Spending Up 40%, Genie+ Going Strong, “No End in Sight” to Disney World’s High Demand
Disney reported its second quarter fiscal year 2022 earnings for this January through March on an investor call held by CEO Bob Chapek on May 11, 2022. This covers the good & bad of these results, including Genie+ performance, guest spending at Walt Disney World & Disneyland, strong revenue from theme parks, streaming subscriber numbers, and more.
Let’s start with the numbers. The second quarter of the Walt Disney Company’s fiscal year (or the first quarter of the calendar year) is another quarter of positive results, especially as the previous year offers an weak comparison due to ongoing closures and soft attendance last year.
While the Walt Disney Company exceeded Wall Street estimates across the board last quarter, the results for Q2 were more mixed. Forecasts called for revenue of $20.05 billion, but the actual total was $19.25 billion. Disney earned $1.08 per share in the latest quarter, whereas analysts were expecting earnings of $1.19 per share. With that said, those misses were relatively minor, and were dinged by over $1 billion in one-time early termination fees for TV shows and films it wanted to use on its Disney+ streaming service. Speaking of which, Disney+ was once again a bright spot…
Disney announced added 7.9 million subscribers, as compared to 11.8 million in the previous quarter that encompassed the holiday season. The number exceeded Wall Street expectations, with average forecasts anticipating around 5 new subscribers. Analysts on average expected Disney Plus to reach 135 million subscribers for the quarter.
In actuality, Disney+ had 137.7 million paid subscribers worldwide. The company also reiterated its guidance of of reaching 230 million to 260 million Disney+ subscribers by 2024. Currently, total subscriptions across all direct to consumer offerings exceed 205 million, which “once again proved that we are in a league of our own,” according to CEO Bob Chapek.
This caused an immediate after hours bump to Disney’s stock in after hours trading, as this bucks the narrative of slowing streaming growth. (The stock is now down ~2.5% after hours, following comments during the Q&A that subscriber growth might slow in the second half of the year.) After Netflix reported disappointing results a couple of weeks ago, including its first net loss of subscribers from quarter to quarter, its stock price and that of its competitors (WarnerMedia, Paramount, Comcast, Disney) have been hit hard.
Netflix also lowered its forward-looking forecast in its latest company outlook, citing heightened churn, delayed content, and pulled-forward demand in the past two years. The big question has been whether Netflix’s woes are reflective of the streaming segment as a whole, or are because of competitor’s gaining ground.
Netflix’s results been a big drag on Disney’s stock, which hit a new 52-week low today. Dropping below $105 per share, Disney’s price is on par with 2015–it’s down 30% year to date and over 40% in the last year. Although the broader market has been down of late, Disney and its streaming cohorts have been laggards.
Many fans and critics have attributed this to the company’s, ahem, assorted controversies. While it’s true that corporate leadership may be weighing on the stock to some degree, Disney has been performing on par with its streaming counterparts. For better or worse, Wall Street is singularly focused on the subscriber growth of Disney+ and the company’s other streaming products, and has largely ignored theme parks and everything else.
While streaming continues to be the emphasis, it continues to lose money–and likely won’t turn a profit for the company until 2024. Between now and then, Disney is chasing market share and subscriber growth. Disney reported an operating loss of $887 million related to its streaming services in the second quarter, up from a loss of $290 million a year ago. For the first six months of Disney’s fiscal year, streaming services have lost approximately $1.5 billion.
Of particular interest to us is Parks, Experiences and Products (or Parks & Resorts). 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 $400 million in the prior-year quarter.
Domestic theme parks revenue was $4.9 billion versus $1.74 billion in the prior-year quarter, whereas the international parks revenue was $574 million. Income for the domestic parks was $1.39 billion, versus a loss of $587 million in the prior-year quarter.
International parks dragged down the results, losing $268 million for the quarter. This was largely due to the closures of Hong Kong Disneyland and Shanghai Disney Resort. HKDL was open for 3 days in the current quarter compared to 33 days in the prior-year quarter. SDL was open for 78 days in the current quarter and open for all of the prior year quarter.
However, Disneyland Paris was a bright spot. Higher operating results there were due to increases in attendance and occupied room nights–this should improve even more in the next quarter due to the Disneyland Paris 30th Anniversary celebration.
