The Walt Disney Firm reported its first quarter fiscal 2025 earnings, with the corporate’s Experiences (Parks & Resorts + Client Merchandise) reporting $9.4 billion in income from October by means of December. This covers the nice & dangerous of those outcomes as they relate to Walt Disney World & Disneyland, together with feedback about Lightning Lanes, Epic Universe, park attendance, and extra.
Firm-wide, Disney’s earnings beat on the highest and backside strains, with earnings per share of $1.76 adjusted versus $1.45 anticipated and income of $24.69 billion versus $24.62 billion anticipated. Internet revenue elevated almost 23% to $2.64 billion, or $1.40 per share, from $2.15 billion or $1.04 per share, throughout the identical quarter final yr. That quantity jumps to $1.76 after adjusting for one-time gadgets.
Though not likely related to this website save for the lengthy shadow it casts over every part else, the corporate’s streaming enterprise reported one other quarter of profitability regardless of a 1% decline in subscribers for Disney+. Nevertheless, home subscriptions for the streaming service elevated by 1%, as worldwide numbers declined 2%. This was in step with earlier warnings from the corporate, which have been reiterated once more on this name as Disney suggested buyers it expects one other “modest decline” in subscribers in the course of the second quarter. Complete paid Disney+ subscriptions stand at 124.6 million; whole Hulu subscriptions rose 3% in the course of the quarter to 53.6 million.
Disney’s Experiences division (which incorporates Parks & Resorts) income rose 3% in the course of the quarter to $9.42 billion. Home theme park income accounted for 68% of the division’s whole, or $6.43 billion. Whereas that income marked a 2% enchancment over the identical quarter final yr, the mixture of Hurricanes Milton and Helene coupled with declines in attendance and investments in Disney’s fleet of cruise ships dragged down home working revenue.
Beforehand, Disney warned that working revenue can be adversely impacted by roughly $130 million as a result of Hurricanes Helene and Milton, the latter of which brought about the parks to shut and had a protracted tail of decrease crowds as a result of cancellations within the days and weeks afterwards. Surely, the antagonistic impression of the hurricanes was $120 million, together with one other $75 million in pre-launch prices for the Disney Treasure. That amounted to a 6% destructive impression on working revenue development for Disney Experiences.
All instructed, the Experiences division posted a 5% decline in home theme park working revenue for the quarter, at $1.98 billion. The corporate attributed this to a modest lower in attendance and flat occupancy, coupled with 4% larger per visitor spending. That quantity can be considerably higher however for the aforementioned hurricanes–the weeks across the two noticed considerably decrease crowds.
In the meantime, the worldwide parks have been up a whopping 28% to $420 million. Disney attributes this to each larger attendance and visitor spending, partially offset by larger prices as a result of new visitor choices.
The sturdy overperformance of the worldwide parks is well the largest merchandise of curiosity to me from your complete earnings name. Though Disney didn’t say as a lot, that is possible attributable largely to Hong Kong Disneyland and Shanghai Disneyland, the place it was the primary full vacation seasons for World of Frozen and the Zootopia Land.
As we noticed firsthand, the Arendelle space at HKDL is extremely common and the brand new Christmas choices have been an enormous hit with friends. This but once more proves that the parks can play video games attempting to squeeze extra spending out of friends, however one of the best ways to enhance the underside line is constructing new points of interest.
Up 28% on larger attendance and spending regardless of larger prices. All of that makes full sense primarily based on what we noticed, with slammed present outlets full of individuals shopping for Frozen and Duffy stuff, together with extra leisure than you could possibly shake a stick at. The kind of win-win for friends and the corporate that you just like to see. (Get Walt Disney World leaders on a airplane to Hong Kong for a “analysis journey” to see how that strategy advantages everybody!)
Additionally attention-grabbing was the ahead outlook for 2025. Within the Govt Commentary, the corporate reiterated that it anticipated fiscal 2025 development for the Experiences phase in the course of the full-year to be 6% to eight% as in comparison with 2024, with development weighted within the second half of the yr. This implies that they’re nonetheless anticipating Could by means of October to be high-growth.
Throughout an interview on CNBC and the earnings name itself, Disney CFO Hugh Johnston expressed enthusiasm for the Experiences phase, indicating it carried out higher than anticipated for the fiscal quarter. This, in flip, reinforces the corporate’s optimism for six% to eight% development.
