Disney (DIS) posted better than expected results in the first quarter — the company’s first report since the launch of its eponymous streaming service.
Here were the main figures from Disney’s first-quarter 2020 earnings report, compared to consensus estimates compiled by Bloomberg:
Revenue: $20.86 billion vs. $20.81 billion expected and $15.3 billion Y/Y
Adjusted earnings per share: $1.53 vs. $1.46 expected and $1.84 Y/Y
Disney+ 1Q subscribers: 26.5 million, vs. 20.8 million expected
Disney+’s success in attracting and retaining subscribers was a key focal point for investors heading into Tuesday’s results. The streaming service, launched in November, added 10 million users in its first day.
During a call with investors, Disney CEO Bob Iger said Disney+ subscribers were 28.6 million as of Monday, growing even further from the end of the reported quarter.
“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations,” Iger said in a statement.
“Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment,” he added.
Disney also broke out its total subscribers for Hulu, which rose 33% to 30.4 million in the reported quarter and were 30.7 million as of Monday. ESPN+ subscribers more than quadrupled to 6.6 million during the quarter, from 1.4 million in the year-ago period, and were 7.6 million as of Monday.
Shares of Disney fluctuated in late trading, after ending Tuesday’s regular session 2% higher.
The debut catapulted Disney+ into the same competitive space as Netflix (NFLX), which launched its own streaming video service more than a decade ago. Netflix, in its own recent earnings results in January, had attributed elevated user churn in part to higher competition. Netflix exited its most recent fiscal quarter with 167 million global subscribers.
The launch of Disney+, however, also generated a host of additional costs for the company. Disney’s direct-to-consumer and international segment, which houses Disney+, posted an operating loss of $693 million in its reported quarter, after losing $740 million in the prior quarter. The most recent results, however, were narrower than the $800 million Disney had anticipated the unit would post in operating losses in November.
Streaming service aside, investors were also closely monitoring Disney’s results in its parks, experiences and consumer products segment, which comprised the bulk of operating profit and revenues for the company. In the prior quarter, results in the unit had been dented by protracted protests in Hong Kong, which had generated a $55 million decline in operating income during the period.
These impacts carried over into the three months ending in December. Disney’s parks, experiences and consumer products unit overall grew operating income 9% during the quarter. However, the company said it saw a decrease in operating income at its international parks and resorts “due to lower results at Hong Kong Disneyland Resort,” caused by “decreases in attendance and occupied room nights reflecting the impact of recent events, the company said in a statement.
In the months since, the negative impact to park attendance in the wake of the Hong Kong protests has compounded with park closures as a result of the coronavirus outbreak in China.
In January, Disney closed both Shanghai Disneyland and Hong Kong Disneyland indefinitely, in effort to contain the spread of the virus. Those closures extended over the Lunar New Year holiday, typically a boon period for Disney when traveling in China totals in the hundreds of millions.
The impact of the January closures of the Hong Kong and Shanghai Disneyland parks was not reflected in Disney’s fiscal first quarter earnings report. But for the current quarter, the temporary halt is expected to dent operating income in Shanghai Disney’s parks segment by $135 million, assuming the closures extends over two months during the period, Chief Financial Officer Christine McCarthy told analysts during a call Tuesday. Hong Kong Disneyland is expected to see a $145 million hit to operating profit, she added.
Meanwhile, Disney’s media networks division grew revenues 24% and operating income 23% to $1.63 billion during the fiscal first quarter. Broadcasting led the advances, which Disney attributed to the consolidation of 21st Century Fox after its acquisition of the media company closed in March.
Revenue in Disney’s studio entertainment segment more than doubled to $3.8 billion, and operating income more than tripled to $948 million. Disney attributed the surge to strong in-theater performances of films including “Frozen II,” and “Star Wars: The Rise of Skywalker.”
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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