The Walt Disney Co. on Wednesday reported fiscal second-quarter profit rose from the year-ago period, as the entertainment giant boosted streaming subscribers and saw continued recovery for businesses like theme parks roiled by pandemic lockdowns.
The world’s largest entertainment company grew subscribers for its Disney+ streaming service by 33% to 137.7 million, up from 103.6 million in the year-ago period and 7.9 million in the quarter alone. This helped boost overall quarterly profit to $1.08 a share from continuing operations on revenue of $19.25 billion.
Disney CEO Bob Chapek reiterated on the earnings call that the company expects to report between 230 million and 260 million subscribers on its streaming platforms worldwide by September 2024.
Wall Street expected Disney to report second-quarter revenue of $18.91 billion. In the year-ago period, the company reported a mixed quarter, with diluted earnings per share of 50 cents on revenue of $15.6 billion.
Disney is the last major Hollywood company to report results for the first three months of the year. Investors hoped the world’s largest entertainment conglomerate will calm frayed nerves after Netflix kicked off the industry-wide anxiety on April 19 by reporting a 200,000 drop in subscribers — its first loss in more than a decade — and warned of steeper declines ahead as layoffs have already begun.
“Our strong results in the second quarter, including fantastic performance at our domestic parks and continued growth of our streaming services — with 7.9 million Disney+ subscribers added in the quarter and total subscriptions across all our DTC offerings exceeding 205 million — once again proved that we are in a league of our own,” said Disney Chief Executive Bob Chapek. “As we look ahead to Disney’s second century, I am confident we will continue to transform entertainment by combining extraordinary storytelling with innovative technology to create an even larger, more connected, and magical Disney universe for families and fans around the world.”
The announcement ripped through Wall Street, as investors began reevaluating the industry’s aggressive shift into streaming subscriptions. Netflix blamed subscriber weakness on customers sharing accounts, increased competition and a looming plateau in how many new customers can be signed up.
During the quarter, Disney’s media and entertainment distribution division posted revenue of $13.5 billion in the quarter, up 9% from a year ago. Streaming revenues rose 23% to $4.9 billion. The company’s linear networks were up 5% to $7.1 billion.
The key parks, experiences and consumer products division, hurt hard during the lockdowns during the pandemic, reported revenue of $6.6 billion, more than double from the year-ago period.
Disney’s stock rose in after-hours trading closing Wednesday $105.21 as investors slugged it out in a pretty brutal year for the company’s value — even before the market-wide plunge in the last week on recession fears. Disney shares have declined 41% this year, trading at about $106 in the hours before earnings were released.
This steep of drop on the year is almost unheard of among the blue-chip members of the Dow Jones index that tracks stock performance of the nation’s 30 largest companies. Further, if you strip out the two years of pandemic-related market volatility, Disney is trading at levels not seen since December 2018.