Streaming strength and Parks expansion offset softness in Sports for Disney in Q3 FY2025

Overview

The Walt Disney Company reported a mixed but resilient Q3 FY2025 performance, driven by continued growth in Direct-to-Consumer streaming and the Experiences segment, while Sports segment profitability was pressured by rising content costs.

CEO Bob Iger emphasized the company’s progress in expanding its streaming ecosystem, enhancing its theme park offerings, and investing in new international experiences, positioning Disney for sustainable long-term growth: “We are pleased with our creative success and financial performance in Q3 as we continue to execute across our strategic priorities. The company is taking major steps forward in streaming with the upcoming launch of ESPN’s direct-to-consumer service, our just-announced plans with the NFL, and our forthcoming integration of Hulu into Disney+, creating a truly differentiated streaming proposition that harnesses the highest caliber brands and franchises, general entertainment, family programming, news, and industry-leading sports content. And we have more expansions underway around the world in our parks and experiences than at any other time in our history. With ambitious plans ahead for all our businesses, we’re not done building, and we are excited for Disney’s future.”

Q3 FY2025 vs. Q3 FY2024:

Revenue increased slightly to $23.65bn (+2% YoY), reflecting streaming and Experiences growth partially offset by softer Sports and Linear Networks.
- Entertainment revenue grew to $10.70bn (+1% YoY), with operating income of $1.02bn (-15% YoY), pressured by declines in Linear Networks (-$269m) and lower content sales (-$275m), partially offset by a $365m increase in DTC operating income. Disney+ subscribers reached 128m (+1.8m QoQ), with 183m total Disney+ and Hulu subs combined (+2.6m QoQ).
- Sports revenue declined to $4.31bn (-5% YoY), as higher programming costs offset advertising growth (+3%). Operating income reached to $1.04bn (+29% YoY), reflecting the prior-year $314m loss from the Star India transaction. Domestic ESPN operating income down 7% YoY due to elevated costs for NBA and college sports rights.
- Experiences (Parks, Resorts & Cruise) revenue rose to $9.09bn (+8% YoY), with operating income of $2.52bn (+13% YoY), benefiting from Easter holiday timing (~$40m), strong U.S. park attendance, and ~$30m cruise growth. Cruise line occupancy exceeded 95% with strong forward bookings.
Income before income taxes was $3.21bn (+4% YoY), demonstrating operating efficiency and cost discipline.
Total segment operating income grew to $4.58bn (+8% YoY), supported by Parks and Sports rebound.
GAAP Diluted EPS rose to $2.92 (>100% YoY vs. $1.43), boosted by operational growth and non-recurring items.
Adjusted EPS recorded a value of $1.61 (+16% YoY), driven by margin improvements in Experiences and DTC.
Operating cash flow increased to $3.67bn (+41% YoY), while free cash flow also grew to $1.89bn (+53% YoY), reflecting stronger earnings conversion.
Disney repurchased $750m in shares during the quarter, totaling $1.75bn YTD FY2025. Quarterly dividend declared was $0.45 per share, consistent with Q2.

Disney projects a strong finish to FY2025, with Q4 subscriber growth exceeding 10m across Disney+ and Hulu, largely driven by Hulu’s expansion under the new Charter deal, while Disney+ is expected to see modest sequential gains. Management reaffirmed full-year adjusted EPS of ~$5.85, an 18% increase versus FY2024, supported by double-digit segment operating income growth in Entertainment, 18% growth in Sports, and 8% growth in Experiences. The company anticipates $1.3bn in Direct-to-Consumer operating income, with pre-opening cruise expenses of $185m ($50m in Q4) and an expected ~$200m equity loss from the India JV related to purchase accounting amortization. Disney continues to focus on streaming profitability, robust park performance, and disciplined capital allocation to drive sustainable long-term shareholder value.

Disney’s stock is currently trading down 3.25%, after the earnings release report. The 50-day simple moving average is at $118.77, while the 200-day simple moving average stands at $108.10. The price has recently dropped below the 50-day SMA, signaling short-term bearish pressure. The RSI (14) is at 36.39, approaching the oversold territory, which may indicate a potential stabilization or short-term rebound. Key support is seen in the $110-$112 range, while a break below could lead the stock toward the $105 area, near the 200-day SMA. A recovery above the 50-day SMA could shift momentum back toward a bullish outlook.