Walt Disney Co eased concerns Wednesday about the future of streaming video by grabbing 7.9 million new Disney+ customers, though the company warned that supply chain disruptions and rising wages could strain finances. .
Wall Street expected 5.3 million new Disney+ customers from January to March. Disney still has a long way to go to hit ambitious multi-year goals, but its growth buoyed investors after losses at Netflix Inc.
The entertainment giant is working to offset inflationary pressures and challenges in the global supply chain, executives said on a call with analysts.
“At this time, it is very difficult to accurately forecast the potential financial impact due to the fluidity of the situation, but you can trust that we are fully aware of this and are working hard to mitigate any pressure on the margin,” said CFO . Officer Christine McCarthy.
Shares of the company, which initially rose after the earnings report, fell 3% in trading after the call closed.
Disney needs to average nearly 9.1 million new customers per quarter to reach the low end of its goal of adding 230 million to 260 million Disney+ subscribers by the end of September 2024. Chief Executive Officer Bob Chapek reiterated that goal Wednesday.
The world’s largest entertainment company has staked its future on building a streaming TV business to compete with Netflix, the company that first brought mass audiences to subscription video.
Netflix flummoxed Wall Street last month when the company revealed it lost subscribers in the first three months of 2022 and forecast more churn through June.
Netflix’s results weighed on media stocks and prompted investors to reassess their expectations for online video.
Total subscriptions for Disney+, launched in November 2019, reached 137.7 million, the company said on Wednesday, helped by new releases including Marvel’s “Moon Knight” series and Pixar’s “Turning Red.” “.
“Despite less-than-optimal results overall, due to positive streaming numbers, Disney will do well,” said Shahid Khan, a partner at Arthur D. Little, a technology and management consulting firm. “As households rationalize their streaming options, given inflation, Disney+ is going to become one of the best options and it’s going to become a real threat to Netflix.”
Disney reported adjusted earnings per share of $1.08, below analyst forecasts of $1.19, according to IBES data from Refinitiv, impacted by an increase in the effective tax rate on foreign earnings.
Revenue came in at $19.2 billion, below the consensus estimate of $20.03 billion. The company said revenue was hit by a $1 billion hit from the early termination of a movie and TV licensing deal so Disney could use programming on its own streaming services.
Disney’s theme park business continued to rebound strongly after prolonged pandemic-related closures and attendance restrictions. Reuters