Disney reported second quarter results Thursday, posting less-than-expected revenue and subscriber numbers for its streaming service.
The company’s stock fell around 3.5% in after-hours trading.
- Earnings per share: 79 cents compared to 27 cents expected in a refinitive poll of analysts
- Revenue: $ 15.61 billion versus $ 15.87 billion expected in the survey
Streaming
The company has missed subscriber estimates for Disney +, standing at 103.6 million paid subscribers. According to FactSet, 109 million were expected.
The streaming service had fueled the company’s success as it lost its business due to Covid restrictions, but it seems that its rapid growth is slowly slowing. Still, the company reiterated its plans to see between 230 and 260 million Disney + subscribers by 2024.
“The numbers for this quarter were exactly in line with our internal forecasts, so no disappointment here,” CEO Bob Chapek told CNBC’s Julia Boorstin.
Average monthly revenue per user was down 29% year over year to $ 3.99, which the company attributed to the launch of Disney + Hotstar. The service has lower average monthly revenue per paid subscriber than traditional Disney + in other markets, lowering the overall average for the quarter.
Christine McCarthy, Disney CFO, said on the company’s earnings call that without Hotstar, the average revenue per paid Disney + subscriber for the quarter would have been $ 5.61.
Average monthly revenue per paid subscriber increased slightly for Disney’s other direct-to-consumer platforms, ESPN + and Hulu.
The company said it had a total of around 159 million subscribers for its streaming services at the end of the second quarter. Revenue for Disney’s direct customer business rose 59% to $ 4 billion, which has helped offset losses in other pandemic-hit segments.
Disney announced that it is also extending its MLB deal through 2028 and signing an eight-year football deal with LaLiga.
Parks
Revenue in Disney’s Parks, Experiences and Products segment declined 44% to $ 3.2 billion as many of its theme parks either closed or operated at reduced capacity and the cruise ships and guided tours ceased.
The company said the outbreak cost this division an operating loss of approximately $ 1.2 billion in its most recent quarter.
Disney recorded a one-time charge of $ 414 million for the quarter for impairment and severance payments for the proposed closure of a Disney-branded animation studio and retail stores, as well as severance payments to employees at its parks and resorts.
Disney reopened its two California-based parks on April 30th, so revenue generated over the past few weeks is not reflected in its fiscal second quarter results. However, the reopening of the parks could raise expectations for the third fiscal quarter.
“We’re very encouraged by the initial response from guests,” McCarthy said, adding that forward-looking bookings are strong as coronavirus cases decrease and vaccines increase.
Additionally, the Centers for Disease Control and Prevention said that fully vaccinated people will no longer need to wear face masks or stay three feet away from others in most environments, whether outdoors or indoors, on Thursday. Chapek pointed to the new guidelines as good news for the company and said in the call for profits that it will be a bigger catalyst for growth and traffic.
“I think our attendance will increase significantly in a relatively short period of time,” Chapek later told CNBC.
As of Thursday, Disney’s Paris-based theme park will be the only place that hasn’t reopened to the public.
Content and licensing revenue declined 36% to $ 1.9 billion for the quarter. Award-winning Nomadland was Disney’s only US theatrical release during the quarter (it debuted simultaneously on Hulu). Disney’s newest animated feature, Raya and the Last Dragon, also premiered in several international cinemas. It was made available on Disney + Premier Access for $ 30.
Several Marvel titles are on the horizon, including “Black Widow”, “Eternals”, “Shang-Chi and the Ten Rings” and “Spider-Man: No Way Home” as well as “Cruella”, “Jungle Cruise”. “” Free Guy “,” Encanto “and” West Side Story “.
The company said that “Shang-Chi and the Ten Rings” and “Free Guy” will be released first in theaters with an exclusive 45-day window. Disney said earlier Thursday that its blockbuster film “Jungle Cruise” will debut in theaters and on Disney + Premier Access on July 30th.
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