Disney Misses Analysts’ Estimates on Earnings and Revenue

Disney shares declined about 8 percent on Tuesday’s after-hours trading after the company reported quarterly results that missed analysts’ expectations. The company also said that it expects its streaming growth to decline in imminent months.

In the fiscal fourth quarter, Disney reported adjusted earnings of 30 cents per share, below the expectation of 55 cents by analysts, according to Refinitiv. Revenue for the fourth quarter came in at $20.15 billion, also below analysts’ expectation of $21.24 billion, according to Refinitiv. Disney reported total subscriptions for its Disney+ service at 164.2 million, beating analysts’ expectation of 160.45 million, according to StreetAccount.

Disney reported revenue of 22 percent for the fiscal year of 2022. The company’s parks and media divisions performed below expectations. Christine McCarthy, the company’s Chief Financial Officer also mentioned that the company expects revenue growth of below 10 percent for the new fiscal year. 

Disney had a 10 percent drop in domestic average revenue per user (ARPU) to $6.10.

The company’s media and entertainment division dropped 3 percent year on year to $12.7 billion. Analysts had estimated this segment to generate $13.9 billion, according to StreetAccount. Disney also reported lower content sales as it had fewer theatrical films on the calendar, which translates to fewer films to place into the home entertainment market. 

In the fourth quarter, Disney+ added 12.1 million subscribers, raising the streaming platform’s total subscribers to 164.2 million. While on an earnings call with analysts on Tuesday, Disney executives said that they expect this growth to slow down in the fiscal first quarter.

Hulu had 47.2 million subscribers and ESPN+ had 24.3 million subscribers at the end of the fiscal fourth quarter. Put together, Hulu, ESPN+, and Disney have more than 235 million streaming subscribers, more than Netflix which had 223 million subscribers according to recent statistics. According to CEO Bob Chapek, Disney+ will attain profitability in fiscal 2024.

The company’s Direct-to-consumer segment lost $1.47 billion in the fiscal fourth quarter. Disney is set to increase its prices for Disney+ and will be adding an ad-supported tier with the hope of boosting revenue. 

Disney reported record results in its parks, experiences, and products segment. Revenue went up 34 percent to $7.4 billion in the fiscal fourth quarter. Analysts had, however, expected $7.5 billion for the division, according to StreetAccount. The division saw operating income increase more than 66 percent to $1.5 billion. Spending increased in its domestic and international parks, and there were more bookings for voyages on its new cruise ship – the Disney Wish. Specifically, the parks unit generated $815 million in operating income, below the expectation of $919 million, according to StreetAccount.