Earnings call transcript: Paramount Global Q2 2025 sees EPS beat, stock drops

Paramount Global (PARA) reported its earnings for the second quarter of 2025, revealing a notable earnings per share (EPS) beat but a slight revenue miss. The company posted an EPS of $0.46, significantly surpassing the forecasted $0.35, marking a 31.43% surprise. Revenue came in at $6.85 billion, just under the expected $6.87 billion. Despite the EPS success, the company’s stock fell by 9.77% in aftermarket trading, closing at $12 from a previous $13.3. According to InvestingPro analysis, the company maintains a "FAIR" overall financial health score, and current valuations suggest the stock may be undervalued relative to its Fair Value.

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Key Takeaways

• Paramount Global’s EPS exceeded expectations by 31.43%.
• Revenue was slightly below forecast, with a -0.29% surprise.
• The stock dropped 9.77% in aftermarket trading.
• Direct-to-Consumer revenue grew 15%.
• Paramount+ added 10 million new subscribers.

Company Performance

Paramount Global demonstrated strong profitability in Q2 2025, with a significant improvement in EPS, driven by operational efficiencies and growth in its Direct-to-Consumer segment. The company maintains healthy liquidity with a current ratio of 1.29, indicating sufficient assets to cover short-term obligations. While the slight revenue miss and challenges in the digital advertising market may have contributed to investor concerns, the company’s position as a top global streaming service remains robust, with Paramount+ showing substantial subscriber growth. The company has also maintained its dividend payments for 20 consecutive years, demonstrating long-term financial stability.

Financial Highlights

• Revenue: $6.85 billion (1% YoY growth)
• Earnings per share: $0.46 (31.43% above forecast)
• Adjusted OIBDA: $824 million
• Direct-to-Consumer revenue: $2.2 billion (15% growth YoY)

Earnings vs. Forecast

Paramount Global reported an EPS of $0.46, exceeding the forecast of $0.35 by 31.43%. Revenue of $6.85 billion was slightly below the forecast of $6.87 billion, a -0.29% surprise. The significant EPS beat highlights improved profitability, while the revenue miss was relatively minor.

Market Reaction

Following the earnings report, Paramount Global’s stock fell 9.77% in aftermarket trading, closing at $12. This decline may reflect investor concerns over the revenue miss and challenges in the digital advertising market, despite the strong EPS performance. InvestingPro data shows analyst price targets ranging from $8.50 to $20, with a consensus recommendation reflecting a cautious outlook. The stock has shown relatively low price volatility historically, with a beta of 1.21.

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Outlook & Guidance

Paramount Global’s future guidance remains cautious due to an upcoming transaction, with no full-year financial expectations provided. The company continues to focus on its streaming-first strategy and content investment, with upcoming shows and franchise extensions expected to drive future growth.

Executive Commentary

• Shari Redstone, Non-Executive Chair, emphasized the importance of content, stating, "Content was king."
• Chris McCarthy, Co-CEO, highlighted the company’s strategic focus, saying, "Our strategy isn’t about the volume of originals, rather it’s about the volume of original hits."
• McCarthy also expressed confidence in the company’s streaming future: "We are substantially better positioned to thrive in the streaming future."

Risks and Challenges

• Revenue miss raises concerns about sales performance.
• Digital advertising market faces increased supply challenges.
• No full-year financial expectations due to the Skydance transaction.
• Potential market saturation in streaming services.
• Broader macroeconomic pressures could impact consumer spending.

Q&A

The earnings call did not include a Q&A session, leaving some analyst questions unanswered, which may have contributed to the market’s cautious response.

Full transcript - Paramount Global Class B (PARA) Q2 2025:

Victoria, Conference Operator: Good afternoon. My name is Victoria, and I’ll be the conference operator today. At this time, I would like to welcome everyone to Paramount Global’s Second Quarter twenty twenty five Earnings Conference Call. All lines have been muted to prevent any background noise. At this time, I would now like to turn the call over to Jamie Morris, Paramount Global’s EVP, Investor Relations.

You may now begin your conference call.

Jamie Morris, EVP, Investor Relations, Paramount Global: Good afternoon, everyone, and thank you for joining our Q2 twenty twenty five earnings call. Before we begin, I would like to remind everyone that in addition to our earnings release, we have trending schedules containing supplemental information available on our website. In addition, certain statements made on this call are forward looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail in our filings with the SEC. Some of today’s financial remarks will focus on adjusted results.

