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Date

Thursday, May 21, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Jon Feltheimer
• Chief Financial Officer — Jimmy Barge
• Motion Picture Group Chair — Adam Fogelson
• Television Group Chair — Kevin Beggs
• Worldwide Television Distribution Chair — Jim Packer
• Co-President, 3 Arts Entertainment — Brian Weinstein
• Head of Investor Relations — Neelay Shah

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Takeaways

• Revenue -- $907 million, representing a year-over-year decline that management described as "expected".
• Adjusted OIBDA -- $165 million, a 17% year-over-year increase and the highest in twelve years.
• Operating Income -- $118 million, up over 50% compared to last year.
• Diluted EPS -- $0.23 per share; Diluted Adjusted EPS -- $0.37 per share.
• Free Cash Flow -- Positive $190 million, which management called "strong," attributed to higher cash returns on content investments and library monetization.
• Trailing 12-Month Library Revenue -- Exceeded $1 billion for the third straight quarter, growing 5% year over year, underscoring library durability.
• Studio Segment Profit -- $218 million, up 24% year over year; noted as a more comparable metric with peer studios.
• Motion Picture Revenue -- $652 million, a 23% year-over-year increase; Motion Picture Segment Profit -- $187 million, up 39% due to hit films "The Housemaid" and carryover from "Now You See Me, Now You Do Not".
• The Housemaid Performance -- Carried into home entertainment to become the industry's highest-grossing PVOD among films with up to $150 million domestic box office, per management.
• Television Revenue -- $255 million; Television Segment Profit -- $31 million, with profit resilience driven by library titles including "The Rookie" and "Mad Men."
• Scripted Series Renewals -- 12 out of 13 scripted series renewed, leading to a projected near doubling of episodic deliveries in fiscal 2027.
• Strategic Franchises and New Projects -- Upcoming releases include new "Hunger Games," a reimagined "Rambo," Mel Gibson's "Resurrection of the Christ" (Parts 1 and 2), a "Blair Witch" reboot, and a "Magic" remake by Sam Raimi.
• Box Office Highlight -- "Michael" is on track to be the company’s first film to surpass $1 billion in worldwide gross, with the Japan release yet to occur.
• Backlog -- $1.3 billion in contractual future revenues and cash flows, with management stating that approximately 90% is expected within 24 months.
• Net Debt -- $1.6 billion at fiscal year-end, improved by almost $150 million versus the prior quarter, attributed to free cash flow; Leverage Ratio -- Improved to 6.1 times, over a full turn lower sequentially.
• Liquidity -- $800 million of unused revolver capacity and $341 million of unrestricted cash at quarter-end.
• AI Integration -- More than 80% of employees now use AI tools, with management positioning AI as "a total net positive" for operations and creative productivity.

Summary

Lionsgate Studios (LION +2.46%) highlighted a record adjusted OIBDA and operating income, emphasizing operational leverage and strong cash generation despite a top-line decline driven by release schedules. Management conveyed heightened visibility into fiscal 2027, citing contractual backlogs and a slate heavily weighted with branded, repeatable properties, which are expected to materially increase television episodic output and support motion picture growth. Company executives described continued natural deleveraging through free cash flow, with no reliance on asset sales, and underscored that greater than 80% workforce activation of AI technologies is driving process efficiency and creativity.

• Jon Feltheimer said that "The housemaid reinforces our unique model and entrepreneurial approach. A provocative movie an unconventional release strategy, a risk mitigated financial structure with significant upside, and one of the highest box office to ancillary market conversion rates in the industry."
• Younger demographics, particularly Gen Z, now comprise up to 34% of theatrical attendance, a trend executives see as critical to ongoing box office recovery and brand relevance.
• Renewals in the television segment help position the company to nearly double scripted episodic deliveries, with the delivery cadence for fiscal 2027 expected to be more back-end loaded for TV compared to motion pictures.
• Strategic conversations referenced by management "would probably involve some deleveraging, but they will for sure be driven by the strategy not the delevering."
• Executives revealed existing footage from "Michael" will constitute about 25%-30% of the sequel’s production, which may potentially enhance sequel economics.
• Management confirmed that expiration of the poison pill will not materially impact operations, leaving future adoption to shareholders’ discretion.
• Among library titles, 17 series were sold to the top six streamers in fiscal 2026, with 10 ranking in the top ten of their respective platforms, reflecting notable TV library demand.
• Recent performance and upcoming launches reinforce an unchanged film portfolio strategy mixing two to four annual tentpole releases with a range of mid-budget titles, with green-lit sequels and new franchise entries highlighted as central growth drivers.

