Lionsgate Studios (LION) Q4 FY26 earnings call: guidance and Q&A

What are the drivers behind the recent box office improvement, is it sustainable, and what is the expected profit cadence for fiscal '27?

Management attributes box office growth to Gen Z audiences and enhanced large-screen formats, noting studios have learned to market effectively in a fragmented world. For FY27, the profit cadence is expected to be less back-end loaded than FY26, with TV being more back-end loaded due to normal episodic delivery cycles (90% of episodes in Q2-Q4).

“the growth in the exhibition business, the moviegoing business is actually being driven by Gen Z, who are up to about a 30%, 34%, I think, share of that market.”

asked by Vikram Kesavabhotla · answered by Jon Feltheimer

Can you provide a more precise range for fiscal '27 growth, and what is the potential impact of the Paramount, Skydance, and Warner Bros. Discovery combinations on your library business?

Management declined to provide a specific range for FY27 due to moving pieces but highlighted a $1.3 billion contractual backlog, with 90% expected within 24 months, providing strong visibility. They view potential M&A as positive, believing a strong, unified streaming player is better than weaker ones, creating receptive buyers for Lionsgate's content and fostering continued competition.

“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.”

asked by David Joyce · answered by James Barge

What is the path to deleveraging, is 3 Arts still part of it, and can you provide an update on Michael 2's progress and commercial deal strength?

CFO Jimmy Barge stated that deleveraging is natural, driven by EBITDA growth and free cash flow, targeting 4x-4.5x leverage by Q4 FY27, and that the 3 Arts put is absorbable but not central to deleveraging. Adam Fogelson confirmed good progress on Michael 2, noting 25-30% of the second movie is already shot from prior production, and there's ample story and music for a compelling sequel.

“I'm looking at 4x, 4.5x leverage off of 6.1x 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.”

asked by Omar Mejias Santiago · answered by James Barge

Can you provide color on Michael's EBITDA contribution and how the economics of Michael 2 might benefit from already shot footage?

Management declined to break out Michael's specific EBITDA contribution but noted its strong performance and partnership with Universal. For Michael 2, Adam Fogelson confirmed that 25% to 30% of the second movie has already been shot from prior production activity, which will provide a material benefit to its economics, while ensuring a big and satisfying film.

“looking at the story for the second movie is unfolding, we think we've got 25% to 30% of a second movie already shot from the prior production activity.”

asked by Brent Penter · answered by Adam Fogelson

How do you see AI changing Studio margins, and what is your perspective on the stand-alone opportunity versus being part of a larger strategic organization?

Jon Feltheimer expressed bullishness on AI as a net positive, enhancing productivity, analytics, and fan engagement, with deployment across 80% of the workforce. He emphasized the company's focus on maximizing shareholder value as a stand-alone, content-driven studio, leveraging its core assets and increased liquidity in a landscape valuing scale and IP.

“I'm very bullish. We're very bullish that AI is a total net positive for us. We want more people to engage with content.”

asked by Sean Diffley · answered by Jon Feltheimer

Why were the 'Resurrection of the Christ' parts separated, and how do you view emerging competition from non-traditional studios, particularly with AI-driven content creation?

Adam Fogelson explained that separating the 'Resurrection of the Christ' release dates (now consecutive years) was a strategic decision to leverage the summer moviegoing corridor and optimize economics, as the films are stand-alone. Jon Feltheimer reiterated that AI is a total net positive, enabling faster, cheaper production and empowering fans to interact with content, dismissing concerns about emerging competition from AI-driven content.

“taking advantage of that in consecutive years as other films in multiple parts have done so well, just felt like the right decision.”

asked by Matthew Harrigan · answered by Adam Fogelson