SPHR Q3 2026 earnings call transcript, November 5, 2026

Today's call, we begin with our executive chairman and CEO Jim Dolan, who will provide an update on our business. Robert Langer, our executive vice president, chief financial officer and treasurer, will then review our financial results for the period.

After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the investor section of our corporate website. Please take note of the following. Today's discussion may... ...contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainty. ...that could cause actual results to differ materially from those in the forward-looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation... ...to update any forward-looking statements that may be discussed during this call. On pages four and five of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to... ...adjusted operating income or AOI, a non-GAAP financial measure. With that, I'll now turn the call over to Jim.

Thank you, Ari, and good morning, everyone. For today's call, I'd like to focus on two areas that remain important to our long-term vision for SPHR. Our plans for a global network of SPHR venues and developing a diverse slate of original content. In Abu Dhabi, construction is moving forward. The venue's underground infrastructure is currently being installed. Procurement is also underway, with the general contractor starting to award key contracts. Construction remains on track to be completed by the end of 2029. Last week, the public incentive package for SPHR at National Harbor was passed by the local county government. However, there remains an additional county vote related to the package, which is expected to take place no longer. Later than February, we are also working through a number of other open items before we turn back to the financing for the balance of the project. We'll continue to keep you updated. At the same time, we remain in discussion with a significant number of other markets around the world. That includes advancing our plans for the next SPHR project, which we anticipate will be located in the U.S. We expect to have more news to share. this project in the coming months. Moving to original content. Production is well underway on the Rocky Horror Picture Show. Rocky Horror will expand our content slate to a new genre and help drive the number of SPHR. experience showings to a new high next year. We expect to debut the production by the end of March, which would be the fastest time to market for a SPHR experience. This reflects the technology advancements we've made in content production.

our financial results. Thank you, Jim. And good morning, everyone. For the September quarter, we generated total company revenues of $274.3 million and a trusted operating income of $39.2 million. Our Sphere segment generated revenues of $198.9 million, an increase of 14% compared to the prior year period. This growth was mainly driven by the Sphere experience, reflecting additional performances and higher personal revenues. In the last year quarter, the Sphere experience included 241 performances of The Visit of Oz, as compared to a combined 220 performances of The Visit of Oz, Postcard from Earth, and VU2, an immersive concert film in the prior year quarter. As a reminder, The Visit of Oz launched on August 28th, 2025, in the year-ago period. We also saw revenue growth in extra-stair advertising, sponsorship, and suite license fees, as well as concert residencies. Quarter-adjusted operating income for our sphere segment was $32.4 million, as compared to $17.1 million in the prior year quarter. This reflected the increase in revenues, partially offset by higher direct operating and SG&A. The increase in direct operating expenses was primarily driven by the sphere experience, reflecting higher per-show expenses as well as additional performances. As mentioned, the current year quarter solely reflected the visit of Oz. As compared to showings of the visit of Oz, Postcard from Earth, and VU2 in the prior year quarter. SG&A expenses for the third quarter were $98.3 million. An increase of $5.6 million as compared to the prior year quarter. This was primarily due to...

...the call for questions. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking... to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster.

Hey, thank you.

Jim, on the prior earnings call, you spoke to an expectation for an announcement on Sphere expansion, if not by the end of 26th, then by... Q1 of next year. So, I just wanted to check in on that and see if that timeline is how you're still thinking about new location announcements. Yes. No, that's the, the, uh, we're, uh, you know, I, uh, I think likely is still this quarter, right? The, the rather than next quarter, um, and, you know, we're still, we're still on track. So stay tuned. Okay. And then, you know, in the last few months, we've obviously seen a jump in interest rates today, uh, notwithstanding, but can you just discuss how, uh, that impacts any discussion around, uh, National Harbor financing? Or even just, uh, sphere expansion conversations generally. Well, I'd answer that, but Digger's signaling me across the table that he really wants to answer. Sure. So, um, the interest rate environment has not affected any of our expansion conversations. Um, as we look at all of our discussions, uh, nothing's been slowed down or paused due to, uh, interest rates. Our potential partners, they recognize the attract. of a sphere venue based on the proven business model in Las Vegas. And that really is the conversations we have with them. With respect to National Harbor, as Jim mentioned, we're working through a number of open items before we turn back to the financing and we'll keep you posted on that.

Thanks.

Your next question comes from the line of Brandon Ross with Light Shed Partners. Your line is open. Please go ahead.

Your next question comes from the line of Matt Condon with Citizens Bank.

