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Disney (DIS) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
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The Walt Disney Company (DIS - Free Report) reported first-quarter fiscal 2024 adjusted earnings of $1.22 per share, which beat the Zacks Consensus Estimate by 25.77% and increased 23.2% year over year.
Revenues rose 0.2% year over year to $23.5 billion but missed the consensus mark by 0.58%.
Shares of Disney have gained 9.5% year to date compared with the Zacks Consumer Discretionary sector’s rise of 8.7%.
The Walt Disney Company Price, Consensus and EPS Surprise
Media and Entertainment Distribution revenues (42.4% of revenues) decreased 6.5% year over year to $9.98 billion.
Revenues from Linear Networks declined 12.5% year over year to $2.8 billion. Direct-to-Consumer revenues increased 15% year over year to $5.54 billion. Content Sales/Licensing and Other revenues plunged 38.4% year over year to $1.63 billion.
Parks, Experiences and Products revenues (38.8% of revenues) increased 6.9% year over year to $9.13 billion. Domestic revenues were $6.29 billion, up 3.7% year over year. International revenues jumped 34.9% year over year to $1.47 billion in the reported quarter.
Meanwhile, revenues from Disney’s Consumer Products dropped 1.5% year over year to $1.35 billion.
Subscriber Details
Disney+, as of Dec 31, 2023, had 111.3 million paid subscribers compared with 112.6 million as of Sep 30, 2023.
Meanwhile, DIS’ Hulu ended the quarter with 49.7 million paid subscribers, up from 48.5 million reported in the previous quarter.
ESPN+ had 25.2 million paid subscribers at the end of the fiscal first quarter compared with 26 million at the end of the previous quarter.
Domestic Disney+ average monthly revenue per paid subscriber increased from $7.50 to $8.15 due to an improvement in retail pricing, partially offset by a higher mix of subscribers to promotional offerings.
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber decreased from $6.10 to $5.91 due to a higher mix of subscribers to promotional offerings.
Disney+ Hotstar average monthly revenue per paid subscriber increased from 70 cents to $1.28 due to improved advertising revenues and a rise in retail pricing, partially offset by a higher mix of subscribers from lower-priced markets.
Hulu SVOD Only average monthly revenue per paid subscriber grew from $12.11 to $12.29 due to a rise in retail pricing, partially offset by lower per-subscriber advertising revenues and a higher mix of subscribers to promotional offerings.
Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $90.08 to $93.61 due to an improvement in retail pricing.
The average monthly revenues per paid subscriber for ESPN+ grew 14% year over year to $6.09, driven by a rise in retail pricing and higher advertising revenues.
Operating Details
Costs & expenses decreased 4.2% year over year to $20.61 billion in the reported quarter.
Segmental operating income was $3.87 billion, up 27.4% year over year.
Media and Entertainment Distribution’s segmental operating income surged 153.3% year over year to $874 million.
Linear Networks’ operating income decreased 7.1% to $1.23 billion. Domestic operating income declined due to lower advertising revenues attributable to a decrease at the ABC Network and lower political advertising revenues at the owned TV stations. The decrease in international operating income was due to lower affiliate revenues, primarily attributable to fewer subscribers.
Direct-to-Consumer operating loss was $138 million, narrower than the year-ago quarter’s loss of $984 million. The decrease in operating loss was due to subscription revenue growth, attributable to higher rates because of increases in retail pricing across the company’s streaming services and subscriber growth at Disney+ Core and, to a lesser extent, Hulu.
Content Sales/Licensing and Other operating losses were $224 million compared with an operating loss of $1 million reported in the year-ago quarter. The increase in operating loss was due to the performance of The Marvels and Wish in the current quarter compared with Black Panther: Wakanda Forever, Avatar: The Way of Water and Strange World in the prior-year quarter.
Parks, Experiences and Products’ operating income was $3.1 billion, up 8.5% year over year.
The Domestic segment reported an operating income of $2.07 billion, down 1.7% year over year. Domestic Parks and Experiences witnessed a decrease in operating income due to lower results at domestic parks and resorts, largely offset by higher results at Disney Cruise Line.
