The magic is back.
Walt Disney (DIS 0.85%) recently announced a 45% sales spike for the fiscal third quarter (which ended July 3). While most of that revenue jump is due to the rebound from the pandemic-fueled demand collapse at parks and movie theaters a year ago, the entertainment giant is setting all-time records, too.
CEO Bob Chapek and his team broke down the booming Q3 performance, which was driven by big gains in its streaming-subscription channels and a triumphant return of theme-park attendance. Let's look at a few highlights from that presentation.
1. We're staying flexible
Numerous breakout hits from our beloved brands, including Pixar's Luca and Marvel's Loki, and The Falcon and the Winter Soldier have contributed to strong engagement and new subscriber growth in core Disney+ markets. -- Chapek
Disney's streaming-subscription numbers got most of the investors' attention immediately following the earnings report. But it's the pricing strength the company is seeing today that should really excite investors.
Average monthly spending by users on the platform rose to $6.12, compared to $5.61 three months ago. Not only are fans taking recent price increases in stride, but they're also eagerly paying up for quicker access to premium releases like Cruella.
Extra earnings from that release on Disney+ goosed profitability and implies a potentially huge revenue stream ahead -- one that streaming peer Netflix has shunned so far. But Disney's management said they're staying flexible about how they launch new feature-film content.
"Distribution decisions are made on a film-by-film basis," Chapek said. "We will continue to utilize all available options going forward."
2. People are paying up for experiences
Attendance levels were generally at or near our daily capacity levels, which increased throughout the quarter. -- CFO Christine McCarthy
Investors were expecting some head-turning rebound metrics at Disney's parks, but Wall Street underestimated the demand for in-person entertainment following pandemic restrictions in 2020. The division added over $3 billion to its sales base, as consumers flocked back to theme parks and resorts. Walt Disney World operated at full capacity for essentially the entire quarter, even as the company slowly boosted its attendance capacity with each passing week.
People shelled out for food and merchandise while visiting the parks, too. "Guest spending at our domestic parks has been exceptionally strong," McCarthy said, "with [average spending] up significantly versus fiscal 2019."
3. It's full speed ahead
We will maximize the synergy of our unique ecosystem to further deepen consumers' connection to our characters and stories and we will use the power of our far-reaching platforms and emerging technologies to better anticipate what our consumers want. -- Chapek
Disney is planning an unusually busy end to the calendar year that could lift all aspects of the business into 2022. New theme-park attractions and an upgraded tiered pricing system are on the way, along with a flood of premium content to the Disney+, ESPN+, and Hulu platforms. Disney is aiming to take full advantage of its wider portfolio in bundling these services in its new marketing.
This aggressive growth posture is another reason for investors to believe the entertainment giant isn't just rebounding from a weak year-ago period, but it is also headed toward higher annual earnings than shareholders saw even before the pandemic struck.