NYSE:SPHR Sphere Entertainment Q1 2025 Earnings Report $28.99 +2.52 (+9.52%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$28.27 -0.72 (-2.48%) As of 04/25/2025 07:57 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Sphere Entertainment EPS ResultsActual EPS-$2.95Consensus EPS -$3.32Beat/MissBeat by +$0.37One Year Ago EPS$1.90Sphere Entertainment Revenue ResultsActual Revenue$227.90 millionExpected Revenue$229.86 millionBeat/MissMissed by -$1.96 millionYoY Revenue Growth+93.10%Sphere Entertainment Announcement DetailsQuarterQ1 2025Date11/12/2024TimeBefore Market OpensConference Call DateTuesday, November 12, 2024Conference Call Time10:00AM ETUpcoming EarningsSphere Entertainment's Q3 2025 earnings is scheduled for Friday, May 9, 2025, with a conference call scheduled at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q3 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by Sphere Entertainment Q1 2025 Earnings Call TranscriptProvided by QuartrNovember 12, 2024 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good morning and thank you for standing by. Welcome to the Sphere Entertainment Company Fiscal 2025 First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session. I would now like to turn the call over to Ari Danes, Investor Relations. Operator00:00:19Please go ahead. Speaker 100:00:22Thank you. Good morning, and welcome to Sphere Entertainment's fiscal 2025 Q1 earnings conference call. Today's call will begin with our Executive Chairman and CEO, Jim Dolan, who will provide an update on Sphere Dave Burns, our Executive Vice President, Chief Financial Officer and Treasurer, will then review our financial results for the period. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website. Speaker 100:00:54Please take note of the following. Today's discussion may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward looking statements that may be discussed during this call. Speaker 100:01:30On Pages 56 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI, a non GAAP financial measure. And with that, I'll now turn the call over to Jim. Speaker 200:01:46Thank you, Ari, and good morning, everyone. When we opened Sphere a little more than a year ago, our goal was to redeploy the live entertainment experience. We started that journey in Las Vegas and have made headway improving our Sphere's innovative business model. From the beginning, our vision also included a global network of venues. In October, we took an important step forward when we announced plans to bring the world's 2nd Sphere to Abu Dhabi, an international capital that welcomed more than 24,000,000 visitors last year. Speaker 200:02:23The Abu Dhabi venue is expected to be similar in scale to Sphere in Las Vegas. And under the terms of our partnership, the Department of Culture and Tourism Abu Dhabi will fully fund its construction. We will receive a franchise initiation fee, which grants them the right to build the venue using our intellectual property. In addition, our team plans to provide both pre and post opening services that leverage our expertise and infrastructure. And as part of a multi year marketing partnership, the Experience Abu Dhabi brand is now an official partner of Sphere in Las Vegas. Speaker 200:03:04This is a significant milestone in expanding Sphere's global footprint and we look forward to sharing more details as we move forward. Turning back to Sphere in Las Vegas, we remain focused on optimizing our operating model to maximize revenue while enhancing the guest experience. To that end, we continue to refine our strategy for the Sphere experience, including show count and pricing. In September, we debuted our 2nd original production VU2, an immersive concert experience. VU2 joins Postcards from Earth and our expanding library of experiential content. Speaker 200:03:46We are actively developing future productions and look forward to introducing new experiences to audiences in 2025. Beyond original content, strong consumer demand continues to drive concerts and events at Sphere. This past quarter, we hosted the UFC, which became our highest grossing single event so far. The Eagles recently extended their multi month run again with new dates into March. And next week, we welcome back Formula 1 and the Las Vegas Grand Prix as part of our multi year agreement. Speaker 200:04:21As we have said, running multiple event types on the same day is a focus of ours. We have started showing the Sphere experience on the same day as residences and we plan to run it during the upcoming F1 event and throughout Anima's multi day run, which begins around New Year's Eve. In addition, Sphere continues to gain traction as a platform for corporate partners. In June, we hosted our first keynote event with Hewlett Packard and we recently announced that Delta Airlines will present at Sphere during the Consumer Electronics Show in January. In terms of sponsorships, in October, we announced Verizon as the official mobile wireless partner of Sphere. Speaker 200:05:06We also recently signed a multi year marketing partnership with Ticketmaster. These partners along with Experience Abu Dhabi will be integrated across various marketing assets including the Exosphere. So with a year of operations under our belt and a second Sphere location now announced, we are moving in the right direction and remain confident in the long term outlook for this next generation medium. With that, I will turn the call over to Dave. Speaker 100:05:34Thank you, Jim, and good morning, everyone. For the fiscal Q1, we generated total company revenues of approximately $228,000,000 and an adjusted operating loss of $10,200,000 Our Sphere segment generated 1st quarter revenues of approximately $127,000,000 as we welcomed over 800,000 guests to 2 25 events, along with an adjusted operating loss of $26,300,000 These results were primarily driven by our original content category, the Sphere