The Walt Disney Company (NYSE: DIS) today reported earnings for
its first fiscal quarter ended December 28, 2024.
Financial Results for the
Quarter:
- Revenues increased 5% for Q1 to $24.7 billion from $23.5
billion in Q1 fiscal 2024
- Income before income taxes increased 27% for Q1 to $3.7 billion
from $2.9 billion in Q1 fiscal 2024
- Diluted earnings per share (EPS) increased 35% for Q1 to $1.40
from $1.04 in Q1 fiscal 2024
- Total segment operating income(1) increased 31% for Q1 to $5.1
billion from $3.9 billion in Q1 fiscal 2024 and adjusted EPS(1)
increased 44% for Q1 to $1.76 from $1.22 in Q1 fiscal 2024
Key Points:
- Entertainment: Segment operating income increased $0.8 billion
to $1.7 billion
- Direct-to-Consumer operating income increased $431 million to
$293 million
- Direct-to-Consumer advertising revenue declined 2%; excluding
the Disney+ Hotstar service in India(2), Direct-to-Consumer
advertising revenue was up 16% vs. Q1 fiscal 2024
- 178 million Disney+ and Hulu subscriptions, an increase of 0.9
million vs. Q4 fiscal 2024
- 125 million Disney+ subscribers, a decrease of 0.7 million vs.
Q4 fiscal 2024
- Content Sales/Licensing and Other operating income increased
$536 million to $312 million driven by the performance of Moana
2
- Sports: Segment operating income increased $350 million to $247
million
- Domestic ESPN advertising revenue up 15% vs. Q1 fiscal
2024
- Experiences: Segment operating income of $3.1 billion
comparable to Q1 fiscal 2024, reflecting a 6 percentage-point
adverse impact to year-over-year growth due to Hurricanes Milton
and Helene (~$120 million impact) and pre-opening expenses (~$75
million impact in Q1 fiscal 2025) driven by the launch of the
Disney Treasure
- Domestic Parks & Experiences operating income declined 5%,
reflecting a 9 percentage-point adverse impact to year-over-year
growth due to the hurricanes and cruise pre-opening expenses
- International Parks & Experiences operating income
increased 28% vs. Q1 fiscal 2024
(1)
Total segment operating income and diluted EPS excluding
certain items (also referred to as adjusted EPS) are non-GAAP
financial measures. The most comparable GAAP measures are income
before income taxes and diluted EPS, respectively. See the
discussion on pages 17 through 20 for how we define and calculate
these measures and a quantitative reconciliation thereof to the
most directly comparable GAAP measures.
(2)
The Disney+ Hotstar service in India had advertising revenue
of approximately $15 million in Q1 fiscal 2025 and $165 million in
Q1 fiscal 2024.
Guidance and Outlook:
- Star India deconsolidated in Q1(1):
- Our India business will contribute $73 million to Entertainment
segment operating income in fiscal 2025, compared to $254 million
in the prior year; and $9 million to Sports segment operating
income, compared to a $636 million loss in the prior year
- Equity loss from the India JV of $33 million in Q1 primarily
due to the impact of purchase accounting; for the full year we
expect an equity loss of roughly $300 million driven by purchase
accounting
- Q2 Fiscal 2025:
- Entertainment Direct-to-Consumer: Modest decline in Disney+
subscribers compared to Q1
- Sports: Segment operating income adversely impacted by
approximately $100 million due to college sports and one additional
NFL game, and about $50 million from exiting the Venu Sports
JV
- Experiences: Disney Cruise Line pre-opening expense of
approximately $40 million
- Fiscal Year 2025:
- High-single digit adjusted EPS(2) growth compared to fiscal
2024
- Approximately $15 billion in cash provided by operations
- Entertainment: Double-digit percentage segment operating income
growth, with an increase in Entertainment Direct-to-Consumer
operating income of approximately $875 million(3)
- Sports: 13% segment operating income growth
- Experiences: 6% to 8% segment operating income growth
- Disney Cruise Line pre-opening expense of ~$200 million
Message From Our CEO:
“Our results this quarter demonstrate Disney’s creative and
financial strength as we advanced the strategic initiatives set in
motion over the past two years,” said Robert A. Iger, Chief
Executive Officer, The Walt Disney Company. “In fiscal Q1 we saw
outstanding box office performance from our studios, which had the
top three movies of 2024; we further improved the profitability of
our Entertainment DTC streaming businesses; we took an important
step to advance ESPN’s digital strategy by adding an ESPN tile on
Disney+; and our Experiences segment demonstrated its enduring
appeal as we continue investing strategically across the globe.
Overall, this quarter proved to be a strong start to the fiscal
year, and we remain confident in our strategy for continued
growth.”
(1)
Q1 fiscal 2025 included approximately one
and a half months of Star India operating results, whereas fiscal
2024 included a full year of results. After November 14, 2024, we
began recognizing our share of the India JV in “Equity in the
income of investees.”
