Disney jumps almost 7% as Parks surge leads easy third-quarter earnings beat
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Walt Disney (NYSE:DIS) shares climbed almost 7% in after-hours trading, Wednesday, after the company released fiscal third-quarter earnings where it beat expectations on the top and bottom line and surprised to the upside on Disney+ subscribers.
And the entertainment giant had another surprise as it introduced a heavy price hike as part of its new streaming structure.
Disney (DIS) said second-quarter revenue rose 26% from a year ago, to $21.5B, which beat expectations by half a billion dollars. Income from continuing operations before taxes more than doubled, to $2.12B, and total segment operating income rose 50% to $3.57B.
Earnings from continuing operations jumped to 77 cents a share, while earnings excluding one-time items totaled $1.09 a share, compared to analysts' expectations for a profit of 99 cents a share.
The results were driven largely by a surge in the company's Parks division. Disney Parks, Experiences and Products revenue jumped 70% to $7.39B, while Disney Media and Entertainment Distribution revenue rose more modestly, by 11% to $14.11B.
The profit effect was larger still: The Parks unit saw operating income jump sixfold, to $2.19B, while the media and streaming side declined 32%, to $1.38B.
Meanwhile, the company added 14.4M Disney+ subscribers, a 31% year-over-year jump that brought that service to 152.1M subscribers. Analysts had forecast Disney (DIS) to add 10M new Disney+ subscribers in the quarter.
With regards to Disney's (DIS) other streaming services, ESPN+ subscribers rose 53% from a year ago, to 22.8M, and Hulu ended the quarter with 46.2M subscribers, an 8% year-over-year increase.
Altogether, those services add up to 221.1M subscribers, seemingly pulling even with Netflix (NFLX)- with the caveat that Disney's (DIS) total count may be double-counting or even triple-counting bundled households.
Disney also made news with streaming structure details. It's boosting its ad-free Disney+ subscription price by a hefty 38%, to $10.99 a month, and introducing its ad-supported Disney+ option at $7.99 a month, starting Dec. 8.
Hulu's ad-free price will go up by $2 a month, to $14.99, as of Oct. 10, while the ad-supported service will rise by $1 a month, to $7.99. And ESPN+ with ads will still be going up 43%, to $9.99 a month.
A bundle of ad-supported Disney+ and ad-supported Hulu will go for $9.99 per month. The bundle of ad-free Disney+ and ad-free Hulu with ESPN+ will add up to $19.99 per month.
Conference call to come at 4:30 p.m. ET.