Walt Disney Co.’s streaming service, Disney +, once again proved to be a big plus during a pandemic that closed almost all of Magic Kingdom’s other businesses. And Disney shares rose 2% in trading after Thursday.
An increase in Disney + subscriptions to 94.9 million led to a return to revenue from the previous quarter, as the media giant continues to double direct sales to consumers.
Disney DIS,
reported a surprising first-quarter tax profit of $ 17 million, or 2 cents a share, on sales of $ 16.25 billion, up from $ 15.8 billion last quarter.
After adjusting for restructuring and other effects, Disney reported earnings of 32 cents a share, down from $ 1.53 a share in the quarter a year ago. On average, analysts expected Disney to report an adjusted loss of 34 cents per share on $ 15.9 billion in sales, according to FactSet.
“We believe that the strategic actions we take to transform our company will fuel our growth and increase shareholder value, as evidenced by the incredible steps we have taken in our DTC business, reaching over 146 million paid subscriptions in totally in our streaming services at the end of the quarter, ”said Disney CEO Bob Chapek in a statement announcing the results.
“Disney + exceeded even the highest expectations,” Chapek said in a conference call with analysts later, noting that it reached 26.5 million subscribers in the same quarter a year ago. He also noted increases in use for ESPN + (83% to 12.1 million) and Hulu (30% to 35.4 million).
Disney’s Media and Entertainment Distribution, which includes Disney +, brought in $ 12.66 billion for that quarter, down 5% from the same quarter a year ago, before the pandemic spread across the country. The Disney Parks, Experiences and Products unit received $ 3.6 billion, down 53% year-over-year as many Disney parks remain closed.
The sustained power of Disney + impressed Wall Street analysts, despite stronger competition from Apple Inc.’s AAPL.
Apple TV +, Netflix Inc. NFLX,
AT&T Inc.
HBO Max, CMCSA Comcast Corp.,
Peacock, AMZN Amazon.com Inc.,
Prime Video and others.
“Disney + has been a massive success and a testament to Disney’s brand equity and storytelling expertise,” said Eric Haggstrom, eMarketer forecast analyst. “This was one of the most successful launches of consumer products in recent memory. Going forward, Disney will continue to grow its streaming business, while parks, television and movies will benefit and recover quickly as a result of increased vaccination and massive reloaded demand. ”
Because Disney is investing heavily in its streaming business – it plans to show between $ 14 billion and $ 16 billion in all its services by 2024 – it is not expected to be profitable until at least 2023. Disney + expects to bring more revenue in March , when the monthly fee increases by $ 1 to $ 7.99 in the US and by 2 euros to 8.99 euros per month in Europe.
The growth of subscribers to Disney +, ESPN +, Hulu and Hotstar remains the focus – and for good reason. On Investor Day on December 10, Disney’s management indicated that these services could reach approximately 350 million subscribers by 2024.
Disney shares have improved by more than 35% in the last year, including 24% since Investors Day in December. Dow Jones Industrial Average DJIA,
– which considers Disney as a component – has advanced by 7% in the last year.