(2)
Diluted EPS excluding certain items (also
referred to as adjusted EPS) is a non-GAAP financial measure. The
most comparable GAAP measure is diluted EPS. See the discussion on
pages 17 through 20 for how we define and calculate this measure
and why the Company is not providing the forward-looking
quantitative reconciliation of diluted EPS excluding certain items
to the most comparable GAAP measure.
(3)
Including a comparison to an adverse
impact of the Disney+ Hotstar service in India of approximately
$200 million in the prior year.
SUMMARIZED FINANCIAL RESULTS
The following table summarizes first quarter results for fiscal
2025 and 2024:
Quarter Ended
($ in millions, except per share
amounts)
December 28, 2024
December 30, 2023
Change
Revenues
$
24,690
$
23,549
5
%
Income before income taxes
$
3,660
$
2,871
27
%
Total segment operating income(1)
$
5,060
$
3,876
31
%
Diluted EPS
$
1.40
$
1.04
35
%
Diluted EPS excluding certain items(1)
$
1.76
$
1.22
44
%
Cash provided by operations
$
3,205
$
2,185
47
%
Free cash flow(1)
$
739
$
886
(17
)%
(1)
Total segment operating income, diluted
EPS excluding certain items and free cash flow are non-GAAP
financial measures. The most comparable GAAP measures are income
before income taxes, diluted EPS and cash provided by operations,
respectively. See the discussion on pages 17 through 20 for how we
define and calculate these measures and a reconciliation thereof to
the most directly comparable GAAP measures.
SUMMARIZED SEGMENT FINANCIAL RESULTS
The following table summarizes first quarter segment revenue and
operating income for fiscal 2025 and 2024:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Change
Revenues:
Entertainment
$
10,872
$
9,981
9
%
Sports
4,850
4,835
—
%
Experiences
9,415
9,132
3
%
Eliminations(1)
(447
)
(399
)
(12
)%
Total revenues
$
24,690
$
23,549
5
%
Segment operating income:
Entertainment
$
1,703
$
874
95
%
Sports
247
(103
)
nm
Experiences
3,110
3,105
—
%
Total segment operating income(2)
$
5,060
$
3,876
31
%
(1)
Reflects fees paid by Hulu to ESPN and the
Entertainment linear networks business for the right to air their
networks on Hulu Live and fees paid by ABC Network and Disney+ to
ESPN to program certain sports content on ABC Network and
Disney+.
(2)
Total segment operating income is a
non-GAAP financial measure. The most comparable GAAP measure is
income before income taxes. See the discussion on pages 17 through
20.
DISCUSSION OF FIRST QUARTER SEGMENT RESULTS
Star India
On November 14, 2024, the Company and Reliance Industries
Limited (RIL) completed a transaction (the Star India Transaction)
to form a joint venture (India joint venture) that combines the
Company’s Star-branded and other general entertainment and sports
television channels and direct-to-consumer Disney+ Hotstar service
in India (Star India) and certain media and entertainment
businesses controlled by RIL. RIL has an effective 56% controlling
interest in the joint venture with 37% held by the Company and 7%
held by a third party investment company.
Upon completion of the Star India Transaction, the Company began
recognizing its 37% share of the India joint venture’s results in
“Equity in the income of investees.” Star India results in the
current quarter through November 14, 2024 and results in the
prior-year quarter are consolidated in the Company’s financial
results for those periods.
Entertainment
Revenue and operating income for the Entertainment segment were
as follows:
Quarter Ended
Change
($ in millions)
December 28, 2024
December 30, 2023
Revenues:
Linear Networks
$
2,617
$
2,803
(7
)%
Direct-to-Consumer
6,072
5,546
9
%
Content Sales/Licensing and Other
2,183
1,632
34
%
$
10,872
$
9,981
9
%
Operating income (loss):
Linear Networks
$
1,098
$
1,236
(11
)%
Direct-to-Consumer
293
(138
)
nm
Content Sales/Licensing and Other
312
(224
)
nm
$
1,703
$
874
95
%
The increase in Entertainment operating income in the current
quarter compared to the prior-year quarter was due to improved
results at Content Sales/Licensing and Other and
Direct-to-Consumer, partially offset by a decrease at Linear
Networks.
Linear Networks
Linear Networks revenues and operating income were as
follows:
Quarter Ended
Change
($ in millions)
December 28, 2024
December 30, 2023
Revenue
Domestic
$
2,206
$
2,210
—
%
International
411
593
(31
)%
$
2,617
$
2,803
(7
)%
Operating income
Domestic
$
837
$
838
—
%
International
138
225
(39
)%
Equity in the income of investees
123
173
(29
)%
$
1,098
$
1,236
(11
)%
Domestic
Domestic operating income in the current quarter was comparable
to the prior-year quarter due to:
- An increase in programming and production costs primarily due
to a higher average cost mix of programming at the ABC Network,
reflecting the impact of the 2023 guild strikes on the prior- year
quarter
- A decrease in affiliate revenue attributable to fewer
subscribers, partially offset by higher effective rates
- Lower technology costs
- Higher advertising revenue reflecting an increase in rates, due
to more political advertising at the owned television stations,
partially offset by fewer impressions due to lower average
viewership at our networks.
