PSKY Misses Q4 Earnings Estimates, Provides Weak Q1 Guidance

Core Insights - Paramount Skydance Corporation (PSKY) reported fourth-quarter 2025 results, with both revenue and net loss missing the Zacks Consensus Estimate, marking the first full quarter under new management led by Chairman and CEO David Ellison [1][3] Financial Performance Overview - PSKY's total revenues for Q4 2025 were $8.14 billion, slightly below the consensus estimate by 0.32%, but within the company's guidance range of $8.10-$8.30 billion, reflecting a 2% year-over-year growth driven by Direct-to-Consumer (DTC) momentum [2] - The company reported a GAAP net loss of $573 million, or 52 cents per share, with an adjusted loss of 12 cents per share, wider than the consensus estimate of a loss of 2 cents [3] - GAAP operating loss was $339 million in Q4 2025, a significant decline from an operating income of $337 million in Q4 2024, primarily due to $465 million in restructuring and severance charges [4] Segment Performance - The DTC segment generated revenues of $2.21 billion, a 10% increase year-over-year, with Paramount+ revenues reaching $1.837 billion, up 17% year-over-year, ending 2025 with approximately 79 million paid subscribers [6] - Non-Paramount+ revenues, mainly from Pluto TV, fell 16% year-over-year, leading to an Adjusted OIBDA loss of $158 million in Q4 [7] - The TV Media segment reported revenues of $4.71 billion, down about 5% year-over-year, but Adjusted OIBDA increased by 14.7% to $1.09 billion, showcasing operational efficiency [8] Full-Year and Future Outlook - For the full year 2025, PSKY achieved revenues close to $29 billion and adjusted OIBDA of approximately $3 billion, aligning with prior guidance [5] - For Q1 2026, PSKY expects revenues of $7.15-$7.35 billion, indicating flat to modest growth year-over-year, while reaffirming a target of $30 billion in total revenues for full-year 2026, reflecting about 4% growth [13][14] - The company anticipates adjusted EBITDA of $3.8 billion for 2026, representing a 12.7% margin and approximately 27% growth in profitability year-over-year [14] Strategic Initiatives - Management indicated that the studio is in a rebuild phase, with significant profitability improvements not expected until 2027, planning to increase theatrical releases from 8 to 16 in 2026 [11] - DTC is projected to be the primary growth driver, with Paramount+ expected to accelerate subscriber and revenue growth in 2026 [15] - PSKY is targeting investment-grade debt metrics by the end of 2027, with anticipated efficiency savings of at least $3 billion through 2027 [12]