Disney Likely to Post Robust Earnings Growth on Direct-to-Consumer Offerings

Disney+, the company’s flagship streaming service, continued to gain subscribers at a rapid clip

Magic Kingdom, Disney World

AaronP/Bauer-Griffin / Contributor / Getty Images

Disney (DIS) is projected to report strong earnings growth for the first three months of the year as the entertainment giant adds direct-to-consumer (D2C) subscriptions at a rapid pace while revenue from theme parks recovers on an uptick in post-pandemic travel.

Key Takeaways

  • Net income is forecast at $1.29 billion, or 71 cents per share, which is up 171% from the year-ago quarter.
  • Revenues are projected at $21.86 billion, up 13.6% year-over-year and led by a 15.8% gain in the direct-to-consumer segment.
  • Disney+, the company’s flagship streaming service, likely saw subscriber growth of 18.4%, with revenues soaring 27.7% to $2.23 billion.

Net income is forecast at $1.29 billion, or 71 cents per share, which is up a whopping 171% from the year-ago quarter, according to estimates from Visible Alpha. Revenues are projected at $21.86 billion, up 13.6% year-over-year and led by gains in the direct-to-consumer segment (D2C), which generates revenue through subscription fees and advertising.

Disney reports its fiscal second-quarter earnings on Wednesday, May 10, after markets close.

Disney’s direct-to-consumer segment, which includes streaming services Disney+, ESPN+, and Hulu, likely saw revenue growth of 15.8% year-over-year to $5.68 billion, marking the strongest growth pace in three quarters. Total subscriptions to Disney’s D2C offerings are projected at 237.44 million, up 15.5% year-over-year.

Disney Key Metrics
  Q2 FY 2023 (Projection) Q2 FY 2022 Q2 FY 2021
Revenue ($M) 21,859 19,249 15,613
Earnings Per Share ($) 0.71 0.26 0.49
Disney+ Subscriptions (M) 163.1 137.7 103.6

Revenues from Disney theme parks and live experiences were probably also up double digits from a year ago. They’re projected at $7.61 billion, up 14.4% year-over-year. Revenues from Disney’s iconic theme parks took a severe hit during the pandemic amid stay-at-home orders and travel restrictions, tumbling 83% year-over-year in the third quarter of 2020. They’ve since rebounded as restrictions have lifted, surpassing their pre-pandemic peak in the company’s latest fiscal quarter.

Key Metrics

Disney+, the company’s flagship streaming service launched in November 2019, has been the leading driver of revenue growth in the D2C segment. It’s added subscribers at a rapid clip, with total subscriptions projected at 163 million, up 18.4% from the year-ago quarter and compared to just 26.5 million in the first quarter of 2020.

Subscription revenues from Disney+, which are forecast at $2.23 billion, have soared in recent years and were likely up 27.7% from the same period last year. They totaled just $442 million in the first quarter of 2020.

Late last month, Disney sued Florida Gov. Ron DeSantis, amid an ongoing feud with the governor over the company's stance on the controversial Florida Parental Rights and Education Act signed into state law in March of last year.

DeSantis has threatened to strip Disney of its self-governing status and has publicly criticized the company. Disney filed a lawsuit in response, accusing the Florida governor of "a relentless campaign to weaponize government power against Disney in retaliation for expressing a political viewpoint."

Disney also announced last month it would be cutting 7,000 jobs, or about 3% of its 220,000-member workforce, as part of a broader reorganization effort aimed at cutting costs by $5.5 billion.

It's the third wave of layoffs so far this year, with 4,000 positions already cut after CEO Bob Iger returned to lead the company in November. Iger previously served as CEO from 2005 to 2020.

Disney shares are up 14% so far this year, in line with a 13.7% gain in the broader S&P 500 consumer discretionary sector over the same period.

Disney (DIS) Return YTD


Article Sources
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  1. Trefis. "Disney Revenues: How Does DIS Make Money?"

  2. The Walt Disney Company | Investor Relations. "Disney's Q2 FY23 Earnings Results Webcast."

  3. FL.gov. "Governor Ron DeSantis Signs Historic Bill to Protect Parental Rights in Education."

  4. The New York Times. "Disney Sues DeSantis Over Control of Its Florida Resort."

  5. CNBC. "Disney Begins Second, Larger Wave of Layoffs."

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