Financial Data and Key Metrics Changes - Total company revenue for Q1 2022 finished down 1%, including a 6 percentage-point impact from the Super Bowl, but grew 5% when excluding this impact [45] - Direct-to-consumer (D2C) revenue reached nearly $1.1 billion, reflecting an 82% year-over-year growth, with subscription revenue increasing by 95% [37][39] - Total global streaming subscribers were 62.4 million at quarter-end, with Paramount+ adding 6.8 million subscribers globally [38][39] - Total company adjusted OIBDA was $913 million, down year-over-year, reflecting increased investment in D2C and the return to theatrical releases [45] Business Line Data and Key Metrics Changes - D2C segment revenue grew 82% year-over-year, driven by a 95% increase in subscription revenue and a 59% increase in advertising revenue [37] - TV Media segment revenue declined 6% year-over-year, with an 8-percentage-point impact from the Super Bowl in the prior year [42] - Filmed Entertainment generated revenue of $624 million, benefiting from the release of three number one movies in Q1 [43] Market Data and Key Metrics Changes - Paramount+ saw continued improvement in engagement, with domestic monthly active rates improving quarter-over-quarter and year-over-year [40] - Pluto TV added 3.1 million users in Q1, bringing its global footprint to 67.5 million monthly active users, with revenue growing 51% [41] Company Strategy and Development Direction - The company is focused on a differentiated playbook that includes broad content offerings, a diversified streaming business model, multiple platforms, and a global operating footprint [8][35] - Paramount+ is set to expand into new markets, including the UK and South Korea in June 2022, with further launches planned for major European markets in the second half of the year [32][34] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the long-term growth potential in the streaming market, believing that the total addressable market (TAM) is larger than perceived [54][56] - The company expects healthy D2C subscriber and revenue growth, with a long-term goal of reaching over 100 million global D2C subscribers by 2024 [50] Other Important Information - The company finished the quarter with $5.3 billion in cash and total debt of $16.8 billion, reflecting early debt repayment and new debt issuance [46][47] - The impact of Russia's invasion of Ukraine is expected to negatively affect full-year OIBDA by $70 million to $80 million [48] Q&A Session Summary Question: Concerns about streaming market saturation and subscriber targets - Management believes the TAM in streaming is large and continues to grow, with a differentiated playbook that includes both paid and free offerings [54][56] Question: Margin profiles in legacy media and India expansion - Management sees potential for margin improvement due to their diversified media model and views India as a fundamentally attractive market with significant growth potential [60][62] Question: Content spend and free cash flow conversion - Management acknowledges the gap between cash content spend and content expense but expects improvements in free cash flow conversion as production normalizes and streaming investment ramps down [71] Question: Importance of Showtime as a separate brand - Management views Showtime as an additive service targeting specific consumer segments, with plans for greater integration with Paramount+ in the future [78] Question: Advertising market dynamics and D2C cadence for the year - Management reports solid growth in advertising revenue, with expectations for a busy second half of the year driven by international launches and a strong content slate [86][88]
Paramount (PARAA) - 2022 Q1 - Earnings Call Transcript