Yesterday, Disney held its quarterly earnings call and shared its latest earnings report.
The report and call revealed a lot about Disney’s current financial standing, how things are going with Disney+, what the future at the parks might look like, and more. Some important updates were shared during the call, but there are quite a few details that you might have missed. Today we’re breaking down everything you need to know from yesterday’s earnings call!
1 — Disney+ Subscribers Are Up, But Not By That Much
Over the past few months, we’ve been on the lookout for updates as to just how many subscribers Disney+ has acquired. In March of 2021, the service had passed 100 million subscribers. In August of 2021, Disney announced that their streaming service, Disney+, had a total of 116 million subscribers. Just how many subscribers did Disney+ acquire during the most recent quarter?
Well, as of October 2nd, 2021, Disney+ has 118.1 million subscribers. That’s an addition of about 2.1 million in the last quarter. As Deadline notes, this growth is “sharply lower than in the previous quarter,” but is something Disney CEO Bob Chapek had warned would be a possibility.
CNBC shares that “StreetAccount estimated the company would report 125.4 million total Disney+ subscribers as of the fourth quarter.”
Overall, Disney reported $16,319,000 in revenues for direct-to-consumer for the fiscal year (across all of its direct-to-consumer platforms), compared to $10,552,000 during the prior fiscal year. But, operating losses during this past quarter in fiscal year 2021 increased in comparison to the operating losses from the prior year’s quarter.
With Disney+ Day around the corner, only time will tell just how many subscribers Disney+ will acquire in the near future, and whether they’ll ultimately hit their big goals for fiscal year 2024.
Speaking of Disney+, during the earnings call, Disney also shared some updated timelines for 3 BIG titles coming to the service, and a look at when more steady content will be released for fans to enjoy.
2 — Disney Parks Are Making Billions More, But There’s Still a Ways to Go
When it comes to the Disney Parks, revenues are certainly looking up. Revenues for Parks, Experiences, and Products division for Q4 of fiscal year 2021 INCREASED by billions compared to the same quarter of the prior year.
Specifically, “Disney Parks, Experiences and Products revenues for the quarter increased to $5.5 billion compared to $2.7 billion in the prior-year quarter.” Compared to the prior year quarter, the change was 99%.
But, things on the operating income side for parks aren’t looking quite as good as analysts had hoped. When it comes to operating income, the division reported a total of $640 million, compared to a loss of $945 million in the prior year quarter. But, according to Deadline, Disney has “narrowly missed Wall Street expectations.”
While the Disney parks around the world are now open, which greatly impacted the revenue and income for this division, there are still a lot of costs associated with operating the parks.
Disney noted that in order to address government regulations and implement safety measures for employees, guests, and talent, they spent “approximately $1 billion in fiscal 2021.” And they expect that additional costs will have to be incurred in relation to these requirements in the future.
So, while things at the parks (and revenue and income in relation to the division) have changed significantly compared to where things were at this point last year, things didn’t seem to exactly meet Wall Street expectations.
3 — Attendance and SPENDING in the Parks is UP!
After seeing that revenue for the parks division has increased by BILLIONS compared to the prior year quarter, perhaps it comes as no surprise that Disney announced that attendance and spending in the parks is UP!
Specifically, Disney shared that Q4 attendance at Walt Disney World is up “double digits” compared to Q3. And attendance is also growing at Disneyland. So, if you feel like you’re seeing some more people in the parks nowadays, it turns out you are probably right.
Things are also looking fairly good when it comes to the future. Christine McCarthy, Disney’s Chief Financial Officer, said that the “forward-looking demand pipeline for domestic guests at Walt Disney World and Disneyland Resort remains strong.”
Another interesting point mentioned during the earnings call is that 40% of new Magic Key Pass sales in Disneyland went to NEW passholders. While you might have expected most of Disneyland’s old passholders to purchase the Magic Key passes, it seems quite a few NEW individuals decided to buy into the program.
When it comes to the parks, more people aren’t just coming to visit, ride some attractions, and enjoy the scenery. They’re also SPENDING more when they visit. According to McCarthy, guest spending at the domestic parks “continued its strong trend with per caps in the fourth quarter, up nearly 30% versus fiscal 2019.”
