From CNBC: 2024-05-07 15:06:44

Despite a drop in Disney shares due to mixed Q2 results, there are positives beneath the surface. Revenue remained flat at $22.08 billion, but adjusted earnings per share rose 30% to $1.21, beating estimates. Disney’s cost-reduction efforts are working, with the streaming business expected to be profitable by September. The company also raised its full-year earnings outlook. Management remains optimistic despite the current quarter’s challenges, expecting a rebound in DTC profitability in the next quarter and further improvement in 2025. Disney’s Experiences division is expected to see profits impacted in the current quarter but rebound significantly in Q4. Quarter commentary – Disney’s Entertainment segment had mixed results, with the direct-to-consumer sector showing better-than-expected sales and profitability, fueled by growth in Disney+ subscriptions and increased ARPU. Hulu Live TV also saw growth. Sports – ESPN+ had a 2% decline in subscriptions but increased revenue per subscriber. The service remains unprofitable. The Domestic ESPN segment saw profitability impacted by higher costs and lower revenue due to subscriber declines. A positive note was strong viewership numbers in April. Experiences – Despite revenue beating estimates, operating income fell short, pointing to margin pressure. Management remains focused on achieving profitability in the DTC business and expects continued cost reductions and free cash flow growth.



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