Q2 Earnings Announcement
Significantly Reduced Net Loss Deficit
Walt Disney, which is undergoing high-intensity restructuring, has succeeded in significantly reducing its deficit through cost-cutting measures. However, the stock price has returned to the level of three years ago due to disappointment over losing growth momentum, such as a continued decline in subscribers in its core business, the online streaming service (OTT) sector.
On the 9th (local time), Walt Disney announced in its earnings report that its Q2 revenue this year reached $22.3 billion, a 3.8% increase compared to the same period last year. This was in line with market expectations ($22.5 billion). Operating profit was also $3.6 billion, exceeding the market consensus of $3.3 billion compiled by financial information firm FactSet. Net loss was $460 million, significantly reduced from $1.41 billion in the same period last year.
In the core OTT sector, losses amounted to $512 million, a sharp decrease from $1.06 billion in the same period last year. This also surpassed market expectations of a $758 million loss. Regarding this, The Wall Street Journal (WSJ) evaluated it as "a sign that the cost-cutting strategy implemented by CEO Bob Iger, who returned as Walt Disney's savior, is beginning to take effect."
As losses accumulated in the OTT business sector, Walt Disney is conducting high-intensity restructuring by reducing content production and cutting staff. Since early this year, it has been aiming to reduce about 7,000 employees and decided to cut the content budget by $5.5 billion to save costs.
Disney Plus's global subscriber count was 146.1 million, down 7.4% from 157.8 million in the previous quarter. Losing the broadcasting rights to the 'Cricket League,' the most popular sports league in India, had a significant impact on the decline in subscribers. In the home market of North America, subscribers also slightly decreased to 46 million from 46.3 million in the previous quarter.
Although the earnings themselves did not significantly deviate from Wall Street expectations, the stock price is falling due to disappointment over failing to defend subscriber numbers in the OTT sector. Walt Disney's stock, listed on the New York Stock Exchange, closed at $87.49, down 0.73% from the previous session during regular trading hours. After the earnings announcement, the decline widened in after-hours trading and was down over 1% as of 5:23 a.m. Korean time.
The stock price, which fell below the $100 mark earlier this year, has plunged to the level of three years ago amid increasing losses. Compared to the peak of over $200 reached intraday in March 2021 during the COVID-19 pandemic boom, it is less than half that level.
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