Disney Plus with a much more engaged experience, including the ability for them to create user-generated content and to consume user-generated content, mostly short form, from others. So a lot going on. We're pleased with the progress that we've already made from a technology perspective. We've made some great hires, by the way, in the last year in that regard, including Adam Smith, who's also brought in some real talent. And the opportunity here, we think, is enormous in terms of increasing our engagement with Disney fans across the world.

Hugh F. Johnston: Okay. And Robert, regarding your question on DTC, a couple of comments. Number one, obviously, we guided you to the double-digit margins as we've been talking about in the past and as was expected coming into the year. Number two, in no way are we gonna get there through cost-cutting. The way we're gonna get there is through revenue growth and through driving operating leverage through the business. We didn't give a specific revenue guide, but our objective and our aspiration is very much to be growing the top line of that business by double digits. As we did on an apples-to-apples basis in Q4. That's what we're looking to do going forward is to grow the top line double digits. And again, as a reminder and as we've discussed in the past, getting beyond '26, we're certainly looking to gain margin in chunks, not in basis points. As we think beyond 2026 and into the future. We think this is a terrific business that's really going to be super strategic for The Walt Disney Company and it's gonna be a growth driver for us for many years to come.

Carlos A. Gomez: Thanks, Robert. Operator, next question, please.

Operator: Our next question today comes from Jessica Reif Ehrlich with Bank of America Securities. Please go ahead.

Jessica Reif Ehrlich: Thank you. I've got a couple of things. One, you've grown content via both building and buying. And, clearly, if we're going to see M&A in media in the coming year, with a lot of moving pieces across the industry, some companies being broken up. So I'm just wondering, do you see any role for Disney and if not, any concern that you'll see a stronger competitor coming out of all of this? And then secondly, I was on advertising, could you maybe go a little bit under the covers? There are a lot of things going on in DTC and linear, both entertainment and sports. Could you give us some color on your outlook for fiscal 2026? Thanks.

Hugh F. Johnston: First question to you. Go ahead, Bob. Sorry. Go ahead. So Jessica, M&A, a couple of things. Number one, obviously, we don't comment on M&A specifically. That said, with what's happening in the industry right now, Bob and the team really built the IP portfolio that we have over the last decade, whether it was the Fox acquisition, or Lucas, or Pixar. So we actually feel like we've got a great portfolio and we don't need to do anything. From that perspective, I think we'll let this play out. In terms of other competitors, we'll see how the various moves play out. But we like the hand that we have right now. So I wouldn't expect us to participate in making any significant moves. As it relates to the advertising side, what you saw for the year for us last year was advertising grew 5%. Sports was particularly strong. DTC has had supply coming into the market. That said, we did see CPMs improve at Disney over the last two quarters. So we feel like that's trending in the right direction. And then from a linear perspective, obviously, that's driven by what happens with subscribers. Going forward, we do expect advertising growth going into '26 as well. Despite the fact that we're overlapping political advertising in the first quarter of '26.

Carlos A. Gomez: Thanks, Jessica. Operator, next question, please.

Operator: Thank you. Our next question today comes from Michael Morris at Guggenheim. Please go ahead.

Michael C. Morris: Thank you. Good morning, guys. Wanted to ask you first on the Experiences business. Can you talk a little bit more about the drivers of the segment in fiscal 2026 in the context of that high single-digit operating income growth that you guided to? So how is demand currently trending? And how much of the guided growth comes from revenue as opposed to margin expansion in the coming year? If I could ask one on the Sports side, you talked about some of the content-driven cost pressure in the second and third quarters of the year. I would assume that comes from the NBA investment. Can you talk a bit about how the NBA investment is positive for you and will drive your growth over time? Thank you.

Hugh F. Johnston: Okay. Yeah, happy to jump in on both of those. In terms of the experiences business and drivers for 2026, obviously, we've made big investments in cruise and we're expecting Cruise to be a meaningful contributor to growth of Experiences during the course of the year, particularly in the second half as we get past the launch costs and some of the dry docks that we have in the first half of the year. Number two, obviously we're always going to have a combination of some pricing and some attendance growth. So certainly feel positive about that. And then obviously with the slate that we have coming on the film side, consumer products ought to be a meaningful contributor as well. As far as sports goes, from the perspective of the NBA, because of the timing of the rights cost, it does create a little bumpiness during the course of the year. Again, the latter half is where we'll really see material growth in ESPN. And then in terms of NBA being a the NBA is obviously a phenomenal property. We were fortunate enough to get out in front of that and create an attractive deal both for the NBA and for ourselves. It obviously, like a lot of other live sports, attracts audience and in the case of the NBA, like the NFL, attracts scale audience. Which obviously is super attractive to advertisers and therefore is strategically beneficial to us as well.

