Sphere Entertainment Co. — Third Quarter 2026 Earnings Summary

Financial Performance

• Total revenues for the three months ended September 30, 2026, were $274.3 million, an increase of $11.7 million (4%) compared to $262.5 million in the prior year quarter.
• Total revenues for the nine months ended September 30, 2026, were $974.3 million, an increase of $148.5 million (18%) compared to $825.8 million in the prior year period.
• Total operating loss for the three months ended September 30, 2026, was $240.6 million, an increase of $77.5 million (47%) compared to $163.1 million in the prior year quarter.
• Total operating loss for the nine months ended September 30, 2026, was $294.6 million, a decrease of $2.8 million (1%) compared to $291.9 million in the prior year period.
• Adjusted operating income for the three months ended September 30, 2026, was $39.2 million, an increase of $2.8 million (8%) compared to $36.4 million in the prior year quarter.
• Adjusted operating income for the nine months ended September 30, 2026, was $200.1 million, an increase of $66.3 million (50%) compared to $133.8 million in the prior year period.
• Net loss attributable to stockholders for the three months ended September 30, 2026, was $176.0 million, compared to $125.7 million in the prior year quarter.
• Net loss attributable to stockholders for the nine months ended September 30, 2026, was $216.4 million, compared to $55.8 million in the prior year period.
• Basic and diluted loss per share for the three months ended September 30, 2026, was $4.84, compared to $3.47 in the prior year quarter.
• Basic and diluted loss per share for the nine months ended September 30, 2026, was $5.99, compared to $1.54 in the prior year period.
• Cash, cash equivalents, and restricted cash as of September 30, 2026, were $527.3 million, compared to $521.3 million as of December 31, 2025.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $159.5 million, compared to $63.1 million in the prior year period.
• Deferred revenue as of September 30, 2026, was $176.2 million, compared to $192.8 million as of December 31, 2025.
• Total debt (current and long-term) as of September 30, 2026, was $768.4 million ($59.7 million current, $708.8 million long-term), compared to $830.4 million ($63.0 million current, $767.4 million long-term) as of December 31, 2025.

Guidance and Future Outlook

• Executive Chairman and CEO James L. Dolan stated the Sphere segment remains on track to deliver substantial growth for the calendar year.
• The Company continues to pursue a long-term vision for a global network of venues and a growing slate of original content.
• The Company expects The Rocky Horror Picture Show at Sphere to debut by the end of March 2027.
• Metallica's new concert residency at Sphere includes 24 concerts planned through March 2027.
• Backstreet Boys and the Eagles have extended their residencies to 63 and 74 planned nights, respectively.
• Oprah Winfrey and John Mayer have announced new residencies for 2027.

Business Segments and Product Lines

• Sphere Segment:
  • Revenues were $198.9 million for the three months ended September 30, 2026, an increase of $24.8 million (14%) compared to $174.1 million in the prior year quarter.
  • Revenues were $691.2 million for the nine months ended September 30, 2026, an increase of $184.0 million (36%) compared to $507.2 million in the prior year period.
  • The Sphere Experience revenues increased $13.1 million in the quarter, driven by 241 performances of The Wizard of Oz at Sphere compared to 220 combined performances in the prior year quarter.
  • The Wizard of Oz at Sphere exceeded $500 million in ticket sales and sold over four million tickets since its August 2025 debut, surpassing its 1,000th showing in early October 2026.
  • Enhanced and expanded 4D effects for The Wizard of Oz debuted in late September 2026.
  • Event-related revenues increased $6.1 million in the quarter due to higher concert revenues from three additional residency shows.
  • Sponsorship, Exosphere advertising, and suite license fee revenues increased $6.2 million in the quarter.
  • Direct operating expenses for the Sphere segment were $83.8 million in the quarter, an increase of $5.1 million (6%) compared to the prior year quarter.
  • Sphere segment operating loss was $67.0 million in the quarter, an improvement of $17.5 million (21%) compared to $84.4 million in the prior year quarter.
  • Sphere segment adjusted operating income was $32.4 million in the quarter, an increase of $15.3 million (90%) compared to $17.1 million in the prior year quarter.
• MSG Networks Segment:
  • Revenues were $75.4 million for the three months ended September 30, 2026, a decrease of $13.0 million (15%) compared to $88.4 million in the prior year quarter.
  • Revenues were $283.1 million for the nine months ended September 30, 2026, a decrease of $35.4 million (11%) compared to $318.5 million in the prior year period.
  • Distribution revenue decreased $12.8 million in the quarter, primarily reflecting a 15.5% decrease in total subscribers.
  • MSG Networks segment operating loss was $173.6 million in the quarter, an increase of $94.9 million compared to $78.7 million in the prior year quarter.
  • MSG Networks segment adjusted operating income was $6.8 million in the quarter, a decrease of $12.5 million (65%) compared to $19.3 million in the prior year quarter.

Market and Competitive Landscape

• The Company operates Sphere, an experiential medium with venues in Las Vegas, with announced plans for venues in Abu Dhabi and National Harbor.
• MSG Networks operates two regional sports and entertainment networks (MSG Network and MSG Sportsnet) and a direct-to-consumer streaming product, MSG+.
• The Company announced a new multi-year sponsorship agreement with Lyft.

Risks and Challenges

• MSG Networks segment operating loss for the quarter included a non-cash goodwill impairment charge of $177.6 million, compared to $98.8 million in the prior year quarter.
• The Company identified and corrected immaterial errors related to the misallocation of deferred tax liabilities between reporting units regarding historical goodwill impairment charges at MSG Networks, resulting in revised prior period financials.
• Selling, general, and administrative expenses increased due to higher employee compensation and other cost increases, partially offset by mark-to-market adjustments on share-based compensation awards due to a decrease in stock price.

Management Commentary and Tone

• Executive Chairman and CEO James L. Dolan expressed confidence that the Sphere segment is on track to deliver substantial growth for the calendar year.
• Management highlighted progress on the long-term vision of a global network of venues and a growing slate of original content.
• The tone regarding the Sphere segment is positive, citing revenue growth and improved adjusted operating income.
• The tone regarding MSG Networks acknowledges challenges, noting significant declines in distribution revenue and increased operating losses driven by impairments.

Other Key Points

• The Company revised previously issued financial statements for the three and nine months ended September 30, 2025, and the six-month transition period ended December 31, 2024, to correct errors related to goodwill impairment charges at MSG Networks.
• The Conference Call will be webcast live at 11:00 a.m. ET on November 5, 2026, with a replay available until November 12, 2026.
• The Company reported a loss on extinguishment of debt of $2.1 million for the nine months ended September 30, 2025, and a gain of $346.1 million for the same period in 2025.
• Interest expense was $8.0 million for the three months ended September 30, 2026, compared to $9.4 million in the prior year quarter.
• Interest income was $4.9 million for the three months ended September 30, 2026, compared to $2.7 million in the prior year quarter.