Disney Amazed Markets by Posting Incredibly Strong Quarterly Results

Walt Disney Company (DIS) was in focus of global investment community by beating expectations on top and bottom lines and surprised to the upside on Disney+ subscribers, while introducing a heavy price hike as part of its new streaming structure.

In numbers, revenues rose 26% for the quarter, to $21.5 billion, a half-billion-dollar beat of expectations. Income from continuing operations before taxes more than doubled, to $2.12 billion, and its operating income rose 50% to $3.57 billion. Furthermore, earnings per share from continuing operations jumped to $0.77 per share, while adjusted EPS came to $1.09, vs. expectations for 99 cents a share.

The results were driven largely by a surge in the company's Parks division. Disney Parks, Experiences and Products revenues jumped 70% to $7.39 billion, while Disney Media and Entertainment Distribution revenue rose more modestly, by 11%to $14.11 billion. However, the profit impact was much broader: The Parks unit saw operating income jump sixfold, to $2.19 billion, while the media/streaming side declined 32%, to $1.38B.

Meanwhile, the company added 14.4 million Disney+ subscribers (again, above expectations for 10 million) which represented a 31% YoY jump that brought that service to 152.1 million. ESPN+ subs rose to 22.8 million (up 53% YoY), and Hulu subs rose to 46.2 million (up 8%). Those add up to 221.1 million subscribers, seemingly upstaging even Netflix.

Disney also made news with the structure of its streaming services, allowing to assume it is currently leading the industry. That fact allowed the company to boost its ad-free Disney+ subscription price by a hefty 38%, to $10.99 per month, and introduce its ad-supported Disney+ at $7.99 per month, starting Dec. 8. We are impressed by DIS’s solid performance and flawless business management and reiterate our “BUY” rating.