Sphere Entertainment (SPHR) 10 May 242024 Q3 Earnings call transcript

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sphere Entertainment Co. Fiscal 2024 Third Quarter Earnings Conference Call. [Operator Instructions]

to conference like Danes, to now Relations. Investor would turn over the Ari I ahead. go Please

remarks, our Good you. XXXX Call. begin update Jim Earnings Fiscal President, call welcome Sphere. financial provide will Third period. the results Conference Vice and an Officer we open Treasurer, the Chief prepared up with will Burns, Dolan, questions. will who Dave Executive call will Thank and for Today's for After Financial our and Quarter then morning, to our our review on Chairman CEO, Executive Sphere Entertainment's

results If meaning not today's Today's the following. you is guarantees the Reform Litigation statements. disclaims company's that and differ discussion of discussed are take uncertainties do to XXXX. Investors not those to release, be in and for the company SEC the have and of discussion a from in of any forward-looking could update Private such call. refer Securities may website. Please obligation may results during actual copy a available forward-looking of corporate risks Please uncertainties. statements that cause note involve this with earnings of the risks The Act of contain section forward-looking Any the any to our forward-looking of materially future statements filings within the it statements

operating statements On Pages adjusted X AOI, financial and or operations of consolidated reconciliation release, of a operating today's provide and measure. to income, X a we of income earnings non-GAAP

call turn And with that, I'll over to the Jim. now

good everyone. morning, Thank and you, Ari,

December operations while pleased Las saw about play with quarter we're of and model. optimistic built our reported this Sphere the know, idea for days, still this out quarter. it traditional our in begin medium. of results we We was early full for you thesis progress And As vision Today, our second to Vegas. remain is disrupting in the the venue with new

This event XXX results positive operating for third by the exceeded the adjusted led once also postcards Experience to world's Sphere income Earth. more million featuring It Sphere again These from busiest and events. nearly welcomed the guests X revenue quarter, quarter. venues. were segment far consecutive for the For than robust Sphere second the drove

debut, this revenue. October $XXX content. and results third includes $X already million category. more signature has second average These are generated in now sales strengthen the of to its developing over content core original our million Since in new category reinforce we the value cinematic That the in belief daily ticket in both quarters. And than offerings

categories front, Sphere. X than X sold advantages are concert acts Fish business, drew a And outlined performing Sphere, National content concerts corporate with sports tour. out the headline its seeing [indiscernible] of events. run and has Arena their content, at upcoming first nights launched in X hour. an its the residency. for the on On residencies, we and UX's audience original XX-show foundation par we already When extended as marquee less and

and offerings for component Packard will month. technology important a us. platform and become will how first We provide corporate looking demonstrate. to an We with our and are next the this forward educate This corporate believe event compelling growing to event showcase that Hewlett category venues now

types inside in the on will run, first business maximizing be June, same focuses multi-day event this we multiple venue. overall event utilization. the the would live show demonstrating Experience, ability Sphere to It on venue the efficiently NHL Our also the Later day. also from will strategy Draft. host Over Sphere our welcome televised

day addition, to on In event such run types other that same content. as continue as explore we shows can EDM original the

Electronics examples platform. significant Show this in in value had true Las the followed Vegas. continue tentpole during Exosphere, This the advertisers We great the to Consumer Super events is February. Bowl to in see January, in X Turning this past by especially quarter,

only focused Vegas, As potential remain ahead, to on world. maximize not Sphere, of look the we but ways Las also in exploring we around the

Expansion forward more sharing discussions the are future. and with to progressing, in we markets look international

with next-generation results and quarter our in this are past we're So for plans medium. confident our pleased this

With call to will I Dave. that, now the turn over

you, Thank everyone. morning, good and Jim,

XXX by we Sphere third the million Aromasky's the operating ran These from of company 'XX Sphere generated December [ adjusted content and category, $XXX Experience, XXX adjusted The featuring in $XXX in at Sphere original included For of Earth, fiscal third revenues revenues income Postcard approximately $XX.X revenue. income our quarter, led versus million generated of the approximately segment. $XXX total This quarter. and million quarter the million results Darren which operating in the is Experience $XX.X million were of over ]. times

demand in We Exosphere. in And also robust with the UX's of the XX week our third annual was Electronics during our the conclusion earlier, in followed benefited Jim advertising Bowl the December quarter. quarter, as February. to January, from multi-month compared the record-setting third for around a this performance up to on performances by Super another strong positive continued In quarter impact Show results included the XX run, leading mentioned Consumer

primarily SG&A corporate to expenses related technology and Studios expenses Sphere $XXX and for the compared million quarter. content third were $XX overhead million the quarter This to in reflects December development. as associated and