Michael C. Morris: Thanks. If I could follow-up, can you share anything about what you're seeing on the demand side currently domestically for the parks? In terms of advanced bookings or per caps?

Hugh F. Johnston: Yeah, yeah, sorry, I forgot to answer that portion of your question. Bookings are up 3% in the first quarter, so feel good about that. And they're also up for the year. So feel good about where demand is right now.

Michael C. Morris: Great. Thank you, Hugh.

Operator: Thank you. And our next question comes from Kannan Venkateshwar with Barclays. Please go ahead.

Kannan Venkateshwar: Thank you. Bob, any interest from you on becoming a broader bundler of streaming? You already have ESPN, Disney Plus, and Hulu bundled, and, of course, you also have Fox One and HBO. And it feels like there's an opportunity here for Disney to maybe emerge as a new form of bundler. Which nobody in the industry appears to have attempted yet. So any thoughts on that would be great. And then just to understand the impact of ESPN bundling on Disney Plus and Hulu a little bit better, anything you can share with respect to maybe the churn benefits or any kind of subscriber acquisition cost tailwinds that you saw in the quarter? What do you expect going forward potentially from that? Thank you.

Robert A. Iger: So I'll answer both parts of your question. First of all, as it relates specifically to ESPN bundling, what we found is that subscribers that bundle, either they bundle Disney Plus and Hulu, or subscribers that bundle Disney Plus, Hulu, and ESPN, are healthier subscribers in the sense that the churn rates are lower than the subscriber that only subscribes to one app. So what I mentioned earlier, the fact that about 80% of all the subscribers to the new ESPN service are actually buying the trio or the triple bundle. That's a very positive sign for us in terms of lowering churn into the future. We've also found that bundling with others, for instance, we've been bundling with Max in the United States, also has an effective lowering churn. And we've expressed the desire to do more bundling with other companies and have been in discussions on and off with other companies about doing just that. So typically, the opportunity to bundle definitely exists and to bundle more exists. And we also have proven that it works both for us in terms of our subscribers and also for the subscribers that we attract for the bundling entity. If you were to ask the folks at Warner Brothers Discovery about the impact of the Max bundle on them, they would tell you that they've signed up a substantial number of subscribers thanks to the bundle with us.

Carlos A. Gomez: Thanks, Kannan. Operator, next question, please.

Operator: Absolutely. Our next question today comes from John Hodulik with UBS. Please go ahead.

John Christopher Hodulik: Great. A quick follow-up on the parks business and then a question on cruises. It looks like domestic parks attendance was a little light in the fourth quarter. Hugh, is that driven by sort of competition? Macro? Or are there any other factors that may have accounted for that? And then on the cruise side, just comment on overall demand for the cruise business. And if you could remind us how do the margins in cruises compare to overall margins in the parks business? And what should be the impact on that segment as that business grows as fast as it's slated to over the next several years?

Hugh F. Johnston: In terms of the demand, demand was, I wouldn't characterize it as light. It basically came in, in line with our expectations. We've talked about Epic in the past in particular as something that we knew was gonna be a factor in domestic parks and in fact was very much in line with our expectations. If anything, it seems to be impacting the rest of the competition down in Florida more than it's impacting us. From a consumer perspective, we certainly feel good about it. In terms of demand for cruise, very strong despite the fact that we've added as much capacity as we have. Utilization rates are in line with what we've seen in the past. So we're filling all of that capacity as quickly as we can add it. Regarding margins, we don't really talk about specifics on cruise margins. That's not a disclosed item. But obviously, it's a very attractive business. We're capable of pricing at a good level. The guest satisfaction scores are higher than basically anything else in the company. So the margins in that business, as you would imagine, are quite attractive.

Carlos A. Gomez: Thanks, John. Operator, next question, please.

Operator: Absolutely. Our next question today comes from Kutgun Maral with Evercore ISI.

