MSG Entertainment (MSGE) Q1 2025 earnings summary

Executive summary

• Fiscal Q1 2025 revenue was $138.7 million, down 2% year-over-year, with a net loss of $19.3 million, a 45% improvement from the prior year, and adjusted operating income (AOI) of $1.9 million, up from a loss of $0.2 million, reflecting operational improvements and lower expenses.

• The Garden hosted a record number of concerts for a fiscal Q1, while Knicks and Rangers regular seasons began, and premium hospitality sales and renewals remained strong.

• Christmas Spectacular advanced ticket sales are up 15% year-over-year, with over one million guests expected and record revenues anticipated; the show expanded to 199 performances for 2024.

• New multi-year sponsorships were secured with Lenovo, Motorola Mobility, and Abu Dhabi's Department of Culture and Tourism, and the Verizon sponsorship was extended.

• MSG Entertainment completed its spin-off from Sphere Entertainment in April 2023, becoming a pure-play live entertainment company with iconic venues in New York and Chicago.

Financial highlights

• Fiscal 2024 revenue reached $959.3 million, up 13% year-over-year, with Q1 revenue at $138.7 million, down from $142.2 million year-over-year.

• Operating income for FY2024 was $111.9 million; AOI was $211.5 million, and Q1 AOI was $1.9 million, up $2.1 million from the prior year.

• Entertainment offerings revenue for Q1 was $115.1 million, down 1% year-over-year, while food, beverage, and merchandise revenue fell 18% to $19.0 million.

• Arena license fees and other leasing revenue rose 90% to $4.7 million in Q1.

• Direct operating expenses decreased 4% to $97.7 million, and SG&A expenses declined 6% to $45.7 million in Q1.

Outlook and guidance

• AOI is expected to grow mid-to-high single digits for FY25, despite added costs from bringing sponsorship sales in-house.

• Management expects continued strong demand for live events and shared experiences, with confidence in long-term value creation.

• The business is highly seasonal, with stronger performance expected in the second and third fiscal quarters due to the Christmas Spectacular and sports events.

• Sufficient liquidity is anticipated for the foreseeable future, supported by cash, cash flow, and credit facility availability.

• Management expects to utilize net operating losses in fiscal 2025 and become a federal taxpayer by year-end.