Reconciliations of these non GAAP financial measures can be found in our earnings release or in our trending schedules, which contain supplemental information and in each case can be found in the Investor Relations section of our website. As we detailed in the eight ks filed last week, we expect the Paramount Skydance transaction to close on 08/07/2025. As a result, this will be our last earnings call with the company in its current configuration. Today, we will share highlights of the quarter, but we will not be taking questions. On this call, we have Sherry Redstone, Non Executive Chair of our Board of Directors Chris McCarthy, our co CEO on behalf of his fellow co CEOs and Andy Warren, our Interim CFO.

Now let me turn the call over to Shari.

Shari Redstone, Non-Executive Chair of Board of Directors, Paramount Global: Thank you, Jamie. Given this is the final earnings call under our current corporate structure, I wanted to take the opportunity to express my thanks to our shareholders for their investment in our business and to the others across the investment community who have followed us for many years. I believe I can take it on faith that many on this call understand the enormous importance of this business to my family and to me. Beginning nearly forty years ago, my father, Sumner Redstone, built Viacom and CBS by bringing together a group of the best assets in media, news, and entertainment. While people often debated whether content or distribution ruled the day, my father’s steadfast belief was that content was king.

Even against the backdrop of enormous change, that core business philosophy remains the reality for our business and industry. That is a reality that Skydance surely understands. I am confident that with their vision for the business and the technology and resources they can bring to bear, they can build on Paramount’s legacy and position it for long term success and value creation. I am proud that when the transaction closes, we will be turning over a healthy business with a strong foundation for success. One year ago, that was not a foregone against the backdrop of tough industry conditions in the linear business in a pending transaction.

The progress we have made is a testament to the talent, focus, and dedication of the people of Paramount, under the leadership of George Cheeks, Chris McCarthy, and Brian Robbins. George, Chris, and Brian took on a very challenging job. While continuing to lead in their core areas of responsibility, they worked together to develop new content and strategic plans for the company while also making difficult decisions to streamline the company’s cost structure and secure the stability and growth potential of the business. I will forever be grateful for their hard work, dedication and friendship. While Chris will go into more detail about the company’s financial results on this call, I would be remiss not to mention a few of the co CEOs’ accomplishments and those of the wonderful teams across our business.

I will start with streaming because it makes me so proud that while we only launched Paramount plus four years ago, we are already a top four global SVOD service, and we will be profitable in The US faster than many of our peers. What has driven this performance? Others might have more content. But Paramount plus has distinguished itself for delivering big, bold, breakthrough original scripted hits that consistently rank in the SVOD top 10, plus incredible sports, kids, and unscripted content from across the company. And as I am particularly proud, programming that informs and educates audiences about the issues we face as a society and around the world.

This is also the reason CBS has been the number one broadcast network for seventeen years in a row, due also to its range of entertainment, sports, and

Andy Warren, Interim CFO, Paramount Global: news

Shari Redstone, Non-Executive Chair of Board of Directors, Paramount Global: programming. And in cable, the company has delivered the number one scripted series, number one reality series, number one late night show, and number one kids show. As for Paramount Pictures, it has continued to expand its hit franchises, Sonic the Hedgehog, Mission Impossible, A Quiet Place, SpongeBob, Teenage Mutant Ninja Turtles, and more. Taken together, this has driven improved bottom line performance and strengthened free cash flow. In closing, it has truly been a privilege to work with George, Chris and Brian over the past year to achieve the goals that have positioned this company so well for the future.

And while it is never easy to step away, please know that it’s been an honor for my family and for me to serve as stewards of these assets over the past several decades. We will always be cheering on Paramount and the talented people who have made it what it is today. Thank you.

Chris McCarthy, Co-CEO, Paramount Global: Thank you, Sherri, and good afternoon, everyone. When George, Brian, and I became co CEOs, our goal was to transform Paramount into a streaming first company and today we are substantially better positioned to thrive in the streaming future. You only have to look to this quarter to see the shift where D2C revenue growth outpaced linear declines. This was powered by an exceptional performance at Paramount plus We delivered industry leading TV hits across both streaming and linear while at the same time this quarter breaking a record with the Mission Impossible franchise. At Paramount plus we made a content strategy choice to go against conventional wisdom of more originals is better.