Experience, which generated approximately $71,000,000 in revenue across 207 shows in the Q1. Our results also reflected 12 performances from Dead and Co as well as the start of the Eagles multi month run with 4 shows in September. In addition, fiscal Q1 results included the UFC event and a corporate takeover as well as advertising campaigns on the Exosphere. And with about half of the December quarter already behind us, we are seeing the Exosphere benefit from positive momentum in these last few months of the calendar year. Speaker 100:06:45SG and A expenses for the Q1 were $105,000,000 As we previously discussed, the infrastructure that we have built out at the Sphere segment, including in areas like corporate and Sphere Studios as well as associated content and technology development is designed to support a global network of spheres over time. Turning to MSC Networks, the segment generated $100,800,000 in revenues and $16,100,000 in AOI, which represent decreases of 9% and 36% respectively as compared to the prior year period. The decreases in revenue and AOI primarily reflect lower distribution revenue, primarily due to an approximately 13% decrease in subscribers inclusive of the impact of MSG Plus. Turning to our balance sheet. As of September 30, we had approximately $540,000,000 of unrestricted cash and cash equivalents. Speaker 100:07:43Our debt balance was approximately $1,360,000,000 at quarterend. This reflected $259,000,000 in convertible debt and the $275,000,000 credit facility related to Sphere in Las Vegas. It also reflected approximately $829,000,000 outstanding on the MSG Networks term loan, which as a reminder, is debt that is recourse only to MSG Networks. As you know, MSG Networks is pursuing a refinancing through a workout with its lenders. The debt matured on October 11. Speaker 100:08:17However, MSG Networks has entered into a forbearance agreement, which provides that during the forbearance period, the supporting lenders will not exercise certain of their remedies under the MSG Networks credit facilities arising from non payment of the debt on the maturity date. That period was initially scheduled to expire on November 8 and was recently extended through November 26, while the workout process continues. We will continue to keep you updated. And with that, we will now open the call for questions. Operator00:08:50Thank you. We will now begin the question and answer session. Your first question comes from the line of Brandon Ross from LightShed. Your line is open. Speaker 300:09:09Thanks. Hey, Jim. Exosphere advertising really softened in the quarter after a pretty strong start last year. Any idea why do you think there's a structural issue or execution issue there? And what's your outlook for that piece of business going forward besides that the seasonal strength that you called out in the prepared? Speaker 200:09:34Yes. Brandon, I do think that there's a structural issue, etcetera, and we've been busy working on it. And I think we're making a lot of progress. At the same time, we're also learning about the product itself and how our advertisers can use it best. And we're making headway on that. Speaker 200:09:59But it's like a lot of things with this project. It's the first pancake. It's the first time we've done it. And we've learned and we're getting better at it. And I do think also that there are seasonal issues that come into play. Speaker 200:10:25I have to say after the 1st year, you'd have to look at that sort of July, August period as being the softest time for Sphere sort of almost across the board, right. And then it starts to pick up momentum in September and we're starting to see some pretty strong results now. And going into the beginning of the year, we're looking pretty good. So but I mean, that's just part and parcel of starting something new. I wish that the day we lit it up that we knew exactly how to run it and exactly how to sell it and exactly how to program it, etcetera. Speaker 200:11:09But that's just not the case. So more to come. Speaker 300:11:17And speaking of First Pancakes, you launched your first immersive concert with BU2 in the quarter. I was wondering what your assessment is of how BU2 has performed. Do you think immersive concerts is a viable category for you and have noticed improvements in attendance there. What can the company do to continue to ensure further improvement? Speaker 200:11:49Well, look, the U2 concert actually was really kind of almost an experiment on our part, right, because we didn't know what that product looked like. So we shot it. We put it together. And yes, I think it's a viable product. How you program the product is something I think we're still trying to figure out. Speaker 200:12:17Do you program it like your program postcards from Earth, right? And then of course, look, it really is an amazing product when you see it. You feel like you're at the concert. So we have some great bands that are coming in over the next year. And so I think we will continue to capture their concerts using our Big Sky technology, etcetera. Speaker 200:12:46How we then bring it to the public and market it, I think we're still trying to figure out what's the best way. And but for I mean, I wish we could go back to 1965 and capture the Beatles. I'm pretty sure you'd all love to see a live Beatles concert like you were really there. So that's when we probably can't do. But we do have some great hacks action and creating a library, right, of these kind of performances, I think, is very valuable. Speaker 200:13:27Again, how we market it, how we schedule it, etcetera, that I'm not sure of. But I do think that the product is valuable. And I also think that it's going to be evergreen. You're not going to be able to see Bono 20 years from now live, except this way. Speaker 300:13:50Thank you. Look forward to hearing who those bands are. Thanks. Operator00:13:56Your next question