Good afternoon, and welcome to the Lionsgate Studios Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. By pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Neelay Shah, Executive Vice President and Head of Investor Relations. Please go ahead.

Good afternoon. Thank you for joining us for the Lionsgate Studios Corp. Fiscal 2025 Fourth Quarter Conference Call. We will begin with opening remarks from our CEO, Jon Feltheimer, followed by remarks from our CFO, Jimmy Barge. After their remarks, we'll open the call for questions. Also joining on the call today are Vice Chairman, Michael Burns; COO, Brian Goldsmith; Chairman of the TV Group, Kevin Beggs; Chairman of the Motion Picture Group, Adam Fogelson; President of Worldwide TV and Digital Distribution, Jim Packer; and Senior Adviser to the Office of the CEO at Lionsgate and Co-CEO of Three Arts, Brian Weinstein. The matters discussed on the call also include forward-looking statements, including those regarding the performance of future fiscal years. Such statements are subject to a number of risks and uncertainties. Actual results could differ materially and adversely from those described in the forward-looking statements as a result of various factors. This includes the risk factors set forth in our public filings for Lionsgate Studios Corp. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. I'll now turn the call over to Jon.

Thank you, Neelay. Good afternoon, everyone, and thank you for joining us. On May 7th, we completed the separation of Lionsgate and Starz, and we began trading on the New York Stock Exchange under the ticker symbol LION. I want to take this opportunity to thank all of our shareholders for your overwhelming support, our Board of Directors for their patience and guidance throughout a long and complex process, and the hundreds of Lionsgate employees who worked tirelessly to bring this important strategic initiative across the finish line. We're confident the separation will unlock significant value not only for the shareholders of both companies but for our respective business and talent partners as we position our companies for continued growth. The separation also simplifies our capital structure by collapsing our previous two classes of stock into one. On Monday, June 9th, we hope to see some of you at the New York Stock Exchange as we ring the opening bell to celebrate the launch. Turning to the quarter's highlights, our Motion Picture Group closed the fiscal year with a strong financial quarter driven by a familiar combination. The profitable mid-budget successes of Flight Risk and Den of Thieves 2, robust library sales, strong performances from our multi-platform and direct-to-platform business, and disciplined theatrical P&A spending. Our television group launched Seth Rogen and Evan Goldberg's critically acclaimed comedy, The Studio, on Apple TV Plus, where it has already become a major Emmy Awards contender and has been renewed for a second season. Our TV group secured a number of other key series renewals in the quarter, including Ghosts, picked up for its fifth and sixth season on CBS; The Rookie, renewed for an eighth season on ABC; The Sherri Shepherd Show, renewed for a fourth season in syndication; and Yellowjackets, picked up earlier this week for a fourth season by Showtime. And finally, our library achieved a record performance with trailing twelve-month revenue of $956 million, driven by a fourth quarter that was our best quarter ever. We've been able to maintain strong library sales in a challenging environment through a combination of organic replenishment, distribution of third-party titles, library acquisitions, and the rollout of new proprietary FAST and AVOD channels. Turning to our individual businesses, during the quarter, our motion group unveiled a strong slate of films for our theatrical exhibition partners at CinemaCon last month. Our lineup is notable not only for the strength of the IP but the breadth of new and repeat talent driving it. Francis Lawrence directing his fifth Hunger Games movie, as well as the adaptation of the gripping Stephen King classic, The Long Walk. Keanu Reeves anchoring our John Wick franchise and also starring with Seth Rogen in Aziz Ansari's comedy Good Fortune. Ruben Fleischer directing Now You See Me 3 and beginning development of Now You See Me 4. Paul Feig directing Sydney Sweeney and Amanda Seyfried in the eagerly anticipated thriller, The Housemaid. Kingdom Story Company partners on our faith-based hits, I Can Only Imagine and Jesus Revolution, preparing I Can Only Imagine 2, and Blumhouse and James Wan's Atomic Monster collaborating with us on the reimagining of Blair Witch. Adding to our roster of repeat filmmaker relationships, we announced last week that Mel Gibson has chosen Lionsgate to be a studio partner on The Resurrection of the Christ, his long-awaited follow-up to the blockbuster, The Passion of the Christ. Most