What drove DIS's earnings surprise in Q3 2024?

Disney's earnings surprise in Q3 2024 was primarily driven by the performance of its streaming business, which contributed to the company's total revenue exceeding expectations.

1. **Streaming Business Growth**: Disney's direct-to-consumer (DTC) segment, which includes its streaming services such as Disney+, Hulu, and ESPN+, has been a significant growth area for the company. Although the streaming business has experienced slower subscriber growth and increased competition, it continues to contribute positively to the company's revenue.
2. **Revenue Contribution**: The revenue generated by Disney's DTC segment was likely a key factor in the company's overall revenue exceeding expectations. In Q3 FY'24, the Parks business saw revenue increase by a mere 2% year-over-year to $8.4 billion, while operating profit fell 3%. The growth in the DTC segment helped to offset some of the challenges faced by the Parks segment.
3. **Analyst Expectations**: Analysts had previously downgraded Disney, citing concerns about flat park attendance and operating income declines. However, the recent upgrade by Seaport Research to a "Buy" rating, with a price target of $108, suggests that analysts are becoming more optimistic about Disney's prospects, particularly in light of improved macroeconomic conditions and emerging profitability in the DTC business.

In conclusion, Disney's earnings surprise in Q3 2024 can be attributed to the strong performance of its streaming business, which helped to drive revenue growth and offset some of the challenges faced by other segments of the company.