Here's our initial take on Walt Disney's (DIS +7.54%) fiscal 2025 second-quarter financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $22.1 billion | $23.6 billion | 7% | Beat |
| Earnings per share (adjusted) | $1.21 | $1.45 | 20% | Beat |
| Direct-to-consumer operating income | $47 million | $336 million | 615% | n/a |
| Experiences segment operating income | $2.3 billion | $2.5 billion | 9% | n/a |
Surprisingly Strong Results Throughout
Disney surprised investors by handily beating expectations on both the top and bottom lines in its fiscal second quarter. Revenue increased by 7%, while adjusted EPS grew by 20% year over year on increased profitability throughout the business, especially when it comes to streaming.
Speaking of streaming, Disney ended the quarter with 126 million Disney+ subscribers, 1.4 million of which were added during the quarter, an uptick that analysts weren't expecting. Including Hulu, the streaming business has 180.7 million total subscribers. Disney's subscriber numbers have been doing well for years. What has analysts intrigued is its $336 million in operating income from the business this quarter, up $289 million from a year ago.
Disney's sports segment reported a decline in operating income, but this was mainly due to an accounting write-off. Sports segment revenue grew by 5% year over year, including a strong 29% growth in domestic advertising.
Last but not least, Disney's experiences segment (which includes its theme parks and cruise line) reported impressive results despite a challenging consumer spending environment. Operating income from domestic parks and experiences, which is the largest part of the segment, grew 13%.
It's also worth noting that Disney spent $1 billion on buybacks for the quarter. Management previously said its full-year target was $3 billion, so this seems to be a bit of an accelerated pace -- possibly because of the recent pressure on the stock.
Looking ahead, Disney forecasts $5.75 in earnings per share for the full fiscal year, significantly higher than the $5.44 per share analysts were expecting. The company's operating cash flow guidance was increased by $2 billion to $17 billion, and CEO Bob Iger called Disney's performance during the quarter "outstanding."
NYSE: DIS
Key Data Points
Immediate Market Reaction
Not surprisingly, the market's reaction to Disney's earnings report was a positive one. As of 8 a.m. EDT on the morning of the announcement, shares were up by more than 6%. Better-than-expected results on both the top and bottom lines, strong performance from all three business segments, and an upward guidance revision is generally a strong recipe for stock performance, and that's exactly what we're seeing here.
What to Watch
Disney has quite a lot in store for the rest of its fiscal year, including the much-anticipated ESPN direct-to-consumer product, several product launches in its parks and cruise line, and some theatrical releases that could make serious money at the box office. With an excellent second fiscal quarter, if Disney can keep up its business momentum for the rest of the year, it could be a big win for investors.
