Disney Lifts FY24 Earnings Growth View As Q3 Beats Market; But Stock Drops

(RTTNews) - Media and entertainment major Walt Disney Co. on Wednesday raised its fiscal 2024 adjusted earnings growth target after reporting a significant profit in its third quarter, compared to prior year's loss. Adjusted earnings for the quarter also topped market estimates on higher revenues. Meanwhile, Disney shares were losing around 4.1 percent on the NYSE, to trade at $86.26.

Robert Iger, Chief Executive Officer, said, "Our performance in Q3 demonstrates the progress we've made against our four strategic priorities across our creative studios, streaming, sports, and Experiences businesses. This was a strong quarter for Disney, driven by excellent results in our Entertainment segment both at the box office and in DTC, as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance."

According to the firm, entertainment Direct-to-Consumer's better-than-expected performance, combined with profitable results at ESPN+, resulted in positive profitability at its combined streaming businesses.

For fiscal 2024, the company now expects adjusted earnings per share to grow 30 percent, higher than previously expected growth rate of 25 percent, driven by third-quarter financial performance, and supported by balanced portfolio of assets.

Disney further said it remains on track for the profitability of its combined streaming businesses to improve in the fourth quarter, with both Entertainment DTC and ESPN+ expected to be profitable in the quarter.

In the fourth quarter, Disney+ Core subscribers are expected to grow modestly.

At Experiences segment, Disney projects that the demand moderation in domestic businesses in the third quarter could impact the next few quarters.

Experiences segment operating income is expected to decline by mid single digits in the fourth quarter, partly due to impacts at Disneyland Paris from a reduction in normal consumer travel due to the Olympics, and some cyclical softening in China.

In its third quarter, Disney's net income attributable was $2.621 billion, compared to loss of $460 million in the same period last year. Earnings per share were $1.43, compared to a loss of $0.25 in the prior-year quarter.

Adjusted earnings were $2.782 billion or $1.39 per share for the period, compared to $1.03 per share last year.

Analysts on average expected the company to report earnings of $ 1.19 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Total segment operating income climbed 19 percent from last year to $4.23 billion.

In the quarter, entertainment segment operating income nearly tripled year over year, due to significantly improved results at Direct-to-Consumer and Content Sales/Licensing and Other.

Revenues for the quarter were $23.155 billion, up 4 percent from $22.330 billion in the same period last year. The Street was looking for revenues of $23.07 billion.

Entertainment revenues grew 4 percent from last year to $10.58 billion, mainly with 15 percent jump in Direct-to-Consumer revenues, despite a 7 percent drop in Linear Networks.

Sports revenues grew 5 percent, and the growth was 2 percent in Experiences segment.

In the quarter, paid subscribers at Disney+ Domestic, from U.S. and Canada, was at 54.8 million, up 1 percent from the preceding quarter end.

Disney+ Core subscribers grew 1 percent to 118.3 million sequentially.

Disney+ Hotstar subscribers, meanwhile, dropped 1 percent sequentially to 35.5 million, while total Hulu subscribers gained 2 percent to 51.1 million.

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