The International segment reported an operating income of $328 million compared with $79 million in the year-ago quarter. International parks and experiences witnessed an improvement in operating results due to growth at Shanghai Disney Resort and higher operating income at Hong Kong Disneyland Resort.
Consumer Products’ operating profit increased 4.5% year over year to $700 million due to licensing revenue growth resulting from higher sales of products based on Spider-Man and Mickey and Friends, partially offset by a decrease in sales of products based on Star Wars.
Balance Sheet
As of Dec 31, 2023, cash and cash equivalents were $7.19 billion compared with $14.1 billion as of Sep 30, 2023.
Total borrowings were $47.68 billion as of Dec 31, 2023 compared with $42.1 billion as of Sep 30, 2023.
Free cash flow was $886 million in the reported quarter compared with $3.42 billion in the previous quarter.
The board of directors recently approved a new share repurchase program effective Feb 7, 2024, wherein the company plans to target $3 billion in repurchases in fiscal 2024.
Guidance
The company expects Disney+ Core subscriber net additions between 5.5 million and 6 million and ongoing positive momentum in ARPU in the fiscal second quarter.
The company is on track to meet or exceed $7.5 billion annualized savings target by the end of fiscal 2024.
Disney expects full-year fiscal 2024 earnings per share (EPS), excluding certain items, to increase at least 20% from 2023 to approximately $4.60. DIS continues to expect free cash flow generation in fiscal 2024 to be roughly $8 billion.
The company continues to expect the combined streaming businesses to reach profitability in the fourth quarter of fiscal 2024.
Image: Bigstock
Disney (DIS) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
The Walt Disney Company (DIS - Free Report) reported first-quarter fiscal 2024 adjusted earnings of $1.22 per share, which beat the Zacks Consensus Estimate by 25.77% and increased 23.2% year over year.
Revenues rose 0.2% year over year to $23.5 billion but missed the consensus mark by 0.58%.
Shares of Disney have gained 9.5% year to date compared with the Zacks Consumer Discretionary sector’s rise of 8.7%.
The Walt Disney Company Price, Consensus and EPS Surprise
The Walt Disney Company price-consensus-eps-surprise-chart | The Walt Disney Company Quote
Segment Details
Media and Entertainment Distribution revenues (42.4% of revenues) decreased 6.5% year over year to $9.98 billion.
Revenues from Linear Networks declined 12.5% year over year to $2.8 billion. Direct-to-Consumer revenues increased 15% year over year to $5.54 billion. Content Sales/Licensing and Other revenues plunged 38.4% year over year to $1.63 billion.
Parks, Experiences and Products revenues (38.8% of revenues) increased 6.9% year over year to $9.13 billion. Domestic revenues were $6.29 billion, up 3.7% year over year. International revenues jumped 34.9% year over year to $1.47 billion in the reported quarter.
Meanwhile, revenues from Disney’s Consumer Products dropped 1.5% year over year to $1.35 billion.
Subscriber Details
Disney+, as of Dec 31, 2023, had 111.3 million paid subscribers compared with 112.6 million as of Sep 30, 2023.
Meanwhile, DIS’ Hulu ended the quarter with 49.7 million paid subscribers, up from 48.5 million reported in the previous quarter.
ESPN+ had 25.2 million paid subscribers at the end of the fiscal first quarter compared with 26 million at the end of the previous quarter.
Domestic Disney+ average monthly revenue per paid subscriber increased from $7.50 to $8.15 due to an improvement in retail pricing, partially offset by a higher mix of subscribers to promotional offerings.
International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber decreased from $6.10 to $5.91 due to a higher mix of subscribers to promotional offerings.
Disney+ Hotstar average monthly revenue per paid subscriber increased from 70 cents to $1.28 due to improved advertising revenues and a rise in retail pricing, partially offset by a higher mix of subscribers from lower-priced markets.
Hulu SVOD Only average monthly revenue per paid subscriber grew from $12.11 to $12.29 due to a rise in retail pricing, partially offset by lower per-subscriber advertising revenues and a higher mix of subscribers to promotional offerings.
