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Walt Disney Company (DIS) Q3 revenues, earnings beat Street view

Updated: Aug 17, 2022

To download the DIS Q3,2022 financial report

Entertainment behemoth The Walt Disney Company (NYSE: DIS) on Wednesday reported higher revenues and earnings for the third quarter of 2022. The results also topped expectations.

Third-quarter revenues of the Los Angeles-based company advanced to $21.50 billion from $17.02 billion in the same period last year and surpassed experts’ projections.

The strong revenues drove up adjusted earnings from continuing operations to $1.09 per share in the latest quarter from $0.80 per share in the prior-year quarter. Analysts had predicted a slower growth. Unadjusted profit from continuing operations was $1.41 million or $0.77 per share, compared to $923 million or $0.50 per share last year.

Disney (DIS) Q3 financial report operating dataDisney (DIS) Q3 Earnings: Disney+ subscriptionsDisney+ subscriptions increased by 14.4 million, well above market expectations of 10 million, with total subscriptions to all "streaming service" (DTC) products reaching 221 million, surpassing Netflix's (NFLX) 220 million.However, the sharp increase in subscriptions did not translate into profits, DTC operating losses expanded to 1.06 billion, reflected in the rise in content costs, So Disney announced a new pricing strategy, in addition to providing "advertised" subscriber eucalyptus, but also launched more diversified bundles, but also increased the subscription fee, hoping to drive profits and subscriptions to grow in tandem with the number of subscriptions.While Disney (DIS) lowered its Disney+ subscriber targets to reach 215 million to 245 million in 2024, an overall cut of about 15 million, the CFO reiterated that Disney+'s losses will peak in fiscal year 2022 and expect to start making a profit in fiscal 2024.Disney (DIS) Q3 Earnings: Average monthly revenue per subscriber at Disney+Disney+ Disney+ has an average monthly revenue (ARPU) per subscriber up 5% annually. ArPU rose to $4.35 from 4.16 last year, flat compared to Q2, with subscription fee increases around the world, but mainly driven by the growth of ARPU in the "international region", while the "US region" declined due to more consumer subscriptions to the same bundle eucalyptusDisney (DIS) Q3 Earnings: Theme Park VisitorsDisney (DIS) CEO said that all theme parks are now fully open, and the number of visitors is very large, and did not see a weakening demand, basically the number of people who want to enter the park exceeded the capacity of the park, and the tourists in the international area continued to recover, because in general, the consumption willingness of international tourists is higher, which will help enhance the profitability of the future.

Disney (DIS) Q3 Earnings: Park & Product RevenueDisney (DIS) parks and product revenue grew strongly, up 70% annually to $7.39 billion, and operating profit soared by 514%, mainly reflected in the "United States" operations rebounded significantly, partially offset by rising costs, under the cancellation of epidemic prevention measures, the number of theme park visitors, tourist consumption, hotel reservations, cruise bookings have increased, the "international region" is still not profitable, but the loss has narrowed from 210 million to 64 million US dollarsDisney (DIS) Q3 Earnings: Content and Sales LicensingDisney's (DIS) content and sales licenses turned from profit to loss, with revenue up 26 percent a year, but operating profits shrank sharply to a loss of $27 million, DIS noted, which was offset in part by the benefits of reopening theaters, DIS noted.Disney (DIS) Q3 earnings outlookDisney (DIS) divides Disney+ subscribers into two categories: Disney+ and Disney+ Hotstar (india bundle). The CFO pointed out that by the end of fiscal 2024, the number of "core" Disney+ subscriptions will reach 135 million to 165 million, which is roughly in line with the previous guidance, that is, in the past, the number of Disney+ subscriptions alone will reach 60% to 70% of the total number of Disney+ subscriptions (230 million to 260 million) in fiscal 2024.However, he updated his expectations for Disney+ Hotstar, which now estimates to reach 80 million in fiscal year 2024, which adds up to the above"core" Disney+ subscriptions, which is the latest subscription estimate: 215 million to 245 million. Goldman Sachs has previously lowered its estimates for Disney+ subscriptions to reflect that DIS has lost the streaming rights to the Indian Cricket League, noting that this will hit the Indian market where Disney (DIS) is actively deployed.

Disney (DIS) Q3 Earnings: Streaming Market ConditionsAccording to the latest data from JustWatch, Disney+ ranks 4th in the US streaming market, but we can see that Disney+ market share is climbing quarter by quarter.According to the Nielsen survey, from 2021 to 2022, the average time Americans spend on streaming content each week has increased by 18%, of which 93% of viewers are satisfied with the streaming service and will continue to subscribe, but nearly half of the respondents find it difficult to choose between many streaming media, and 64% of respondents said they would like to have the same bundle. In terms of subscription status, only 18% of viewers subscribe to only one type of streaming, and most people subscribe to many homes at the same time.The above information reveals that the streaming media market is still expected to flourish, even if the economy slows down to compress consumer spending, consumers' willingness to renew is still very strong, although it may be under budget considerations, consumers have to abandon a few subscribers, at this time, Disney's bundle of eucalyptus just solves the "choice barrier" of many people.In addition to the new pricing strategy mentioned above, Disney raised the subscription fee of espn+ sports streaming service BY 43% in one go to $9.99 per month in July, which will naturally fund Disney's revenue if consumers continue to pay, and since Disney has not significantly increased the subscription fee of the same bundle (Disney+, Hulu, ESPN+), it may be able to stimulate more users to subscribe to the same bundle under the narrowing of the price difference between ESPN+ and the same bundle.However, it is worth mentioning that the price increase of course has to provide a corresponding content improvement, but a few days ago ESPN announced that it withdrew from the competition for the broadcast rights of the "Big Ten Alliances", whether it will have an impact on consumers can be seen again.What is the Big Ten Conference?

The Big Ten Conference is a sports league of 14 U.S. universities that include basketball, football, volleyball, and more, and ESPN has worked with the big ten for 40 years.

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