comes from the line of David Karnovsky from JPMorgan. Your line is open. Speaker 400:14:02Hey, thanks for the question. Jim, just on the back of the Abu Dhabi agreement, maybe you can discuss how this has impacted other partner conversations. Should we think of this as a catalyst? And is there anything you're willing to say on timing for future Sphere announcements? Speaker 200:14:21Well, I think that we're certainly interested in future Sphere announcements and expanding into other marketplaces. I think that the having the getting the confidence of the people at Abu Dhabi, right, and then showing that we can build a second one, although we already built the first one. So I think it helps and kind of see where it goes from there. But we're still you're wondering whether we're pushing the envelope still. We definitely still are. Speaker 200:14:57We definitely want to build in multiple places. We've built an organization, right, that can handle the construction of multiple spheres at the same time. And so, yes, we're still moving. Speaker 500:15:15Okay. And then on that, Speaker 400:15:16I mean, just on the international model more broadly, should we look at Abu Dhabi as sort of representing Sphere in the Middle East exclusively and therefore think of incremental locations as likely in kind of other parts of the world? Or is it feasible to have multiple spheres in close proximity? Speaker 200:15:36Okay. Well, I'll tell you what, I had a discussion with David Bramble Smith about this, this morning about how we release information on the Abu Dhabi deal. So I'm going to ask David to just take us through what we've revealed so far and what is basically anticipation of releasing more information about the Abu Dhabi deal. So David? Speaker 600:16:04Sure. Thanks, Jim. With respect to the specific question on other spheres potential in Middle East. As Jim mentioned, look, we're going to evaluate our international expansion across multiple regions and we're not at a position right now to make any announcements about what the next region would potentially be. Specifically on the Abu Dhabi deal, we have an arrangement with respect to a number of different revenue streams, which we can talk about as well. Speaker 600:16:32But from an expansion point of view, I would think that as we evolve in our thinking, we'll obviously relay that back to the market in terms of what other areas. And as Jim mentioned specifically, it is our intention to over the next several years roll out a number of Sears. Speaker 300:16:50Thank you. Operator00:16:54Your next question comes from the line of Peter Cipino from Wolfe Research. Please go ahead. Speaker 700:17:02Hi, good afternoon and thank you. You've caught me as I'm getting out of a taxi at the airport, so I'll try to put you back on those. But the question is about the revenue opportunity in Las Vegas. And I specifically wondered about residences. There were 75 over the last year in Vegas, give or take. Speaker 700:17:20And I'm wondering if you think that's kind of the right number or if you see upside to that over time and what you've learned about the availability and relevance of the concert talent and demand out there? Thank you. Speaker 200:17:32What was that last part? You kind of that last part got jumbled. Speaker 700:17:37Whether 75 shows seems like the right number of residency shows in Las Vegas? Speaker 200:17:44Well, that's a good question. I think we don't look at it that way. I think the way we look at it is how to maximize the revenue, right. This year we did $75,000,000 But I think a key component of it is that we ended the year doing what we call side by sides, right. So if it's an Eagle show that's on Saturday and starts at 8 o'clock, we have a show in the afternoon for postcards from Earth or BU2 or the other properties that we're developing. Speaker 200:18:25And I think that's kind of key. If we can get we can keep pursuing this side by side and our hope is that we can get 2 shows and then a concert all on the same day, right. That's pretty good use of the capital, right. It's going to generate a lot of revenue And I probably do that all day long till the cows come home. So we just have to see what we can work. Speaker 200:18:57And a lot of this has to do with logistics about setting up the arena for 1 and taking it down and then setting it up for the other. But the formula, right, which is really the basis for how we design Sphere, right, was to be busy 365 days a year with multiple shows, right, really changes the venue model, right? That's what we wanted to do when we started this thing was to change the venue model, right. They create a lot more opportunity for us, right. So basically, I don't know, take the Knicks and the Rangers and Christmas Spectacular and put it all into the same building and then add bunch more concerts into it and that's what we want to try and do. Speaker 700:19:50Following up on that, have you found that there's enough interest from performers who are big and popular enough to fill that building at the price point you require to have a bigger schedule than 75, if the physical constraints are manageable in the way you just described? Speaker 200:20:10Yes. I don't think that there's any impediment there. I think we have basically right now we're struggling with 2025 just figuring out how we're going to get the people in who want to get in, right, the acts that want to get in. So no, I don't anticipate that that's going to be an issue. I think more importantly is what I said before to get to do those with side by sides, right, really sort of turbo charges the entire model. Speaker 200:20:51So but no problem with the ax. Speaker 700:20:56Thank you. Operator00:20:58Your next question comes from the line of Daniel Durant from Morgan Stanley. Your line is open. Speaker 800:21:05Hello, good morning. Thank you for taking my question. So once the 2nd sphere opens, what are the largest revenue opportunities for you from the content and services that you will be providing to your partner? And will these be revenue sharing agreements or have more of a fixed payment structure? Thank you. Speaker 200:21:25Once again, I'm going to turn this over to Mr. Smith, who's going to keep us on the straight and narrow. Speaker 600:21:31Sure. So there are 2 components of the revenue stream. 