Q3 2020 Dolphin Entertainment Inc Earnings Call
And gentlemen, thank you for holding on conference will begin momentarily once again, thank you for holding on.
The conference will begin momentarily.
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Greetings and welcome to Dolphin Entertainment third quarter 2020 conference call at this time all participants on this call moving.
Let me answer session will follow the formal presentation depending.
If anyone should require operating system for the conference. Please press star zero and the telephone keypad. As a reminder, this conference is being recorded I would now like to turn the conference on what sort of to Jim's commentary with Hayden IR. Please proceed.
Thank you and once again welcome to Dolphin Entertainment third quarter 2020 earnings call.
Yeah on the call are below Dallas, Chief Executive Officer, and there for integrating Chief Financial Officer I'd.
I'd like to begin the call by reading the Safe Harbor statement.
Good day and is made pursuant to the safe Harbor for forward looking statements as described in the private Securities Litigation Reform Act the vitamin D.
All statements made on this call with the exception for historical price maybe considered forward looking statements within the meaning of section 27 eight of the Securities Act of 1933.
Section 21 E series exchange active 1930 for.
The company believes the expectations and assumptions reflected in these forward looking statements are reasonable they flow through such expectations will prove to be correct.
Actual results may differ materially from those expressed or implied in the forward looking statements due to various risks and uncertainties per.
For a discussion on such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the for book statements. Please see risk factors detailed in the Companys annual report on form 10-K contained in subsequent filed quarterly reports on form 10-Q as well as in other reports that the company files from time to time Securities Exchange Commission.
Any forward looking statements included in this earnings call are made only as of the date on this call. We do not undertake any obligation to update or supplement any forward looking statement to reflect subsequent knowledge for events or circumstances.
Now I'd like to turn the call over to blow down Chief Executive Officer of Dolphin interesting Bill. Please proceed.
Thanks, James and thanks, everyone for joining today.
As usual I'm going to start by highlighting some top level financial results and then per body. Some operational updates before turning it over to mirror to dive deeper into our financial results and of course, we'll take questions.
Okay.
So let's start with the financial results well, yeah, obviously on line at that they were better than expected.
Revenue grew 23% for Q2.
For just under 5.2 million to just under 6.4 billion. This.
This also represents a 7% year over year increase.
More importantly, operating results show a loss of $493185, which included non cash expenses and depreciation and amortization for $514097. This.
This represents an improvement by over $900000.
From Q3 2019.
Lastly, our net loss was less than $150000, which obviously also included the non cash depreciation and amortization expense was up just over 500000 I just mentioned among.
Among other non cash items merger will share and for more detailed analysis on.
All three metrics revenues operating income and net income exceeded both our own internal and analyst expectations.
Simply put we are blessed to have the best PR firms in the entertainment industry and our Super group and they are more than holding their own during the past.
And all of this while new movie releases are available on bidders and the restaurant industry has faced severe challenges.
At the end of the day.
Quality matters.
It really really does and we've got three world class PR firms. We believe we're the only company in America, let alone the only company on NASDAQ that has more than one PR for most of the top 50, most powerful PR firms in the United States.
And in tough times, it's great to have people that are the best at what they do playing on your team.
Our numbers reflect that more than anything else.
And speaking of quality the other headlong stop to our third quarter was the acquisition of leading Influencer marketing for the social.
As noted on our Q2 earnings call, bringing social media Influencer marketing into our Super Group was the single biggest goal for Dolphin Entertainment this year.
We wanted to be able to design that integrates social media influence for campaigns for clients and combined them with our world class PR capabilities.
Simply put now would be social we can sing promotional calendars online and offline in a nutshell, that's the basic idea so.
So be social is a highly highly strategic acquisition for us and day like all for companies before them for our first choice of companies from their vertical.
We also are extremely good at what they do and leap Needless to say would be social on our entertainment marketing supergroup, we've already begun cross selling their services.
They were an immediate plug and play across all three of our PR agencies.
Let's say that a publicist, we're happy to add these capabilities would be a bass for understatement.
Let's just leave it that we're very enthusiastic about this acquisition. That's precisely the next vertical we wanted to add for Super group and the staffing capabilities of these social or everything we hoped they would be.
With all that said I'll segue to operational updates at each other or five subsidiaries in order of acquisition.
So let's start with 40 to us.
Well, what can I say the words, just keep rolling in validating 42 west as the cornerstone we knew they would be really uplisting to NASDAQ three years ago.
Here's the latest last month Forbes created an inaugural regimen of America's Best PR firms, we did not submit ourselves for consideration because we didn't even know that this was going on.
To develop the list for surveyed more than 12700 experts and 20500 customers who nominated for more than 5000 PR firms nationwide across all industries.
5000 for us.
Participants for then on indicate how likely they were to nominate a particular agency on scale of zero very unlikely to Ted very likely.
