STRZ Q2 Earnings Miss Estimates on Higher Costs, Revenues Beat

Revenues of $307.9 million declined 3.7% year over year but topped the consensus mark of $306 million by 0.68%. The top-line decline reflected continued pressure in linear and other revenues.

STRZ’s Q2 Revenue Breakdown

OTT revenues reached $221.3 million (71.9% of total revenues), up 0.1% from $221.1 million in the year-ago quarter, reflecting positive year-over-year OTT revenue growth and strong audience engagement during the period.

Linear and other revenues fell 12.2% year over year to $86.6 million from $98.6 million. The decline more than offset the modest improvement in OTT revenues and drove the overall contraction in the top line.

Starz’s Cost Base Weighs on Results

In the second quarter, total operating expenses rose 39.5% year over year to $483.4 million. Restructuring and other expenses surged to $151.2 million from $6.4 million, largely reflecting $147.2 million of contract termination fees related to certain live-action films under a post-pay-one output licensing agreement.

Advertising and marketing expenses increased 10.9% year over year to $70.3 million, while general and administrative expenses rose 37.5% to $40 million. Programming amortization, however, declined to $114.1 million from $162.5 million.

STRZ’s Adjusted OIBDA Shows Improvement

In the reported quarter, Adjusted OIBDA came in at $59.9 million, up 79.3% from $33.4 million in the year-ago quarter and above the $58 million reported in the first quarter of 2026.

On a trailing 12-month basis, adjusted OIBDA totaled $195.2 million, translating into an adjusted OIBDA leverage ratio of 2.9x at quarter-end.

STRZ’s Q2 Balance Sheet & Cash Flow

As of June 30, 2026, cash and cash equivalents were $59.6 million, down from $102.1 million as of March 31, 2026. Total debt was $625.1 million and net debt stood at $565.5 million.

The adjusted OIBDA leverage ratio was 2.9x at quarter-end, improving from 3.2x a year earlier and 3.1x at the end of March. The ratio is calculated using net corporate debt and trailing 12-month adjusted OIBDA. The company’s $150 million revolving credit facility remained fully undrawn.

Net cash used in operating activities was $28.2 million in the second quarter of 2026. Equity-free cash flow was negative $33.4 million, while unlevered free cash flow was negative $14.7 million.

Starz Raises Key 2026 Targets

For 2026, management raised its adjusted OIBDA growth outlook to mid-single digits from low-single digits. The company also lifted its unlevered free cash flow expectation to the mid-to-upper end of its previously stated $80-$120 million range.

STRZ reiterated its expectations for positive year-over-year OTT revenue growth and an adjusted OIBDA leverage ratio of roughly 2.7x exiting 2026. Management also maintained its outlook for a 20% adjusted OIBDA margin in the second half of 2027.

STRZ’s Zacks Rank & Stocks to Consider

Currently, Starz carries a Zacks Rank #3 (Hold).

Kontoor Brands KTB, Newsmax Inc. NMAX and Viking Holdings VIK are some better-ranked stocks that investors can consider in the broader Consumer Discretionary sector.

Kontoor Brands, Newsmax and Viking Holdings carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kontoor Brands is slated to announce second-quarter 2026 results on Aug. 12. Meanwhile, Newsmax will report on Aug. 13, and Viking Holdings is scheduled to release results on Aug. 19.

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