Disney(US:DIS)2024-05-07 15:27Financial Data and Key Metrics Changes - Adjusted earnings per share (EPS) increased by 30% year-over-year, raising the full-year adjusted EPS growth target to 25% [4][11] - Diluted EPS for Q2 was $1.21, reflecting strong double-digit percentage year-over-year earnings growth [11] Business Segment Data and Key Metrics Changes - Entertainment segment operating income increased by over 70% year-over-year, driven by direct-to-consumer (DTC) revenue growth of 13% year-over-year [12] - Core Disney+ subscribers increased by 6.3 million in the quarter, with domestic additions of nearly 8 million [12] - Experiences segment revenue grew by 10%, with operating income increasing by 12% year-over-year [16] Market Data and Key Metrics Changes - ESPN achieved its highest April viewership since 2012, with record-breaking ratings for various sports events [8] - The NCAA Women's Final Four was the most viewed on record, and the championship game set a viewership record for college basketball [8] Company Strategy and Development Direction - The company is focused on long-term strategic investments, including the Disneyland Forward initiative, which received preliminary approval for expansion [9] - Plans to enhance the streaming service by adding an ESPN tile to Disney+ and launching a standalone ESPN streaming service in fall 2025 [5][6] Management's Comments on Operating Environment and Future Outlook - Management anticipates a softer third quarter due to seasonality but expects streaming to be a future growth driver [5] - The company is optimistic about the path to profitability in streaming, forecasting profitability in combined streaming businesses by Q4 [5][13] Other Important Information - The company is making progress on cost-efficiency initiatives, expecting to exceed the $7.5 billion annualized target and generate over $8 billion in free cash flow this fiscal year [18] - The company repurchased $1 billion of stock in Q2, indicating a commitment to returning capital to shareholders [18] Q&A Session Summary Question: Attendance expectations at domestic and global levels - Management indicated that attendance is normalizing relative to post-COVID highs, with healthy growth expected in bookings [20][21] Question: Timing for achieving double-digit operating margins in DTC - Management emphasized the goal of achieving both growth and healthy margins, with various levers in place to support this [20] Question: Outlook for ESPN and profitability amid rising sports rights costs - Management expressed confidence in ESPN's future, highlighting strong ratings and a solid sports rights portfolio [24] Question: Balance between established franchises and new IP investment - Management plans to balance sequels with original content, particularly in animation, while also exploring opportunities in the 20th Century Fox library [49] Question: Update on the Charter partnership and subscriber engagement - Early results from the Charter partnership have been positive, with added subscribers and good engagement [51] Question: Licensing content off-platform versus keeping it in-house - Management is open to selectively licensing content while maintaining a focus on exclusive offerings on their platforms [54]