1 will be fixed, one would be variable. On the fixed side, and Jim mentioned this early on the call, it will be the franchise initiation fee, the pre and post opening services and the marketing partnership. And on the variable side, it will be the senior experiences and a royalty fee that we'll get for the IP that they're utilizing. Speaker 600:21:51With respect to, if you look at Las Vegas and obviously original content is very important. So we do expect that Sphere experiences will be a big driver of revenue in Abu Dhabi as well. Speaker 800:22:06Got it. Thank you. And following up on that on the 2 year experiences, will the global will the offer the content offering be global or will the content be custom to each region or to each new sphere? Speaker 200:22:20Well, the answer to that question is yes. It will probably be both. But I do want to point out one thing that's sort of inherent in your question, right. Look, we built this company not to operate one building in Las Vegas, right? A lot of the overhead and stuff that you see, for instance, in Dave's report, right, is still about the growth of the company, right, particularly in the case of Abu Dhabi with our Construction and Development division, but also with our content creations, etcetera. Speaker 200:22:55So the more of these that we do, right, the more we utilize the investment that we made into the company itself to be able to do that. So that's one of the reasons why we're really happy about Abu Dhabi and we're looking for the next one. Speaker 800:23:14Got it. Thank you very much. Operator00:23:18Your next question comes from the line of Peter Henderson from Bank of America. Your line is open. Speaker 500:23:24Good morning and thank you for taking the question. So just can you provide an update on the timing of the release of your next original production at Sphere? And any color you can provide related to the type of the content or the genre or even the cost would be helpful? And then I have a second question. Speaker 200:23:42Well, now you're asking for the special sauce. We don't do the special sauce. You're going to have to wait with everybody else. I'll just tell you it's going to be great. You'll love it. Speaker 200:23:55We'll tell you more about it later, right, but no special sauce. Speaker 500:24:01Okay, that's fair. Then I guess I saw in the release this morning that you've extended the workout for the MSG term loan. Can you just talk through your considerations in that process and what you believe will be like the outcome? Do you think you're going to get a haircut to the debt? Sure, Peter. Speaker 500:24:17I'll take that. Yes, you're right. We extended the forbearance period through November 26. And this gives us additional time as we continue to try to negotiate a restructuring agreement that's acceptable to all of the parties involved. And we'll keep you updated as we get further into that process. Speaker 100:24:39Thank you. Thanks, Peter. Operator, we have time for one last caller. Operator00:24:45Certainly. Your final question comes from the line of David Joyce from Seaport Research Partners. Your line is open. Speaker 900:24:53Thank you. My first question is regarding the residencies for the next year. Could you provide some color on the timing, so we can think about the comparability of events year over year and what genres those artists are and when they might go on sale? Speaker 200:25:12Again, well, you like the Eagles? Yes, of course. You're going to see a lot of Eagles for a while. But we haven't really announced anything else beyond that, but I will tell you we're just to wet your appetite more and not give you an answer. We're struggling with how to squeeze everybody in through the fall, right, who's signed up. Speaker 200:25:47But we obviously have not made any announcements and I don't think today is the day we're going to do that. But like I said, we don't have any problem with Axewoning to play the Sphere. It's just getting them in and then making sure that we can do these side by side is really important to us. Speaker 900:26:06Okay. And then on the Abu Dhabi Sphere, could you provide some color on the timing in terms of when construction would start? How long the pre opening fees would be accruing to Sphere Entertainment? And when do you think it might be opening? Speaker 100:26:25Yes, Dave. Speaker 600:26:26Yes. We have not disclosed yet when we think it will be opening. Right now, we're obviously in the phase of working with them on the pre opening services. So, over the course of the near term, that's the real focus and we'll, come back out when we have a sense of that better timing. Speaker 100:26:42All right. Thank you. Operator00:26:44Yes. And that concludes our question and answer session. I will now turn the call back over to Ari Danes for closing remarks. Speaker 100:26:53Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day. Operator00:26:59This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSphere Entertainment Q1 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) Sphere Entertainment Earnings HeadlinesSphere Entertainment rises 12.2%April 26 at 8:28 AM | markets.businessinsider.comSphere Entertainment rises 10.0%April 25 at 8:52 PM | markets.businessinsider.comHere’s How to Claim Your Stake in Elon’s Private Company, xAII predict this single breakthrough could make Elon the world’s first trillionaire — and mint more new millionaires than any tech advance in history. And for a limited time, you have the chance to claim a stake in this project, even though it’s housed inside Elon’s private company, xAI.April 26, 2025 | Brownstone Research (Ad)Sphere Entertainment Shares Rise on Debt RestructuringApril 25 at 3:03 PM | marketwatch.comSphere Entertainment secures forbearance extensionApril 23 at 11:54 PM | uk.investing.comSphere Entertainment Co. (SPHR) Traded Lower Due to Profit TakingApril 23 at 9:23 AM | insidermonkey.comSee More Sphere Entertainment Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Sphere Entertainment? