Walt Disney Co.’s streaming service, Disney +, proved to be another big plus during a pandemic that virtually shut down the other Magic Kingdom businesses. And that had seen Disney stock up 2% in after-hours trading Thursday.
An increase in Disney + subscriptions, to 94.9 million, drove revenues up from the previous quarter as the media giant continues to double its consumer sales.
Disney DIS,
reported a surprising first quarter fiscal profit of $ 17 million, or 2 cents a share, on revenues of $ 16.25 billion, up from $ 15.8 billion in the same quarter a year ago.
Adjusted for restructuring costs and other effects, Disney reported earnings of 32 cents a share, down from $ 1.53 a share in the same quarter last year. On average, analysts expected Disney to report an adjusted loss of 34 cents per share on revenue of $ 15.9 billion, according to FactSet.
“We believe the strategic actions we take to transform our business will drive our growth and increase shareholder value, as evidenced by the incredible progress we’ve made in our DTC business, with more than 146 million paid subscriptions for our streaming services at the end of the quarter, ”said Disney Chief Executive Bob Chapek in a statement announcing the results.
“Disney + has exceeded even our highest expectations,” Chapek later said in a conference call with analysts, noting that it had 26.5 million subscribers in the same quarter a year ago. He also noted spikes in the use of ESPN + (+ 83% to 12.1 million) and Hulu (+ 30% to 35.4 million).
Disney’s media and entertainment distribution, which includes Disney +, brought in $ 12.66 billion in the quarter, a 5% decline from the year-ago quarter before the pandemic engulfed the entire country. The Disney Parks, Experiences and Products unit took in $ 3.6 billion, down 53% year-on-year as many Disney parks and the cruise line remain closed.
The continued strength of Disney + has impressed Wall Street analysts, despite increasing competition from Apple Inc.’s AAPL.
Apple TV +, Netflix Inc. NFLX,
AT&T Inc.’s T,
HBO Max, CMCSA from Comcast Corp.,
Peacock, AMZN from Amazon.com Inc.,
Prime Video and others.
“Disney + has been a huge success and is a testament to Disney’s brand value and expertise in storytelling,” said eMarketer analyst Eric Haggstrom. “This was one of the most successful consumer product launches in recent memory. Going forward, Disney will continue to expand their streaming business, while their parks, television and movie companies will benefit and recover quickly due to increased vaccination and massive pent-up demand. “
Because Disney invests heavily in its streaming business – it plans to plow $ 14 billion to $ 16 billion for all of its services by 2024 – it’s not expected to be profitable until 2023. Disney + is expected to generate more revenue in March, when the monthly fee increases by $ 1 to $ 7.99 in the US and by $ 2 to $ 8.99 per month in Europe.
The subscriber growth at Disney +, ESPN +, Hulu and Hotstar instead remains the focus – and with good reason. During the investor day of December 10, Disney management indicated that those services could reach approximately 350 million subscribers by 2024.
Shares of Disney are up more than 35% in the past year, 24% of them since investor day in December. The Dow Jones Industrial Average DJIA,
– which Disney counts as a component – is up 7% over the past year.