Starz Entertainment (STRZ) Q2 2025 earnings summary

Executive summary

• Completed separation from Lionsgate Studios, now operating as a standalone public company focused on premium subscription video services in the U.S. and Canada, with a digital-first, profitable growth strategy targeting women and underrepresented audiences.

• Restructuring initiatives led to significant content write-downs and international business exits, with ongoing evaluation of programming strategy.

• Management highlighted strong content performance, notably high subscriber additions from the 'Outlander: Blood of my Blood' premiere, and is focused on returning to revenue growth, margin improvement, and higher free cash flow conversion.

• Subscriber base declined year-over-year, impacting both OTT and linear revenue streams.

Financial highlights

• Q2 2025 revenue was $319.7 million, down 8% from $347.6 million in Q2 2024, with a net loss of $42.5 million and operating loss of $26.9 million.

• Adjusted OIBDA was $33.4 million, down from $56.3 million year-over-year, mainly due to higher content amortization.

• Cash and cash equivalents at quarter-end were $51.6 million, up from $17.8 million a year ago.

• Net debt at quarter-end was $573.5 million, down $42.1 million sequentially.

Outlook and guidance

• Management expects sequential revenue and OTT subscriber growth in Q3 and Q4 2025, driven by strong content premieres and improved cost structure.

• Projecting approximately $200 million adjusted OIBDA in calendar 2025 and 70% conversion to unleveraged free cash flow in 2026.

• Targeting a 20% margin run rate by 2028, supported by lower content costs and increased ownership of original programming.

• Leverage expected to rise to 3.5x in September due to content payments, but to end the year around 3.1x.

• Cash flow from operations, available credit, and receivables monetization expected to meet operational and debt service needs for the next twelve months and beyond.