Disney Does Well Despite Hurricane Season
What a difference a year makes!
Disney Turns the Page
Photo: Coronado Beach Company
One year ago, Disney spent the week of its February earnings apart throwing everything at the wall to see what stuck.
That isn’t me saying that. Activist investor Nelson Peltz appeared on CNBC and dismissed Disney CEO Bob Iger with that quote.
Walt Disney Company
Peltz felt strongly that Disney lacked vision and was in desperate need of the vision only a ketchup bottle magnate could possess.
No, I’m not over it. Anyway. Wall Street heavily favored Disney, dealing Peltz the worst defeat of the billionaire’s career.
Photo: CNBC
Nine months later, Disney took a victory lap when it confirmed its annual revenue performance.
At the time, Iger and CFO Hugh Johnston warned that the Disney Experiences division faced headwinds due to two hurricanes.
Photo: CNBC
In a matter of weeks, Hurricane Helene and Hurricane Milton touched down in Florida and caused theme park closures.
So, Disney executives knew that the storms could cost the company as much as $130 million.
That’s in addition to $90 million in payments toward the completion of the Disney Treasure.
Basically, Disney Experiences was down $220 million, which is $73.3 million per month during this most recent quarter.
Photo: Disney
Still, I’m happy to report that Disney did well despite hurricane season. Let’s discuss the latest report.
Wall Street’s Expectations
Photo: Disney
As a reminder, Disney recently did the unthinkable. The company opened the books to reveal multi-year guidance.
During the Peltz nonsense in early 2024, Disney conversed with several major shareholders, including investment funds.
Photo: Disney
As a part of these conversations, Iger and his team learned that Wall Street felt strongly about Disney’s perceived lack of transparency.
Right or wrong, some shareholders sided with Peltz, even though he’d bring little to the table, as a punishment to Disney.
Photo: Disney
Since then, Iger and his team have learned to be proactive about the company, which is easier now that Disney is more stable.
Disney was opaque during 2023 and early 2024 because it was still kind of a mess due to Bob Chapek’s mistakes.
Photo: Disney
Iger didn’t want anyone sniffing around too carefully under he’d righted the ship. So, Peltz proved a nuisance more than anything else.
Once Disney’s CEO felt comfortable with that status of the company, he proudly threw open the books.
Photo: The Walt Disney Company
Iger all but shouted, “See? SEE!” to investors, signaling his confidence that Disney had stabilized.
Since then, Disney stock has experienced several ups and downs due to the tumultuous nature of the Peltz battle.
Photo: PepsiCo
Once Peltz went away, allegedly for good, many casual investors engaged in profit-taking, which led to a quick decline in the stock.
Later, the price gradually increased again then soared rapidly three months ago.
Photo: Disney
On November 15th, 2024, the stock reached $115 and has hovered in that range ever since.
At the close of business yesterday, the stock held at $113.28. Disney officials have welcomed that stability.
Photo: CNBC
Alas, that stability likely ends this morning, as the latest earnings report all but assures some movement.
We just don’t know which way yet, as it depends on Disney’s performance. So, how did Disney do?
Disney’s Performance
Credit: Disney
The stock movement typically depends on a few essential factors such as whether Disney reached certain goals.
Two of them are revenue and earnings per share, with Wall Street forecasting $24.62 billion and $1.45 in earnings per share.
The Walt Disney Company
In actuality, Disney reported revenue of $24.69 billion and a scintillating EPS of $1.76.
During the same quarter in 2024, Disney earned $22.08 billion and $1.21 per share.
So, for the fiscal first quarter of 2025, Disney increased its revenue by 11.8 percent.
Meanwhile, earnings per share went up by a scintillating 45 percent!
The Walt Disney Company
In terms of specific divisions, Disney Entertainment claimed a whopping $10.87 billion.
That’s a sizable increase of 8.9 percent from $9.98 billion during Q1 2024.
Mandatory Credit: Photo by JUSTIN LANE/EPA-EFE/Shutterstock
On the downside, Disney sports revenue ever so modestly increased from $4.84 billion last year to $4.85 billion in 2025.
In terms of operating income, this segment reversed its operating income loss of $103 million last year into a gain of $247 million this quarter.
About Disney Parks…
As I’ve stressed over the past five years, two divisions matter the most to you and to Disney.
For you, nothing matters more than Disney Experiences, the theme parks division.
Photo: Disney
As I mentioned, Disney faced an uphill struggle here due to some bad timing and even worse luck.
While we’re all grateful that the hurricanes largely overlooked Central Florida, Disney felt their financial impact.
Image: Disney
Consider that Disney Experiences earned $9.13 billion during Q1 2024.
So, that $220 million I mentioned represents a 2.5 percent disadvantage this division faced during the quarter. It’s sizable.
Still, Disney Experiences somehow managed to increase its year-over-year revenue by a narrow amount.
This division earned an exceptional $9.41 billion, which is an unexpected win for Disney as that’s 3.1 percent more than last year.
Image: Disney
MickeyBlog will discuss this more throughout the day, as we’ll learn other details during the upcoming earnings call.
Specifically, we’re watching for data about hotel occupancy rates and information regarding attendance and Disney cruise performance.
About Disney Streaming…
Photo: Natacha Rafalski on Instagram
However, we did learn about one other vital metric, which is revenue in the Direct-to-Consumer (DtC) division.
Disney has proved that this segment will turn a profit of at least $875 million during fiscal 2025.
Photo: The Walt Disney Company
So, that would require an approximate net profit of $219 million per quarter.
Disney managed $6.07 billion in its DtC division. On the subscriber side, Disney+ core subscribers dropped by 700,000 to 125 million.
Photo: Disney
This reflects good news for Disney, as the segment is now pacing for more than $1 billion for the year after operating income of $293 million.
Disney had expected some subscriber losses due to a price increase during the quarter. So, that part isn’t a surprise.
Photo: Disney
Overall, Disney returned a reliable performance during the quarter, thereby maintaining its stability.
As always, Wall Street will probably overreact to this news in some way. It’s just a question of how.
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