Lions Gate’s QQ2 2025 results show a meaningful sequential rebound in revenue and robust EBITDA generation, but the quarter delivered a material net loss driven by substantial non-cash and other expense items that eclipsed operating profits. Revenue rose 13.65% QoQ to $948.6 million, and gross profit climbed to $394.0 million with a gross margin of 41.5%. Operating income improved sharply to $161.1 million, yet net income declined to a negative $163.3 million as total other income/expenses net swung to a $-337.0 million drag, paired with a large depreciation and amortization base of $553.3 million. The company posted a negative full-year equity position (total stockholders’ equity of -$142.1 million) and elevated leverage (total debt $2.46 billion; net debt $2.23 billion), underscoring balance sheet fragility even as EBITDA remains positive.
From a cash-flow perspective, operating cash flow was negative at $-82.0 million and free cash flow was $-91.2 million, highlighting working-capital-intensive dynamics and non-cash charges that weighed on cash economics, despite a positive financing cash flow of $417.8 million. The balance sheet shows total assets of $7.15 billion against liabilities of $7.27 billion, with modest liquidity and a current ratio of 0.30. In a competitive landscape for entertainment content and streaming, the company’s near-term trajectory will hinge on Starz monetization, content-cost discipline, and a clear deleveraging path.
Key takeaway for investors: EBITDA remains a meaningful source of operating cash generation, but meaningful non-cash/one-time items and sustained leverage necessitate cautious positioning. The stock’s valuation metrics imply some upside if deleveraging and Starz monetization progress, but material balance-sheet risks warrant a conservative, time-phased investment approach.