Sony Group on Wednesday reported a 29% dip in net income to $1.32 billion for the fiscal second quarter of 2023, with revenues edging up 8% to $18.73 billion. The results, including diluted earnings per share of $1.07, were driven by a decline in revenue and operating income in its Entertainment, Technology and Services sector, as well as its Financial Services segment.
The Japanese company’s financial results fell short of Zacks’ estimates of $19.93 billion in revenues and $1.19 in diluted earning per share. This marks the first time in a year that the electronics conglomerate failed to come out ahead of forecasts after four straight quarters of meeting consensus estimates.
Sony nonetheless benefitted again from its domination in the video game field, as well as for creating sought-after image sensors for smartphones. And for the second quarter in a row, Miles Morales was the star of its motion picture division.
Sales in the Pictures segment, which includes film and television-related content, grew in the second quarter to $2.65 billion, up $410 million, or 18%, with operating income ticking up by $13 million, or 6.5%, to $192 million.
“Spider-Man: Across the Spider-Verse” has earned $690 million in global theatrical box office since opening in early June, becoming one of this summer’s unmitigated blockbusters. Beyond quarterly box office, some of which applied in the currently reported quarter, the Miles Morales passion play leveraged its popularity in post-theatrical revenue streams such as VOD, EST and physical media, recently debuting on Netflix to strong viewership figures (8.8 million global views in week one) as a cherry on top.
The rest of Sony’s theatrical line-up, namely “Gran Turismo” and “Dumb Money,” didn’t quite break out. The lone bright spot was Denzel Washington’s “The Equalizer 3” which earned $187 million global, on par with its predecessors, despite its top-billed star being unable to promote the film amid the SAG-AFTRA strike.
That still added up to operating income for Sony Pictures Entertainment of $190 million, a 1.8% increase compared to this time last year when Brad Pitt’s “Bullet Train” led the pack.
Strikes Will Have ‘Negative Impact’ In FY 2024
Considering the comparatively light theatrical slate in second quarter, the SAG-AFTRA strike, which was resolved with a tentative agreement on Wednesday, had minimal impact. “Kraven The Hunter,” delayed until next Labor Day, was not supposed to come out until the beginning of Sony’s third quarter.
But in its video earning presentation on Thursday, the company said the strikes were nevertheless causing “a delay in the release of certain motion pictures, and a delay in the delivery of television productions.”
Sony said it had “incorporated the impact that can be assumed at the present time into a forecast for the fiscal year.” Still, even after the actor strike ends, “it will take time for business activities to normalize due to the concentration of productions and theatrical releases. So we expect this to have a negative impact on next fiscal year’s results.”
The current end-of-year theatrical slate includes “Napoleon” and the rom-com “Anyone But You.” With the actors strike now concluded, stars Glen Powell and Sydney Sweeney will be able to participate in conventional pre-release publicity.
Quarterly sales for the Japanese company’s Entertainment, Technology and Services segment fell 9% to $4.07 billion, with operating income sliding 21% to $404 million, a falloff the company attributed largely to poor television sales.
Sony’s Financial Services division, while much smaller, suffered a 42% tumble in sales to $689 million, and an 80% drop in operating income to $106 million. The company said the severe decline resulted mainly due to “gains and losses from market fluctuations associated with variable life insurance.”
Sony’s music division, which includes recorded music and publishing, grew its revenues by 14% in the second quarter, earning $2.71 billion, up from $2.38 billion in the year-ago period. The company touted the success of Doja Cat’s latest single, “Paint The Town Red,” as well as Latin star Bad Bunny’s latest album, Nadie Sabe Lo Que Va a Pasar Mañana (Nobody Knows What Is Going to Happen Tomorrow).
The games and network services division skyrocketed in year-to-year quarterly comparisons, jumping 32% to $6.31 billion in fiscal Q2 2023. Sony still expects to sell 25 million PlayStation 5 consoles over the course of 2023 as supply chain issues recede. Meanwhile, the demand for newer and better smartphones, for which Sony is a major supplier, does not seem to be slowing down anytime soon.
The post Sony Net Income Plunges 29% in Q2 to $1.32 Billion, Fueled by Decline in Entertainment, Financial Services appeared first on TheWrap.