Disney (DIS) Q2 Earnings Beat Estimates, Revenues Rise Y/Y

Core Insights - The Walt Disney Company reported second-quarter fiscal 2024 adjusted earnings of $1.21 per share, exceeding the Zacks Consensus Estimate by 8.04% and reflecting a year-over-year increase of 30.1% [1] - Revenues for the quarter rose 1.2% year over year to $22.08 billion, but fell short of the consensus estimate by 0.23% [1] - Disney's shares have increased by 16.7% year to date, contrasting with a 2.8% decline in the Zacks Consumer Discretionary sector [1] Segment Details - Media and Entertainment Distribution revenues, accounting for 44.4% of total revenues, decreased by 5% year over year to $9.79 billion [2] - Linear Networks revenues declined by 7.8% year over year to $2.76 billion, while Direct-to-Consumer revenues increased by 13.2% year over year to $5.64 billion [2] - Parks, Experiences and Products revenues, making up 38% of total revenues, increased by 9.8% year over year to $8.39 billion, with domestic revenues at $5.95 billion (up 6.9%) and international revenues at $1.52 billion (up 28.5%) [2] - Consumer Products revenues rose by 2.6% year over year to $913 million [2] Subscriber Details - As of March 31, 2024, Disney+ had 117.6 million paid subscribers, up from 111.3 million as of December 31, 2023 [3] - Domestic Disney+ average monthly revenue per paid subscriber decreased from $8.15 to $8, while international average monthly revenue per paid subscriber increased from $5.91 to $6.66 [3] - Hulu ended the quarter with 50.2 million paid subscribers, an increase from 49.7 million in the previous quarter [3] Operating Details - Total costs and expenses decreased by 1.7% year over year to $19.2 billion [5] - Segmental operating income was $3.84 billion, up 17% year over year, with Media and Entertainment Distribution's operating income surging by 71.6% to $781 million [6] - Parks, Experiences and Products' operating income increased by 12.3% year over year to $2.28 billion [7] Balance Sheet - As of March 31, 2024, cash and cash equivalents were $6.635 billion, down from $7.19 billion as of December 31, 2023 [10] - Total borrowings decreased to $39.51 billion from $47.68 billion over the same period [10] - Free cash flow for the quarter was $2.407 billion, compared to $886 million in the previous quarter [10] Guidance - The company does not expect core subscriber growth at Disney+ in the fiscal third quarter but anticipates improvements in the fiscal fourth quarter [11] - Disney forecasts a loss for Entertainment DTC in the third quarter, while expecting modestly positive operating income from the Entertainment Linear Networks business [12] - The company aims to meet or exceed a $7.5 billion annualized savings target by the end of fiscal 2024 and expects full-year fiscal 2024 earnings per share to increase by at least 25% from fiscal 2023 [12]