Falcon's Beyond (FBYD) - 2025 Q2 - Quarterly Results

Executive Summary This section provides a high-level overview of Falcon's Beyond's financial performance and key operational achievements for the second quarter of 2025 Q2 2025 Key Financial Highlights Falcon's Beyond reported $2.5 million consolidated revenue, with FCG and PDP contributing significant revenue and a substantial hotel sale gain Q2 2025 Key Financial Highlights | Metric | Q2 2025 Value | | :------------------------------------------------ | :------------ | | Consolidated Revenue | $2.5 Million | | FCG Revenue (Unconsolidated Subsidiary) | $12.3 Million | | PDP Gain on Sale of Sol Tenerife Hotel (Unconsolidated JV) | $59.6 Million | | PDP Revenue from Continuing Operations (Unconsolidated JV) | $6.5 Million | Second Quarter 2025 Financial Results This section details Falcon's Beyond's Q2 2025 financial performance, including revenue, net income, and Adjusted EBITDA Revenue Analysis Consolidated revenue increased, FCG revenue decreased due to project timing, and PDP's continuing revenue grew, boosted by a hotel sale gain Q2 2025 Revenue Performance | Metric | Q2 2025 | Q2 2024 | Change (YoY) | % Change (YoY) | | :------------------------------------------------ | :------ | :------ | :----------- | :------------- | | Falcon's Beyond Consolidated Revenue | $2.5M | $1.8M | +$0.7M | +38.9% | | FCG Revenue | $12.3M | $15.7M | -$3.4M | -21.6% | | FCG Operating Income | $2.4M | $2.3M | +$0.1M | +4.3% | | FCG Net Income | $2.3M | $2.5M | -$0.2M | -8.0% | | Falcon's Beyond Share of FCG Net Income | $0.7M | N/A | N/A | N/A | | PDP Revenue (Continuing Operations) | $6.5M | $5.9M | +$0.6M | +10.2% | | PDP Net Income (Continuing Operations) | $0.8M | ($0.1)M | +$0.9M | N/A | | PDP Net Income (incl. hotel sale gain) | $60.9M | N/A | N/A | N/A | Net Income Analysis Consolidated net income significantly increased to $25.1 million in Q2 2025, primarily driven by a substantial gain from the Tenerife hotel sale and other financial adjustments Consolidated Net Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------------------------------ | :------ | :------ | :----- | | Consolidated Net Income | $25.1M | $8.0M | +$17.1M | - Primary drivers for the increase in consolidated net income: * $29.8 million share of gain from the sale of the Tenerife hotel[4] * $3.5 million credit to transaction expenses from a settlement[4] * $1.6 million increase in unrealized foreign currency transactional gains[4] * $2.6 million quarter-over-quarter change in fair value of warrant liabilities[4] - Partially offset by: * $5.3 million other than temporary impairment of remaining investment in PDP[4] * $13.0 million decrease in change in the fair value of earnout liabilities[4] * $0.3 million decrease in share of income from equity method investments[4] * $0.4 million increase in interest expense[4] * $1.3 million increase in other operating expenses related to the new Falcon's Attractions business[4] Adjusted EBITDA Adjusted EBITDA loss decreased by $0.2 million to $(1.7) million in Q2 2025, primarily due to increased foreign exchange gains, partially offset by decreased equity method gains and increased operating losses Adjusted EBITDA (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :------------- | :------ | :------ | :----- | | Adjusted EBITDA Loss | $(1.7)M | $(1.9)M | +$0.2M | | Foreign exchange transaction gains | +$1.6M | N/A | N/A | | Share of gain from equity method investments | -$0.3M | N/A | N/A | | Losses from operations (OES integration) | +$1.1M | N/A | N/A | Other Business Highlights This section outlines Falcon's Beyond's strategic acquisitions and divestitures, including the OES acquisition and the sale of the Sol Tenerife hotel Strategic Acquisitions and Divestitures Falcon's Beyond completed the acquisition of key assets from Oceaneering Entertainment Systems (OES) to bolster its attraction integration services and sold the Sol Tenerife hotel through its PDP joint venture, distributing $27 million from the net proceeds - Oceaneering Entertainment Systems (OES) Transaction (May 9, 2025): * Acquired key tangible assets, intellectual property (patented technologies, proprietary engineering/manufacturing processes)[7] * Assumed lease for a 106,000+ sq-ft facility in Orlando, FL for Falcon's Beyond Brands division[7] * Hired key OES team members in February 2025 to bolster research, development, manufacturing, and attraction integration services[7] - Tenerife Hotel Sale (May 30, 2025): * Completed the sale of the Sol Tenerife Hotel through the PDP joint venture with Melia[7] * Transaction structured as a sale of all shares of Tertian XXI, S.L., which owned the hotel's real estate assets[7] * Purchasers paid an aggregate of €71 million[7] * PDP distributed $27 million to Falcon's Beyond from the net proceeds[7] About Falcon's Beyond This section provides an overview of Falcon's Beyond, highlighting its mission as an innovator in immersive storytelling and detailing its three core business units Company Overview and Business Units Falcon's Beyond is an innovator in immersive storytelling, operating across content, technology, and experiences, activating intellectual property through three core business units: Falcon's Creative Group (FCG), Falcon's Beyond Destinations (FBD), and Falcon's Beyond Brands (FBB) - Falcon's Beyond is a visionary innovator in immersive storytelling, focusing on content, technology, and experiences, and invents immersive rides, attractions, and technologies globally[8] - Core Business Units: * Falcon's Creative Group (FCG): Creates master plans, designs attractions and experiential entertainment, and produces content, interactives, and software[8] * Falcon's Beyond Destinations (FBD): Develops diverse entertainment experiences using owned and third-party licensed IP, spanning location-based entertainment, dining, and retail[8] * Falcon's Beyond Brands (FBB): Brings brands and IP to life through animation, movies, licensing, merchandising, gaming, and ride/technology sales[8][14] Financial Statements This section presents Falcon's Beyond's condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, for the periods ended June 30, 2025 Condensed Consolidated Balance Sheets The balance sheet shows a significant increase in cash and cash equivalents and total assets as of June 30, 2025, compared to December 31, 2024, with a positive shift in total equity from a deficit Condensed Consolidated Balance Sheets (Selected Items) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $26,064 | $825 | | Total current assets | $28,547 | $4,134 | | Total assets | $89,207 | $61,231 | | Total current liabilities | $55,965 | $45,640 | | Total liabilities | $88,283 | $81,328 | | Total equity (deficit) | $924 | ($20,097) | Condensed Consolidated Statements of Operations The statements of operations show a substantial increase in net income for both the three and six months ended June 30, 2025, driven by a significant share of gain from equity method investments, despite an increase in operating expenses Condensed Consolidated Statements of Operations (Selected Items) | Item | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenue | $2,549 | $1,798 | $4,257 | $3,314 | | Total operating expenses | $3