In 1 / 4 during which macroeconomic headwinds loomed and Wall Avenue stored its expectations cautious, Disney (DIS) delivered a efficiency that nearly felt magical.
Within the firm’s second-quarter fiscal 2025 earnings report, launched Might 7, Disney posted income of $23.62 billion, up 7 p.c from a yr earlier and above analyst expectations. Streaming and home theme parks performed a starring position in Disney’s outperformance.
For traders, Disney’s earnings report alerts the corporate is now not struggling to outlive the post-pandemic media panorama. It’s performing, rising and proving that the streaming turnaround is actual.
1 / 4 of robust outcomes
For traders, there have been loads of constructive numbers throughout the board.
Adjusted earnings per share (EPS) got here in at $1.45 — 20 p.c increased than the Wall Avenue consensus of $1.20. In the meantime, internet earnings soared to $3.28 billion, a night-and-day turnaround from the $20 million internet loss posted in the identical quarter final yr.
Traders took observe. Disney’s shares jumped 5.8 p.c in pre-market buying and selling.
The corporate additionally raised its full-year steering, forecasting $5.75 in adjusted EPS for fiscal 2025 — a 16 p.c year-over-year improve and an indication of confidence from management that the quarter wasn’t a fluke.
Want an advisor?
Want professional steering in terms of managing your investments or planning for retirement?
Bankrate’s AdvisorMatch can join you to a CFP® skilled that will help you obtain your monetary targets.
Streaming: From cash pit to profit-generator
Probably the most eye-catching turnaround was in Disney’s streaming division. After years of bleeding money in pursuit of Netflix’s (NFLX) dominance, Disney’s direct-to-consumer streaming enterprise is lastly within the black, marking the fourth-straight worthwhile quarter for the phase.
Streaming working earnings hit $336 million, up $289 million from a yr in the past. Income was additionally up, pushed by subscriber progress and worth hikes.
Disney+ added 1.4 million subscribers globally, bringing the whole to 126 million. Mixed with Hulu, Disney’s whole subscriber base hit 180.7 million.
What makes this greater than only a one-off win is the technique shift behind it. CEO Bob Iger and his group are now not taking part in the scale-at-all-costs recreation. They’re optimizing for profitability and progress.
“That eye towards the long run and driving progress is central to the necessary work we’ve carried out,” Iger stated throughout Wednesday’s earnings name. “And taking a look at our second quarter outcomes, we’re making wonderful progress.”
Parks and experiences are nonetheless Disney’s monetary anchor
Whereas streaming grabbed headlines, the core of Disney’s monetary engine stays its experiences phase — its theme parks, resorts, cruise ships and client merchandise. That division introduced in $8.89 billion in income and $2.49 billion in working earnings, up 6 p.c and 9 p.c, respectively, from final yr.
The standout right here was home theme parks and experiences, the place working earnings jumped 13 p.c to $1.82 billion. That progress got here from increased park attendance, elevated visitor spending and robust efficiency from the brand new Disney Treasure cruise ship. Disney’s home parks are proving to be extremely resilient, even within the face of financial uncertainty.
The image wasn’t as vibrant abroad, although. Working earnings from worldwide parks dropped 23 p.c, dragged down by falling attendance in Shanghai and Hong Kong.
Analysts had warned that anti-American sentiment and rising journey prices may weigh on worldwide demand. In that sense, the decline wasn’t stunning, although declines have been offset by stronger-than-expected home demand.
Leisure is again on its ft
Disney’s broader leisure phase — which incorporates movie, tv and content material licensing — additionally had a surprisingly robust displaying. Working earnings surged 61 p.c year-over-year to $1.25 billion.
Even Disney’s lagging linear TV enterprise turned in a combined however manageable report: Home income was down 3 p.c, however working earnings grew 20 p.c due to cost-cutting measures.
Nonetheless, some headwinds stay
Nevertheless, it’s not all pixie mud and parades for Disney. The corporate faces actual challenges, particularly in terms of financial situations and political threat.
President Donald Trump’s tariffs proposal — which incorporates probably slapping a 100% tax on foreign-made movies — rattled traders earlier this week. If carried out, it might jack up manufacturing prices and cut back flexibility in the place content material is created.
It’s not clear how “foreign-produced” will even be outlined, or whether or not it applies to streaming content material.
Disney’s inventory briefly dipped Monday after Trump’s announcement, although shares recovered most of these losses by shut, ending down simply 0.4 p.c.
There’s additionally the continued threat of an financial slowdown. Analysts from Morningstar have been skeptical simply final month, citing the danger that theme parks may lose steam if customers pull again on discretionary spending. The worldwide drop-off in park attendance provides the priority some credence.
However Disney’s Q2 numbers recommend that, for now, the corporate is bypassing financial issues — and even gaining floor.
Wanting forward
Disney administration is betting huge on enlargement throughout the board. A $60 billion funding in theme parks is underway, with new lands themed round Disney Villains, Automobiles and Monsters Inc. deliberate to open by the tip of the last decade. On Wednesday, Iger introduced plans for Disney’s seventh theme park in Abu Dhabi.
In the meantime, cruise capability is predicted to double by 2026 with seven new ships on the best way. And ESPN’s upcoming standalone streaming app — with options like betting and fantasy sports activities — is slated for launch this fall.
On the content material facet, Disney’s pipeline stays full, with upcoming theatrical releases from Marvel and Pixar. And with improved money stream steering — $17 billion for the fiscal yr, up $2 billion from earlier estimates — Disney is projecting a fortunately ever after, too.
Backside line
Disney’s second-quarter outcomes weren’t only a beat — in some ways, they have been a comeback.
After 5 years of lackluster efficiency on Wall Avenue, the corporate is reaffirming its standing as a blue chip inventory.
Streaming is now not a monetary sinkhole. Parks are worthwhile. And the broader leisure enterprise is regaining its footing. For traders, it exhibits Disney is now not a turnaround story. It’s a progress story — once more.
Editorial Disclaimer: All traders are suggested to conduct their very own impartial analysis into funding methods earlier than investing determination. As well as, traders are suggested that previous funding product efficiency is not any assure of future worth appreciation.
