Disney Streaming Service Tops 26M Subscribers, Company Beats Earnings Estimates

Walt Disney Co DIS topped 26 million subscribers for its new Disney+ streaming service and reported fourth-quarter earnings and revenue beats.

While the earnings and revenue numbers were good news, investors and analysts were closely watching the much-anticipated streaming subscriptions number.

Disney shares were up about 2% immediately after the release, but quickly gave back the gains in after-hours trading.

Disney said its $7-a-month streaming service hit 26.5 million subscribers on Dec. 28. The company has set a five-year goal of 60 million to 90 million subscribers for the streaming service worldwide.Average monthly revenue per paid subscriber was $5.56.

"We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations," said Disney chairman and CEO Robert Iger.

EPS, Revenue Beat Estimates

Disney put up earnings of $1.53 per share, beating analysts' expectations for $1.46 by 4.8%. Quarterly revenue came in at $20.86 billion, beating the Street's $20.78 billion estimate.

While revenue was up more than 36% over the same quarter a year ago, earnings per share declined as the company spent money to build its new streaming service, which it rolled out in November.

Disney+ launched Nov. 12, and said 10 million people signed up right away, though some were on a free offer for customers of Verizon Communications Inc. VZ. The service also likely picked up a number of subscribers because of the buzz around its first hit series, "The Mandalorian."

“Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment," Iger said.

Year-over-year revenue was up in Disney's media networks unit, and its parks division, where revenues for the quarter increased 8% to $7.4 billion. Growth at domestic parks and results was mostly due to higher guest spending, the company said.

China Concern

Disney said a drop in operating income at international parks and resorts was due to lower results at Hong Kong Disneyland due to decreases in attendance and occupied room nights "reflecting the impact of recent events." Hong Kong has recently been affected by the coronavirus outbreak in China.

Huge Studio Year

The studio division had a blockbuster 2019. Disney dominated the last quarter, and all of 2019, at the big screen box office. Last year's "Avenger's Endgame" was the highest grossing movie of all time and Disney had seven of the top 10 grossing films last year, raking in just over $11 billion. "Frozen 2," which was on screens during the December quarter, was also a big part of that success.

Studio Entertainment revenues for the quarter increased from $1.8 billion to $3.8 billion.

DIS Stock Price

Disney's stock closed at $144.73 per share.

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Photo courtesy of Disney.