Starz Entertainment Corp(STRZ) - 2026 Q1 - Quarterly Results

Q2 2025 Earnings Release Financial Highlights For the quarter ended June 30, 2025, Starz Entertainment Corp. reported a net loss of $42.5 million on revenues of $319.7 million, generating an Adjusted OIBDA of $33.4 million despite an operating loss of $26.9 million, with management reiterating its outlook for sequential revenue and OTT subscriber growth for the remainder of 2025 | Metric | Value | | :--- | :--- | | Revenue | $319.7 Million | | Operating Loss | $(26.9) Million | | Net Loss | $(42.5) Million | | Net Loss Per Share | $(2.54) | | Adjusted OIBDA | $33.4 Million | - Management reaffirms its forecast for sequential growth in both revenue and OTT subscribers in the third and fourth quarters of 2025[2] Management Commentary CEO Jeffrey Hirsch highlighted significant progress since becoming a standalone company, citing strong audience resonance with its content strategy, evidenced by the successful premiere of 'Outlander: Blood of my Blood', with the company focused on returning to revenue growth, improving margins, and increasing free cash flow conversion, supported by a compelling content slate and an improved cost structure - The premiere of 'Outlander: Blood of my Blood' achieved the third-highest subscriber additions for a series premiere in the company's history, indicating a successful content strategy[3] - Key strategic objectives include returning to revenue growth, improving margins, and increasing the conversion of Adjusted OIBDA to free cash flow[3] Operational and Financial Position As of June 30, 2025, STARZ had total net debt of $573.5 million and a Total Adjusted OIBDA Leverage Ratio of 3.2x, experiencing a sequential decline in subscribers, with total U.S. subscribers decreasing by 410,000 to 17.6 million, primarily due to pressures on linear subscribers and lower OTT additions | Metric | Value | | :--- | :--- | | Term Loan A Outstanding | $300.0 Million | | Senior Unsecured Notes | $325.1 Million | | Cash | $51.6 Million | | Total Net Debt | $573.5 Million | | Total Adjusted OIBDA Leverage Ratio (TTM) | 3.2x | | Subscriber Category | Q2 2025 Count | Sequential Decline | | :--- | :--- | :--- | | U.S. OTT Subscribers | 12.2 Million | 120,000 | | Total U.S. Subscribers | 17.6 Million | 410,000 | | Total North American Subscribers | 19.1 Million | 520,000 | Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, Starz reported total assets of $2.09 billion, a decrease from $2.17 billion at the end of the prior quarter, with total liabilities also decreasing slightly to $1.38 billion from $1.41 billion, reflecting shifts in accounts like 'Due from/to LG Studios Business' following the company's separation | Balance Sheet Item | June 30, 2025 (in millions) | March 31, 2025 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $51.6 | $17.8 | | Total current assets | $123.2 | $170.5 | | Total assets | $2,091.6 | $2,173.2 | | Total current liabilities | $677.1 | $622.5 | | Debt | $611.7 | $699.9 | | Total liabilities | $1,379.3 | $1,406.8 | | Total equity | $712.3 | $766.4 | Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, Starz reported a total revenue of $319.7 million, down from $347.6 million in the same period last year, posting an operating loss of $26.9 million, a significant shift from an operating income of $10.1 million year-over-year, consequently resulting in a net loss of $42.5 million, compared to a net income of $4.2 million in Q2 2024 | Income Statement Item | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | OTT revenue | $221.1 | $234.4 | | Linear and other revenue | $98.6 | $113.2 | | Total revenue | $319.7 | $347.6 | | Total expenses | $346.6 | $337.5 | | Operating (loss) income | $(26.9) | $10.1 | | Net (loss) income | $(42.5) | $4.2 | | Basic and diluted net (loss) income per share | $(2.54) | $0.26 | Condensed Consolidated Statements of Cash Flows In Q2 2025, Starz generated $65.4 million in cash from operating activities, a significant improvement from a $33.5 million use of cash in the prior-year quarter, with net cash used in financing activities totaling $106.8 million, primarily due to a distribution to New Lionsgate upon separation, ending the quarter with $51.6 million in cash and cash equivalents, an increase of $33.8 million during the period | Cash Flow Activity | Q2 2025 (in millions) | Q2 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $65.4 | $(33.5) | | Net cash provided by (used in) investing activities | $75.2 | $(71.6) | | Net cash (used in) provided by financing activities | $(106.8) | $93.3 | | Net change in cash and cash equivalents | $33.8 | $(11.8) | | Cash and cash equivalents – end of period | $51.6 | $25.2 | Supplemental Information Reconciliation of Operating Income (Loss) to Adjusted OIBDA The company provides a reconciliation from the GAAP measure of Operating Income (Loss) to the non-GAAP measure of Adjusted OIBDA, where for Q2 2025, an operating loss of $26.9 million was adjusted for items like depreciation, amortization, and restructuring costs to arrive at an Adjusted OIBDA of $33.4 million, with the trailing twelve months ended June 30, 2025, showing an Adjusted OIBDA of $178.6 million | Reconciliation Item (in millions) | Q2 2025 | Trailing Twelve Months | | :--- | :--- | :--- | | Operating income (loss) | $(26.9) | $(207.3) | | Depreciation and amortization | $48.7 | $177.4 | | Restructuring and other | $6.4 | $191.1 | | Adjusted share-based compensation expense | $5.2 | $17.5 | | Adjusted OIBDA | $33.4 | $178.6 | - Restructuring and other costs for Q2 2025 totaled $6.4 million, which included $4.5 million in transaction costs related to strategic activities and $2.2 million for a one-time modification of equity awards connected to the Separation[16][17] Subscriber Data Starz experienced a decline in its total subscriber base over the past year, with total Starz Networks subscribers standing at 19.08 million as of June 30, 2025, down from 21.30 million a year prior, a decline observed in both OTT and linear segments across the U.S. and Canada, with linear subscribers showing a more pronounced downward trend | Subscriber Category (in millions) | 6/30/2025 | 3/31/2025 | 6/30/2024 | | :--- | :--- | :--- | :--- | | Total Domestic Subscribers | 17.59 | 18.00 | 18.93 | | - Domestic OTT Subscribers | 12.18 | 12.30 | 12.44 | | - Domestic Linear Subscribers | 5.41 | 5.70 | 6.49 | | Total Starz Networks Subscribers | 19.08 | 19.60 | 21.30 | Use of Non-GAAP Financial Measures Starz utilizes non-GAAP financial measures, such as Adjusted OIBDA and Adjusted OIBDA Leverage Ratio, to evaluate its operating performance, defining Adjusted OIBDA as operating income adjusted for depreciation, amortization, adjusted share-based compensation, and restructuring costs, as management believes these metrics provide useful information to investors by eliminating items that may not reflect the fundamental performance of the business - Adjusted OIBDA is defined as operating income (loss) adjusted for depreciation, amortization, adjusted share-based compensation, restructuring costs, and other unusual items[25] - Adjusted OIBDA Leverage Ratio is defined as Net Corporate Debt divided by Adjusted OIBDA for the trailing twelve-month period[26] - The company uses these non-GAAP measures to assess performance, believing they eliminate non-fundamental, infrequent, or non-cash expenses, which is a common practice in the entertainment industry[27][28]