Disney posted strong results for its fiscal second quarter Wednesday, beginning the Josh D’Amaro era with a bang.
Total revenue increased 7% from the year-ago period to reach almost $25.2 billion. Earnings per share, excluding certain items, came in at $1.57. Both metrics topped Wall Street analysts’ consensus forecasts.
The company’s entertainment streaming operation posted an 88% leap in operating income, reaching $582 million. The company credited subscriber gains, price increases and more ad impressions due to high-profile titles like Zootopia 2 rolling from theatrical to Disney+ in March.
The quarter marks the company’s first with D’Amaro at the helm as CEO. The long-tenured exec was heading Disney’s Experiences division before being selected in February to follow Bob Iger in the top job after a closely tracked succession process reached its conclusion. Apart from his remarks at the company’s annual shareholder meeting, the quarterly earnings call later on Wednesday was slated to offer D’Amaro his first opportunity to speak to Wall Streeters about his strategic goals.
The company’s earnings release identified three main strategic pillars: investing in IP; improving customer reach and engagement; and leaning into technology.
Entertainment revenue climbed 10% to $11.7 billion, while operating income went up 6% to $1.336 billion. Subscription and affiliate revenues grew 14% compared to the prior-year quarter. Disney Entertainment advertising revenues grew nearly 5% compared to the prior-year quarter, with the Fubo transaction contributing more than 1%. “This growth reflects our expanding streaming revenues more than offsetting our declining linear revenues,” the company said in its earnings release. “We currently generate more Entertainment subscription and affiliate fees and advertising revenues from SVOD than linear TV,” the release went on, with the company expecting “the mix shift from linear toward streaming to continue.”
Zootopia 2 smashed records en route to $1.9 billion in global box office, with anticipation for the sequel and then its availability driving the franchise past 1 billion hours of viewing on Disney+.
The company also flagged Predator: Badlands, the 20th anniversary of Hannah Montana, Season 2 of Paradise on Hulu, and FX’s Love Story: John F. Kennedy Jr. and Carolyn Bessette as streaming successes. Recent theatrical hits Avatar: Fire and Ash and Hoppers are due on Disney+ soon, along with the final season of The Bear on Disney+ and Hulu. Disney+ also has made strides outside the U.S., the company said, with notable series including Battle of Fates in Korea and Rivals in the UK, whose second season will premiere next week.
Sports had a tougher go, as the quarter lacked football. Total revenue in the division housing ESPN inched up 2% to $4.6 billion, while operating income sagged 5% to $652 million.
Against a difficult economic backdrop, with the Iran War and other factors weighing on air travel and tourism, the Experiences division posted 7% higher revenue, at $9.5 billion, while operating income rose 5% to $2.6 billion.
Attendance at domestic parks declined 1% from the previous quarter, which the company chalked up to “continued softness in international visitation.” Disney noted it is “beginning to lap the attendance headwinds we have faced in the domestic parks over the past year,” as consumers have grappled with inflation. “While we acknowledge the potential impact of heightened global macro uncertainty on consumers,” the earnings release said, “we are encouraged by current demand and expect year-over-year attendance at our domestic parks in Q3 to show improvement compared to Q2 results.”
Zooming out, Disney said its “unique competitive strength is our ability to create characters, stories, and franchises that form enduring relationships with audiences around the world. We engage with these audiences across streaming, theatrical, sports, consumer products, experiences, and games. What begins as a single creative investment can evolve into a multi-decade relationship — one that spans platforms, geographies, and generations. We believe these strengths support durable earnings growth and cash flow generation.”
D’Amaro was expected to expand on those themes in his remarks to analysts.
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