MSGE Q1 FY2027 earnings call transcript, November 4, 2026

For our first quarter, we generated revenues of $217 million and adjusted operating income of $34 million. These results represent significant year-over-year increases as we continue to benefit from robust ongoing demand for our offerings. This past quarter, that strength was most notably reflected in our bookings business. And looking ahead, we anticipate that demand will also drive another record I don't know. setting run for the Christmas Spectacular, along with robust growth in revenue and AOI for the full fiscal year 27. That confidence in our outlook for the business also led us to repurchase approximately $25 million of our Class A common stock this past quarter, as we continue to look for opportunities to return capital to our shareholders. Let's now review some key operational highlights. During the quarter, we hosted over 1.3 million guests across 160 live events. This reflected broad-based booking strength from concerts to performing art shows to special events. That included the start of Harry Styles' 30-night residency during the quarter, which helped us deliver a new record for the number of concerts in any quarter at the Garden. It also reflected a number of other unique events across our venues. That included Les Mis, multi-night run, and the return of the New York Philharmonic at Radio City Music Hall, both utilizing the venue's groundbreaking audio technology. Sphere, immersive sound. In terms of consumer demand, the significant majority of our concerts were again sold out during the quarter. In addition, combined food, beverage, and merchandise per cap spending at concerts

was up a double-digit percentage year-over-year. Looking ahead, we remain on track to grow the total number of events at our venues in Fiscal 27. This includes our expectations for growth in concerts this year at the Garden. and our theaters. With regards to the Knicks and Rangers, the team began their 26-27 regular seasons at the Garden last month with the Knicks returning as defending NBA champions. I would also note that last week the Rangers business became a standalone public company after completing a spinoff from the Knicks business. The spinoff did not impact our arena license agreements with either team. This fiscal year the cash component of the arena license fees from those agreements will be $47 million and will continue to grow at 3% each year through fiscal 2055. And while still early, we are seeing positive momentum across our share of food, beverage, and merchandise sales at Knicks and Rangers home games. Turning to the Christmas spinoff. Spectacular. The 93rd holiday season kicks off later today with 231 shows planned for this year's run. This represents the most shows ever in a season and compares to 215 performances last year. This year's production features several new elements. Including the addition of a new Rockettes number. It also integrates multiple onstage cameras to give audiences different perspectives of the Rockettes in real time as we leverage immersive technology to continue enhancing the experience. Based on the demand we are seeing, we anticipate welcoming

over 1.2 million guests to the Christmas Spectacular this holiday season and we are confident we are on track to deliver another year of record revenues for the production. Turning to marketing partnerships, we are seeing the positive momentum from fiscal 26 carry over into this new fiscal year. And in terms of premium hospitality, we are again seeing strong new sales and renewal activity for suites at the garden. We also recently completed the renovation of several event and Lexus level suites and are benefiting from the incremental revenue driven by these enhancements. spaces. Lastly, on the Penn Station redevelopment, we continue to work towards definitive agreements with the master developer on the potential transfer of the Infosys Theater at Madison Square Garden as part of their plans. We will keep you updated as we have more to share. Now let's turn to our financial results. For the fiscal 27 first quarter, revenues were $217.1 million, up 37% year over year. This primarily reflected an increase in revenues from entertainment offerings and to a lesser extent higher food, beverage, and merchandise revenues. The increase in revenues from entertainment offerings as well as food, beverage, and merchandise primarily reflected the increase in the number of concerts at the garden during the quarter as well as higher per concert revenues. In addition, revenues from other live entertainment and sporting events increased year over year, primarily due to an increase in the number of events at the company's venues and higher per event revenue.

Increases were partially offset by fewer concerts at our theaters. First quarter adjusted operating income of $34.3 million increased $27.2 million as compared to the prior year quarter. This primarily reflects the robust increase in revenues partially offset by higher direct operating and SG&A expenses. Turning to our balance sheet, as of September 30th, we had $194 million of unrestricted cash, while our debt balance was approximately $571 million. With respect to fiscal 27, we continue to expect to generate significant free cash flow on an underlying basis. This will primarily be driven by our substantial and growing adjusted operating income, partially offset by on- Ongoing net interest payments related to our credit facilities, which totaled $32 million in fiscal 26, our status as a full cash taxpayer, capital expenditures, which will reflect some incremental spend related to technology- investments across the company and select suite renovations at the garden, and the timing of working capital, including the partial reversal of the balance of our cash due to promoters due to the timing of events. You can see the start of that reversal in today's reported cash balance. As I mentioned earlier during the quarter, we repurchased approximately 314,000 shares of our Class A common stock for $25 million. Since our spinoff in 2023, we have repurchased approximately 6.4 million shares for $230 million. And going forward, we'll continue to explore ways to opportunistically return capital to shareholders. So in summary, we are off to a great start this fiscal year. We remain confident in both the near and longer

