Executive Summary & Key Highlights

• Revenue Growth: Total revenues for Q2 2026 reached \$313.6 million, up 11% year-over-year. Sphere segment revenues surged 29% to \$226.4 million, driven primarily by The Wizard of Oz at Sphere Las Vegas.
• Expansion Plans: Announced Sphere Abu Dhabi, with construction expected to complete by end of 2029. Discussions ongoing for additional Sphere venues globally, including progress at National Harbor.
• New Content & Partnerships: Launch of a new Sphere Experience based on The Rocky Horror Picture Show expected in 2027. The Wizard of Oz at Sphere surpassed \$400 million in ticket sales and three million tickets sold. Sphere extended its partnership with Formula 1 Las Vegas Grand Prix for five more years, through 2030.
• Financial Performance: Operating loss increased 22% to \$61.3 million, but Sphere segment’s adjusted operating income grew 60% to \$39.9 million. MSG Networks segment revenues declined 18% to \$87.3 million, with adjusted operating income down 70%.
• Liquidity Position: Cash and equivalents at end of Q2 were \$552 million, up from \$521 million at year end 2025.

Detailed Financial Performance

Operating Expenses & Losses

• Selling, general, and administrative expenses for Sphere increased by 30% (\$29.2M), notably due to mark-to-market adjustments on share-based compensation, higher employee costs, and litigation expenses related to the MSG Networks merger.
• Sphere segment’s operating loss improved by \$13.9M (17%) due to increased revenue and the absence of impairment losses, offset by higher expenses.
• MSG Networks segment saw higher rights fee expenses due to fewer NBA/NHL games and retroactive reductions in the prior year, as well as lower distribution and advertising revenue.

Business and Strategic Developments

• Sphere Abu Dhabi: Yas Island selected for the new venue, marking a major international expansion. Completion targeted by end of 2029.
• National Harbor: Plans advancing for another Sphere location, indicating continued growth of immersive venues.
• Content Innovation: The Wizard of Oz at Sphere Las Vegas is a blockbuster, with \$400M in ticket sales and over three million tickets since August 2025. The Rocky Horror Picture Show Sphere Experience expected to launch in 2027, likely to attract new audiences.
• Formula 1 Partnership: Sphere’s collaboration with the Las Vegas Grand Prix extended for five years, securing recurring event revenue and brand exposure.

Cash Flow and Balance Sheet

• Net cash provided by operating activities for the first half of 2026 was \$102.6M, compared to a negative \$52.7M in the prior year period.
• Cash and equivalents increased to \$552M, reflecting improved liquidity. Total assets stood at \$4.04B, with total equity of \$2.23B.
• Debt levels remain significant, with current portion at \$58M and long-term debt at \$722M.

Adjusted Operating Income (Non-GAAP)

Sphere Entertainment Co. uses adjusted operating income as a key performance metric, excluding non-cash and non-recurring items such as share-based compensation, depreciation/amortization, restructuring charges, impairment losses, merger and acquisition costs, cloud computing amortization, and deferred compensation plan remeasurement. This metric is used internally and by analysts to assess segment and consolidated performance.

Shareholder and Price-Sensitive Information

• Expansion Announcements: Sphere Abu Dhabi and progress at National Harbor are potentially price-sensitive, signaling growth and international reach.
• Blockbuster Content Performance: The Wizard of Oz’s \$400M ticket milestone and new experiences such as The Rocky Horror Picture Show may drive future revenues.
• Partnership Extensions: Securement of Formula 1 partnership for five more years ensures recurring revenue streams and enhances Sphere’s brand visibility.
• Operating Loss and Expense Increases: While Sphere segment improved its operating loss and adjusted income, overall company operating loss increased. MSG Networks’ continuing revenue decline and subscriber attrition could weigh negatively on share value.
• Cash Flow Turnaround: Positive operating cash flow after a negative prior period signals improved financial health.

Outlook & Management Commentary

Executive Chairman and CEO James L. Dolan highlighted ongoing execution in Las Vegas and expects substantial growth for the year. He reiterated Sphere’s global expansion ambitions, including Abu Dhabi and National Harbor projects, reflecting confidence in Sphere’s immersive entertainment business model.

Investors should note the company’s focus on adjusted operating income as a key metric, and the potential for further growth via new venues and content experiences. However, challenges remain in the MSG Networks segment, including declining subscribers and advertising revenues.