AOI, $XXX XX%, higher offset period. lower year generated reflects revenues Turning decrease of MSG+, impact primarily $XX.X The revenue represent million in compared by which XX.X% affiliate subscribers, due the of and X% as segment respectively, million rates. partially in prior distribution revenue, The of decrease to a Networks. inclusive decreases to to MSG to the in

sales decreased the related advertising lower revenue by game content on to networks lower and MSG+. brand advertising advertising due partially advertising, per offset primarily In linear to revenue year-over-year addition,

offset as direct decrease lower revenue AOI The SG&A expenses. partially lower reflects by in as well operating costs, higher

operate how business industry remains to our focused we can our as So efficiently. incremental remain pursue opportunities we like MSG+ direct-to-consumer the continue also revenue while challenging, app, more we on

sheet. Turning our balance to

unrestricted $XXX of had As million of cash equivalents. and March XX, we cash approximately

balance in $XXX related facility end, was at billion quarter to the Las term $XXX Sphere approximately approximately in million $XXX credit With debt on Networks regarding would $X.X facility lenders outstanding million which we debt. extension reflected that satisfactory. Vegas our term in the loan, on loan, MSG and an with terms discussions convertible be credit regard MSG the Networks' of to Our million the remain

that, I with back And to call over turn will now the Ari.

please? Dave. Thanks, for the we open Operator, can call up questions,

Brandon the first Ross the come Instructions] line LightShed. [Operator And with of will question from

I with wanted expansion to plans. off your start

could said then call, since or or helpful of when or kind markets? with has discussion been to prepared any resolution? the the progressing. would are be additional You domestic international those what things expect, there discussions And that any last other potential in investors, holdup remarks is we on more details from Any interest the

[indiscernible] Brandon, the like Sphere a one see building McDonald's built. been this world the building as a don't one will it's hold a very It's project. having that I have be really complicated. Jim. I only a us up we It's will build, not the the second in expensive is one, think that that's just there. -- second be only This the

all the there does the details out in that working time. and and so take construction are cost And the relationships

year, not to to see see that really and -- And the product I there late it it begin launched the over September that we has what was of until get don't how mean, think in remember, but been performs. interest plenty I people

-- understand though, all going hear new to the interest to we but we continue begin and to of markets. The the from we known with what and conclude -- soon. better predict, too, it markets, Sphere soon. remains do markets it our economics that, can the discussions in behind think becomes and at strong. not for How We one So are people as soon? marketplace, we're to several have with least going those I'm

on day at per an of think you and what made then Showtime of terms And it stands And refinements longevity of a Great. certainly and think in least where flattening made? quarter-over-quarter, provide [indiscernible] the not assessment was if be but little that that up you revenues weaker. show out, you you you show appear postcard postcards, then per is. that Can show the the today to

Yes.

this itself. learning the what So of year about we're doing our marketplace And is operation. first is we're

come we postcards, the pricing is visitors The So It's pricing, over go the we're Vegas how every in it, those that is XX getting an getting when and visitors market interesting Las It is better the what then and year we million both cetera, and fluctuates reflect having market at market. and they market. cetera, the of And something with what do how scheduling et et a it, at. day. good we're has an schedule that understanding international market. still

came, show people but once year the yes, right, Las a convention for benefited postcards post from do trip. their Vegas the I Look, see that market, reason also. go people being there. a to first And think that meaning or for that to annual cyclical guards, the Sphere see is a that was,

be So place in new the to and hit has that as that I content draw we need do to annual in. for new mark that, people able have think postcards, content we to

on and something be, to successful. draws needs customer the we're too I to I And that's and very the But -- what it. preparing in it give and it itself, can't think details we're So do. better to going you that be many honestly, than be postcards

Peter Bank from of Your Henderson next the question of come America. line will with

around postcards question original and following on content. Just Brandon's up

wondering quickly, just model And your thoughts whether Comcast any other when there's you would with been in RSN expect Is even costs. of that I are Yes perhaps extend be that us considering in if Can around and the on us original something is Sphere considerations big or you to MSG Valley. and time of potential type or then update you're some around not that between works Just how there's also JV a the RSN speculation of content can RSNs? on the experience. with the update the partnerships or just there in strategy you the and sort UX believe Networks could thinking another recently on next terms and about debut, form this you're works? your

just Peter, second there's in there. Maybe me with the questions attraction. so try -- let it, at parse starting X and least

