Sphere Entertainment Co

For the period ended Mar 31, 2024. Filed May 10, 2024.

About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Mar 31, 2024 · Filed May 10, 2024

SPHR$121.40+1.1%Stored close · as of Nov 9, 2026

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Contents

Item 5. Other information

Capital expenditures	$17,502	$1,962	$19,464

	Three Months Ended
Sphere · MSG Networks · Total
Revenues	$626	$161,436		$162,062
Direct operating expenses	(4,414)	(89,251)		(93,665)
Selling, general and administrative expenses	(83,381)	(60,052)		(143,433)
Depreciation and amortization	(6,511)	(1,689)		(8,200)
Restructuring charges	(18,670)	—		(18,670)
Operating (loss) income	$(112,350)	$10,444		$(101,906)
Interest income			3,374
Other expense, net			(4,182)
Loss from operations before income taxes			$(102,714)
Reconciliation of operating (loss) income to adjusted operating (loss) income:
Operating (loss) income	$(112,350)	$10,444		$(101,906)
Add back:
Share-based compensation	8,466	639		9,105
Depreciation and amortization	6,511	1,689		8,200
Restructuring charges	18,670	—		18,670
Merger and acquisition related costs	1,532	45,513		47,045
Amortization for capitalized cloud computing arrangement costs	125	43		168
Adjusted operating (loss) income	$(77,046)	$58,328		$(18,718)
Other information:
Capital expenditures	$195,945	$1,818		$197,763

	Nine Months Ended
Sphere · MSG Networks · Total
Revenues	$345,942	$407,552		$753,494
Direct operating expenses	(137,437)	(260,868)		(398,305)
Selling, general and administrative expenses	(290,930)	(34,883)		(325,813)
Depreciation and amortization	(168,127)	(6,030)		(174,157)
Impairment and other losses, net	(115,738)	—		(115,738)
Restructuring charges	(9,564)	219		(9,345)
Operating (loss) income	$(375,854)	$105,990		$(269,864)
Interest income			17,958
Interest expense			(52,947)
Other income, net			37,810
Loss from operations before income taxes			$(267,043)
Reconciliation of operating (loss) income to adjusted operating (loss) income:
Operating (loss) income	$(375,854)	$105,990		$(269,864)
Add back:
Share-based compensation	28,177	5,346		33,523
Depreciation and amortization	168,127	6,030		174,157
Restructuring charges	9,564	(219)		9,345
Impairment and other losses, net	115,738	—		115,738
Merger and acquisition related costs, net of insurance recoveries	(2,086)	(6,069)		(8,155)
Amortization for capitalized cloud computing arrangement costs	—	66		66
Remeasurement of deferred compensation plan liabilities	264	—		264
Adjusted operating (loss) income	$(56,070)	$111,144		$55,074
Other information:
Capital expenditures	$244,963	$6,473		$251,436

	Nine Months Ended
Sphere · MSG Networks · Total
Revenues	$1,919	$442,813		$444,732
Direct operating expenses	(4,414)	(255,071)		(259,485)
Selling, general and administrative expenses	(235,331)	(107,148)		(342,479)
Depreciation and amortization	(16,775)	(4,944)		(21,719)
Other gains	3,000	—		3,000
Restructuring charges	(22,757)	(3,988)		(26,745)
Operating (loss) income	$(274,358)	$71,662		$(202,696)
Interest income			9,376
Other expense, net			(5,952)
Loss from operations before income taxes			$(199,272)
Reconciliation of operating (loss) income to adjusted operating (loss) income:
Operating (loss) income	$(274,358)	$71,662		$(202,696)
Add back:
Share-based compensation	31,308	5,642		36,950
Depreciation and amortization	16,775	4,944		21,719
Restructuring charges	22,757	3,988		26,745
Other gains	(3,000)	—		(3,000)
Merger and acquisition related costs	4,223	52,958		57,181
Amortization for capitalized cloud computing arrangement costs	285	131		416
Adjusted operating (loss) income	$(202,010)	$139,325		$(62,685)
Other information:
Capital expenditures	$733,198	$5,710		$738,908

Concentration of Risk

Accounts receivable, net in the accompanying condensed consolidated balance sheets as of March 31, 2024 and June 30, 2023 include amounts due from the following individual customers, which accounted for the noted percentages of the gross balance:

	As of
	March 31,2024	June 30,2023
Customer A	13%	23%
Customer B	13%	22%
Customer C	10%	17%

Revenues in the accompanying condensed consolidated statements of operations for the three and nine months ended March 31, 2024 and 2023 include amounts from the following individual customers:

Three Months Ended · Nine Months Ended
	March 31,		March 31,
	2024	2023	2024	2023
Customer 1	11%	23%	14%	26%
Customer 2	11%	21%	14%	25%
Customer 3	8%	19%	11%	21%

Note 17. Additional Financial Information

The following table provides a summary of the amounts recorded as cash, cash equivalents and restricted cash.

	As of
	March 31,2024	June 30,2023
Cash and cash equivalents	$680,575	$131,965
Restricted cash	13,371	297,149
Total cash, cash equivalents and restricted cash	$693,946	$429,114

The Company’s cash, cash equivalents, and restricted cash are classified within Level I of the fair value hierarchy as it is valued using observable inputs that reflect quoted prices for identical assets in active markets. The Company’s restricted cash includes cash deposited in escrow accounts. The Company has deposited cash in interest-bearing escrow accounts related to credit support, debt facilities, and collateral to its workers compensation and general liability insurance obligations.

Prepaid expenses and other current assets consisted of the following:

	As of
	March 31,2024	June 30,2023
Prepaid expenses	$12,614	$22,616
Note and other receivables	8,589	21,453
Inventory	1,684	—
Current deferred production content costs	1,906	6,524
Other	5,423	5,492
Total prepaid expenses and other current assets	$30,216	$56,085

Accounts payable, accrued and other current liabilities consisted of the following:

	As of
	March 31,2024	June 30,2023
Accounts payable	$73,670	$39,654
Accrued payroll and employee related liabilities	71,584	75,579
Cash due to promoters	57,360	73,611
Capital expenditure accruals	155,352	236,593
Accrued legal fees	23,442	53,857
Other accrued expenses	41,705	36,437
Total accounts payable, accrued and other current liabilities	$423,113	$515,731

Other (expense) income, net includes the following:

Three Months Ended · Nine Months Ended
	March 31,		March 31,
	2024	2023	2024	2023
Gain on litigation settlement	$—	$—	$62,647	$—
Realized loss on equity method investments	—	—	(19,027)	—
Other	(3,256)	(4,182)	(5,810)	(5,952)
Total other (expense) income, net	$(3,256)	$(4,182)	$37,810	$(5,952)

Income Taxes

During the nine months ended March 31, 2024 and 2023, the Company made income tax payments, net of refunds, of $18,859 and $5,372, respectively.

Note 18. Subsequent Events

On April 25, 2024, a subsidiary of the Company entered into a share purchase and transfer agreement to acquire the remaining equity interest in Holoplot GmbH not previously owned by the Company. Following the acquisition on April 25, 2024, Holoplot is now a consolidated subsidiary of the Company. The Company expects to complete the related purchase price allocation and the corresponding recognition of assets acquired and liabilities assumed during the fourth quarter of Fiscal Year 2024.

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