Buried underneath the bombshell information of Disneyland Abu Dhabi is that Disney reported its second quarter fiscal 2025 earnings, they usually had been fairly, fairly good. A lot in order that the corporate’s inventory was up sharply in pre-market buying and selling within the ~30 minute window between the discharge of the report and the announcement of a brand new park within the UAE. This covers the great & dangerous of those outcomes as they relate to Walt Disney World & Disneyland.
Firm-wide, Disney’s earnings beat on the highest and backside strains, with earnings per share of $1.45 adjusted versus $1.20 anticipated and up 20% from the prior yr. Income jumped 7% year-over-year at $23.62 billion versus $23.14 billion anticipated. Whole section working revenue elevated 15% for Q2 to $4.4 billion from $3.8 billion in Q2 fiscal 2024. Disney now expects full-year adjusted EPS of $5.75, a rise of 16% in contrast with fiscal 2024. The corporate’s prior steering known as for top single-digit adjusted EPS development.
Streaming casts an extended shadow over every thing else, so it’s good to see the corporate’s streaming enterprise reported one other quarter of profitability. Moreover, home subscriptions for the streaming service elevated by 2%, and worldwide numbers had been up 1%. That is noteworthy as a result of Disney beforehand provided steering of a decline in the course of the quarter, however as a substitute reported a 1.4 million improve in subscriptions to the Disney+ service, bringing its world base to 126 million. Not solely that, however the common month-to-month income per paid Disney+ subscriber elevated for each the home and worldwide markets. A uncommon, unequivocal win for streaming–and the ahead steering is equally constructive.
Disney’s Experiences division (which incorporates Parks & Resorts) income rose 6% in the course of the quarter to $8.89 billion. Home theme park income rose 9% to $6.5 billion, and working revenue elevated 13% to $1.8 billion. In the meantime, worldwide park revenues dipped 5% to $1.44 billion and revenue dropped 23%.
The corporate attributed the worldwide declines to decrease outcomes at Shanghai Disneyland and Hong Kong Disneyland, pushed by softer spending amongst Chinese language shoppers. This can be a uncommon position reversal from the final a number of quarters of the worldwide parks outperforming the home ones.
The corporate attributed income positive aspects to increased visitor spend at its home parks and better volumes on its cruise ships following the launch of the Disney Treasure, development in Disney Trip Membership gross sales, increased attendance on the home parks, and better per visitor spending. This was all partially offset by pre-launch prices of the Disney Journey and Future cruise ships.
Additionally fascinating was the ahead outlook for 2025. Within the Government Commentary, the corporate indicated that it was monitoring macroeconomic developments for potential impacts to its companies. Disney acknowledges that uncertainty stays concerning the working surroundings for the stability of the fiscal yr, however there’s no noticeable affect but.
Nonetheless, based mostly on the robust first-half outcomes and what they’re seeing for the second half, Disney now expects the aforementioned improve in EPS of roughly $5.75 (16% above the prior yr) and roughly $17 billion in money supplied by operations (a $2 billion improve over prior steering).
As you would possibly recall, Disney had beforehand reiterated that it anticipated fiscal 2025 development for the Experiences (Parks & Resorts) section in the course of the full-year to be 6% to eight% as in comparison with final yr, with development weighted within the second half of the yr. That instructed that they had been nonetheless anticipating Might by way of October to be high-growth as just lately as February.
Throughout Bob Iger’s opening remarks, he had this to say: “Our Experiences section delivered robust outcomes this quarter, pushed by the excellent efficiency from our home companies. Investments on this section have delivered spectacular returns on invested capital with returns from our experiences companies at all-time highs.”
“Experiences is clearly a important enterprise for Disney and likewise an vital development platform. Regardless of questions round any macroeconomic uncertainty or the affect of competitors, I’m inspired by the power and resilience of our enterprise, as evidenced in these earnings and within the second half bookings at Walt Disney World.”
Lately, we had solid doubt on the second half of the yr at Walt Disney World, noting that the flurry of reductions instructed softness in bookings. It now seems that we had been flawed.
Throughout the earnings name itself, Disney CFO Hugh Johnston expressed enthusiasm for the Experiences section, indicating it carried out higher than anticipated for the fiscal quarter. In response to an analyst query, Johnston indicated that the outlook is definitely “nonetheless fairly robust” for the Experiences enterprise.
He shared that bookings proper now for Walt Disney World are up 4% within the third quarter, and that’s with about what we’d say is about 80% in (that means that by this level in a median yr, 80% of reservations for the present quarter, would already be made). Then for the fourth quarter, bookings are up 7%, that’s in all probability someplace between 50% and 60% in at this level.