including transaction we're pull, announce we're attraction. the you [indiscernible] of So But second suppose to. cetera. a deal its -- summer have tech, a what is we're like and and what with tell of that AI employing actually great the you Dmit this there technology component building of I I that has this. foresees, et said attraction amount But I tremendous before, up a it can probably to own significant we'll in employing a the second second

that the component an blow with that following but the we're socks immersion, and off. experience before, we along should additional basically same themes there is followed And technology which in your

question. interesting an to Going it's the model, RSN

talk comes in sports it do. model just national needed NFL, and games that sports comes very and the of hockey RSNs me general. that, about things Let -- when basketball that to works well. -- have not that that that season, they When But national everything like to like the to do XX to tends we model like it

need figuring the RSNs, all team is have But sports, right is with and We fueling in to these need from versus we shift are the access, especially the people and what's of Knicks our are RSN. Rangers, markets have demand. television. We on-demand, in very, the primarily see to disarray much to digital The have local that product, very, so those honestly, to because our the RSNs. things appointment home components and want our going we still to on regional have to very linear and the into marketing markets now, -- their

your you were major overall out of watch that, they them fewer that the meaning distributed subscriber, you cable And receive didn't companies, came these. paid a if the them. even were from the you television suppliers, package, cable even all RSNs on in right, an underlying and television to place But priced primarily for basis, where basic

want to were before. Now that it people If then we -- What getting to is to pay sell with not are the And model model the middle changing. we're we that's watch pricing. everybody, what still right who it, going transition along pay need in to that who is of. needs change that do to

we're And via to et start and the now, not if model right to bottom the going the distribution and That is And to, trough should increase in a a Pricing curve. believe the at to important close that lot market. to emerge. of that we're I that of and new a should is online, different model, in increase. repricing But the going very every very I cetera, very, probably to that's starting what sports be changes RSNs are still league, very, that -- see. do with component but believe important there's

And going I away. so don't them therefore, see

know are far to offering our announced the ours goes, our would as entire things of taking you of together, to platform to as platform And combined continuing the the we one teams. Yes. consumer We think we discussions be at joined your that multiple And the like powerful. in And that idea that marketplace with -- of all across sports very be power you package/" multiple that's and saying,"Here, the basically and here's marketplace sports, sports going want if local look going

out it, how we're is a I trough, a monetize important. just I And with now we're at still have consumer And can that's that point in at that way so and product et low to prop. that though that, product we cetera, going the think figure wants even to think

from Stanley. comes of line next Morgan with Ben Your question Swinburne the

with get Thank should the lenders. to you I as we in remarks, on a you're the What theme. prepared be then just in that you Sphere. And the October do or Networks know you. likely -- there Good comment as to morning. I discussions sticking what you discussions? was the closer follow-up What that think Jim, of guys had are those outcome trying accomplish maturity? with thinking

take Ben, networks I'll the Dave. it's question.

will MSG include remarks, that, MSG extension Networks. point, successful remain we agreement, I cash mentioned just the your reaching loan to a cash lenders will the at as the using with extension. only contribution parent. pay note in regarding partial If of down likely Any in hand term to to to an well existing an the Networks, discussions recourse As I our in from we're that as on want continue remain do

At expansion. networks Sphere's loan growth lenders, any would we right a Networks this extension But assume continue in contribution decide impact any again, Networks you initiatives, us MSG If the as by would from the to X will unsuccessful business. with out. don't we play move maturity not which pursue reaching year extend continuing parent, international you for this into to to expect to the the And MSG workout. we're flexibility how the should from update process. an path stage, parent the We to the will evaluate that this know we'll cash we're confident continue gives our ability including through to enter long-term on

higher just couple you profits. on both really maybe right expectations. on than Any been I'm -- that you if know terms do next you of on be I years, X day. strong, But nights? comments Jim, nights residencies, the be have want amount thing. like guess, of the postcard be a I of And maybe think a would there residency able thinking artists original clearly your might mix it. more Got Has residency at demand great. same seems which huge is in consumer the if success, of to to just it from wondering than volume the of have and all more as revenue out and you the over look your changed

So there very than this artists. from can is demand Honestly, accommodate even we point. strong a stronger at

And with So the each to things there's catalysts are, corporates, contend go we et The the all But there. -- at other show, Sphere. bidder. like Postcard you cetera. problem being we're They take the good a use going when no EDM, that highest of the the to look for the

we good question, that's win, ones which But multiples same will the everybody when can day, do a wins. right? on so And then really

model. the is uses that that's the the goes particularly of And in contention of gross revenue, It's it the our of built benefit the with kind a Sphere. between that's so revenue, up. that model And

