01—Abstract
Summary
Summary of the 10-Q filed August 10, 2022. Cited figures are marked; the original filing is the authoritative source.
The Walt Disney Company's (DIS) fiscal third quarter 2022 report (ending July 1, 2022) demonstrates robust top-line growth, with total revenues increasing by 26% year-over-year to $21.5 billiona.
This growth was primarily driven by a significant rebound in the Parks, Experiences and Products (DPEP) segment, which saw revenues surge by 70% due to the easing of COVID-19 restrictions and increased guest spending. The Media and Entertainment Distribution (DMED) segment also saw revenue growth of 11%, albeit with a decline in operating income, reflecting higher costs associated with direct-to-consumer (DTC) services and content. Net income attributable to Disney shareholders saw a substantial increase of 53% to $1.4 billionb, translating to diluted EPS from continuing operations of $0.77, up from $0.50 in the prior year.
This improvement was largely due to the strong performance of the DPEP segment, which more than offset the increased operating losses in the DTC business within DMED. While the company is navigating inflationary pressures and ongoing content investments, the recovery in its theme parks and the continued expansion of its streaming services present a dynamic financial picture for investors.
02—Key points
Key Highlights
- Total revenues increased by 26% year-over-year to $21.5 billion, driven by strong performance across segments.
- Diluted EPS from continuing operations rose to $0.77 from $0.50 in the prior year, reflecting improved profitability.
- The Parks, Experiences and Products (DPEP) segment experienced a significant revenue increase of 70% to $7.4 billion, driven by higher attendance and per capita spending, indicating a strong recovery from pandemic-related impacts.
- The Direct-to-Consumer (DTC) business within the Media and Entertainment Distribution (DMED) segment reported an increased operating loss of $1.06 billion, up from $293 million in the prior year, due to higher programming and marketing costs.
- Disney+ subscribers grew 31% year-over-year to 152.1 million, with average revenue per user (ARPU) increasing globally.
- The company's cash provided by operations increased by 19% to $3.5 billion for the nine months ended July 2, 2022, signaling improved cash flow generation.
- Capital expenditures increased significantly, reflecting investments in cruise ship fleet expansion and corporate facilities, with total capital expenditures expected to reach $5 billion for fiscal year 2022.
03—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in the quarter?
The primary driver of revenue growth was the significant rebound in the Disney Parks, Experiences and Products (DPEP) segment, which saw revenues increase by 70%. This was largely due to the easing of COVID-19 restrictions, leading to increased attendance and higher per capita spending at theme parks and resorts.
How is the Direct-to-Consumer (DTC) business performing, specifically Disney+?
While Disney+ subscriber numbers continued to grow, reaching 152.1 million globally, the Direct-to-Consumer (DTC) segment as a whole reported an increased operating loss of $1.06 billion for the quarter. This was attributed to higher programming and production costs, as well as increased marketing expenses, as the company continues to invest in content and expand its streaming services.
What is the outlook for capital expenditures?
Disney expects its capital expenditures for fiscal year 2022 to be approximately $5 billion, an increase from fiscal year 2021. This investment is primarily directed towards the expansion of its cruise ship fleet and upgrades to corporate facilities.
Are there any significant non-recurring items impacting the results?
Yes, the company recorded a $136 million loss related to its investment in DraftKings in the current quarter. Additionally, the company incurred $585 million in TFCF and Hulu acquisition amortization and $42 million in restructuring and impairment charges. These items, among others, impacted the comparability of results from the prior year.
04—Continue