Angel Studios, Inc. 2026 Q2 Earnings Call

Hello, everyone. Welcome to Angel's second quarter 2026 earnings call. Joining me are Angel's co-founder and CEO, Neal Harmon, and Angel's CFO, Scott Klossner. Before we begin, I would like to remind everyone that certain statements made on today's call, including statements regarding future financial performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Information regarding these risks and uncertainties is included in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q.

These forward-looking statements represent our outlook only as of the date of this call. We undertake no obligation to update any forward-looking statements, except as required by applicable law. During this call, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings press release. These cautionary statements apply to all forward-looking statements wherever they appear in this call, including in the question and answer session. Our earnings press release is available on our investor relations website at angx.com, where we also encourage you to sign up for our email alerts. Neal and Scott will take approximately 20 minutes for their opening remarks before we turn the call over to questions. Thank you all for joining us. Now I'll pass the call over to Neal.

Thank you, Luke. Good morning, everyone, and thank you for joining us. When we started in 2026, we set out to accomplish two things. First, we wanted to continue growing the Guild, our community of paying members. Second, we wanted to show that as Angel grows, our business becomes more efficient and more valuable. This quarter, we've made meaningful progress on both. Guild growth continues to exceed analyst expectations. Our operating leverage improved, and we're reaffirming our commitment to limit our full-year adjusted EBITDA loss to no more than $25 million. When investors look at Angel, they usually ask four questions: What are you building? Why is it different? Is it working? How big can it become? I'd like to answer those today. First, what are we building? Investors should think about Angel differently.

We're not trying to build another streaming service, there's so many of those, or another studio. We're building a first-of-its-kind, audience-driven entertainment platform. Everything begins with the Angel Guild. The Guild helps us discover stories. It helps us to understand what audiences want. It helps us build awareness for every single title release. It helps filmmakers improve their work before release. Increasingly, it helps us decide where to invest. Every major decision at Angel starts with one simple question: Does it strengthen the Angel Guild community? Because we've proved something that's become fundamental to how we think about Angel. Every new Guild member makes Angel better. Better for audiences, better for filmmakers, and ultimately, better for investors. That's the company we're building together. Now, why is it different from the rest of the industry?

Traditional entertainment companies start with a lot of capital, a lot more than we've got, and they invest billions making content, and they spend billions more trying to find an audience for what they made. We start with the audience. Our community tells us which stories matter. It helps us improve the stories we choose to distribute. It builds awareness before release. It validates demand before we commit capital. Traditional studios don't have a revenue problem. They have a cost problem. We use audiences to decide where to invest capital and do it far more efficiently. That's a different way to build an entertainment company, one that's aligned with filmmakers. It's more capital efficient and increasingly difficult to replicate as our community grows. The next question that investors ask is: Is this working?

We very much believe the answer is yes, and this quarter gave us more evidence than ever before. In three years, we've grown to more than 2.85 million paying Guild members. In Q2, Guild sales and marketing was reduced by over 26% over Q2 2025, from 71.6% of Guild revenue to 52.8% of Guild revenue, even as we added almost 400,000 Guild members. That's exactly the type of operating leverage we hoped this model would create. What's encouraging is that we're seeing momentum across nearly every part of the business. Take theatrical. People often ask how theatrical fits into Angel. We actually think they're asking the wrong question. We don't think of theatrical as a separate business. We think of it as part of the engine that strengthens the entire platform. "Young Washington" serves as a great example. It delivered one of the strongest theatrical openings in Angel's history.

What was even more important and more exciting for us is what happened around the film. It brought new audiences into the Guild with new talent. It will strengthen our existing streaming library. It has expanded awareness of Angel. It attracted new filmmakers to the Angel platform, and it demonstrated how our community can help build momentum long before opening weekend. Guild members, I being one of them, we're proud to be part of the release of this great film on the 250th anniversary of the United States of America. That's exactly how we designed the model to work. Every successful release grows the Guild. A larger Guild attracts better filmmakers and better talent. Better filmmakers tell better stories, especially with early feedback from the Angel Guild, and better stories attract more Guild members. That's what we call the Angel Flywheel. We're excited about what's ahead.

