Buried beneath the bombshell information of Disneyland Abu Dhabi is that Disney reported its second quarter fiscal 2025 earnings, they usually have 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 & unhealthy of those outcomes as they relate to Walt Disney World & Disneyland.
Firm-wide, Disney’s earnings beat on the highest and backside traces, with earnings per share of $1.45 adjusted versus $1.20 anticipated and up 20% from the prior 12 months. Income jumped 7% year-over-year at $23.62 billion versus $23.14 billion anticipated. Whole section working earnings 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 referred to as for prime single-digit adjusted EPS development.
Streaming casts an extended shadow over the whole lot 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 have been up 1%. That is noteworthy as a result of Disney beforehand supplied steering of a decline in the course of the quarter, however as an alternative reported a 1.4 million improve in subscriptions to the Disney+ service, bringing its international 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 optimistic.
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 earnings elevated 13% to $1.8 billion. In the meantime, worldwide park revenues dipped 5% to $1.44 billion and earnings 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 customers. This can be a uncommon function reversal from the final a number of quarters of the worldwide parks outperforming the home ones.
The corporate attributed income positive aspects to greater 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, greater 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 attention-grabbing 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 relating to the working atmosphere for the steadiness of the fiscal 12 months, however there’s no noticeable impression but.
Nevertheless, based mostly on the sturdy 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 12 months) and roughly $17 billion in money offered 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 12 months, with development weighted within the second half of the 12 months. That advised that they have been nonetheless anticipating Could by means of October to be high-growth as lately as February.
Throughout Bob Iger’s opening remarks, he had this to say: “Our Experiences section delivered sturdy 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 crucial enterprise for Disney and in addition an necessary development platform. Regardless of questions round any macroeconomic uncertainty or the impression of competitors, I’m inspired by the energy and resilience of our enterprise, as evidenced in these earnings and within the second half bookings at Walt Disney World.”
Just lately, we had solid doubt on the second half of the 12 months at Walt Disney World, noting that the flurry of reductions advised softness in bookings. It now seems that we have been improper.
Through 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 sturdy” 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 12 months, 80% of reservations for the present quarter, would already be made). Then for the fourth quarter, bookings are up 7%, that’s most likely someplace between 50% and 60% in at this level.
Johnston said that issues are “actually wanting 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 customers 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 customers are “tightening their belts slightly 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 selecting up some slack 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 largely China) are the drag. If we take a look at simply home numbers, the whole lot is up.
Johnston additional shared that, when it comes to expectations for the rest of this fiscal 12 months and the primary quarter of 2026 (which is definitely October by means of December 2025), Disney beforehand guided to six% to eight% development.
Given the numbers that Disney is at present seeing, the precise development might be going to be on the greater finish of that for the Experiences enterprise for this 12 months. For 2026 and past, he stated 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 a success 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 impression” 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 attainable to reconcile this sturdy efficiency and ahead steering with what we’ve seen currently? Tough, fairly actually…however we’ll give it a strive!
My intestine stage response is that it’s not tremendous stunning that numbers for the second quarter are up. When the aggressive push for “Cool Child Summer time” was being rolled out, Walt Disney World management indicated that they have 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 lately up to date the checklist of Least expensive 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 worth whereas summer season decreased. That’s not likely a lot a “warning” as a development already in progress. However we consider it’ll speed up within the years to return.
It’s additionally price noting that after no ticket worth will increase since December 2022, admission costs are up for the 2025 calendar 12 months. In order that proper that is a rise in per caps (apart from Florida residents profiting from that annual deal) on a year-over-year foundation, since admission was unchanged from 2023 to 2024.
Furthermore, the costs of Lightning Lanes Multi-Go and Single Go costs are up; Genie+ nonetheless existed throughout this quarter final 12 months, and it’s our understanding that uptake is greater with the pre-arrival possibility. Not solely that, however Premier Go is a product providing that didn’t exist throughout this quarter final 12 months. 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 have been about on par with final 12 months. In order that most likely isn’t a contributing issue. But when different key metrics are up–particularly admission, which is a biggie–room charges don’t must be.
