Things are CHANGING at the Walt Disney Company and we now have an inside look at what’s going on.

On August 9th, 2023, Disney released its earnings report for the third quarter of fiscal year 2023 (Q3 of FY 2023) and held an earnings call related to the report. Why is this a big deal? Well, these earnings reports/calls give us a peek behind the curtain (so to speak) — a look at just how things are going financially for the Company, from the parks to Disney+. And this earnings report/call revealed some especially important things — let’s take a look!

A few key things to keep in mind. This is the first Disney earnings call following the announcement that CEO Bob Iger’s contract at Disney has been extended through 2026. It is also the first Disney earnings call following the start of the actors’ strike, and the first following Christine McCarthy’s announcement that she would be stepping down as Disney’s CFO — a temporary CFO had been announced to take her place.

Overall Financial Results

In terms of overall financial results, here’s what Disney has reported for Q3 of FY 2023:

Iger called Disney’s first quarter of 2023 “solid” and previously said Disney was “pleased” with their accomplishments in the second quarter. So how has this third quarter gone? Well, in the earnings report, he noted that revenues for the quarter and nine months grew 4% and 8%, respectively.

However, diluted earnings per share (EPS) from continuing operations for the quarter was a loss of $0.25 compared to income of $0.77 in the prior-year quarter. Not only this, but diluted EPS for the quarter was $1.03, down from $1.09 in the prior year quarter. EPS from continuing operations for the nine months ended July 1, 2023, and decreased to $1.14 from $1.66 in the prior-year period. Lastly, diluted EPS for the nine months, which also ended July 1, 2023, decreased to $2.94 from $3.22 in the prior-year period.

So, the company has seen quite a few decreases in revenue. Below is a chart showing some of the key financial results from Q3 of FY 2023, just so that you can see it visually!

 

Now, let’s look at Disney+ numbers.

Disney+ Subscribers

The number of Disney+ subscribers has been a big topic over the past few years. In Q1 of FY 2023, Disney+ LOST some subscribers. It also lost some subscribers in Q2 of FY 2023. As of the Q2 report, the total number of subscribers was 157.8 million. So how has that changed?

In Q3 of FY 2023, domestic subscriptions saw a drop in Disney+ subscribers compared to the prior-year quarter, but overall, Disney+ Core saw a slight increase in total subscribers.

The total number of Disney+ subscribers (as of the latest updates) is now 146.1 million. This statistic represents the number of Domestic, International, and Hotstar subscribers combined. Despite this, Disney reported that “Direct-to-Consumer revenues for the quarter increased 9% to $5.5 billion.” They noted that this improvement was “due to higher subscription revenue and a decrease in marketing costs, partially offset by higher programming and production costs and lower advertising revenue.”

Click here to learn about the price increase previously announced for Disney+

Disney+ Financial Status

Now, let’s take a look beyond the subscriber numbers. While subscribers are important, Disney has also been focused on the profitability of Disney+. In fact, Iger has previously shared that improving streaming is his #1 goal at Disney. So…how are things looking?

Well, in Q2 of FY 2023, Disney’s direct-to-consumer department as a whole reported an increase in revenue ($5.5 billion was the total) and the operating loss decreased a bit (down to $0.2 billion). For Q3 of FY 2023, domestic Disney+ average monthly revenue per paid subscriber increased from $7.14 to $7.31 due to higher per-subscriber advertising revenue. International Disney+ (excluding Disney+ Hotstar) average monthly revenue per paid subscriber increased from $5.93 to $6.01 due to an increase in average retail pricing and a favorable foreign exchange impact, partially offset by a higher mix of wholesale subscribers.

So, the company did see an overall increase in revenue from individual subscribers, which is good. Disney said that The improvement at Disney+ was due to higher subscription revenue and a decrease in marketing costs, partially offset by higher programming and production costs and lower advertising revenue. Higher subscription revenue was attributable to Disney+ Core subscriber growth and increases in Disney+ Core retail pricing.

Theme Park Updates

Now, let’s talk about the theme parks. This has typically been a highlight of the financial reports, with the parks bringing in some big numbers. But, Q2 of FY 2023 brought some interesting wrinkles to the situation.

Though the division reported an increase in revenue, results at the domestic parks were “slightly unfavorable” compared to the previous year (with a decrease at Disney World offset by growth at Disneyland).

During the Q2 earnings call, McCarthy also warned that during the back half of the fiscal year, there would be an unfavorable comparison compared to the prior year because the 50th Anniversary celebration has ended at Disney World so there is an expected moderation in demand.

We’ve seen a number of signs pointing to an emptier Disney World this summer, though that hasn’t seemed to worry Iger. So what has actually happened with the financial standing of the parks? Keep in mind that Q3 of FY 2023 only runs through part of July 2023.

Well, in Q3 of FY 2023, the Parks, Experiences, and Products division reported that revenues for the quarter increased 13% to $8.3 billion and segment operating income increased 11% to $2.4 billion. Higher operating results for the quarter reflected increases at our international parks and resorts, however, there were lower results for domestic operations.

Disney World crowd numbers are down again and at lower volumes, and the company has even seen some decreases in occupied room nights and attendance. Disney said that the decrease at Disney World was primarily due to higher costs and lower volumes. The price increases in the parks were due to inflation and accelerated depreciation related to the planned closure of Star Wars: Galactic Starcruiser.

At Disneyland, higher attendance and increased guest spending were largely offset by higher costs, driven by inflation. Guest spending growth was primarily due to an increase in average ticket prices.

Overall, though, parks revenue is up compared to the prior-year quarter.

Those are some of the key takeaways from the earnings call so far. We will continue to update this post with more details. Check back for updates!

For more Disney news, see our posts below:

• The New Disney Task Force That Could CHANGE the Company
• 17 Critical Dates For Disney World Fans in 2024
• Executive CHANGES Announced for The Walt Disney Company

And check back with us for all the latest news.

What do you think about Disney’s latest updates? Tell us in the comments.

The post Inside Look at the Big CHANGES Hitting Disney Right Now first appeared on the disney food blog.