The Walt Disney Firm reported its first quarter fiscal 2025 earnings, with the corporate’s Experiences (Parks & Resorts + Client Merchandise) reporting $9.4 billion in income from October by December. This covers the great & dangerous of those outcomes as they relate to Walt Disney World & Disneyland, together with feedback about Lightning Lanes, Epic Universe, park attendance, and extra.
Firm-wide, Disney’s earnings beat on the highest and backside traces, with earnings per share of $1.76 adjusted versus $1.45 anticipated and income of $24.69 billion versus $24.62 billion anticipated. Web earnings elevated almost 23% to $2.64 billion, or $1.40 per share, from $2.15 billion or $1.04 per share, throughout the identical quarter final yr. That quantity jumps to $1.76 after adjusting for one-time gadgets.
Though probably not related to this web site save for the lengthy shadow it casts over every thing else, the corporate’s streaming enterprise reported one other quarter of profitability regardless of a 1% decline in subscribers for Disney+. Nevertheless, home subscriptions for the streaming service elevated by 1%, as worldwide numbers declined 2%. This was consistent with earlier warnings from the corporate, which had been reiterated once more on this name as Disney suggested buyers it expects one other “modest decline” in subscribers through the second quarter. Complete paid Disney+ subscriptions stand at 124.6 million; whole Hulu subscriptions rose 3% through the quarter to 53.6 million.
Disney’s Experiences division (which incorporates Parks & Resorts) income rose 3% through the quarter to $9.42 billion. Home theme park income accounted for 68% of the division’s whole, or $6.43 billion. Whereas that income marked a 2% enchancment over the identical quarter final yr, the mixture of Hurricanes Milton and Helene coupled with declines in attendance and investments in Disney’s fleet of cruise ships dragged down home working earnings.
Beforehand, Disney warned that working earnings can be adversely impacted by roughly $130 million resulting from Hurricanes Helene and Milton, the latter of which triggered the parks to shut and had a protracted tail of decrease crowds resulting from cancellations within the days and weeks afterwards. In truth, the opposed impression of the hurricanes was $120 million, together with one other $75 million in pre-launch prices for the Disney Treasure. That amounted to a 6% unfavourable impression on working earnings progress for Disney Experiences.
All instructed, the Experiences division posted a 5% decline in home theme park working earnings for the quarter, at $1.98 billion. The corporate attributed this to a modest lower in attendance and flat occupancy, coupled with 4% greater per visitor spending. That quantity can be considerably higher however for the aforementioned hurricanes–the weeks across the two noticed considerably decrease crowds.
In the meantime, the worldwide parks had been up a whopping 28% to $420 million. Disney attributes this to each greater attendance and visitor spending, partially offset by greater prices resulting from new visitor choices.
The sturdy overperformance of the worldwide parks is well the largest merchandise of curiosity to me from your complete earnings name. Though Disney didn’t say as a lot, that is probably attributable largely to Hong Kong Disneyland and Shanghai Disneyland, the place it was the primary full vacation seasons for World of Frozen and the Zootopia Land.
As we noticed firsthand, the Arendelle space at HKDL is extremely standard and the brand new Christmas choices had been an enormous hit with friends. This but once more proves that the parks can play video games making an attempt to squeeze extra spending out of friends, however the easiest way to enhance the underside line is constructing new points of interest.
Up 28% on greater attendance and spending regardless of greater prices. All of that makes full sense primarily based on what we noticed, with slammed reward outlets full of individuals shopping for Frozen and Duffy stuff, together with extra leisure than you could possibly shake a stick at. The kind of win-win for friends and the corporate that you just like to see. (Get Walt Disney World leaders on a airplane to Hong Kong for a “analysis journey” to see how that strategy advantages everybody!)
Additionally attention-grabbing was the ahead outlook for 2025. Within the Govt Commentary, the corporate reiterated that it anticipated fiscal 2025 progress for the Experiences section through the full-year to be 6% to eight% as in comparison with 2024, with progress weighted within the second half of the yr. This means that they’re nonetheless anticipating Might by October to be high-growth.
Throughout an interview on CNBC and 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. This, in flip, reinforces the corporate’s optimism for six% to eight% progress.