of you have seen the announcements this week of the incredible talent we're putting together for The Hunger Games: Sunrise on the Reaping, with Jesse Plemons, Ralph Fiennes, Kieran Culkin, and Elle Fanning joining newcomers Joseph Zeta and Whitney Peak, with more star power to come. The film, based on Hunger Games creator Suzanne Collins' bestseller, is one of the hottest properties at the Cannes Film Festival this week, and we are already seeing a corresponding major uptick in the sales of all of the Hunger Games library titles. The film opens worldwide on November 20, 2026. In two weeks, you'll see Ana de Armas squaring off against assassin and former mentor Keanu Reeves in Ballerina, the first major release of our fiscal 2026 slate. We're holding the Ballerina world premiere in London today, and fan response to early material and preliminary tracking indicate that it will be a strong addition to the John Wick universe. That universe continues to expand with production scheduled to begin in September on the upcoming John Wick spin-off, Kane, directed by and starring Donnie Yen. An animated John Wick prequel is in the works, and Chad Stahelski and Keanu are beginning development on John Wick Chapter 5. And if you're in Las Vegas, please check out the John Wick experience branded attraction, which opened to strong ticket sales in March. In regard to our Michael Jackson biopic, we're excited about the three and a half hours of amazing footage from producer Graham King and director Antoine Fuqua, and we will be announcing a definitive release strategy and timing in the next few weeks. I would note that it is likely we will move Michael out of the fiscal year, which will impact fiscal 2026 financial results but will bolster an already strong fiscal 2027 slate. Turning to television, in addition to the success of The Studio and Ghosts, we're continuing to add other premium properties such as Spartacus, House of Usher, which has wrapped its first season of production for Starz, The Rainmaker, the adaptation of John Grisham's bestseller being readied for USA Network, and a new version of the classic Robin Hood saga for MGM Plus. Behind them, we continue to develop the Twilight TV adaptation Midnight Sun for Netflix, the John Wick Under the High Table series, and a TV adaptation of the hit comedy Bad Moms. In addition, the assets we acquired with our eOne deal are performing well. We finished integrating these content assets into our company, strengthened key properties like The Rookie and Yellowjackets, reinforced existing talent partnerships, launched new series, Mistletoe Murders and Private Eyes West Coast, monetized thousands of additional library titles, and reduced overhead. Turning to Three Arts, our premier talent management and production company has always been a leader in broadcast network comedies, with The Office and Parks and Recreation. Now it has expanded that leadership into streaming comedies with the second season renewals of the hit series Nobody Wants This, A Man on the Inside, Running Point, and The Four Seasons, all for Netflix. And you'll be hearing more about our initiatives to grow and diversify Three Arts into adjacent new areas of representation in the near future. We've also launched a major initiative to become a force in the creator economy. We're creating original content for digital platforms, negotiating with two leading advertising agencies to form brand partnerships to support that content, and building digital businesses for our talent at the studio and Three Arts, initiatives that are all designed to take advantage of our critical mass of IP and unlock its full potential. And with half of YouTube viewing now taking place on traditional connected TVs, our content portfolio will have more applications in the new digital ecosystem than ever before. In closing, the separation of Lionsgate and Starz doesn't diminish the headwinds in our operating environment, but it does give both companies more flexibility in responding to them. And it enables us to launch an exciting new chapter in the growth of our studio, positioning ourselves in the sweet spot of the entertainment ecosystem, making and delivering great content for our buyers, expanding opportunities for our talent in old and new businesses, and translating our unique portfolio of assets into incremental value for our shareholders, partners, and audiences. In a moment, Jimmy will take you through the component parts of a very strong quarter, whose drivers—another outsized library performance, our Motion Picture Group's diversified model, and a strong post-strike uptick in deliveries of key television series—demonstrate what we can do when all the pieces of our business are working as they should. And it affirms our confidence in a content investment strategy that enables us to refill our content pipeline in fiscal 2026 while positioning us for a strong growth year in fiscal 2027.