When requested particularly concerning the opening of Epic Universe, Johnston responded that the corporate anticipated the brand new park to have a “small impression” on the fiscal yr. The analyst who requested the query indicated that Epic Universe’s impression on Walt Disney World is the #1 query he receives. Regardless of that, Johnston didn’t actually say something of substance nor did he use the phrases “Common” or “Epic Universe.”
In all probability a sensible transfer to keep away from headline-grabbing quotes and depriving us of something to speak about. Though we already know from the final earnings name that Bob Iger and Johnston imagine that Common’s Epic Universe can be “really constructive” and “helpful” to Walt Disney World’s attendance and backside line. This time, Johnston famous that the 6-8% development elements within the “small impression” of Common’s Epic Universe (however not by that identify).
In equity, Johnston additionally didn’t actually focus on something within the pipeline for Walt Disney World or Disneyland this summer season, both, regardless of leisure being possible drivers of attendance. He did say that the “shopper is a bit stronger than we’d have anticipated.” He added that buyers are “very worth centered, and in case you ship worth to them, they’re prepared to pay the value for it.” Fascinating take, and one with which many followers would agree…albeit maybe not in the way in which he’s making the purpose.
All of this largely aligns with expectations. Beforehand, Disney CEO Bob Iger warned buyers of attendance softness and “demand moderation” into 2025. That was nothing new, as the corporate has cautioned of a slowdown at Walt Disney World. They’ve beforehand attributed this to the top of “revenge journey,” lapping the fiftieth Anniversary, and poor climate.
The one different feedback of curiosity from the earnings name got here in response to a query about Lightning Lane Premier Go and its uptake. Johnston declined to supply stats about its adoption price, however described it as a premium product and emphasised that Disney is taking a measured strategy to its rollout. He added: “It’s very a lot in step with our expectations, however we’re transferring gently with that product as a way to make it a fantastic expertise, each for the purchasers of the product, and for the remainder of our friends within the park. We really feel nice about it, and that it’s going to construct over time, however it is extremely a lot the early days.”
It’s attention-grabbing that the corporate nonetheless expects Lightning Lane Premier Go to “construct over time” on condition that it’s already had resort restrictions eliminated and is now obtainable to all friends. So both Johnston didn’t know that had occurred already (totally believable), it didn’t occur in the course of the quarter being mentioned so he didn’t point out it (equally believable), or there’s additional growth of LLPP to come back.
That final one can be a risk, particularly in the direction of the beginning of the following fiscal yr if Disney must determine alternatives for “development” on flat or down attendance. The plain choices are a Multi-Park Lightning Lane Premier Go or Lightning Lane Premier Go Limitless. Neither would shock me, as the previous is already obtainable at Disneyland and the latter exists at Common. As we’ve talked about beforehand, the considerations can be cannibalizing VIP tour gross sales or reducing size of keep. It’s not a web constructive for the corporate if high-spending friends all of the sudden are doing shorter journeys in expensive Deluxe Resorts.
Finally, it was a robust quarter for the corporate as a complete, however particularly the Parks & Resorts division. Walt Disney World and Disneyland are nonetheless performing properly sufficient, nevertheless it does appear more and more clear that the story for the following couple of years can be discovering methods to squeeze “development” with out really rising the enterprise.
Conversely, the precise development and growth of the worldwide parks is basically spectacular. Hopefully that reinforces the corporate’s bullishness within the enterprise, and investing $60 billion in Parks & Resorts over the following decade.
Keep in mind when Disney really elevated spending on streaming, believing it was the long run? It’d be superior to see a uncommon win like that for Parks & Resorts, with Disney upping that quantity to $70 billion. Wishful considering, I do know–nevertheless it’s what ought to occur if years upon years of earnings outcomes have been dictating these selections.
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YOUR THOUGHTS
Ideas on the Walt Disney Firm’s Q1FY25 earnings? What do you consider the corporate’s evaluation that Epic Universe could have a “small impression” on Walt Disney World? Will the opening of Epic Universe lead to decrease attendance or does a rising tide carry all boats? Anticipate Lightning Lane Premier Go to one way or the other broaden once more? Ideas on the 28% development of the worldwide parks pushed by precise growth? Do you agree or disagree with our evaluation? Every other ideas or commentary so as to add? Any questions we may also help you reply? Listening to your suggestions–even if you disagree with us–is each attention-grabbing to us and useful to different readers, so please share your ideas under within the feedback!