long-term outlook for our business and our ability to drive shareholder value. Before I turn the call back to Ari, I would like to take a moment to congratulate Josephine Vaccarello, who was recently named president of MSG Entertainment. Josephine, who has been with the company for nearly 30 years and

previously served as executive vice president of Live, now oversees strategy and operations of multiple areas of our business. We look forward to having Josephine join us on future earnings calls. With that, I'll now turn the call back over to Ari. Thanks, David.

Operator, can we now open up the call for questions? We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset. when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the q&a roster. Your first question comes. The line of Peter Henderson with Bank of America. Your line is open. Please go ahead.

Good morning, and thank you for taking the question. So with the Christmas Spectacular having its first show later today, as you mentioned, could you... provide an update on the sell-through trends and pricing, and then just any thoughts you have on, you know, how the season will progress. Thank you. Yeah, good morning, Peter. Great. Thanks for the question.

We're seeing strong demand, and we are pleased to say, again, host over 1.2 million guests at the show this holiday season. Advanced ticket revenue is currently paid. Increasing up as compared to the same time last year. Also, in terms of show count, we have 231 planned performances as compared to 215 last year. And that equates to a mid-single-digit percent increase in show count for this year. In addition, the Christmas Spectacular continues to be a premium entertainment product and is still priced well below average ticket prices for comparable entertainment options. You know, with that said... You know, we continue to strategically manage, market, and price our ticket inventory to make sure that we maximize revenue for every show. I would again note that this year's show will include a new Rockette scene. As well as new immersive on-stage camera technology that...

...the production is utilizing Radio City's groundbreaking audio technology, what we call Sphere Immersive Sound. You know, we believe that our continued innovation helps to drive increased in the show. And, you know, with that said, we remain confident. ...and our ability to deliver strong growth in this business for this fiscal year. Thank you.

Thanks, Peter. We'll take the next caller.

Your next question comes from the line of Cameron Manson Perrone with Morgan Stanley. Your line is open. Please go ahead.

Sure, Cameron. Thanks. You know, as far as the concert bookings, as I mentioned earlier, we had a robust fiscal first quarter with the Garden shattering our record for the number of concerts in any quarter at the venue. You know, looking ahead, we now have, we've slightly exceeded our concert bookings goal at the Garden for this fiscal year. And we are... over 80% of the way there across our venue portfolios. And, you know, our goal does contemplate growth at both the Garden and our theater. So, in the terms of the upcoming quarters, starting with the Garden, we continue to expect to be up in the December quarter. in terms of the number of concerts. But, we are currently pacing down in the back half of the year. However, we view that as just timing based on where concerts are landing during the fiscal year. At the theaters, we do continue to expect to be down in terms of the number of concerts in the December quarter. However, we are currently pacing up for the second half of fiscal 27. So I would say all in all, we feel good about our start and remain confident that we're on track for growth at both the garden and the theaters for this year. As far as your question on run, let me just say, you know, obviously we were pleased to have hosted Harry Styles for his record setting 30 night run, which ended just this past weekend. Um, you know, that, that run took place every Wednesday, Friday, and Saturday night at the garden for 10 straight weeks.

16 of those shows fell in our first fiscal quarter. So a little over half of the residency. Um, you know, in terms, you know, your question on incrementality, you know, while it's difficult to answer that question. You know, we believe that the garden did deliver robust growth in the number of concerts year over year on an underlying basis. Obviously, Harry Styles' run was an additional positive on top of that underlying strength. Um, but, you know, we do believe the garden delivered robust growth. So, you know, I would say the same also goes from a financial standpoint. Um, so, you know, it's difficult to quantify, but I hope that's helpful. That is helpful. Thank you.

Your next question comes in the line of David Karnofsky with JP Morgan.

