Disney’s stock is down in premarket trading after releasing Q3 results that showed some weakness in the conventional entertainment TV segment. Despite this, the company raised its full-year adjusted EPS guidance to $5.85, beating expectations of $5.77. While adjusted EPS of $1.61 surpassed estimates, the decline in the entertainment TV segment overshadowed the strong performance of the parks and streaming divisions.
Revenue for the quarter ended June 28 increased by 2.1% year-over-year to $23.68 billion, in line with consensus estimates. The theme parks division saw a 13% growth in income to $2.52 billion, while the streaming segment reported a quarterly profit of $346 million.
However, the decline in conventional entertainment TV income by 28% and losses from the film studio overshadowed Disney’s overall performance. Despite this, the theme parks and streaming businesses showed strength.
Key financial and subscriber metrics for Disney’s Q3 include:
Headline Results
Adjusted EPS: $1.61 (Up from $1.39 y/y, Beats estimate of $1.46)
Revenue: $23.65B (+2.1% y/y, Slightly below estimate of $23.68B)
Revenue by Segment
Entertainment: $10.70B (+1.2% y/y, Below estimate of $10.82B)
Sports (mainly ESPN): $4.31B (-5.5% y/y, Missed estimate of $4.44B)
Experiences (Theme Parks, Cruises, etc.): $9.09B (+8.3% y/y, Beat estimate of $8.87B)
Eliminations (internal sales): -$448M (Down 21% y/y, non-core line item)
Operating Income by Segment
Total Operating Income: $4.58B (+8.3% y/y, Beat estimate of $4.47B)
Entertainment: $1.02B (-15% y/y, Below estimate of $1.11B)
Sports: $1.04B (+29% y/y, Beat estimate of $961.7M)
Experiences: $2.52B (+13% y/y, Beat estimate of $2.44B)
Streaming Metrics
Disney+ Total Subscribers:
127.8M (+1.4% QoQ)
Domestic (US/Canada): 57.8M (flat QoQ)
International: 69.9M (+2.5% QoQ)
Hulu Total Subscribers:
55.5M (+1.5% QoQ)
Hulu SVOD only: 51.2M (+1.8%)
Hulu Live TV + SVOD: 4.3M (-2.3%)
Average Revenue Per User (ARPU)
Disney+ ARPU: $7.86 (+1.2% QoQ)
Hulu SVOD ARPU: $12.40 (+0.3% QoQ)
Hulu Live TV + SVOD ARPU: $100.27 (+0.3% QoQ)
Looking ahead, Disney’s Q4 and full-year forecasts indicate strong profitability momentum:
Disney Q4 Forecast Summary:
Disney+ Subscribers: Expected to see a modest quarter-over-quarter increase
Total Streaming (Disney+ + Hulu): Forecasts net subscriber growth of over 10 million
Disney 2025 Full-Year Outlook Summary:
Adjusted EPS $5.85 (estimate $5.77)
Entertainment direct-to-consumer operating income $1.3 billion (estimate $1.22 billion)
Entertainment operating income growth double-digit percentage (estimate +24.2%)
Experiences operating income +8% (estimate +7.5%)
Sports operating income +18% (estimate +17.4%)
Cruise line pre-opening expense of about $185 million, with about $50 million in Q4
Equity loss from India JV about $200 million from purchase accounting amortization
Disney shares are trading slightly lower in premarket activity, with a 6% increase year-to-date. The stock is currently trading around Covid lows.
Additionally, Disney announced that the National Football League will acquire a 10% equity stake in ESPN.
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