Your David next with question will Karnovsky of come JPMorgan. from the line

demand talked And acts I compares the about one up to Following venue pipeline you placed if in David. could Jim, to about the don't to know SG&A more touring just if then a acts stepped the how think figure on artists, play strong to last wanted major to you the items residencies, current that bit curious the up fiscal what question for more looks And say quarter-over-quarter. know anything like. legacy from some early going onetime demand there around forward? Or that's know Sphere's far. versus for of so I are then there? have that some segment right 'XX

Okay. Well, first let me one. take the

legacy So team of very you rock, sure elect just Legacy. of country, we that we not actually acts, are They would number like I'm and the want think that not have a to called. they're those varied still... cognizant times

real. Pretty

basically to we that bunch almost that have we the rAnd are And I'm But the Sphere, a We will that every with do never act time to whole looking an -- the the drugs. takes books well, we're the of -- every up Remember, screen, they while no, have biggest in have act for create right? have draws, doesn't talking right? they the acts have Pretty those, on biggest something are but play they discussions compelling that vibrant. category. it in demonstrated Sphere an content that. a around,

they even now. Sphere, too can we're monetize content more The So more therefore, the than better on about invest act being across it. and, multiple UX, show. content play they and what judicious shows the more like That's create can an we're right, the an seeing

bring hit, up. will even the you're And And and the The same the that for you're not that dead for Eagles we -- right, show. acts love that if premiers you're to think I find [indiscernible] think going true think going right? on next be to Thursday, I I a they're that

portion question not is, to to the as in March quarter the to I'll fees And expenses. I'll going -- in number. significant is as well were specifics. compared some you comp the provide What the December SG&A some quarter David, say professional we're quarter, employee There then, increase a SG&A. in that were nonrecurring due of on just matters, had mixed a

be Let where us the And to operation, I spend, about me to should is just in of where buck. can just how to instance, And the to the Look, at first chime tell security, on bang you also like opened year better slightly we're might the learning get that, how some with learning we're the spend, we understand, this to learning and things we all of model first been operate. a and for we're right? going when better Sphere, et We're gives not that. cetera, for have right, overdone. that. what efficient

so Sphere, expect next next place we that [indiscernible]. should dedicated the I to and overhead will operating there And actually drop overhead, overheads change Sphere, once a that be some apply that overhead. to ready announce will particularly, bunch to of so the build begin And also is being which

Logan Angress Research. with Wolfe

it of market. years, or optimal the generally X for think your do or of experiences of end Verga. those I appeal fiscal And in levers first, you about 'XX. in Vegas talk because those day riding X the future the per of sort and the the the in biggest you for genius And Sphere working how the with X guess, you the should per the priorities then main are main experiences X Sphere I'm market those what think about we 'XX. day if like but growth? mentioned can for Curious curious visual fiscal markets, just in seems about for part

Can your up. first were Danes. first question, Ari repeat it's question, Just breaking please? you Logan, you your

was. It just know don't was good sounds really like question, what a it it

Yes.

and year? priorities wondering lever in hear think the Sphere main talk you fiscal was you you now. hope I just about heard Sorry I can second the about the on pool that. Sphere me fiscal I how we growth next hope can And for in the for Experiences. should question 'XX if the about better

the second Ari, question.

fiscal levers for and next got. Main that's main Logan, potential 'XX levers 'XX year. fiscal priorities for what growth and priorities Spear in fiscal Yes, for in growth. I

execute operations very The priorities, bunch right? Okay. getting of but a multiple very, events very certainly size business so the high construction priority the strategy, same and our others, schedule very efficient of Well, Becoming are high are priority. for that at company, our it in ones. the a Sphere, mean I'd say there I in being able of infrastructure a the few the second be are There on they the least big a X day, that's to those priority. on beginning would the can top right

about for that of Got that the seems multiple it. X you per to [indiscernible] was work Vegas Sphere then question host these business And than in the city it's which next like might experience? just the of that an Experiences How do X your markets part different around this? jwith other day. genius optimal Vegas, Or think in are a to model Sphere

Okay.

think every people obviously that I of right? and right, the because is a got that of is peculiar I So Las market markets bigger York a are nature particularly other smaller. much market here. Vegas different, But the it, New market. right? transient There are is come through

to Sphere, Sphere smaller there will come I marketplace. in York, Broadway But a in come your mean, product show. also size see of to not catch But right? have think that be can that the catch -- right, assuming are a Broadway you we the that, coming want adjust question And the they and we specifically New is they will that, year, York catch. they're how people can that it available, that for by show. in show to people many also happen, of see I They do New I think a and We to to do that people instance, that. a

going you're that market follow Las quite that the adjust model population we There's that markets, home market population. looking And Sphere, market, in are at is, do right, I to at think a sustain visiting built and the particularly their Vegas. look right, internationally, same so a few full-sized there's that to are plenty that. and from market, enough that each you you its there you potential look to how what at

will come Global. with line question Joyce Seaport from next of the David Our

Jim. questions, X got I've

Bowl first trending wondering can got special The Is a Exosphere advertising not particular And then when Super the just I've even has follow-up. a maintain conventions is it are in price how or CES. post and been events that town? medium

Vegas right? I Sure. an this Look, is Las was thinking marketplace, international about earlier.

