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  • Writer's pictureHahn Lee

Disney FY3Q Earnings Recap

August 4, 2020

Disney FY3Q (June) Earnings Recap - Mixed Results, but 100mm Direct to Consumer Subscribers and Growing


  • Revenue shortfall. Consolidated revenue for the quarter was $11.8 billion, down 42% vs. $20.3 billion reported a year ago. The results fell shy of Wall Street’s consensus estimate of $12.4 billion.

  • EPS surprise. Disney reported a FY3Q (June) adjusted EPS of $0.08 per share vs. $1.34 in the prior-year quarter (-94%). Analysts expected an adjusted loss of $0.61 per share, down sharply from a $0.60 profit in FY2Q (March) when COVID-19 began to impact results.

  • Paying Direct-to-Consumer (DTC) subs > 100 million. Overall, Direct-to-Consumer (DTC) paid subscriptions now exceed 100 million.

  • Disney+ growing, but reported number lower than expected. Disney+ subscriptions hit 57.5 million at the end of the quarter, but fell shy of expectations (59.3 million). As of August 3rd, however, the service was at 60.5 million paying subscribers.

  • Hulu subscriber numbers beat. 35.5 million Hulu subscribers exceeded expectations of 33.8 million.

  • COVID net adverse impact of $2.9 billion. Estimated net adverse COVID-19 impact on operating income during the quarter across all businesses was $2.9 billion. The net adverse impact was $3.5 billion from the Parks segment, offset by a net positive impact across the rest of the company.

  • Parks most heavily impacted by COVID, as expected. The Parks division was most impacted by COVID. Segment revenue was $983 million, an 85% decline vs. prior year revenue of $6.6 billion. Reported operating loss was approximately $2 billion.



Overall a mixed bag, but fine given that the quarter could have been a lot worse. The positive reported adjusted EPS of $0.08 vs. the expected loss of $0.61 buoyed the narrative as did the headline number of 100 million DTC paying subscribers. Despite the fact that the reported Disney+ subscriber number fell shy of expectations, 57.5 million paying subscribers just 8 months post-launch is nonetheless quite impressive.

While plans for re-opening parks and ramping content production back up to full capacity are still a bit murky, the Company did say that it would spend an incremental $1 billion through the end of FY21 for precautionary measures aimed at keeping cast members (employees), talent and guests safe amidst the pandemic backdrop.


As mentioned in a previous post, Disney’s DTC business is the key to its future. As such, here are some additional tidbits of information provided by management during the conference call:

  • Disney+ will continue its geographic expansion through CY20. Disney will continue its Disney+ expansion with launches in the Nordics, Belgium, Luxembourg and Portugal in September followed by Latin America in November. Disney+ Hotstar will launch on September 5th in Indonesia. By the end of CY20, Disney+ will be in 9 out of the top 10 economies of the world.

  • Mulan skipping theatrical release, but coming to Disney+ next month for $30. In most Disney+ markets including the US, Canada, Australia, New Zealand and countries throughout Western Europe, Disney will offer Mulan for $29.99 (price in the US; the price will vary slightly in other countries). Mulan will be released theatrically in markets where Disney+ is not available and where theaters are open.

  • International DTC service under the Star brand will launch in CY21. The Company plans to launch an international DTC general entertainment service under the Star brand in CY21. The service will mirror the Disney+ strategy and offer Disney-owned content from ABC Studios, Fox TV, FX, Freeform, 20th Century Studios, Searchlight, etc.

More next time…


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