Industry glossary

• PVOD: Premium Video on Demand, a digital rental or purchase window for newly released films at higher-than-standard prices, typically concurrent with or shortly after theatrical release.
• P&A Spend: Print and advertising expenditures associated with marketing new release films; critical for maximizing opening performance and ancillary revenues.
• OIBDA: Operating Income Before Depreciation and Amortization; a standard studio profitability metric prior to non-cash charges.
• Backlog: Contracted future revenues, particularly from licensing and distribution agreements for unreleased or undelivered content.

Full Conference Call Transcript

Jon Feltheimer: Thank you, Neelay, and good afternoon, everyone. We just reported a quarter that is indicative of our earnings power. Paving the way for outsized growth in fiscal 27 and 28. Since this is our fiscal year end call, I am going to take you through some of the highlights during the year. Last May, we completed the separation of Lionsgate and STARZ into 2 stand alone public companies, collapsing our dual share structure into a single class of stock. The market's response confirms that a focused content driven Lionsgate is the right structure for unlocking value.

We have put together 1 of the strongest content pipelines we have ever had, Over the next 2 to 3 years, over half of our film, television, and live entertainment slates will be comprised of branded repeatable intellectual properties that we own or control. We secured renewals for 12 of our 13 scripted series setting the stage for our television slate to nearly double the number episodic deliveries from fiscal 26 to fiscal 27. We reported our third consecutive quarter of $1 billion trailing 12 month library revenue creating valuable consistency in a constantly changing operating environment.

We leaned into AI with a strategy designed to make technology a valuable part of the creative process and a driver of quality and efficiency across every part of our business. And we ended fiscal 26 and started fiscal 27 with 2 massively successful movies The Housemaid and Michael, reasserting our brand and demonstrating our ability compete effectively at every level of box office, The housemaid reinforces our unique model and entrepreneurial approach. A provocative movie an unconventional release strategy, a risk mitigated financial structure with significant upside, and 1 of the highest box office to ancillary market conversion rates in the industry.

We are excited to begin production later this year on The Housemaid's Secret, based on the best selling second book in the trilogy, for a 12/17/2027 release. During the quarter, we took a number of other steps to keep this momentum growing. Kicking off the marketing campaign for the next in installment of our Hunger Games franchise, wrapping production on a new interpretation of Rambo with rising star Noah Centineo. Wrapping production on Mel Gibson's Resurrection of the Christ parts 1 and 2. Green lighting the reimagining of Blair Witch in partnership with Blumhouse and James Wan's Atomic Monster, and signing acclaimed Spider Man director Sam Raimi to direct a remake of the classic horror thriller magic.

After the quarter, we opened Michael, The scenes of moviegoers dressing up bringing their families over and over and dancing in the aisles, are testament to what entertainment at its very best can do. With Japan still to open, Michael is on track to become our first movie grossing over $1 billion at the worldwide box office. And we believe there is a lot more story to tell and a lot more music to share. Turning to television. The mantra remains the same. Lean into the creative strengths that enabled us to secure renewals of scripted TV series with 12 different buyers.

Keep costs down, and maintain our flexibility to make shows at every price point every buyer and across a balanced mix of retained rights, and cost plus models. The Rookie, our long running procedural at ABC and Hulu, showed no signs of slowing down in the quarter coming off a season 8 finale that set a new streaming viewership record for the series and benefiting from an influx of younger audiences, the show was renewed for its ninth season. And we are excited to extend the brand with the ABC pickup of The Rookie: North with potential breakout star Jay Ellis. No discussion of our television business would be complete.

Without a few words about the hit comedy, The Studio on Apple TV. The series just took the international category at the BAFTA Awards to complete 1 of the most dominant award runs in modern television history by winning the top prizes at the Emmys, Golden Globes, the ACCTA Awards, and the PGA, DGA, and WGA awards. We are so proud of Seth Rogen, Evan Goldberg, the amazing cast and writers together with our partners at Apple TV. For everything they have and are continuing to accomplish. In closing, our success in the quarter is about more than 1 hit movie.

We are beginning to see signs that our operating environment is improving, People are returning to theaters, IMAX, Dolby, XD, and other premium large format screens, are transforming the movie going experience. Brand storytelling is emerging in new and unexpected places, across traditional and digital media alike. And Gen Z audiences are enabling shows like the rookie to break out with renewed vitality as we are again seeing the resilience of our business in the largest entertainment market. in the world. In this improving environment, the fact that our content pipelines are strong our library is robust, Our brand stands out, and our franchises are adding value from new markets and new audiences.