The earnings document also revealed that capital expenditures increased from $1.01 billion to $1.44 billion year-over-year, driven by the temporary suspension of certain capital projects in the previous year. Capex increased for domestic parks & resorts increased year-over-year to $1.05 billion, up from $656 million in the previous year.
Spending has increased in the last couple of quarters as projects have started to resume and kick into higher gear. Work has kicked into high gear in EPCOT and on TRON Lightcycle Run at Magic Kingdom. For the international parks, the Zootopia expansion at Shanghai Disneyland, Arendelle: World of Frozen at Hong Kong Disneyland, and the expansion of Walt Disney Studios Park at Disneyland Paris are all underway again. Spending was also significant on the Disney Wish cruise ship and on corporate facilities.
When directly discussing theme parks during his opening remarks, Chapek said that Disney’s “domestic parks were standout” and that “they continue to fire on all cylinders.”
Chapek continued: “Powered by strong demand, coupled with customized and personalized guest experience enhancements, that grew per capita spending by more than 40%, versus 2019.” He also pointed specifically to Star Wars: Galactic Starcruiser, stating that guest satisfaction ratings were “incredibly high and in line with best-in-class offerings. Demand is strong, and we expect 100% utilization, through the end of Q3.”
Disney CFO Christine McCarthy stated that per capita spending at the domestic parks was up more than 40% versus fiscal second quarter 2019, and up 20% as of the prior quarter. This would be surprising, but it’s the same story as last quarter. She stated that this was due to increases across the board, on admissions, food and beverage, and merchandise.
McCarthy went on to state that demand for many days exceeded 2019 levels, but that Disney continued to manage attendance via reservations with “an eye on delivering, a quality guest experience.” Looking ahead to the third quarter, demand at both Walt Disney World and Disneyland “remains robust” according to McCarthy.
Once again, these increases were driven by a more favorable guest and ticket mix (read: fewer Annual Passholders), plus higher food & beverage and merchandise spending, as well as contributions from Genie+ and Lightning Lanes. Putting these factors together, domestic parks and resorts delivered Q2 revenue and operating income exceeding pre-pandemic levels, and that’s even as Disney continued managing attendance.
The higher year-over-year numbers are a result of favorable comparisons. Although Walt Disney World was open for the entirety of the prior-year quarter, attendance was capped at ~35% then. Disneyland was not open at all during the prior-year quarter. These favorable comps won’t last much longer.
During the Q&A, Chapek was asked whether the company expected a deceleration in coming quarters due the health of the economy, inflation, and consumer spending. He stated that Disney is “very, very encouraged by the continuation of the trends that we’re seeing in terms of number of people, for example, who [purchase] Genie+.”
Chapek went on to credit the “balanced reservation system” that helps the company manage price per day and yield management, which has structurally allowed the company to increase per capita spending meaningfully without having to rely solely on raising ticket prices. “We don’t see any end in sight” to the sky-high demand and strong spending numbers, said Chapek.
McCarthy was essentially asked the same question about inflation and guest spending, and stated: “we feel really good about consumer demand, and what we’re seeing, in the forward-looking bookings and…in the attendance levels.
With regard to inflation, McCarthy conceded that it was “more challenging” but that the company pays close attention to all inflationary pressures–everything from merchandise to food & beverage, and how to mitigate rising costs. She also gave a specific example of how this is done with the increased cost of fuel–the company has resumed its “very robust fuel hedging program” at Walt Disney World that reduces risk and minimizes volatility.
All in all a relatively uninteresting call. Most of the statements and questions & answers were covered on prior calls, with the answers just restated in slightly different ways. Nothing particularly illuminating about the future, major announcements or hints at what’s to come–not even any “good gaffes” as have become par for the course during the Chapek era. (Not that I’m actively rooting for those flubs, but they’re good for generating amusing discourse.)
From my perspective, perhaps the biggest takeaway is how much they’re leaning on the park reservations system to explain away problems or underscore demand. McCarthy and Chapek highlighted the reservations system on multiple occasions, presenting it as an asset to “balance demand” or improve the “consumer experience” (among other things) while not really speaking to its continued necessity due to staffing shortages and other operational woes. Even when asked directly about staffing, McCarthy pivoted to points about “managing attendance” and other purported benefits.
This question was presumably asked because Chapek spoke to staffing shortages during the last earnings call, and virtually every other hospitality company has discussed the same subject and the challenges it poses during their earnings calls. At the very least, it seems like the reservations system will stick around for the next few quarters since it’s a way to present problems in more favorable terms.
