Disney Earnings Beat Estimates (Top & Bottom Line)
Earnings reports come fast and furious during earnings season. Let’s review a few of them. Disney reported results on Tuesday. It had EPS of $1.53 with beat estimates by 9 cents. Revenues of $20.79 billion beat estimates by $70 million. Disney stock fell 2.32% on Wednesday because of this quarter, but rose 0.94% on Thursday.
An important aspect of this report was its streaming service Disney+ which launched in the quarter. It reported having 26.5 million subscribers which vastly beat estimates for 20.8 million. Latest update as of Monday was 28.6 million. Disney made sure to give up to the day results to investors to emphasize its quick growth. I’m always in favor of firms providing additional information to investors.
Average monthly revenue per user was $5.56. 20% of new subs signed up through a free trial with Verizon. About 50% signed up through Disney+’s website, many of which signed up for a full year or even 3 years. Conversion from free to pay and the churn rate were both better than expected. The firm still expects to garner between 60 and 90 million subscribers by the end of 2024.
As the table above shows, ESPN+ had 6.6 million subscribers which increased from 1.4 million last year. Disney also owns Hulu which has 30.4 million subscribers which is up from 22.8 million. Combined that is 63.5 million. Hulu’s average revenue per subscriber is $59.47 and ESPN+’s average revenue per sub is $4.44 which was down 5% from last quarter.
Finally, Studio Entertainment revenues were up from $1.8 billion to $3.76 billion because of Frozen II and Star Wars: The Rise of Skywalker. Disney’s Parks, Experience, and Products segment had 9% operating income growth which brought it to $2.3 billion. Two notable new parks and attractions were Star Wars: Galaxy’s Edge park and the Rise of the Resistance ride.
Chipotle’s Momentum Continues
Chipotle reported great results again as the firm had EPS of $2.86 which beat estimates by 9 cents. Revenues of $1.4 billion met estimates. Same store sales growth was a fantastic 13.4% which destroyed estimates for 9.5%. Net income was up from $1.15 last year to $2.55 per share. Net sales were up 17.6%.
In response to these results, the stock fell 3.48% on Wednesday, but it rose 0.35% on Thursday. Digital sales were up 78.3% as they accounted for over 20% of sales. That category is going to have a huge impact on the top line if it continues growing above 50% in 2020. In Q3, its growth was 87.9%, so it’s definitely decelerating.
Average check was up 5.4%. The firm will open between 150 and 165 new stores in 2020. Half of those will have a drive thru lane for digital orders. That will increase the current count of 66 stores with Chipotlelanes in the country. The firm expects same store sales growth in the mid-single digits in 2020.
Comps will be very hard. The firm was helped by the limited run of carne asada which it wants to add to its menu if it can find supply. And the firm is testing a new store design which can add a new leg to this growth story. Image below shows the new seating arrangements. It’s also testing a walk-up window.
Twitter Misses Profit Estimates, But Has Great User Growth
With Twitter stock’s 15.03% rally on its earnings report, investors showed they care more about user growth than profitability. That’s fair because users drive the platform forward. They determine long term profitability. Specifically, the firm reported 25 cents of EPS which missed estimates by 4 cents. Revenue of $1.01 billion beat estimates for $996.7 billion. Number of monetizable daily active users (mDAU) rose 21% yearly to 152 million which beat estimates for 147.5 million.
As you can see from the chart below, its mDAU growth has increased 4 straight quarters and is the highest in at least 3 years. This growth canceled out the negative impact of the weak guidance as the firm expects Q1 revenue between $825 million and $885 million which has a midpoint below the consensus estimate of $873 million. The presidential election will certainly increase activity on Twitter. However, Twitter has eliminated political ads which might help avoid fines and claims of bias in the long run.
Last quarter the firm mentioned it had problems with its Mobile Application Promotion (MAP) product which hurt its ability to target ads. The firm hopes to finish its ad server rebuild by mid-2020 and has made progress on its next generation of MAP which will come out later this year. Total ad engagements were up 29% and the cost per engagement fell 13% because of the shift to video.
Uber Expects To Be Profitable
After a rough first few months as a public company, Uber is headed in the right direction. It reported a loss of 64 cents per share which beat estimates by 4 cents. Revenue of $4.07 billion beat estimates by $10 million. Its CEO stated it will be EBITDA profitable by Q4 2020 instead of 2021. This sent the stock up 5.45% after hours on Thursday.
Annualized revenue growth increased from 30% to 37%. Uber expects only a loss of $1.35 billion in 2020 which is much less than the consensus estimate of $2.83 billion.
Rides gross bookings were $13.51 billion which was up 18% from last year, but missed estimates by $90 million. Uber for Business is expected to increase margins. Gross bookings for Eats were up 71% as they came in at $4.37 billion which beat estimates for $4.13 billion.
A problem is the firm spent $319 million on referrals and incentives for Eats. It spent $20 million on this in its Rides segment. The growth engine for Uber in 2020 will be subscriptions for both Eats and Rides. Its self-driving technology won’t impact the business in the near term. I doubt anything comes of it in the next few years.
The firm spun off its Advanced Technologies Group business in April 2019. $1 billion in funding it received pre-funded 18 months of development work.
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