Should give everyone confidence in a strong year ahead. In the coming weeks, we will post several slides on our investor site that illustrate the core tenets of our business that I have touched on throughout my remarks. The proportion of repeatable branded properties on our film and television slates. The strength and consistent performance of our library, and the uniqueness of our business models. I encourage you to take a look because we will be returning to these themes often on future calls Now I will turn things over to Jim.

Jimmy Barge: Thanks, John, and good afternoon, everyone. I will briefly discuss our fiscal fourth quarter 2 thousand and 26 studio financial results and provide an update on the balance sheet. Beginning with the quarter, Lionsgate Studios revenue was expectedly down year over year to $907 million while adjusted OIBDA reached a 12 year high of a $165 million and was up 17% year over year. Operating income of a $118 million was up over 50% compared to last year. Reported diluted earnings per share was $0.23 per share, and diluted adjusted earnings per share was $0.37 per share.

Free cash flow for the quarter was a strong positive $190 million reflecting improved operating performance in the period as cash returns on our content investments in library were on full display. Trailing 12 months library revenue remained above $1 billion for yet another quarter. Growing 5% year over year and continuing to demonstrate the durability and growing value of our content portfolio. Now breaking down the performance in the quarter, I will start with the discussion of our studio segment profit. Studio segment profit, reflects our motion picture and television segment profits before corporate overhead expense increased 24% year over year to $218 million.

We began highlighting our studio segment profit last quarter because this metric is generally more comparable to the studio adjusted OIBDA figures reported by many of our peers. The increase in studio segment profit was driven primarily by strong motion picture performance. Moving to motion picture. Revenue increased 23% year over year $652 million while segment profit grew 39% to a $187 million. The quarter was driven primarily by the outstanding performance of The Housemaid and continued carryover from Now You See Me, Now You Do not.

Particularly noteworthy, was The Housemaid strong carryover into the home entertainment window where it became the industry's highest gross and PVOD title among films with up to a $150 million of domestic box office. Additionally, motion picture results were particularly impressive given we leaned in heavily near the end of the quarter with incremental pre release P&A spend for Michael, as well as early P&A spend for Hunger Games Sunrise on Reaping, and John Rambo. Turning to television. Revenue was $255 million and segment profit was $31 million. Television's year over year comparisons continue to reflect the timing of episodic deliveries and lower volume of scripted deliveries versus the prior year. Television segment profit remained resilient.

Benefiting from continued strength in library performance including the rookie and Mad Men. Importantly, we remain confident in TV's growth in fiscal 2 thousand and 27 as we expect to double the number of episodic scripted deliveries versus fiscal 2 thousand and 26. Now turning to the balance sheet. This quarter marks a post spin inflection point for strengthening our balance sheet as trailing 12 month adjusted OIBDA and free cash flow benefit from fully replenished pipelines in motion picture and television. We ended the fiscal year with net debt of approximately $1.6 billion an improvement of nearly a $150 million relative to the prior quarter driven by strong free cash flow.

Year end leverage improved well over a full turn to 6.1 times, reflecting both higher trailing 12 months adjusted OIBDA and strength in free cash flow. At quarter end, we had approximately $800 million of unused capacity on our revolver available and $341 million of unrestricted cash on the balance sheet. Now let's discuss how the business is positioned going forward. Our first year as a stand alone company was a transition year and we have all the pieces in place to enter fiscal 2 thousand and 27 with a lot of momentum. In particular, we enter the year with strong carryover contribution from our fiscal 2026 theatrical slate.

In addition to starting the year with the exceptional performance of Michael, we have a highly anticipated motion picture release schedule and a large increase in scripted episodic deliveries within television. We now have enhanced visibility and continue to expect significant adjusted OIBDA growth in fiscal 2 thousand and 27. Additionally, this adjusted OIBDA improvement is expected to result in substantial growth in free cash flow and a continuation of significant deleveraging over the course of the year. Now I would like to turn the call over to Neelay for Q&A.

Neelay Shah: Thanks, Jim. Operator, can we open the line up for Q&A?

Operator: We will now begin the question and answer session. The first question today comes from Vikram Kesavabhotla with Baird. Please go ahead.