International
The decrease in international operating income was primarily due
to the Star India Transaction.
Equity in the Income of
Investees
Income from equity investees decreased due to lower income from
A+E Television Networks (A+E) attributable to decreases in
advertising and affiliate revenue and the comparison to a gain on
the sale of an investment in the prior-year quarter.
Direct-to-Consumer
Direct-to-Consumer revenues and operating income (loss) were as
follows:
Quarter Ended
Change
($ in millions)
December 28, 2024
December 30, 2023
Revenue
$
6,072
$
5,546
9
%
Operating income (loss)
$
293
$
(138
)
nm
The improvement in operating results in the current quarter
compared to the prior-year quarter was due to:
- Subscription revenue growth attributable to higher effective
rates, reflecting increases in pricing, and more subscribers,
partially offset by an unfavorable foreign exchange impact
- Higher technology and distribution costs
- An increase in programming and production costs reflecting:
- Higher subscriber-based fees for programming the Hulu Live TV
service due to rate increases
- Lower costs for sports programming on Disney+, reflecting the
comparison to the International Cricket Council (ICC) Cricket World
Cup, which was carried on Disney+ Hotstar in the prior-year
quarter. There were no significant cricket events in the current
quarter prior to the Star India Transaction.
- Lower advertising revenue as the comparison to ICC Cricket
World Cup programming in the prior-year quarter on Disney+ Hotstar
was largely offset by higher advertising revenue at Disney+ Core
and Hulu. The increase in advertising revenue at Disney+ Core and
Hulu was due to more impressions, partially offset by lower
rates.
Key Metrics - First Quarter of Fiscal 2025
Comparison to Fourth Quarter of Fiscal 2024
In addition to revenue, costs and operating income, management
uses the following key metrics(1) to analyze trends and evaluate
the overall performance of our Disney+ and Hulu direct-to-consumer
(DTC) product offerings, and we believe these metrics are useful to
investors in analyzing the business. The following tables and
related discussion are on a sequential quarter basis.
Paid subscribers at:
(in millions)
December 28, 2024
September 28, 2024
Change
Disney+
Domestic (U.S. and Canada)
56.8
56.0
1
%
International(2)
67.8
69.3
(2
)%
Total Disney+(2)(3)
124.6
125.3
(1
)%
Hulu
SVOD Only
49.0
47.4
3
%
Live TV + SVOD
4.6
4.6
—
%
Total Hulu(3)
53.6
52.0
3
%
Average Monthly Revenue Per Paid Subscriber for the quarter
ended:
December 28, 2024
September 28, 2024
Change
Disney+
Domestic (U.S. and Canada)
$
7.99
$
7.70
4
%
International(2)
7.19
6.78
6
%
Disney+(2)
7.55
7.20
5
%
Hulu
SVOD Only
12.52
12.54
—
%
Live TV + SVOD
99.22
95.82
4
%
(1)
See discussion on page 16—DTC Product
Descriptions and Key Definitions
(2)
The sequential prior quarter Paid
Subscribers and Average Monthly Revenue per Paid Subscriber have
been adjusted to include Disney+ subscribers in Southeast Asia,
which were previously reported with Disney+ Hotstar. Disney+
Hotstar is no longer presented as this business was included in the
Star India Transaction.
(3)
Total may not equal the sum of the column
due to rounding
Domestic Disney+ average monthly revenue per paid subscriber
increased from $7.70 to $7.99 due to increases in pricing,
partially offset by a higher mix of subscribers to promotional
offerings.
International Disney+ average monthly revenue per paid
subscriber increased from $6.78 to $7.19 due to increases in
pricing and higher advertising revenue, partially offset by a
higher mix of subscribers to promotional offerings.
Hulu SVOD Only average monthly revenue per paid subscriber was
comparable to the prior sequential quarter as lower advertising
revenue was offset by increases in pricing and a higher mix of
subscribers to higher priced multi-product offerings.
Hulu Live TV + SVOD average monthly revenue per paid subscriber
increased from $95.82 to $99.22 primarily due to increases in
pricing.
Content Sales/Licensing and Other
Content Sales/Licensing and Other revenues and operating income
(loss) were as follows:
Quarter Ended
Change
($ in millions)
December 28, 2024
December 30, 2023
Revenue
$
2,183
$
1,632
34
%
Operating income (loss)
$
312
$
(224
)
nm
The improvement in operating results was due to higher
theatrical distribution results reflecting the strong performance
of Moana 2 in the current quarter. The current quarter also
included Mufasa: The Lion King and the prior-year quarter included
The Marvels and Wish.
