Walt Disney Company (The)

Good day and welcome to the Walt Disney Company second quarter 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Alexia Quadrani, Executive Vice President of Investor Relations. Please go ahead.

Good morning. It's my pleasure to welcome everybody to the Walt Disney Company's second quarter 2024 earnings call. Our press release was issued earlier this morning and is available on our website at www.disney.com forward slash investors. Today's call is being webcast and a replay and transcript, as well as the second quarter earnings presentation, will all be made available on our website after the call. Joining me for today's call are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston. Senior Executive Vice President and Chief Financial Officer. Following comments from Bob and Hugh, we'll be happy to take some of your questions. So with that, let me turn the call over to Bob to get started.

Thank you, Alexia, and good morning, everyone. Our strong performance in Q2 demonstrates we are delivering on our strategic priorities while building for the future. Overall, this was another impressive quarter for us, with adjusted earnings per share up 30% compared to prior year. And I'm pleased to say this outperformance raises our full-year adjusted EPS growth target to 25%. Our results were driven in large part by our experiences segment and our streaming business, which achieved an important milestone with the entertainment portion of the streaming business achieving profitability in the quarter. This is a testament to the turnaround we set in motion last year and the outstanding leadership of Disney Entertainment co-chairman Alan Bergman and Dana Walden. It is particularly noteworthy when you consider we reported peak losses only 18 months ago. We also remain on track to reach profitability in our combined streaming businesses in Q4. We've said all along our path to profitability will not be linear. And while we're anticipating a softer third quarter, due in large part to the seasonality of our India sports offerings, we fully expect streaming to be a growth driver for the company in the future, and we have prioritized the steps necessary to achieve this. In March, we successfully launched Hulu on Disney+, bringing extensive general entertainment content to the platform for bundle subscribers, and were encouraged by the early results. And by the end of this calendar year, we will be adding an ESPN tile to Disney+, giving all U.S. subscribers access to select live games and studio programming within the Disney Plus app. We see this as a first step to bringing ESPN to Disney Plus viewers as we ready the launch of our enhanced standalone ESPN streaming service in the fall of 2025. The key to our success in streaming and what consistently brings consumers back for more is the array of exceptional content we produce that captivates audiences of all ages and backgrounds. Looking at our film studios, we have a number of highly anticipated theatrical releases arriving over the next few months, including Kingdom of the Planet of the Apes, which opens this Friday, as well as Pixar's Inside Out 2, Marvel's Deadpool and Wolverine, and 20th Century Studios' Alien Romulus, which are all slated for this summer. Later this year, we're looking forward to Moana 2 and Mufasa the Lion King, and in 2025, our slate remains just as robust with Captain America Brave New World, Fantastic Four, Elio, Zootopia 2, and Avatar 3. Our series also continue to resonate with audiences and critics alike. FX's Shogun has proven to be a global hit with success on both linear and streaming. It's tracking as FX's most watched show ever on our streaming platforms, and it's driving the second largest number of signups to our streaming services since 2022, behind only Black Panther, Wakanda Forever. This is a great example of how we are successfully reaching wider audiences with our combined linear and streaming ecosystem. In Q2, series that aired on linear networks accounted for 17 of the top 20 most viewed series on our streaming platforms with almost 3 billion hours of consumption. Our linear channels are deeply embedded in our direct-to-consumer strategy as they continue to deliver high-quality content that reaches demographics not captured on streaming alone, allowing us to broaden our audiences and leverage our unmatched content engine across an expansive base. Turning to ESPN, sports continues to stand out when it comes to convening large audiences, with recent big ratings wins across a variety of sports. ESPN had a fantastic April in terms of total day viewership. the highest April since 2012. For primetime viewership, it was ESPN's highest April on record. The NCAA Women's Final Four in Cleveland was the most viewed on record, and the championship between Iowa and South Carolina was ESPN's most viewed college basketball game ever, men's or women's. We also saw record-breaking ratings for the WNBA draft. Monday Night Football had its most watched season since 2000, and the NFL postseason also broke viewership records. The divisional playoff game between the Houston Texans and Baltimore Ravens was ESPN's most watched NFL game ever with 32.4 million viewers. Looking at our experiences business, which remained an impressive financial driver in the quarter, we were focused on turbocharging growth with a number of long-term strategic investments. That includes our Disneyland Forward initiative, the first step in our expansion plans at Disneyland Resort, which received unanimous preliminary approval by the Anaheim City Council last month. This was a significant milestone, and the final vote is expected to take place this evening. We're incredibly excited for the many potential new stories our guests could experience at Walt's original theme park including the much-anticipated opportunity to bring Avatar to Disneyland. When you consider all of our businesses as a whole, from entertainment to sports to experiences, it's clear that no one has what Disney has. The turnaround and growth initiatives we set in motion last year have continued to yield positive results, and we are executing against our ambitious strategic priorities with both speed and determination. To walk you through more of our results from the quarter, I will now turn things over to Hugh.