Disney earnings beat estimates but stocks drop on subscriber miss

Disney (DIS) reported fiscal third quarter earnings after the bell on Wednesday that beat expectations after the company revealed its flagship sports network ESPN has struck a $2 billion deal with Penn Entertainment (PENN) to launch ESPN Bet, a branded sportsbook.

Still, Disney+ subscribers missed estimates in the quarter, causing shares to slide as much as 2% in after-hours trading.

The company reported 146.1 million total Disney+ subscribers, a 7.4% decline from the previous quarter. Analyst polled by Bloomberg had expected a narrower loss of 154.8 million paying users.

Amid Disney’s continued efforts to slash $5.5 billion in costs this year, streaming losses came in at $512 million compared to a loss of $1.1 billion in the prior-year period and significantly ahead of estimates of a loss of $777 million. The company reported a streaming loss of $659 million in Q2 and a $1.1 billion loss in Q1.

Iger, who stepped back into the CEO position in November and recently accepted a contract extension through the end of 2026, has remained hyper-focused on profitability.

The executive has consistently reaffirmed the company’s outlook of reaching streaming profitability by the year 2024, aided by new revenue streams like Disney’s recently launched ad-supported tier, in addition to various price increases to help pare losses and lift metrics like average revenue per user, or ARPU.

Here are Disney’s third-quarter results compared to Wall Street’s consensus estimates, as compiled by Bloomberg:

Revenue: $22.33 billion versus $22.51 billion expected

Adj. earnings per share (EPS): $1.03 versus $0.99 expected

Total Disney+ subscribers: 146.1 million versus 154.8 million expected 

Disney Parks, Experiences and Products revenue: $8.33 billion versus $8.25 billion expected

Disney Media and Entertainment Distribution revenue: $14 billion versus $14.36 billion expected

On the parks side of the business, operating income came in at $2.43 billion, ahead of estimates of $2.39 billion and above Q3 2022’s $2.19 billion total.

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