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Disney Beats Q1 2024 Estimates, Hikes Dividend By 50%

Disney Beats Q1 2024 Estimates, Hikes Dividend By 50%

ER Velasco

Thursday, February 08 2024, 07:32:41:AM

The Walt Disney Company (NYSE: DIS) announced its fiscal first-quarter earnings on Wednesday, delivering results that surpassed Wall Street expectations. Despite stagnant revenue, the media giant reported better-than-expected earnings, buoyed by significant cost-cutting measures and strategic investments in its streaming and entertainment businesses.

According to Disney's financial report, revenue fell slightly short at $23.55 billion compared to the expected $23.64 billion. Earnings per share came in at $1.22 adjusted, beating analysts' expectations of 99 cents. Net income attributable to the company saw a substantial increase to $1.91 billion, or $1.04 per share, up from $1.28 billion, or 70 cents per share, in the prior-year period.


Disney's ongoing efforts to streamline operations and reduce costs have been a key focus. The company remains on track to achieve its goal of cutting costs by at least $7.5 billion by the end of fiscal 2024. CEO Bob Iger emphasized this commitment, stating, "Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation."

One notable development is Disney's announcement of a $1.5 billion stake in Fortnite studio Epic Games, signaling a strategic move into the lucrative gaming industry. Additionally, the company revealed plans to launch its flagship ESPN streaming service in fall 2025, further expanding its digital footprint.

The news comes amidst pressure from activist investor Nelson Peltz to improve financial performance. Peltz, chairman of Trian Fund Management, has been vocal about his concerns regarding Disney's stock performance and studio content. Despite this, Disney's stock surged approximately 7% in extended trading following the earnings announcement.


In terms of its streaming business, Disney reported mixed results. While its direct-to-consumer unit posted a $138 million operating loss, losses for all streaming businesses narrowed to $216 million from $1.05 billion in the prior-year period. Disney+ core subscribers declined by 1.3 million due to price increases, but the company saw an increase in average revenue per user.


The company's newly segmented financial reporting structure highlighted both challenges and growth opportunities. Revenues in the entertainment division fell 7%, while the direct-to-consumer business experienced a 15% jump. ESPN revenues rose 4%, driven by growth in subscription revenue and subscribers.

The board of directors also declared a cash dividend of $0.45 per share, marking a 50% boost compared to the previous dividend distributed in January. Shareholders can anticipate receiving this dividend on July 25th.

Looking ahead, Disney is optimistic about the future of its streaming business, projecting profitability by the end of fiscal 2024. The company is set to capitalize on its strong content pipeline, including exclusive streaming rights to Taylor Swift Era's tour film and upcoming releases such as "Deadpool 3," "Inside Out 2," and "Moana 2."

Despite ongoing proxy battles with activist investors, Disney remains focused on executing its long-term strategy. With a 50% increase in dividends and plans for a $3 billion stock buyback in 2024, the company is committed to delivering value to its shareholders.

The results follow the industry news of Disney's ESPN collaborating with Fox and Warner Bros. Discovery for an expansive joint streaming service, promising to revolutionize the accessibility and delivery of sports content. 

Disney's stock closed Wednesday at $99.14 per share.

Information for this briefing was found via CNBC, Variety, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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