Analyst (Vikram Kesavabhotla): Yes. Hey, thank you for taking the questions. First 1 is a higher level question on the industry, and you referenced this a little bit in your prepared remarks. But it seems like the box office has been in a really good place over the past few months. And I am curious to hear your perspective on the drivers behind those trends. And in particular, I am curious if you think we are seeing a sustainable improvement consumer demand at the box office or if you think it is too early to make that characterization.

And realize it is a tough question to unpack with a lot of precision, but it would be great to hear your perspective on the trends that you are observing out there And then separate from that, Jim, I am curious if you could just talk more about what is cadence of fiscal 27 is going to look like from a profit perspective. Seems like there is some moving pieces to consider, you know, relative to fiscal 26. You called out a few of those in the remarks. It would be great if you could just talk more about some of the puts and takes we should be taking into consideration.

Jon Feltheimer: Thanks. Thanks, Vikram. I will start and I think I will turn it over to Adam to say just 1 thing I think is sort of an interesting statistic right now that the YouTube growth is actually being driven by a 55 plus and that actually the growth in the exhibition business the movie going business is actually being driven by Gen Z who are up to about 30%, 34% I think share of that market. And so that is obviously that is the group that we want to engage with right now. We are finding different ways to reach them. But overall, that is very exciting. That coupled with obviously this large screen formats that I talked about before.

They are actually making the movie going experience really like the live what is going on in live right now. it is just not more of an event, especially if you have got an event movie. Adam, I do not know if you want to add to that.

Adam Fogelson: Yes. Thanks, John. I would just say that I think the studios have done a tremendous job over the last couple of years of understanding and recognizing what type of experience moviegoers of all ages want to have in a movie theater. And how to reach moviegoers with marketing campaigns in a world where there is so much more fragmentation than there was once upon a time. So I think you are seeing lessons learned by studios across the board. And I think there is much more content on the release schedule over the course of the next year and beyond that I think is going to continue to drive that type of attendance.

Jimmy Barge: it is really exciting to see, and I am listening to it in my own house. Young people are talking about movies and going to the movie theaters as an incredibly fun way to spend time with their friends. And no question, the exit polls reflect what John said, which is that group is driving real outsized opportunity alongside those that have gone in the past. So I am encouraged by what is happening. And thanks, Vikram. For sure, we have got great visibility and confidence as we look at significant growth rolling into 2027 from a cadence standpoint, I would say that it is not as back end loaded as it was in the prior year.

So not as back end loaded as fiscal 26. TV is a little bit more back end loaded this year than motion picture. And to give you some color, part of that visibility, right, is we are doubling up Sonic deliveries going into fiscal 27. We saw you saw we had 12, 13 returning series renewed. So of that, about 90% of those episodes are going to fall over Q2, Q3 and Q4. that is just normal delivery cycles. So that is why TV will be a little bit more back end loaded in that context.

Analyst (Vikram Kesavabhotla): Okay. Great. Thank you.

Operator: The next question is from David Joyce with Seaport Research Partners. Please go ahead.

Analyst (David Joyce): Thank you. A couple of questions. The first was a great exit to 2026, great start to 2027. But could you put a little finer points on the possible range of outcomes for the next year? Really, what does strong growth and significant growth mean given that you are also laying the groundwork sequels and some other films coming out and now have a follow-up, please.

Jimmy Barge: Well, for sure. Thanks, David. Appreciate it. Yes, I mean, clearly we do have greater visibility in fiscal 2027 as you would expect as we are a bit closer, but it is still early in the year. I mean, we got to remind you, right, there is timing and release schedules both on our film slate, ultimately episodic deliveries. Even the cadence of P and A spend, right? So we are not going to put a range on that for you. But we got great carryover coming out of the 26 slate, you know that. I mean, Housemaid's written all over that.

Obviously, a great start to the year in terms of theatrical slate with Michael but also great things to come as well as Hunger Games and beyond. So and the TV episodic deliveries, I have already kind of provided some color there. I would also point you, I mean, I think it helps with the confidence and maybe does not help you with the range, but the backlog, which is contractual future revenues and cash flows, is $1.3 billion. So that likewise gives us a lot of confidence. And probably 90% of that backlog will come within the next 24 months.

So it is not only strong carryover into 27, but also fiscal 2028 is also nicely set up as well. So thank you.

Analyst (David Joyce): Appreciate that there is a lot of moving pieces and timing still to come. Could you talk about some of the other TV titles besides The Rookie and the spin-off and The Studio? What are some others that you are excited about? And then finally, could you provide a perspective on what the impact might be from the Paramount Skydance and Warner Brothers discovery combination on your library business? Thank you.

