Is Disney's Q1'23 Earnings Really That Great?

So are their latest results really that fantastic? What made investors so excited?

Disney's strategy is clearly highlighted within the first few pages of its earnings presentation.

1. Reorganizing leadership structure: Disney was plagued by a management mutiny during Bob Chapek's era. Now with Bob Iger back at the helm, it sought to reorganize the leadership structure. This includes a timetable and key milestones for CEO succession planning.

2. Implementing cost reduction and streamlining organizational structure to enhance productivity: With Disney operating in various revenue segments, the company has sought to sharpen its efficiency while maintaining growth. This includes a targeted $5.5 billion of cost savings.

3. Working towards achieving both sustained growth and profitability in DTC business: Disney's direct-to-consumer (DTC) segment is still loss-making due to higher programming and production costs. Thus, it will focus on dishing out more content and has a timetable of series and movies to be released to drive DTC business growth.

4. Improving the guest experience at Disney parks by providing more value and flexibility: Disneyland is becoming more flexible for its visitors. Disneyland Resort is offering low-priced, one-day, one-park tickets in 2023 to help provide more value to visitors. For Walt Disney World Annual Passholders, you will be able to visit the theme parks without a reservation on certain days and times.

5. Primarily focusing on and significantly investing in Disney's core brands and franchises: Since Disney is not just a movie production company and has a great track record in honing new brands and intellectual property, it has sought to double down on its initiatives to invest in its core brands and franchises, which will help deliver more revenue.

6. Leveraging Disney's platforms to reach larger audiences and optimize the value of Disney content: Disney's media flywheel has been effective and evergreen throughout these years. It might not have one-shot wonders like Netflix's series, but it has relatively strong IPs that have withstood the test of time and are still delivering value to Disney's overall business, whether via digital content or even park experiences.

In a nutshell, due to the clear strategies moving forward, and a better income from continuing operations before taxes, Disney share prices have rallied off-market, and look set to continue going up when the market reopens!

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