Disney (DIS) released its fiscal third-quarter results, which were somewhat mixed, but the company’s restructuring plan and streaming strategy showed signs of promise. Despite falling short of analysts’ expectations, Disney’s revenue increased by approximately 4% year-over-year to $22.33 billion. Earnings-per-share declined by 5.5% to $1.03, beating forecasts of 95 cents. Despite concerns about the third quarter, Disney’s stock has only experienced a marginal loss since its second-quarter report. The company’s restructuring efforts and potential cost savings appear to be paying off, as losses in the Direct-to-Consumer business narrowed, leading to optimism that the losses will continue to decrease in the coming months. The parks business remains a significant profit generator for Disney, and the company’s performance is surpassing 2019 levels. Following the earnings report, Disney’s stock experienced a 2% increase in after-hours trading. Despite lowering the price target from $140 to $120, analysts are optimistic about Disney’s future and maintain a 1-rating on the stock. In terms of streaming, while Disney+ missed on its total number of subscribers, the core markets actually saw an increase in subscribers and average revenue per user (ARPU). Disney has also introduced price increases for its ad-free Disney+ option and plans to expand its ad-tier offering to select markets. The company expects to address account sharing of its services by 2024. In the Direct-to-Consumer segment, Disney’s losses were halved from the previous year, and the company remains on track to achieve profitability by the end of fiscal 2024. The Linear Networks business is facing challenges due to cord-cutting and a weaker advertising market, but the growth in advertising revenue from Direct-to-Consumer partially offsets these declines. In the ESPN segment, ad revenue increased by 4% for the quarter, and the company is considering strategic partnerships for the sports division. In the Parks, Experiences, and Products segment, revenues surpassed expectations. While inflationary cost pressures and some softness in Walt Disney World affected margins, the segment was still more profitable than before the pandemic. The ongoing strength of Disney’s international parks and cruise line business is expected to drive higher operating margins in the coming quarter. Overall, while Disney’s third-quarter results were mixed, the company’s restructuring efforts, streaming strategy, and performance in its parks business point towards a positive future.
Disney’s Quarterly Performance Shows Progress on CEO Bob Iger’s Plan
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