Paramount Skydance (PSKY) shares surged approximately 5% in premarket trading on Tuesday as investors absorbed the company’s third quarter earnings report released after market hours on Monday. Despite quarterly revenue coming in slightly below Wall Street’s expectations, the firm expressed an optimistic outlook for the future, raising its cost-savings target and signaling stronger profitability from its streaming services.
For the quarter ending in September, Paramount Skydance reported revenues of $6.7 billion, a figure that fell short of analysts’ average estimate of $7 billion. This marks the company’s first earnings report since finalizing its merger with Skydance in August. CEO David Ellison asserted that the company is now projecting total revenue to reach $30 billion and anticipates adjusted OIBDA of $3.5 billion by 2026, bolstered by what he described as a “healthy acceleration” in streaming growth.
Ellison also revealed that Paramount+ is expected to achieve profitability this year, with an aim for continued growth in its profitability by 2026. Notably, direct-to-consumer revenue saw a year-over-year increase of 17%, although challenges in the TV Media sector tempered overall results. Paramount+ reported a substantial 24% growth in revenue, with total subscribers now at 79.1 million.
On a broader scale, the company’s operating income for the quarter stood at $324 million, but it did report a net loss of approximately $257 million. It’s important to note that the results before and after the merger aren’t directly comparable.
To streamline operations, the newly formed entity has already implemented significant changes, including workforce reductions of 1,000 employees, with plans to cut an additional 1,600 positions. In a bid to enhance operational efficiency, Paramount has raised its efficiency-savings target to $3 billion, up from an earlier goal of $2 billion.
In a strategic move aimed at boosting profitability, the company is also set to increase subscription prices for Paramount+ in the United States early next year, following similar announcements for price hikes in Canada and Australia. These adjustments are part of a broader initiative to invest in new content and technology, reinforcing the company’s commitment to enhancing its offerings as competition in the streaming space intensifies.
