Walt Disney Company’s Q2 2022 Earnings Results

The Walt Disney Company stock closed for the day at $105.25 a share before reporting their earnings for the second quarter (Q2) of fiscal year 2022 which ended on April 2, 2022. Revenues for the quarter and six months grew 23% and 29%, respectively, despite a $1.0 billion reduction for the amount due to a customer to early terminate license agreements for film and television content delivered in previous years in order for the Company to use the content primarily on our direct-to-consumer services. EPS from continuing operations for the six months ended April 2, 2022 increased to $0.89 from $0.52 in the prior-year period. Excluding certain items, EPS for the six months increased to $2.14 from $1.11 in the prior-year period.

“Our strong results in the second quarter, including fantastic performance at our domestic parks and continued growth of our streaming services—with 7.9 million Disney+ subscribers added in the quarter and total subscriptions across all our DTC offerings exceeding 205 million—once again proved that we are in a league of our own,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “As we look ahead to Disney’s second century, I am confident we will continue to transform entertainment by combining extraordinary storytelling with innovative technology to create an even larger, more connected, and magical Disney universe for families and fans around the world.”

Diluted earnings per share (EPS) from continuing operations for the quarter decreased to $0.26 from $0.50 in the prior-year quarter. Excluding certain items, diluted EPS for the quarter increased to $1.08 from $0.79 in the prior-year quarter..

The Parks, Experiences and Products segment (which includes Disney Cruise Line) saw revenues for the quarter increased to $6.7 billion compared to $3.2 billion in the prior-year quarter. Segment operating results increased by $2.2 billion to income of $1.8 billion compared to a loss of $0.4 billion in the prior-year quarter. Higher operating results for the quarter reflected increases at our domestic parks and experiences businesses and, to a lesser extent, at our international parks and resorts and merchandise licensing businesses.

Operating income growth at our domestic parks and experiences was due to higher volumes and increased guest spending, partially offset by higher costs. Higher volumes were due to increases in attendance, occupied room nights and cruise ship sailings. Cruise ships operated at reduced capacities in the current quarter while sailings were suspended in the prior-year quarter. Guest spending growth was due to an increase in average per capita ticket revenue, higher average daily hotel room rates and an increase in food, beverage and merchandise spending. The increase in average per capita ticket revenue was due to a favorable attendance mix and the introduction of Genie+ and Lightning Lane in the first quarter of the current fiscal year. Higher costs were primarily due to volume growth, cost inflation and higher marketing spending. Our domestic parks and resorts were open for the entire current quarter, whereas Disneyland Resort was closed for all of the prior-year quarter, and Walt Disney World Resort operated at reduced capacity in the prior-year quarter due to COVID-19 restrictions.

Improved results at our international parks and resorts was due to growth at Disneyland Paris, partially offset by decreases at Hong Kong Disneyland Resort and Shanghai Disney Resort. Higher operating results at Disneyland Paris were due to increases in attendance and occupied room nights, partially offset by higher operating costs due to volume growth and increased marketing costs. The decreases at Hong Kong Disneyland Resort and Shanghai Disney Resort were driven by lower attendance. Disneyland Paris was open for the entire current quarter and closed for all of the prior-year quarter. Hong Kong Disneyland Resort was open for 3 days in the current quarter compared to 33 days in the prior-year quarter. Shanghai Disney Resort was open for 78 days in the current quarter and open for all of the prior- year quarter. Tokyo Disney Resort was open for the entire quarter in both the current and prior years.

Growth in merchandise licensing was driven by higher sales of merchandise based on Mickey and Minnie, Spider-Man, Star Wars Classic and Disney Princesses, partially offset by lower minimum guarantee shortfall recognition.

COVID-19 and measures to prevent its spread have impacted The Walt Disney Company’s segments in a number of ways, most significantly at the Disney Parks, Experiences and Products segment where the theme parks and resorts were closed and cruise ship sailings and guided tours were suspended. These operations resumed at various points since May 2020, initially at reduced operating capacities as a result of COVID-19 restrictions. In fiscal 2020 and 2021, Disney delayed, or in some cases, shortened or canceled theatrical releases. In addition, Disney experienced significant disruptions in the production and availability of content, including the delay of key live sports programming during fiscal 2020 and fiscal 2021.

In fiscal 2022, Disney’s domestic parks and resorts are generally operating without significant COVID-19- related capacity restrictions, such as those that were in place in the prior year. Certain of the company’s international parks and resorts and cruise ship operations continue to be impacted by COVID-19-related closures and capacity and travel restrictions. At the Disney Media and Entertainment Distribution segment, Disney’s film and television productions have generally resumed, although Disney experienced disruptions of production activities depending on local circumstances. The company has generally been able to release films theatrically in the first half of fiscal 2022, although certain markets continue to impose restrictions on theater openings and capacity.

Disney incurred, and will continue to incur, costs to address government regulations and the safety of employees, guests and talent, of which certain costs are capitalized and will be amortized over future periods.

There was no additional details regarding Disney Cruise Line in the press release. We will update this post if we hear anything during the earnings call and Q&A.

For more information and an overall report click over to the Q2-2022 Earnings Report.

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