Bullish Highlights:
– Revenue Growth: Q4 revenues increased by 5%, with a 7% rise year-over-year (YOY).
– Earnings Per Share (EPS): Q4 EPS from continuing operations rose to $0.14 from $0.09 YOY.
– Adjusted EPS: When excluding certain items, Q4 EPS jumped to $0.82 from $0.30, and annual EPS increased to $3.76 from $3.53.
– Subscriber Growth: Disney+ added a strong 7 million subscribers in Q4.
– Parks and Experiences: Operating income soared over 30% YOY, with growth across all segments.
– Cost Efficiency: The company has raised its annualized efficiency target to $7.5 billion, up from $5.5 billion.
– Free Cash Flow: There's an expectation of significant growth in FY24, with targets set to reach pre-pandemic levels.
Bearish Considerations:
– Annual EPS Decline: Despite a strong quarter, annual EPS fell to $1.29 from $1.75.
– Wage Inflation: The company is managing against wage inflation and challenging comparisons to the previous year's 50th-anniversary celebrations at Walt Disney World.
Forward Outlook:
– Disney anticipates its streaming services to achieve profitability by Q4 of FY24, though they caution that progress may be uneven quarter to quarter.
– The company is bullish on ESPN's growth and its evolution into a leading digital sports platform.
– There's a focus on improving the economics of film studios and turbocharging growth in the parks and experiences sector.
CEO's Perspective:
Robert A. Iger, CEO, expressed optimism about the company's trajectory. He emphasized the foundational work done over the past year, which positions Disney to move from a period of restructuring to a phase of growth. Iger outlined four key areas for future success: streaming profitability, ESPN's digital transformation, film studio output, and parks and experiences growth. He's bullish on the opportunities ahead and is focused on creating lasting growth and increasing shareholder value.
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