Disney (DIS) posted quarterly results that missed Wall Street’s expectations as the media giant saw a more marked-than-expected slowdown in Disney+ streaming subscribers, with consumer mobility picking up and virus-related disruptions weighing on show production. Shares fell more than 3% in late trading following. the results.
Here were the main metrics Disney posted in its fiscal fourth-quarter report, compared to consensus estimates compiled by Bloomberg:
- Revenue: $18.53 billion vs. $18.78 billion expected, $14.71 billion Y/Y
- Adjusted earnings per share: 37 cents vs. 49 cents expected, loss of 20 cents Y/Y
- Disney+ subscribers: 118.1 million vs. 119.6 million expected
The Burbank, Calif.-based company’s flagship Disney+ streaming platform has become a key growth driver for the company overall, with the two-year-old platform capitalizing on a consumer shift to streaming. However, the platform has been adding users at a decelerating clip compared to earlier on during the pandemic, when stay-at-home behavior helped boost sign-ups both at Disney+ and at rivals like Netflix (NFLX).
Heading into results, executives warned that Disney was still seeing some lingering virus-related disruptions for its streaming business. CEO Bob Chapek said during Goldman Sachs’ Communacopia Conference in September that investors should expect to see the company bring on just “low single-digit millions of subscribers versus Q3,” or when the company had added more than 12 million net new users. At the time, Chapek noted that COVID-induced production delays were inhibiting new content from coming to the service globally, which was in turn affecting subscriber growth.
“Although film and television production generally resumed beginning in the fourth quarter of fiscal 2020, we continue to see disruption of production activities depending on local circumstances,” Disney said in its earnings release. “Fewer theatrical releases and production delays have limited the availability of film content to be sold in distribution windows subsequent to the theatrical release.”
Disney+ subscribers of 118.1 million for fiscal fourth quarter compared to the third quarter’s 116.0 million. Including subscribers to Disney’s sports streaming platform ESPN+ and Hulu, the company had a total of 179 million paid streaming subscribers as of Oct. 2.
Vaccinations and a rise in consumer mobility have strongly aided other parts of Disney’s sprawling entertainment empire. Disney’s theme parks have seen a pick-up in attendance as 2021 progressed, aided by pent-up consumer demand for live events.
The company’s parks, experiences and products segment produced operating income for the first time since the pandemic began in the fiscal third quarter, and this segment remained profitable in the third quarter. All of Disney’s global theme parks were open for at least a portion of the fiscal fourth quarter — albeit at reduced capacity due to the ongoing pandemic — and several of Disney’s cruise ships resumed sailing.
The business unit saw revenue grow 26% compared to the previous quarter to come in at $5.45 billion. Operating income in the segment, however, missed expectations, with this totaling $640 million versus Wall Street’s estimate for $864.4 million. This miss was due in part to increased costs, with Disney noting that the company incurred total costs of $1 billion in fiscal 2021 to meet government regulations and add safety measures for its workers and guests.
Impacts from a multi-day closure at Shanghai Disneyland in early November — which saw tens of thousands of visitors get locked into the park for COVID testing after one customer tested positive for the virus — were not captured in fourth-quarter results.
Shares of Disney have fallen 3.5% for the year-to-date, underperforming against the S&P 500’s more than 23% gain over that period.