Thanks, Jon, and good afternoon, everyone. I'll briefly discuss our fiscal fourth quarter and annual studio financial results and provide an update on the balance sheet. For the quarter, Lionsgate Studios revenue was up 22% year over year to $1.1 billion. Adjusted OIBDA reached a ten-year high and was up 49% to $138 million, and operating income was up significantly to $94 million. Reported fully diluted earnings per share was $0.10 per share, and fully diluted adjusted earnings per share was $0.21 per share. Net cash flow from operating activities was $256 million, while adjusted free cash flow for the quarter was a positive $395 million. Quarterly library revenue was a record $340 million. For the year, the studio's revenue was up 7% year over year to $3.2 billion. Adjusted OIBDA was down 8% to $302 million, and operating income was down 11% to $125 million. Reported fully diluted earnings per share was a loss of $0.43 per share, and fully diluted adjusted earnings per share was a positive $0.10 per share. Net cash flow used in operating activities was $107 million, while adjusted free cash flow for the year was a positive $89 million. And finally, as Jon mentioned, our trailing twelve-month library revenue of $956 million reached another record and grew 8% year over year. Breaking down the studio performance in the quarter, let's start with Motion Picture. Motion Picture revenue was up 28% year over year to $526 million, and segment profit reached a ten-year high of $135 million, up 65% year over year. Revenue and segment profit growth were driven by strength across the group's various lines of business. On the wide theatrical side, we had successful releases of Den of Thieves 2 and Flight Risk. We also benefited from strong performances on our direct-to-platform releases of Another Simple Favor, Reagan, and Jingle Bell Heist, as well as robust library demand for key franchise titles like The Hunger Games. Moving to TV, quarterly television revenue of $543 million was up 16% year over year, while segment profit of $41 million was down 23% year over year. TV continues to rebound from the strike, with revenue strength driven by continued growth in episodic deliveries. Segment profit faced a tough comparison with last year's Q4, which included a library sale of content to MGM Plus. Now let's take a look at the balance sheet. We ended the quarter with $1.5 billion of net debt at the studio, which compares to $1.8 billion at the end of Q3. The quarter-over-quarter decrease in net debt reflects the anticipated strength in Q4 free cash flow as we closed out the year. On a trailing twelve-month basis, studio leverage at the end of the quarter declined to 4.9 times, as we benefited from both free cash flow and an increase in trailing twelve months adjusted EBITDA. Subsequent to the end of the quarter, we fully separated our studio and Starz businesses. At the date of separation, the term loan A was paid off. We assumed $390 million of 2030 unsecured bonds from our previously announced debt exchange and established a new $800 million revolver. Net debt at separation was just under the $1.65 billion we noted on our last call. Looking forward, a strong film and TV slate in fiscal 2026 will help replenish the pipeline, providing the financial underpinning to go into fiscal 2027 with operating and financial momentum. We expect this momentum, coupled with an exciting fiscal 2027 slate, will result in solid two-year adjusted OIBDA growth from fiscal 2025 through fiscal 2027.

Thanks, Jimmy. Operator, can we open up the line for analyst Q&A?

We will now begin the question and answer session. Pressing the keys. Our first question today comes from David Joyce with Seaport Research Partners. Please go ahead.

Thank you. Jimmy, if we can just follow along more in more detail, your outlook for the next two years granted with Michael film getting delayed, but you also took on a lot more production-related borrowing. There's clearly a big revival in production activity. So what should we think about the cadence over the next two years? And what gives you confidence in further, you know, library sales to help out the cash flows while you're producing new content?

Great. Thanks, David. I appreciate the question. Obviously, a very solid fourth quarter. And as we move into 2026, we're super excited about our slate. We're looking at strong growth, as I mentioned, over the two years into 2027. So 2026 is we're refreshing the pipeline. As Jon noted and you referenced, Michael's likely to move out of fiscal '26. So that likely will take place. I think the cadence overall in 2026 is gonna be back-end loaded very similar to what we saw in fiscal 2025. So similar territory. We'll refresh the pipeline. This will drive carryover into 2027. Refreshing the pipelines in both TV and motion picture. When you see the tent poles on the film side, both Ballerina in Q1, now you see me in Q3. There'll be some P&A spending, of course, to support that. That'll affect the cadence throughout 2026. And then we got a number of mid-budget films we're very excited about. Housemaids, Long Walk, Good Fortune. On the TV side, a lot of returning and new series and growth at Three Arts. And really feel good about rebuilding that pipeline as we go into 2027. So all of this really provides improved carryover into 2027 where we got an incredibly strong slate likely including Michael Jackson, Hunger Games, Resurrection, as well as, you know, our paid TV deal will be in full swing. So really feel good about 2027. Both strong numbers and sustainable numbers. '27.

