DIS Q3 Deep Dive: Flat Revenue and Streaming Progress Amid Market Caution

Global entertainment and media company Disney (NYSE:DIS) missed Wall Street’s revenue expectations in Q3 CY2025, with sales flat year on year at $22.46 billion. Its non-GAAP profit of $1.11 per share was 8.4% above analysts’ consensus estimates.

Is now the time to buy DIS? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Disney’s third quarter saw flat year-over-year revenue and a significant market selloff after results missed Wall Street’s sales expectations. Management emphasized that growth in streaming operating income, improved margins, and robust performance in the Experiences segment were key positives. CEO Bob Iger highlighted the global appeal of recent film releases and the turnaround in direct-to-consumer profitability, noting, “Our DTC business was running a $4 billion operating loss just three years ago.” However, a cautious tone emerged around domestic park attendance and the evolving competitive landscape in media.

Looking forward, Disney’s strategic focus is on leveraging its content portfolio, expanding direct-to-consumer offerings, and investing in technology to boost engagement and operating margins. Management outlined plans for a unified streaming experience and signaled that new features, international market expansion, and increased adoption of bundled services will underpin growth. CFO Hugh Johnston noted, “We expect to grow the top line of that business by double digits,” while Iger described the upcoming studio slate and AI-driven initiatives as central to long-term revenue and margin expansion.

Key Insights from Management’s Remarks

Disney’s management attributed the quarter’s margin improvement and earnings growth to cost discipline, streaming profitability, and the success of recent film and content releases, even as revenue remained flat.

• Streaming turnaround: Management reported a substantial improvement in direct-to-consumer operating income, citing the roll-out of new streaming features and the integration of Hulu as Disney’s global general entertainment brand. Iger noted that, “operating income [in streaming] was up 39% in Q4,” and the business achieved $1.3 billion in annual operating profit, a $1.2 billion increase from last year.
• Film franchise strength: The company’s studios delivered multiple global hits, with new releases such as the live-action Lilo and Stitch achieving high viewership on Disney Plus and driving strong consumer product sales. Disney has produced four global franchise films earning over $1 billion each in the past two years, setting it apart from industry peers.
• ESPN direct-to-consumer launch: The launch of ESPN’s new streaming app attracted new users and increased engagement among existing subscribers. Management highlighted strong adoption of bundled packages (Disney Plus, Hulu, ESPN), with Iger stating that about 80% of new ESPN subscribers chose the trio bundle.
• Experiences segment resilience: The Experiences segment, which includes theme parks and cruises, reached record operating income for the quarter and full year. Management credited new cruise ship launches and expansion projects as key contributors, with bookings for the next quarter up and cruise utilization rates described as “very strong.”
• Advertising and international content: Disney saw advertising growth in sports and direct-to-consumer, with improving ad rates and supply. The company also continued to invest in local content and technology integration, aiming to increase engagement and unlock new markets, particularly as Hulu’s international expansion advances.

Drivers of Future Performance

Disney expects the next year’s growth to be driven by new content releases, technology upgrades, and continued streaming adoption, while closely monitoring cost efficiency and competitive pressures.

• New content slate and franchise momentum: Management is optimistic about upcoming film releases, such as Zootopia 2, Avatar: Fire and Ash, and Avengers: Doomsday, expecting these to drive box office and merchandise sales. They also see a strong pipeline extending into the next several years, supporting both theatrical and streaming engagement.
• Unified streaming and bundling strategy: Disney plans to consolidate its streaming offerings into a single app, enhance personalization through AI, and expand bundles with partners. Iger highlighted the goal of creating a “one-app experience” that integrates commerce, games, and park engagement, with bundling shown to reduce subscriber churn.
• Operational leverage and international expansion: The company aims to achieve double-digit revenue growth and improved margins in streaming by balancing investments in technology, content, and international market prioritization. CFO Hugh Johnston expects expenses to grow slower than revenue, helping to drive margin improvement even as Disney invests in product and international originals.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be focused on (1) the impact of Disney’s unified streaming app rollout and AI-driven personalization features, (2) the performance of new film releases and their effect on consumer products and theme park demand, and (3) the success of cruise expansion and international content initiatives. Developments in advertising markets and the resolution of key distribution negotiations will also be important to track.

Disney currently trades at $107.62, down from $116.72 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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