Hulu Live TV + SVOD average monthly revenue per paid subscriber increased from $90.08 to $93.61 due to an improvement in retail pricing.
The average monthly revenues per paid subscriber for ESPN+ grew 14% year over year to $6.09, driven by a rise in retail pricing and higher advertising revenues.
Operating Details
Costs & expenses decreased 4.2% year over year to $20.61 billion in the reported quarter.
Segmental operating income was $3.87 billion, up 27.4% year over year.
Media and Entertainment Distribution’s segmental operating income surged 153.3% year over year to $874 million.
Linear Networks’ operating income decreased 7.1% to $1.23 billion. Domestic operating income declined due to lower advertising revenues attributable to a decrease at the ABC Network and lower political advertising revenues at the owned TV stations. The decrease in international operating income was due to lower affiliate revenues, primarily attributable to fewer subscribers.
Direct-to-Consumer operating loss was $138 million, narrower than the year-ago quarter’s loss of $984 million. The decrease in operating loss was due to subscription revenue growth, attributable to higher rates because of increases in retail pricing across the company’s streaming services and subscriber growth at Disney+ Core and, to a lesser extent, Hulu.
Content Sales/Licensing and Other operating losses were $224 million compared with an operating loss of $1 million reported in the year-ago quarter. The increase in operating loss was due to the performance of The Marvels and Wish in the current quarter compared with Black Panther: Wakanda Forever, Avatar: The Way of Water and Strange World in the prior-year quarter.
Parks, Experiences and Products’ operating income was $3.1 billion, up 8.5% year over year.
The Domestic segment reported an operating income of $2.07 billion, down 1.7% year over year. Domestic Parks and Experiences witnessed a decrease in operating income due to lower results at domestic parks and resorts, largely offset by higher results at Disney Cruise Line.
The International segment reported an operating income of $328 million compared with $79 million in the year-ago quarter. International parks and experiences witnessed an improvement in operating results due to growth at Shanghai Disney Resort and higher operating income at Hong Kong Disneyland Resort.
Consumer Products’ operating profit increased 4.5% year over year to $700 million due to licensing revenue growth resulting from higher sales of products based on Spider-Man and Mickey and Friends, partially offset by a decrease in sales of products based on Star Wars.
Balance Sheet
As of Dec 31, 2023, cash and cash equivalents were $7.19 billion compared with $14.1 billion as of Sep 30, 2023.
Total borrowings were $47.68 billion as of Dec 31, 2023 compared with $42.1 billion as of Sep 30, 2023.
Free cash flow was $886 million in the reported quarter compared with $3.42 billion in the previous quarter.
The board of directors recently approved a new share repurchase program effective Feb 7, 2024, wherein the company plans to target $3 billion in repurchases in fiscal 2024.
Guidance
The company expects Disney+ Core subscriber net additions between 5.5 million and 6 million and ongoing positive momentum in ARPU in the fiscal second quarter.
The company is on track to meet or exceed $7.5 billion annualized savings target by the end of fiscal 2024.
Disney expects full-year fiscal 2024 earnings per share (EPS), excluding certain items, to increase at least 20% from 2023 to approximately $4.60. DIS continues to expect free cash flow generation in fiscal 2024 to be roughly $8 billion.
The company continues to expect the combined streaming businesses to reach profitability in the fourth quarter of fiscal 2024.
Zacks Rank & Stocks to Consider
Disney currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are Ralph Lauren (RL - Free Report) , AMC Networks (AMCX - Free Report) and Corsair Gaming (CRSR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ralph Lauren, AMC Networks and Corsair Gaming are scheduled to report the quarterly results on Feb 8, Feb 10 and Feb 13, respectively.
The Zacks Consensus Estimate for RL’s fourth-quarter 2023 EPS is pegged at $3.53 per share, up 1.7% over the past 30 days.
The Zacks Consensus Estimate for AMCX’s fourth-quarter 2023 EPS is pegged at 64 cents, which has been unchanged over the past 30 days.
The Zacks Consensus Estimate CRSR’s fourth-quarter 2023 EPS is pegged at 24 cents, which has been unchanged over the past 30 days.