The Walt Disney Company 2nd Quarter Earnings Results
The Walt Disney Company released their earnings report for their fiscal second quarter after the market closed on Tuesday. How did they do? If you picture Daffy Duck diving into a pile of coins, you’ll get the gist. Disney had a phenomenal second quarter in 2017. This year, they absolutely eviscerated it. Yes, Disney stockholders are extremely happy people right now.
First of all, let’s remember how Disney defines their fiscal quarters. The “second” quarter of fiscal 2018 runs from December 31st, 2017, through March 31, 2018. I have no idea why they included the last day of December in this quarter since that was a Sunday. Let’s just accept it and move along.
For this second fiscal quarter, Disney earned total revenue of $14.548 billion, a massive number that’s $1.212 billion better than their second quarter in 2017. And I say again that people were over the moon about that quarter. You can imagine how thrilled analysts are about this performance. They’d projected $14.1 billion in earnings. Yes, Disney beat all reasonable expectations by more than $350 million.
Analysts had also predicted that Disney would return $1.70 per share this quarter. Instead, the number was $1.84. That’s a whopping 23 percent increase from the second quarter of 2017. Venerable stocks like Disney rarely see this sort of extreme growth year over year. What’s happened here borders on historic, and you’re about to see that the good news is only getting started.
Disney’s One True Hero
What’s the key ingredient in the success? Black Panther. Should you google stock reports for Disney’s second quarter, virtually all of them will lead with the shocking success of this film, which we’ve chronicled over several MickeyBlog News updates.
Disney’s latest superhero blockbuster (well, one of their latest two) singlehandedly boosted an entire division. Projections for Disney’s film division were for $2.19 billion in revenue. That’s something that people like myself can track with a high degree of accuracy. Because Disney did so shockingly well this quarter, however, they still managed to surprise. Actual revenue within the division was $2.45 billion, a 12 percent improvement over reasonable expectations.
How good is this performance? The holiday box office season is the most important one on the annual calendar. Disney released Star Wars: The Last Jedi in time for the last fiscal quarter, and that’s when it earned most of its revenue.
During that first quarter, Disney earned $2.50 billion. The period at the start of the calendar year is supposed to be much slower. The company earned $2.03 billion during the same timeframe last year, and that was with a live action remake of Beauty and the Beast inflating the totals. The fact that their first quarter total this year is up more than $400 million from 2017 and only a bit behind a holiday quarter featuring a Star Wars movie is absolutely flabbergasting.
These facts also bode well for the third and four quarters at Disney. Avengers: Infinity War is already decimating the box office with its historic pace. The company also has another Marvel Cinematic Universe (MCU) title out by the end of the summer. While Ant-Man and the Wasp won’t do as well as its predecessors, the goodwill that Disney has built with the Marvel franchise should carry it to impressive heights, too. Oh, and there’s a Star Wars movie coming out later this month, too! Disney’s film division is a runaway money train.
Disney went ahead and reported their fiscal results the same way this time. That wasn’t guaranteed since they reorganized their divisions earlier this year. Since they chose to stick with the previous methodology, we can compare to apples to apples a lot more than I’d anticipated. Here’s what we know.
All of Disney’s four divisions saw revenue increases during the fiscal quarter, although one was modest in scope. We’ve already discussed the film department’s improvement thanks to the power of Black Panther. The Media Networks department also improved from $5.946 billion to $6.138 billion.
That number is basically a wash with the first fiscal quarter’s $6.243 billion, which is again amazing since holiday revenue is better in this silo, too. Since so much has been made about the struggles in the cable television medium, the increase in revenue is a huge win for Disney.
The area that matters the most to us is, of course, the Parks & Resorts division. As usual, it’s a juggernaut. Disney earned $4.879 billion from this segment, up 13 percent from last year’s $4.299 billion. That’s also in line with the holiday season’s $5.154 million. The pattern you’re seeing here is that Disney’s seeing little drop from the lucrative October-December period to the historically slow January-March quarter.
The one area for concern is the Consumer Products & Interactive Media division. It is relatively stagnant year-over-year with $1.077 billion in earnings this year after $1.057 billion last year. Growth of 1.9 percent is barely even with inflation, so it’s nothing to write home about. One of the primary reasons Disney reorganized was to boost this flagging division. You know things are going great when even this department sees improvement!
Even More Numbers
With two fiscal quarters in the books, we can do some calculations to see where Disney stands at the halfway point in their fiscal year. Their gross revenue after six months is almost exactly $29.9 billion.
Let’s be a bit lazy with our analysis and double that for the year. They’d fall just short of $60 billion at $59.8 billion. This number would indicate a massive increase of $4.7 billion from fiscal 2017’s $55.1 billion.
This statement aptly demonstrates just how scorching hot Disney’s been thus far in fiscal 2018. They have a real chance to boost their total revenue $5 billion in a calendar year. ANY business in the world would be thrilled to do that. Disney can do absolutely no wrong right now.
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