That means people in the parks seem to be spending nearly 30% MORE than they did in fiscal year 2019, which was prior to the pandemic. That’s a pretty substantial increase and a sign that things truly seem to be getting back to “normal,” at least in some ways.
4 — People Are Buying Genie+
This year, Disney’s paid FastPass+ replacement program(s) — Disney Genie+ and the related Individual Attraction Selection — launched in Disney World. They’re also set to launch in Disneyland in the future.
We’ve tested Genie+ in the parks, shared a bunch of tips and tricks, and given you our thoughts on the program overall. But, considering the fact that FastPass+ was previously free and Genie+ is a paid program, you might be wondering just how many guests are buying it.
Well, it turns out quite a few guests are making the jump to Genie+. During the earnings call, Disney CEO Bob Chapek actually noted that 1/3 of park guests in Disney World have upgraded to Genie+.
That’s a fairly substantial number, particularly when it comes to looking at spending in the parks (which, again, we mentioned is up). Disney CEO Bob Chapek even said, “I’m not sure if everyone appreciates the gravity of this to the Genie+ success, one-third of our guests at Walt Disney World are buying the Genie+ upgrade at $15, that’s per guest per day. And that is a very, very material increase for us in per caps, but also in margins.”
5 — Recovery of International Visitors Is Going to Take a While
For several months, the United States has had a number of travel restrictions in place, preventing quite a lot of international leisure travel. But, on November 8th, 2021, that all changed. Starting that day, new international travel restrictions were put in place, and international visitors from several countries are now able to enter the U.S. (provided they meet certain health requirements).
During the earnings call, McCarthy shared that Disney is looking forward to the return of its international visitors at the domestic parks and resorts. But, just how quickly will Disney recover its regular flow of international visitors? Well, things aren’t going to change as quickly as you might expect.
McCarthy said that Disney doesn’t “expect to see a substantial recovery in international attendance at our domestic parks until toward the end of fiscal 2022.” McCarthy noted that this was the case particularly due to “longer vacation planning lead times.”
So, while more international visitors can and likely will visit the parks soon, things are going to take a while before they’re back to “normal” on that front.
6 — Cost Cutting Measures Might Be Coming Soon (Including Portion Size Adjustments)
During the call, one individual asked about inflation and just what Disney is doing to mitigate those concerns. In response, McCarthy noted that it is something that’s at the top of a lot of companies’ minds right now, including Disney’s.
McCarthy shared that they’ve talked about the increase in price of content. She noted that she’s also been discussing the issue with the parks team and they’ve discussed a number of potential options.
McCarthy said there’s a lot of things “worth taking about. We can adjust suppliers. We can substitute products. We can cut portion size, which is probably good for some people’s waistlines. We can look at pricing where necessary. But we aren’t going to go just straight across and increase prices.”
McCarthy said, “we’re really trying to use our heads here to come up with a way to kind of mitigate some of these challenges that we have.”
While Disney hasn’t said exactly what measures will ultimately be put in place, McCarthy’s comments seem to suggest that things like cutting portion sizes could be on the table. Thats’ something we’ll definitely be on the lookout for.
7 — Things Aren’t Going Quite as Well as Some Predicted
While Disney+ has more subscribers, the parks earned billions more in terms of revenue compared to the prior year quarter, and other things are looking up, Disney hasn’t quite hit the financial marks Wall Street forecasters had in mind, according to Deadline.
The total revenue for Disney for the quarter ending on October 2nd, 2021, was $18,534,000, up 26% from the prior year quarter, but still below analysts’ expectations.
In terms of media, the company released some big films (like Shang-Chi and the Legend of the Ten Rings) during the last quarter and got good results. But, as CNBC notes, “However, higher operating and marketing costs led the company’s content sales and licensing segment to post an operating loss of $65 million during the quarter.”
Ultimately, Disney’s stock has seen the impact of missing some analysts’ expectations. As of around 11:17AM ET on November 11th, the stock was down about $12.
Still, the stock value is higher than it was around this time last year.
Only time will tell how things continue to go for the company. We’ll keep an eye out for more updates and we’ll be sure to share those with you.
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What news from yesterday’s earnings call and report surprised you the most? Tell us in the comments.