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Disney Reports Better-than-expected Earnings For First Fiscal Quarter, Adds Over 11 Million New Subscribers

Disney reported better-than-expected earnings for its fiscal first-quarter – earnings per share, revenue and streaming numbers surpassed the estimates of analysts. The company’s stock also soared about 8 percent in extended trading after the announcement.

Disney reported earnings per share of $1.06, adjusted, surpassing the estimate of 63 cents provided by a Refinitiv survey of analysts. Revenue shined gallantly at $21.82 billion, higher than the $20.91 billion that analysts had expected, according to Refinitiv. The company also provided Disney+ total subscribers of 129.8 million, beating the 125.75 million estimate of analysts, according to StreetAccount.

In the fiscal first quarter, Disney added 11.8 million new subscribers, surpassing the estimate of 7 million, according to StreetAccount. Average revenue per user (ARPU) in the US and Canada grew to $6.68 from $5.80 recorded in the same period in the previous year.

According to Chief Financial Officer Christine McCarthy, while on an earnings call with analysts, the company envisions spending significantly in the imminent quarter, adding that this will because it expects an increase in programming and production expenses for the direct to consumer business to increase by about $800 million to $1 billion, including Hulu live. These expenses are expected to increase by about $500 million, partly due to pandemic-induced timing shifts. She added that Disney is not at a point of steady expenses for Disney+, but said they “expect to have made significant progress by fiscal 2023”.

Disney’s streaming numbers surpassed that of rival company Netflix in terms of growth. While Netflix reported 8.23 million subscribers added in the same period, this figure was well short of what it recorded in the same period in 2020. Disney, on the other hand, had almost 12 million new subscribers. Netflix, however, admitted that it was facing some serious competition that was taking a toll on its numbers.

While on a recent interview, Disney’s CEO Bob Chapek mentioned the company was going deeper into streaming adding that it was already bidding for NFL Sunday Ticket.

The CEO also reiterated guidance for subscriber growth. He said Disney expects to add between 230 million and 260 million new Disney+ subscribers by 2024. He also did mention that Disney+ could be the major platform for releasing its original content. While referencing its latest release Encanto, the CEO said “We do not subscribe to the belief that theatrical distribution is the only way to build a Disney franchise”.

In the quarter, the company’s parks, experiences and consumer products division doubled revenue of $3.6 billion from a year ago to $7.2 billion. The category had operating results of $2.5 billion compared to the same period from the previous year where it recorded a loss of $100 million. The growth experienced in this category was boosted by more guest attendances who visited its theme parks, either booked cruises or branded hotels.

Disney’s consumer products business had revenue fall from 8.5 percent to $1.5 billion. This followed the closure of a handful of its Disney-branded retail stores in the second half of 2021.

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