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PSKY Q1 Earnings & Revenues Beat Estimates, Q2 Outlook Soft
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Key Takeaways
Paramount Skydance saw 11% DTC revenue growth and improved EBITDA on cost discipline.
Paramount Skydance added 700K subs, but exited over 1M uneconomic bundled users.
PSKY's WBD merger is on track for Q3 close, backed by $10B financing and $49B bridge funding.
Paramount Skydance Corporation (PSKY - Free Report) reported first-quarter 2026 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate.
The quarter reflected continued momentum across the company's ongoing transformation, with Direct-to-Consumer growth, a studio recovery and disciplined cost management driving outperformance on both revenue and profitability.
On the revenue front, PSKY posted total revenues of $7.35 billion, beating the Zacks Consensus Estimate by 1.4%. Revenues grew 2.16% year over year, reflecting continued momentum in streaming and a double-digit rebound at the studio, partially offset by structural headwinds in linear television.
PSKY reported adjusted earnings per share of 23 cents per share, beating the Zacks Consensus Estimate by 53.33%. The first-quarter 2026 results include $103 million in transaction-related costs associated with the pending Warner Bros. Discovery merger.
Paramount Skydance Corporation Price, Consensus and EPS Surprise
GAAP operating income totaled $616 million in the first quarter of 2026 compared with $550 million in the first quarter of 2025, with the current period including $103 million in transaction-related costs associated with the pending WBD merger, excluded from the company's adjusted profitability measure.
Adjusted EBITDA reached $1.16 billion in the first quarter of 2026, rising 59% year over year from $732 million and translating to a 15.8% margin. The result reflected strong cost discipline across the business, with expenses coming in lighter than planned on slower hiring pacing and favorable content spend timing.
On the advertising front, total company ad revenues declined 3% year over year, an improvement from the fourth-quarter 2025 trajectory, with the DTC advertising business returning to growth driven by improved fill rates across both Paramount+ and Pluto TV.
PSKY's Q1 Segment Performance Details
The DTC segment posted revenues of $2.40 billion, up 11% year over year. Paramount+ revenues grew 17% year over year to $1.97 billion, driven by a 14% increase in ARPU reflecting the January price increase and an improved subscriber mix. The platform ended the quarter with 79.6 million paid subscribers, adding 700,000 on a reported basis and approximately 2 million on an underlying basis, partially offset by the deliberate exit of over 1 million uneconomic international hard-bundle subscribers. DTC Adjusted EBITDA improved to $251 million (10% margin) from a loss of $4 million in the first quarter of 2025, reflecting subscription and advertising growth as well as a content expense benefit from the Skydance accounting basis change. Pluto TV saw VOD hours per user rise 60% year over year, with 65% of U.S. viewing minutes now coming from registered users.
The TV Media segment reported revenues of $3.67 billion, down 6% year over year, with both advertising and affiliate revenues declining 6% each, reflecting international exits and continued pay-TV subscriber erosion. Despite the revenue pressure, cost discipline drove TV Media Adjusted EBITDA to $1.1 billion (29% margin), up from a 24% margin in the first quarter of 2025. CBS held 13 of the top 20 primetime series and delivered the most-watched Masters final-round broadcast in over a decade.
The Studios segment revenues grew 11% year over year to $1.28 billion, led by Scream 7 — which surpassed $200 million globally — and the consolidation of Skydance licensing revenues. Studios Adjusted EBITDA reached $164 million (13% margin), up from $82 million in the first quarter of 2025. The film slate has doubled to 15 releases in 2026 from 8 in 2025.
PSKY's Q1 Balance Sheet and Cash Flow Details
As of March 31, 2026, cash and cash equivalents totaled $1.94 billion, down from $3.27 billion at Dec. 31, 2025, primarily reflecting a $2.8 billion advance consideration payment for the WBD acquisition funded via a $2.15 billion revolving credit facility draw, partially offset by $347 million in debt repayments.
Gross debt stood at $15.48 billion as of March 31, 2026, up from $13.66 billion at Dec. 31, 2025, with $86 million in debt maturities remaining for the balance of 2026.
