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    DIS
    Earnings call· Mar 2025(Q2 FY25)

    Walt Disney Q2 FY25 earnings call DIS

    May 7, 2025 Source

    Executive summary

    The Walt Disney Company Q2 FY25 — Strong Earnings and Strategic Expansion

    The Walt Disney Company reported a strong Q2 FY25, driven by robust performance in its Experiences segment and a healthy advertising market. The company announced a new Disney theme park in Abu Dhabi, leveraging its IP without capital investment. Strategic priorities, including streaming integration and content investment, are progressing, with optimism for the rest of the fiscal year.

    Highlights

    5

    • Adjusted EPS for Q2 FY25 was up 20% from the prior year.

    • The Experiences segment delivered strong results, with domestic park margins up 110 basis points.

    • ESPN's Q2 primetime audience among the 18-49 demographic was up 32%, marking its most watched Q2 ever.

    • Walt Disney World bookings for Q3 FY25 are up 4% and for Q4 FY25 are up 7%.

    • ESPN advertising revenue for the quarter was up over 20%.

    Concerns

    2

    • The DTC advertising market continues to be challenged by supply from new entrants.

    • Per capita spending in China parks is softer, reflecting a challenged Chinese consumer, despite good attendance.

    Guidance & targets

    4
    CategoryTargetConfidence
    Adjusted EPS
    $5.75
    high materiality
    High
    Long-term earnings growth
    double-digit earnings growth
    high materiality
    High
    Experiences segment growth
    higher end of 6% to 8%
    medium materiality
    High
    Advertising growth
    in excess of what we indicated back at the beginning of the year
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Experiences
    Delivered strong results this quarter, driven by outstanding performance from domestic businesses. Investments in this segment have delivered impressive returns on invested capital at all-time highs.
    Domestic park margins: up 110 bpsCruise: margin accretive
    		———up 110 basis points (domestic park margins)
    Entertainment (movies, television series, news, sports)
    Feature films continue to enjoy success at the global box office. General entertainment and news programming performing well. Sports viewership trends continue to be healthy.
    		—strong growth——
    ESPN
    Driven by NFL, College Football, the NCAA Women's Basketball Tournament and other exciting events. Strong advertising demand.
    Q2 primetime audience (18-49 demographic): up 32%Most watched Q2 in primetime ever
    		—up 20% (advertising)——
    Streaming Business
    Improvements in the product continue to enhance the user experience, increase engagement and reduce churn, enabling accelerated growth over time.
    Engagement: upChurn: down significantly
    		————

    Operational metrics

    12
    Adjusted EPS
    $5.75up from $5.30
    FY25

    Full-year guidance for adjusted EPS, raised from previous guidance.

    Adjusted EPS growth
    20%YoY
    Q2 FY25

    Year-over-year growth in adjusted EPS for the second quarter.

    Walt Disney World bookings
    4%up
    Q3 FY25

    Bookings for the third fiscal quarter.

    Walt Disney World bookings
    7%up
    Q4 FY25

    Bookings for the fourth fiscal quarter.

    Advertising growth
    in excess of 3%YoY
    FY25

    Overall advertising growth expected for the full fiscal year, exceeding prior guidance.

    ESPN advertising revenue growth
    20%up over
    Q2 FY25

    Growth in advertising revenue for ESPN during the quarter.

    ESPN Q2 primetime audience (18-49 demographic)
    32%up
    Q2 FY25

    Increase in ESPN's primetime audience for the key demographic.

    International attendance at domestic parks
    double digits1% to 1.5% impact vs pre-COVID
    current

    International attendance has not returned to pre-COVID levels but remains in double digits, with a minor impact on mix.

    Investment in theme parks
    $30B
    future

    Planned investment to expand theme parks in Florida and California.

    Abu Dhabi tourist projection
    39M
    by 2030

    Estimated number of tourists visiting Abu Dhabi by 2030.

    Income-qualified population within 4 hours of Abu Dhabi
    500M
    current

    Estimated number of income-qualified people living within a 4-hour travel radius of Abu Dhabi.

    People coming through Dubai and Abu Dhabi
    120M
    this year alone

    Estimated number of people traveling through Dubai and Abu Dhabi in the current year.

