Q2 FY2022 Earnings Highlights
- Disney (DIS) reported stronger-than-expected growth in its streaming subscribers across all the media platforms.
- The Walt Disney company’s revenues grew 23% to $19.25 billion in Q2 FY2022 which includes a $1 billion reduction resulting from the early termination of some of the licensing agreements.
- Disney+ subscriptions rose to 137.7 million during the quarter, higher than the street estimates of 135 million.
- Average Revenue Per User (ARPU) for domestic Disney+ subscribers was up 5% to $6.32.
- The ccompany announced a total of 205 million subscribers across all of its direct-to-consumer (DTC) services, including 7.9 million new subscribers to Disney+ which is likely to keep the company on track to reach its goal of 230-260 million subscribers FY2024.
- Diluted earnings per share (EPS) decreased to $0.26 from $0.50 a year ago. However, after excluding certain items, the Diluted EPS increased to $1.08 from $0.79 a year ago.
- Parks, Experiences and Products revenue more than doubled to $6.7 billion during the quarter compared to $3.2 billion seen a year ago as the company showed signs of revival after bouncing back from the Covid restrictions.
- Growth was largely fuelled by increased attendance, hotel bookings, cruise ship sailings, higher ticket prices, and increased spending on food, beverage and merchandise.
- Per capita guest spending at the domestic theme parks increased by over 40% from Q2 2019 and by 20% vs. Q2 2021.
Why are the shares of the company down in spite of good results?
Shares of Disney have corrected over 30% since January and more than 40% compared to the same period last year and has touched its lows of 100 levels as investors are concerned if the company would be able to sustain its streaming growth. The higher inflation and a possible recession are also likely to impact its other business ventures.
Historical data of the share price
- The Disney stock (DIS) is currently trading at $107 levels
- The all-time high closing for the stock was $201.91 on March 8, 2021
- The 52-week high stock price is $187.58, about 75% above the current share price
- The 52-week low for the stock is $99.47, about 7% below the current share price
- At the end of the next quarter (Q3) this year, the company plans to roll out Disney+ to 53 new markets across Europe, Africa and West Asia. Disney+ will debut in South Africa this week.
- The streaming service is likely to launch an ad-supported version in the U.S. by the end of this year and internationally by 2023.
- For the theme parks and experiences segment, Disney’s domestic parks are beginning to see the return from international travellers but still lower than the levels that the company saw before the pandemic.
- Additionally, not all international parks are fully operational. Disneyland Shanghai and Hong Kong both experienced temporary closures due to COVID-19 lockdowns.
- The management expressed that the overall parks, experiences and consumer products segment is likely to see an impact of $350 million in operating income in the current quarter due to the theme park closures in Asia.
“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”
Bob Chapek-Chief Executive Officer, The Walt Disney Company