Operating cash flow was $185 million in the first quarter, broadly in line with $180 million in the year-ago period. Free cash flow was $96 million, compared with $123 million in the first quarter of 2025, reflecting higher capital expenditures of $89 million versus $57 million in the prior-year period.
PSKY Offers Q2 and Full-Year 2026 Outlook
For the second quarter of 2026, PSKY expects total revenues between $6.75 billion and $6.95 billion (flat to down 1% year over year). The outlook reflects a difficult comparison against Mission: Impossible — The Final Reckoning theatrical revenues in the second quarter of 2025 and the lapping of NCAA Final Four and Championship ad revenue.
Paramount+ subscriber growth is expected to be flattish quarter over quarter due to the planned exit of approximately 2 million additional international hard-bundle subscribers.
Adjusted EBITDA is guided to $900 million to $1 billion (13.9% margin at midpoint). The company also anticipates transformation costs of several hundred million dollars in the second quarter, which will weigh on reported free cash flow.
DTC segment margins are expected to face additional pressure in the third and fourth quarters as the content slate ramps through the second half of 2026.
For 2026, PSKY reaffirmed its target of $30 billion in total revenue (+4% year over year) and $3.8 billion in Adjusted EBITDA (12.7% margin), representing approximately 16% profitability growth year over year. Free cash flow conversion is expected at approximately 5% before roughly $800 million in transformation costs. The efficiency program remains on track to deliver more than $2.5 billion in run-rate efficiencies by year-end 2026 and at least $3 billion through 2027.
On the technology and operations front, PSKY remains on track to unify its streaming services, BET+, Pluto TV and Paramount+, onto a single tech stack by mid-2026, with Pluto TV set to receive its most significant product update in a decade this summer.
The WBD acquisition remains on track to close by the end of the third quarter of 2026, with $10 billion in permanent financing secured and $49 billion in bridge financing syndicated to 18 global financial institutions.
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PSKY Q1 Earnings & Revenues Beat Estimates, Q2 Outlook Soft
Key Takeaways
Paramount Skydance Corporation (PSKY - Free Report) reported first-quarter 2026 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate.
The quarter reflected continued momentum across the company's ongoing transformation, with Direct-to-Consumer growth, a studio recovery and disciplined cost management driving outperformance on both revenue and profitability.
On the revenue front, PSKY posted total revenues of $7.35 billion, beating the Zacks Consensus Estimate by 1.4%. Revenues grew 2.16% year over year, reflecting continued momentum in streaming and a double-digit rebound at the studio, partially offset by structural headwinds in linear television.
PSKY reported adjusted earnings per share of 23 cents per share, beating the Zacks Consensus Estimate by 53.33%. The first-quarter 2026 results include $103 million in transaction-related costs associated with the pending Warner Bros. Discovery merger.
Paramount Skydance Corporation Price, Consensus and EPS Surprise
Paramount Skydance Corporation price-consensus-eps-surprise-chart | Paramount Skydance Corporation Quote
PSKY's Financial Performance Overvie
GAAP operating income totaled $616 million in the first quarter of 2026 compared with $550 million in the first quarter of 2025, with the current period including $103 million in transaction-related costs associated with the pending WBD merger, excluded from the company's adjusted profitability measure.
Adjusted EBITDA reached $1.16 billion in the first quarter of 2026, rising 59% year over year from $732 million and translating to a 15.8% margin. The result reflected strong cost discipline across the business, with expenses coming in lighter than planned on slower hiring pacing and favorable content spend timing.
On the advertising front, total company ad revenues declined 3% year over year, an improvement from the fourth-quarter 2025 trajectory, with the DTC advertising business returning to growth driven by improved fill rates across both Paramount+ and Pluto TV.
PSKY's Q1 Segment Performance Details
The DTC segment posted revenues of $2.40 billion, up 11% year over year. Paramount+ revenues grew 17% year over year to $1.97 billion, driven by a 14% increase in ARPU reflecting the January price increase and an improved subscriber mix. The platform ended the quarter with 79.6 million paid subscribers, adding 700,000 on a reported basis and approximately 2 million on an underlying basis, partially offset by the deliberate exit of over 1 million uneconomic international hard-bundle subscribers. DTC Adjusted EBITDA improved to $251 million (10% margin) from a loss of $4 million in the first quarter of 2025, reflecting subscription and advertising growth as well as a content expense benefit from the Skydance accounting basis change. Pluto TV saw VOD hours per user rise 60% year over year, with 65% of U.S. viewing minutes now coming from registered users.