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Sphere Entertainment and other key companies, straight to your email. Email Address About Sphere EntertainmentSphere Entertainment (NYSE:SPHR) Co. engages in the entertainment business. It produces, presents, or hosts various live entertainment events, including concerts, family shows, and special events, as well as sporting events, such as professional boxing, college basketball and hockey, professional bull riding, mixed martial arts, and esports and wrestling in its venues, including The Garden, Hulu Theater, Radio City Music Hall, and the Beacon Theatre in New York City; and The Chicago Theatre. The company also operates entertainment dining and nightlife venues markets under the Tao, Marquee, Lavo, Beauty & Essex, Cathédrale, Hakkasan, and Omnia brand names. The company was formerly known as Madison Square Garden Entertainment Corp. and changed its name to Sphere Entertainment Co. in April 2023. 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There are 10 speakers on the call. Operator00:00:00Good morning and thank you for standing by. Welcome to the Sphere Entertainment Company Fiscal 2025 First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session. I would now like to turn the call over to Ari Danes, Investor Relations. Operator00:00:19Please go ahead. Speaker 100:00:22Thank you. Good morning, and welcome to Sphere Entertainment's fiscal 2025 Q1 earnings conference call. Today's call will begin with our Executive Chairman and CEO, Jim Dolan, who will provide an update on Sphere Dave Burns, our Executive Vice President, Chief Financial Officer and Treasurer, will then review our financial results for the period. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website. Speaker 100:00:54Please take note of the following. Today's discussion may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward looking statements that may be discussed during this call. Speaker 100:01:30On Pages 56 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI, a non GAAP financial measure. And with that, I'll now turn the call over to Jim. Speaker 200:01:46Thank you, Ari, and good morning, everyone. When we opened Sphere a little more than a year ago, our goal was to redeploy the live entertainment experience. We started that journey in Las Vegas and have made headway improving our Sphere's innovative business model. From the beginning, our vision also included a global network of venues. In October, we took an important step forward when we announced plans to bring the world's 2nd Sphere to Abu Dhabi, an international capital that welcomed more than 24,000,000 visitors last year. Speaker 200:02:23The Abu Dhabi venue is expected to be similar in scale to Sphere in Las Vegas. And under the terms of our partnership, the Department of Culture and Tourism Abu Dhabi will fully fund its construction. We will receive a franchise initiation fee, which grants them the right to build the venue using our intellectual property. In addition, our team plans to provide both pre and post opening services that leverage our expertise and infrastructure. And as part of a multi year marketing partnership, the Experience Abu Dhabi brand is now an official partner of Sphere in Las Vegas. Speaker 200:03:04This is a significant milestone in expanding Sphere's global footprint and we look forward to sharing more details as we move forward. Turning back to Sphere in Las Vegas, we remain focused on optimizing our operating model to maximize revenue while enhancing the guest experience. To that end, we continue to refine our strategy for the Sphere experience, including show count and pricing. In September, we debuted our 2nd original production VU2, an immersive concert experience. VU2 joins Postcards from Earth and our expanding library of experiential content. Speaker 200:03:46We are actively developing future productions and look forward to introducing new experiences to audiences in 2025. Beyond original content, strong consumer demand continues to drive concerts and events at Sphere. This past quarter, we hosted the UFC, which became our highest grossing single event so far. The Eagles recently extended their multi month run again with new dates into March. And next week, we welcome back Formula 1 and the Las Vegas Grand Prix as part of our multi year agreement. Speaker 200:04:21As we have said, running multiple event types on the same day is a focus of ours. We have started showing the Sphere experience on the same day as residences and we plan to run it during the upcoming F1 event and throughout Anima's multi day run, which begins around New Year's Eve. In addition, Sphere continues to gain traction as a platform for corporate partners. In June, we hosted our first keynote event with Hewlett Packard and we recently announced that Delta Airlines will present at Sphere during the Consumer Electronics Show in January. In terms of sponsorships, in October, we announced Verizon as the official mobile wireless partner of Sphere. Speaker 200:05:06We also recently signed a multi year marketing partnership with Ticketmaster. These partners along with Experience Abu Dhabi will be integrated across various marketing assets including the Exosphere. So with a year of operations under our belt and a second Sphere location now announced, we are moving in the right direction and remain confident in the long term outlook