Disney revenue misses estimates as streaming losses shrink and parks soar

Disney revenue misses estimates as streaming losses shrink and parks soar

Disney (DIS) released quarterly results after the bell on Wednesday which showed earnings per share missed estimates by a penny while streaming losses narrowed as the company continues its efforts to cut costs $5.5 billion this year.

The report was the first since Disney announced its new three-pronged business reorganization – Disney Entertainment, ESPN and Disney Parks, Experiences and Products – as CEO Bob Iger attempts to streamline the media giant and reset its strategy. The company will begin reporting under the new structure later this year.

Theme parks, particularly international parks, continued to be a strong outperformer with operating income reaching $2.17 billion in the quarter, echoing recent trends at competitors like Comcast’s Universal (CMCSA ).

Although Disney+ subscribers have fallen short of expectations amid recent price hikes, streaming losses narrowed to $659 million in the second quarter – above consensus estimates of $850 million – vs. a loss of $887 million a year ago. The company posted a $1.1 billion stream loss in the first quarter and a $1.5 billion loss in the fourth quarter.

“We are pleased with our achievements this quarter, including the improved financial performance of our streaming business, which reflects the strategic changes we have made across the business to realign Disney for growth and success. sustainable,” Iger said in the earnings release. . “From movies to television, sports, news and our theme parks, we continue to deliver to consumers, while establishing a more efficient, coordinated and streamlined approach to our operations.”

The stock fell immediately after the release, with shares falling 2% in after-hours trading

Here are Disney’s second quarter results compared to Wall Street consensus estimates, as compiled by Bloomberg:

  • Income: $21.82 billion vs $21.82 billion expected

  • Adj. earnings per share (EPS): $0.93 vs $0.94 expected

  • Total number of Disney+ subscribers: 157.8 million against 163.1 million expected

  • Disney Parks, Experiences and Products revenue: $7.78 billion against $7.67 billion expected

Iger, who took over as CEO in November, has remained hyper-focused on profitability as investors shift away from subscriber growth and focus more on margins. The company’s direct-to-consumer division, which includes Disney+, Hulu and ESPN+, lost more than $4 billion in its 2022 fiscal year ending Oct. 1, after spending about $33 billion on content the last year.

Since then, Iger has worked hard to establish new revenue streams like Disney’s recently launched ad-supported tier, in addition to various price increases to help reduce losses and increase metrics like average revenue per user. , or ARPU.

Disney+ Domestic ARPU improved 20% sequentially to $7.14 in the second quarter of 2022. The company reported Domestic ARPU of $5.95 in the prior quarter.

FILE – Bob Iger speaks at the Bloomberg Global Business Forum, Sept. 25, 2019, in New York City. Since Iger returned to The Walt Disney Co., there have been many issues to keep him busy, one of them definitely on the mind: reconnecting with Disney theme park die-hards and restoring their trust in the brand. (AP Photo/Mark Lennihan, File)

Iger has consistently reaffirmed the company’s outlook for achieving streaming profitability by 2024, even if the road ahead will be bumpy.

Coupled with profitability concerns, Hulu’s future hangs in the balance after Bob Iger said “everything is on the table” regarding the company’s stake in the streamer. Investors will be closely watching any additional comments on the earnings call regarding the future of Hulu and Iger’s overall streaming vision.

Advertising also continued to be a headwind, as did competitors. Linear network revenue fell 7% in the quarter compared to the same period a year earlier.

On the parks side of the business, operating profit beat expectations by $2.14 billion to $2.17 billion, higher than the $1.76 billion in the second quarter of 2022.

Parks soared to $3.05 billion in the first quarter on strong national theme park trends. Analysts remained broadly bullish on park activity despite heightened margin risks amid inflation.

Earlier this year, Disney announced long-awaited updates to its park reservation system and annual passholder program following intense consumer backlash over long wait times and exorbitant ticket prices.

Alexandra Channel is a senior reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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