Here are the key numbers:
- Earnings per share: $1.53 per share vs. $1.44 per share expected, according to analysts surveyed by Refinitiv
- Revenue: $20.86 billion vs. $20.79 billion expected, per Refinitiv
The results mark Disney’s first earnings report since the launch of its new streaming service, Disney+, last November. In the earnings release, Disney CEO Bob Iger said the service has “exceeded even our greatest expectations.”
Disney+ now has 26.5 million subscribers, which is up from the 10 million sign-ups it registered for the service after it launched November 12. Disney said the average monthly revenue per paid Disney user was $5.56.
On the company’s earnings call, Iger said about 20% of the 26.5 million subscribers who signed up for Disney+ did so through a free trial with Verizon. Roughly 50% of subscribers signed up for the service through the Disney+ site and “many of them have bought a year-long service or even a three-year” subscription, Iger said.
Iger added that “both conversion from free to pay and churn rate were better than expected.” Churn refers to the pace at which users sign up for and cancel subscriptions.
Disney also did not update its guidance for the service. The company previously forecast between 60 million and 90 million subscribers by the end of its 2024 fiscal year. Iger said on the call that it’s “far too early” in the rollout of Disney+ to change the guidance, especially as the service has yet to launch in some international markets.
“Well, it’s obviously a very good start, but we are not updating our guidance today,” Bob Iger, CEO of Disney told Julia Boorstin on CNBC’s “Closing Bell” on Tuesday. “We will say something on the call about subs between the end of the quarter, the end of December and where we are as of yesterday. But we are not updating our guidances.”
ESPN+ now counts 6.6 million subscribers and Hulu has 30.4 million total subscribers. Hulu reported average monthly revenue per paid subscriber of $59.47 during the quarter. Meanwhile, ESPN+ reported average monthly revenue per paid subscriber of $4.44, which was a 5% decline from the year ago period.
Disney blamed the decline on a “shift in the mix of subscribers” to its bundled subscription package of Disney+, ESPN+ and Hulu, which has a lower average retail price per service compared to the average retail price of each service on a standalone basis.
Revenue for Disney’s Parks, Experience and Products segment grew 8% year over year to $7.4 billion during the quarter, while operating income increased 9% to $2.3 billion. The company said operating income growth during the quarter was partially offset by lower results at its international parks and resorts.
Disney’s international parks and resorts were hit by the protests in Hong Kong, as well as the coronavirus outbreak. The company is one of numerous U.S. companies that have suspended operations in China as the coronavirus outbreak worsens. The company closed its Shanghai Disney resort on Jan. 25 until further notice and temporarily closed its Hong Kong Disneyland Park.
The company said the recent closures of its parks in Shanghai and Hong Kong will negatively impact its fiscal second quarter and full year results, but the extent of the impact will depend on how long the parks remain closed. Disney said it expected operating income at Shanghai Disney to fall by $135 million in the fiscal second quarter, while Hong Kong Disneyland could see its operating income decline by about $145 million for the second quarter.
Operating income at Hong Kong Disneyland fell by $80 million during the fiscal first quarter due to lower attendance and hotel occupancy as a result of protests in the region.
This story is developing. Check back for updates.