Other than that, not really many much of consequence discussed on this call pertaining to Walt Disney World.
As always, it’ll be interesting to see how Disney’s forward-looking forecast actually plays out. It makes sense that Chapek and McCarthy are optimistic in their forward-looking projections, as the mixture of pent-up demand and diminished capacity have produced strong results Things could continue to remain strong, with demand continuing to exceed pre-closure levels and reservations unavailable throughout the summer season. With Guardians of the Galaxy: Cosmic Rewind coupled with the summer tourist season, this seems likely.
However, at some point there’s likely to be a slowdown–which is exactly what was intimated by several analyst questions during that segment. Pent-up demand among domestic visitors could fizzle out, inflation on necessities might result in reductions to discretionary spending, and the same could also happen due to depleted household savings and stimulus money. Inflationary pressures and the rising cost of travel due to oil prices could bring the party to a premature end, too.
When all or some of that happens, consumers will return to being more cost-conscious and price sensitive, and things will normalize to at least some degree. However, there don’t appear to be any signs of those things happening this summer. For now, get used to high prices, heavy crowds, and nickel & diming at Walt Disney World and Disneyland as this record run of revenue and income continues for the foreseeable future. Of course, things could always change in a hurry–exactly that has happened before.
Planning a Walt Disney World trip? Learn about hotels on our Walt Disney World Hotels Reviews page. For where to eat, read our Walt Disney World Restaurant Reviews. To save money on tickets or determine which type to buy, read our Tips for Saving Money on Walt Disney World Tickets post. Our What to Pack for Disney Trips post takes a unique look at clever items to take. For what to do and when to do it, our Walt Disney World Ride Guides will help. For comprehensive advice, the best place to start is our Walt Disney World Trip Planning Guide for everything you need to know!
YOUR THOUGHTS
What do you think of Walt Disney Company’s Q2 FY2022 earnings and future forecast? What about the spike in per guest spending? Are you worried about the future of Walt Disney World, Disneyland, or the company in general? Think things will improve or get worse throughout this year? Do you agree or disagree with our assessment? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!
I always sit on these e-mail updates sometimes because I want to Commet, so please excuse me for being late to the party. Anyway, I think it is kinda of funny how they have not really “increased sales” as much as they cut and gouged various offerings, I mean the money is the same, you just cut thing’s and are like “look at me I am making you money”. I believe these people and us are all just ridiculous, and maybe it is time for us the consumer look at what it is we are actually getting. Universal is looking more and more like a far superior park and destination right now. And these out of touch ultra rich exec’s are not seeing the real picture. I do not believe with customer satisfaction at an all time low, how they think they will still remain on top? Sure not everyone is going to stay no to the mouse, however on most all comments section, in this and other spots I pay attention to, there is a lot more ” my last trip” or “I have canceled” then used to be. I don’t know, I mean hats off to Tom and Sarah, you two do your very best to remain positive and try to keep folks in and up beat feeling about going, so does the vblogs I watch as well. I understand its business, however what are we really getting? Even deluxe guests what are ya getting? if ya drive ya got to pay to park, and really what? two extra hours in the parks on certain days? Universal offers the fast pass express and early entry, and no one has to fight with a phone and a convoluted ultra complicated, competitive fast pass system. The food is supposed to be better etc. I don’t know, I do not like feeling or being negative about it, however we are the ones spending the money, so again maybe we should do our talking with it. I have been following this blog since 2016 looking for those “Disney secrets” (which an update with all the new stuff would be wonderful) And honestly, reading the blog and watching the youtubers we do, has always been part of the fun, and it is sad to think that after this trip, all this may be over.
My husband and I just came back from 6-nights at Disney World, renting DVC points for Animal Kingdom Lodge. We feel our second ever trip to Walt Disney World was better than our 2019 trip, but we also noticed that a LOT is missing. Most notably, the walking characters and entertainment. We saw the Stormtroopers on their platform at Hollywood Studios and that was it. Is it just because there really aren’t enough employees?
We also spent $1,222 in food and souvenirs, even though souvenirs made up less than $100. We ate at a few steakhouses and were thirsty. I would have loved to spend more at the shops, but without the option of resort pick-up or end-of-day park pick-up, I didn’t go into any shops other than my resort and Pandora. I’m not carrying that stuff around all day. We did notice that everyone had bags and bags of stuff, and every kid had a bubble wand.
