Walt Disney Co. CEO Josh D’Amaro lays out his long-term vision for the company, using his first quarterly earnings report since succeeding Bob Iger two months ago to introduce himself to Wall Street and explain the direction he sees the company headed.
The company beat Wall Street expectations in its fiscal second quarter that ended March 3, reporting revenue of $25.2 billion (up 7 percent) and segment operating income of $4.6 billion (up 4 percent).
Disney’s entertainment division topped the list with revenues of $11.7 billion, an increase of 10 percent over last year, and operating income of $1.3 billion, an increase of 6 percent. This was followed by trials with revenue of $9.5 billion, up 7 percent, with operating income of $2.6 billion, up 5 percent (they also said plans for the Abu Dhabi park remain “unchanged” given the years-long development process). Sports, which consists mostly of ESPN, had revenue of $4.6 billion, up 2 percent, and operating income of $652 million, down 5 percent.
The company also revised its guidance, raising its share repurchase target to $8 billion, with adjusted EPS growth of 12 percent this year.
But it will certainly be the vision of D’Amaro and his leadership team that dominates the discussion, as CEO and CFO Hugh Johnston explains in some detail in a newly formatted earnings speech how they think about Disney’s future.
This starts with “three pillars” that will serve as the heart of this strategy:
- Investing in intellectual property and creativity that achieves success, builds connections and lasts
- Reach more consumers in more seamless and attractive ways around the world
- Using advanced technologies to enhance our storytelling and increase income and returns
On the intellectual property and creativity front, executives promoted franchises e.g The Mandalorian and Grogu, Toy Story 5 And live action Moanaexplaining that “even when we invest in existing franchises, we recognize the importance of taking creative risks to build new franchises.
“Hoppersfrom Pixar, is a strong example of our focus on original intellectual property, and we’re thrilled about it
“The critical reception and the enthusiasm with which fans have embraced the story and characters,” he said, before noting how all creations, from films and TV shows to originals and games, now report to Dana Walden.
Regarding the second pillar, executives reiterated the plan to make Disney+ a core focus of the company’s strategy, writing that “as we look to build Disney+ beyond a premium video streaming service, we are focused on making the platform more engaging, more personalized and more central to how fans experience our brands. Recent efforts to revamp the user interface and improve personalization are contributing to increased engagement.”
This includes the vertical video product Verts, which was launched recently. In a notable move, they also noted the popularity of Disney characters in fortniteConfirming the relationship between these two companies.
Disney reaffirmed the profitability of its streaming platforms in the quarter, with streaming entertainment operating income reaching $582 million.
They expanded somewhat on how they see AI being used within the company, noting that even with Sora’s closure, “we continue to explore potential business opportunities with OpenAI and others.”
“We view advanced technologies, including artificial intelligence, as a meaningful long-term opportunity,” they wrote. We see opportunities for AI to play a role in five areas of our business: content creation and production, monetization, workforce productivity, guest and consumer experiences, and enterprise operations. At the same time, we are committed to implementing AI in a way that puts human creativity at the heart of everything we do and respects creators and the value of our intellectual property.
