Walt Disney (DIS) is set to report its fiscal first-quarter earnings after the market close today. Investors are eagerly awaiting the results as CEO Bob Iger aims to shift the focus to the company's profitability in the direct-to-consumer (DTC) segment and its cost-cutting initiatives. The company slashed $7.5 billion costs in 2023. With new CFO Hugh Johnston in place, analysts will be keen to gain insights into his priorities, particularly regarding cost management and profitability. The company's results will be released at 4:05 pm ET, followed by a conference call at 4:30 pm ET
Walt Disney (DIS) is expected to post adjusted earnings per share (EPS) of $1.01 and revenue of $23.80 billion, according to consensus estimates. Disnaey+ subscribers (including India"s Disney+ Hotstar) is expected to be 174,000.
Though the Q1 figures are forecasted to show a decline in subscribers due to recent price increases, the main focal point for investors will be the progress made in achieving streaming profitability. Disney has consistently reiterated its goal of reaching profitability in the streaming sector by the end of 2024.
The company is expected to report a similar loss in DTC for this quarter as it did in the previous one. In its last earnings report, DTC losses within its entertainment division amounted to $420 million, while total DTC losses, including ESPN+, reached $387 million.
The Experiences segment has shown strong top-line growth, with revenue surging by 13% in the previous quarter. Revenue is expected to be approx. $9 billion in Q4. The international parks segment was particularly impressive, with each park generating year-over-year growth. However, Walt Disney World saw a decline in results, partly due to inflationary impacts and unfavorable year-over-year comparisons.
One of the challenges DIS faces is the slowdown in domestic leisure travel, which has affected its domestic parks. However, the company remains optimistic about its prospects and is committed to rightsizing costs and achieving profitability.
In addition to the focus on streaming profitability, Disney has announced the formation of a new joint venture with Fox Corp. (FOXA) and Warner Bros. Discovery (WBD) to create a sports streaming platform. This move aligns with CEO Bob Iger's vision of shifting Disney's sports content to a streaming platform. The new platform, set to launch in fall 2024, will feature live sports from the NFL, NBA, MLB, and NHL. This partnership marks a significant step for Disney as it seeks to expand its streaming offerings and cater to consumers' evolving preferences. DIS has reportedly engaged in talks with the NFL regarding a potential equity stake. Analysts will likely ask the company about this during the Q&A.
The entertainment division is expected to face challenges in this quarter due to lackluster titles such as Wish and The Marvels. The company"s box office has struggled for the past couple of quarters as the push from Marvel movies has cooled noticeably.
Disney's crackdown on password sharing is also grabbing attention. The company recently sent notices to Disney+ users and Hulu subscribers, notifying them of its plans to limit account sharing starting in March. This strategy aims to mitigate the impact of password sharing on subscriber numbers and improve revenue generation.
Shares of DIS have been quietly marching higher in 2024, up by about 9% on a year-to-date basis. With a new sports streaming platform and a focus on cost-cutting initiatives, DIS is well-positioned to capitalize on the growing demand for streaming content and create long-term value for its shareholders.
The earnings report will shed light on the progress made towards its goals. Furthermore, the new joint venture for a sports streaming platform signals the company's commitment to expanding its streaming offerings and capturing a wider audience. Investors will closely analyze these factors to assess the growth potential and investment value of Walt Disney stock (DIS).
Overall, DIS's Q1 report is expected to provide investors with a clearer picture of the company's progress towards profitability in its DTC segment and its plans to address password sharing and expand its sports streaming offerings. With a new sports streaming platform and a focus on cost-cutting initiatives, DIS is well- positioned to capitalize on the growing demand for streaming content and create long-term value for its shareholders.