Disney Surpasses Q4 Earnings Expectations, Reports YoY Revenue Growth

Disney Stock

The Walt Disney Company (NYSE:DIS) has announced adjusted earnings of 82 cents per share for the fourth quarter of fiscal 2023, exceeding the Zacks Consensus Estimate by 22.39% and marking a remarkable 173.3% year-over-year increase.

Although revenues rose by 5.4% year over year to $21.24 billion, they slightly fell short of the consensus estimate by 0.36%. Disney’s shares have experienced a 2.7% decline year to date, contrasting with the Consumer Discretionary sector’s 6.1% rise.

Segment Breakdown

In the Media and Entertainment Distribution segment (accounting for 44.8% of revenues), there was a 2.5% year-over-year increase to $6.52 billion. While Linear Networks saw a 9.1% decline to $2.62 billion, Direct-to-Consumer revenues rose by 12.1% to $5.03 billion. Content Sales/Licensing and Other revenues decreased by 2.5% year over year to $1.86 billion.

Parks, Experiences, and Products contributing 38.4% of revenues, reported a robust 12.5% year-over-year increase to $8.16 billion. Domestic revenues reached $5.38 billion, a 7.5% rise, while international revenues soared by 55% to $1.66 billion.

Disney’s Consumer Products revenues, however, experienced a 5% year-over-year decrease, amounting to $1.11 billion.

Subscriber Highlights

As of September 30, 2023, Disney+ boasted 150 million paid subscribers, up from 146.7 million on July 1, 2023. The streaming service added nearly seven million core subscribers in the fourth quarter. Hulu reported 48.5 million paid subscribers, up from the previous quarter’s 48.3 million.

ESPN+ closed the fiscal fourth quarter with 26 million paid subscribers, compared with 25.2 million in the previous quarter. Disney+ and Hulu demonstrated increased average monthly revenue per paid subscriber, while Hulu SVOD, Hulu Live TV + SVOD, and ESPN+ experienced varied results.

Financial Performance and Outlook

Costs and expenses decreased by 2.3% year over year to $19.15 billion in the reported quarter. Segmental operating income surged by 86.3% year over year to $2.97 billion.

Disney’s balance sheet as of September 30, 2023, reveals cash and cash equivalents of $14.1 billion, up from $11.46 billion on July 1, 2023. Total borrowings decreased to $42.1 billion, compared with $47.19 billion on July 1, 2023.

The company reported a free cash flow of $3.42 billion in the fourth quarter, a significant increase from $1.64 billion in the previous quarter. Looking ahead, Disney anticipates a substantial increase in free cash flow in fiscal 2024, nearing pre-pandemic levels, and expects the combined streaming businesses to achieve profitability in the fourth quarter of fiscal 2024.

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