Teagan, if I could just ask back on the fourth quarter, there was elevated, you know, direct OpEx. Was that kind of related to content amortization from the strong library sales? Is it the P&A spend for the couple of wide releases? There are anything specifically you would call out on the elevated direct OpEx there? Thanks.

No, I think you have it. It's just a cycle of the revenue cycle and specific films and TV projects and episodic deliveries because you're amortizing on a revenue curve.

Okay. Great. Thank you. Thanks, David.

Excuse me. The next question is from Steven Cahall with Wells Fargo. Please go ahead.

Thank you. Maybe first, this might be for Michael or Jon. So now that you have the separation complete, just wondering how you think about opportunities to unlock value. You know, is there anything that you do differently now that Lion is standalone versus part of the larger Lion entity before? So just curious on strategy. And then, Jimmy, maybe just on free cash flow conversion for the year. So, you know, you kinda gave us a sense as to where EBITDA may land as we think about either cash taxes or content working capital, maybe including the production loans. Any way to think about how that EBITDA will convert to free cash flow for deleveraging in 2026? Thanks.

No. I appreciate it. Yeah. Let me just take the conversation about deals. Obviously, we're not I know you already give away our equity at these levels. The major reason one of the major reasons we did the separation is obviously to create liquidity in the LionChief stock with 286 million shares now trading one class of stock, trying to keep it very simple. And so we're not gonna do deals with giving away equity at these levels. But we have a lot of capacity. As Jimmy mentioned, we have an undrawn credit facility. We have the ability to do that, but only to do deals where we think it's gonna be incredibly accretive. Like, for example, our results so far, we're very happy with, for example, the eOne transaction that we did.

And Steven, on your question on free cash flow and the cadence, I would expect the free cash flow similarly to be back-end loaded throughout the year. I think the content spend will generally be in the same area as our prior year spend, so call it $1.6 billion probably spread pretty evenly between motion picture and TV. On the cadence, you know, we came in very strong in Q4. So $395 million of free cash flow. Was some timing in that context related to lower content spend. Some of that comes spend actually payments will flow over into the first quarter of fiscal 2026. So you'll see some of that. So you'll see some timing reduce the cash flow in Q1 and the cadence. What I would say is we have very good free cash flow conversion. I mean, taxes are just near zero, not quite zero, but you call it ten or fifteen million dollars. We don't really have any CapEx to speak of, as you know. We do have cash interest, but we manage that very well. So you're going to generally have a good conversion there. But I would look at the overall positive cash flow that we delivered into fiscal 2025 and then look out to 2026 and 2027 say over that two-year period, would expect positive free cash flow. The cadence is gonna be more back-end loaded.

Great. Thank you.

Hey, Steven. Operator, can we get the next question, please?

The next question is from Thomas Yee with Morgan Stanley. Please go ahead.

Thanks so much. I had a quick question just on some of the news that's been coming out about potential tariffs impacting movie production. Know it's preliminary and pretty hard to speculate, but anything you're seeing about the direction of travel there and your positioning as a studio that you know, obviously kinda runs production and takes advantage of tax credits around the world. Giving a give they could maybe give us a sense of how you might approach it. And then on the TV side, I think it sounded like there was a healthy pipeline of renewals that you mentioned for some of these more anchored shows that have long-dated seasons. Is there an update on the broader industry rationalization and any expectations for how you think about navigating the continued focus for some of your buyers on controlling spending? Thanks.

Yeah. Thomas, I'll let Kevin answer the question about the TV business and I'll cover tariffs and effect.

