Walt Disney Co (NYSE: DIS) reported lower-than-anticipated fiscal 2022 second-quarter earnings and revenues. However, the company reported better than anticipated Disney+ subscriber additions in the latest quarter. Following the mixed results, the stock lost $0.90 or 0.86% to close at $104.31.
The Burbank, California-based Walt Disney reported second-quarter revenues of $19.25 billion, an increase of 23% from $15.61 billion in the comparable period last year.
For the quarter ended April 2, 2022, the media and entertainment company posted a net income of $470 million, or $0.26 per share, down from $901 million, or $0.49 a share in the quarter ended April 3, 2021.
Excluding contract license early termination, amortization of intangible assets, and restructuring and impairment charges, among others, 2Q22 adjusted earnings were $3.072 billion, or $1.08 per share, an increase from $1.944 billion, or $0.79 a share in 2Q 2021.
Wall Street analysts had anticipated the company to report earnings of $1.17 per share on revenues of $20.10 billion.
One of the reasons for the earnings miss could be due to an amendment in tax rules, which resulted in the company’s effective tax rate rising to 45.80% in the latest quarter, from 8.80% last year. Disney also recorded a $1 billion charge linked to the termination of content licensing deals.
Segment-wise,
- Disney media and entertainment distribution revenues rose by 9% y-o-y to $13.62 billion. Specifically, linear network revenues were $7.116 billion, an increase of 5% from the past year. Direct-to-Consumer revenues surged 23% y-o-y to $4.903 billion. Content sales/licensing revenues fell by 3% y-o-y to $1.866 billion.
- Disney Parks, Experiences, and Products revenues were $6.65 billion, up 100% from the prior year. Domestic parks & experiences revenues were $4.898 billion, an increase from $1.735 billion last year. International revenues were $574 million, up more than 100% from $262 million. Consumer products revenues remained almost flat at $1.180 billion.
Regarding the channel in Russia, Walt Disney also recorded an impairment charge of $195 million. The company has started taking steps to move out of Russia after the country invaded Ukraine.
Notably, Disney+ subscribers jumped 33% to 137.70 million in Q2 2022, from 103.60 million in Q2 2021. The StreetAccount analysts had forecast 135 million subscribers.
During the latest quarter, the company’s Disney+ division added 7.90 million subscribers, beating forecasts calling for subscriber additions in the range of 4.50 million to 5 million. Also, Hulu added 300,000 subscribers, while ESPN posted 1 million subscriber additions.
At the end of the second quarter, Hulu has 45.60 million subscribers, an increase of 1% from the previous year. Likewise, ESPN+ had 22.30 million subscribers, reflecting a jump of 62% from the prior year.
The quarterly earnings miss and better-than-anticipated subscriber additions are expected to keep the stock range-bound in the short term.
The historical price chart indicates that the stock of Disney has been on a decline after failing to rebound at 130 levels, where minor support exists. The next major support is anticipated only near 95. Additionally, the stock is trading below its 50-day moving average. Notably, the Ulcer Index indicates that the stock is nearing the oversold region. Therefore, we can expect a technical rebound after testing the support band (95-100).
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