SPHR

• Global Sphere Venue Expansion

  • Construction of Sphere Abu Dhabi on Yaz Island is underway, with completion expected by the end of 2029, under a franchise model where the local partner funds and owns the venue, and Sphere receives franchise and royalty fees.
  • Plans for Sphere at National Harbor (U.S.) are advancing: detailed site plans have been filed with Prince George's County, and the company expects to finalize a third-party build-to-suit leaseback financing agreement in the near term. This structure will give Sphere full daily operational control, allow consolidation of the venue's financials, and let Sphere retain more economic upside. The venue is expected to open within four years. $200 million in state, local, and private incentives are already secured.
  • Management is in active discussions with multiple markets for additional large and small-scale Sphere venues, and expects to announce another project by the end of 2026 or Q1 2027, with a long-term goal of 5+ open venues and 5+ under construction within 5-6 years.
  • The company will use flexible, project-specific financing and operating models (including franchise, build-to-leaseback, minority equity, and self-ownership) to accelerate expansion and maximize return on investment.

• Original Content Development

  • The Wizard of Oz at Sphere has sold nearly 3.6 million tickets for approximately $450 million in total ticket sales, and continues to perform well even during Las Vegas' off-peak summer season. An enhanced 2.0 version of the production is expected to launch in September 2026.
  • A new original Sphere experience, The Rocky Horror Picture Show, was recently announced and will debut in March 2027. This expands the company's content slate to a new genre, enables later evening shows for adult audiences, and increases venue utilization. Development of Rocky Horror will take less than 12 months, half the development time of The Wizard of Oz, driven by improved production efficiency and AI adoption.
  • The core content strategy is to build reusable, durable original IP that can be rotated across the global Sphere venue network to drive monetization as more venues open. Management expects 3-4 original Sphere experiences to be running at the Las Vegas venue by the end of 2027.

• MSG Networks Updates

  • A new partnership was announced making DAZN the exclusive direct-to-consumer streaming home for MSG Networks, which is expected to benefit existing subscribers and content via DAZN's platform.
  • MSG Networks debt has been reduced to $116 million at quarter end, and remains non-recourse to the broader Sphere business.

• Balance Sheet

  • As of June 30, 2026, the Sphere business held $534 million in unrestricted cash and cash equivalents, with $259 million in convertible debt and a $275 million term loan for the Las Vegas Sphere.

• Management reaffirmed its long-term vision of building a global network of Sphere venues, with a target of 5+ open venues and another 5 under construction within 5-6 years.
• An additional Sphere project announcement is expected by the end of 2026, or by Q1 2027 at the latest.
• The Las Vegas Sphere will have 3-4 original Sphere experiences running by the end of 2027.
• Sphere at National Harbor is on track to open within four years of permitting, with completion expected in the early 2030s; Sphere Abu Dhabi is on track for completion by the end of 2029.
• ExoSphere advertising and sponsorship is expected to continue growing through the remainder of 2026 and into 2027, supported by a strong pipeline of multi-year brand partnership deals.
• The mark-to-market impact on SG&A from share-based compensation is expected to decrease in future periods, as more than half of the affected awards were cash settled during Q2 2026.

Total company revenue for Q2 2026 was $313.6 million, with an adjusted operating income of $50.9 million.

1. Sphere segment: Generated $226.4 million in revenue, which accounts for 72.2% of total company revenue, representing a nearly 30% increase year-over-year. Growth was driven by strong ticket sales for The Wizard of Oz at Sphere, as well as higher revenue from ExoSphere advertising, sponsorships, suite licenses, and concert residencies. Growth was partially offset by fewer brand events held at the venue year-over-year. Adjusted operating income for the segment was $39.9 million, up from $24.9 million in the prior year quarter; the increase in revenue was partially offset by higher SG&A and direct operating expenses.
2. MSG Networks segment: Generated $87.3 million in revenue, which accounts for 27.8% of total company revenue, compared to $107.1 million in the prior year quarter. Adjusted operating income (AOI) was $11 million, down from $36.5 million year-over-year. The decline reflects a 16.5% subscriber decrease, lower advertising revenue, and the absence of retroactive media rights agreement adjustments that were recorded in the prior year quarter. Net debt at the segment was approximately $98 million ($116 million in outstanding term debt) at quarter end, which is non-recourse to Sphere Entertainment.

The company noted that all forward-looking statements related to venue expansion, content development, and future financial performance are subject to inherent risks and uncertainties that could cause actual results to differ materially. Key identified risks include: delays in securing construction permits for new venues, construction cost overruns, slower than expected content development, weaker than anticipated attendence or demand for existing and new content, and the ability to secure favorable financing terms for new venue projects on schedule. Additional risks are detailed in the company's SEC filings.

Q: How has The Wizard of Oz attendance trended since launch, particularly with seasonality, and what is the outlook for the show after its first anniversary with the upcoming 2.0 enhancements?

A: The show has performed very well overall, and it follows standard Las Vegas seasonality, with slower demand in the current low summer season. Management expects the show to have very long legs, potentially running for a decade across multiple Sphere venues, given its broad, universal appeal. The enhanced 2.0 version launching in September will add new immersive elements, and the addition of Rocky Horror Picture Show will allow the venue to serve family audiences during the day and adult audiences in the evening, sustaining demand for The Wizard of Oz. /

Q: What are the key growth levers for the existing Las Vegas Sphere beyond concerts in 2027 and beyond?

A: The core business strategy for Sphere is focused on increasing venue utilization to maximize revenue potential. While there is already strong unmet demand from artists for concert residencies, growth will primarily come from increased utilization via the company's owned original IP content, rather than just external events. The company has not yet maximized the venue's full revenue potential, and the ongoing addition of complementary original content will unlock this growth. /

Q: What are the benefits of the OpCo operating model for National Harbor compared to a traditional franchise model, and will this model be used for future venues?

A: The build-to-suit leaseback model for National Harbor lets a third party fund full construction, while Sphere retains full day-to-day operational control, consolidates the venue's financial results, and retains more adjusted operating income and future upside. Management uses project-specific structures rather than a one-size-fits-all approach: franchise models work well for international markets like Abu Dhabi, while domestic projects are more likely to use structures that give Sphere full operational control. Flexible financing structures allow the company to build more venues faster, which aligns with its global expansion goal. /

Q: What is driving growth in ExoSphere advertising and sponsorship, and what is the outlook for this segment?

A: This segment saw strong growth this quarter from large brand activations, including high-impact takeovers by global brands like Verizon during the World Cup and Adobe during its Vegas summit. The company has a strong pipeline of pending multi-year sponsorship deals, and management expects this segment to continue growing through the rest of 2026 and into 2027, supported by rising venue utilization.