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Walt Disney (DIS) delivered strong 2Q25 results, surpassing EPS and revenue expectations, driven by another impressive performance in the Entertainment segment as the DTC business benefitted from price hikes and a surprise increase in Disney+ subscribers. Additionally, the Experiences segment saw resilient demand with the domestic theme parks displaying notable strength, despite earlier hurricane-related disruptions. Bolstered by the better-than-expected Q2 results, DIS raised its FY25 EPS guidance to $5.75, equating to estimated yr/yr growth of 16% compared to its prior forecast of high-single-digit growth.

Separately, DIS also announced plans for a new theme park in Abu Dhabi, slated to open in 2028, which is expected to enhance long-term revenue diversification and drive incremental growth in the Experiences segment. Assuming regional demand aligns with current projections, analysts estimate that the new theme park could boost DIS's operating income by 3-5% annually.

• The Entertainment segment showcased solid growth with revenue jumping 9% yr/yr to $10.7 bln and operating income surging 61% to $1.3 bln, primarily driven by the DTC business. Disney+ added 1.4 mln subscribers, reaching 126.0 mln, easily surpassing the 123.5 mln FactSet consensus estimate. Price increases lifted Disney+ Core average revenue per paid subscriber (ARPU) by 3% yr/yr to $7.77, significantly boosting DTC operating income to $336 mln, up from $47 mln in the prior year period, with minimal churn impact due to strong content offerings like Mufasa: The Lion King.
• DIS's Q3 guidance projects a modest increase in Disney+ subscribers -- implying 1-2 mln net additions -- which is better-than-feared given concerns over seasonal softness and recent pricing adjustments. The subscriber growth signals confidence in retention and content appeal.
• Staying with Entertainment, Content Sales/Licensing was a standout again in Q2 as revenue soared by 54% yr/yr to $2.15 bln, swinging operating income into positive territory to $153 mln compared to $(18) mln in the year earlier period. The much-improved results were buoyed by the theatrical success of Mufasa: The Lion King, and sustained home entertainment demand for 2024 blockbusters such as Inside Out 2 and Deadpool and Wolverine. However, growth in the theatrical business is expected to moderate in FY25 due to a less robust content slate that lacks comparable high-impact releases.
• Turing to the Experiences segment, revenue climbed 6% to $8.9 bln and operating income gained 9% to $2.5 bln, fueled by the domestic theme park business. Walt Disney World saw higher per capital guest spending (+4% yr/yr) and stable attendance, supported by new attractions like Tiana’s Bayou Adventure. However, the international theme park business experienced a slowdown, with operating income growth falling by 23% yr/yr to $225 mln, reflecting normalization in post-COVID demand at parks like Hong Kong Disneyland and Shanghai Disney Resort. DIS reaffirmed Experiences operating income growth of 6-8%, with growth weighted towards the second half.

DIS's Q2 results and improved FY25 outlook underscore the company's operational strength, driven by DTC profitability, theme park resilience, and strategic content investments. However, risks such as a moderating content slate, international park slowdown, and ESPN streaming launch costs could temper near-term upside for shares if execution falters.