The big crowds we’ve been seeing in Disney World recently might indicate that The Walt Disney Company has been doing “okay” financially from a parks perspective, but dropping stock numbers could show a different picture. Now we’ve got a much better idea of where things stand as Disney has released their quarterly earnings report for the second quarter of fiscal year 2022.
The Earnings Report for the Second Quarter of Fiscal Year 2022 covers some early months in 2022, ending on April 2nd, 2022. These early months had some pretty major events for Disney. We saw restaurants reopen in the parks, the release of a popular Marvel show on Disney+, a couple of big announcements about ongoing projects, and more. So how are the parks, Disney+, and other aspects of the company REALLY doing? Let’s see the numbers.
Overall Financial Results
Overall, Disney has shared that revenues for this past quarter (Q2 of FY 2022) and six months grew 23% and 29% respectively, despite a reduction of $1.0 billion for certain amounts due to the end of certain license agreements and other matters.
Certain diluted earnings per share numbers DECREASED while others increased. Specifically, “Diluted earnings per share (EPS) from continuing operations for the quarter decreased to $0.26 from $0.50 in the prior-year quarter.” But, excluding certain items, the “diluted EPS for the quarter increased to $1.08 from $0.79 in the prior-year quarter.”
When you look at the EPS from continuing operations for the 6 month period that ended on April 2nd, 2022, that EPS actually increased to $0.89 compared to $0.52 in the prior-year’s period.
According to Variety, these numbers fell short of analysts’ expectations. Overall revenues were $19.25 million for the quarter, compared to the expectation that they would be closer to $20.05 billion. Additionally, diluted earnings per share (excluding certain things) were $1.08, whereas analysts had predicted $1.19.
Still, Disney CEO Bob Chapek expressed a sense of optimism moving forward. In the earnings report, Chapek shared, “Our strong results in the second quarter, including fantastic performance at our domestic parks and continued growth of our streaming services—with 7.9 million Disney+ subscribers added in the quarter and total subscriptions across all our DTC offerings exceeding 205 million—once again proved that we are in a league of our own.”
Chapek continued by saying, “As we look ahead to Disney’s second century, I am confident we will continue to transform entertainment by combining extraordinary storytelling with innovative technology to create an even larger, more connected, and magical Disney universe for families and fans around the world.”
Let’s look a little further into some of the specific numbers.
Impact of COVID-19
In many ways, Disney is returning to a state of “normal” in the theme parks and with theatrical releases. Recently, face mask mandates were dropped in all areas in Disney World and Disneyland except at certain portions of First Aid stations. And a few of the latest movies have had very successful opening weekends at the box office in theaters.
But is COVID-19 still affecting Disney’s earnings? Disney does continue to be impacted by COVID-19 in some ways. In the earnings report, Disney notes, “COVID-19 and measures to prevent its spread have impacted our segments in a number of way.”
When it comes to the parks and resorts, Disney shared that they are “generally operating without significant COVID-19-related capacity restrictions, such as those that were in place in the prior year.”
But, some of their “international parks and resorts and cruise ship operations continue to be impacted by COVID-19-related closures and capacity and travel restrictions.” We certainly saw that with things like the closure of Shanghai Disneyland (which still does not have a reopening date).
In terms of media, Disney shares that their film and TV products are generally back, but they have “seen disruptions of production activities depending on local circumstances.” Most Disney films have been able to be released in theaters during fiscal 2022, but some markets are still imposing restrictions when it comes to openings and capacity.
Disney shares, “We have incurred, and will continue to incur, costs to address government regulations and the safety of our employees, guests and talent, of which certain costs are capitalized and will be amortized over future periods.”
Click here to see 18 rules to follow now that normal character meet-and-greets are back in Disney World
Disney Parks, Experiences, and Products
When it comes to Parks, Experiences, and Products, revenues for this past quarter (Q2 of FY 2022) are more than DOUBLE what they were during the prior-year quarter. Specifically, Disney shared that “revenues for the quarter increased to $6.7 billion compared to $3.2 billion in the prior-year quarter.” The segment operating results also increased to an “income of $1.8 billion compared to a loss of $0.4 billion in the prior-year quarter.”
According to Disney, this operating income growth at the domestic parks was due to higher volumes and INCREASED guest spending. What brought about higher volumes? Disney notes that the higher volumes were due to “increases in attendance, occupied room nights and cruise ship sailings.”
Guest spending has also grown in the parks. According to Disney, the growth in guest spending was due to “an increase in average per capita ticket revenue, higher average daily hotel room rates and an increase in food, beverage and merchandise spending.”
The increase in that per capita ticket revenue is due to a number of factors including the introduction of Genie+ and Lightning Lanes.
Things in this quarter are also dramatically different than they were a year ago. During Q2 of fiscal year 2022, the domestic parks were open for the whole time, while Disneyland was actually closed during the prior-year quarter and Disney World was operating at a reduced capacity during the prior-year quarter.
There were some more complex situations when it comes to the international parks as some, like Hong Kong Disneyland, were actually open for less days in the current quarter compared to the prior-year quarter, but there was some improved results at certain international parks.
When it comes to merchandise, Disney shared that the growth in licensing was “driven by higher sales of merchandise based on Mickey and Minnie, Spider-Man, Star Wars Classic and Disney Princesses.”
Here’s a look at some of the parks numbers.
You can see where Parks & Experiences reached a total of $4,898,000,000 in this quarter, compared to just $1,735,000,000 in the same quarter in 2021.
Disney+ Subscriber Numbers
Disney has been ambitious with their goals for Disney+ subscriber numbers. We’ve seen the number of subscribers rising over the past few quarters, and this time is no different.
Overall, the total number of Disney+ subscribers during Q2 of 2022 is 137.7 million.
The numbers also EXCEEDED analysts’ expectations, which had Disney+ only getting to 135 million subscribers during Q2. (CNBC)
In terms of other media updates, Disney shared that ESPN viewership is up with ratings up double digits.
You can also see that Hulu subscriptions are also up compared to the prior-year quarter.
In terms of media generally, linear networks saw an increase in revenue compared to the prior-year quarter, though operating income decreased. Direct-to-consumer revenue also increased compared to the prior year quarter, and operating losses increased.
According to Disney, “The increase in operating loss was due to higher losses at Disney+ and ESPN+ and lower operating income at Hulu.”
For Disney+ those lower results were a reflection of “higher programming and production, marketing and technology costs, partially offset by an increase in subscription revenue.” There was, however, “Higher subscription revenue” that was “due to subscriber growth and increases in retail pricing.”
You can see in the chart below how Disney+ average monthly revenue per paid subscriber increased compared to the prior-year quarter.
Inflation, Park Passes, and More
During the earnings call, we also got to hear Disney’s executives discuss inflation, supply chain issues, and how the Company is addressing those. To see more on that topic, click here.
In terms of Park Passes, we got an update on that too. During the earnings call, Disney CEO Bob Chapek commented on the Park Pass system, how Disney is still controlling attendance, and how that system has worked for them so far. To see his full comments, click here.
When it comes to the Star Wars Hotel, Disney shared news on that as well. Specifically, Disney’s executives commented on predicted availability at the hotel, and if things play out as they expect, the hotel could be VERY busy this year. Click here to see more about these comments.
Those are the biggest updates from the earnings report and call for now. Keep following DFB for more of the latest news from Disney!
Which statistics from Disney’s Second-Quarter Earnings Call are surprising to you? Let us know in the comments.