Disney Earnings Top Expectations After Iger's Return

Revenue beat expectations and subscription numbers hit projections in Disney’s first earnings report since the 71-year-old CEO returned to the company.

Disney stakeholders are eager for Bob Iger — and that’s a good thing for the company as it undergoes what Iger is calling a “significant transformation.” In the first Disney earnings report since his rehiring in November, the 71-year-old CEO isn’t fretting $1.1 billion in Q1 losses as Disney’s ad-supported tier and recent price hikes helped recover the losses.

Overall, Disney’s earnings beat projections as the company continues to navigate a difficult time.

“We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders,” he said on a conference call.

Here’s a quick overview of the Q1 Disney earnings report, obtained by Refinitiv and StreetAccount:

Earnings/Share: 99 cents vs 78 cents expected
Revenue: $23.51 billion vs $23.37 billion expected
Subscriptions: Reached the 161.1 million expected

Not long after Iger took over in November, Disney+ subscriptions increased from $7.99/month to $10.99/month (or an annual rate of $79.99/year to $109.99/year). This was probably the biggest stain in the report as the company announced that it lost roughly 2.4 million subscribers during the quarter — short of the three million they were expected to lose.

Back on the bright side, Disney’s revenue jumped by 21% to $8.7 billion off its parks, experiences, and products division. In January, Disney announced updates to its parks reservation system and annual pass-holder program after consumers complained about wait times and high ticket prices. Additionally, Avatar: The Way of Water sequel generated more than $2 billion in box-office receipts worldwide, as Disney essentially broke even on the film’s $350 million cost.

What’s Next For Disney?

Disney will reorganize business under three segments: Entertainment, ESPN, and Parks, Experiences & Products. This move comes on the heels of Iger’s dismantling of Disney Media & Entertainment Distribution, which his predecessor Bob Chapek created. The new model is giving Disney creative authority to a “world-class creative team” and its “unparalleled brands and franchises,” Iger said on the conference call.

DTC turns to entertainment, while Parks & Resorts will remain in their respective divisions. ESPN is becoming sought after from Disney investors, considering the increased viewership/streaming within sports. Daniel Loeb of Third Point’s — a NYC investment firm and Disney investor — sees ESPN as a potential “stand-alone business and another vertical for Disney to reach a global audience to generate ad and subscriber revenues.”

ESPN+ had 24.9 million paid subscribers at the end of 2022, up from 24.3 million (2%) in 2021.

In 2022, Disney shares fell about 45% — the worst annual stock performance for the company since 1974. The stock is up more than 20% over the past year.