The Walt Disney Company’s shares surged during morning trading on May 7 after reporting solid second-quarter results for fiscal 2025, driven by strong demand for its streaming and theme park services. The results defied concerns about a slowdown in consumer spending. The company also announced plans to open its first theme park in the Middle East.
Income before taxes was $3.1 billion, up from $0.7 billion in the previous year, and total operating income was up 15 percent.
Operating income was robust across all segments, led by Domestic Parks & Experiences, which grew 13 percent to $1.8 billion, and consumer products, which grew 14 percent to $0.4 billion.
In addition, the company gave a robust outlook for the rest of the year, led by an 18 percent operating income growth in the sports segment, double-digit percentage growth in the entertainment segment, and 6 percent to 8 percent growth in the experience segment.
These solid results come after a series of disappointing reports due to the company’s struggle to compete effectively with video-streaming pioneer Netflix, which has seen its subscription services and revenues grow significantly.
Wall Street sent the company’s shares more than 10 percent higher during the morning session on May 7.
Beyond Wall Street, Disney’s solid results from its theme park business segment confirm that consumers spend generously on discretionary services, defying the recent gloomy prediction from the University of Michigan and the Conference Board of an impending collapse in consumer spending.
Attending the earnings conference call from the United Arab Emirates, Disney CEO Robert A. Iger announced that the company had reached an agreement with the country to build a Disney theme park in Abu Dhabi.
This will be the company’s seventh Disney theme park resort across the world. It will be funded, constructed, and operated by the Morale Group of Abu Dhabi, with Disney overseeing the design, licensing its IP, and providing operational expertise.
“With the addition of the cruise ships, we’re making ourselves very accessible to hundreds of millions of more people than we were in the past,” Iger said.
Regarding the strong second-quarter results, Iger attributed the company’s turnaround to the effective execution of its strategy.
“Our outstanding performance this quarter—with adjusted [earnings per share] up 20 percent from the prior year, driven by our Entertainment and Experiences businesses—underscores our continued success building for growth and executing across our strategic priorities,” he said in a statement.
At the same time, Iger struck a positive tone for the company’s future.
“Following an excellent first half of the fiscal year, we have a lot more to look forward to, including our upcoming theatrical slate, the launch of ESPN’s new DTC offering, and an unprecedented number of expansion projects underway in our Experiences segment,” he said.
“Overall, we remain optimistic about the direction of the company and our outlook for the remainder of the fiscal year.”
Commenting on the performance of different business segments during the earnings conference call, Mr. Iger dismissed concerns raised by several consumer product companies in recent weeks about a challenging macroeconomic environment.
“Despite questions around any macroeconomic uncertainty or the impact of competition, I’m encouraged by the strength and resilience of our business as evidenced in these earnings and the second half bookings at Walt Disney World,” he said.
“Our entertainment business, including movies, television series, news, and continues to generate strong growth. Our feature films continue to enjoy success at the global box office.”
Georgios Koimisis, associate professor of finance at Manhattan University, reacted positively to Disney’s report.
“Overall, Disney reported strong earnings this quarter, driven by higher spending at its U.S. parks and growing profits from its streaming services,” he told The Epoch Times via email.
However, he expressed skepticism about the company’s performance in its international parks, which was weakened mainly due to lower attendance and high operating costs.
“One key concern is the risk of new tariffs,” he said. “Tariffs would push up consumer prices, making people less likely to spend on travel, entertainment, or subscriptions. ”
If the U.S. imposes tariffs on imported goods or media, this could raise costs for Disney, especially for merchandise, technology, and production equipment, he said.
“Retaliatory tariffs from other countries could also hurt Disney’s overseas film revenues, particularly in big markets like China,” he said.
Hugh Johnston, senior executive vice president and chief financial officer at Disney, gave an upbeat forecast for theme parks.
“Bookings right now for Walt Disney World for the third quarter are up 4 percent,” he said. “And that’s with about what we would say is about 80 percent in, and then bookings are up 7 percent for the fourth quarter.”
