Disney (DIS) reported fiscal second quarter earnings on Wednesday that beat expectations on both the top and bottom lines, driven by a rebound in its domestic parks business and strong performance in its streaming unit.
The company raised its full-year profit forecast to $5.75 a share, up 16% from fiscal 2024 and roughly double its prior guidance for high single-digit growth. Analysts had expected 2025 adjusted earnings per share to come in at $5.44.
Disney stock closed nearly 11% higher Tuesday following the results.
The project will be developed in partnership with Miral, the state-backed tourism and real estate firm behind many of Abu Dhabi's landmark attractions.
Disney CEO Bob Iger described the project as "authentically Disney and distinctly Emirati" during the company's earnings call. He added the resort "will serve as an oasis of extraordinary Disney entertainment for millions and millions of people in this crossroads of the world, connecting travelers from the Middle East and Africa, India, Asia, Europe and beyond."
The new park announcement and quarterly results come as President Trump's shifting tariff policies cast a shadow over many companies this earnings season.
In its release, the company acknowledged the uncertainty, stating, "We continue to monitor macroeconomic developments for potential impacts to our businesses and recognize that uncertainty remains regarding the operating environment for the balance of the fiscal year."
Streaming surprise
Disney+ added 1.4 million subscribers in the quarter, a beat compared to the 1.25 million subscriber loss analysts polled by Bloomberg had expected. The company reported a drop of 700,000 paying users in Q1 as a result of expected user churn from recent price hikes.
In the midst of those price increases, along with other initiatives like password sharing crackdowns, the company's direct-to-consumer (DTC) streaming unit, which includes Disney+ and Hulu, posted a profit of $336 million. That's up from $47 million one year ago and also ahead of analyst expectations.
It marked the fourth straight quarter of profitability for the streaming business.
Achieving consistent profits in streaming is critical for Disney and other media giants as more consumers shift to DTC services from traditional pay-TV packages. The company has a streaming profit target of approximately $875 million in fiscal 2025.
Overall, revenue of $23.62 billion beat expectations of $23.05 billion in the quarter and represented a 7% increase from the prior-year period.
Adjusted earnings per share of $1.45 came in ahead of the $1.20 expected by analysts polled by Bloomberg. Earnings increased 20% from a year ago.
Disney saw an increase in guest spending at its theme parks in its fiscal second quarter. (AP Photo/John Raoux, File) ·ASSOCIATED PRESS
Disney also saw an increase in guest spending at the parks, bucking fears of a consumer and tourism pullback in the US. This was offset by the higher costs needed to expand the cruise line, with two more ships set to launch later this year.
But international parks disappointed amid greater macroeconomic pressures. The segment posted a significant 23% drop in operating income, driven by lower theme park attendance and increased costs at Shanghai Disneyland and Hong Kong Disneyland.
Heading into the report, Needham analyst Laura Martin said she was most interested in attendance at Disney’s Shanghai and Hong Kong parks, viewing it as a proxy for the global strength of the US brand.
Disney CFO Hugh Johnston said on the company’s earnings call that attendance at its China parks remains strong, though per capita spending is down as consumers continue to be “challenged.” Still, he noted overall engagement is healthy.
"Consumers are tightening their belts a little bit in that particular market and that's what you're seeing flow through there," he said.
Disney said it expects 6% to 8% operating income growth in its parks segment for fiscal year 2025, with expectations for stronger performance in the latter half of the year. Johnston said the company will most likely deliver "at the higher end" of that range.
Notably, the company took a $109 million content impairment charge in the quarter. It reported a roughly $50 million charge in Q1 due to its Venu Sports joint venture exit earlier in the year.
