Disney (sadistic) reported fiscal fourth-quarter earnings on Tuesday after the bell, lost on both the top and bottom lines. Macroeconomic challenges, including a global advertising slowdown, weighed on earnings as the company also battled larger-than-expected streaming losses.
Disney stock moved down on the heels of the report, with losses accelerating as investors digested the results – down as much as 10% in after-hours trading.
Here are Disney’s fourth-quarter results compared to Wall Street consensus estimates, compiled by Bloomberg:
Income: $20.15 billion vs $21.26 billion expected
Adj. earnings per share (EPS): $0.30 vs $0.51 expected
Additional net Disney + subscribers: 12.1 million vs. 9.35 million expected
Park, experience and revenue of consumer products: $7.43 billion vs $7.59 billion expected
Disney+ saw net additions of subscribers rise to 12 million, beating expectations of more than 9 million. The beat comes after the company reported a customer surge in the third quarter (14.4 million) after the launch of new markets and strong content.
The company cautioned that it expects Disney+’s core subscriber growth, along with Hotstar’s subscriber numbers, to be lower in the first quarter. Content spending is guided in the low $30 billion range for 2023.
Disney+, Hulu, and ESPN+ lost a combined $1.5 billion in the fourth quarter (vs. a loss of $1.1 billion in the third quarter). Disney CFO Christine McCarthy said she expects Disney+’s losses to peak this year, with management guiding that streaming losses will shrink to around $200 million in the first quarter of 2023.
“We expect our DTC operating losses to narrow going forward and that Disney+ will still be profitable in fiscal 2024, assuming we don’t see a significant shift in the economic climate,” Disney CEO Bob Chapek said in an earnings release.
“By adjusting our costs and realizing the benefits of the price and rate increases supported by our Disney+ ads on December 8, we believe we will be on the way to achieving a profitable streaming business that will drive continued growth and generate shareholder value.” long stock in the future.,” he continued.
Despite the recent price increase, the average revenue per user for Disney + fell to $3.91, vs. estimates of $4.29 amid a stronger foreign exchange impact and a greater customer mix.
The company will launch an ad-supported tier of $7.99 in December, a month after its highly anticipated Netflix debut. Despite the overall slowdown in ad spending, analysts remain bullish on the prospects of profitability of ad-supported plans – especially for streaming companies.
Park operations missed expectations amid recession fears
Disney’s theme parks, which saw the rapid rise of COVID-19 amid increased attractions, price hikes, and updated technology such as Genie+ appalso missed expectations in the quarter as fear of recession pressured consumer demand.
Revenue from the company’s parks, experiences, and consumer products division reached $7.43 billion, with operating income reaching $1.51 billion (vs. estimates of $1.9 billion.) Disney Resort Shanghai remains closed amid strict COVID-19 protocols. The company said it had “no visibility on the reopening date” for the Shanghai location.
However, McCarthy said the media giant expects a “strong” holiday season at the parks in the first quarter of 2023.
In the earnings call, the company touted its upcoming movie slate, revealing that it sees “Black Panther: Wakanda Forever” and “Avatar: The Way of Water” driving movie sales. Not so good? His linear TV business. McCarthy said he expects linear TV customers to decline to accelerate, in line with current industry trends.