Walt Disney Co. CEO Josh D’Amaro is laying 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 where he sees the company going.
The company beat Wall Street expectations in its fiscal Q2, which ended March 3, reporting revenue of $25.2 billion (up 7%) and segment operating income of $4.6 billion (up 4%).
Disney’s entertainment division led the pack, with revenues of $11.7 billion, up 10% from a year ago and operating income of $1.3 billion, up 6%. That was followed by experiences, which had revenues of $9.5 billion, up 7%, with operating income of $2.6 billion, up 5% (they also said that the Abu Dhabi park plans remain “unchanged” given the years-long development process). Sports, which is mostly comprised of ESPN, had revenue of $4.6 billion, up 2%, and operating income of $652 million, down 5%.
The company also further adjusted its guidance, raising its share buyback goal to $8 billion, with adjusted EPS growth of 12% this year.
But it will be D’Amaro and his leadership team’s vision that surely dominates the discussion, with the CEO and CFO Hugh Johnston explaining in some detail in a newly-formatted earnings letter how they are thinking about the future of Disney.
That begins with “three pillars” that will serve as the heart of that strategy
- Investing in IP and creativity that breaks through, builds connections, and endures
- Reaching more consumers in more seamless, engaging ways around the world
- Using advanced technologies to power our storytelling and increase monetization and returns
On the IP and creativity front, the executives touted franchises like The Mandalorian and Grogu, Toy Story 5 and the live-action Moana, while making it clear that “even as we invest in existing franchises, we know the importance of taking creative risks to build new ones.
“Hoppers, from Pixar, is a strong example of our focus on original IP, and we are pleased with its
critical reception and the enthusiasm with which fans have embraced the story and characters.” They continue, he said, before noting how all creative, from films and TV shows to streaming originals and games now report into Dana Walden.
On the second pillar, the executives reiterated the plan to make Disney+ a centerpiece of the company’s strategy, writing that “as we look to build Disney+ beyond a premium streaming video 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 an increase in engagement.”
That includes the Verts vertical video product, which recently launched. And in a notable move, they also noted the popularity of Disney’s characters in Fortnite, affirming the relationship between those two companies.
And they expanded somewhat on how they see artificial intelligence being used within the company, noting that even with Sora shut down, “we continue to explore potential commercial opportunities with OpenAI and others.”
“We view advanced technologies, including AI, as a meaningful long-term opportunity,” they write. We see opportunities for AI to play a role across 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 keeps human creativity at the center of everything we do and respects creators and the value of our intellectual property.”
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