01—Abstract
Summary
Summary of the 10-Q filed May 13, 2021. Cited figures are marked; the original filing is the authoritative source.
The Walt Disney Company's (DIS) 10-Q filing for the period ending April 3, 2021, reveals a company navigating the ongoing impacts of the COVID-19 pandemic.
While total revenues saw a decline compared to the prior year, primarily driven by the severe impact on the Parks, Experiences and Products segment, the Disney Media and Entertainment Distribution segment demonstrated resilience and growth, particularly in its Direct-to-Consumer offerings. Net income attributable to Disney significantly increased year-over-year, bolstered by strong performance in the Media and Entertainment segment and a favorable shift in the effective tax rate.
Despite the challenges, Disney is strategically investing in its streaming services, which are showing promising subscriber growth, while the Parks segment begins its recovery with cautious reopenings and reduced capacities. The company also made significant restructuring charges, reflecting a strategic realignment and the closure of certain retail operations.
02—Key points
Key Highlights
- Total revenues for the quarter decreased by 13% to $15.6 billion compared to the prior year, largely due to the COVID-19 impact on Parks, Experiences and Products.
- Net income attributable to Disney more than doubled to $901 million, or $0.50 per diluted share from continuing operations, up from $460 million ($0.26 per share) in the prior year's quarter.
- The Disney Media and Entertainment Distribution (DMED) segment saw a 1% revenue increase to $12.4 billion, driven by a 59% surge in Direct-to-Consumer (DTC) revenues, primarily from Disney+ subscriber growth.
- The Parks, Experiences and Products (DPEP) segment experienced a significant 44% revenue decline to $3.2 billion, reflecting continued closures and reduced operating capacities due to COVID-19.
- DTC subscription revenue grew substantially, with Disney+ reaching 103.6 million subscribers, ESPN+ at 13.8 million, and Hulu at 41.6 million total subscribers.
- The company incurred $414 million in restructuring and impairment charges in the current quarter, primarily related to the closure of an animation studio and Disney-branded retail stores.
- Other income included a $305 million gain from an adjustment to the investment in DraftKings, Inc.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed May 13, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $17.02B$11.78B | +44.5% |
| SG&A Expenses | $3.17B$2.46B | +29.0% |
| Operating Expenses | $15.67B$11.73B | +33.6% |
| Operating Income | $2.38B$1.10B | +116.7% |
| Interest Expense | $404.00M$456.00M | −11.4% |
| Net Income | $918.00M-$4.72B | +119.4% |
| EPS (Basic) | $0.50$-2.61 | +119.2% |
| EPS (Diluted) | $0.50$-2.61 | +119.2% |
| Shares Outstanding (Basic) | 1.82B1.81B | +0.5% |
| Shares Outstanding (Diluted) | 1.83B1.81B | +1.2% |
05—Questions
Frequently Asked Questions
How did COVID-19 impact Disney's financial performance in this quarter?
COVID-19 significantly impacted Disney's financial results, primarily by causing closures and reduced operating capacities at its theme parks and resorts, leading to a substantial revenue and operating income decline in the Parks, Experiences and Products segment. While content production and release schedules were also disrupted, the Media and Entertainment segment, particularly Direct-to-Consumer services, showed resilience and growth, partially offsetting the losses.
What is the performance of Disney's Direct-to-Consumer (DTC) segment, especially Disney+?
The DTC segment showed strong growth, with total revenues increasing by 59% year-over-year. Disney+ subscribers reached 103.6 million, contributing significantly to this growth. While DTC operating losses narrowed due to subscriber growth and cost management, the segment continues to be a strategic investment area for the company.
Did Disney pay any dividends in this period?
No, Disney did not pay a dividend for fiscal year 2020 operations, and there were no dividends declared or paid with respect to fiscal 2021 operations during this reporting period. This was part of the company's mitigation efforts in response to the pandemic's financial impact.
What were the significant restructuring or impairment charges?
Disney recorded $414 million in restructuring and impairment charges in the current quarter. These charges were primarily related to the planned closure of an animation studio, a substantial number of Disney-branded retail stores, and severance costs at parks and resorts businesses.
06—Continue