Sphere Entertainment Co. (NYSE:SPHR) Q2 2024 Earnings Call Transcript February 5, 2024
Sphere Entertainment Co. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and thank you for standing by, and welcome to the Sphere Entertainment Co. Fiscal 2024 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Danes, Investor Relations. Please go ahead.
Ari Danes: Thank you. Good morning, and welcome to Sphere Entertainment’s fiscal 2024 second quarter earnings conference call. Today’s call will begin with our Executive Chairman and CEO, Jim Dolan, who will provide an update on Sphere. This will be followed by an update from Andrea Greenberg, President and CEO of MSG Networks. And then Dave Byrnes, our Executive Vice President, Chief Financial Officer, and Treasurer, will conclude with a review of 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 Investors 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 uncertainties 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 5 and 6 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. And with that, I’ll now turn the call over to Jim.
Stagehands setting up the equipment for a live entertainment event.
Jim Dolan: Thank you, Ari, and good morning, everyone. As we said from the very start, the vision for Sphere was to create a next-generation medium that would disrupt the traditional venue model. Now, with our first full quarter of operations in Las Vegas behind us, we can see from our results that our thesis is starting to play out. With Sphere, we wanted to design a venue that would be busy 365 days a year with multiple events per day. During the second quarter, we sold more than 1 million tickets to over 200 events. This volume is two to three times greater than what you would typically see from the busiest arena size venues in the world. Our original content category, The Sphere Experience, drove this volume, grossing more than $1 million in average daily ticket sales at a high margin.
While The Sphere Experience is our key economic engine, residencies will continue to have an important place on our event calendar. High-profile residencies are not only profitable, they generate awareness for Sphere and other events at the venue. U2’s sold-out extended run is a great example. We’ve also had strong demand from advertisers who have been quick to recognize the unique value of the Exosphere. And in November, we demonstrated what Sphere can do for corporate partners through our collaboration with Formula 1. With strong results from both events and advertising, our Sphere business segment generated positive adjusted operating income for our second quarter. This is an important financial milestone, demonstrating that the Sphere business model can be both profitable and self-sustaining.
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