We did buy tickets with Genie+, and purchased 3 different individual Lightning Lanes throughout the trip. Magic Kingdom was the only park we couldn’t get more than 3 rides out of Genie+, otherwise it was well worth it. The wait times for everything was always over 45 minutes, and we just don’t get on rides with more than a 20 minute wait time. I only got to ride PeopleMover, my favorite ride, once!
It’s really disappointing that they are happy with how things are right now – giving us less for more money. But, we are still giving them more and more of our money. The new rides like Ratatouille, Runaway Railway, and Rise of the Resistance is nothing short of amazing, though. Rise of the Resistance was just amazing, and I was absolutely stressing about the drop. I hope the money is going towards more things like this, and not just lining the pockets of the already ultra rich just trying to hoard more money. I feel like I already know, though.
Hi – thanks in advance 🙂
I’m trying to figure out if you can book a paid LL slot and a genie+ LL at the same time (not the same time frame window, but do you have to wait for one to expire to get the other)?
I was up at 7 AM each morning to book our Genie+ options, and could pick a paid Lighting Lane and Genie+ at the same time. Once you pick your first Genie+, and enough time has passed, you can even book a second Genie+ if the first one hasn’t been used. This helped us tremendously at Hollywood Studios! We were able to do all the big attractions except Tower of Terror, and were in the park from 9:30 AM to 5 PM.
I’m also in the camp that pent-up demand will wane at some point. They are still in the midst of the 50th Anniversary and international travel is not back to pre-pandemic levels. However, with inflation and the pandemic forcing families to re-think budgets, I can’t imagine too many Disney newbies deciding to spend as much as they would have to on their 1st or 2nd trip. On the other side, those who have been many times are upset with the reduction of services and increased hassle. So short term, I really do think the full return of international travel, the typical Summer and Fall crowds, and the 50th will keep demand high for another 12 months. After that? I can very easily see the loyalists saying no thank you for a couple years and new guests unwilling to pay exorbitant prices. The report one year from now will be an interesting tell – I would wager it won’t be so rosy for parks, domestically at least.
Mostly agree, but I think that if inflation and oil costs remain elevated, travel as a whole could see a pullback sooner than one year from now. In that case, forward-looking bookings could start slowing in the next few months, with the impact felt this fall.
Assuming the best case scenario with both (that inflation has already peaked and oil starts coming down soon), I think Disney sees a slowdown next summer.
Thanks for the summary. The photo of the castle at sunset is lovely – is that Shanghai’s castle?
Never since our first Disney World vacation in 1986 has a trip to the “Happiest Place On Earth” carried such a hefty price tag while offering so little in return. When $16,000+ (5 adults and 3 kids) only provides four room reservations at a moderate resort and park passes, it’s time to say nuts to that. Our trip, first booked in January 2021 and moved forward twice to October 2022 originally included Magical Express transportation, Magic Bands and unlimited Park Hopper Passes…all of which have disappeared by bits and pieces.
Chapek better pray there’s an unending stream of young parents, many who save for years, to bring their children to see Mickey Mouse and are either willing to stand in line for hours and/or spend the day on their phones trying to snag Genie+ and dining reservations. Again, nuts to that. My kids, and fortunately my grandkids, have experienced the best Disney World has to offer. Either Chapek doesn’t think loyal Disney guests will notice or he doesn’t care. This family does notice and our money is not following him down that rabbit hole.
“We don’t see any end in sight” to the sky-high demand and strong spending numbers, said Chapek.
*sigh* Of course it will end. It always comes to and end. I presume Chapek must be a smart guy, and obviously he won’t want to say anything negative and spook the shareholders, but this just sounds like arrogance to me and I’ll be VERY curious to see how the Keystone Kops…uh, Disney execs…handle it all when the bubble bursts.
“I presume Chapek must be a smart guy, and obviously he won’t want to say anything negative and spook the shareholders…”
This is exactly it. Regardless of what any of us might think about his leadership–or lack thereof–Disney earnings calls are always about painting everything in the best possible light, only disclosing the positives, and offering optimistic forward-looking guidance.
Even beyond Disney, right now feels like one of those times that the party is going to end rather abruptly, which probably at least partially explains the sell-off on Wall Street. Things are great until they aren’t.
Hi Tom!