Our strategy isn’t about the volume of originals, rather it’s about the volume of original hits. We closed 2024, our first year as co CEOs, and it was a transformative year. OIBDA grew 30% to $3,100,000,000 driven by a nearly $1,200,000,000 improvement in D2C profitability. Now this was powered by Paramount plus where our content strategy delivered. We led with the most top 10 SVOD originals behind only the market leader, which drove increased engagement, improved churn.

We added 10,000,000 new subscribers which solidified our place as a top four SVOD and resulting in revenue growth of 33%. Now since then we have not slowed down. In the 2025 we again scored with the most top 10 SVOD originals behind only the market leader. Paramount plus revenue continued to grow up 19% driven by strong subscription revenue growth of 22%. Watch time per subscriber increased 14% and churn improved another 100 basis points.

Over at CBS, we continued our leadership position as the most watched broadcast network in primetime for the seventeenth consecutive season. We have eight of the top 10 series, 14 of the top 20 series. That’s more programs in the top 10 and top 20 than all other networks combined. Paramount Pictures continue to drive revenue for the business, successfully monetizing the value of our IP in theaters and downstream. Over this past year, we added new installments of our valuable bank of franchises, including Sonic the Hedgehog, Smile, A Quiet Place, and Mission Impossible.

We also reshaped the organization to be leaner and more nimble, reducing redundancies, all with the goal to drive productivity. Over the past four quarters, we’ve implemented over 800,000,000 in annual run rate non content expense savings. Our progress is reflected in the results for the quarter. Total company revenue grew 1% year over year to $6,800,000,000 Most notably, D2C revenue growth outpaced linear declines. In fact, strong subscription growth at Paramount plus drove total company affiliate and subscription revenue growth, which accelerated to 5%.

D2C generated adjusted OIBDA of $157,000,000 an improvement of 6x versus a year ago. To put that in perspective, this year alone we’ve improved D2C profitability by $300,000,000 versus the comparable period a year ago. Now let’s get into some detail at D2C. Revenue growth accelerated to 15% driven again by Paramount plus where total revenue grew 23% year over year and records were set. For the third consecutive quarter, watch time per subscriber increased and was up 11% year over year and churn improved again by 70 basis points year over year, achieving a record low.

These results were powered by a strong content slate of original hits with Landmen, Yellowjackets, The Shy, and Mobland, our newest top 10 SVOD series, which ranked as the number one series globally and active subscriber households on Paramount plus this quarter. Looking ahead, we’re thrilled to welcome South Park to Paramount plus this month here in The United States. It has consistently been a top acquisition and engagement driver in international and we have every confidence it will do just as well for us here in The US. We have our biggest hits to come kicking off with Dexter Resurrection followed by the first NCIS franchise extension with Tony and Ziva and continues with the nonstop Taylor Sheridan slate of hits starting with Tulsa King in September, Mayor of Kingstown in October, followed by Landman in December and of course an all new Yellowstone franchise extension, the Dutton Ranch. Now turning to TV media, when we talk about transforming into a streaming first company, nothing says it better than the alignment with CBS and Paramount plus This season, streaming of CBS series on Paramount plus grew 42% over the last year, and year to date CBS content accounts for nearly half of all viewing on Paramount plus CBS has consistently ranked as the number one broadcast network in primetime, and moreover, CBS is also ranked number one in multi platform viewership.

Now turning to sports, live sports more valuable today than ever before across both platforms. This year’s Final Four was the most watched in eight years and CBS Sports Golf coverage in 2025 is up 13% year over year, its best performance in seven years. The power of this combined content is evident across distribution and advertising. In June, we signed a new deal with DIRECTV that includes a curated selection of Paramount’s most popular networks across entertainment, news, and sports in various direct TV genre packs. And we’re nearing the completion of our upfront where we see strong advertiser demand for sports and entertainment programming.

Turning to filmed entertainment, this quarter a record was achieved with The Final Reckoning, which was the biggest global opening in franchise history. When a new film hits theaters, we see an immediate lift in the library content on Paramount plus For example, following the release of Mission Impossible The Final Reckoning for the month, the Mission franchise library saw a 60% lift in daily active subscriber households on Paramount plus Now this is a good example of how franchise drive revenue across every part of our business. We are pleased with the results for the quarter, which represent our strong and continued progress in executing as a streaming first company. Now, let me turn it over to Andy to provide more detail on the financials.

Andy Warren, Interim CFO, Paramount Global: Thank you, Chris, and good afternoon, everyone. Let’s dive right into the second quarter numbers. Paramount generated total company revenue of $6,800,000,000 and adjusted OIBDA of $824,000,000 reflecting continued year over year improvement in our direct to consumer segment. Total improved $214,000,000 including approximately $70,000,000 in payments for restructuring and cost reduction initiatives. Now, let’s discuss our operating segment results, starting with direct to consumer.