The words then there on the list of the top 200 for recognition with either for stars or five stars for.
40 to US is one of only 180 PR firms to receive five stars, placing in the top 100 per cent of all PR firms in the United States.
I'm very proud of that not at all surprised that 42 other consistently recognized as one of the best PR firms in the country, Amanda Lunberg and the entire team.
Sales of culture of excellence in everything they do they.
They are a trusted strategic partner for their clients and these unprecedented times and have worked very hard and deserved their reputation as the very best in the entertainment business.
It would be hard for anyone to argue against over 20000 customers surveyed across the country.
Now do you think that's worthy of a might drop hold on that gets better one month earlier 40 to us on one of the best nights in company history.
On the energy Ministry. This was a really big deal 42, EPS was involved in various capacities with 33 programs and individuals that earned a total of a 145 nominations and 143 Emmy Awards overall.
During the M. news broadcasts 42 other clients so called more than half of the awards for his.
More than half.
Among the highlights was pop see these shoots Creek, which for me to US has been represents just one do you see the series Winter Nine Emmy Awards over all based on history.
As the first comedy series win all sub in major awards on the category in the same year.
42 has also served as a consultant for each other you. What's led all networks by winning 30 Emmy Awards. These fields winners included Watchman, which one outstanding limited series on was the most honored program of the year with 11 wells.
Session. It's one outstanding drama series on one Southern awards itself.
And bad Education, which won the award for outstanding television moving.
Also 42 West Kras Division represented the Amazon So marvelous Mrs. Nasal was received for creative Arts.
So to repeat 42, s. campaigns with clients one.
Outstanding drama series Outstanding comedy series.
All seven comedy awards for the first time in EMEA history.
One of the outstanding limited series and the outstanding television moving.
Okay now we can do the backdrop, but we.
We certainly believe that this show and establishes 40 to us it's a very technical intelligent Pee on.
Just as they have been for film PR for more than a decade.
Also it now means that our awards season extends for six months or more of every year, given 42 was leading position with Oscar nominations for multiple years running now.
Switching to the door.
The restaurant business continues to be extremely challenged any hopes we had have a need for were turned for this industry, but in the year have been dashed obviously, though recent positive news of possible vaccines will be very welcome as they will for movie theater turns for 42.
On the awards for CONMED.
On the net traveler 2020 readers choice awards recognize amazing 11 on the doors hotel clients in the hospitality portfolio.
These awards are important because they are the longest running the most prestigious recognition of excellence on the travel industry.
This year more than 715000 Communist traveler readers submitted responses reading their travel experiences across the globe to determine the winners.
Having 11 hotels flies when go lives for the door also at the very cynical love what they do.
For those who are curious this year's lineup of winners among the door branded hotel clients includes.
The family Coca Cola highways.
Ready hotels.
The Polish or train and New Orleans, which is James Carbonara favorite hotel.
Destroyed hotels and resorts and Virgin hotels.
Also for consumer products Division for the door continues to do very well for us continuing to steadily increase revenues for Q2.
And now we are happy to report that hotels are on their way back.
As for viewpoint.
In line with our goal to broaden their client base. They have launched a quarterly earnings report video service.
Just before Q3 reporting and ahead of major fall and winter virtual Investor day us, including the virtual CES conference and the virtual JP Morgan Healthcare conference.
Basically viewpoint is now offering the reward when full service live action and animated video capabilities two publicly traded companies.
Looking to add a dynamic visual component to their quarterly earnings presentation.
And pay Pal is their first line.
I Love this offering I really really love it because whether you're a mega cap for micro cap.
For this offering allows you to speak directly to your stakeholders and control your own narrative. These videos are short and digestible. They make the most complex of subjects easy to understand and they are customized for each company most.
Most importantly, they can be used in so many different ways.
Obviously, they are perfect for every social media for you. The company uses that goes without saying same with every press release, just put the link at the bottom of the boilerplate.
And in every presentation.
But the real value comes on the fact that no one knows a comfort story better than the company itself.
Viewpoints, new offering allows Ceos to tell their company's story on the most compelling way possible.
Rubio.
For this reason on initial response to this offering has been extremely promising well.
Well certainly provide updates on this product when we speak again with our times debt.
Turning to short fire media they've been busy on June three promoting new outlets and music artists, including Bruce Springsteen accuse anybody had heard about the bosses new album.
Is there anybody in the world is in here about that album, that's awesome, if you haven't heard yet.
Cargo price Elvis Costello die in the war on Kylie Minogue, among dozens of other so.
So as you can see the promotion of music on mine has not slowed down.
That is allows for fire to come very close to pre pandemic revenues.
Even with the temporary loss of the lives of entering business, Maryland, Liberty and her team have done a really great job and we're really proud to have them in the supergroup.
Finally for be social as I said before we have been busy integrating their influencer marketing capabilities into the campaign offerings for each of our PR for us.