Sports
Sports revenues and operating income (loss) were as follows:
Quarter Ended
Change
($ in millions)
December 28, 2024
December 30, 2023
Revenue
ESPN
Domestic
$
4,422
$
4,073
9
%
International
389
363
7
%
4,811
4,436
8
%
Star India
39
399
(90
)%
$
4,850
$
4,835
—
%
Operating income (loss)
ESPN
Domestic
$
231
$
255
(9
)%
International
(3
)
(56
)
95
%
228
199
15
%
Star India
9
(315
)
nm
Equity in the income of investees
10
13
(23
)%
$
247
$
(103
)
nm
Domestic ESPN
The decrease in domestic ESPN operating results in the current
quarter compared to the prior-year quarter reflected:
- Higher programming and production costs primarily attributable
to expanded college football programming rights including one
additional College Football Playoff (CFP) game
- The CFP format was revised starting with the 2024-2025 season,
which added four first round games in the current quarter, two of
which aired on our networks and two of which were
sub-licensed.
- In the prior-year quarter, we aired three host games, which
under the new format are now quarterfinal and semifinal games that
aired in the second quarter of the current fiscal year.
- An increase in advertising revenue primarily due to higher
rates
- Fees from sub-licensing CFP programming rights
- Affiliate revenue was comparable to the prior-year quarter as
effective rate increases were offset by fewer subscribers
International ESPN
The decrease in operating loss at international ESPN in the
current quarter compared to the prior-year quarter was driven
by:
- Higher fees received from the Entertainment segment to program
sports content on Disney+
- An increase in programming and production costs attributable to
higher soccer rights costs reflecting contractual rate
increases
- Lower affiliate revenue due to fewer subscribers
Star India
The improvement in Star India’s operating results reflected the
comparison to the ICC Cricket World Cup in the prior-year quarter,
as there were no significant cricket events aired in the current
quarter prior to the Star India Transaction.
Key Metrics - First Quarter of Fiscal 2025
Comparison to Fourth Quarter of Fiscal 2024
In addition to revenue, costs and operating income, management
uses the following key metrics(1) to analyze trends and evaluate
the overall performance of our ESPN+ DTC product offering, and we
believe these metrics are useful to investors in analyzing the
business. The following table is on a sequential quarter basis.
December 28, 2024
September 28, 2024
Change
Paid subscribers at: (in millions)
24.9
25.6
(3
)%
Average Monthly Revenue Per Paid
Subscriber for the quarter ended:
$
6.36
$
5.94
7
%
(1)
See discussion on page 16—DTC Product
Descriptions and Key Definitions
ESPN+ average monthly revenue per paid subscriber increased from
$5.94 to 6.36 due to increases in pricing and higher advertising
revenue.
Experiences
Experiences revenues and operating income were as follows:
Quarter Ended
Change
($ in millions)
December 28, 2024
December 30, 2023
Revenue
Parks & Experiences
Domestic
$
6,432
$
6,297
2
%
International
1,646
1,476
12
%
Consumer Products
1,337
1,359
(2
)%
$
9,415
$
9,132
3
%
Operating income
Parks & Experiences
Domestic
$
1,982
$
2,077
(5
)%
International
420
328
28
%
Consumer Products
708
700
1
%
$
3,110
$
3,105
—
%
Domestic Parks and Experiences
Domestic parks and experiences’ operating results for the
current quarter were unfavorably impacted by Hurricane Milton and,
to a lesser extent, Hurricane Helene. As a result of Hurricane
Milton, Walt Disney World Resort was closed for a day and we
canceled a cruise itinerary.
Operating results at our domestic parks and experiences
decreased compared to the prior-year quarter due to:
- Higher costs primarily due to the fleet expansion at Disney
Cruise Line and inflation
- Lower volumes attributable to declines in attendance,
reflecting the impact of the hurricanes
- Increased guest spending
International Parks and
Experiences
The increase in operating income at our international parks and
experiences was primarily attributable to:
- Growth in guest spending
- Higher volumes primarily attributable to an increase in
attendance
- An increase in costs primarily due to new guest offerings
OTHER FINANCIAL INFORMATION
Corporate and Unallocated Shared
Expenses
Corporate and unallocated shared expenses increased $152 million
for the quarter, from $308 million to $460 million, primarily due
to a legal settlement.
Restructuring and Impairment
Charges
In the current quarter, the Company recorded a $143 million loss
in connection with the Star India Transaction.
Interest Expense, net
Interest expense, net was as follows:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Change
Interest expense
$
(487
)
$
(528
)
8
%
Interest income, investment income and
other
120
282
(57
)%
Interest expense, net
$
(367
)
$
(246
)
(49
)%
The decrease in interest expense was primarily due to lower
average rates and debt balances, partially offset by a decrease in
capitalized interest.
The decrease in interest income, investment income and other
reflected the impact of lower cash and cash equivalent balances, an
unfavorable comparison related to pension and postretirement
benefit costs, other than service cost, and investment losses in
the current quarter compared to investment gains in the prior-year
quarter.
