01—Abstract
Summary
Summary of the 10-Q filed February 8, 2023. Cited figures are marked; the original filing is the authoritative source.
The Walt Disney Company's (DIS) Q1 2023 earnings report shows a solid top-line performance with total revenues increasing by 8% year-over-year to $23.5 billiona.
This growth was driven primarily by a strong rebound in the Parks, Experiences and Products (DPEP) segment, which saw a 21% revenue increase due to higher attendance and guest spending across its theme parks and resorts. The Disney Media and Entertainment Distribution (DMED) segment experienced a more modest 1% revenue growth, with its Direct-to-Consumer (DTC) business showing an increase in subscribers and revenue, though still operating at a significant loss. Net income attributable to Disney shareholders rose by 16% to $1.3 billionb, resulting in diluted earnings per share (EPS) from continuing operations of $0.70, up from $0.63 in the prior year.
This improvement was supported by the DPEP segment's robust performance and a reduction in investment losses, notably a smaller loss from DraftKings compared to the previous year. However, the DMED segment's operating income declined significantly, primarily due to increased programming and production costs for DTC services and a drop in advertising revenue. The company is also undergoing a leadership transition with the return of Bob Iger, signaling potential strategic shifts and restructuring efforts ahead.
02—Key points
Key Highlights
- Total revenues increased 8% to $23.5 billion, driven by strong performance in Parks, Experiences and Products (DPEP).
- DPEP segment revenue grew 21% to $8.7 billion, with Parks, Experiences and Products seeing a 23% increase in admissions revenue and higher guest spending.
- Disney Media and Entertainment Distribution (DMED) segment revenue grew 1% to $14.8 billion, with Direct-to-Consumer (DTC) revenue up 13% to $5.3 billion.
- Net income attributable to Disney increased 16% to $1.3 billion, and diluted EPS from continuing operations rose to $0.70 from $0.63.
- The Direct-to-Consumer (DTC) business, encompassing Disney+, Hulu, and ESPN+, saw total paid subscribers reach 161.8 million for Disney+, 24.9 million for ESPN+, and 48.0 million for Hulu, though the segment continues to operate at a significant loss.
- The company incurred $69 million in restructuring and impairment charges related to exiting its business in Russia.
- Cash used in operations significantly increased to $974 million, compared to $209 million in the prior year, partly due to collateral payments related to hedging programs.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed February 8, 2023Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $23.51B$21.82B | +7.8% |
| SG&A Expenses | $3.83B$3.79B | +1.1% |
| Operating Expenses | $21.52B$19.62B | +9.7% |
| Operating Income | $3.04B$3.26B | −6.6% |
| Interest Expense | $465.00M$361.00M | +28.8% |
| Net Income | $1.28B$1.10B | +15.9% |
| EPS (Basic) | $0.70$0.61 | +14.8% |
| EPS (Diluted) | $0.70$0.60 | +16.7% |
| Shares Outstanding (Basic) | 1.82B1.82B | +0.3% |
| Shares Outstanding (Diluted) | 1.83B1.83B | −0.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in this quarter?
The primary driver of revenue growth was the Parks, Experiences and Products (DPEP) segment, which saw a significant 21% increase in revenue. This growth was fueled by higher attendance and increased guest spending at theme parks and resorts, as well as growth in resort and vacation offerings.
How is the Direct-to-Consumer (DTC) segment performing financially?
While the DTC segment's revenue increased by 13% to $5.3 billion, driven by subscriber growth and higher rates, it continues to operate at a substantial loss. The operating loss for the DTC segment widened to $1.05 billion from $593 million in the prior year, primarily due to increased programming and production costs at Disney+ and higher overall operating expenses.
What is the company's outlook on content spending?
Disney expects its fiscal 2023 spend on produced and licensed content, including sports rights, to be in the low $30 billion range, an increase from approximately $30 billion in fiscal 2022. This indicates a continued significant investment in content creation and acquisition.
Are there any significant changes in leadership or strategy mentioned?
Yes, the report notes the return of Robert A. Iger as CEO. He has formed a committee to advise on a new organizational structure and operational changes, which may result in material restructuring and impairment charges and a different reporting structure for operating segments in the future.
06—Continue