Jon Feltheimer: Evan, why do not you start?

Kevin Beggs: Sure. This is, Kevin Beggs speaking. In addition to the rookie going into season 9, which is really quite an accomplishment, and as John alluded to in his remarks, getting younger every year in demographics, which is just simply unheard of in broadcast television. The Rookie: North spin off is a great complement and expansion to that franchise. The studio, obviously, we are in season 2. Hunting Wives has been a breakout success for us on Netflix. We just wrapped shooting season 2. We are in the middle of shooting the Rainmaker Season 2 for USA Network, huge international driver for our business. About to start shooting Robin Hood season 2.

And we continue to be deeply immersed in the Power universe the power franchise that we share with stars. Force wrapped up in early January, that particular show season 5 of Kanan is coming in June and we are in the first season of production on origins. Which is essentially a take on a young Power and hopefully more Power in that pipeline. Speaking for about the Skydance Paramount-Warner potential combination, We are really excited about what SkyDance and Paramount have done before that relative to opening up their platform to outside studio suppliers like ourselves. Both in originals in my area and Jim Packer's distribution side.

I think our thesis is that a strong, unified streaming player, whether they differentiate that to 2 brands or just 1. Is better than maybe 2 weaker ones in terms of firepower and ability to buy from the outside market. And we know we need to compete with the best creative product that we can. And come up with better financial models, knowing there is a receptive buyer of course makes that virtuous circle really work for us. Jim may want to talk about distribution.

Jim Packer: Yes. David, I would say talking about Paramount, and Warner Brothers, also both of those platforms are really going to be wanting to be strong and compete internationally. HBO has just opened up a couple of new territories. The last 24 months. The 1 thing I have seen when all these types of mergers or consolidations go on is nobody stops competing. They just compete and we have the kind of content that really fits competition well. Going back, I know Kevin talked a lot about the original shows. If you just look at our library, I will give you 1 quick stat that gives you a sense of the strength of our TV library.

In fiscal 2022, we only had 4 series that were sold. To the big 6 streamers. And if you look at fiscal 2026, had 17 series. But the most important part of that 10 of those 17 ranked in the top 10 of those various top 6 streaming platforms. Things like Nurse Jackie, Hightown, Mad Men, as you saw, went to number 1 or 2 on HBO. And Spartacus. So the library itself from a TV perspective, continues to perform in a way that I think many, many clients are going to want.

Analyst (David Joyce): Appreciate the color all. Thank you.

Operator: The next question is from Omar Mejias with Wells Fargo. Please go ahead.

Analyst (Omar Mejias Santiago): Hey, guys. Thanks for the question. Jim, can you remind us what is the path to deleveraging here? Is 3 Arts still a part of that deleveraging story? Or are you now focused on organic, deleveraging And then my second question, Adam, following the stellar performance of Michael, can you give us an update on Michael too? And if you believe part 2 carries that similar strong commercial appeal as part 1 given the arc of the story.

Adam Fogelson: Thank you. Hey, Omar. it is Adam. I will go first and then I will turn it over to Jim. We are really excited about the progress we are making with respect to a second Michael film. All the conversations that we have been having with all of the appropriate parties continue to go exceptionally well. And I would say that there is a ton of incredibly entertaining Michael Jackson story and much of the biggest and most popular parts of his music catalog that were not touched upon in the first film. And also I would just say we can go forwards and back in telling this story.

There are so many other events that happened even in the time frame of the original movie that were not touched upon. So we are very, very confident that we have got an incredibly entertaining movie that will appeal once again to a global audience as the pieces come together.

Jimmy Barge: And Omar, we are just naturally delevering. I mean, with the visibility that we have in the context of EBITDA growth, significant growth into 2027 likewise strong positive free cash flow momentum just coming through our operations. So 3 Arts really is not either here or there with regards to the delevering. I am looking at 4, 4.5 times leverage off of 6.1 this period, which was, as you saw, down just a little over a full turn from the prior quarter. Okay. All of that is natural. When we get into the fourth quarter of our fiscal 2027, as you know, there is a 3 Arts put there.

We could easily absorb that would be about a half a turn. Otherwise, if it is the right thing to do for 3 Arts and we will do whatever we need to do, is great for shareholder value in the business. But as far as deleveraging, we are deleveraging naturally.

