Paramount's Streaming Push Boosts Q2 Earnings, Analyst Sees More Growth Ahead

Paramount Global's Q2 earnings beat analyst estimates, with a $0.46 per share profit and $6.849 billion in sales, up 1% YoY. The company's direct-to-consumer segment saw a 14.9% YoY increase in revenue, driven by growth in Paramount+ subscribers and recent price increases. Analyst Michael Morris maintained a Buy rating and $14 price target, citing the company's strong content portfolio and ongoing pivot from linear TV to streaming.

Paramount Global (PARA) reported its earnings for the second quarter of 2025, revealing a notable earnings per share (EPS) beat but a slight revenue miss. The company posted an EPS of $0.46, significantly surpassing the forecasted $0.35, marking a 31.43% surprise. Revenue came in at $6.85 billion, just under the expected $6.87 billion. Despite the EPS success, the company’s stock fell by 9.77% in aftermarket trading, closing at $12 from a previous $13.3. According to InvestingPro analysis, the company maintains a "FAIR" overall financial health score, and current valuations suggest the stock may be undervalued relative to its Fair Value [1].

Key Takeaways

- Paramount Global’s EPS exceeded expectations by 31.43%.
- Revenue was slightly below forecast, with a -0.29% surprise.
- The stock dropped 9.77% in aftermarket trading.
- Direct-to-Consumer revenue grew 15%.
- Paramount+ added 10 million new subscribers.

Company Performance

Paramount Global demonstrated strong profitability in Q2 2025, with a significant improvement in EPS, driven by operational efficiencies and growth in its Direct-to-Consumer segment. The company maintains healthy liquidity with a current ratio of 1.29, indicating sufficient assets to cover short-term obligations. While the slight revenue miss and challenges in the digital advertising market may have contributed to investor concerns, the company’s position as a top global streaming service remains robust, with Paramount+ showing substantial subscriber growth. The company has also maintained its dividend payments for 20 consecutive years, demonstrating long-term financial stability [1].

Financial Highlights

- Revenue: $6.85 billion (1% YoY growth)
- Earnings per share: $0.46 (31.43% above forecast)
- Adjusted OIBDA: $824 million
- Direct-to-Consumer revenue: $2.2 billion (15% growth YoY)

Market Reaction

Following the earnings report, Paramount Global’s stock fell 9.77% in aftermarket trading, closing at $12. This decline may reflect investor concerns over the revenue miss and challenges in the digital advertising market, despite the strong EPS performance. InvestingPro data shows analyst price targets ranging from $8.50 to $20, with a consensus recommendation reflecting a cautious outlook. The stock has shown relatively low price volatility historically, with a beta of 1.21 [1].

Outlook & Guidance

Paramount Global’s future guidance remains cautious due to an upcoming transaction, with no full-year financial expectations provided. The company continues to focus on its streaming-first strategy and content investment, with upcoming shows and franchise extensions expected to drive future growth. Executive Commentary Shari Redstone, Non-Executive Chair, emphasized the importance of content, stating, "Content was king." Chris McCarthy, Co-CEO, highlighted the company’s strategic focus, saying, "Our strategy isn’t about the volume of originals, rather it’s about the volume of original hits." McCarthy also expressed confidence in the company’s streaming future: "We are substantially better positioned to thrive in the streaming future" [1].

Risks and Challenges

- Revenue miss raises concerns about sales performance.
- Digital advertising market faces increased supply challenges.
- No full-year financial expectations due to the Skydance transaction.
- Potential market saturation in streaming services.
- Broader macroeconomic pressures could impact consumer spending.

Q&A

The earnings call did not include a Q&A session, leaving some analyst questions unanswered, which may have contributed to the market’s cautious response [1].

References

[1] https://za.investing.com/news/transcripts/earnings-call-transcript-paramount-global-q2-2025-sees-eps-beat-stock-drops-93CH-3815187