Lions Gate Entertainment’s QQ2 2025 results reflect a landscape of solid EBITDA generation overshadowed by a heavy depreciation regime and substantial other income/expense items that drive net income negative for the quarter. Revenue of $948.6 million declined on a year-over-year basis by approximately 6.6%, while sequentially the company posted a meaningful QoQ uptick of about 13.7% from Q1 2025. Gross margin remained robust at roughly 41.5%, underscoring a favorable product mix and core film/TV licensing activity, but the bottom line remains pressured by elevated non-operating items and significant amortization related to its large content library and production assets.
Balance sheet health is a critical concern: total debt stands at $2.46 billion with net debt around $2.23 billion, and stockholders’ equity sits in negative territory at approximately -$142 million. The current ratio and quick ratio are both ~0.30, signaling tight near-term liquidity despite a cash balance near $290 million at period end. Operating cash flow was negative for the quarter (-$82 million), and free cash flow was also negative (-$91 million), implying ongoing cash burn that management will need to manage through financing or improved operating performance. Management commentary is not included in the provided transcript data; however, the sequential revenue uptick and sustained EBITDA of $451.7 million highlight a model that, with stabilization in non-cash charges and a clearer path to profitability, could transition to positive free cash flow over the coming quarters if debt servicing and content amortization trends improve. The upcoming quarters will likely hinge on Starz monetization, content slate efficiency, and refinancing opportunities to ease leverage pressure.
Overall, LGF-B remains strategically positioned with Starz-based international distribution and a diversified content footprint, but the near-term investment thesis must contend with significant leverage, negative equity, and liquidity constraints. An improving operating cadence and any meaningful de-leveraging catalysts (refinancing, monetization upgrades, and disciplined content spend) would be essential to shift investors’ risk-reward toward a more favorable trajectory.