Brian Goldsmith: Yes. And just it is Brian Weinstein just jumping in. Look, we are it is an interesting time in our category. there is a ton of momentum in the entire space. there is a lot of investor focus. And if you take a step back and you look at Exel's transaction with Goldman Sachs and the team's process formerly Wasser and theirs, it is quite a bit of enthusiasm in the space for us in spite of some downward pressure in scripted and unscripted, we have real momentum in our core business and look, our decision diversify has proven to be the right 1.

Just to give you some specifics on the production side, we have got renewals with running points On Netflix and Will Trent and nobody wants this and Hunting Wives and The False Wives of Redlands, so it feels good. For our business, the long term deal that SAG and the WGA struck are a real positive sign going forward. In our diversification strategy, we got ahead of some of the stuff. We have signed clients in sports like Myles Garrett and Mookie Betts and Jayden Daniels and Sophie Cunningham. We feel real good about that. Obviously, the creator economy business is a big part of everyone's future, including ours. We are really proud.

We have got a client named Kai Cenat who is filmed The Backrooms. This has come out soon. Started on his own YouTube channel, made it into a major motion picture. it is just a sign of the sort of things to come. As we move forward. So we are excited.

Jon Feltheimer: I would add the strategic conversations we have alluded to before would probably involve some deleveraging, but they will for sure be driven by the strategy not the delevering.

Analyst (Omar Mejias Santiago): This is super helpful. Thank you, guys. Appreciate it.

Operator: The next question is from Brent Penter with Raymond James. Please go ahead.

Analyst (Brent Penter): Hi, good afternoon, everyone. Thank you for taking the questions. First 1 for me on Michael, is there any color you all can give in terms of EBITDA contribution from that movie? Or at least as we try and do our own math to think about the puts and takes versus another movie of a similar scale? Terms of maybe a very strong international presale, also factoring in the estates portion.

Jimmy Barge: Well, yes, we are not going to break out the absolute contribution on that, but obviously it is strong. Keep in mind we have Universal as a partner on the international side. And then of course, we handle the presales in Japan, which as John noted is yet to open, but great demand and great things happening there we think. And we are just excited about this and that is part of the momentum. Again, coming into the year extremely strong, gives us enhanced visibility. We were always looking and striving for significant growth into fiscal 27.

And I think this lays it out and I think we are in a good position to not only drive 2027, but also great carryover into 2028.

Analyst (Brent Penter): Okay, great. And then just in broad terms without getting into numbers, how should we think about the sequel and puts and takes in terms of economics there. I think maybe there was some footage from the first 1 that is already been shot that you might be able to use. So how that might that benefit you for the sequel?

Adam Fogelson: Yes. As we have said pre-- it is Adam. As we have said previously, looking at the story for the second movie is unfolding, we think we have got 25% to 30% of a second movie already shot. From the prior production activity. And so obviously, that will have some benefit ultimately. But we are going to make sure we make a big and satisfying movie for a global audience once again. So I would not want to quantify exactly what that is going to look like, but undoubtedly 25% to 30% will be material.

Analyst (Brent Penter): Okay, okay, great. And then final question for me. The poison pill expired on May 7. Can you all talk at all about what that enables for you or what conversations that has enabled now that the poison pill is no longer in place?

Jon Feltheimer: it is not going to change our business materially. The shareholders can always decide if they want to re up a poison but we are going to leave it in their hands. And we think of the time that we did it, it was the right thing to do. And so as you mentioned, it will be expiring in the next shareholder meeting.

Analyst (Brent Penter): All right. Thanks, everyone.

Operator: The next question is from Thomas Yeh with Morgan Stanley. Please go ahead.

Analyst: Great. Thanks very much team. 2 if I may. The first is curious how you see AI changing studio margins over time and different things that it could unlock for your business? And then the second follow-up to the Poison Pill question, just as you think about the strategic landscape, obviously the value of IP, which has been underscored by Warner Brothers, and other instances. How do you think about the standalone opportunity versus the potential benefits of being part of a bigger strategic organization? Thank you.

Jon Feltheimer: Well, the landscape continues to be moving towards more scale. it is significant opportunities for a pure-play studio like ours. We love the core assets that we put together over the last 25 years. Both built and acquired. And we are laser focused on maximizing the shareholder value. We separated the business to create a standalone studio and collapse into a single share class, which has given us a great deal of maximum optionality, but also certainly increased our liquidity dramatically. And we feel like we have a world where scale and franchises as well as very well known IP have never been more relevant.

