Walt Disney Co.’s streaming service, Disney +, was again a big plus during a pandemic that shut down the Magic Kingdom’s other businesses besides. And that increased Disney shares by 2% on Thursday.
An increase in Disney + subscriptions to 94.9 million led to a surge in revenue in the previous quarter, as the media giant continued to double sales from direct to consumers.
Disney DIS,
reported a surprising fiscal profit in the first quarter of $ 17 million, or 2 cents per share, on sales of $ 16.25 billion, compared to $ 15.8 billion in the previous quarter.
After adjusting for restructuring costs and other securities, Disney showed earnings of 32 cents per share, up from $ 1.53 per share in the previous quarter. Analysts, on average, expected Disney to report an adjusted loss of 34 cents per share on sales of $ 15.9 billion, according to FactSet.
“We believe that the strategic actions we take to transform our company will increase our growth and increase the value of shareholders, as evidenced by the incredible progress we have made in our DTC business and more than 146 million total paid subscriptions to our streaming services by the end of the quarter, ”Disney CEO Bob Chapek said in a statement announcing the results.
“Disney + even exceeded our highest expectations,” Chapek said in a conference call with analysts, saying it stood at 26.5 million subscribers in the same quarter a year ago. He also noted the increase in usage for ESPN + (by 83% to 12.1 million) and Hulu (by 30% to 35.4 million).
Disney’s Media and Entertainment Distribution, which includes Disney +, brought in $ 12.66 billion for the quarter, down 5% from the same quarter a year ago before the pandemic swept across the country. The Disney Parks, Experiences and Products unit raised $ 3.6 billion, up 53% from a year ago, as many Disney parks and its crossroads remain closed.
The continued strength of Disney + has impressed Wall Street analysts despite intensified competition from Apple Inc. see AAPL,
Apple TV +, Netflix Inc. NFLX,
AT&T Inc. see T,
HBO Max, Comcast Corp. CMCSA,
Peacock, AMZN of Amazon.com Inc.,
Prime Video, and others.
“Disney + has been a huge success and is a testament to Disney’s brand equity and storytelling expertise,” said Eric Haggstrom, eMarketer forecast analyst. ‘It was one of the most successful consumer product launches in recent memory. In the future, Disney will grow its streaming business, while its parks, television and film industries will benefit and recover quickly due to increased vaccination and a massive pent-up demand. ”
Because Disney is investing heavily in its streaming business – it plans to plow between $ 14 billion and $ 16 billion into all its services by 2024 – it is expected to be profitable only in 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 euros to 8.99 euros per month in Europe.
The growth of subscribers at Disney +, ESPN +, Hulu and Hotstar remains the focus – and with good reason. Disney’s management announced during Investors’ Day on December 10 that the services could reach approximately 350 million subscribers by 2024.
Disney’s share has improved by more than 35% in the past year, including 24% since investor day in December. The Dow Jones Industrial Average DJIA,
– which counts Disney as a component – has risen 7% in the past year.