Equity in the Income of
Investees
Equity in the income of investees was as follows:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Change
Amounts included in segment results:
Entertainment
$
118
$
171
(31
)%
Sports
10
13
(23
)%
Equity in the loss of India joint
venture
(33
)
—
nm
Amortization of TFCF Corporation (TFCF)
intangible assets related to an equity investee
(3
)
(3
)
—
%
Equity in the income of investees
$
92
$
181
(49
)%
Income from equity investees decreased $89 million, to $92
million from $181 million, due to lower income from A+E and losses
from the India joint venture in the current quarter.
Income Taxes
The effective income tax rate was as follows:
Quarter Ended
December 28, 2024
December 30, 2023
Income before income taxes
$
3,660
$
2,871
Income tax expense
1,016
720
Effective income tax rate
27.8
%
25.1
%
The increase in the effective income tax rate in the current
quarter compared to the prior-year quarter was due to a non-cash
tax charge in connection with the Star India Transaction. This
increase was partially offset by the comparison to an unfavorable
effect of employee share-based awards in the prior-year quarter,
the impact of adjustments related to prior years and a lower
foreign effective tax rate. Adjustments related to prior years were
favorable in the current quarter and unfavorable in the prior-year
quarter.
Noncontrolling Interests
Net income attributable to noncontrolling interests was as
follows:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Change
Net income attributable to noncontrolling
interests
$
(90
)
$
(240
)
63
%
The decrease in net income attributable to noncontrolling
interests was due to the comparison to accretion of NBC Universal’s
interest in Hulu in the prior-year quarter.
Net income attributable to noncontrolling interests is
determined on income after royalties and management fees, financing
costs and income taxes, as applicable.
Cash from Operations
Cash provided by operations and free cash flow were as
follows:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Change
Cash provided by operations
$
3,205
$
2,185
$
1,020
Investments in parks, resorts and other
property
(2,466
)
(1,299
)
(1,167
)
Free cash flow(1)
$
739
$
886
$
(147
)
(1)
Free cash flow is not a financial measure
defined by GAAP. The most comparable GAAP measure is cash provided
by operations. See the discussion on pages 17 through 20.
Cash provided by operations increased $1.0 billion to $3.2
billion in the current quarter from $2.2 billion in the prior-year
quarter driven by:
- Lower tax payments in the current quarter compared to the
prior-year quarter due to payment of fiscal 2023 U.S. federal and
California state income taxes in the prior-year quarter that had
been deferred pursuant to relief provided by the Internal Revenue
Service and California Board of Equalization as a result of the
2023 winter storms in California
- Higher operating income at Entertainment
- Higher film and television production spending and the timing
of payments for sports rights
Capital Expenditures
Investments in parks, resorts and other property were as
follows:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Entertainment
$
(268
)
$
(309
)
Sports
(1
)
—
Experiences
Domestic
(1,786
)
(571
)
International
(293
)
(244
)
Total Experiences
(2,079
)
(815
)
Corporate
(118
)
(175
)
Total investments in parks, resorts and
other property
$
(2,466
)
$
(1,299
)
Capital expenditures increased to $2.5 billion from $1.3 billion
due to higher spend on cruise ship fleet expansion at the
Experiences segment.
Depreciation Expense
Depreciation expense was as follows:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Entertainment
$
165
$
163
Sports
10
11
Experiences
Domestic
461
424
International
191
171
Total Experiences
652
595
Corporate
82
54
Total depreciation expense
$
909
$
823
THE WALT DISNEY
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(unaudited; $ in millions,
except per share data)
Quarter Ended
December 28, 2024
December 30, 2023
Revenues
$
24,690
$
23,549
Costs and expenses
(20,612
)
(20,613
)
Restructuring and impairment charges
(143
)
—
Interest expense, net
(367
)
(246
)
Equity in the income of investees
92
181
Income before income taxes
3,660
2,871
Income taxes
(1,016
)
(720
)
Net income
2,644
2,151
Net income attributable to noncontrolling
interests
(90
)
(240
)
Net income attributable to The Walt Disney
Company (Disney)
$
2,554
$
1,911
Earnings per share attributable to
Disney:
Diluted
$
1.40
$
1.04
Basic
$
1.41
$
1.04
Weighted average number of common and
common equivalent shares outstanding:
Diluted
1,818
1,835
Basic
1,812
1,832
THE WALT DISNEY
COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited; $ in millions,
except per share data)
December 28, 2024
September 28, 2024
ASSETS
Current assets
Cash and cash equivalents
$
5,486
$
6,002
Receivables, net
13,767
12,729
Inventories
2,018
2,022
Content advances
1,157
2,097
Other current assets
1,239
2,391
Total current assets
23,667
25,241
Produced and licensed content costs
32,505
32,312
Investments
8,902
4,459
Parks, resorts and other property
Attractions, buildings and equipment
78,328
76,674
Accumulated depreciation
(45,898
)
(45,506
)
32,430
31,168
Projects in progress
4,581
4,728
Land
1,129
1,145
38,140
37,041
Intangible assets, net
10,372
10,739
Goodwill
73,312
73,326
Other assets
10,148
13,101
Total assets
$
197,046
$
196,219
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and other accrued
