Lionsgate Studios (NYSE:LION) reported a 41% increase in fiscal second-quarter revenue as growth in its film and television businesses helped drive a sharp improvement in profitability. Executives said upcoming franchise releases, television deliveries and library licensing underpin their expectations for continued growth.
Revenue rose to $669 million, while adjusted operating income before depreciation and amortization, or OIBDA, reached $72 million. Operating income was $29 million. The company reported a diluted loss of $0.05 per share and adjusted diluted earnings of $0.07 per share.
CEO Jon Feltheimer said the results reinforced management’s confidence in significant adjusted OIBDA growth for fiscal 2027 and provided greater visibility into fiscal 2028 and 2029. CFO Jimmy Barge also expects full-year growth in free cash flow, although the company used $8 million of adjusted free cash flow in the quarter.
Film and television businesses grow
Motion picture revenue increased 30% year over year to $359 million, with segment profit rising to $89 million. Barge attributed the performance to continued contributions from “Michael,” carryover from the prior-year slate, library strength and lower prints and advertising expenses.
Television revenue rose 56% to $310 million, while segment profit increased 73% to $22 million. Lionsgate delivered 22 scripted episodes during the quarter, compared with seven a year earlier, including episodes of “The Hunting Wives,” “Power: Origins” and “The Studio.”
Feltheimer said 10 of the company’s next 15 wide theatrical releases are repeatable branded properties. The slate includes “The Hunger Games: Sunrise on the Reaping,” which he said would open in two weeks, as well as “The Housemaid’s Secret,” “Michael 2” and “Naruto.” Sony Pictures has joined “Naruto” as international partner and co-financier, with production expected to begin in the spring.
Adam Fogelson, chairman of the Motion Picture Group, said tracking, social media signals and advance ticket sales for the coming “Hunger Games” film were encouraging. He did not provide specific ticket figures but said available indicators pointed to a result meaningfully higher than the last film in the franchise.
Fogelson said Lionsgate was developing the story and assembling the creative team for a “Michael” sequel, with production and release timing to be announced later.
Library and franchises support outlook
Trailing 12-month library revenue rose 4% to approximately $1.04 billion, the second-highest performance in the studio’s history. Feltheimer said the library generated cash flow margins of approximately 60%, while Barge put gross contribution at roughly 50%.
Chief Revenue Officer Jim Packer said television had grown to nearly 30% of trailing 12-month library revenue. The company’s channels business also lets it use available licensing windows strategically, he said. Lionsgate has launched more than 50 free ad-supported streaming television channels and offers subscription add-on channels in 36 territories, Feltheimer said.
On television, Feltheimer said “The Rookie: North” is scheduled to arrive in January on ABC and stream on Hulu in the U.S. Netflix has renewed “The Hunting Wives” for a third season ahead of its second-season debut. Kevin Beggs, chairman of the TV Group, said the company expects to produce the show on a cadence that allows it to return annually around the same time.
Barge said Lionsgate had $1.487 billion in backlog, approximately 58% of it from television, providing visibility into future revenue and cash flow. He expects the third quarter to be the year’s strongest in absolute terms, helped by the licensing of “Power” to Netflix.
Barge cautioned that the fourth quarter would face a difficult comparison with the prior year and include marketing spending for “Karoshi,” “Day Drinker” and the upcoming “Resurrection” film.
Debt and capital allocation
Lionsgate ended the quarter with approximately $1.5 billion in net debt, $359 million in cash and $800 million of available capacity on its revolving credit facility. Leverage improved to 3.7 times from 4.3 times as trailing 12-month adjusted OIBDA grew, Barge said.
The CFO expects net debt to decline modestly and leverage to fall significantly below three times in fiscal 2029, largely through higher earnings. He said content investment is weighted toward the second half of fiscal 2027, which could affect free cash flow from quarter to quarter.
Barge said proceeds from SP Media’s investment in a joint venture that includes Lionsgate’s interest in talent management company 3 Arts would appear on the December-quarter balance sheet. Lionsgate expects to use the proceeds primarily to help satisfy a put obligation in January 2027. COO Brian Goldsmith said the venture does not participate in 3 Arts’ operations or management.
Asked about reported acquisition interest, Vice Chairman Michael Burns declined to address M&A speculation, saying Lionsgate is well positioned in a consolidating industry. Barge said the company continues to evaluate financing options but has no near-term corporate debt maturities and does not need to refinance.
About Lionsgate Studios (NYSE:LION)
Lionsgate Studios is a film and television production and distribution company whose operations include Lionsgate’s motion picture and television studio businesses. Its activities span developing, producing, marketing and distributing films and television programs, as well as licensing content to platforms and broadcasters.
The company’s portfolio includes well-known franchises such as The Hunger Games, John Wick and Saw, along with a broad library of film and television titles.
