Disney’s Q1 earnings surge as streaming revenue grows despite subscriber dip

The Walt Disney Company has started fiscal 2025 on a strong note, reporting first-quarter earnings that exceeded expectations, driven by higher revenue from its streaming business. Despite a slight decline in Disney+ subscriber growth, the company demonstrated improved profitability in its direct-to-consumer (DTC) segment, reinforcing its long-term streaming strategy. Investors responded positively to the earnings report, with Disney’s stock rising 0.4% in premarket trading to $113.74, even as the broader market faced downward pressure, with S&P 500 futures down 0.4%.

How Did Disney’s Financial Performance Compare to Last Year?

Disney reported $24.7 billion in total revenue for the quarter ending December 28, 2024, marking a 5% increase from $23.5 billion in Q1 2024. Income before taxes surged 27%, climbing to $3.7 billion from $2.9 billion in the prior-year quarter. Earnings per share (EPS) experienced substantial growth, with diluted EPS rising 35% to $1.40, compared to $1.04 in the same period last year. Adjusted EPS, which excludes one-time items, rose 44% to $1.76, reflecting Disney’s efforts to drive higher profitability. The company’s total segment operating income grew 31%, reaching $5.1 billion, showcasing the impact of strategic pricing adjustments and operational efficiencies.

What Drove Disney’s Streaming Revenue Growth?

Disney’s direct-to-consumer (DTC) business, which includes Disney+, Hulu, and ESPN+, saw a significant turnaround, with operating income improving by $431 million, shifting from a $138 million loss in Q1 2024 to a $293 million gain this quarter. The primary driver behind this growth was higher Disney streaming revenue, fueled by subscription price increases.

Despite revenue gains, Disney+ subscriber growth declined slightly, with a net loss of 0.7 million subscribers, bringing total subscriptions to 125 million. However, the company successfully increased its average revenue per user (ARPU), with Disney+ Core and Hulu seeing improved advertising revenue. The decline in Disney+ subscribers was primarily attributed to the performance of Disney+ Hotstar in India, where advertising revenue fell due to the recent merger of Disney’s Star India business with Reliance Industries.

Did Disney’s Theme Parks and Experiences Segment Maintain Growth?

Disney’s Experiences division, which encompasses theme parks, cruise lines, and resorts, remained a vital revenue contributor, generating $3.1 billion in operating income, which was in line with the previous year. However, growth was impacted by external factors, including natural disasters and pre-opening costs. The company reported that Hurricanes Milton and Helene led to a $120 million revenue loss, while an additional $75 million in pre-opening expenses was attributed to the Disney Treasure cruise ship launch.

While revenue from domestic parks declined 5%, this was offset by strong international park attendance, where operating income increased by 28% year-over-year. The continued demand for Disney’s global theme park offerings demonstrated the brand’s resilience, even in the face of temporary setbacks caused by weather-related disruptions.

How Did ESPN and Disney’s Sports Division Perform?

Disney’s Sports segment, led by ESPN, experienced a notable resurgence, with operating income rising by $350 million, reaching $247 million compared to a loss in the previous year. This growth was driven by domestic ESPN advertising revenue, which increased 15%, as higher ad rates and the expansion of College Football Playoff programming contributed to stronger earnings.

A key strategic move was ESPN’s integration into Disney+, aimed at capturing a larger digital audience for live sports content. With a standalone ESPN streaming service expected to launch in 2025, Disney is making significant investments to strengthen its position in the sports streaming market, where demand for live events remains a major revenue driver.

What Are Disney’s Strategic Priorities for 2025?

Disney is projecting high-single-digit adjusted EPS growth for the full fiscal year, with a continued focus on expanding Disney streaming revenue, improving cost efficiencies, and driving profitability. The company is optimistic about further revenue gains from its streaming business through pricing adjustments and premium content offerings.

Disney’s Experiences segment is expected to continue growing despite short-term setbacks, as the company remains committed to investing in theme parks and cruise line expansion. Additionally, ESPN’s evolution into a stronger digital platform remains a priority, with sports segment operating income projected to grow by 13% in 2025. The company also expects to generate $15 billion in cash flow, reinforcing its ability to invest in content, theme parks, and streaming innovations.

CEO Bob Iger’s Outlook on Disney’s Growth Strategy

Disney CEO Robert A. Iger emphasized the company’s strong momentum, stating that Disney’s performance in the first quarter demonstrated the company’s ability to drive profitability while advancing its long-term goals. He pointed to the success of recent theatrical releases, the turnaround in streaming business profitability, and the growing influence of ESPN’s digital strategy as indicators of a promising trajectory for 2025.

With a strong financial foundation, a focused approach to high-margin revenue growth, and strategic investments in sports, theme parks, and entertainment, Disney’s Q1 earnings report highlights its ability to navigate a shifting media landscape while delivering strong shareholder value.