A theme-park comeback continued to boost Disney's results in the most recent quarter. The company also added more subscribers to its Disney+ streaming service than analysts expected.
Disney had closed or limited capacity at its theme parks and suspended cruises earlier in the pandemic. Domestic parks have reopened, and revenue in that division doubled in the most recent quarter, to $7.23 billion, while profit came to $2.45 billion from a year-ago loss of $119 million, even as the omicron variant suppressed some people's travel plans COVID-19 restrictions continued to affect some international operations.
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Burbank, California-based Disney on Wednesday reported net income of $1.15 billion in the three months through Jan. 1, compared with $17 million in the fiscal first quarter the year before.
Earnings per share came to 60 cents, or $1.06 when excluding certain items, while revenue climbed 34% to $21.82 billion. Analysts polled by FactSet predicted earnings of 74 cents per share on revenue of $20.27 billion. Disney shares jumped 8% to $159.08 in aftermarket trading.
“These results speak volumes for Disney’s storied brands and its ability to rise above the competition in an increasingly crowded digital media market,” said Insider Intelligence analyst Paul Verna in an emailed note.
Disney's streaming business is its top priority as cord-cutting reduces the viewing universe for traditional TV networks. Investors have closely followed the trajectory of Disney+, which quickly picked up big subscriber numbers after launching in November 2019. Growth had lagged recently, and some analysts had warned that Disney+ could miss its target of 230 million to 260 million subscribers by 2024.
But the subscriber gain topped expectations even as growth at rival Netflix disappointed, logging 129.8 million Disney+ subscribers, up 37% from the previous year, 11.8 million higher than the previous quarter and greater than analysts’ forecast of 125.4 million. Disney backed its 2024 forecast.
It has 196.4 million total streaming subscribers including Disney+, ESPN+ and Hulu.
While streaming is the company's focus, Disney's networks business still brings in plenty of cash. The division housing ABC, ESPN and FX made $1.5 billion in profit in the most recent quarter, down 13% from the year before, as production and marketing costs increased.
The segment that includes the movie business also moved to a loss of $98 million from a year-ago profit of $188 million, even as revenue rose 43% to $2.4 billion. Theatrical distribution results declined as the movie business is still recovering.
The company is watching consumer behavior to see how best to release films, and Disney CEO Bob Chapek noted Wednesday that the company doesn’t believe theatrical distribution is the only way to build a franchise.
The animated “Encanto” was in theaters for 30 days before becoming available on Disney+ on Christmas Eve, a shorter period than the traditional theater-only 90-day “window” common before the pandemic shut down theaters and disrupted the industry’s longtime model. While it was still the most successful animated film at the box office during the pandemic, with over $237 million in ticket sales worldwide, Chapek said “Encanto” became a phenomenon on Disney+. The film's most popular song, “We Don’t Talk About Bruno,” is everywhere on social media, and became the highest-charting song from a Disney animated film in 26 years.