Yeah. I think in general, you're still seeing a lot of pressure on the key platforms to control spending. Reduce budgets, and be very disciplined about how they meet out their programming dollars as they try to balance earnings and profitability with customer and subscriber acquisition. So we kind of are continuing to rely not only on digging deep into the renewals that you that Jon went through and he touched on, you mentioned. As well as finding new models, lower budgets, different locations, different buyers, new buyers, and programming solutions that fit this moment. With the regulatory pieces still coming together with something like Skydance and Paramount, InverseNow spinning off from Comcast and Warner discussing spinning off cable assets, there's still a lot of uncertainty in the market, which typically dampens buying. I feel like toward year-end, that's gonna start to bounce back a little bit and get to a new run rate. And we're hopeful that that'll trigger more buying. But even without that, we're trying to definitely navigate in a disciplined way getting our shows renewed and getting new ones on the board.

And in terms of tariffs, I think we're taking a wait-and-see approach. We are giving our feedback into the process, but, you know, I think we think certainly that if some version of a federal tax credit is better for the business, I think that film and television production is complicated in terms of tariff. The component parts are sourced from many different places. And so, you know, we think there's a better way to protect what is already a surplus in terms of balance of trade in our industry. But for us, we also have a lot of flexibility in where we produce. We've got stages in New York and in Georgia. We've got a very special deal and working on stages in New Jersey. So have a lot of flexibility in terms of where we produce. But I think there's probably some smarter ways other than tariffs to support our business and support the overall US economy. Thank you.

Hey, Thomas. Operator, could we get the next question, please?

And the next question is from Brent Penter with Raymond James. Please go ahead.

Hey, everyone. Thanks for taking the questions. First one for me, you talked about leverage a bit. And now that the split is done, appreciate the comments on not doing deals with your equity value where it is. But where do you all think standalone leverage needs to be? And what's the roadmap to get there? Obviously, EBITDA growth helps bring leverage down. But is there anything else you can do in terms of asset monetizations there?

Yeah. Thanks for the question, Brent. Look, we're finishing the year 4.9 times. Okay. At separation on May 6, we brought net debt in right in the range we talked about the $4 billion a little under $1.65 billion so that'd be right around on pro forma basis 5.5 times. So with the cadence back-end loaded for trailing twelve months and free cash flow, you'll see the leverage ratio move up a bit before it starts coming back down. Then what I would think is when we move into the back end of fiscal 2027, that, you know, we're in between a 3.5 to 4 times range. And our long-range target would be 3 to 3.5 times.

Got it. And then the other question for me, Starz has talked quite a bit about expanding margins and one way I think they plan on doing that is focusing more on new and owned IP. Obviously, this has been planned for a while. So how do you all think about maybe the risks of Starz kind of shifting towards some of its own IP and what's embedded in your expectations in terms of Starz spending with your TV production business?

Yeah. This is Kevin speaking. You know, from the get-go, the way Jon and Michael set up this Starz relationship with Jeff was for us to be, you know, an arm's length supplier just like any supplier out there with some advantages of knowing much more about what their programming needs are and hammering out a license fee arrangement that we didn't have to renegotiate every time we sold them a new show. We have some very important key franchises together, assets that we own, the Power universe, BMF, Spartacus, P-Valley, which will be for we're delivering right now in the third season. Those are the ones we're quite focused on and have the potential for, I think, many more iterations. We're on the fourth iteration of Power and more in the pipeline. We've just sold them something last week in a competitive situation, so we expect that we'll continue to do business. And that aspiration to own some of their own properties and their franchises is no different than any buyer we've ever sold to over the years. So we know our product has to be great. It has to be something they must have. The good news is we've got a template in place for how we work together for the years to come on licensee distribution and other ways. So it's very turnkey.

Yeah. I would say I'd add to that. Sometimes, sort of a more arms-length relationship actually leads to a better allocation of resource. We've got, as Kevin's saying, we've got the three of their four biggest franchises at this point in time. We've got the bulk of their the core part of their movie lineup. So there's significant, if you will, appropriate creative tension between both parties and I think and, you know, we have a great relationship. And by the way, we're all and I am a big shareholder of Starz right now. So we're gonna figure out a smart way for us to work together. It's a win-win.

