It has been about a month since the last earnings report for Paramount Skydance (PSKY Quick QuotePSKY - Free Report) . Shares have added about 25.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Paramount Skydance due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Paramount Skydance Corporation before we dive into how investors and analysts have reacted as of late.

PSKY Beats Q2 Earnings & Revenue Estimates, Reports Strong Q3 Outlook

Paramount Skydance Corporation reported second-quarter 2026 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate.

The quarter reflected continued strength in the Direct-to-Consumer (DTC) business, a Studios turnaround and disciplined cost management, partially offset by ongoing weakness in TV Media.

On the revenue front, PSKY posted total revenues of $6.91 billion, beating the Zacks Consensus Estimate of $6.88 billion by 0.43%. Revenues increased 0.93% year over year.

PSKY reported adjusted earnings of 18 cents per share, which beat the Zacks Consensus Estimate of 15 cents by 20%. The quarter included $153 million in transaction-related costs.

PSKY's Financial Performance Overview

GAAP operating income increased to $475 million in the second quarter of 2026 from $399 million in the year-ago quarter. Operating margin expanded to 6.9% from 5.8%, reflecting improved profitability across the DTC and Studios businesses and disciplined expense management despite continued pressure in linear television.
 
Adjusted EBITDA rose 27% year over year to $1.10 billion, while adjusted EBITDA margin expanded to 15.9% from 12.6%. The improvement was driven by continued DTC margin expansion, stronger Studios profitability and higher margins in TV Media through ongoing cost discipline. Management noted that enterprise-wide efficiency initiatives remain on track to deliver more than $2.7 billion in run-rate efficiencies by year-end 2026.

On the advertising front, digital advertising continued to gain traction, with DTC advertising revenues up 8% year over year and Paramount+ advertising revenues rising more than 30%, supported by stronger engagement and improved monetization.

PSKY's Q2 Segment Performance Details

DTC revenues came in at $2.47 billion, up 9% year over year, led by 16% growth in Paramount+ revenues to $2.06 billion on subscriber and ARPU gains. Paramount+ ended the quarter with 81.6 million subscribers, adding approximately two million despite nearly two million international hard bundle exits. DTC adjusted EBITDA climbed 44% to $366 million, with margin expanding to 14.8% from 11.2%, supported by the platform's best-ever retention quarter, driven by Dutton Ranch, UFC programming and the FIFA World Cup in select Latin American markets.

Studios revenues grew 16% year over year to $1.31 billion on higher third-party television deliveries and the consolidation of Skydance licensing revenues, partly offset by a difficult theatrical comparison against Mission: Impossible – The Final Reckoning. Studios adjusted EBITDA improved to $36 million from a loss of $31 million a year earlier, reflecting a more disciplined approach to greenlighting, marketing and distribution.

TV Media revenues declined 9% year over year to $3.13 billion, with advertising down 14% on the NCAA lap and international divestitures, and affiliate revenues down 6% amid continued pay TV subscriber declines. TV Media adjusted EBITDA rose to $1.06 billion, with margin expanding to 34% from 26.4%, on disciplined cost management. CBS held seven of the top 10 broadcast series in the most recent broadcast season.

PSKY's Q2 Balance Sheet and Cash Flow Details

Cash and cash equivalents were $1.63 billion as of June 30, 2026, down from $1.94 billion as of March 31, 2026. Gross debt decreased sequentially to $15.16 billion from $15.48 billion, with $1.8 billion drawn under the revolving credit facility. Operating cash flow totaled $319 million and free cash flow was $258 million.

PSKY’s Q3 and 2026 Outlook

For the third quarter, PSKY expects revenues of $6.95 billion to $7.15 billion, implying 4% to 7% growth year over year, with Paramount+ subscribers expected to be roughly flat sequentially. Adjusted EBITDA is projected at $875 million to $975 million (13.1% margin at midpoint), with approximately $200 million in transformation costs expected during the quarter. Studios and TV Media profitability are expected to improve year over year, while DTC margins are expected to moderate on higher content amortization tied to the second-half programming slate.

For 2026, PSKY reaffirmed its $30 billion revenue target (4% growth) and raised its adjusted EBITDA outlook to $3.8-$3.9 billion from a prior guidance of $3.8 billion. Free cash flow conversion is now expected at a minimum of 10%, up from a prior guidance of 5%, before roughly $800 million in transformation costs. Management reiterated confidence that the proposed Warner Bros. Discovery acquisition will be completed.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted 30.11% due to these changes.

VGM Scores

Currently, Paramount Skydance has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Paramount Skydance has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.