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.
• Sphere segment revenues were $198.9 million for the quarter (up 14% YoY) and $691.2 million for the nine months (up 36% YoY).
• MSG Networks segment revenues were $75.4 million for the quarter (down 15% YoY) and $283.1 million for the nine months (down 11% YoY).
• The Company reported an operating loss of $240.6 million for the quarter, a 47% increase compared to $163.1 million in the prior year quarter.
• The Company reported an operating loss of $294.6 million for the nine months, a 1% decrease compared to $291.9 million in the prior year period.
• Adjusted operating income was $39.2 million for the quarter, an 8% increase compared to $36.4 million in the prior year quarter.
• Adjusted operating income was $200.1 million for the nine months, a 50% increase compared to $133.8 million in the prior year period.
• Sphere adjusted operating income was $32.4 million for the quarter (up 90% YoY) and $146.6 million for the nine months (up 166% YoY).
• MSG Networks adjusted operating income was $6.8 million for the quarter (down 65% YoY) and $53.5 million for the nine months (down 32% YoY).
• Net loss attributable to stockholders was $176.0 million for the quarter and $216.4 million for the nine months.
• Basic and diluted loss per share was $4.84 for the quarter and $5.99 for the nine months.
• Cash, cash equivalents, and restricted cash were $527.3 million as of September 30, 2026, compared to $521.3 million as of December 31, 2025.
• Net cash provided by operating activities was $159.5 million for the nine months ended September 30, 2026, compared to $63.1 million in the prior year period.
• Net cash used in financing activities was $90.0 million for the nine months ended September 30, 2026.
• Deferred revenue was $176.2 million as of September 30, 2026, down from $192.8 million as of December 31, 2025.
• Long-term debt, net, was $708.8 million as of September 30, 2026, down from $767.4 million as of December 31, 2025.
• Goodwill was $80.6 million as of September 30, 2026, down from $258.1 million as of December 31, 2025, following a $177.6 million non-cash goodwill impairment charge recorded in the quarter.

Guidance and Future Outlook:

• Executive Chairman and CEO James L. Dolan stated the Sphere segment remains on track to deliver substantial growth in the 2026 calendar year.
• The Company continues to pursue a long-term vision for Sphere, including a global network of venues and a growing slate of original content.
• Production is underway on The Rocky Horror Picture Show at Sphere, expected to debut by the end of March 2027.
• Metallica's 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.
• The Company has announced plans for Sphere venues in Abu Dhabi and National Harbor in addition to Las Vegas.

Business Segments and Product Lines:

• Sphere Segment:
  • The Wizard of Oz at Sphere exceeded $500 million in ticket sales with over 4 million tickets sold since its August 2025 debut and surpassed its 1,000th showing in early October 2026.
  • Enhanced and expanded 4D effects for The Wizard of Oz debuted in late September 2026.
  • The Sphere Experience generated $13.1 million in additional revenue compared to the prior year quarter, driven by 241 performances of The Wizard of Oz versus 220 combined performances in the prior year.
  • Event-related revenues increased $6.1 million due to higher concert revenues, including three additional concert residency shows held in the quarter.
  • Sponsorship, Exosphere advertising, and suite license fees increased $6.2 million, driven by higher Exosphere advertising revenues.
  • Direct operating expenses for the Sphere segment were $83.8 million, up 6% YoY, primarily due to higher per-show expenses and increased performances for The Wizard of Oz.
• MSG Networks Segment:
  • Distribution revenue decreased $12.8 million, primarily reflecting a 15.5% decrease in total subscribers.
  • Direct operating expenses increased $1.0 million to $59.3 million.
  • Selling, general, and administrative expenses increased $3.0 million to $10.0 million, driven by higher employee compensation and other costs, partially offset by lower advertising and marketing costs.

Market and Competitive Landscape:

• The Company operates as a leader in immersive experiences, technology, and media, including the Sphere experiential medium and MSG Networks regional sports and entertainment networks.
• MSG Networks operates MSG Network, MSG Sportsnet, and the MSG+ direct-to-consumer streaming product.

Risks and Challenges:

• The MSG Networks segment reported an operating loss of $173.6 million for the quarter, a 121% increase compared to the prior year, primarily due to a $177.6 million non-cash goodwill impairment charge and a decrease in revenues.
• The Company noted that prior period financials were revised for corrections of immaterial errors related to historical goodwill impairment charges at MSG Networks.
• Forward-looking statements involve risks and uncertainties, including financial community perceptions and factors described in the Company's SEC filings.

Management Commentary and Tone:

• Executive Chairman and CEO James L. Dolan expressed confidence that the Sphere segment is on track for substantial growth in 2026.
• Management highlighted progress on the long-term vision for a global network of venues and original content.
• The tone regarding the Sphere segment is positive, citing record ticket sales and extended residencies.
• The tone regarding MSG Networks acknowledges significant headwinds, including subscriber loss and a large impairment charge.

Other Key Points:

• The Company announced a new multi-year sponsorship agreement with Lyft in October 2026.
• A non-cash goodwill impairment charge of $177.6 million was recorded in the quarter for MSG Networks, compared to $98.8 million in the prior year quarter.
• Share-based compensation expense was $14.7 million for the quarter and $46.3 million for the nine months.
• Depreciation and amortization expense was $83.4 million for the quarter and $252.0 million for the nine months.
• The Company has Class A and Class B common stock, with 29,403 Class A shares and 6,867 Class B shares outstanding as of September 30, 2026.
• Treasury stock held at cost was $50.0 million as of September 30, 2026.
• Accumulated deficit increased to $461.0 million as of September 30, 2026, from $251.1 million as of December 31, 2025.