Disney earnings: Surge by Disney+ to almost 95 million subscriptions results in shock revenue
Walt Disney Co.’s streaming service, Disney +, again proved to be a huge plus during a pandemic that all but closed the Magic Kingdom’s other stores. And with that, Disney shares rose 2% after close of trading on Thursday.
A surge in Disney + subscriptions to 94.9 million led to a quarter-over-quarter recovery in revenue as the media giant further doubled its direct sales to consumers.
Disney DIS (+ 0.67%) reported a surprising profit of 17 million US dollars, or 2 cents per share, on sales of 16.25 billion US dollars in the first quarter, compared to 15.8 billion US dollars in the same quarter last year.
Adjusted for restructuring charges and other effects, Disney posted earnings of 32 cents per share, compared to $ 1.53 per share in the year-ago quarter. According to FactSet, analysts expect an average adjusted loss of 34 cents per revenue share of $ 15.9 billion.
“We believe the strategic actions we are taking to transform our business will fuel our growth and increase shareholder value. It shows in the incredible strides we’ve made in our DTC business, which totaled more than 146 million paid subscriptions across our streaming services at the end of the quarter, ”said Bob Chapek, Disney Chief Executive, in a statement announcing the results.
“Disney + even exceeded our highest expectations,” Chapek later said on a conference call with analysts, noting that there were 26.5 million subscribers in the same quarter a year ago. He also noted an increase in usage for ESPN + (plus 83% to 12.1 million) and Hulu (plus 30% to 35.4 million).
Disney’s media and entertainment distribution, which also includes Disney +, grossed $ 12.66 billion in the quarter, a 5% decrease from the year-ago quarter before the pandemic hit the country. The Disney Parks, Experiences and Products unit grossed $ 3.6 billion, down 53% year over year as many Disney parks remain closed.
The continued strength of Disney + has impressed Wall Street analysts, despite increased competition from Apple Inc.’s AAPL, -0.19% Apple TV +, Netflix Inc. NFLX, -1.06%.,
T from AT&T Inc., + 0.49% HBO Max, CMCSA from Comcast Corp., + 0.91% Peacock, AMZN from Amazon.com Inc., -0.74% Prime Video, and others.
“Disney + was a huge success and is a testament to Disney’s brand equity and storytelling expertise,” said Eric Haggstrom, predictive analyst at eMarketer. “This was one of the most successful consumer product launches in recent times. Going forward, Disney will continue to grow its streaming business, while the park, television and movie businesses will benefit from the surge in vaccination and massive pent-up demand and will recover quickly. “
With Disney investing heavily in its streaming business – it plans to allocate $ 14 billion to $ 16 billion across all of its services by 2024 – it is unlikely to be profitable until at least 2023. Disney + is expected to have more sales in March. when the monthly fee increases by $ 1 to $ 7.99 per month in the US and $ 2 to $ 8.99 per month in Europe.
Instead, it remains focused on subscriber growth at Disney +, ESPN +, Hulu, and Hotstar – and for good reason. During Investor Day on December 10, Disney management stated that these services could reach around 350 million subscribers by 2024.
Disney’s stock is up more than 35% over the past year, including 24% since December Investor Day. The Dow Jones Industrial Average DJIA, -0.02%,
– what Disney counts as a component – is up 7% over the past year.