Kutgun Maral: Morning, and thanks for taking the questions. Two, if I could. First, on direct-to-consumer, I was hoping you could share some of the puts and takes on the cost side in 2026. Especially as you continue to invest in technology and programming. But I didn't know if there's some maybe cost savings associated with integrating the tech stacks, for example, that we should be mindful of. Then, Hugh, just a housekeeping one, if I could, around the fifty-third week. Thank you for providing a clean guidance for the year and on an underlying basis. With that, can you help quantify the impacts of the extra week to this year? And as we look to fiscal 2027, would the expectation be that you could grow EPS double digits again even without adjusting for the fifty-third week comp? Thank you.

Hugh F. Johnston: Yeah. First on DTC. It's really consistent with what we've talked about in the past. So we expect to grow revenue at an attractive rate. As I mentioned earlier in the call, the aspiration is to be double digits in that business. In terms of then the line items underneath, we'll obviously continue to invest at a reasonable level in content. Leaning a bit more towards the international side as we identify opportunities in specific markets to grow the international business where we have a big opportunity. In addition to that, we'll be investing in product. So the technology area will get some level of investment as well. And obviously, as we put the two businesses together, there's opportunities to do a bit of savings on SG&A. That said, I would expect P&L leverage, in other words, expenses growing less quickly than revenue, across all of those items. Which is how we drive the margin growth that we would expect to see. In terms of the fifty-third week, again, would expect us to figure out as we get to Q4 what the fifty-third week is worth. And then as we determine that, as we have in the past two times, we've had the fifty-third week, we would share something on that with investors and we'd look to grow double digits off of that.

Carlos A. Gomez: All right. Thanks, Kutgun. Operator, we have time for one more question.

Operator: Thank you. And our final question today comes from David Karnovsky with JPMorgan. Please go ahead.

David Karnovsky: Hey, thank you. Bob, you noted Generative AI earlier, but it sounded primarily as a use case within your apps. And I'm wondering how you view the opportunity or risk to license out content or IP to some of the emerging video creation platforms. And then just relatedly, it pertains to production costs over time, what role do you see for generative AI to drive cost efficiencies in the business? Thanks.

Robert A. Iger: Very good question. We've been in some interesting conversations with some of the AI companies. I would characterize some of them as quite productive conversations as well. Seeking to not only protect the value of our IP and of our creative engines, but also to seek opportunities for us to use their technology to create more engagement with consumers. And we feel encouraged by some of the discussions that we're having. It's obviously imperative for us to protect our IP using or with this new technology. And we've been pretty engaged on that subject with a number of entities. And hopeful that ultimately, we'll be able to reach some agreement, either the industry or the company has on its own, with some of these entities that would in fact reflect our need to protect the IP. We also, as we look ahead, we see opportunities in terms of efficiency and effectiveness by deploying AI not just in the production process, but really across our company as we engage with our cast members and our employees, but also our guests and our customers. There are opportunities as you talked about earlier about what I'll call the office and creating efficiency there. They are great in terms of our collection of data and our mining of data. And I'd say above all else, there's phenomenal opportunities to deploy AI across our direct-to-consumer platforms. Both to provide tools that make the platforms more dynamic and more sticky with consumers, but also to give consumers the opportunity to create on our platforms. I also before we end the call, Carlos, I just wanna say one thing. Because I know there was reference to where we are with YouTube. And I just wanna end the call because we've been so engaged in this over the last few weeks. By kinda giving an overall summary of just where things stand. First of all, obviously, we care deeply about our consumer. And our priority has always been to remain on their service without interruption, to close a deal on a timely basis so that interruption does not occur. The deal that we have proposed is equal to or better than what other large distributors have already agreed to. So we're not trying to really break any new ground. And while we've been working tirelessly to close this deal, and restore our channels to the platform, it's also imperative that we make sure that we agree to a deal that reflects the value that we deliver which both YouTube by the way and Alphabet have told us is greater than the value of any other provider. So we're not trying to break new ground. The offer that's on the table is commensurate with deals that we've already struck with actually distributors that are larger than they are. We're trying really hard, as I said, working tirelessly. To close this deal. And we're hopeful that we'll be able to do so on a timely enough basis to at least give consumers the opportunity to access our content over their platform.

Carlos A. Gomez: Thanks, Bob. And thanks to everyone for your questions. We wish you all a good day.

Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

[speaker 0]: Goodbye.