Johnston said that issues are “definitely trying very optimistic and that was a part of what factored into our change within the steering going ahead…it’s not getting any worse. And once more, simply to reiterate what Josh talked about on the CNBC attendance is definitely nonetheless fairly good. It’s simply per cap spending isn’t fairly as excessive.”
At that time, Iger jumped in to make clear that the issue with per caps is in China, as a result of shoppers there are a “bit challenged.” Disney feels good that they proceed to have engagement and robust attendance at Shanghai Disneyland and Hong Kong Disneyland, whilst Chinese language shoppers are “tightening their belts somewhat bit.”
This bit about China is related to us as a result of there’s no explaining away these numbers by pointing to the worldwide markets. These have been choosing up some slack just lately within the post-pent-up demand period, however not now. Walt Disney World and Disneyland are up throughout the board, whereas the worldwide parks (however principally China) are the drag. If we have a look at simply home numbers, every thing is up.
Johnston additional shared that, when it comes to expectations for the rest of this fiscal yr and the primary quarter of 2026 (which is definitely October by way of December 2025), Disney beforehand guided to six% to eight% development.
Given the numbers that Disney is presently seeing, the precise development might be going to be on the increased finish of that for the Experiences enterprise for this yr. For 2026 and past, he mentioned he was not going to touch upon that at this level–it’s too early.
As a follow-up to that, Johnston was requested if the home parks have seen successful to worldwide visitation (presumably for the explanations mentioned in Canadians Are Canceling Walt Disney World Holidays.)
When it comes to the attendance, Johnston indicated that worldwide attendance on the home parks nonetheless has not gotten again to pre-COVID ranges (this isn’t a brand new growth), however it’s nonetheless within the double-digits. As for current worldwide visitation, Walt Disney World and Disneyland have “seen a little bit of an affect” of roughly 1% to 1.5%. What Disney expects going ahead is one thing much like that, however the firm factors out that it’s “greater than making up for it with home attendance–attendance on the parks has been terrific.”
How is it potential to reconcile this robust efficiency and ahead steering with what we’ve seen these days? Troublesome, fairly truthfully…however we’ll give it a strive!
My intestine degree response is that it’s not tremendous stunning that numbers for the second quarter are up. When the aggressive push for “Cool Child Summer season” was being rolled out, Walt Disney World management indicated that they had been coming off their finest 10 weeks for occupancy. That encompassed winter and the primary half of spring break, lining up with this newest quarter, which ended on March 29.
After we just lately up to date the listing of Most cost-effective Dates to Go to Walt Disney World in 2025 & 2026, we warned that the tides might be turning–that means winter would probably improve in value whereas summer time decreased. That’s not likely a lot a “warning” as a pattern already in progress. However we imagine it’ll speed up within the years to return.
It’s additionally value noting that after no ticket value will increase since December 2022, admission costs are up for the 2025 calendar yr. In order that proper that is a rise in per caps (apart from Florida residents making the most of that annual deal) on a year-over-year foundation, since admission was unchanged from 2023 to 2024.
Furthermore, the costs of Lightning Lanes Multi-Move and Single Move costs are up; Genie+ nonetheless existed throughout this quarter final yr, and it’s our understanding that uptake is increased with the pre-arrival choice. Not solely that, however Premier Move is a product providing that didn’t exist throughout this quarter final yr. So line-skipping is probably going outperforming, even when it’s coming on the expense of desk service meals or memento purchases.
Lodge costs weren’t up materially in the course of the quarter, and reductions had been about on par with final yr. In order that in all probability isn’t a contributing issue. But when different key metrics are up–particularly admission, which is a biggie–room charges don’t have to be.
What will probably be fascinating to see is whether or not per visitor spending numbers are nonetheless up for summer time. There are a number of provides for admission and room charges which might be higher–significantly better–than final yr. Whereas it’s potential, even probably, that Disney already captured loads of friends at increased costs (they usually received’t rebook at decrease charges), it’s equally probably that Disney is up on quantity however will probably be down on per visitor metrics for the summer time.
As we’ve identified, Summer season 2025 marks probably the most aggressive reductions we’ve seen in a very long time. By rigorously making the most of the newest wave of reductions for this summer time on tickets & resorts, we’re seeing the bottom costs for Walt Disney World holidays in over 6 years. (See Find out how to Get the Most cost-effective Walt Disney World Journey Since 2019.)
The aggressive discounting would clarify the 4% improve, and there was definitely additional bandwidth final summer time when it comes to occupancy and attendance. Earlier than you are worried an excessive amount of about how this can affect the in-park expertise, don’t. Now we have a chunk coming quickly explaining the decrease wait occasions even in increased attendance. (Looks like crowds and congestion are a distinct story–and presumably will probably be worse at Magic Kingdom in July and past because of Starlight.)