Got it. Thanks, everyone.

Thanks, Brent. Operator, could we get the next question, please?

And the next question is from Matthew Harrigan with Benchmark. Please go ahead.

Thank you. This may be your first ever internal balance sheet question. When you mentioned The Resurrection of the Christ, I actually Googled it and I found that Catholic Herald and the interview Joe Rogan did with Gibson. It sounds like it almost has, like, a Marvel-type feel to it. I mean, he says it's an asset trip. You tell the story properly. You have to start to follow the angels. You need to go to hell. And then he talks about the de-aging of Jim Caviezel. I hope I'm not mangling his name. So this just sounds like a really premium project, and, clearly, there's a lot of interest in religion both in the US and Europe with the new pope and all that. So this sounds like a real upside, but I'm curious, what would the financial exposure be? I mean, do it just sounds like this is gonna be a really expensive movie even if you've got a lot of upside on the possible commercial reception. I'm well aware it's kind of a funky question, but it certainly seems like an interesting Thank you.

Hey, Matthew. It's Adam. Thanks for the question and a funky question that includes rabid enthusiasm something we're doing is okay by me. Look, I would say that the international marketplace is every bit as enthusiastic as you just were, if not more. And that there are tons of people, both in the international marketplace and elsewhere who are really excited about finding a way to participate in this. I can tell you that an incredibly conservative model relative to not only what the first movie did, but size and scale and theatricality of what Mel and Bruce are planning on putting together. Does not make it a remotely frightening proposition. For us. Obviously, every movie comes with a certain degree of risk, but I would not put this as anything other than incredibly exciting opportunity both creatively and financially.

Great. Thank you.

Thanks, Matt. Operator, could we get the next question, please?

The next question is from Barton Crockett with Rosenblatt. Please go ahead.

Okay. Thanks for taking the question. I was kind of curious for kind of a temperature check or check-in on the core one of the core thesis for the whole split, which part of it was that it would you know, create opportunities for the studio business to be acquired in what has been an industry that's historically been consolidating at premium multiples. And, you know, to that point, I'm just wondering, what would be the process to get there? Is this you know, given that you've just completed the split, obviously, you know, it'd be kinda quick to think about you know, looking at the other side of it. But is this something where, you know, if you were to pursue M&A, you have to wait for a period of time for offers or interest to come in. Could there potentially be a process where you hang a forced sales sign and ask people to come in and make offers? And if you were to do that, do you feel like you know, whether you do that or not, do you feel like this is a time that is optimal or maybe suboptimal for consolidation given that I think the consensus view is that we've kinda come off a peak TV environment maybe of kind of evaluation bubble in content, And, you know, maybe it'd be better to wait for a better period. So how do you feel about that?

Well, that's a mouthful, Bart, and I would say I'm not gonna comment on most of your speculation, including that the reason we did it was to sell the company. That I think that the reason we did it was multipurpose, was to allow both companies to go forward with a path that is specific to their core business, and I think you're gonna see that happening very early in the process. I think, you know, part of this was getting liquidity in our stock and combining the A and B shares, and which we've done, and I think you're seeing just from a liquidity perspective, you know, that that seems to be working. I would say that, you know, listening to Jimmy's cadence on the financials and sort of looking at the time frame of this incredible portfolio, of films that we haven't even finished them now, you know, some of them. Most of the carryover that we would expect in, you know, a really strong year goes from really 2026 to 2027 as opposed to 2025 to 2026. As well as the backlog. So both of our businesses are backloaded this year. And lead very strongly into 2027. So from a perspective of stock price, from a perspective of earnings, whether it's using our currency in terms of doing things like the eOne transaction is a very, very a very accretive transaction, one that we're really doing, I think, a pretty good job of integrating quickly and renegotiating certain deals like The Rookie and Yellowjackets. So, you know, we think we have a lot of work to do start getting people to do what really was the point of the whole thing, which is to recognize the value, the unique value, the non-replicable value of the studio. And so I'm not gonna answer the speculation on how we would sell it. You know, what a process would be. I'm focused we're focused right now for the next year on getting the stock where we think it should be in terms of looking at the some of the parts, and realizing the value of these projects that we've got in the pipeline, Michael, and Resurrection and Hunger Games and the series Twilight and John Wick. So we've got a lot coming out. I think, you know, once we get it there, I think the value will start getting to a place where, we'd be comfortable to see what happens. But at this point in time, that's our job. I believe the bottom line is when the businesses perform, you'll see the stock perform as well.