When requested particularly in regards to the opening of Epic Universe, Johnston responded that the corporate anticipated the brand new park to have a “small impression” on the fiscal yr. The analyst who requested the query indicated that Epic Universe’s impression on Walt Disney World is the #1 query he receives. Regardless of that, Johnston didn’t actually say something of substance nor did he use the phrases “Common” or “Epic Universe.”
In all probability a sensible transfer to keep away from headline-grabbing quotes and depriving us of something to speak about. Though we already know from the final earnings name that Bob Iger and Johnston imagine that Common’s Epic Universe will probably be “truly constructive” and “helpful” to Walt Disney World’s attendance and backside line. This time, Johnston famous that the 6-8% progress components within the “small impression” of Common’s Epic Universe (however not by that title).
In equity, Johnston additionally didn’t actually focus on something within the pipeline for Walt Disney World or Disneyland this summer time, both, regardless of leisure being probably drivers of attendance. He did say that the “client is a bit stronger than we might have anticipated.” He added that customers are “very worth centered, and in the event you ship worth to them, they’re keen to pay the value for it.” Fascinating take, and one with which many followers would agree…albeit maybe not in the best way he’s making the purpose.
All of this largely aligns with expectations. Beforehand, Disney CEO Bob Iger warned buyers of attendance softness and “demand moderation” into 2025. That was nothing new, as the corporate has cautioned of a slowdown at Walt Disney World. They’ve beforehand attributed this to the top of “revenge journey,” lapping the fiftieth Anniversary, and poor climate.
The one different feedback of curiosity from the earnings name got here in response to a query about Lightning Lane Premier Cross and its uptake. Johnston declined to supply stats about its adoption price, however described it as a premium product and emphasised that Disney is taking a measured strategy to its rollout. He added: “It’s very a lot consistent with our expectations, however we’re transferring gently with that product with the intention to make it an ideal expertise, each for the purchasers of the product, and for the remainder of our friends within the park. We really feel nice about it, and that it’ll construct over time, however it is vitally a lot the early days.”
It’s attention-grabbing that the corporate nonetheless expects Lightning Lane Premier Cross to “construct over time” provided that it’s already had resort restrictions eliminated and is now obtainable to all friends. So both Johnston didn’t know that had occurred already (solely believable), it didn’t occur through the quarter being mentioned so he didn’t point out it (equally believable), or there’s additional enlargement of LLPP to return.
That final one can be a chance, particularly in the direction of the beginning of the subsequent fiscal yr if Disney must determine alternatives for “progress” on flat or down attendance. The plain choices are a Multi-Park Lightning Lane Premier Cross or Lightning Lane Premier Cross Limitless. Neither would shock me, as the previous is already obtainable at Disneyland and the latter exists at Common. As we’ve talked about beforehand, the issues can be cannibalizing VIP tour gross sales or lowering size of keep. It’s not a web constructive for the corporate if high-spending friends all of the sudden are doing shorter journeys in expensive Deluxe Resorts.
Finally, it was a powerful quarter for the corporate as an entire, however particularly the Parks & Resorts division. Walt Disney World and Disneyland are nonetheless performing effectively sufficient, however it does appear more and more clear that the story for the subsequent couple of years will probably be discovering methods to squeeze “progress” with out truly rising the enterprise.
Conversely, the precise progress and enlargement of the worldwide parks is absolutely spectacular. Hopefully that reinforces the corporate’s bullishness within the enterprise, and investing $60 billion in Parks & Resorts over the subsequent decade.
Bear in mind when Disney truly elevated spending on streaming, believing it was the longer term? It’d be superior to see a uncommon win like that for Parks & Resorts, with Disney upping that quantity to $70 billion. Wishful pondering, I do know–however it’s what ought to occur if years upon years of earnings outcomes had been dictating these selections.
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YOUR THOUGHTS
Ideas on the Walt Disney Firm’s Q1FY25 earnings? What do you consider the corporate’s evaluation that Epic Universe can have a “small impression” on Walt Disney World? Will the opening of Epic Universe lead to decrease attendance or does a rising tide carry all boats? Anticipate Lightning Lane Premier Cross to one way or the other develop once more? Ideas on the 28% progress of the worldwide parks pushed by precise enlargement? 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 while you disagree with us–is each attention-grabbing to us and useful to different readers, so please share your ideas under within the feedback!