Your line is open. Please go ahead. Hey, thank you. Um, just regarding emphasis theater on a prior earnings call, you talked about potentially shielding, uh, tax gains, uh, with reinvestment. Um, you talk a little bit more to the mechanics here. So for instance, is there a time limit on when you'd have to invest? Um, have to use the full proceeds and does that specifically have to be in New York City? Just any additional cover would be great. Thanks. Yeah. Great, David. Thanks. Uh, good question. Um, you know, as, as I had mentioned earlier, we are We are currently working through the definitive documents with the master developer team. And, uh, you know, as of now, no decisions have, have been made in terms of the use of pro actually be completed. Uh, you know, that said, we, we remain mindful of, of, of the potential tax implications related to the transfer of the emphasis theater. Um, you know, as you alluded to in your question, you know, the primary. way, uh, for us to minimize the tax leakage would be to reinvest all of the potential proceeds in another domestic venue. Um, so I would say that we are not limited to. Just the New York City market. Um, however, I would also say that, you know, New York City is, is our core operating market. And, you know, with us having one less theater here, we would definitely most likely look to the New York. Market first, um, in terms of any time limit that you had mentioned, it would ultimately depend on, you know, how the transfer of the theater ends up being structured. But in any case, we would expect to have ample.

Time to determine, you know, the appropriate path forward. So, you know, we will definitely have more to share, uh, with you as we move through the process. Thank you. Your next question comes in the line of Steven Lasik with.

Goldman Sachs. Your line is open. Please go ahead. Great. Thank you, David. Curious, how you would characterize the pacing of concert sell through and per cap spending so far this year and maybe how it relates to what you saw this. Time last year. Just to be curious if you're seeing any signs of the broader macro volatility showing up in consumer demand or perhaps even audience demographic shifts. Thank you. Great. Thanks, Stephen. You know, as always, we are certainly keeping close. I on the macro environment, especially given the macro volatility that you mentioned, you know, but I have to say, you know, we continue to see strong consumer demand. You know, there are a number of factors that I can share to support this view. As I mentioned earlier, the significant majority of concerts at our venues were again sold out this past quarter. In addition, throughout the first fiscal quarter, we saw concerts perform better than initially expected. We also saw combined F&B and merchandise per cap spending at concerts up double digit percentages year over year. There are also a number of upcoming acts. across our venues that we've added additional shows due to strong demand and when we look at the next two quarters the sell through rate for concerts is currently pacing ahead of where it was the same time last year. You know and lastly you also. heard me mention that we're seeing positive momentum in marketing partnerships and premium hospitality and and that includes strong new sales and renewals for suites. In fact our renewal rate for suite licenses this fiscal year is is over 95% so.

Given all this, you know, even even though we're paying close attention to the macro environment, you know, we continue to see strong demand from both consumers and our corporate clientele. Great, thank you.

Your next question.

comes from the line of David Joyce with Seaport Research Partners. Your line is open. Please go ahead.

Thank you. I was wondering if you could please provide some more color on your outlook. for the bookings growth by category and anything that we can be looking forward to for additional residencies. Just a more color about the next year. Thanks. Sure. Thanks, David. Well, let me. I'd like to start by saying that our financial outlook for our bookings business this year is stronger than when we last spoke to you. Underlying that statement is our continued expectation for growth in the number of booking events in fiscal 27. Starting with our concert category. As we've discussed, we anticipate another year of concert growth at the Garden, as well as increases across our theaters. And we have continued to see concerts play off better than expected. In terms of special events, we are also expecting an increase in the number of events, along with improved per event economics. In terms of our family and performing arts category, we are now anticipating fewer shows than we initially contemplated. However, we are now expecting more marquee sports events than before. And that puts us on a path towards robust growth in that category. And obviously, that includes the NCAA regional tournament at the Garden in March. So overall, we feel good about the outlook for our bookings business in fiscal 27.

Your next question comes from the line of Joe Stoff with Susquehanna.

And then...

Thanks, Joe. Operator, we have time for one last caller.

Your final question comes from the line of James Callahan with Piper Sandler. Your line is open. Please go ahead.

We have reached the end of the Q&A session. I will now turn the call back to Ari for closing remarks.

Thank you all for joining us. We will speak with you on our next earnings call. Have a good day. It's today's call. Thank you for attending. You may now disconnect.