DreamWorks Animation Shares Jump on Third-Quarter Revenue Growth

Jeffrey Katzenberg - H 2015
Chris Pizzello/Invision/AP

Jeffrey Katzenberg - H 2015

The company beat Wall Street's expectations with adjusted earnings of 2 cents per share.

DreamWorks Animation shares popped more than 14 percent during after-hours trading immediately after the company reported third-quarter earnings that beat Wall Street's expectations. 

The studio reported Thursday that it had a quarterly adjusted net income of 2 cents per share on revenue of $259 million, up 43 percent from the same period last year. Analysts surveyed by Thompson Reuters were expecting an adjusted loss of 5 cents per share on revenue of $206 million. 

The adjusted earnings did not include the $3.6 million pre-tax charge associated with the studio's ongoing restructuring. Including those costs, DWA reported a net loss of 4 cents per share for the quarter. CEO Jeffrey Katzenberg announced the corporate restructuring — which included 500 layoffs, a scaled-back movie slate and the sale of the studio's Glendale campus for $215 million — in January. 

Speaking on a conference call with investors, Katzenberg said that nine months after the restructuring, he's seeing "higher levels of creativity collaboration" within the organization, noting that "while there is still much to do, I'm proud of the work our team have done."

In the film segment, DWA brought in $158 million in revenue, up from $142 million year-over-year. ?The studio hasn't released a new film since the March premiere of Home, which grossed $386 million at the box office. The film sold 4.7 million units during the quarter and contributed $49.7 million thanks to a strong performance on the digital and home entertainment markets. It had the highest number of digital sell-through transactions of any DWA title, Katzenberg said.

The studio's next film is Kung Fu Panda 3, which will arrive in theaters on Jan. 29. 

Quarterly revenue for the television series and specials segment was $50.7 million, up from $14.3 million during the same period last year thanks to licensing agreements including a large output deal with Netflix.

"[Netflix] has been an incredible partner to us, and we value that in an incredible way and we're constantly in conversations with them about things we can incrementally do together in both the near term and the long term," Katzenberg said during the call, which he was patched into from Shanghai. "Being that we are in the unique position of being able to deliver high-quality branded entertainment in the first window, it does really position us uniquely and very favorably in the growing SVOD market."

Consumer products revenue more than doubled from last year to $27 million for the quarter.

Meanwhile, the new media segment, which includes YouTube network AwesomenessTV, brought in $20.7 million during the quarter, up from $8.5 million year-over-year. Verizon's new ad-supported streaming app, go90, got a shout-out during the call. ATV struck a multiyear deal with Verizon to bring more than 175 hours of content to the app. Katzenberg noted that Verizon has singled out ATV's Top 5 Live and Betch as gaining early traction with millennials and encouraging revisits to the go90 platform.

In late October, DWA announced that Frontier Communications executive chairman Maggie Wilderotter had joined its board of directors. 

DWA shares closed the day up less than 1 percent, or 7 cents, to $20.21 on the Nasdaq. After their initial boost during after-hours trading, DWA shares settled up around 10 percent.