Paramount Global (NASDAQ:PARA) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: positive elements include a 2% revenue increase, a 16% rise in D2C subscription revenue, and improved OIBDA. However, challenges such as declining affiliate and D2C advertising revenue, macroeconomic uncertainties, and management's vague responses in the Q&A section temper optimism. The company's content strategy and franchise expansion are promising, but the lack of clear guidance and potential revenue pressures suggest a neutral short-term stock price movement.
Key Financial Performance
Earnings Per Share (EPS) $0.29, up from $0.27 year-over-year.
Total Company Revenue $7.2 billion, a 2% increase year-over-year excluding the Super Bowl.
Direct to Consumer (D2C) Revenue $2 billion, up 9% year-over-year.
D2C Subscription Revenue Increased by 16% year-over-year.
D2C Advertising Revenue Declined by 9% year-over-year, impacted by an 800-basis point headwind from last year’s Super Bowl.
D2C OIBDA Improved by $177 million year-over-year to a loss of $109 million.
TV Media Revenue OIBDA was $922 million, impacted by the comparison to last year’s Super Bowl.
TV Media Advertising Revenue Flat year-over-year excluding the Super Bowl.
Affiliate Revenue Declined by 8.6% year-over-year due to subscriber declines and recent renewals.
Film Entertainment Revenue $627 million, up 4% year-over-year.
Film Entertainment OIBDA $20 million, compared to a loss of $3 million in the year-ago quarter.
Free Cash Flow $123 million, including $108 million in payments for restructuring and other initiatives.
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Operating Highlights
New Series Launches: MobLand premiered at the end of Q1, becoming Paramount+’s biggest global series launch ever.
Franchise Expansions: Three new series from the Yellowstone franchise are set to premiere, including Dutton Ranch in Q4 and The Marshals in Q1 of 2026.
Film Releases: Sonic the Hedgehog 3 delivered box office sales of nearly $500 million, becoming a top acquisition driver on Paramount+.
Upcoming Films: Mission: Impossible – The Final Reckoning is set to premiere on May 23.
Subscriber Growth: Paramount+ ended the quarter with 79 million global subscribers, up 11% year-over-year.
Revenue Growth: Paramount+ revenue increased 16% year-over-year.
TV Media Advertising: TV media advertising revenue, excluding the Super Bowl, was flat year-over-year.
Free Cash Flow: Generated $123 million of free cash flow.
Cost Reductions: Successfully reduced average production costs on Paramount pictures films by 35% over the last 24 months.
Investment Focus: Prioritizing key investments while streamlining non-content expenses.
Profitability Goals: Expecting Paramount+ domestic profitability for 2025.
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Risk or Challenges
Macro Environment Risks: The company has not seen a meaningful impact due to the dynamic macro environment, but there is uncertainty that could affect future results.
Advertising Revenue Challenges: Digital advertising revenue is expected to decline due to increased supply in digital video, which has disproportionately affected Pluto TV.
Affiliate Revenue Decline: Affiliate revenue declined 8.6% in the quarter, primarily due to subscriber declines and the impact of recent renewals.
Content Seasonality Impact: Q2 subscribers are expected to decline due to content seasonality and the termination of an international hard bundle partnership.
Economic Uncertainty: Growing macroeconomic uncertainty, particularly in advertising, has the potential to impact results later in the year.
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Guidance & Outlook
D2C Profitability: Paramount+ is expected to achieve domestic profitability for 2025.
Content Strategy: Focus on fewer, bigger breakthrough original series to drive subscriber growth and engagement.
Cost Management: Prioritizing key investments while streamlining non-content expenses.
Franchise Expansion: Expansion of the Yellowstone franchise with three new series planned.
Film Strategy: Balancing investment across titles to drive profitability, including reducing average production costs by 35%.
Q1 2025 Revenue: Total company revenue of $7.2 billion.
Q1 2025 Adjusted OIBDA: Adjusted OIBDA of $688 million.
Free Cash Flow: Generated $123 million in free cash flow.
Q2 2025 Expectations: Expecting healthy revenue growth driven by ARPU acceleration at Paramount+.
Full Year 2025 Outlook: Expecting to deliver Paramount+ domestic profitability and working towards full year OIBDA and free cash flow outlook.