Jimmy Barge: From Studio margins perspective, we feel good about that. I mean, obviously, we had really strong margins in the fourth quarter. So you cannot always look to something like The Housemaid, for example, is very modestly priced and even less expensive when you look at it relative to our New Jersey tax credits that were something special here. And I did $400 million of global box office. So, yeah, you cannot look at that margin, but generally speaking, good margins going into next year if you look at our fiscal 20 margins in total. Going growing those in Motion Pictures, we go into 2027. TV right around the same level, I would think.

You know, you have got a lot of renewals, but there are some sophomore series that are building in terms of profitability and margin-- I mean, certainly profitable, but margins building.

Jon Feltheimer: So I think I feel really strong about 2027 margins continuing to increase or hold certain levels in TV. I just want to clarify 1 thing. We put the pill in a year ago. It has expired. Thanks very much.

Operator: The next question is from Matthew Harrigan with Benchmark. Please go ahead.

Analyst (Matthew Harrigan): Thank you and congratulations. Firstly, I guess it came out a few hours ago that you are actually going to separate the resurrection Ascension Day 26 and 27 versus having them so tightly clustered, which I always thought was kind of maybe not economically optimal. You get more cannibalization, you get more into anticipation. For the second film. Is there anything to comment on there other than the economics probably look better with better separation? Just out of curiosity.

Adam Fogelson: Hey, Matthew. it is Adam. Thanks for the question. No. You have hit the nail right on the head. Look. It was we claimed those 2 dates because those were the 2 most obvious dates where a film like The Resurrection could conceivably go, and we were able to protect both dates. Having just seen production wrap actually slightly ahead schedule and slightly under budget. The scale of what Mel and the team have created is astonishing, and we could not be more comfortable that there are 2 stand alone exquisite movies.

And with Ascension Day falling effectively at beginning of the incredibly lucrative summer movie going corridor, taking advantage of that in consecutive years as other films in multiple parts have done so well. Just felt like the right decision. So the reality is that initial dating was designed more than anything to protect the 2 possible dates we might want. And we are excited now that we have landed on this as our go forward strategy.

Jimmy Barge: And Matthew, with regards to just economics on fiscal 27, right? As you move that out of back end of 27, that is a slight improvement, but realize we are also dropping day drinker in on that date. And gonna have P&A there. So it is actually relatively neutral, probably slightly down a bit, just those changes on their own relative to fiscal 27.

Analyst (Matthew Harrigan): And then secondly, I know this is really conjectural. But you had the C Dance 2 point zero sell off among the studio stocks. In February, and then we had some talk today on HoloGrind that shown at Cannes, which was supposedly produced for $500 thousand which certainly does not look like a you know, top studio film. It looks a lot better than you would expect. For $500 thousand what I have seen. How do you feel about just on the obviously, you have got benefits on the timeline for getting movies out faster and costs. How do you feel about Immersion competition from maybe people outside those even the traditional studio rather in particular on the streaming side.

Jon Feltheimer: Yes. Look, as you well know, through the history of our business, all the technological advances of unlocked value for media companies. This is going to be the same. I am very bullish. We are very bullish that AI is a total net positive for us. We want more people engaged with content. We are across all of our digital footprints, YouTube, social channels, then we will be launching.

I am very excited, but we are launching a new fan and creators creator site We are engaging with the fans wherever they are and these are digital tool kits that we are gonna give them that will empower them to interact with our content, to extend our brand, to build new versions of our brands, We are excited about the use of AI across the board in our own company right now, we have deployed it over 80% of our workforce, whether it is co Pilot, whether it is ChatGPT, Enterprise, Snowflake, whatever. We are utilizing it across the board for productivity, for advanced analytics.

And so across the board, whether it is just the operations of our business in terms of sales or whether it is enhancing our preproduction, postproduction, AI is a total net positive for us. And again, we want to engage with our fans. We want to give them digital toolkits. To create different versions, obviously, a protected environment. Obviously, with the authority and approvals of our talent. But we are really excited about it. Our early engagement with Runway enabled us to take an early look at generative AI. And so big plus for us, big value add, looking forward to more and more deployments.

Analyst (Matthew Harrigan): Great. Thanks, John. Thanks, Adam.

Operator: The next question is a follow-up from Vikram Kesavabhotla with Baird. Please go ahead.

