Disney’s flagship streaming service grew at a slower pace than expected during a fourth quarter in which the entertainment giant missed Wall Street’s projections across the board, according to an earnings release on Wednesday.
Disney+ had 118.1 million global paid subscribers as of the end of the fourth quarter, an increase of 2.1 million subscribers for the quarter and 60% compared to the same quarter one year earlier. However, Wall Street analysts expected the company to end the quarter with 126.2 million subscribers, according to estimates from FactSet. Disney+ generated average monthly revenue per paid subscriber of $4.12, down 9% compared to last year.
Despite the disappointing growth, Disney CEO Bob Chapek said the company expects to hit its target for 230 million to 260 million Disney+ subscribers by the year 2024. During Disney's earnings call, CFO Christine McCarthy said the company expects subscriber growth to accelerate in the second half of fiscal 2022 as it ramps up content releases, adding the streaming service is on track to achieve profitability by fiscal 2024.
The company posted adjusted earnings per share of 37 cents for the quarter after posting a loss in the same quarter one year earlier but fell short of Wall Street’s earnings estimate of 51 cents per share. Quarterly revenue was $18.53 billion versus an expected $18.79 billion.
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"This has been a very productive year for The Walt Disney Company, as we’ve made great strides in reopening our businesses while taking meaningful and innovative steps in Direct-to-Consumer and at our Parks, particularly with our popular new Disney Genie and Magic Key offerings," Chapek said in a statement.
Chapek warned in September that the company was experiencing "headwinds" in its streaming business, a key source of its growth in recent years. At the time, Chapek said the company expected the Disney+ global subscriber base to post "low-single-digit" growth.
Shares were initially down more than 4% in after-hours trading.
Disney is recovering from COVID-19 pandemic-related interruptions that resulted in months-long shutdowns of its theme park and cruise line operations. Revenue from Disney’s Parks, Experiences and Products Division grew 99% to $5.4 billion, though the company noted results continue to be "impacted by reduced operating capacities."
"Revenue and operating income growth was due to the reopening of our parks and resorts, which were open for the entire quarter this year," the company's release said.
Disney's direct-to-consumer segment also includes the Hulu and ESPN+ streaming services. Hulu has 43.8 million paid subscribers, while ESPN+ has 17.1 million. The segment's overall revenue grew 38% to $4.6 billion.
This story has been updated.