liabilities
$
21,635
$
21,070
Current portion of borrowings
6,620
6,845
Deferred revenue and other
6,591
6,684
Total current liabilities
34,846
34,599
Borrowings
38,688
38,970
Deferred income taxes
6,336
6,277
Other long-term liabilities
10,437
10,851
Commitments and contingencies
Equity
Preferred stock
—
—
Common stock, $0.01 par value, Authorized
– 4.6 billion shares, Issued – 1.9 billion shares
58,868
58,592
Retained earnings
50,468
49,722
Accumulated other comprehensive loss
(2,688
)
(3,699
)
Treasury stock, at cost, 54 million shares
at December 28, 2024 and 47 million shares at September 28,
2024
(4,715
)
(3,919
)
Total Disney Shareholders’ equity
101,933
100,696
Noncontrolling interests
4,806
4,826
Total equity
106,739
105,522
Total liabilities and equity
$
197,046
$
196,219
THE WALT DISNEY
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited; $ in
millions)
Quarter Ended
December 28, 2024
December 30, 2023
OPERATING ACTIVITIES
Net income
$
2,644
$
2,151
Depreciation and amortization
1,276
1,243
Deferred income taxes
25
(51
)
Equity in the income of investees
(92
)
(181
)
Cash distributions received from equity
investees
33
153
Net change in produced and licensed
content costs and advances
1,141
2,642
Equity-based compensation
317
308
Other, net
206
(64
)
Changes in operating assets and
liabilities
Receivables
(1,277
)
(1,554
)
Inventories
4
8
Other assets
(116
)
30
Accounts payable and other liabilities
(1,533
)
(1,396
)
Income taxes
577
(1,104
)
Cash provided by operations
3,205
2,185
INVESTING ACTIVITIES
Investments in parks, resorts and other
property
(2,466
)
(1,299
)
Other, net
(109
)
53
Cash used in investing activities
(2,575
)
(1,246
)
FINANCING ACTIVITIES
Commercial paper borrowings (payments),
net
(169
)
1,046
Borrowings
1,057
—
Reduction of borrowings
(951
)
(309
)
Repurchases of common stock
(794
)
—
Acquisition of redeemable noncontrolling
interests
—
(8,610
)
Other, net
(140
)
(133
)
Cash used in financing activities
(997
)
(8,006
)
Impact of exchange rates on cash, cash
equivalents and restricted cash
(153
)
79
Change in cash, cash equivalents and
restricted cash
(520
)
(6,988
)
Cash, cash equivalents and restricted
cash, beginning of period
6,102
14,235
Cash, cash equivalents and restricted
cash, end of period
$
5,582
$
7,247
DTC PRODUCT DESCRIPTIONS AND KEY
DEFINITIONS
Product offerings
In the U.S., Disney+, ESPN+ and Hulu SVOD Only are each offered
as a standalone service or as part of various multi-product
offerings. Hulu Live TV + SVOD includes Disney+ and ESPN+. Disney+
is available in more than 150 countries and territories outside the
U.S. and Canada. Depending on the market, our services can be
purchased on our websites or through third-party platforms/apps or
are available via wholesale arrangements.
Paid subscribers
Paid subscribers reflect subscribers for which we recognized
subscription revenue. Certain product offerings provide the option
for an extra member to be added to an account (extra member
add-on). These extra members are not counted as paid subscribers.
Subscribers cease to be a paid subscriber as of their effective
cancellation date or as a result of a failed payment method.
Subscribers to multi-product offerings in the U.S. are counted as a
paid subscriber for each of the Company's services included in the
multi-product offering and subscribers to Hulu Live TV + SVOD are
counted as one paid subscriber for each of the Hulu Live TV + SVOD,
Disney+ and ESPN+ services. Subscribers include those who receive
an entitlement to a service through wholesale arrangements,
including those for which the service is available to each
subscriber of an existing content distribution tier. When we
aggregate the total number of paid subscribers across our DTC
streaming services, we refer to them as paid subscriptions.
International Disney+
International Disney+ includes the Disney+ service outside the
U.S. and Canada.
Average Monthly Revenue Per Paid
Subscriber
Hulu and ESPN+ average monthly revenue per paid subscriber is
calculated based on the average of the monthly average paid
subscribers for each month in the period. The monthly average paid
subscribers is calculated as the sum of the beginning of the month
and end of the month paid subscriber count, divided by two. Disney+
average monthly revenue per paid subscriber is calculated using a
daily average of paid subscribers for the period. Revenue includes
subscription fees, advertising (excluding revenue earned from
selling advertising spots to other Company businesses), premium and
feature add-on revenue and extra member add-on revenue but excludes
Pay-Per-View revenue. Advertising revenue generated by content on
one DTC streaming service that is accessed through another DTC
streaming service by subscribers to both streaming services is
allocated between both streaming services. The average revenue per
paid subscriber is net of discounts on offerings that carry more
than one service. Revenue is allocated to each service based on the
relative retail or wholesale price of each service on a standalone
basis. Hulu Live TV + SVOD revenue is allocated to the SVOD
services based on the wholesale price of the Hulu SVOD Only,
Disney+ and ESPN+ multi-product offering. In general, wholesale
arrangements have a lower average monthly revenue per paid
subscriber than subscribers that we acquire directly or through
third-party platforms.
