Disney Reports Strong Q2 Earnings Amid Market Challenges

The Walt Disney Company (DIS) reported adjusted earnings of $1.45 per share for the second quarter of fiscal 2025. This figure surpassed the Zacks Consensus Estimate by 22.88% and marked a 19.8% increase compared to the previous year.

Revenues for this quarter rose 7% year over year, totaling $23.62 billion, exceeding the consensus forecast by 2.1%.

At the time of this report, Disney shares had surged over 10%. However, DIS shares have declined by 8.5% year to date (YTD), performing better than streaming competitors Amazon (AMZN) and Apple (AAPL), which saw declines of 14.8% and 20.9%, respectively. In contrast, Disney shares fell short of Netflix (NFLX), which reported a 27.9% YTD gain.

In the past 12 months, Disney shares have lagged behind Amazon, Apple, and Netflix. Disney has decreased by 4.3%, while Apple and Netflix have experienced increases of 8.3% and 87%, respectively. Amazon shares saw a slight decline of 0.7%.

Disney Q2 Financial Performance

The Walt Disney Company’s pricing performance remains monitored closely.

Segment Performance Breakdown

Revenues from the Entertainment segment, which accounts for 45.2% of total revenues, increased by 9% year over year, reaching $10.68 billion.

In contrast, revenues from Linear Networks dropped 12.5% year over year to $2.42 billion. However, Direct-to-Consumer revenues rose 8.4% year over year to $6.12 billion, while Content Sales/Licensing and Other revenues saw a significant increase of 54.5% year over year, totaling $2.15 billion.

Revenues from Experiences, making up 37.6% of total revenues, increased by 5.9% year over year, hitting $8.89 billion. Domestic revenue was $6.5 billion, a 9.1% increase, while international revenues dipped 5.3% to $1.44 billion.

Moreover, Sports revenues rose by 5% year over year, reaching $4.53 billion.

Subscriber Metrics Update

As of March 29, 2025, Disney+ had 126 million paid subscribers, up from 124.6 million as of December 28, 2024.

The monthly revenue per paid subscriber for Domestic Disney+ rose 5% to $7.52, spurred by price increases but partially offset by lower advertising revenues.

For International Disney+ (excluding Disney+ Hotstar), the average monthly revenue per paid subscriber climbed from $6.78 to $7.19, driven by price adjustments and subscriber mix changes.

Conversely, Hulu’s SVOD-only average monthly revenue per paid subscriber fell from $12.52 to $12.36 due to decreased advertising revenue, despite some pricing increases.

Operating Income Insights

Disney’s costs and expenses rose 4.7% year over year to $20.12 billion. Segmental operating income totaled $4.44 billion, up 15.4% from the previous year.

Operating income within the Entertainment segment soared by 94.9% year over year to $1.7 billion. The Linear Networks segment reported a 2.3% increase in operating income to $769 million. For Direct-to-Consumer, operating income soared to $336 million, up from just $47 million in the previous year. Content Sales/Licensing and Other reported operating income of $153 million compared to an operating loss of $18 million last year.

The Experiences segment saw operating income of $2.49 billion, up 9% year over year, with domestic operations reporting an income of $1.82 billion, marking a 13.4% increase. The International segment’s operating income fell by 22.9% to $225 million, while Consumer Products increased its operating profit by 14.5% to $443 million.

Sports operating income declined by 12% to $687 million year over year.

Strong Financial Position

As of March 29, 2025, Disney’s cash and cash equivalents stood at $5.85 billion, up from $5.48 billion on December 28, 2024. Total borrowings decreased to $42.9 billion from $45.3 billion in the prior quarter. Free cash flow for the reported quarter was $4.89 billion.

Future Outlook

For fiscal 2025, Disney projects adjusted earnings of $5.75 per share, indicating a 16% rise over fiscal 2024. Operating income in the Entertainment segment is expected to grow in the double digits, while Experiences operating income is forecast to increase between 6% and 8% year over year. Additionally, the Sports segment’s operating income is expected to see an 18% growth.

In the upcoming fiscal third quarter, Disney anticipates a modest rise in its Disney+ subscriber base.

Zacks Rank

Disney currently holds a Zacks Rank #3 (Hold).