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The Walt Disney Co. blew away earnings expectations with a Thursday report, but shares still fell in late trading as the pandemic-fueled growth of its streaming services slowed down.
Disney
DIS,
on Thursday reported fiscal second-quarter earnings of $901 million, or 49 cents a share, on sales of $15.61 billion, down from $18 billion a year ago. After adjusting for restructuring costs and other effects, the company reported earnings of 79 cents a share, unexpected growth from 60 cents a share a year ago.
Analysts on average expected adjusted earnings of 26 cents a share on sales of $15.86 billion, according to FactSet. Yet Disney stock fell more than 4% in after-hours trading immediately following the release of the results, after closing with a 0.3% increase at $178.37, as streaming subscribers and revenue came in lower than estimates.
This will be the last quarter that Disney will have to compare to results that largely were unaffected by COVID-19, which has harmed many of Disney’s core businesses, such as theme parks and movies. The one business that had been a bright spot for Disney during the pandemic has been its nascent streaming service, Disney+, which managed to top 100 million subscribers thanks to large growth during the pandemic.
Disney disclosed Thursday that Disney+ now had 103.6 million subscribers, after Chief Executive Bob Chapek revealed the 100 million milestone at the company’s annual shareholder meeting in March. Analysts on average expected 109.26 million subscribers, according to FactSet, as well as 161.67 million total streaming subscribers, which wraps in other Disney streaming services such as Hulu and ESPN+. Disney said it had 158.8 million total streaming subscribers.
The streaming segment for Disney reported sales of $4 billion, while analysts were expecting $4.05 billion on average. Last year, Disney reported $3.99 billion in revenue from its direct-to-consumer and international efforts.
Since last year, Disney has reorganized its reporting segments, breaking the company into a media segment and an “experiences” segment that focuses on theme parks and product sales. Overall, Disney reported media and entertainment sales of $12.44 billion, while analysts on average were projecting $12.74 billion; the majority of those sales — $6.75 billion — came from Disney’s traditional linear television networks.
Disney’s theme parks and product sales segment reported $3.17 billion in revenue, though most of its theme parks faced closures or limited attendance during the quarter, which ended March 31. That is up from $2.4 billion a year ago, and trounced the average analyst estimate of $1.24 billion.
For more: Disneyland finally reopens, but it’s now make or break for the industry
Disney’s U.S. theme parks are now welcoming visitors again, and analysts expected that revenue in that segment would jump to $2.46 billion in the current quarter, though the second-quarter performance is likely to affect those estimates. Disney did not provide a forecast in its announcement Thursday, but sometimes provides additional color and guidance in its conference call, which is scheduled for 4: 30 p.m. Eastern.
Disney stock suffered early in the pandemic, but has hit record highs since the end of its last fiscal year in the fall. Shares have increased 73.5% in the past year, as the S&P 500 index
SPX,
has gained 44.1%.
