WALT DISNEY CO/THE (DIS) Earnings Summary for Q3 FY2024

Key Metrics

WALT DISNEY CO/THE (DIS) Q3 2024 Earnings Metrics:

• Revenue:
  • Total Revenue: $23,155 million (4% yoy)
  • Entertainment: $10,580 million (4% yoy)
  • Sports: $4,558 million (5% yoy)
  • Experiences: $8,386 million (2% yoy)
• Segment Operating Income:
  • Total Segment Operating Income: $4,225 million (>100% yoy)
  • Entertainment: $1,201 million (>100% yoy)
  • Sports: $802 million (-6% yoy)
  • Experiences: $2,222 million (-3% yoy)
• DTC Streaming:
  • Total Revenue: $5,805 million (not provided yoy)
  • Operating Income: $(19) million (not provided yoy)
• Cash from Operations:
  • Cash Provided by Operations: $8,453 million (67% yoy)
• Subscriptions (Total DTC):
  • Total DTC Subscriptions: 149.4 million (not provided yoy)
  • Disney+: 118.3 million (not provided yoy)
    • Disney+ Core: 118.3 million (not provided yoy)
      • Domestic (ex-Hotstar): 54.8 million (not provided yoy)
      • International (ex-Hotstar): 63.5 million (not provided yoy)
    • Disney+ Hotstar: 35.5 million (not provided yoy)
  • Total Hulu: 51.1 million (not provided yoy)
    • Hulu SVOD Only: 46.7 million (not provided yoy)
    • Live TV + SVOD: 4.4 million (not provided yoy)
• ARPU (Average Revenue Per User):
  • Disney+ Core: $7.22 (not provided yoy)
  • Domestic (ex-Hotstar): $7.74 (not provided yoy)
  • International (ex-Hotstar): $6.78 (not provided yoy)
  • Disney+ Hotstar: $1.05 (not provided yoy)
  • Hulu SVOD Only: $12.73 (not provided yoy)
  • Hulu Live TV + SVOD: $96.11 (not provided yoy)

Forward guidance

1. Free Cash Flow: Expected to be $8 billion for FY2024, with no material changes anticipated.
2. Disney+ Profitability: Aiming for double-digit margins, with no specific timing provided but progress is being made.
3. Cruise Ship Costs: Anticipated startup costs for cruise ships in 2025 will be over double the costs incurred in 2024.
4. Parks Revenue: Expect flattish revenue in Q4 2024, with a continuation of similar results for a few quarters.
5. NBA Contract Impact: New NBA contract begins in fiscal 2026, expected to drive significant revenue growth, but profitability in early years is not specified.
6. Content Spending: Continued significant investment across sports, scripted TV, and movies to drive future growth.
7. International Parks Strength: Anticipated improvement in international park attendance post-Olympics, particularly at Disneyland Paris.

Key takeaways

• Positives:
  • Hugh Johnston noted, "We actually had 2% revenue growth in Q3," indicating resilience in demand despite some moderation. The strength of Disney's IP continues to attract audiences, supporting park attendance and revenue.
  • Bob Iger emphasized the value of the NBA deal, stating, "It reflects the growing value of basketball and the growing value of women's sports," suggesting potential for increased revenue from sports programming.
  • Iger expressed confidence in Disney+, stating, "We feel very bullish about the future of this business," highlighting the success of recent content and the potential for pricing power despite recent increases.
  • Johnston reported, "Advertising grew 8% for the quarter," with ESPN up 17%, indicating a healthy ad market bolstered by live sports and effective audience targeting.
• Negatives:
  • Johnston acknowledged, "We saw a slight moderation in demand," particularly from lower-income consumers, which could impact future attendance and revenue in parks.
  • Iger mentioned, "We do have some expenses attached to our ships coming in," indicating potential cost pressures in the Experiences segment as new cruise ships are introduced.
  • Johnston noted, "The lower income consumer is feeling a little bit of stress," which may lead to continued softness in park attendance and spending.
  • Iger stated, "We're still having conversations about [ESPN] partnerships," suggesting ongoing uncertainty in strategic direction for ESPN amidst competitive pressures.

Peer Summary

• Consumer Demand Softening: Multiple competitors, including Disney, noted a "slight moderation in demand," particularly from lower-income consumers, which could impact attendance and spending across parks and experiences.
• Advertising Revenue Trends: Comcast reported a 19% revenue increase in its Content & Experiences segment, driven by the Olympics, while Warner Bros Discovery noted a 7% decline in overall advertising revenue, indicating mixed sentiment in the advertising market.
• Streaming Growth: Warner Bros Discovery anticipates strong subscriber growth for its D2C segment, projecting over 110 million subscribers, while Netflix expects significant revenue growth driven by membership increases, highlighting competitive pressures in the streaming space.
• Cost Pressures: Disney and its competitors face rising costs, with Disney mentioning expenses related to new cruise ships, while Paramount Global is implementing $500 million in cost savings, reflecting broader industry challenges in managing operational expenses.
• Content Strategy: Paramount Global and Warner Bros Discovery emphasized the importance of hit content in driving subscriber growth, indicating a competitive focus on content quality and strategic releases to capture audience attention.