Paramount Skydance Corporation Class B Common Stock (PSKY) Income Statement

Revenue growth has been erratic, with 2025Q4 showing a 6.1% jump to $8.5B, likely driven by theatrical releases, but subsequent quarters reverted to near-zero growth. The flat trajectory indicates that the shift to DTC is not yet offsetting linear declines. Investors should monitor whether the expanded 2026 content slate can convert into sustained revenue acceleration.

The 2026Q2 gross margin of 6.9% is a dramatic outlier compared to the 30-37% range seen in prior quarters, suggesting a significant content write-down or revenue mix shift. This volatility underscores the difficulty in assessing underlying profitability during the streaming transition. The negative operating margin of -18.0% in 2025Q4 further highlights the pressure from high fixed costs and merger-related charges.

Despite revenue stability, operating income has been highly volatile, with 2025Q4's massive loss likely driven by impairment charges. SG&A has not scaled down proportionally, suggesting limited cost flexibility. The negative operating leverage implies that any revenue decline directly pressures profitability, making cost synergy realization from the Skydance merger critical.

The spike in COGS in 2026Q2 is alarming, as it suggests either a major content write-off or a shift to lower-margin revenue streams. SG&A has been relatively stable, but the lack of reduction despite revenue stagnation indicates inefficiency. The company's high fixed-cost structure, including sports rights, makes cost control essential for margin recovery.