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01/10 16:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates strong financial performance, optimistic guidance, and high engagement in key projects like 'Resurrection' and 'Michael.' The management's strategic focus on mid and small-budget films, along with strong library performance and efficient marketing, suggests positive market sentiment. Although there is some uncertainty in M&A and lack of specific financial guidance, the overall tone is positive, supported by strong backlog and international demand.
Lionsgate Studios revenue $475 million, adjusted OIBDA was $14 million and operating loss was $46 million. Reported fully diluted loss per share was $0.39 and fully diluted adjusted loss per share was $0.20.
Net cash flow used in operating activities $104 million, while use of adjusted free cash flow for the quarter was $129 million.
Trailing 12-month library revenue Grew 13% year-over-year to just over $1 billion, reaching record levels for the fourth consecutive quarter.
Motion Picture revenue $276 million and segment profit was $31 million. Revenue was expectedly down year-over-year due to a difficult comparison with last year's second quarter, which had 5 wide theatrical releases in the period relative to just 2 releases this quarter. Segment profit was up significantly year-over-year as we rebounded off of last year's underperformance of Borderlands.
TV revenue $199 million and segment profit was $13 million. Revenue and segment profit were expectedly down year-over-year due to the timing of episodic deliveries in the quarter.
Net debt $1.7 billion, expectedly reflecting a modest sequential increase in leverage to 6.4x on the timing of content spend.
Backlog Ending the quarter at approximately $1.6 billion, up $379 million or 31% sequentially.
New Film Productions: Lionsgate wrapped production on 'Michael' and is shooting 'Hunger Games' and two 'Resurrection' films. They also announced acquiring future film and TV rights to the 'Expendables' franchise and worldwide distribution rights to the next 'Rambo' movie.
Stage Play Launch: The first-ever 'Hunger Games' stage play launched in London with strong ticket sales, extended to October 2026.
Film Slate: Upcoming releases include 'Now You See Me: Now You Don’t,' 'The Housemaid,' and Quentin Tarantino's 'Kill Bill: The Whole Bloody Affair.' Future projects include 'Saw,' 'Blair Witch,' 'American Psycho,' and 'John Wick' universe films.
International Licensing: Lionsgate renegotiated international licensing deals for 'The Hunting Wives,' paving the way for a second season renewal on Netflix.
Stage Play Expansion: Lionsgate is expanding into stage plays with titles like 'La La Land,' 'Dirty Dancing,' and 'Silver Linings Playbook.'
Sports Talent Management: 3 Arts expanded into sports talent management, acquiring A&A Management and hiring a leading sports manager, adding NFL stars like Travis Kelce and Miles Garrett.
Headcount Reduction: Lionsgate reduced its workforce by 5% this quarter, totaling a 20% reduction over 18 months to align with market realities.
AI Integration: AI is being applied to increase productivity, generate cost savings, and expand creative capabilities while protecting intellectual property.
Content Library Growth: Trailing 12-month library revenue reached $1 billion for the first time, highlighting the value of Lionsgate's intellectual property.
Scripted TV Growth: Anticipated doubling of scripted series deliveries from fiscal '26 to fiscal '27, with key renewals and new shows like 'Robinhood' and 'Spartacus House of Ashur.'
Financial Strategy: Upsized IP facility by $320 million, early paid Spyglass library acquisition facility, and reduced revolver draw to $0, strengthening the balance sheet.
Economic uncertainties: The company faces challenges in an unpredictable box office environment, which could impact the performance of its tentpole films and overall revenue.
Operational cost management: The company has reduced its headcount by 5% in September, bringing the total reduction to over 20% in the past 18 months, indicating ongoing cost pressures and the need to align with market realities.
AI and intellectual property risks: While the company is leveraging AI for productivity and cost savings, it is also facing challenges in protecting its intellectual property from unauthorized use of AI, which could impact its core business.
Competitive pressures: The entertainment industry is described as ultra-competitive, requiring the company to work overtime and entrepreneurially for every win, which could strain resources and impact operational efficiency.
Revenue timing and dependency: Revenue and segment profits in both Motion Picture and TV segments were down year-over-year due to timing of episodic deliveries and fewer theatrical releases, highlighting dependency on specific release schedules.
Debt and financial leverage: The company ended the quarter with $1.7 billion in net debt and a leverage ratio of 6.4x, reflecting financial pressures and the need for careful debt management.
Revenue and Profit Growth: The company anticipates significant growth in revenue and adjusted OIBDA in fiscal '27 compared to fiscal '25, driven by a strong slate of tentpole films and increased scripted television deliveries.
Motion Picture Segment: The company expects motion picture segment profit to grow in fiscal '27, supported by a slate of tentpole films including 'Michael' (April 2027), 'Hunger Games: Sunrise on the Reaping' (November 2027), and 'Resurrection Part 1' (March 2027).
Television Segment: The television segment is forecasted to experience significant growth in fiscal '27, with a doubling of scripted series deliveries compared to fiscal '26 and incremental licensing revenue from international markets.
Content Pipeline and Backlog: The company reported a backlog of $1.6 billion, up 31% sequentially, indicating strong future revenues and cash flows.
Market Trends and Strategic Focus: The company is focusing on leveraging its intellectual property portfolio, efficient production models, and entrepreneurial spirit to navigate a competitive and evolving market environment.
The selected topic was not discussed during the call.
The earnings call summary indicates strong financial performance, optimistic guidance, and high engagement in key projects like 'Resurrection' and 'Michael.' The management's strategic focus on mid and small-budget films, along with strong library performance and efficient marketing, suggests positive market sentiment. Although there is some uncertainty in M&A and lack of specific financial guidance, the overall tone is positive, supported by strong backlog and international demand.
The earnings call highlighted strong financial performance with significant revenue and profit growth in Q4 2025, alongside a record library revenue. Positive developments include a new Amazon Prime deal and strategic initiatives like expanding into new experiences. However, the lack of a share repurchase program and competitive pressures were noted. The Q&A revealed cautious optimism about future growth and strategic partnerships, boosting sentiment. Overall, despite some concerns about economic factors and debt, the strong quarterly results and strategic moves suggest a positive stock price movement.
The earnings call presents a mixed but generally positive outlook. Financial performance shows revenue growth and improved adjusted earnings, despite a loss in EPS. The Amazon deal promises future revenue boosts, and the separation plan indicates a strategic focus on deleveraging. The Q&A highlights optimism about future profits, though management was vague about specifics. Overall, the financial improvements and strategic partnerships suggest a positive short-term stock price movement.
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