Paramount+ Adds 3.7M Subs In Q2, Overall D2C Revenue Up 56%

Despite the massive box-office hit “Top Gun: Maverick” and significant gains in direct-to-consumer revenues, Paramount sustained operating-profit and earnings-per-share losses in the second quarter, as television advertising and affiliate revenue stalled.

However, the results topped analysts' expectations, pushing Paramount's stock up about 2% in premarket trading.

Paramount+ bucked the recent trend of subscription losses at major streamers, adding 3.7 million net subscribers in the second quarter (after the removal of 1.2 million Russian subscribers), for a total of 43.3 million.

Paramount touted Antenna data showing that Paramount+ had the most sign-ups, gross and net subscriber additions among premium U.S. streaming services in Q2.

Companywide, total direct-to-consumer streaming subscribers rose by 1.7 million, to 63.7 million, driven entirely by Paramount+.



Paid subscribers for Paramount’s other D2C services, including Showtime, BET+ and Noggin, declined by 2.4 million.

Free, ad-supported streamer Pluto TV gained 2.1 million monthly active users (MAUs) in the quarter, to total 69.6 million. The platform’s total global viewing hours grew by double digits year-over-year for the second consecutive quarter, according to Paramount.

Overall Paramount+ revenue rose 120%, to $672 million.

Total Q2 D2C revenue rose 56% to $1.19 billion, driven by a 74% gain in subscription revenue and a 25% gain in ad revenue.

D2C subscription revenue totaled $830 million, primarily reflecting the Paramount+ sub gain.

D2C advertising revenue totaled $363 million. Gains were driven by increased impressions at both Paramount+ and Pluto TV, according to Paramount.

However, the D2C segment’s operating losses leapt by 211%, to $445 million in the period, as a result of spending on content and international expansion.

Earlier this year, Paramount upped its global subscriber goal for 2024 to 100 million, from a previous target of 65 million to 75 million. The company also upped its planned streaming content investment by 2024 from $4 billion to $6 billion.

Despite a companywide revenue gain of 19%, to $7.8 billion — driven by a 126% jump in revenue in Paramount’s filmed entertainment business as a result of more than $1 billion in box-office for “Top Gun: Maverick” — Paramount’s Q2 operating profit dropped 33%, to $819 million (from $1.23 billion in Q2 2021).

The overall results reflected Paramount’s TV business, which suffered a 6% decline in advertising revenue, to $2.2 billion, and a 3% decline in affiliate and subscription revenue, to $2.1 billion. Total TV revenue rose just 1%, to $5.3 billion, and operating profit declined 8%, to $1.4 billion.

The company’s diluted earnings per share declined 65%, to $0.53, from $1.50 in the year-ago quarter.

In late July, MoffettNathanson downgraded Paramount to "underperform," saying that "despite growing momentum at Paramount+, the growing risk of lower advertising puts additional pressure on the company’s ability to grow earnings before interest, taxes, depreciation and amortization (EBITDA) and free cash flow (FCF) to match prior levels."

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