The Walt Disney Company Reports First Quarter Earnings for Fiscal 2024
BURBANK, Calif.----February 07, 2024--
The Walt Disney Company (NYSE: DIS) today reported earnings for its first quarter ended December 30, 2023.
Financial Results for the Quarter:
-- Revenues for the quarter were comparable to the prior-year quarter at
$23.5 billion.
-- Diluted earnings per share (EPS) for the quarter increased to $1.04
from $0.70 in the prior-year quarter.
-- Excluding certain items(1), diluted EPS for the quarter increased to
$1.22 from $0.99 in the prior-year quarter.
Key Points:
-- Our first quarter earnings results reflect the progress we've made in
our strategic transformation, as we continue to build from a position of
strength.
-- We are achieving significant cost reductions across our businesses, as
evidenced by the realization of over $500 million in selling, general and
administrative and other operating expense savings across the enterprise
in the first quarter.
-- We are on track to meet or exceed our $7.5 billion annualized savings
target by the end of fiscal 2024, while we continue to look for further
efficiency opportunities.
-- Based on the strength of first quarter results as well as our
expectations for the balance of the year, we expect full year fiscal 2024
earnings per share excluding certain items(1) to increase by at least 20%
versus 2023, to approximately $4.60.
-- Further, we continue to expect free cash flow(1) generation in fiscal
2024 to total roughly $8 billion.
-- We continue to expect to reach profitability at our combined streaming
businesses in the fourth quarter of fiscal 2024, and are making
tremendous progress in this area, with first quarter Entertainment DTC
operating losses improving by nearly $300 million versus the prior
quarter. We believe this business will ultimately be a key earnings
growth driver for the Company.
-- Hulu subscribers increased by 1.2 million from the prior quarter.
Disney+ Core subscribers decreased sequentially by 1.3 million, in line
with prior guidance and reflecting a substantial price increase in the
quarter as well as the end of the global summer promotion. Disney+ Core
ARPU increased sequentially by $0.14 versus the fourth quarter.
-- We expect Disney+ Core subscriber net additions of between 5.5 and 6
million and ongoing positive momentum in ARPU in the second quarter.
-- ESPN's domestic business grew both revenue and operating income year
over year in the first quarter, and we continue to build ESPN into the
world's preeminent digital sports platform.
-- At Experiences, we generated all-time records in revenue, operating
income, and operating margin in the first quarter, and we recently
celebrated the well-received openings of World of Frozen at Hong Kong
Disneyland Resort and Zootopia at Shanghai Disney Resort.
-- In February 2024, the Board of Directors approved a new share
repurchase program effective February 7, 2024; we plan to target $3
billion in repurchases in fiscal 2024.
-- The Board also declared on February 7, 2024 a cash dividend of $0.45
per share - an increase of 50% versus the last dividend paid in January -
payable July 25, 2024 to shareholders of record at the close of business
on July 8, 2024.
_________________
(1) Diluted EPS excluding certain items and free cash flow are non-GAAP
financial measures. The most comparable GAAP measures are diluted EPS
and cash provided by operations, respectively. See the discussion on
pages 18 through 21 for how we define and calculate these measures and
a quantitative reconciliation of historical measures thereof to the
most directly comparable GAAP measures and why Disney is not providing
forward-looking quantitative reconciliation to the most comparable GAAP
measures.
Message From Our CEO:
“Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation,” said Robert A. Iger, Chief Executive Officer, The Walt Disney Company. “Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences.
“As we build for the future, the steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content. Looking at the renewed strength of all of our businesses this quarter — from Sports, to Entertainment, to Experiences — we believe the stage is now set for significant growth and success, including ample opportunity to increase shareholder returns as our earnings and free cash flow continue to grow.”
SUMMARIZED FINANCIAL RESULTS
The following table summarizes first quarter results for fiscal 2024 and 2023:
Quarter Ended
------------------------------
($ in millions, except per December 30, December 31,
share amounts) 2023 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
(1) Total segment operating income, diluted EPS excluding certain items and
free cash flow are non-GAAP financial measures. The most comparable
GAAP measures are income before income taxes, diluted EPS and cash
provided by operations, respectively. See the discussion on pages 18
through 21 for how we define and calculate these measures and a
reconciliation thereof to the most directly comparable GAAP measures.
SUMMARIZED SEGMENT FINANCIAL RESULTS
The following table summarizes first quarter segment revenue and operating income (loss) for fiscal 2024 and 2023:
Quarter Ended
------------------------------
December 30, December 31,
($ in millions) 2023 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+.
DISCUSSION OF FIRST QUARTER SEGMENT RESULTS
Entertainment
Revenue and operating income (loss) for the Entertainment segment are as follows:
Quarter Ended
------------------------------ -----
December 30, December 31,
($ in millions) 2023 2022 Change
-------------- -------------- ---------
Revenues:
Linear Networks $ 2,803 $ 3,202 (12)%
Direct-to-Consumer 5,546 4,822 15%
Content Sales/Licensing
and Other 1,632 2,651 (38)%
--------- ---------
$ 9,981 $ 10,675 (7)%
========= =========
Operating income (loss):
Linear Networks $ 1,236 $ 1,330 (7)%
Direct-to-Consumer (138) (984) 86%
Content Sales/Licensing
and Other (224) (1) >(100)%
--------- ---------
$ 874 $ 345 >100%
========= =========
The increase in Entertainment operating income was due to improved results at Direct-to- Consumer, partially offset by a decline at Content Sales/Licensing and Other.