Sphere Entertainment Co. Q4 FY2025 earnings call

• Jim Dolan highlighted the success of The Wizard of Oz at Sphere in Las Vegas, with over 2.2 million tickets sold and approximately $290 million in ticket sales, and plans to release The Wizard of Oz 2.0 later this year with new scenes and 4D effects. - Announced bringing the second Sphere in the U.S. to National Harbor in Maryland, with support from multiple entities and expecting the venue to open in 4 years or less; also in advanced preconstruction in Abu Dhabi and in discussions with numerous domestic and international markets for Spheres. - Robert Langer mentioned that the Sphere segment's revenue growth was driven by higher revenues from the Sphere experience, concert residencies, and Exosphere advertising/sponsorship, and SG&A expenses decreased year-over-year due to cost efficiency efforts.

The Sphere segment generated revenues of $274.2 million in the fourth quarter, a surge of over 60% compared to the prior year period. Its adjusted operating income was $89.4 million. The MSG Networks segment recorded revenues of $120.1 million in the December quarter, with an adjusted operating income of $38.6 million.

• Expect to commence 5 or 6 Sphere expansion projects in the next few years, assuming profitability and manageable by the management team. - For the National Harbor project, there is $200 million of public and private funding, with various financing sources available. - Will continue to focus on efficiently managing SG&A expenses while supporting the global growth plans for Sphere.

• Potential construction cost overruns that could impact project timelines and financials. - Competition in securing prime markets and IP holders for new Sphere projects. - Uncertainties in financing additional Sphere projects beyond the initial funding sources.

Q: How many Sphere expansion projects, full-size versus smaller scale, do you expect to be able to begin in the next few years? And knowing you're capital light on most, how many projects can you guys handle managing at once?

A: Jim Dolan said initially as many as they can get assuming profitability, with the limiting factor being the management team's handling capacity, expecting 5 or 6 projects to be ongoing at once in the best markets.

Q: Can you speak a bit more to how you settled on the location for National Harbor? And help bridge the financing gap for National Harbor and whether it's a venue planned to run and consolidate in the financials?

A: James Dolan said it was a good offer in a prime location from the competition, and there are various financing sources available including stand-alone financing and potential partners, and it's a venue they plan to operate and consolidate in the financials.

Q: Curious if you could talk a little bit more about how ticket sales for WOZ are trending into what's usually a seasonally weaker period in Vegas over the winter? And then if there's anything you're seeing on the demand front from the show that's encouraging your thinking in one direction or the other on things like show count and pricing as we head into the spring and the summer?

A: Jennifer Koester said they've been resilient despite Vegas winter seasonality, been aggressively scheduling multiple shows per day to grow revenue per day, and will release WOZ 2.0 which is expected to extend the product's lifespan.

Q: On the cost side, SG&A came in a bit heavier. In the fourth quarter, even adjusting for some of the management transition expenses. Just curious if there's anything more you can say on SG&A in the quarter and then perhaps the outlook for the expense line item in '26?

A: Robert Langer said they're focused on efficiently managing cost infrastructure, fourth quarter SG&A included certain transition and share-based expenses, adjusting for those it was similar to other 2025 quarters, and will continue to seek cost savings in '26 while supporting Sphere's growth.

Q: You had mentioned that you'll complete the Edge later this year. Wondering if you or Jennifer can kind of talk about how we should think about when you might launch that? What's involved with that?

A: James Dolan said it's expected to debut from The Edge sometime in the fourth quarter, possibly slipping into the first quarter, driven by maximizing revenue inside the facility.

Q: In the context of a broader sphere franchise rollout, how do you think about the potential cannibalization or competition between spheres, for example, what a potential franchisee on the East Coast be concerned at all that they'd have to compete with the newly announced National Harbor Sphere for demand?

A: James Dolan said he doesn't see cannibalization as markets can absorb the attendance, like Las Vegas has ~4 million total attendance and National Harbor has 15 million annual visitors, so not concerned about one market disturbing the other.

Q: You mentioned positive discussions with other IP holders in your prepared remarks. I guess if you could elaborate on that, I guess, in the context of the success Wizard of Oz and really the longevity of demand and the strength there as it's continued now for a handful more months than the last time we spoke. So I guess the question is, what does that pipeline look like? Any additional details you can give from interested IP holders and how those conversations are going?

A: James Dolan said they're in discussions with other IP holders, every IP holder is enthusiastic about putting their IP into the new medium, but need to consider payback, value, and revenue potential from their IP.

Q: Can you provide an update on the residency pipeline through 2027? Just what you view as the sort of optimal number of residencies annually?

A: James Dolan said they're mostly booked for '26, might have some slots left in '27, focusing on long weekends and leveraging the Las Vegas market.

Q: You made a recent announcement that included the Delta having a new branded space within the sphere. Could you please update us on the rest of the sponsorship strategy, just the updates there and on the excess of your progress?

A: Jennifer Koester said they're off to a strong start in 2026, had strong growth at CES with advertisers like Google, Delta, Lenovo, debuted an interactive game experience with LEGO and Star Wars on Exosphere, and have announcements like Anheuser-Busch and active conversations with other food chip brands, expecting more announcements throughout the year.