Disney (DIS) reported quarterly results after the bell on Wednesday that showed earnings per share missed estimates by a penny while streaming losses narrowed as the company continues efforts to slash $5.5 billion in costs 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 hitting $2.17 billion in the quarter, echoing recent trends at competitors like 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 a loss of $887 million in the year-ago period. The company reported a streaming loss of $1.1 billion in Q1 and a $1.5 billion loss in Q4.
“We’re pleased with our accomplishments this quarter, including the improved financial performance of our streaming business, which reflect the strategic changes we’ve been making throughout the company to realign 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 for consumers, while establishing a more efficient, coordinated, and streamlined approach to our operations.”
The stock dipped immediately following the release, with shares slumping 2% in after-hours trading
Here are Disney’s second-quarter results compared with Wall Street’s consensus estimates, as compiled by Bloomberg:
Revenue: $21.82 billion versus $21.82 billion expected
Adj. earnings per share (EPS): $0.93 versus $0.94 expected
Total Disney+ subscribers: 157.8 million versus 163.1 million expected
Disney Parks, Experiences and Products revenue: $7.78 billion versus $7.67 billion expected
Iger, who stepped back into the CEO position in November, has remained hyper-focused on profitability as investors shift focus away from subscriber growth and put more emphasis on margins. The company’s direct-to-consumer division, which includes Disney+, Hulu and ESPN+, shed a whopping $4 billion-plus in its fiscal 2022 ended Oct. 1, after it spent an estimated $33 billion on content last year.
Since that time, 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 pare losses and lift 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 in the prior quarter.
Iger has consistently reaffirmed the company’s outlook of reaching streaming profitability by the year 2024, although it will be a bumpy road ahead.
Coupled 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 closely monitoring any additional commentary on the earnings call regarding the future of Hulu and Iger’s overall streaming vision.
Advertising also continued to be a headwind, similar to competitors. Linear network revenues fell 7% in the quarter compared to the year-ago period.
On the parks side of the business, operating income beat expectations of $2.14 billion to hit $2.17 billion, higher than Q2 2022’s $1.76 billion.
Parks soared to $3.05 billion in Q1 on strong domestic theme park trends. Analysts have remained largely bullish on the parks business despite heightened risks to margins amid inflation.
Earlier this year, Disney announced long-awaited updates to its parks reservation system and annual passholder program following intense backlash from consumers over lengthy 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 [email protected]
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Source: https://finance.yahoo.com/news/disney-earnings-second-quarter-2023-may-10-200858196.html