Disney earnings: Disney + rise to nearly 95 million subscriptions generates surprise earnings

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Walt Disney Co.’s streaming service, Disney +, again proved itself to be a huge advantage during a pandemic that has nearly shut down the other Magic Kingdom businesses. And that sent Disney shares up 3% in after-hours trading on Thursday. An increase in Disney + subscriptions, to 94.9 million, triggered a rebound in revenue from the previous quarter, as the media giant continues to double direct-to-consumer sales.

Disney DIS, + 0.67% reported a surprise fiscal first quarter profit of $ 17 million, or 2 cents a share, on sales of $ 16.25 billion, compared to $ 15.8 billion in the prior-year quarter. After adjusting for restructuring charges and other effects, Disney reported earnings of 32 cents a share, down from $ 1.53 a share in the prior-year quarter. On average, analysts expected Disney to report an adjusted loss of 34 cents a share on sales of $ 15.9 billion, according to FactSet. “We believe that the strategic actions we are taking to transform our business will drive our growth and enhance shareholder value, as evidenced by the incredible strides we have made in our DTC business, reaching more than 146 million total paid subscriptions in our streaming services. at the end of the quarter, ”Disney Chief Executive Bob Chapek said in a statement announcing the results. “Disney + has exceeded even our highest expectations,” Chapek said in a conference call with analysts later, noting that it stood at 26.5 million subscribers in the same quarter last year. It also noticed spikes in use of ESPN + (up 83% to 12.1 million) and Hulu (up 30% to 35.4 million). Disney’s media and entertainment distribution, which includes Disney +, raised $ 12.66 billion for the quarter, a 5% decrease from the same quarter a year earlier before the pandemic spread across the country. Disney’s Parks, Experiences and Products unit made $ 3.6 billion, down 53% year-over-year, as many Disney parks and its cruise line remain closed. The iconic Disneyland park in Anaheim, California, and Disneyland Paris will remain closed in the current quarter, Disney Chief Financial Officer Christine McCarthy said during the call with the analyst. The sustained strength of Disney + has impressed Wall Street analysts despite increasingly stiff competition from Apple Inc.’s AAPL, -0.19% Apple TV +, Netflix Inc. NFLX, -1.06%, T from AT&T Inc., + 0.49% HBO Max, Comcast Corp.’s CMCSA, + ​​0.91% Peacock, AMZN from Amazon.com Inc., -0.74% Prime Video and others. “Disney + has been a massive success and is a testament to Disney’s brand equity and storytelling expertise,” said eMarketer forecast analyst Eric Haggstrom. “This has been one of the most successful consumer product launches in recent times. Moving forward, Disney will continue to grow its broadcast business, while its parks, television and film businesses will benefit and recover rapidly as a result of increased vaccines and massive pent-up demand. “Because Disney is investing heavily in its streaming business (it plans to invest between $ 14 billion and $ 16 billion in all its services in 2024), it is not expected to be profitable until at least 2023 and most likely in fiscal 2024. Disney + is expected generate more revenue in March, when the monthly fee increases from $ 1 to $ 7.99 in the US and from € 2 to € 8.99 per month in Europe. In contrast, subscriber growth on Disney +, ESPN +, Hulu, and Hotstar remain the focus, and for good reason: During its investor day on Dec. 10, Disney management indicated that those services could reach about 350 million subscribers by 2024. Disney shares , that reaches They had a 52-week high in after-hours operations on Thursday, they have improved more than 35% in the last year. including 24% from the investor’s day on December 10. The Dow Jones Industrial Average DJIA, -0.02%, which counts Disney as a component, has advanced 7% over the past year.