    Industry KPIs

    4
    MetricValueDetails
    Member quality and retention—
    Live sports events rights roi—
    Addressable market penetration—
    Content spend title performance—

    Product announcements

    1
    ProductTypeDetails
    ESPN direct-to-consumer productlaunch

    Deals & partnerships

    1
    Miral Group of Abu DhabiAgreement to bring a Disney theme park to Abu Dhabi. Disney will oversee design, license IP, and provide operational expertise, while Miral will provide the capital, construction resources, and operational oversight.

    This will be the seventh Disney theme park resort, blending Disney stories and characters with local culture and technology. The Imagineering team is already working on the design. Disney will have considerable involvement in oversight to ensure the Disney theme park experience meets quality standards, with employees embedded in the organization.

    Risks & headwinds

    2
    Softness in per capita spending in China parkscurrent

    Consumers are tightening their belts a little bit in that particular market.

    Mitigation: Attendance is still quite good, indicating continued engagement.

    DTC advertising market challenged by supply from new entrantscurrent

    continues to be a bit more challenged

    Mitigation: There is still strong demand for Disney advertising in this segment.

    What to watch in Q3 FY25

    5

    ESPN direct-to-consumer product launch details

    very soon
    Currentfew months away
    TargetPricing and timing details

    Why it matters

    Crucial for understanding the strategy and financial implications of a major new streaming offering.

    Meanwhile, we are only a few months away from the launch of ESPN's exciting new direct-to-consumer product offering, and we look forward to sharing pricing and timing details very soon.

    Q&A highlights

    6

    Is the integration of Hulu and sports content into Disney+ positively impacting engagement and churn, and is the 3-year double-digit earnings growth guidance still intact off the new FY25 EPS base?

    The integration is positively impacting engagement and churn. Streaming growth will be driven by continued Disney+/Hulu integration, technology improvements (paid sharing, personalization, ad tech), and international content investment. The long-term double-digit earnings growth guidance for FY26 and FY27 remains unchanged.

    “The long-term guide remains intact. What we announced before, no change to that.”

    asked by Ben Swinburne · answered by Hugh Johnston

    2 min read5 chapters

    Detailed Narrative

    01

    Abu Dhabi Theme Park Agreement

    Disney announced a strategic partnership with Miral Group to develop a new Disney theme park in Abu Dhabi, marking the company's seventh global theme park destination. Disney will oversee design, license its intellectual property, and provide operational expertise, while Miral Group will provide the necessary capital, construction resources, and operational oversight. This agreement allows Disney to expand its global footprint and reach new audiences without direct capital investment, targeting a broad international demographic.

    02

    Experiences Segment Performance and Investment

    The Experiences segment delivered strong results in Q2 FY25, driven by robust performance from domestic businesses, with domestic park margins increasing by 110 basis points. The company highlighted that investments in this segment have yielded impressive returns on invested capital, reaching all-time highs. Disney plans to invest over $30 billion in its Florida and California theme parks to enhance offerings, add capacity, and support the U.S. economy, demonstrating strong confidence in the segment's growth potential.

    03

    Streaming Strategy and Integration

    Disney is actively integrating Hulu content and sports into the Disney+ user experience, which has positively impacted engagement and significantly reduced churn. The strategy aims to transform the streaming business into a true growth engine through three pillars: continued integration of Disney+ and Hulu, technology improvements (including paid sharing, personalization, and ad tech), and increased investment in local content outside the United States. The upcoming ESPN direct-to-consumer product will also be bundled for a seamless, integrated experience.

    04

    Content and Studio Outlook

    The studio has a strong theatrical slate for the remainder of the calendar year, including 'Lilo & Stitch,' Pixar's 'Elio,' Marvel's 'The Fantastic Four: First Steps,' 'Zootopia 2,' and 'Avatar: Fire and Ash.' Management expressed high confidence in the upcoming films and the slate for the next 1.5 years, which includes 'Avengers' and 'Moana' live action. The company is also refocusing Marvel on film quality over quantity, citing 'Thunderbolts*' as a positive example of this shift.

    05

    Advertising Market Health

    The advertising market is currently healthy for Disney, particularly in live sports, with ESPN's Q2 advertising revenue up over 20%. Management noted robust demand for its advertising inventory heading into the upfront season, with strong interest from sectors like restaurants and healthcare. While the DTC advertising market faces challenges from new entrants, demand for Disney's offerings remains strong, leading to an expectation of overall advertising growth exceeding initial full-year guidance.

    AI-generated summary of the company’s earnings call. Not investment advice.