Why Is Disney (DIS) Down 3.7% Since Last Earnings Report?

Core Viewpoint - The Walt Disney Company reported a mixed performance in its Q2 fiscal 2024 earnings, with adjusted earnings per share beating estimates but revenues slightly missing consensus expectations. The company faces challenges in its media and entertainment segments while showing growth in parks and experiences [2][12]. Financial Performance - Adjusted earnings for Q2 fiscal 2024 were $1.21 per share, exceeding the Zacks Consensus Estimate by 8.04% and reflecting a 30.1% year-over-year increase [2]. - Total revenues rose 1.2% year-over-year to $22.08 billion but fell short of the consensus mark by 0.23% [2]. Segment Details - Media and Entertainment Distribution revenues, accounting for 44.4% of total revenues, decreased by 5% year-over-year to $9.79 billion [3]. - 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 [3]. - 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%) [3]. Subscriber Metrics - Disney+ had 117.6 million paid subscribers as of March 31, 2024, up from 111.3 million at the end of 2023 [4]. - Domestic average monthly revenue per paid subscriber for Disney+ decreased from $8.15 to $8, while international average monthly revenue increased from $5.91 to $6.66 [4]. - Hulu ended the quarter with 50.2 million paid subscribers, an increase from 49.7 million in the previous quarter [4]. Operating Income - Total costs and expenses decreased by 1.7% year-over-year to $19.2 billion, leading to a segmental operating income of $3.84 billion, up 17% year-over-year [7]. - Direct-to-Consumer operating income improved to $47 million from a loss of $587 million in the previous year, driven by increased subscription revenues [8]. - Parks, Experiences and Products' operating income rose by 12.3% year-over-year to $2.28 billion [8]. Balance Sheet - As of March 31, 2024, cash and cash equivalents were $6.635 billion, down from $7.19 billion at the end of 2023 [11]. - Total borrowings decreased to $39.51 billion from $47.68 billion [11]. - Free cash flow for the quarter was $2.407 billion, significantly up from $886 million in the previous quarter [11]. Guidance - The company does not expect core subscriber growth at Disney+ in Q3 but anticipates improvements in Q4 [12]. - Disney forecasts a loss for Entertainment DTC in Q3 but expects modestly positive operating income from Entertainment Linear Networks [12]. - The company aims to meet or exceed a $7.5 billion annualized savings target by the end of fiscal 2024 and projects a full-year EPS increase of at least 25% from fiscal 2023 [12].