DreamWorks Animation Blasts Past Expectations; Stock Rises

Jeffrey Katzenberg and kung fu panda 3  - H 2016
Getty Images; Dreamworks

The animation company reported 55 cents per share in earnings while analyst expected just 16 cents.

DreamWorks Animation's financial results blew by expectations in the fourth quarter as the company on Tuesday reported 55 cents per share in earnings and $319 million in revenue while Analysts had expected DWA to earn just 16 cents per share on revenue of $274 million.

A year ago in the same quarter, the company reported a loss of $3.08 per share on $234.2 million revenue.

Home delivered $55.3 million in revenue during the quarter, mostly from worldwide pay TV and home entertainment. The Penguins of Madagascar kicked in $13.8 million and How to Train Your Dragon 2 helped out with $4 million. Mr. Peabody and Sherman, well-reviewed by some but deemed a disappointment in theaters, contributed $2.1 million.

DWA said library titles contributed $71.2 million in revenue during the quarter driven by an extension of existing licensing arrangements for subscription VOD.

The biggest contribution came from a segment called, "television series and specials," which kicked in $104.9 million, up from $50.7 million the year prior.

Consumer products also did will, taking in $31.7 million in revenue compared with $22.1 million a year ago. New media accounted for $32.9 million, up from $24.9 million.

While Kung Fu Panda 3 wasn't released in time to impact the fourth quarter, the movie is in theaters now and DWA CEO Jeffrey Katzenberg on Tuesday raved about the movie's performance thus far. 

Kung Fu Panda 3 is an especially important title because it hails from Oriental DreamWorks, the studio's joint venture with Chinese investment firms, and it was a co-production with the state-run China Film Group.

Katzenberg is betting heavily on the massive but very regulated and restricted Chinese market to help DWA shares recover from a two-year, 36 percent slump.

On a conference call Tuesday, the CEO said the movie has made $144 million in China thus far and is "on its way" to perhaps becoming the biggest animated film ever released in that country.

Katzenberg said that Oriental DreamWorks is on a path to becoming "a leading provider in China." After some initial challenges, the entity is now in a "very, very enviable and valuable position," he said.

On Tuesday, shares of DreamWorks Animation fell 2 percent to $21.06 and in after-hours trading they were flying 10 percent higher once Wall Street got a look at its earnings report.

Katzenberg also said DWA is in an "exploratory phase with several partners" who want to use the entertainment company's intellectual property in theme parks.

"DWA delivered its best top-line result in 11 years and highest revenue growth in eight years," Katzenberg said when revealing the fourth-quarter results.

Email: Paul.Bond@THR.com