Disney+, Hulu Combined Operating Profit Surges

The Walt Disney Company reported its fiscal second-quarter earnings for 2025 on Wednesday, delivering results that surpassed Wall Street expectations for both earnings and revenue, driven by stronger-than-anticipated subscriber growth for Disney+ and robust performance across all business segments. 

• Revenue: Disney reported revenues of $23.6 billion for the fiscal second quarter (January–March 2025), a 7% increase from $22.1 billion in the same quarter of the previous year. This figure exceeded the Zacks Consensus Estimate of $23.14 billion and analyst expectations of $22.1 billion.
• Earnings Per Share (EPS): Adjusted EPS was $1.21, beating the Zacks Consensus Estimate of $1.18 and Wall Street’s forecast of $1.12. This represents a slight decline of 2.48% from the year-ago quarter’s $1.24 but still reflects strong profitability.
• Income Before Taxes: Income before income taxes surged to $3.1 billion, up $2.4 billion from $0.7 billion in the prior-year quarter, reflecting improved operational efficiency and segment performance.
• Total Segment Operating Income: Operating income across Disney’s segments rose 15% to $4.4 billion, driven by gains in all three business segments: Entertainment, Sports, and Experiences.

Disney+ Subscriber Growth

• Subscriber Numbers: Disney+ Core subscribers (excluding Disney+ Hotstar) reached 153.6 million, falling slightly short of analyst estimates of 155 million but marking significant growth of over 6 million subscribers from the prior quarter. Total Disney+ subscribers, including Hotstar, were reported at 124.6 million, a 1% decline from the prior quarter due to a price increase in October 2024, though this was better than the company’s guidance for a “modest decline.”
• Profitability: The Entertainment Direct-to-Consumer (DTC) business, encompassing Disney+ and Hulu, achieved profitability for the third consecutive quarter, posting an operating income of $293 million, a stark improvement from a $138 million loss in the year-ago quarter. The combined streaming businesses (Disney+, Hulu, and ESPN+) reported a narrow loss of $18 million in the prior quarter, highlighting a trend toward profitability.
• Strategic Moves: Disney’s addition of an ESPN tile to Disney+ has boosted engagement, with subscribers spending more time on sports content. The launch of “SC+,” a daily SportsCenter show, and plans for a flagship ESPN offering within Disney+ this fall aim to further enhance the platform’s appeal.

Disney’s three core segments—Entertainment, Sports, and Experiences—all contributed to revenue growth, a notable achievement compared to prior quarters where certain segments lagged.

Bob Iger

➤Entertainment Revenue: The segment, which includes streaming services, traditional TV networks, and films, saw a 14% year-over-year revenue increase to approximately $10.58 billion in the prior quarter, with similar growth expected in Q2.

Operating Income: Operating income for the segment was $1.7 billion in Q1 fiscal 2025, up 95% year over year, driven by streaming profitability and strong theatrical performance. Q2 likely sustained this momentum, with films like Moana 2 (which grossed over $1 billion globally) continuing to boost content sales/licensing income.

Key Drivers: Subscription revenue grew due to higher pricing and subscriber gains at Disney+ Core and Hulu, though traditional TV networks saw a 6% revenue decline to $2.46 billion in Q4 fiscal 2024, a trend likely persisting into Q2 due to cord-cutting. Advertising revenue for streaming rose 14% in Q4, and Q2 likely benefited from increased impressions on Disney+ and Hulu.

➤Sports Revenue: Revenue growth was supported by a 15% increase in domestic ESPN advertising revenue in Q1 fiscal 2025, with Q2 expected to follow suit despite a $100 million operating income hit from the timing of three College Football Playoff games and an additional NFL game.

Operating Income: Sports segment operating income was $247 million in Q1, up $350 million year over year, though Q2 faced headwinds from a $50 million write-off tied to Disney’s exit from the Venu Sports joint venture with Warner Bros. Discovery and Fox.

ESPN’s dominance in college football broadcasting, including the entire Southeastern Conference schedule, drove a 56% year-over-year increase in viewership, boosting ad revenue. The segment also benefited from lower programming costs on Disney+ due to the absence of major cricket events like the ICC Cricket World Cup.