Angel Studios, Inc. Q2 FY2026 earnings call

• Core Business & Mission: Angel is building a first-of-its-kind audience-driven entertainment platform centered on the Angel Guild, a community of paying members. The Guild guides content investment, curation, and development, creating a self-reinforcing growth loop (the Angel Flywheel) where more members attract better filmmakers, leading to better content that attracts more members. The company is not trying to replace major generalist streaming platforms, instead filling a unique niche for values-aligned content selected by the community.
• Membership Growth: As of July 31, 2026, Angel has grown to more than 2.85 million paying Guild members, adding 390,000 net members in Q2 2026, exceeding analyst expectations. Annual recurring revenue from membership is approximately $466 million, with 60% annualized growth through the first half of 2026. Trailing 12-month average revenue per member (ARPM) is $13.63, a small 6 cent drop driven by discounted annual memberships from the successful America 250 acquisition campaign.
• Operational Efficiency: Guild sales and marketing spend as a percentage of Guild revenue fell from 78% in 2025 to 48% in 2026, while still delivering strong membership growth. Total sales and marketing expense was essentially flat year-over-year at $61.1 million, with improved operating leverage as revenue grew. Gross margin was 54% in Q2 2026, down from 69% in Q2 2025 due to a mix shift to higher-volume, lower-margin Guild revenue from 84% of total revenue this quarter versus much higher theatrical distribution share last year.
• Content & Platform Expansion: The company is ahead of schedule on its 2026 target of 750 total releases, having added 115 films, 31 comedy specials, and 340 TV episodes (including 18 new series) through the first half of the year. 6 of 10 planned 2026 theatrical releases remain for the second half of the year. Angel has added curated third-party catalog titles to the platform, increasing value for members and improving business economics; enterprise-grade digital rights management and anti-piracy tools were built in 6 weeks (versus an expected 1+ year) using internal AI tools. During the quarter, Angel launched on Comcast X1, Xfinity Flex, Zumo, and LG, expanding distribution reach. Filmmakers have earned nearly $300 million through Angel's revenue-sharing model to date.
• Technology: All employees now use AI tools daily, accelerating production, reducing content costs, and improving company-wide productivity. AI also enables more granular, scalable marketing iteration through internally developed tools like the Ad Factory and Creative Studio.

Angel's Q2 2026 total revenue was $111 million, a 28% increase from $88 million in Q2 2025. The core Angel Guild segment achieved revenues of $90.7 million, representing 81.7% of total revenue, which is a 94% increase year-over-year. Theatrical distribution revenue contributed 16% of total revenue in Q2 2026, down from 45% in Q2 2025, with gross margins structurally higher than Guild revenue. Content licensing revenue is a smaller, growing segment that includes revenue from post-theatrical PVOD and out-licensing of Angel original content to third-party streaming platforms.

• Management reaffirmed full-year 2026 guidance to keep full-year adjusted EBITDA loss to no more than $25 million. The year-to-date adjusted EBITDA loss through the first half of 2026 is only $7.7 million, well ahead of plan to meet the annual target.
• Management expects to continue growing membership as fast as possible within the constraints of current balance sheet, and does not expect to need to raise additional cash to continue growing to 5 million members on the current trajectory.
• 2027 theatrical release volume is expected to be similar to 2026, with a potential modest increase to one release per month, though no final decision has been made.

• Theatrical box office results are inherently unpredictable, and any large unexpected hit or miss could swing full-year financial results versus guidance. Marketing efficiency can vary seasonally, with higher advertising CPMs expected in Q4 that may slightly reduce contribution margins in the second half. Membership growth rates depend on sustained conversion efficiency; if conversion drops, management will pull back on marketing spend to maintain financial targets, slowing near-term growth. Churn and retention metrics have not been publicly disclosed, and retention varies as the company scales and tests new audience segments. Revenue recognition timing can create quarterly volatility between membership growth and reported revenue.

Q: How does management adjust marketing spend over time, and what drove improved efficiency this quarter? / A: Management only increases marketing spend when campaigns deliver strong conversion at target costs, balancing both cash efficiency and growth targets. Q2 had stronger-than-expected membership growth driven by two key breakthroughs: internally developed AI-powered marketing tools (Ad Factory and Creative Studio) that enable more granular, scalable ad iteration to support the growing slate of titles, and a doubling of aided brand awareness from 8% to 14.9% year-over-year, which makes all marketing more effective. Q2's faster growth slightly reduced near-term ARPM and margins, but delivers long-term membership growth benefits, and Q3 may see slower growth as spend adjusts to current conversion levels.

Q: Investors think theatrical releases are dying, and misunderstand whether Angel pursues theatrical for profit or growth. Can you clarify the strategy? / A: Angel does intend to make a profit on successful theatrical releases, and has delivered the highest average per-title independent box office from 2023 to 2025, so the model works. However, the primary strategic goal of theatrical is to grow the Guild community, not just rely on box office profits which are inherently unpredictable. Contrary to the idea that theatrical is dying, data shows Gen Z and Gen Alpha are the fastest growing demographic for theatrical attendance, as younger audiences crave in-person community experiences away from phones. Theatrical also attracts high-quality talent that would not otherwise join the Angel ecosystem, strengthening the entire platform.

Q: What is the purpose of transferring 10 million super-voting shares to the Angel Mission Trust, and what does it mean for public investors? / A: The transfer is designed to lock in Angel's original long-term mission after the founding team's tenure, drawing on models from mission-driven companies like Hershey, Patagonia, and Rolex. While there are tradeoffs to mission control via a trust, history shows that staying true to a consistent long-term mission can deliver superior long-term returns for public investors relative to companies that stray from their founding values after founders exit. This structure protects Angel's unique community-driven model long-term.

Q: With the membership base at ~2.85 million today, what is the path to 5 million and 10 million members? / A: Management is already on track to reach 5 million members using only the current balance sheet, without needing additional capital or new revenue streams to hit that target. New channels including international expansion will accelerate growth beyond 5 million into the tens of millions, and international expansion will be prioritized once the company reaches profitability and positive free cash flow, which is approaching soon. Management believes the total addressable market is far larger than current investor expectations, as Angel is broader than the niche positioning many investors assign to it.