• Brett Schafer

Three Important Numbers from Disney’s Earnings

Disney reported its first quarter 2019 earnings after the bell on Tuesday, beating Wall Street expectations on the top and bottom lines. The stock jumped a meager 2% after hours and then retreated after the algorithmic buying faded.

Here are the big numbers from the report:

  1. Earnings excluding one-time expenses of $1.84 a share, down 3% Y/Y but above $1.55 expected from analysts

  2. Revenue of $15.3 billion, flat Y/Y and barely beating expectations

For Disney shareholders this is again a quarter where the bottom and top lines didn’t move much as the company continues to (very slowly, I might add) transition to video streaming.

Here are the three most interesting things I saw in the earnings report:

  1. ESPN+ doubled subscribers to 2 million in five months

  2. Theme Parks operating income up 10% to $2.2 billion even though international comps were down

  3. Disney+ still set to launch in late 2019

Image result for disney

Theme Parks crushed it this year.

At $5 a month, ESPN+ has been a solid success for Disney since launching less than a year ago. Right now investors should focus on subscriber growth numbers, which is the most important for recurring revenue businesses models. If they can grow subscribers to 25 million that will be a relatively easy $1.5 billion in extra revenue annually.

CEO Bob Iger said streaming is the company’s “number one priority” at the moment. They are going for a three-headed monster of ESPN+, Disney+, and Hulu as they try and fight the OG streaming giant Netflix. Iger actually took a not-so-subtle shot at the tech giant, stating that “When presented with an overabundance of choice, consumers look to brands they know … to find what they actually want.” As a Disney shareholder, here’s to hoping he is correct.

Disclosure: The author may have interest in the stocks talked about.

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