The Walt Disney Company reported its financial results for the first quarter of FY 2024, which ended December 30, 2023. The report showcases a mix of steady revenues, improved earnings per share (EPS), and significant progress towards strategic cost savings and streaming service profitability.
Related: Disney+ Subscribers Drop by over 1 Million in First Quarter of 2024
Overall Financial Performance:
- Revenues remained consistent year-over-year at $23.5 billion.
- Diluted EPS increased to $1.04 from $0.70, with adjusted EPS (excluding certain items) rising to $1.22 from $0.99.
- The company is on track with its cost reduction strategy, realizing over $500 million in savings this quarter toward a $7.5 billion annualized target.
The following table summarizes first quarter results for fiscal 2024 and 2023 (taken from the Walt Disney Company FY24 First Quarter Earnings Report):
| Quarter Ended | |||||||||
| ($ in millions, except per share amounts) | December 30, 2023 | December 31, 2022 | Change | ||||||
| Revenues | $ | 23,549 | $ | 23,512 | — | % | |||
| Income before income taxes | $ | 2,871 | $ | 1,773 | 62 | % | |||
| Total segment operating income(1) | $ | 3,876 | $ | 3,043 | 27 | % | |||
| Diluted EPS | $ | 1.04 | $ | 0.70 | 49 | % | |||
| Diluted EPS excluding certain items(1) | $ | 1.22 | $ | 0.99 | 23 | % | |||
| Cash provided by (used in) operations | $ | 2,185 | $ | (974 | ) | nm | |||
| Free cash flow(1) | $ | 886 | $ | (2,155 | ) | nm | |||
Direct-to-Consumer (DTC) Segment:
- The DTC segment, encompassing Disney+, Hulu, and ESPN+, is nearing its profitability milestone with a reduced operating loss and improved performance.
- Disney+ Core experienced a decrease in subscribers by 1.3 million due to price adjustments but saw an increase in ARPU, signaling a strategic pivot towards revenue quality.
- Disney+ Hotstar added 700,000 subscribers, contributing positively to the overall subscriber base.
- Hulu saw an increase of 1.2 million subscribers, indicating robust growth in this segment.
ESPN and Sports Streaming Venture:
- ESPN’s domestic operations reported growth in both revenue and operating income, reaffirming its position as a key player in the sports content arena.
- The announcement of a new sports streaming venture with Fox and Warner Bros. Discovery signifies Disney’s ambition to expand its footprint in sports broadcasting and streaming.
Experiences and Products Segment:
- This segment reported record-breaking revenue, operating income, and margin, driven by strong performance at its parks and resorts.
- Experiences noted a 7% increase in revenue over the Q1 in FY 2023, with a 4% increase in the performance at domestic parks and a 35% increase in the international parks segment.
- Notable openings like the World of Frozen at Hong Kong Disneyland Resort and Zootopia at Shanghai Disney Resort have been well received, contributing to the segment’s success.
The following table summarizes first quarter segment revenue and operating income (loss) for fiscal 2024 and 2023 (taken from the Walt Disney Company FY24 First Quarter Earnings Report):
| Quarter Ended | ||||||||||
| ($ in millions) | December 30, 2023 | December 31, 2022 | Change | |||||||
| Revenues: | ||||||||||
| Entertainment | $ | 9,981 | $ | 10,675 | (7 | )% | ||||
| Sports | 4,835 | 4,640 | 4 | % | ||||||
| Experiences | 9,132 | 8,545 | 7 | % | ||||||
| Eliminations(2) | (399 | ) | (348 | ) | (15 | )% | ||||
| Total revenues | $ | 23,549 | $ | 23,512 | — | % | ||||
| Segment operating income (loss): | ||||||||||
| Entertainment | $ | 874 | $ | 345 | >100 | % | ||||
| Sports | (103 | ) | (164 | ) | 37 | % | ||||
| Experiences | 3,105 | 2,862 | 8 | % | ||||||
| Total segment operating income(1) | $ | 3,876 | $ | 3,043 | 27 | % | ||||
| (1) | Total segment operating income is a non-GAAP financial measure. The most comparable GAAP measure is income before income taxes. See the discussion on pages 18 through 21. | |
| (2) | Reflects fees paid by Direct-to-Consumer to Sports and other Entertainment businesses for the right to air their linear networks on Hulu Live and fees paid by Entertainment to Sports to program sports on the ABC Network and Star+. |
Strategic Cost Management and Efficiency:
- Disney’s aggressive cost management strategy is yielding significant savings, putting the company on track to exceed its ambitious savings target.
- These efforts are crucial as the company aims to streamline operations and enhance profitability across all business units.
Capital Allocation and Shareholder Returns:
- The board’s approval of a new $3 billion share repurchase program for fiscal 2024 underscores Disney’s commitment to delivering shareholder value.
- An increase in the cash dividend to $0.45 per share reflects confidence in the company’s financial health and future prospects.
CEO’s Outlook:
- CEO Robert A. Iger emphasized the transformative strides Disney has made, pointing to a new era of growth and shareholder value creation. The focus on fortifying ESPN, achieving streaming profitability, rejuvenating film studios, and turbocharging the parks and experiences segment are central to Disney’s strategy.
Overall Summary:
Disney’s Q1 2024 earnings report illustrates a company in transition, making significant headway toward strategic cost savings, streaming profitability, and a stronger, more focused operational model. Through targeted investments in content, strategic pricing adjustments, and a keen eye on cost efficiencies, Disney is poised for sustained growth across its diverse portfolio of businesses.
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