The Walt Disney Company posted a loss in its second quarter due to restructuring and impairment charges, but its adjusted profit beat expectations and its streaming business turned profitable. Theme parks also continued to perform well, and the company raised its full-year outlook.
Disney on Tuesday said its overall streaming business will soften in the current quarter due to its platform Disney + Hotstar in India, expecting its combined streaming businesses to be profitable in the fourth quarter and a meaningful future growth driver. The company, with further improvements in profitability in FY2025.
The direct-to-consumer business, which includes Disney+ and Hulu, posted quarterly operating income of $47 million, compared with $587 million a year earlier. Revenue rose 13% to $5.64 billion.
Disney+ Prime subscribers rose more than 6% in the second quarter.
“Looking at our company as a whole, it’s clear that the turnaround and growth initiatives we’ve put in place over the past year continue to yield positive results,” CEO Bob Iger said in a prepared statement.
It was the first financial report since shareholders rejected attempts by activist investor Nelson Belts Last month, Iger stood firmly behind the company as it tried to revive the company after a difficult stretch to secure seats on the company’s board.
Thomas Montero, senior analyst at Investing.com, said some Disney investors may have expected more from the quarterly report, but “the company has tilted its performance toward its core business model, which is inherently more conservative.”
Monteiro focused on trying to make the company’s streaming division profitable.
“The big surprise of the day came on the streaming front, which finally managed to turn a profit — ahead of forecasts — amid a period of massive Hollywood strikes,” Monteiro said. “This suggests that perhaps a more global, lower-production-cost Netflix-like model is the way to go in a process that needs to rethink its growth expectations overall.”
Revenue at Disney’s domestic theme parks rose 7%, while its overseas theme parks rose 29%.
But Disney acknowledged wrestling with higher costs at its theme parks in the quarter due to inflation.
The company said guests spent more at Walt Disney World due to higher ticket prices, while Disneyland guests increased their spending due to higher ticket prices and hotel room rates.
Overseas, Hong Kong Disneyland benefited from the November opening of World of Frozen, a section of the park that includes rides based on the popular “Frozen” movies.
In the period ended March 30, Disney lost $20 million, or a penny per share. That compares with a profit of $1.27 billion, or 69 cents per share, a year ago.
Charges for restructuring and impairments rose to $2.05 billion from $152 million in the prior-year period.
Adjusted earnings, which strip out charges and other items, came in at $1.21 per share, easily beating the $1.12 per share analysts had expected from Zacks Investment Research.
Disney now has a full-year adjusted earnings per share growth target of 25%, thanks to its second-quarter performance. It had previously predicted at least 20% growth.
The Burbank, California, company’s revenue rose to $22.08 billion from $21.82 billion a year earlier, but fell slightly short of Wall Street estimates of $22.13 billion.
Content sales and licensing revenue fell 40% in the second quarter as Disney didn’t release any significant movie titles in the second quarter, compared to a year earlier after the release of “Ant-Man and the Wasp: Quantummania.” Last year’s results were helped by the ongoing performance of the show “Avatar: The Way of Water,” which releases in December 2022.
Shares fell 5% before the market opened.
In February, The Walt Disney Company said it was making “significant cost reductions” and would reduce its selling, general and other operating expenses by $500 million in its first quarter. Company Cut thousands of jobs In 2023.
In March, Gov. Ron DeSantis and Disney allies A solution Agreement in state court battle over how Walt Disney World is shaped in the future following the Florida governor’s government takeover of the theme park resort.
Character artists and their organizing union, Actors Equity, said last month at Disneyland in California: They filed a petition For union recognition.
