The Walt Disney Company has reported its financial results for the third quarter ended June 29, 2024. The company's revenues for the quarter increased to $23.2 billion from $22.3 billion in the prior-year quarter. Income before income taxes improved to $3.1 billion in the current quarter from a loss of $0.1 billion in the prior-year quarter. Diluted earnings per share (EPS) was $1.43 for the current quarter compared to a loss of $0.25 in the prior-year quarter. Excluding certain items, diluted EPS for the quarter increased to $1.39 from $1.03 in the prior-year quarter.
Key points from the report include: Strong double-digit percentage growth of 19% for total segment operating income and 35% for adjusted EPS in the third fiscal quarter of 2024. Entertainment segment operating income nearly tripled year over year in Q3, driven by significantly improved results at direct-to-consumer and content sales/licensing and other. Entertainment direct-to-consumer’s better-than-expected Q3 performance, combined with profitable results at ESPN+, resulted in positive profitability at the combined streaming businesses for the first time and one quarter ahead of previous guidance. Success of "Inside Out 2," which became the highest-grossing animated film of all time, drove strong outperformance at content sales/licensing and other. ESPN operating income grew by 4%, while Star India results were lower versus the prior year, resulting in sports segment operating income declining by 6% in Q3. Q3 experiences revenue increased by 2% and segment operating income decreased by 3%.
The company's guidance and outlook include: Full year adjusted EPS growth target is now 30%. Focus on driving incremental cost savings above and beyond the previously stated target as the company delivers on its strategic priorities. * Expectation for the profitability of combined streaming businesses to improve in Q4, with both entertainment direct-to-consumer and ESPN+ expected to be profitable in the quarter.
In terms of key financial metrics, Disney's total segment operating income increased by 19% in the third quarter of fiscal 2024 compared to the prior-year quarter. Diluted EPS excluding certain items increased by 35% in the same period. Cash provided by operations decreased by 7%, and free cash flow decreased by 24% compared to the prior-year quarter.
The summarized segment financial results show that the entertainment segment's revenues increased by 4% in the third quarter of fiscal 2024 compared to the prior-year quarter. The segment operating income for entertainment increased by over 100% in the same period.
In the entertainment segment, the direct-to-consumer revenues increased by 15% and the operating loss improved by 96% in the current quarter compared to the prior-year quarter. Content sales/licensing and other revenues decreased by 4%, but the operating income improved to $254 million from a loss of $112 million in the prior-year quarter.
Moreover, Disney's sports segment revenues increased by 5%, with ESPN's domestic operating income growing by 1% and international operating income improving from a loss to a gain. However, Star India's operating loss increased in the current quarter.
In the direct-to-consumer segment, Disney's key metrics for the third quarter of fiscal 2024 compared to the second quarter of fiscal 2024 show growth in paid subscribers for Disney+ and Hulu. The average monthly revenue per paid subscriber for Disney+ and Hulu also changed during this period.
Following these announcements, the company's shares moved 2.5%, and are now trading at a price of $89.97. For more information, read the company's full 8-K submission here.
