Lionsgate heads into its fiscal second-quarter report with a credibility question that its last quarter both answered and raised. A roughly $1 billion worldwide run for Michael powered the best first-quarter film profit in company history and pulled leverage down about two turns in a single quarter. The stock has still slipped since then. The September-quarter numbers, due after the close on November 5, will help show whether that surge was the opening act of a sustained fiscal 2027 growth story or a blockbuster spike now fading.
The Street expects a loss of 9 cents a share on revenue of about $628.6 million. Against the year-ago quarter, that is a big improvement: revenue up roughly 32% and the loss narrowing by about two-thirds from 27 cents. Sequentially, the picture is softer. Revenue would fall from $776.6 million last quarter, and the loss would widen from 5 cents. That is reasonable as Michael's theatrical tail shortens. A wider loss could also reflect spending ahead of the studio's next tentpole, Hunger Games: Sunrise on the Reaping. Management has called it the best-testing film in the studio's history, and it lands in the fiscal third quarter. No updated formal guidance accompanies the report, so the debate centers on whether the year-over-year trajectory holds.
The most telling number may be trailing-12-month library revenue. It slipped to $987 million last quarter, breaking a run of record quarters above $1 billion. Management characterized that as roughly in line. A return toward the $1 billion mark would support that view. A second step down would suggest the library, Lionsgate's steadiest cash engine, has plateaued just as the buyer environment is clouded by the delayed Paramount-Warner combination. The new Netflix licensing deal for the Power franchise only begins in November. It should not show up in these results, though any color on its revenue cadence would be useful.
Television is the other swing factor. The segment earned just $10 million last quarter on episodic delivery timing, and management has repeatedly said TV profit is weighted to the back half of the year. A modest rebound this quarter would be encouraging. Continued softness would only increase pressure on the March half to deliver, and that concentration risk has become a recurring theme. Backlog, which stood at $1.5 billion and up 21% year over year, should hold steady if the 13-for-13 renewal pace and new pickups like Dinks and Trauma are translating into contracted work.
The balance sheet deserves equal attention. Hitting the mid-4x leverage target early was the clearest win of the prior call. The finance chief now points to 3 to 3.5 times in fiscal 2028. Leverage holding near 4.3 times in a seasonally lighter quarter would make that path look credible. Any drift higher, especially with a potential 3Arts put that could add about half a turn in the fiscal fourth quarter, would undercut the deleveraging story.
Sentiment has cooled. Readings are more bearish than before the last report, and shares have dropped about 8.6% while the S&P 500 was essentially flat. The stock, at $12.19, sits above its 200-day average and in the upper half of its post-earnings range of $10.46 to $13.40. That range is well below the prior quarter's $12.73 to $16.70 band. In short, the market has marked down a story that management told with unusual confidence.
That gap is the real setup. If library revenue stabilizes, leverage holds and backlog stays firm, the September quarter can serve as a bridge to a Hunger Games-driven holiday period, and the recent selloff may look overdone. If instead the library keeps eroding and the balance sheet stalls, the past quarter's optimism will start to look tied to a single film.