Okay. Alright. I appreciate that. That was a great response. Thank you.

Again, if you have a question, The next question is from Patrick Scholl with Barrington Research. Please go ahead.

Hi. Thanks for taking the question. Was just kinda curious on how you are approaching, like, just the environment for theatrical content. And if you think, like, the maybe reduction in the screen size in the US is maybe created any additional challenges on, like, franchise development and getting traction on some of the smaller higher upside potential films that you tend to focus on.

Hey, Patrick. It's Adam. Thanks. Look, I think the entire theatrical environment conversation we're all having today is pretty radically different from the one we were having three months ago. There were lots of questions about the viability of theatrical literally every weekend, we're seeing massive overperformance and not only from giant films like A Minecraft, but also films like Final Destination last weekend. And the reality is while it may not be headline-grabbing, as you saw from the numbers, movies like Den of Thieves and Flight Risk are really genuinely meaningful to the contribution that we're able to deliver to the company. So we absolutely think there will be room not only to maximize what we're delivering on our franchise films, on our tent poles, and we have many more of them in the next chunk of time. Certainly, than we had over the last year. But also that we're gonna be able to grow and build new franchises on low and mid-budget films and we think the overall health of the theatrical environment speaks volumes to what's possible for us going forward.

Thank you. Operator, could we get the next question, please?

And the next question is from Jason Bazin with Citi. Please go ahead.

I just had a question about potential consolidation among DTC apps. I guess my question is, I wonder if it seems like it could be a positive for you because you have healthier potential customers. But on the other hand, it seems like a potential negative just because there's fewer buyers. So can you just talk about how you see the shape of your production business changing if at all if we end up seeing fewer DTC apps in the marketplace? Two or three years from now?

Jason, I'm afraid it was really hard to hear that question. I don't wanna answer it wrongly, but it's you're kinda breaking up on it.

Can you repeat it, Jason? I think I kinda heard, but can you repeat it one more time?

I'm gonna try. So if we saw DTC apps consolidate, is that good or bad for your business?

Yeah. Consolidation. Yeah. That's a great question. I think we could see it both ways. What we want, what we're hoping for is for all of our streamer buyers to be really profitable and do very well. It looks to us like that's happening right now, whether they can consolidate or not. Certain of this the consolidation probably would be very good I'm doubting that it could be bad for us. You know, it's not gonna end up all in one place, I think at the end of it, it's really important that our buyers be profitable, be strong. And again, there's gonna be new buyers that pop up every day and, you know, we're starting to spend a lot of time working on new buyers. And, really, the bottom line is to find out, like, where the audience is, you know, right now with YouTube having such a large share of viewership and advertising, you're not calling that an app or streamer, but we are. And so you know, we're looking to find where that audience is as opposed to waiting for that audience to come to us. And we're gonna figure out how to serve them properly and make money with, you know, newer if you will, apps or newer sources. I think we're fine in that, and we're fine again if there has to be consolidation long as at the end of the day, those companies are more profitable, that'll be good for us.

Thank you.

Thanks, Jason. Operator, could we get the next question, please?

And the next question is from Alan Gould with Loop Capital. Please go ahead.

Hi. Thanks for taking the question. Was just kinda curious on how you are approaching, like, just the environment for theatrical content. And if you think, like, the maybe reduction in the screen size in the US is maybe created any additional challenges on, like, franchise development and getting traction on some of the smaller higher upside potential films that you tend to focus on.

Yeah, Alan, look, I think I already addressed that. It is a very different landscape than it was a few months ago. We've seen a lot of success in theatrical releases, which speaks to potential for building franchises moving forward. We remain optimistic about new project development at all budget levels.

Thanks, Alan.

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

Thanks, 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. Thank you.

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