Paramount plus finished the quarter with 77,700,000 subscribers, a year over year increase of 9,300,000 subscribers, but down 1,300,000 subs versus 1Q twenty five, primarily reflecting the anticipated expiration of an international distribution agreement, as well as the timing of Paramount plus Premier’s. Paramount plus ARPU growth accelerated in the second quarter to a positive 9% increase year over year. Importantly, the combination of year over year subscriber growth, churn reduction and ARPU improvement drove Paramount plus revenue to increase nearly $330,000,000 versus 2Q ’twenty four. In total, direct to consumer generated revenue of $2,200,000,000 growing 15% year over year despite a 4% decline in DTC advertising, which continues to be impacted by increased supply in the digital ad marketplace. Separately, DTC subscription revenue growth accelerated and was up a robust 22%.

Turning to our TV media segment, linear TV trends continue to pressure advertising and affiliate revenue. TV media revenue was $4,000,000,000 in the second quarter, with OIBDA of $863,000,000 TV media advertising revenue was down 4% year over year, as higher CPMs were more than offset by viewership declines. We are nearing completion of our 2026 upfront, which will remain overall volume consistent with last year, driven by increased sports and streaming sales. Streaming accounted for almost 30% of total upfront volume, while demand for our sports portfolio was very strong across the board and saw double digit growth. Our TV media affiliate revenue declined 7% versus the prior year, largely reflecting market subscriber trends.

However, and more importantly, the combination of our traditional and streaming businesses again yielded net positive growth, with total company affiliate and subscription revenue up 5% in the second quarter, a positive acceleration versus the first quarter of this year. Lastly, in the Filmed Entertainment segment, we generated second quarter revenue of $690,000,000 up 2% year over year. Adjusted OIBDA was a loss of $84,000,000 in the quarter, which compares to a loss of $54,000,000 in this year ago quarter. This year over year change in OIBDA primarily reflects lower profit from licensing. Regarding forward looking statements, as you can appreciate, with the Skydance transaction closing on August 7, it would be inappropriate for us to outline full year 2025 financial expectations for Paramount standalone results.

In summary, our first half results demonstrate that our global teams remain focused on operating execution as we prepare for the deal to close. Now, let’s turn the call back over to Chris for closing comments.

Chris McCarthy, Co-CEO, Paramount Global: As this will be our last earnings call, before we close the Skydance transaction, allow me to take a moment on behalf of my co CEOs, Brian and George, to thank the people responsible for our successful shift into a streaming first company. To our teams, our partners, the board, and to Sherry, thank you for your support and efforts. We talk a lot about hit TV series and blockbuster films. That doesn’t happen in our content teams without the support and hard work and efforts from every person in every department across the entire company. Against enormous headwinds and challenges, this team continued to be resilient and unwavering in your commitment to execute with excellence and more importantly to support each other with compassion.

It’s that combination that truly made the difference. You should be very proud of all of your efforts. They’ve helped to make Paramount substantially stronger today. We’d also like to thank the Redstone family for their stewardship of the company over the last forty years. Sumner Redstone was a visionary who predicted where the industry was going before anyone else.

Under Sherri’s leadership, Paramount has transitioned from a disconnected collection of TD assets into a streaming first company with a powerful portfolio of hit content and franchises. Now, the naysayers and against all the odds, Sherry, you did what you thought was right. You pushed us forward with the mission to combine these companies and just look at what we’ve achieved. While we’re the last to launch, only four years later, Paramount plus is a top four global SVOD service. Your vision has been realized.

And what made that possible was content being king, hit TV series and blockbuster films just as your father had predicted. We thank you, Sherri, for your vision to see where it was all going and your leadership of the company and on a personal level for your friendship to all of us. And to our board, thank you for your dedication and guidance. Throughout a very eventful year, we appreciate each and every one of you. Now looking ahead under David Ellison, the next chapter of Paramount is sure to be another historic one.

We’d like to thank David and the Skydance Redbird teams of Jeff Schell, Amy Gordon and Cindy Holland for their partnership throughout this transition. We are excited to see what you do and you have a great team here to help you. With that, thank you for joining us and have a good night.

Victoria, Conference Operator: That concludes today’s call. Thank you for your participation and enjoy the rest of your day.

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