As a guest coming from the uk, I have spent £25,000 on a trip for my family of 5 and cannot believe that due to the LL situation, we may not even get to ride our favourite attractions. We’re staying at the Beach Club and don’t get any of the perks we previously enjoyed being on property. Our last visit I’m sad to say.
Thanks for all your invaluable info Jane B
Had the same feeling before our trip 2 weeks ago. Felt like all news about Disney was negative, thought it would be my final trip. Sure, we spent more than usual but was the best trip we ever had. Make the most of this trip, enjoy!
I am throwing some serious side eye to the comment that the park reservations “improve the consumer experience” Hahahahahahahaha!!!!!
Also when in the heck will they lift the park hopping restrictions or at least start it at noon?
I’m not surprised to hear that satisfaction scores are at an all time low. Unfortunately I don’t think they will do anything about it until sales dip.
Tom in regards to the dining plan example I have a hunch that it might be coming and here’s why…occasionally I spot check dining reservations 60 days out for a party of 6. Yesterday I was shocked while checking at 7 PM how many places had openings (Cinderella for example at ALL 3 meals?! ) and the same thing going on today for July 10. In the past many months of me doing this, this has never happened. This either means bookings are very low for July or imo more likely they have dramatically increased capacity in preparation for dining plans-thoughts on that theory?
I’ve definitely noticed that with some restaurants (e.g. FINALLY got into Sci-Fi this week!) but nothing with consistency. I’ll have to do some more searching with larger party sizes–thanks for the heads up.
I see there was no mention of overall customer satisfaction with the many negative changes made recently. Not only did they make a free service a paid service (Fast Pass), but they made it an inferior service. You now have to get up early each day to make reservations and stay on your phone all day. They took what was already a stressful experience even more so. The final straw for us was when they cancelled the Magical Express. This was the biggest thing that set Disney apart from everyone else. Once you booked at a Disney World hotel, you were in the Disney bubble and they took care of you: free magic band, luggage tags so that they picked up your luggage for you, a bus waiting when you arrived, etc. Once we realized they weren’t going to back off on this, we cancelled the 10 day reservation we had at the Wilderness Resort and will never come back to Disney World again, after having made 9 previous trips (all the way from Seattle). Universal Florida is our new family destination. It’s sad to see that nickle-and-diming guests has replaced the Disney magic. Yes, the parks will be full for some time with pent up demand, but once that has been filled, previously loyal guests (such as ourselves) will not return and Disney will have to depend on first time guests demand, which in the long run will result in diminishing attendance.
“I see there was no mention of overall customer satisfaction with the many negative changes made recently.”
I’ve heard from a credible source that guest satisfaction scores are at an all-time low.
I totally agree with everything you have said, however the problem I see is there isn’t enough people NOT spending the money at Disney. As long as people spend the money on Genie+ and keep going to Disney and spending, as far as Disney is concerned there is no reason for them to change. It breaks my heart, as a big Walt fan I just don’t feel the same about Disney anymore either, although I am still drawn to it and want to go but keep resisting and our family group trips of 12 have moved over to Universal as well. At least for now….we will see what the future holds. Waiting for the tide to turn.
I believe I read airfare was up 18% in the latest figures. I’m dreading booking our next family flight in a month or so. Feel like the wave they are riding can’t last forever. But I’ve been wrong so many times I’m done prognosticating.
“I believe I read airfare was up 18% in the latest figures.”
Maybe we’ve just been really unlucky, but that number seems way too low to me.
I would say that percentage is low too. Our most recent flight we booked to Disney is about 40% higher than we were used to paying.
Any word on the Disney Dining Plan?
Not a single word. Aside from the fuel hedging example, this earnings call was very light on specifics. If I were to “review” earnings calls, I’d give this one a 4/10. Not nearly as interesting or insightful as past calls–very redundant.
I was hoping for some sort of hint or even flat out announcement about annual pass sales. As a new Florida resident, I am on the fence about buying the Pixie Dust pass or waiting until they are all on sale again. My fear is buying the Pixie and then not being allowed to upgrade when the others are released. But I’m also not seeing any sign of hope that they will be on sale anytime soon….. Frustrating to say the least, as a Disney lover that moved down here largely for the parks. :/
Here’s our latest update on APs: https://www.disneytouristblog.com/when-will-disney-world-sell-annual-passes-again/
TL;DR – Don’t expect them to return before August.
We were new Florida residents as well, and decided to buy the Pixie dust because if and when they start selling the other passes again, you can upgrade if you’d like.