MSG Entertainment (MSGE) Q1 2025 earnings summary

Executive summary

• Fiscal Q1 2025 revenue was $138.7 million, down 2% year-over-year, with an operating loss of $18.5 million, a 45% improvement from the prior year, and adjusted operating income (AOI) of $1.9 million, up $2.1 million from the prior year, reflecting lower expenses.

• The Garden hosted a record number of concerts for a fiscal Q1, with nearly 800,000 guests at over 120 events, and most concerts sold out.

• Christmas Spectacular advanced ticket sales are up 15% year-over-year, with over one million guests expected and record revenues anticipated; the show expanded to 199 performances for the 2024 season.

• Premium hospitality sales and renewals remained strong, with new multi-year sponsorships secured, including Lenovo, Motorola Mobility, Abu Dhabi's Department of Culture and Tourism, and an extended Verizon deal.

• MSG Entertainment completed its spin-off from Sphere Entertainment in April 2023, becoming a pure-play live entertainment company with iconic venues in New York and Chicago.

Financial highlights

• Q1 revenue was $138.7 million, down from $142.2 million year-over-year, mainly due to lower per-concert revenues and fewer theater concerts; entertainment offerings revenue was $115.1 million, down 1% year-over-year.

• Food, beverage, and merchandise revenue fell 18% to $19.0 million, primarily from lower per-concert sales.

• Arena license fees and other leasing revenue rose 90% to $4.7 million, driven by higher leasing revenues.

• Adjusted operating income margin improved to 1.4% from negative in the prior year.

• Net loss was $19.3 million, an improvement from a $50.7 million loss in the prior year; EPS was $(0.40) vs. $(1.00) year-over-year.

Outlook and guidance

• Fiscal 2025 AOI is expected to increase mid-to-high single digits, despite added costs from bringing sponsorship sales in-house.

• Management expects continued strong demand for live events and shared experiences, with confidence in long-term value creation.

• The business is highly seasonal, with stronger performance expected in the second and third fiscal quarters due to the Christmas Spectacular and sports events.

• Sufficient liquidity is anticipated for the foreseeable future, supported by cash, cash flow, and credit facility availability.

• Management expects to utilize net operating losses in fiscal 2025 and become a federal taxpayer by year-end.