for this next generation medium. With that, I will turn the call over to Dave. Speaker 100:05:34Thank you, Jim, and good morning, everyone. For the fiscal Q1, we generated total company revenues of approximately $228,000,000 and an adjusted operating loss of $10,200,000 Our Sphere segment generated 1st quarter revenues of approximately $127,000,000 as we welcomed over 800,000 guests to 2 25 events, along with an adjusted operating loss of $26,300,000 These results were primarily driven by our original content category, the Sphere Experience, which generated approximately $71,000,000 in revenue across 207 shows in the Q1. Our results also reflected 12 performances from Dead and Co as well as the start of the Eagles multi month run with 4 shows in September. In addition, fiscal Q1 results included the UFC event and a corporate takeover as well as advertising campaigns on the Exosphere. And with about half of the December quarter already behind us, we are seeing the Exosphere benefit from positive momentum in these last few months of the calendar year. Speaker 100:06:45SG and A expenses for the Q1 were $105,000,000 As we previously discussed, the infrastructure that we have built out at the Sphere segment, including in areas like corporate and Sphere Studios as well as associated content and technology development is designed to support a global network of spheres over time. Turning to MSC Networks, the segment generated $100,800,000 in revenues and $16,100,000 in AOI, which represent decreases of 9% and 36% respectively as compared to the prior year period. The decreases in revenue and AOI primarily reflect lower distribution revenue, primarily due to an approximately 13% decrease in subscribers inclusive of the impact of MSG Plus. Turning to our balance sheet. As of September 30, we had approximately $540,000,000 of unrestricted cash and cash equivalents. Speaker 100:07:43Our debt balance was approximately $1,360,000,000 at quarterend. This reflected $259,000,000 in convertible debt and the $275,000,000 credit facility related to Sphere in Las Vegas. It also reflected approximately $829,000,000 outstanding on the MSG Networks term loan, which as a reminder, is debt that is recourse only to MSG Networks. As you know, MSG Networks is pursuing a refinancing through a workout with its lenders. The debt matured on October 11. Speaker 100:08:17However, MSG Networks has entered into a forbearance agreement, which provides that during the forbearance period, the supporting lenders will not exercise certain of their remedies under the MSG Networks credit facilities arising from non payment of the debt on the maturity date. That period was initially scheduled to expire on November 8 and was recently extended through November 26, while the workout process continues. We will continue to keep you updated. And with that, we will now open the call for questions. Operator00:08:50Thank you. We will now begin the question and answer session. Your first question comes from the line of Brandon Ross from LightShed. Your line is open. Speaker 300:09:09Thanks. Hey, Jim. Exosphere advertising really softened in the quarter after a pretty strong start last year. Any idea why do you think there's a structural issue or execution issue there? And what's your outlook for that piece of business going forward besides that the seasonal strength that you called out in the prepared? Speaker 200:09:34Yes. Brandon, I do think that there's a structural issue, etcetera, and we've been busy working on it. And I think we're making a lot of progress. At the same time, we're also learning about the product itself and how our advertisers can use it best. And we're making headway on that. Speaker 200:09:59But it's like a lot of things with this project. It's the first pancake. It's the first time we've done it. And we've learned and we're getting better at it. And I do think also that there are seasonal issues that come into play. Speaker 200:10:25I have to say after the 1st year, you'd have to look at that sort of July, August period as being the softest time for Sphere sort of almost across the board, right. And then it starts to pick up momentum in September and we're starting to see some pretty strong results now. And going into the beginning of the year, we're looking pretty good. So but I mean, that's just part and parcel of starting something new. I wish that the day we lit it up that we knew exactly how to run it and exactly how to sell it and exactly how to program it, etcetera. Speaker 200:11:09But that's just not the case. So more to come. Speaker 300:11:17And speaking of First Pancakes, you launched your first immersive concert with BU2 in the quarter. I was wondering what your assessment is of how BU2 has performed. Do you think immersive concerts is a viable category for you and have noticed improvements in attendance there. What can the company do to continue to ensure further improvement? Speaker 200:11:49Well, look, the U2 concert actually was really kind of almost an experiment on our part, right, because we didn't know what that product looked like. So we shot it. We put it together. And yes, I think it's a viable product. How you program the product is something I think we're still trying to figure out. Speaker 200:12:17Do you program it like your program postcards from Earth, right? And then of course, look, it really is an amazing product when you see it. You feel like you're at the concert. So we have some great bands that are coming in over the next year. And so I think we will continue to capture their concerts using our Big Sky technology, etcetera. Speaker 200:12:46How we then bring it to the public and market it, I think we're still trying to figure out what's the best way. And but for I mean, I wish we could go back to 1965 and capture the Beatles. I'm pretty sure you'd all love to see a live Beatles concert like you were really there. So that's when