NON-GAAP FINANCIAL
MEASURES
This earnings release presents diluted EPS excluding certain
items (also referred to as adjusted EPS), total segment operating
income and free cash flow. Diluted EPS excluding certain items,
total segment operating income and free cash flow are important
financial measures for the Company but are not financial measures
defined by GAAP.
These measures should be reviewed in conjunction with the most
comparable GAAP financial measures and are not presented as
alternative measures of diluted EPS, income before income taxes or
cash provided by operations as determined in accordance with GAAP.
Diluted EPS excluding certain items, total segment operating income
and free cash flow as we have calculated them may not be comparable
to similarly titled measures reported by other companies.
Our definitions and calculations of diluted EPS excluding
certain items, total segment operating income and free cash flow,
as well as quantitative reconciliations of each of these measures
to the most directly comparable GAAP financial measure, are
provided below.
The Company is not providing the forward-looking measure for
diluted EPS, which is the most directly comparable GAAP measure to
diluted EPS excluding certain items, or a quantitative
reconciliation of forward-looking diluted EPS excluding certain
items to that most directly comparable GAAP measure. The Company is
unable to predict or estimate with reasonable certainty the
ultimate outcome of certain significant items required for such
GAAP measure without unreasonable effort. Information about other
adjusting items that is currently not available to the Company
could have a potentially unpredictable and significant impact on
future GAAP financial results.
Diluted EPS excluding certain
items
The Company uses diluted EPS excluding (1) certain items
affecting comparability of results from period to period and (2)
amortization of TFCF and Hulu intangible assets, including purchase
accounting step-up adjustments for released content, to facilitate
the evaluation of the performance of the Company’s operations
exclusive of these items, and these adjustments reflect how senior
management is evaluating segment performance.
The Company believes that providing diluted EPS exclusive of
certain items impacting comparability is useful to investors,
particularly where the impact of the excluded items is significant
in relation to reported earnings and because the measure allows for
comparability between periods of the operating performance of the
Company’s business and allows investors to evaluate the impact of
these items separately.
The Company further believes that providing diluted EPS
exclusive of amortization of TFCF and Hulu intangible assets
associated with the acquisition in 2019 is useful to investors
because the TFCF and Hulu acquisition was considerably larger than
the Company’s historic acquisitions with a significantly greater
acquisition accounting impact.
The following table reconciles reported diluted EPS to diluted
EPS excluding certain items for the first quarter:
($ in millions except EPS)
Pre-Tax Income/
Loss
Tax Benefit/
Expense(1)
After-Tax Income/
Loss(2)
Diluted EPS(3)
Change vs. prior-year period
Quarter Ended December 28, 2024
As reported
$
3,660
$
(1,016
)
$
2,644
$
1.40
35
%
Exclude:
Restructuring and impairment
charges(4)
143
213
356
0.20
Amortization of TFCF and Hulu intangible
assets and fair value step-up on film and television costs(5)
397
(93
)
304
0.16
Excluding certain items
$
4,200
$
(896
)
$
3,304
$
1.76
44
%
Quarter Ended December 30, 2023
As reported
$
2,871
$
(720
)
$
2,151
$
1.04
Exclude:
Amortization of TFCF and Hulu intangible
assets and fair value step-up on film and television costs(5)
451
(106
)
345
0.18
Excluding certain items
$
3,322
$
(826
)
$
2,496
$
1.22
(1)
Tax benefit/expense is determined using
the tax rate applicable to the individual item.
(2)
Before noncontrolling interest share.
(3)
Net of noncontrolling interest share,
where applicable. Total may not equal the sum of the column due to
rounding.
(4)
Amounts relate to the Star India
Transaction.
(5)
For the current quarter, intangible asset
amortization was $327 million, step-up amortization was $67 million
and amortization of intangible assets related to a TFCF equity
investee was $3 million. For the prior-year quarter, intangible
asset amortization was $380 million, step-up amortization was $68
million and amortization of intangible assets related to a TFCF
equity investee was $3 million.
Total segment operating income
The Company evaluates the performance of its operating segments
based on segment operating income, and management uses total
segment operating income (the sum of segment operating income from
all of the Company’s segments) as a measure of the performance of
operating businesses separate from non-operating factors. The
Company believes that information about total segment operating
income assists investors by allowing them to evaluate changes in
the operating results of the Company’s portfolio of businesses
separate from non-operational factors that affect net income, thus
providing separate insight into both operations and other factors
that affect reported results.