The TV Media segment reported revenues of $3.67 billion, down 6% year over year, with both advertising and affiliate revenues declining 6% each, reflecting international exits and continued pay-TV subscriber erosion. Despite the revenue pressure, cost discipline drove TV Media Adjusted EBITDA to $1.1 billion (29% margin), up from a 24% margin in the first quarter of 2025. CBS held 13 of the top 20 primetime series and delivered the most-watched Masters final-round broadcast in over a decade.
The Studios segment revenues grew 11% year over year to $1.28 billion, led by Scream 7 — which surpassed $200 million globally — and the consolidation of Skydance licensing revenues. Studios Adjusted EBITDA reached $164 million (13% margin), up from $82 million in the first quarter of 2025. The film slate has doubled to 15 releases in 2026 from 8 in 2025.
PSKY's Q1 Balance Sheet and Cash Flow Details
As of March 31, 2026, cash and cash equivalents totaled $1.94 billion, down from $3.27 billion at Dec. 31, 2025, primarily reflecting a $2.8 billion advance consideration payment for the WBD acquisition funded via a $2.15 billion revolving credit facility draw, partially offset by $347 million in debt repayments.
Gross debt stood at $15.48 billion as of March 31, 2026, up from $13.66 billion at Dec. 31, 2025, with $86 million in debt maturities remaining for the balance of 2026.
Operating cash flow was $185 million in the first quarter, broadly in line with $180 million in the year-ago period. Free cash flow was $96 million, compared with $123 million in the first quarter of 2025, reflecting higher capital expenditures of $89 million versus $57 million in the prior-year period.
PSKY Offers Q2 and Full-Year 2026 Outlook
For the second quarter of 2026, PSKY expects total revenues between $6.75 billion and $6.95 billion (flat to down 1% year over year). The outlook reflects a difficult comparison against Mission: Impossible — The Final Reckoning theatrical revenues in the second quarter of 2025 and the lapping of NCAA Final Four and Championship ad revenue.
Paramount+ subscriber growth is expected to be flattish quarter over quarter due to the planned exit of approximately 2 million additional international hard-bundle subscribers.
Adjusted EBITDA is guided to $900 million to $1 billion (13.9% margin at midpoint). The company also anticipates transformation costs of several hundred million dollars in the second quarter, which will weigh on reported free cash flow.
DTC segment margins are expected to face additional pressure in the third and fourth quarters as the content slate ramps through the second half of 2026.
For 2026, PSKY reaffirmed its target of $30 billion in total revenue (+4% year over year) and $3.8 billion in Adjusted EBITDA (12.7% margin), representing approximately 16% profitability growth year over year. Free cash flow conversion is expected at approximately 5% before roughly $800 million in transformation costs. The efficiency program remains on track to deliver more than $2.5 billion in run-rate efficiencies by year-end 2026 and at least $3 billion through 2027.
On the technology and operations front, PSKY remains on track to unify its streaming services, BET+, Pluto TV and Paramount+, onto a single tech stack by mid-2026, with Pluto TV set to receive its most significant product update in a decade this summer.
The WBD acquisition remains on track to close by the end of the third quarter of 2026, with $10 billion in permanent financing secured and $49 billion in bridge financing syndicated to 18 global financial institutions.
Zacks Rank & Stocks to Consider
PSKY currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Consumer Discretionary sector are Capcom (CCOEY - Free Report) , Sony (SONY - Free Report) and Fox Corporation (FOXA - Free Report) . Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Capcom is set to report fourth-quarter fiscal 2026 results on May 12. Capcom shares have declined 8.1% year to date.
Sony is slated to report fourth-quarter fiscal 2026 results on May 13. Sony shares have declined 22.7% year to date.
Fox Corporation is set to report third-quarter fiscal 2026 results on May 11. Fox Corporation shares have declined 13.3% year to date.