Starz Entertainment (STRZ) Q1 2027 earnings summary

Executive summary

• Achieved or exceeded all key financial targets in the first year post-separation, including margin, cash flow conversion, and delevering goals, while delivering positive operating cash flow and accelerating the margin expansion timeline.

• OTT revenue grew sequentially to $211.1 million, with management confident in further OTT growth and margin expansion; content slate performed strongly with record-setting premieres and new originals announced.

• Revenue for Q1 2026 declined 7.2% year-over-year to $306.9 million, driven by decreases in both OTT and linear revenue streams.

• Net loss from continuing operations increased to $164.9 million, reflecting higher programming amortization and general and administrative expenses.

• Completed separation from Lions Gate Entertainment in May 2025, resulting in a standalone public entity focused on premium subscription video services.

Financial highlights

• Q1 2026 OTT revenue was $211.1 million, up sequentially but down 6.4% year-over-year; total revenue was $306.9 million, down from $323 million due to Canadian licensing timing and declines in linear revenue.

• Adjusted OIBDA reached $58 million, up sequentially but down year-over-year due to lower revenue and higher content amortization.

• Unlevered free cash flow was $80.7 million, up $147 million year-over-year; equity free cash flow was $68.7 million, up $136 million year-over-year.

• Net debt at March 31, 2026, was $523 million; leverage ratio at 3.1x, with a year-end target of 2.7x.

• Cash and cash equivalents increased to $102.1 million as of March 31, 2026.

Outlook and guidance

• Reaffirmed full-year 2026 guidance: OTT revenue growth, low single-digit adjusted OIBDA growth, $80–$120 million unlevered free cash flow, and leverage at ~2.7x by year-end.

• Margin expansion to 20% now expected in the back half of 2027, a year earlier than prior guidance.

• Management expects continued pressure on traditional linear revenue and a higher mix of discounting in OTT services.

• Termination of certain live-action film licensing agreements in Q2 2026 will result in estimated termination fees of $185–$205 million, payable in 2027–2028.