Hurter knows Vegas, Las If Vegas Siberia, what on is. do become right, And the he in the now Las and world, Sphere, Las that showcase about things on And Sphere what just Jack the right, the we you the attention put Vegas. garners there. not art go The of has around ask for we sort the advertising but other

that One we a up get interesting turned if of right, hotels, the a things the that it Exosphere, the on, the when happened faces you room surcharge have opened when Sphere. we that casino is

that along even go with worldwide, able, cetera. there's that that put component compelling idea sort content they you more that of more of advertiser happen attractive. be it year, artists The think the And or Exosphere, add be et an Exosphere the social, Exosphere. and can able probably goes to go the we to depends, the to gives will of of do they have. think power And doesn't an audio the with the this the the make, more billboard, a the which this it summer, We there, media that lot up will more with course, way, themselves. the the So on right, by we'll finally,

bullish Exosphere. the we're pretty still So on

for to the rights how then announced is and And should wondering was expect be from here, online? often and come new strategy second, naming Great. Okay. sponsorship I sponsors we what

the still will be won't a it we're major to for sponsors I I big a you're We're more see off think rights, bunch going take of now, think I discussions naming sure. -- but with I mean, it table, number. in

And going we're so if get to know not with I it. don't there or

So you're to see going continue yes, to grow. it I think

used advertisers what do for understanding the getting to medium, are think I can definitely it them. right,

to we're business, repeat see the a medium. for which good so starting is And really sign

Operator, caller. we'll take one last

with the question of Golding Paul Capital. SPX Our from come final line will Macquarie

figure opportunity. been able there might progress to subsequent if driving savings had any your wondering the how large just potentially part you do cost to whether about was thinking to a be in or yield do might And construction or as where determining that I indication be. cost venue venue how that that is it any of share decision the when a then much franchising as construction to conversations, around might a capacity

cost What the the part? charging Okay. first themselves. Oh, was

it So right, always pancake. pancake, rarely best first is the

way think supply I issues, do of size down sizes costs. Spheres,of sports going which can't all that a Things like predict, nightmare same a seats. beginning, can we would me, of teams. night we to right? think money. do construction significantly injuries the -- I Vegas, on the COVID, be restart You that I if So the we to X,XXX mean, I for sort the reduce think portfolio were Las could et we less build those of was I in chain, a But do think the from put different for together like cetera, kinds

the the adjust size of marketplace. can project we the by So

thing in the Sphere a a significant a marketplace, of talk -- to to going your they cost like what talking marketplace. itself, marketplace And that we with build people the franchise to for it's really the are do on to the for analogy. right? that they're seeing have It's all does it. -- it's sports that we're major landed not with center what looking impact to, sudden, If marketplaces if It's do you the a lot a we're that back sports

a it marketplace. that at do way, they're the for for what would looking same that's think I the spear

can't to that look if way, Sphere at, And paid And so I similar that we Sphere, it's question name think a build won't their arenas not like take own at price. to really which the cost marketplaces that you is, does. by that so and much -- do cost price those the anything obviously have Sphere you'll find the certain the a even a they I right, built what arenas, Las names, Vegas, of

closing will Ari to call back I the remarks. turn for now

talk for basically called to to operates We in the a you question think weeks. We development not a this that is patented. We last is just that beam-forming Right. weeks. able controlling can't X have nobody the a that acquire -- a work Hollowplot, you happened And the company the this company. there's should unless it. interest the And were a want we to sound beam-forming of called And on system Halloplot technology. without of be X do really minute that to think the equity asked inside about know a of going might about build component you legs does last I right, technology sound. It's Sphere lot that technology. unique. it's The that to Sphere. all sound

we're very were doing happy for we that able company, and so technology, see acquire great to us. things this And we the acquire

and Jim, day. We forward for in with joining look us. you year-end all to on good speaking our you thank call August. a Thanks, Have

conclude meeting. you will today's all now joining, for Thank may disconnect. and That you