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Disney’s revenue misses estimates as streaming losses shrink, parks grow




Disney ( DIS ) reported quarterly results after hours Wednesday that showed earnings per share missed estimates by a penny while streaming losses narrowed as the company continues efforts to cut $5.5 billion in costs this year.

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

Theme parks, especially international parks, continued to be a strong outperformer with operating income of $2.1[ads1]7 billion in the quarter, mirroring recent trends at competitors such as Comcast’s Universal ( CMCSA ).

Despite Disney+ subscribers missing expectations amid recent price hikes, streaming losses narrowed to $659 million in the second quarter — above consensus estimates of $850 million — from an $887 million loss in the year-ago period. The company reported a streaming loss of $1.1 billion in Q1 and a loss of $1.5 billion in Q4.

“We are pleased with our performance this quarter, including the improved financial performance of our streaming business, which reflects the strategic changes we have made across the company to align Disney for sustained growth and success,” Iger said in the earnings release. . “From movies to television, to 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’s consensus estimates, compiled by Bloomberg:

  • Income: $21.82 billion vs. $21.82 billion expected

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

  • Total Disney+ Subscribers: 157.8 million against the expected 163.1 million

  • Revenue from Disney Parks, Experiences and Products: 7.78 billion dollars against the expected 7.67 billion dollars

Iger, who stepped back as CEO in November, has been hyper-focused on profitability as investors shift their focus away from subscriber growth and place more emphasis on margins. The company’s direct-to-consumer division, which includes Disney+, Hulu and ESPN+, squandered a whopping $4 billion-plus in the 2022 fiscal year that ended Oct. 1, after spending an estimated $33 billion on content last year.

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

Domestic ARPU at Disney+ improved 20% sequentially to reach $7.14 in Q2 2022. The company reported domestic ARPU of $5.95 last quarter.

Disney’s revenue misses estimates as streaming losses shrink, parks grow

FILE – Bob Iger speaks at the Bloomberg Global Business Forum, Sept. 25, 2019, in New York. Since Iger’s return to The Walt Disney Co., there have been plenty of issues to keep him busy, one definitely being at the top: Reconnecting with the hard-hitting Disney theme parks and restoring faith in the brand. (AP Photo/Mark Lennihan, File)

Iger has consistently affirmed the company’s outlook to reach streaming profitability by the year 2024, though it will be a bumpy road ahead.

Along with profitability concerns, the future of Hulu hangs in the balance after Bob Iger said “everything was on the table” regarding the company’s stake in the streamer. Investors will be watching closely for 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 last year.

On the park side of the business, operating income beat expectations of $2.14 billion to $2.17 billion, up from $1.76 billion in Q2 2022.

Parks rose to $3.05 billion in the first quarter on strong domestic theme park trends. Analysts have largely remained bullish on the parks business despite heightened risks to margins amid inflation.

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

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

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