Disney beats earnings expectations despite revenue miss
By Josh White
Date: Wednesday 06 Aug 2025
(Sharecast News) - Walt Disney reported stronger-than-expected earnings for its third quarter on Wednesday, driven by continued growth in its streaming business and higher spending at US theme parks, although revenue just missed expectations as its traditional television networks weighed on overall results.
The entertainment giant also raised its full-year profit outlook, citing strategic gains in streaming and experiences.
Adjusted earnings per share rose 16% year-on-year to $1.61, topping Wall Street expectations of $1.47.
Revenue increased 2% to $23.65bn, narrowly missing estimates of $23.73bn.
Net income more than doubled to $5.26bn, or $2.92 per share, due in part to tax benefits linked to Disney's acquisition of Comcast's Hulu stake.
Disney's direct-to-consumer segment, which includes Disney+ and Hulu, posted a $346m profit, reversing a $19m loss a year ago.
Revenue in the unit grew 6% to $6.18bn, supported by a net gain of 1.8 million Disney+ subscribers, bringing the total to 128m.
Hulu subscriptions rose to 55.5m, lifting total subscriptions across both platforms to 183m.
Chief financial officer Hugh Johnston highlighted the turnaround in streaming.
"Just a couple of years ago we were losing a billion dollars a quarter," he said.
"We now really have a solid foundation."
In response to growing momentum, Disney lifted its full-year adjusted earnings per share forecast to $5.85, up from its May guidance of $5.75 and representing an 18% increase over 2024.
Theme parks and experiences also delivered strong performance, with segment revenue up 8% to $9.09bn and operating income rising 13% to $2.5bn.
Domestic parks led the gains, with operating income climbing 22% to $1.7bn, driven by increased guest spending, higher hotel occupancy, and a rise in cruise passenger volumes.
CFO Johnston said Walt Disney World had its "biggest third quarter ever" and reported "solid" traffic despite concerns about US consumer demand.
Conversely, Disney's entertainment division saw operating income fall 15% to $1bn, as gains in streaming were offset by declines in traditional television and a weaker film slate.
Linear network revenue dropped 15% to $2.27bn, with operating income plunging 28% to $697m, due to lower advertising revenue and international declines following the Star India transaction.
Theatrical revenue rose 7% to $2.26bn, but the unit recorded a $21m operating loss, compared with $254m in profit a year earlier.
That was due to weaker box office returns from films such as Elio and Thunderbolts, in contrast to last year's record-setting Inside Out 2.
Lilo & Stitch partially offset the shortfall but its strong performance will be reflected more fully in the next quarter.
Disney's sports division, anchored by ESPN, posted operating income of $1bn, up 29% year-on-year, though domestic ESPN profit fell 7% due to higher programming costs.
On Tuesday, Disney announced that the NFL would take a 10% equity stake in ESPN, as part of a broader deal giving ESPN control of NFL Media assets, including NFL Network and RedZone.
ESPN's new streaming service, set to launch 21 August, would feature bundled NFL content, including live WWE events beginning in 2026 under a separate $1.6bn rights deal.
CEO Bob Iger said the company was making "major steps forward in streaming," citing the Hulu integration into Disney+, the ESPN-NFL partnership, and global park expansions.
"We're not done building, and we are excited for Disney's future," he added.
Looking ahead, Disney said it expected Disney+ and Hulu subscriptions to grow by more than 10 million in the fourth quarter, driven primarily by an expanded distribution deal with Charter.
The company reaffirmed its target of $1.3bn in streaming profits for the 2025 financial year.
At 0815 EDT (1315 BST), shares in the Walt Disney Company were down 2.25% in premarket trading in New York at $115.80.
Reporting by Josh White for Sharecast.com.
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