Six of our 10 planned theatrical releases are still scheduled for the remaining half of this year. These are in-person, in real-life experiences that build our Guild community and that build the Angel brand. We're also seeing momentum in technology. Each team member across Angel now uses AI tools in their daily work. Over the last several quarters, we've shared examples of how AI has helped us move faster, release more titles, and improved productivity across the company. I actually think the bigger story here is what AI will do for the entire entertainment industry, and it's really exciting. Every week, we meet with filmmakers using AI to dramatically reduce both the cost and time required to produce great films. As an example, Wonder Project, the company behind "Young Washington," used AI to increase the production quality for theaters and to reduce the cost of production.

The Angel Guild cares about quality, they care about the values in the story, not whether it was produced with practical or AI effects. However, we do believe AI will significantly increase the amount of film and television being created over the next decade, if this is true, something very interesting happens. As the supply of films grows exponentially, curation becomes even more valuable. What do I watch with all the titles available? That's exactly what our Guild does. They curate, it's curation audiences trust because it represents them. Our release cadence is accelerating as well. July was the biggest release month in Angel's history, so far this year, we've added 115 films, 31 comedy specials, and 340 television episodes, including 18 new series. More than halfway toward our goal of 750 total releases in 2026, that's on top of doubling our library last year.

We're also becoming more than a destination for Angel Originals. We're becoming a destination for a beautiful, values-driven library of great stories. Industry data shows that nearly 90% of viewing happens on old catalog titles. People love discovering something new, they also love returning to the stories they already know. That's why we've partnered with studios large and small to bring curated catalog titles onto Angel. Those partnerships make the platform more valuable for Guild members while also improving the economics of the business. Supporting these partners actually required us to build enterprise-grade digital rights management that is high-grade anti-piracy security for the movies. We were told by a major studio that to upgrade to that level would take over a year. With our AI tools, our engineering team delivered it in under six weeks. That's another example of how Angel is operating at scale.

We're also making Angel available where audiences want to watch. During the quarter, we launched on Comcast X1, Xfinity Flex, Xumo, and LG, significantly expanding our reach on improved economic terms. Finally, our filmmaker ecosystem continues to strengthen. Filmmakers have now earned nearly $300 million through Angel. As our community grows, the value of building with Angel grows, too. I actually remember when, many years into their story, YouTube announced a few creators getting paid over $100,000 in a single year, that was a huge deal. Big news in the industry. Look where Angel has come in so little time. Filmmakers have earned $290 million. When we step back and look across the business, we don't see just individual wins. We see multiple parts of the Angel platform reinforcing one another. The royalties, the talent, the filmmakers, the Guild. Finally, how big can this all become?

Well, in the common baseball parlance, we believe we're still in the early innings. Today, as we stated in our earnings release, more than 90% of households subscribe to at least one streaming service. The average household in America pays for four streaming services. That's 117 million households, which is a huge domestic market. Streaming isn't a winner-take-all business. Consumers already choose multiple streamers because each serves a different purpose. At Angel, we're not trying to replace or replicate major streaming platforms, Netflix, Disney, or Prime Video. Streamers primarily focus on persuading audiences to consume what a few gatekeepers decided to make. At Angel, millions of Guild members help filmmakers know what they would like to see made with their values, votes, and their wallets. Guild members are part of a community with purpose, belonging, and impact. Again, 117 million households. When we grow into the international market, the opportunity grows exponentially.

That is such a huge opportunity. As we look into the second half of the year, our priorities are clear. First, we will continue to grow the Guild because it is the foundation of everything we do, our Guild community. Second, we will continue demonstrating operating leverage as we scale, showing that growth and improved economics can go hand-in-hand. Third, we will continue to build Angel in a disciplined, cash, and capital-efficient way as we execute our long-term strategy. These priorities position us well, not only for the second half of this year, but for many years ahead. Thank you. Now I will turn it over to Scott.

Thanks, Neal. Welcome everyone. Angel operates a unique and straightforward business model. Q2 saw that model continue to expose itself in building and sustaining for future profitability. Every facet of our business is directed toward growing the Angel Guild, our paying members. With each passing month, our results continue to demonstrate that the Guild's total addressable market is enormous. My job is, in part, to balance cash, adjusted EBITDA, and growth as we invest in sales and marketing to bring ever more paying members into our community. First, let me start with our second quarter results for 2026. Total revenue was $111 million in the second quarter of 2026, compared to $88 million in the second quarter of 2025, an increase of 28%.