Financial Associated Press (Shanghai, editor Bian Chun) - Walt Disney Co., the world's largest entertainment company, released its first-quarter results report after hours on Wednesday, showing that earnings per share and revenue both exceeded expectations, and streaming subscribers approached 130 million, reversing the downward trend. After the earnings report, Disney's stock price rose 8% at one point in after-hours trading.
For the quarter ended January 1, 2022, Disney's fiscal first-quarter adjusted earnings per share were $1.06, compared to market expectations of 63 cents; revenue was $21.82 billion, compared to $16.25 billion in the year-ago quarter, compared to $20.91 billion; and disney+'s streaming service had a total subscriber count of $129.8 million, up from 118.1 million in the previous fiscal quarter, with a market expectation of $125.75 million.
Streaming subscriber growth remains strong
In the fiscal first quarter, revenue from Disney's media and entertainment distribution business increased 15% year-over-year to $14.59 billion and operating profit of $808 million, down 44% year-over-year.
Disney+ saw its subscriber count increase nearly 12 million to 129.8 million in its first fiscal quarter. This means that in the last three months of 2021, Disney's subscriber growth has surpassed that of streaming giant Netflix. As Netflix acknowledged last month, competition may be eroding its subscriber base. Netflix added 8.3 million subscribers last quarter, bringing its global total to 222 million.
Disney+'s average revenue per user (ARPU) in the U.S. and Canada also grew to $6.68 from $5.80 a year ago.
Disney has invested billions of dollars in new programming, expects a piece of the Netflix-dominated online video market, and bets its future on a direct-to-consumer strategy.
Disney executives had previously expected Disney+ subscription growth in the second half of the year to be stronger than in the first half of the year. More original content will be released on the platform in the fourth quarter of 2022.
Disney Chief Financial Officer Christine McCarthy said on the earnings call that the company expects to invest heavily in streaming in the second quarter. She said it expects the company's direct-to-consumer business to increase programming and production fees by about $800 million to $1 billion, including the production of programs for Hulu Live.
CEO Bob Chapek said Disney was bidding for the rights to the NFL Sunday Tickets show, further into streaming.
Although Netflix's latest earnings report showed a slowdown in subscriber growth and caused its stock price to fall sharply, Chapec reiterated its guidance that Disney+ subscribers will reach 230 million to 260 million by 2024.
The park business is back
As concerns about Omicron subsided, government restrictions eased and pent-up demand was released to bring strong foot traffic to Disney theme parks.
Disney's Parks, Experiences and Consumer Products division generated revenue of $7.2 billion in the quarter, double the $3.6 billion in the year-ago quarter. Operating profit for the division jumped to $2.5 billion, compared to a loss of $100 million in the year-ago quarter.
Disney said the revenue growth came from more guests visiting its theme parks, staying at branded hotels and booking cruise ships.
After closing most of its Disney-branded retail stores in the second half of 2021, the company's consumer goods business revenue fell 8.5 percent to $1.5 billion.
"This year marks the final year of the Walt Disney Company's first 100 years, and a performance like this, combined with our unrivalled collection of assets and platforms, creative capabilities, and a unique place in our culture, gives me great confidence that we will continue to define entertainment for the next 100 years." Chapec said.
After the earnings report, Disney shares rose 8% at one point after hours on Wednesday. The stock closed up 3.33% at $147.23 during regular trading hours. Year-to-date, however, the stock has fallen more than 6 percent year-to-date.