Summary
The Walt Disney Company reported its fiscal second-quarter 2020 results, reflecting the significant impact of the COVID-19 pandemic, which led to widespread business closures including theme parks, cruise lines, and retail stores. Total revenues increased by 21% year-over-year to $18.0 billion, largely driven by the consolidation of Twenty-First Century Fox (TFCF) and Hulu. However, net income attributable to Disney plummeted by 92% to $460 million, and diluted earnings per share (EPS) from continuing operations dropped 93% to $0.26. This sharp decline in profitability was primarily due to the absence of the significant Hulu gain recorded in the prior year's quarter, coupled with increased amortization expenses related to the TFCF acquisition and the operational disruptions caused by COVID-19. The Parks, Experiences and Products segment saw a substantial 58% decline in operating income, significantly impacted by temporary closures and reduced demand. Conversely, the Direct-to-Consumer & International segment showed strong revenue growth, largely due to the launch of Disney+ and the inclusion of Hulu and TFCF, though it reported a substantial operating loss as investment in the streaming service continues. Media Networks and Studio Entertainment experienced more modest changes in operating income compared to the prior year, with Media Networks showing growth and Studio Entertainment a slight decline. Despite the challenges, Disney highlighted the strong subscriber growth for Disney+ exceeding 50 million paid subscribers. The company has implemented significant mitigation efforts in response to the pandemic, including increasing its cash balance through debt issuance, suspending dividends, and reducing discretionary spending. Management expressed confidence in the company's financial position and liquidity, supported by its cash reserves and available credit facilities, while acknowledging the ongoing uncertainty and potential for further impacts depending on the duration of the pandemic.
Financial Highlights
52 data points| Revenue | $18.02B |
| SG&A Expenses | $3.39B |
| Operating Expenses | $16.66B |
| Operating Income | $2.41B |
| Interest Expense | $365.00M |
| Net Income | $460.00M |
| EPS (Basic) | $0.25 |
| EPS (Diluted) | $0.25 |
| Shares Outstanding (Basic) | 1.81B |
| Shares Outstanding (Diluted) | 1.82B |
Key Highlights
- 1Total revenues increased 21% to $18.0 billion, primarily due to the consolidation of TFCF and Hulu.
- 2Net income attributable to Disney decreased 92% to $460 million, impacted by the absence of a prior-year gain and COVID-19 disruptions.
- 3Diluted EPS from continuing operations fell 93% to $0.26, significantly below the prior year's $3.53.
- 4Parks, Experiences and Products operating income decreased 58% to $639 million, largely due to COVID-19 related closures.
- 5Direct-to-Consumer & International revenue surged, driven by Disney+'s launch and subscriber growth, but operating loss widened to $812 million due to increased investment.
- 6Disney+ surpassed 50 million paid subscribers globally.
- 7The company took significant mitigation steps in response to COVID-19, including not declaring a dividend for July 2020 and increasing its cash balance through debt.