Analyst (Vikram Kesavabhotla): Yes. Hey, thanks for letting me ask a couple more questions here. Just wanted to follow-up on Michael, given that it was such a standout result for you Now that you have had time to reflect on the feedback and the reactions, do you think that this film performed as well as it did? And it seems like you did some unique approaches to marketing around that film that may have benefited the performance as well. I would be curious if you could elaborate on some of the strategies that you use there that helped drive the success?

Adam Fogelson: Sure. I am happy to try to offer some thoughts. Look, I think, as we said on multiple earnings calls prior to the release of the film, the fact that Michael is inarguably 1 of the most influential artists in human history and that so many of not only his songs, but his dancing, his impact on fashion, his impact on motion pictures, his impact across so many different areas. had a profound emotional effect on people all over the world. the idea that when people had a chance to, if they are old enough, relive many of those extraordinary moments.

And for younger people who we were not shocked, but thrilled at how many young people are really, really engaged with his music and his life. And Antoine and Graham did an extraordinary job of capturing that with energy And so we expected something big. We were planning for big, and we said to everyone that it was the most watched trailer in the history of the studio. It was not just that fact. It was looking into the details of who was responding to it. And seeing the ancillary benefits because his music is at the top of the charts now as well.

In terms of marketing, is definitely a different era than when I was running marketing 20 years ago, how you reach people has significantly changed. And I give an immense amount of credit to both our marketing and distribution teams, and in partnership with Universal. We really found ways to create stunts that were not only exciting to the people who were seeing them in the moment, but became viral and passed along on every platform and social media. And you just cannot buy your way into awareness and enthusiasm anymore. You have to create the tools for fans to share with 1 another and I think the teams here and around the world did that extraordinarily well.

Analyst (Vikram Kesavabhotla): Okay. that is helpful. And just last 1 for me. Curious if you could talk about, or refresh us on your philosophy around balancing the mix of tentpole films versus mid budget films over the next few years. And particularly given the success you have had recently with the housemaid and Michael if any of that has affected your perspective on how you plan to manage the portfolio going forward?

Adam Fogelson: Yeah. No. It has not changed it. it is reinforced. What I have been talking about with John has been talking about in the conversations that we have been having. I mean, it is nice that when you mention a movie like The House Maid and a movie like Michael, you are talking about 2 very different movies. 1, lower end of mid budget film that while it had a passionate fan base from book sales, it was not a massive fan base from book sales. And Michael being a very large movie and both of which were extraordinarily profitable. The criteria we are using to decide what films to make remains unchanged.

Do we believe it can be creatively great? And I am so thrilled every time we make another announcement about what filmmakers and what actors are coming on board, what producers we are working with. Can it be creatively great? Is there a marketing strategy that allows us to do what I was just talking about, that allows us to reach consumers where they are now and the way they want to they want to be impacted. And then is there a rational plan? Can you make enough money and reasonable success to justify the risks that go into every film?

And so we have definitely been working hard to make sure that our existing IP when we see an audience demanding more, that we are giving them an exciting version of what they are demanding, but when John mentioned in his opening remarks, things like Blair Witch, or another Hunger Games movie, those are very modestly priced films. When we are talking about a Hunger Games or we are talking about a Michael, those are larger films. And when any film is able to pass the threshold criteria that I laid out, it becomes a great candidate.

And I think we will have 2 to 4 tent poles and the rest of the films fit into a variety of other cost categories.

Jon Feltheimer: Yeah. I think I just add that, you know, that word 'tentpole' implies just a huge a huge box office, a huge project You could interchange 'tentpole' and 'franchise' and they branded properties. And as I said in my remarks, we are gonna be posting, and we are gonna keep doing that in the future. We are gonna be posting at least 1 slide that just shows what our pipeline looks like going forward in terms of television, film and live entertainment. I think everyone's going to be really surprised to see how many branded properties we have.

I think you will be able to look at that and you will see that we have as many well known branded properties as any studio in the business. So we will be filling the pipeline with those properties in the future. And obviously, whether it is The Housemaid that was made for about a fifth of the price of Michael, I mean, you can call that now a tentpole, you can call it a franchise. I think the key thing is take a look at that slide. I think you will be excited to know how much visibility we have in terms of proven IP going forward.

Analyst (Vikram Kesavabhotla): Okay. Thanks everyone. I appreciate the color.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Neelay Shah for any closing remarks.

Neelay Shah: Hi, everyone. Please refer to the Press Releases and Events tab under the Investor Relations section of our website for a discussion of certain non GAAP forward looking measures discussed on this call.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.