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Shareholder Return Plan
Free Cash Flow: $123 million generated in Q1 2025.
Restructuring Payments: $108 million in payments for restructuring and other initiatives.
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Key Q&A
Q:Is the pricing pressure in digital advertising firming up?
A:We expect that the pricing pressure might abate over time, but we have yet to see that at this moment.
Q:Will reverse compensation contribute to affiliate revenue pressure over time?
A:We believe the relationship with our affiliates is mutually beneficial and we have a strong record of securing partnerships.
Q:What is the balance between licensing content to third-party streamers versus keeping it exclusive for Paramount+?
A:Content licensing is a growth business for us, but we believe in using our most valuable IP to grow our owned and operated assets.
Q:What are your thoughts on bidding for more sports rights?
A:We have a robust sports portfolio and will continue to take a disciplined approach to acquiring sports rights.
Q:What are your expectations for linear declines and streaming growth?
A:The primary factor driving revenue trends is the subscriber decline, which we expect to continue.
Q:Why haven't you sought to acquire 101 Studios?
A:We value our relationship with Taylor Sheridan and prefer the current partnership model.
Q:What are your thoughts on potential bundling or M&A opportunities?
A:We are happy with our current success and will take an opportunistic look at bundling opportunities.
Q:What drove the upside in TV media performance this quarter?
A:The strength of CBS and the broadcast slate was a big driver, helping to offset softness in the digital landscape.
Q:Are you reiterating your guidance for OIBDA and free cash flow?
A:The fundamental drivers of earnings improvement remain in place, but the macro environment creates uncertainty.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the current state of pricing pressure in digital advertising and the potential impact of reverse compensation on affiliate revenue.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Cheeks
Dutton Ranch
Mission
Paramount SVOD
Robbins
SVOD original
Showtime series
Sonic
South Park
Yellowstone series
appeal
approach
audience
bowl
broadcast
churn
content investment
driver Paramount
efficiency
engagement driver
expectation
franchise
momentum
monetization
movie
network
platform
portfolio
premiere
series Paramount
service
show CBS
slate
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start driver
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title
PARA Transcript
Paramount Global (NASDAQ:PARA) Q1 2025 Earnings Call Transcript
Unknown5-9
The earnings call presents a mixed picture: positive elements include a 2% revenue increase, a 16% rise in D2C subscription revenue, and improved OIBDA. However, challenges such as declining affiliate and D2C advertising revenue, macroeconomic uncertainties, and management's vague responses in the Q&A section temper optimism. The company's content strategy and franchise expansion are promising, but the lack of clear guidance and potential revenue pressures suggest a neutral short-term stock price movement.
Earnings call transcript: Paramount Global Q1 2025 exceeds earnings expectations
Unknown5-8
The earnings call reveals concerns about declining subscriber numbers, regulatory risks impacting affiliate revenue, and increased competition in digital advertising. Despite some positive metrics like revenue growth and improved churn rate, the Q&A section highlights management's avoidance of direct answers on key issues, creating uncertainty. The overall sentiment is negative, with potential regulatory changes and economic factors posing risks to future performance.
Paramount Global (PARA) Q3 2024 Earnings Call Transcript
Unknown11-8
The earnings call reveals mixed signals: strong adjusted OIBDA growth and D2C subscription growth, but concerns about negative free cash flow, regulatory risks, and declining licensing revenue. The Q&A section highlighted management's strategic focus but also revealed some uncertainties, particularly in international markets and partnerships. The expected domestic profitability of Paramount+ in 2025 and cost-saving initiatives are positive, yet the market might be wary due to economic pressures and content production risks. Without a market cap, the overall sentiment suggests a neutral stock price movement.
Paramount Global (PARA) Q1 2024 Earnings Call Transcript
Positive4-29
The earnings call reveals strong financial performance, with significant revenue and OIBDA growth driven by successful advertising and D2C segments. Despite challenges like the pay TV decline and content engagement, positive factors such as Paramount+'s growth, improved leverage, and free cash flow highlight the company's resilience. While there are risks related to regulatory approvals and dividend reductions, the overall sentiment is positive, especially with the anticipated profitability in 2025 and strategic cost management. The absence of a Q&A session limits insight into management's direct responses to concerns.
PARA Slides
PARA Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