we probably can't do. But we do have some great hacks action and creating a library, right, of these kind of performances, I think, is very valuable. Speaker 200:13:27Again, how we market it, how we schedule it, etcetera, that I'm not sure of. But I do think that the product is valuable. And I also think that it's going to be evergreen. You're not going to be able to see Bono 20 years from now live, except this way. Speaker 300:13:50Thank you. Look forward to hearing who those bands are. Thanks. Operator00:13:56Your next question comes from the line of David Karnovsky from JPMorgan. Your line is open. Speaker 400:14:02Hey, thanks for the question. Jim, just on the back of the Abu Dhabi agreement, maybe you can discuss how this has impacted other partner conversations. Should we think of this as a catalyst? And is there anything you're willing to say on timing for future Sphere announcements? Speaker 200:14:21Well, I think that we're certainly interested in future Sphere announcements and expanding into other marketplaces. I think that the having the getting the confidence of the people at Abu Dhabi, right, and then showing that we can build a second one, although we already built the first one. So I think it helps and kind of see where it goes from there. But we're still you're wondering whether we're pushing the envelope still. We definitely still are. Speaker 200:14:57We definitely want to build in multiple places. We've built an organization, right, that can handle the construction of multiple spheres at the same time. And so, yes, we're still moving. Speaker 500:15:15Okay. And then on that, Speaker 400:15:16I mean, just on the international model more broadly, should we look at Abu Dhabi as sort of representing Sphere in the Middle East exclusively and therefore think of incremental locations as likely in kind of other parts of the world? Or is it feasible to have multiple spheres in close proximity? Speaker 200:15:36Okay. Well, I'll tell you what, I had a discussion with David Bramble Smith about this, this morning about how we release information on the Abu Dhabi deal. So I'm going to ask David to just take us through what we've revealed so far and what is basically anticipation of releasing more information about the Abu Dhabi deal. So David? Speaker 600:16:04Sure. Thanks, Jim. With respect to the specific question on other spheres potential in Middle East. As Jim mentioned, look, we're going to evaluate our international expansion across multiple regions and we're not at a position right now to make any announcements about what the next region would potentially be. Specifically on the Abu Dhabi deal, we have an arrangement with respect to a number of different revenue streams, which we can talk about as well. Speaker 600:16:32But from an expansion point of view, I would think that as we evolve in our thinking, we'll obviously relay that back to the market in terms of what other areas. And as Jim mentioned specifically, it is our intention to over the next several years roll out a number of Sears. Speaker 300:16:50Thank you. Operator00:16:54Your next question comes from the line of Peter Cipino from Wolfe Research. Please go ahead. Speaker 700:17:02Hi, good afternoon and thank you. You've caught me as I'm getting out of a taxi at the airport, so I'll try to put you back on those. But the question is about the revenue opportunity in Las Vegas. And I specifically wondered about residences. There were 75 over the last year in Vegas, give or take. Speaker 700:17:20And I'm wondering if you think that's kind of the right number or if you see upside to that over time and what you've learned about the availability and relevance of the concert talent and demand out there? Thank you. Speaker 200:17:32What was that last part? You kind of that last part got jumbled. Speaker 700:17:37Whether 75 shows seems like the right number of residency shows in Las Vegas? Speaker 200:17:44Well, that's a good question. I think we don't look at it that way. I think the way we look at it is how to maximize the revenue, right. This year we did $75,000,000 But I think a key component of it is that we ended the year doing what we call side by sides, right. So if it's an Eagle show that's on Saturday and starts at 8 o'clock, we have a show in the afternoon for postcards from Earth or BU2 or the other properties that we're developing. Speaker 200:18:25And I think that's kind of key. If we can get we can keep pursuing this side by side and our hope is that we can get 2 shows and then a concert all on the same day, right. That's pretty good use of the capital, right. It's going to generate a lot of revenue And I probably do that all day long till the cows come home. So we just have to see what we can work. Speaker 200:18:57And a lot of this has to do with logistics about setting up the arena for 1 and taking it down and then setting it up for the other. But the formula, right, which is really the basis for how we design Sphere, right, was to be busy 365 days a year with multiple shows, right, really changes the venue model, right? That's what we wanted to do when we started this thing was to change the venue model, right. They create a lot more opportunity for us, right. So basically, I don't know, take the Knicks and the Rangers and Christmas Spectacular and put it all into the same building and then add bunch more concerts into it and that's what we want to try and do. Speaker 700:19:50Following up on that, have you found that there's enough interest from performers who are big and popular enough to fill that building at the price point you require to have a bigger schedule than 75, if the physical constraints are manageable in the way you just described? Speaker 200:20:10Yes. I don't think that there's any impediment there. I think we have basically right now we're struggling with 2025 just figuring out how we're going to get the people in who want to get