Disney’s home theme park outcomes are fairly the distinction to the outcomes Comcast just lately reported. As revealed in its earnings for the primary three months of the yr, attendance dropped at Common’s theme parks in the US. Theme parks income was down 5.2% year-over-year, to $1.876 billion. The corporate attributed the decline partly resulting from January’s wildfires, which pressured the non permanent closure of Common Studios Hollywood. Adjusted EBITDA within the theme parks section additionally was down for the quarter by 32.1% year-over-year.
Whereas the wildfires unquestionably performed a job, there’s additionally this fascinating pattern of each Comcast and Disney attributing decreases to externalities. The trend-line can also be down at Common Orlando, so this isn’t simply a matter of the wildfires. In Common’s protection, there may be nearly definitely a ‘calm earlier than the storm’ with folks suspending visits previous to the opening of Epic Universe.
Regardless of the decreases, Common is seeing “robust demand” for Epic Universe, in line with Comcast CEO Brian Roberts. “Theme Parks stay on an unbelievable development trajectory,” he mentioned. “We couldn’t be extra excited for the grand opening of Epic Universe in Orlando subsequent month and our plans to carry a brand new world-class theme park to the UK.”
For sure, Comcast’s numbers will get a lift from Epic Universe. However we’re additionally anticipating the primary few months of Epic Universe to underperform expectations, with softer bookings than initially anticipated. In fact they’re going to say there’s “robust demand,” and there received’t be any strategy to rebut that since no steering was provided. Including a park improves numbers–that’s the way in which it really works.
We point out this as a result of there’s this sentiment amongst some followers that Common goes to “crush” Disney as soon as Epic Universe opens. That’s a extra far-fetched fantasy than any Disney fairytale. We noticed this most just lately in response to Common Warns of Digital Queues to Enter Epic Universe Lands, with some readers erroneously concluding that Epic Universe has such sky-high demand that it must handle capability by way of digital queues.
That isn’t remotely correct. The digital queues usually are not a few surplus demand, they’re a few scarcity of provide (capability). Epic Universe is presently buckling underneath the burden of far fewer than 20,000 friends per day. That’s solely worsen as soon as summer time storm season arrives and the park’s (many) outside points of interest are taking place with regularity, on high of the opposite points. Digital queues could be a needed evil within the quick time period, however let’s not fake like they’re all of the sudden factor (the giveaway is within the phrase evil).
Simply to be clear, it’s not trigger for long-term concern or an indication of disinterest in Epic Universe. Such a phenomenon shouldn’t be unusual with main new openings. It’s form of a provided that Comcast’s numbers received’t proceed they’re decline, although, as that’s how including a brand new theme park to the combination works. Epic Universe is a principally incredible park and I’m a giant fan, however I additionally assume it’s pretty simple that the park goes to have main rising pains. The cracks are already evident.
Finally, it was a robust quarter for the corporate as an entire, however particularly the Disney Experiences division and the home Parks & Resorts, particularly. Walt Disney World and Disneyland, in addition to Disney Cruise Line had been actual vibrant spots. Hopefully that reinforces the corporate’s bullishness within the enterprise, and investing in Parks & Resorts over the following decade.
Talking of which, one other factor that obtained misplaced within the shuffle with the Disneyland Abu Dhabi information is that Bob Iger said twice in the course of the earnings name that the corporate nonetheless has plans to speculate greater than $30 billion in its present theme parks in Florida and California “to boost these choices, create jobs and help the U.S. economic system.” Iger known as this a “vote of confidence” in each Walt Disney World and Disneyland.
I’m undecided we’ve ever heard this $30 billion quantity earlier than. (It’s potential we’ve–I don’t see it within the DTB Archives.) We’d beforehand heard $17 billion for Walt Disney World, $2-3 billion because the minimums set by DisneylandForward, and $60 billion as an entire–however that final quantity additionally included the worldwide parks and Disney Cruise Line. We’ve additionally heard percentages of the $60 billion for varied issues, however by no means that half the full would go into WDW and DLR. This is able to by itself be massive information, suggesting that the $60 billion has both elevated or a higher allocation is now being funneled to Walt Disney World and Disneyland. Both means, we’ll take it.
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YOUR THOUGHTS
Ideas on the Walt Disney Firm’s Q2FY25 earnings? Ideas on the expansion of the home parks versus the underperformance of the worldwide parks (specifically China)? Do you agree or disagree with our evaluation? Every other ideas or commentary so as to add? Any questions we may help you reply? Listening to your suggestions–even if you disagree with us–is each fascinating to us and useful to different readers, so please share your ideas under within the feedback!