Your next question comes from the line of Peter Stupino with Wolf Research. Your line is open. Please go ahead.

your next question comes from the line of steven lasik with goldman sachs your line is open please go ahead

great thank you jim thinking longer term could you give us an update on the conversations you're having around new sphere franchise around the world what markets are top of mind what regions are top of mind uh and what the timeline could potentially look like as you look out to expand uh the sphere network outside the us thank you yeah um you know we can continue to uh develop and refine the model that we look at to go into other marketplaces i i will say that the you know one of the big factors um is environment right other words you know we loved when we were looking to build in london we loved the london market we thought the london market was going to do great um etc but what we didn't take into account enough was the environment which in this case was the governmental environment that the so as we look at each one of the marketplaces we're we're assessing you know how much market there is i mean you take a look at a market like tokyo with 90 million people right that's pretty good marketplace but that they but then you also have to take a look at the governmental aspects and how long it will take to build and do they really want a project like ours um and those all go into factoring uh you know whether we're going to go forward or not but i will say that you know it does it you know we really we have the financing available right that the um so financing really isn't an issue that the uh so then the next question is

which market how good of a market will be how long it will take to build and how expensive it will be to build those are all factors that go into it um we're getting better at being able to analyze markets and and determine what will be good and uh and what might be problematic and uh i think you'll see by our next announcement that we're we're we're doing pretty well with it and i think we're we're only going to pick markets where we think we can be

thank you your next question comes from the line of cameron manson perron with morgan stanley your line is open please go ahead thank you morning uh jim i wanted to

follow up on something you said about rocky horror earlier which is just about kind of day parting and the outlook for that to be to fulfill uh kind of later in the night or evening slot um do you see pot like potential for that to be screened more frequently than just the late night part and how do you think about weighing the balance between wizard of oz and and moving rocky into earlier day parts well it's it's really all an algorithm right that the uh you know um it's knowing you know it's knowing who's in the market the um at that particular time that the uh and you know which one will appeal to them more and you know the more data we can get on that will help us continue to to schedule right are the with some products like like uh wizard of oz um you know the mornings aren't you know are are are possible sundays might be better because it's more family-oriented product you know they showing rocky horror picture show at 11 a.m on a sunday morning right the people who we really want to have go to rocky horror picture shows especially in vegas they're not awake yet obviously you couldn't get them to do anything at 11 o'clock in the morning so i mean that we're just going to continue to work on the algorithm and and attempt to maximize ticket sales understood that's helpful and then separately any update on the outlook for exosphere and your broader sponsorship business as we look forward to the fourth quarter and into 27.

i'm going to give that one to jen goster so we continue to see great momentum in this area of our business um you know significant growth in this category this quarter and typically this is probably our slowest quarter from a seasonal perspective uh we watch you know major brands like google bringing forth their viral campaign featuring global k-pop band like pts to bring these high impact moments um that are that are often built in the zeitgeist of what's happening and i think that's really attracted to brands and we continue to see a strong pipeline there um as we think about the next quarter which is probably seasonally our strongest quarter we continue to make progress expanding those roster of official partners we recently announced lift to our growing list of sponsors and we've got a strong pipeline of deals behind them so we expect to share more in the coming months but again we you know we see this area of our business with substantial growth opportunity for 2027 and beyond you know just to add to that there's there's two aspects of the exosphere right that are continuing to show improvement the uh one which is that we're we're seeing more and more companies products etc want to debut their their uh you know their products and their announcements on the sphere um because you know it's not just the vegas market it's a viral market and when you take your your product whether it's a new movie or or a new hard product etc and you put it out sphere you get a you get a lot of coverage really world worldwide so

the other thing that that actually that that I'm really kind of happy about is that our sponsors themselves have really embraced the medium so if you take a look at at their you know at their content at what they're putting up on the sphere it's interesting it's it's exciting and that's what we want for for the exosphere we want people to keep looking at the exosphere and see well what's on it now and who did this and what does it look like and and and i we're really seeing um you know like i said the sponsors uh embrace that they're investing in the content and putting some pretty amazing stuff up on the sphere

thank you for the questions

operator we have time for one last follow your final question comes from the line of peter henderson with bank of america your line is open please go ahead good morning and thank you for taking the questions so just wondering as you if you look ahead to the calendar 27 and as wizard of oz matured a bit further and you face tougher comparisons do you expect the las vegas sphere business to grow year over year and just how should we think about contributions from concert residency sponsorship and new content to driving growth in 27. well we definitely expect growth the monthly but you know where it comes from it's we were learning still about you know how to maximize revenue at sphere both from exosphere to what the content is inside from residencies etc. so I expect most of the growth to come from that the you know it's you know when we when we built this sphere the model what was for a venue that was busy 365 days a year and we've achieved that right that they they're literally every day of the year is busy so so the capital you invested in the in the project right there's much quicker to it. so but we'll continue to work on utilization because it's it's utilization and then of course how many tickets you sell per event etc that's going to drive the growth. thank you. 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 look forward to speaking with you on our next earnings call. have a good day.

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