Disney Q2 Earnings: Streaming Surges, Experiences Deliver, and Stock Tests $100 Resistance

The Walt disney Company reported a robust second quarter for fiscal 2025, surpassing Wall Street expectations on both top and bottom lines while lifting its full-year profit outlook. Adjusted earnings per share came in at $1.45, beating the $1.20 consensus, while revenue rose 7% year-over-year to $23.6 billion, ahead of the $23.14 billion estimate. Segment operating income climbed 15% to $4.4 billion, with growth across key units. Management now expects full-year adjusted EPS of $5.75, up 16% from FY24, and the stock jumped 6% in premarket trading—challenging the psychologically important $100 level and its 200-day moving average.

Headline Results and Guidance

Disney’s performance reflected momentum across both its traditional and streaming businesses, aided by strong subscriber gains and resilient consumer engagement at domestic parks. The quarter’s adjusted EPS of $1.45 grew 20% year-over-year, and diluted GAAP EPS reached $1.81 versus a loss in the prior year. Free cash flow was an impressive $4.89 billion, with Disney on track to complete $3 billion in share repurchases this fiscal year.

Management raised its full-year outlook, forecasting $5.75 in adjusted EPS versus prior guidance of $5.44, and boosted its cash flow forecast to $17 billion. CEO Bob Iger highlighted strong performance in the Entertainment and Experiences businesses and reaffirmed confidence in Disney’s direction despite macro uncertainties.

Segment Breakdown

Disney’s Entertainment segment delivered a standout quarter with operating income up 61% year-over-year to $1.3 billion. Direct-to-Consumer streaming contributed $336 million in operating income, marking a $289 million improvement from a year ago. Disney+ added 1.4 million subscribers, bringing the total to 126 million, while Hulu added another 1.1 million. Subscriber growth, price increases, and popular content like Moana 2, Mufasa, and Daredevil: Born Again helped fuel momentum.

Content Sales and Licensing also posted a strong rebound, with income of $153 million, up $171 million from Q2 2024, driven by higher episodic TV and home entertainment sales. Linear Networks improved 2% overall, with a 20% rise in domestic income offset by weakness in international channels, particularly following the Star India transition.

The Sports segment showed mixed results. Revenue rose 5% year-over-year to $4.2 billion, thanks to strong advertising and event-driven viewership. Domestic ESPN ad revenue grew 29%, driven by format changes to the College Football Playoff and an additional NFL game. However, operating income declined 12% to $687 million, due to increased programming costs and the write-off from exiting the Venu joint venture. Looking ahead, management expects an 18% rebound in Sports operating income for the full year, citing favorable comps and the upcoming launch of ESPN’s new direct-to-consumer product.

The Experiences segment remained a critical growth engine, with operating income up 9% year-over-year to $2.5 billion. Domestic Parks & Experiences rose 13% to $1.8 billion, buoyed by strong cruise demand, increased guest spending, and higher attendance. Consumer Products also gained 14%, supported by licensing tied to franchises like Moana and The Lion King. International park income, however, declined 23% due to softness in China and ongoing recovery challenges in Asia. Management expects full-year Experiences growth of 6% to 8%, aided by a slate of park expansions and upcoming cruise launches.

Macro and Consumer Commentary

Disney acknowledged ongoing macroeconomic uncertainty but noted solid forward bookings, especially at Walt Disney World, which are tracking above prior-year levels. Management said it continues to monitor inflation, discretionary spending, and consumer behavior but did not cite material deterioration in demand across its businesses. CEO Iger struck a confident tone, emphasizing a “disciplined and focused growth strategy” and expressing optimism about the second half of the year.

Streaming and Strategic Progress

Streaming profitability remains a key strategic milestone for Disney, and Q2 marks the third straight quarter of meaningful improvement. The company ended the quarter with more than 180 million total streaming subscribers between Disney+ and Hulu. Management reiterated plans for a more unified streaming experience later this year, and emphasized the growth opportunity in international markets like Korea and Japan, where local originals are gaining traction.

On the content front, Disney highlighted the multiplier effect of theatrical hits like Moana 2 and Thunderbolts, which drive engagement across parks, products, and streaming. The studio also teased an upcoming release slate including Zootopia 2, The Fantastic Four: First Steps, and Avatar: Fire and Ash.

A New Theme Park

Disney announced plans to build its first new theme park resort in over a decade, partnering with Miral to develop a waterfront Disney destination on Yas Island in Abu Dhabi, marking a major strategic expansion into a region that sits within a four-hour flight of one-third of the world’s population and further establishing Yas Island as an international entertainment hub. The endeavor will be funded by Miral in conjunction with Disney. Disney will have total say in the design and oversight on the project. This is a similar model to what Disney did in Tokyo. Disney did not fully go into the details around forward profit-sharing and royalties.

Technical Outlook and Investor Reaction

Disney stock rose 6% in premarket trading following the results, breaking above near-term resistance and approaching the $100 psychological level, which also aligns with its 200-day moving average. The stronger-than-expected EPS guidance and the return of streaming profitability appear to be catalyzing renewed investor confidence.

Conclusion

Disney’s second quarter was a strong reaffirmation of its multifaceted business model, with streaming, experiences, and content all contributing to upside surprise. While sports margins compressed due to higher event costs, forward guidance suggests a meaningful rebound. With management raising both its EPS and cash flow forecasts, and momentum building in key segments, Disney is reasserting itself as a top-tier media and entertainment growth story heading into the back half of fiscal 2025.

Ask Aime: "Is Disney's Q2 earnings growth a sign of market resilience?"