Disney (DIS) Q4 2022 results

Disney CEO Bob Chapek at the Boston College Chief Executives Club on November 15, 2021.

Charles Krupa | PA

disney fell short of expectations for earnings and key revenue segments in the fiscal fourth quarter on Tuesday and warned that strong streaming growth for its Disney+ platform may decline going forward.

Shares of the company fell about 8% in after-hours trading.

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The company’s quarterly results beat Wall Street expectations for revenue and earnings as its parks and media divisions underperformed estimates. And Chief Financial Officer Christine McCarthy has tempered investors’ expectations for the new fiscal year, forecasting revenue growth in the single digits. The company announced tax revenue growth of 22% in 2022.

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In the fourth quarter, revenue for the media and entertainment division fell 3% year-over-year to $12.7 billion in the prior-year period, as business the company’s direct-to-consumer and movie businesses were struggling. Analysts had expected revenue of $13.9 billion, according to StreetAccount estimates.

The company also saw lower content sales as it had fewer theatrical movies on the schedule, and therefore fewer movies to place in the home entertainment market.

Here’s how the company fared in the July-September period:

  • Earnings per share: 30 cents per share adjusted vs. 55 cents expected, according to Refinitiv analyst survey
  • Revenue: $20.15 billion vs. $21.24 billion expected, according to Refinitiv
  • Total Disney+ Subscriptions: 164.2 million vs. 160.45 million expected, according to StreetAccount

Disney+ added 12.1 million subscriptions during the period, bringing the platform’s total subscriber count to 164.2 million, higher than the 160.45 million forecast by analysts, according to estimates from StreetAccount.

However, growth is expected to slow in the fiscal first quarter, Disney executives warned during Tuesday’s conference call.

At the end of the fourth fiscal quarter, Hulu had 47.2 million subscribers and ESPN+ 24.3 million. Combined, Hulu, ESPN+ and Disney+ have over 235 million streaming subscribers. Netflix, long the leader in the streaming space, had 223 million subscribers, according to the latest count.

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Disney CEO Bob Chapek said in the company’s earnings release that Disney+ will achieve profitability in fiscal year 2024. The direct-to-consumer division lost $1.47 billion in the last quarter. . It also reported a 10% drop in national average revenue per user (ARPU) to $6.10.

The company is expected to raise prices for the service in December and expects an ad-supported tier, which should boost revenue.

Chapek is on a mission to better connect the company’s divisions into one organization and accelerate its direct-to-consumer strategy.

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The company announced record results in its parks, experiences and products segment, Chapek said. The division, which includes the company’s theme parks, resorts, cruise lines and merchandise, saw revenue rise more than 34% to $7.4 billion in the quarter.

Still, Wall Street had slightly higher hopes for the division: Analysts had expected revenue of $7.5 billion, according to StreetAccount.

The division’s operating profit rose more than 66% to $1.5 billion as spending increased at its domestic and international parks and consumers booked trips on its new cruise ship, the Disney Wish. The parks unit, in particular, generated operating profit of $815 million, well below the $919 million expected by StreetAccount.

Disney cited higher costs and said they were only partially offset by higher ticket revenue driven by the introduction of Genie+ and Lightning Lane guest deals.

Chief Financial Officer McCarthy said Tuesday that Disney is looking for “meaningful efficiencies” and actively reviewing the company’s cost base.

– CNBC’s Alex Sherman contributed to this report.

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