in, right, the acts that want to get in. So no, I don't anticipate that that's going to be an issue. I think more importantly is what I said before to get to do those with side by sides, right, really sort of turbo charges the entire model. Speaker 200:20:51So but no problem with the ax. Speaker 700:20:56Thank you. Operator00:20:58Your next question comes from the line of Daniel Durant from Morgan Stanley. Your line is open. Speaker 800:21:05Hello, good morning. Thank you for taking my question. So once the 2nd sphere opens, what are the largest revenue opportunities for you from the content and services that you will be providing to your partner? And will these be revenue sharing agreements or have more of a fixed payment structure? Thank you. Speaker 200:21:25Once again, I'm going to turn this over to Mr. Smith, who's going to keep us on the straight and narrow. Speaker 600:21:31Sure. So there are 2 components of the revenue stream. 1 will be fixed, one would be variable. On the fixed side, and Jim mentioned this early on the call, it will be the franchise initiation fee, the pre and post opening services and the marketing partnership. And on the variable side, it will be the senior experiences and a royalty fee that we'll get for the IP that they're utilizing. Speaker 600:21:51With respect to, if you look at Las Vegas and obviously original content is very important. So we do expect that Sphere experiences will be a big driver of revenue in Abu Dhabi as well. Speaker 800:22:06Got it. Thank you. And following up on that on the 2 year experiences, will the global will the offer the content offering be global or will the content be custom to each region or to each new sphere? Speaker 200:22:20Well, the answer to that question is yes. It will probably be both. But I do want to point out one thing that's sort of inherent in your question, right. Look, we built this company not to operate one building in Las Vegas, right? A lot of the overhead and stuff that you see, for instance, in Dave's report, right, is still about the growth of the company, right, particularly in the case of Abu Dhabi with our Construction and Development division, but also with our content creations, etcetera. Speaker 200:22:55So the more of these that we do, right, the more we utilize the investment that we made into the company itself to be able to do that. So that's one of the reasons why we're really happy about Abu Dhabi and we're looking for the next one. Speaker 800:23:14Got it. Thank you very much. Operator00:23:18Your next question comes from the line of Peter Henderson from Bank of America. Your line is open. Speaker 500:23:24Good morning and thank you for taking the question. So just can you provide an update on the timing of the release of your next original production at Sphere? And any color you can provide related to the type of the content or the genre or even the cost would be helpful? And then I have a second question. Speaker 200:23:42Well, now you're asking for the special sauce. We don't do the special sauce. You're going to have to wait with everybody else. I'll just tell you it's going to be great. You'll love it. Speaker 200:23:55We'll tell you more about it later, right, but no special sauce. Speaker 500:24:01Okay, that's fair. Then I guess I saw in the release this morning that you've extended the workout for the MSG term loan. Can you just talk through your considerations in that process and what you believe will be like the outcome? Do you think you're going to get a haircut to the debt? Sure, Peter. Speaker 500:24:17I'll take that. Yes, you're right. We extended the forbearance period through November 26. And this gives us additional time as we continue to try to negotiate a restructuring agreement that's acceptable to all of the parties involved. And we'll keep you updated as we get further into that process. Speaker 100:24:39Thank you. Thanks, Peter. Operator, we have time for one last caller. Operator00:24:45Certainly. Your final question comes from the line of David Joyce from Seaport Research Partners. Your line is open. Speaker 900:24:53Thank you. My first question is regarding the residencies for the next year. Could you provide some color on the timing, so we can think about the comparability of events year over year and what genres those artists are and when they might go on sale? Speaker 200:25:12Again, well, you like the Eagles? Yes, of course. You're going to see a lot of Eagles for a while. But we haven't really announced anything else beyond that, but I will tell you we're just to wet your appetite more and not give you an answer. We're struggling with how to squeeze everybody in through the fall, right, who's signed up. Speaker 200:25:47But we obviously have not made any announcements and I don't think today is the day we're going to do that. But like I said, we don't have any problem with Axewoning to play the Sphere. It's just getting them in and then making sure that we can do these side by side is really important to us. Speaker 900:26:06Okay. And then on the Abu Dhabi Sphere, could you provide some color on the timing in terms of when construction would start? How long the pre opening fees would be accruing to Sphere Entertainment? And when do you think it might be opening? Speaker 100:26:25Yes, Dave. Speaker 600:26:26Yes. We have not disclosed yet when we think it will be opening. Right now, we're obviously in the phase of working with them on the pre opening services. So, over the course of the near term, that's the real focus and we'll, come back out when we have a sense of that better timing. Speaker 100:26:42All right. Thank you. Operator00:26:44Yes. And that concludes our question and answer session. I will now turn the call back over to Ari Danes for closing remarks. Speaker 100:26:53Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day. Operator00:26:59This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by