By Dhirendra Tripathi
Investing.com – Walt Disney stock (NYSE:DIS) was up almost 5% in Friday’s premarket trading as people returned to its theme parks and more users paid for its streaming services to help its third-quarter earnings beat estimates comfortably.
Earnings per share for the quarter ended July 3 came in at 80 cents, well past the 54 cents analysts estimated.
A good part of Disney’s business of theme parks, movie production and cruises was shut last year due to the pandemic-induced lockdown. One of them rolled on and that was the streaming operations.
According to Reuters, reservations at the company's two U.S. parks, including the flagship Walt Disney World, remained strong, and are currently outpacing attendance for the quarter that just ended.
Florida, Walt Disney World’s home, is the epicenter of the latest surge in COVID cases.
Disney Parks, experiences and products revenue for the quarter increased to $4.3 billion compared to $1.1 billion in the prior-year quarter as people thronged public spaces after a year of being closeted at home.
Across its three online subscription offerings of Disney+, Hulu and ESPN+, the company gained close to 15 million new subscribers to close the quarter with 174 million.
Disney+ had 116 million paying customers at the end of the quarter, more than doubling its base in a year to emerge as a rival to Netflix (NASDAQ:NFLX) which had 209 million subscribers at the end of June.
Revenue of the direct-to-consumer business, which includes Disney+ and Hulu, rose 57% to $4.3 billion while operating loss more than halved to $293 million. At both Hulu and Disney, subscription revenue rose while programming costs weighed.
Domestic channels revenue for the quarter increased 13% to $5.6 billion and operating income decreased 37% to $1.8 billion. The decrease in operating income was due to a decrease at cable and to a lesser extent, at broadcasting, the company said.
Disney attributed the decrease at cable to higher programming and production costs and to a lesser extent, an increase in marketing costs, partially offset by higher advertising.
Programming and production costs rose due to the return of live sports events.
The company's overall revenue rose 45% to $17.02 billion in the third quarter, topping analysts' estimate of $16.76 billion, according to a poll by Investing.com