What shall be attention-grabbing to see is whether or not per visitor spending numbers are nonetheless up for summer season. There are a number of affords for admission and room charges which can be higher–significantly better–than final 12 months. Whereas it’s attainable, even probably, that Disney already captured loads of company at greater costs (they usually received’t rebook at decrease charges), it’s equally probably that Disney is up on quantity however shall be down on per visitor metrics for the summer season.
As we’ve identified, Summer time 2025 marks probably the most aggressive reductions we’ve seen in a very long time. By fastidiously profiting from the most recent wave of reductions for this summer season on tickets & resorts, we’re seeing the bottom costs for Walt Disney World holidays in over 6 years. (See The way to Get the Least expensive Walt Disney World Journey Since 2019.)
The aggressive discounting would clarify the 4% improve, and there was actually additional bandwidth final summer season when it comes to occupancy and attendance. Earlier than you are concerned an excessive amount of about how this may impression the in-park expertise, don’t. We have now a bit coming quickly explaining the decrease wait instances even in greater attendance. (Appears like crowds and congestion are a special story–and presumably shall be worse at Magic Kingdom in July and past due to Starlight.)
Disney’s home theme park outcomes are fairly the distinction to the outcomes Comcast lately reported. As revealed in its earnings for the primary three months of the 12 months, attendance dropped at Common’s theme parks in the USA. Theme parks income was down 5.2% year-over-year, to $1.876 billion. The corporate attributed the decline partly as a consequence of January’s wildfires, which compelled 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 attention-grabbing development of each Comcast and Disney attributing decreases to externalities. The trend-line can be down at Common Orlando, so this isn’t simply a matter of the wildfires. In Common’s protection, there may be virtually actually a ‘calm earlier than the storm’ with folks suspending visits previous to the opening of Epic Universe.
Regardless of the decreases, Common is seeing “sturdy demand” for Epic Universe, in keeping with Comcast CEO Brian Roberts. “Theme Parks stay on an unimaginable development trajectory,” he stated. “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.”
Certainly, 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. After all they’re going to say there’s “sturdy demand,” and there received’t be any technique to rebut that since no steering was supplied. Including a park improves numbers–that’s the best way 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 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 aren’t a couple of surplus demand, they’re a couple of scarcity of provide (capability). Epic Universe is at present buckling beneath the load of far fewer than 20,000 company per day. That’s solely worsen as soon as summer season storm season arrives and the park’s (many) out of doors points of interest are happening with regularity, on prime of the opposite points. Digital queues is likely to be a mandatory evil within the brief time period, however let’s not faux like they’re out of the blue a superb 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 is just not unusual with main new openings. It’s sort 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 combo works. Epic Universe is a largely improbable park and I’m a giant fan, however I additionally assume it’s pretty plain that the park goes to have main rising pains. The cracks are already evident.
In the end, it was a robust quarter for the corporate as an entire, however particularly the Disney Experiences division and the home Parks & Resorts, specifically. Walt Disney World and Disneyland, in addition to Disney Cruise Line have been actual vivid 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 bought 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 assist the U.S. economic system.” Iger referred to as this a “vote of confidence” in each Walt Disney World and Disneyland.
I’m unsure we’ve ever heard this $30 billion quantity earlier than. (It’s attainable we’ve got–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 numerous issues, however by no means that half the full would go into WDW and DLR. This may by itself be massive information, suggesting that the $60 billion has both elevated or a better allocation is now being funneled to Walt Disney World and Disneyland. Both manner, 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? Some other ideas or commentary so as to add? Any questions we will help you reply? Listening to your suggestions–even if you disagree with us–is each attention-grabbing to us and useful to different readers, so please share your ideas under within the feedback!
