An upswing in Disney+ subscriptions, to 94.9 million, led a revenue bounce-back from the previous quarter as the media giant continues to build direct-to-consumer sales. Disney [$DIS] posted a surprise fiscal Q1 profit of $17 million, or 2 cents a share, on sales of $16.25 billion, up from $15.8 billion in the year-ago quarter.
After adjusting for restructuring charges and other effects, Disney reported earnings of 32 cents a share, down from $1.53 a share in the year-ago quarter. Analysts on average expected Disney to report an adjusted loss of 34 cents a share on sales of $15.9 billion.
“We believe the strategic actions we’re taking to transform our company will fuel our growth and enhance shareholder value, as demonstrated by the incredible strides we’ve made in our DTC business, reaching more than 146 million total paid subscriptions across our streaming services at the end of the quarter,” Disney CEO Bob Chapek noted while announcing the results.
“Disney+ has exceeded even our highest expectations,” Chapek noted, saying it stood at 26.5 million subscribers in the same-quarter a year ago. He also mentioned jumps in usage for ESPN+ (up 83% to 12.1 million) and Hulu (up 30% to 35.4 million).
Disney’s Media and Entertainment Distribution, which includes Disney+, brought in $12.66 billion for the quarter, a decline of 5% from the same quarter a year ago before the pandy swept the country. The Disney Parks, Experiences and Products unit brought in $3.6 billion, down 53% year-over-year as many Disney parks and its cruise line remain closed. The flagship Disneyland Park in Anaheim and Disneyland Paris will stay closed in the current quarter, Disney CFO Christine McCarthy said during the analyst call.
The steadfast growth of Disney+ has impressed Wall Street analysts despite added competition from Apple’s [$AAPL] Apple TV+, Netflix [$NFLX], AT&T’s [$T] HBO Max, Comcast’s [$CMCSA] Peacock, Amazon’s [$AMZN] Prime Video, and others.
Because Disney is investing heavily on its streaming business — it plans to dump between $14-16 billion across all of its services in 2024 — it isn’t expected to be profitable until at least 2023. Disney+ is looking to to deliver more revenue in March, when the monthly fee rises by $1 to $7.99 in the U.S. and by 2 euros to 8.99 euros a month in Europe.
Subscriber growth at Disney+, ESPN+, Hulu, and Hotstar remains the focus instead — and for good reason. During its December 10 investor day, Disney management indicated those services could reach some 350 million subscribers by 2024.