The following table reconciles income before income taxes to
total segment operating income:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Change
Income before income taxes
$
3,660
$
2,871
27
%
Add (subtract):
Corporate and unallocated shared
expenses
460
308
(49
)%
Equity in the loss of India joint
venture
33
—
nm
Restructuring and impairment charges
143
—
nm
Interest expense, net
367
246
(49
)%
Amortization of TFCF and Hulu intangible
assets and fair value step-up on film and television costs
397
451
12
%
Total segment operating income
$
5,060
$
3,876
31
%
Free cash flow
The Company uses free cash flow (cash provided by operations
less investments in parks, resorts and other property), among other
measures, to evaluate the ability of its operations to generate
cash that is available for purposes other than capital
expenditures. Management believes that information about free cash
flow provides investors with an important perspective on the cash
available to service debt obligations, make strategic acquisitions
and investments and pay dividends or repurchase shares.
The following table presents a summary of the Company’s
consolidated cash flows:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Cash provided by operations
$
3,205
$
2,185
Cash used in investing activities
(2,575
)
(1,246
)
Cash used in financing activities
(997
)
(8,006
)
Impact of exchange rates on cash, cash
equivalents and restricted cash
(153
)
79
Change in cash, cash equivalents and
restricted cash
(520
)
(6,988
)
Cash, cash equivalents and restricted
cash, beginning of period
6,102
14,235
Cash, cash equivalents and restricted
cash, end of period
$
5,582
$
7,247
The following table reconciles the Company’s consolidated cash
provided by operations to free cash flow:
Quarter Ended
($ in millions)
December 28, 2024
December 30, 2023
Change
Cash provided by operations
$
3,205
$
2,185
$
1,020
Investments in parks, resorts and other
property
(2,466
)
(1,299
)
(1,167
)
Free cash flow
$
739
$
886
$
(147
)
FORWARD-LOOKING STATEMENTS
Certain statements and information in this earnings release may
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, including
statements regarding our expectations, beliefs, plans, financial
prospects, trends or outlook and guidance; financial or performance
estimates and expectations (including estimated or expected
revenues, earnings, operating income, cash position, costs,
expenses and impact of certain items) and expected drivers;
direct-to-consumer prospects, including expectations for
subscribers; value of our intellectual property, content offerings,
businesses and assets; business and other plans; strategic
priorities and initiatives; consumer sentiment, behavior or demand
and other statements that are not historical in nature. Any
information that is not historical in nature included in this
earnings release is subject to change. These statements are made on
the basis of management’s views and assumptions regarding future
events and business performance as of the time the statements are
made. Management does not undertake any obligation to update these
statements.
Actual results may differ materially from those expressed or
implied. Such differences may result from actions taken by the
Company, including restructuring or strategic initiatives
(including capital investments, asset acquisitions or dispositions,
new or expanded business lines or cessation of certain operations),
our execution of our business plans (including the content we
create and IP we invest in, our pricing decisions, our cost
structure and our management and other personnel decisions), our
ability to quickly execute on cost rationalization while preserving
revenue, the discovery of additional information or other business
decisions, as well as from developments beyond the Company’s
control, including:
- the occurrence of subsequent events;
- deterioration in domestic and global economic conditions or
failure of conditions to improve as anticipated;
- deterioration in or pressures from competitive conditions,
including competition to create or acquire content, competition for
talent and competition for advertising revenue;
- consumer preferences and acceptance of our content, offerings,
pricing model and price increases, and corresponding subscriber
additions and churn, and the market for advertising sales on our
DTC streaming services and linear networks;
- health concerns and their impact on our businesses and
productions;
- international, political or military developments;
- regulatory and legal developments;
- technological developments;
- labor markets and activities, including work stoppages;
- adverse weather conditions or natural disasters; and
- availability of content.
Such developments may further affect entertainment, travel and
leisure businesses generally and may, among other things, affect
(or further affect, as applicable):
- our operations, business plans or profitability, including
direct-to-consumer profitability;
- demand for our products and services;
- the performance of the Company’s content;
- our ability to create or obtain desirable content at or under
the value we assign the content;
- the advertising market for programming;
- taxation; and
- performance of some or all Company businesses either directly
or through their impact on those who distribute our products.
Additional factors are set forth in the Company’s most recent
Annual Report on Form 10-K, including under the captions “Risk
Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and “Business,” quarterly
reports on Form 10-Q, including under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” and subsequent filings with the
Securities and Exchange Commission.
The terms “Company,” “we,” and “our” are used in this report to
refer collectively to the parent company and the subsidiaries
through which our various businesses are actually conducted.
PREPARED EARNINGS REMARKS AND CONFERENCE CALL
INFORMATION
In conjunction with this release, The Walt Disney Company will
post prepared management remarks (Executive Commentary) at
www.disney.com/investors and will host a conference call today,
February 5, 2025, at 8:30 AM EST/5:30 AM PST via a live Webcast. To
access the Webcast go to www.disney.com/investors. The Webcast
replay will also be available on the site.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250205352004/en/
David Jefferson Corporate Communications 818-560-4832
Carlos Gomez Investor Relations 818-560-1933
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