Also on their core business. They are about to enter a relatively busy time of year with holiday season.
As you can imagine brands use influencer marketing to drive sales during this all importance on for the year and this year, we'll certainly be no different.
We are very very happy with this acquisition.
And we've only just touched the tip of the iceberg of what we plan to do together.
On the production side, we still have two great projects ready to go the wedding comedy scissors before ministers will the Thompson attached to direct and the road movie action thriller special delivery with Wallenstein attached to direct.
We're actively making progress on both projects to be on the decision to film seasonally as the production environment evolves.
These opportunities just like the restaurant business for the door and the movie theater business for 40 to us will be most favorably impacted by the widespread adoption of an effective vaccine.
With the recent news from Pfizer Modera, we're hopeful we can enter production by next spring or summer.
So in summary were very pleased to report a strong performance in the third quarter on the last earnings call a share the momentum that was felt within our companies generally and specifically for me acquisition would be social all.
Well that momentum is showing up in our numbers. Our revenues are up 23% from Q2, which is a real credit to the skills flexibility and client devotion of our entertainment publicity in marketing supergroup more.
Moreover, we are liquid with 99.2 million of cash in the bank at quarter's end.
Even after buying be social and we are looking forward to finishing the year very strong.
At this point on that I will now turn it over to mirror for more index view of our financials.
Thank you Bill and good afternoon revenue.
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Thank you at this.
This time, we will conduct a question and answer session.
I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone indicate your line is on a question on Q.
You make brightstar too.
What's your questions on the Q for.
For participants you must be equipment, it may be necessary to pick up your handset before I think the sparky once again Thats star one to ask a question at this time one moment, while we poll for our first question.
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Our first question comes on Jack's been Darden with Maxim Group. Please proceed with your question.
Hi, a great and thanks for taking my question is Albert <unk> speaking for Jack band Arty.
But first congratulations on the quarter and solid third quarter growth performance. Despite.
Credit environment.
If I could just start with the social.
Good day, Ladies addition to the supergroup I was just wondering if you could provide some color on how.
Their performance.
Thus far since the acquisition I know you mentioned that they were at one of the great drivers of this quarter's revenue, but just digging a little deeper on it.
There has been on any kind of growth you do organic growth or has it been mostly through cross selling and also finally, if you could provide some perspective as to how much further growth is expected impossible for their continued integration and increasing cross selling their services.
Sure well on thank you for the time works out where to start.
Well be social is is a tremendously strategic acquisition on interestingly, we only acquired them on August 16 for them. So.
They were with us for just under half of the quarter. So no contribute even more in future quarters to our results they're drilling organically, it's a fast growing sector, there fast growing company within that sector for me.
On this management team.
Within be social where get exponential for us and for them, but.
All in one family right is in addition to their current client roster of brands that use them to run social Influencer marketing campaigns, we will be adding clients from each of our three PR firms all of them operating and industry.
Please.
Net be social currently doesn't service.
So that's where the spiderweb of cross selling Craig's exponential growth.
We are actively working would be social integrating their offerings into the consumer product offerings of the door with their brands.
We'll be working with 42 west hub for the social and their imposed on marketing campaign support.
Our movie launches a 42 other as a big roster of movies to launch in the first half for next year figures to this guy right and and of course I don't need to tell you how influential online marketing is for music with short bar on that so.
More good things to come from be social bodes other immediately paying dividends for us now.
All right. Thank you for like that was helpful and if I could just switch frames to the overall business. As you mentioned there has been news about Koby index, a development and potential distribution by early 2021.
Hi, either nowadays made a pack for your expectations for the future regarding like growth and recovery.
Or.
Was your answer to that kind of already set in mind that around this time like it was going to be calibrated.
Well I mean, I think like the rest of the thank you for that question on like the rest of the World what were all go for it.
We read I'd like I'm very proud of the results, we just announced right. We're blessed we're very fortunate I don't think.
I'll give you on I mean back in March and April what I'm about to say.
I would not have thought possible, which is <unk>.
I think it's fairly certain at this point, we can state.
Our revenues and 2020.
It will be higher than our revenues in 2019.
That's.
On an incredible resolve but there is no chance and give us volume would have been possible.
And that's a real tribute to the 150 or so people that work with the dolphin.
So I don't want to pretend that I knew that that was going to happen eight months ago Hum.
Conversely, I think you know looking back into Crystal ball back in in April I think we all would have hope.
That the restaurant business for the door would have been further along by now it's just not.
As I mentioned in my prepared remarks, you know the hotel business is.
He is coming back nicely.
But we've been able to do all of this without the restaurant business with the war and without a movies in theaters for 40 to us when those two things can happen.
And dolphin and go back into production.
No it will.
Well really jumped right. So we're all hopeful for a vaccine that on the consumer feel comfortable.
And local restrictions to be relax on around movie theaters on and restaurants, and if that were to happen in the spring.
All the better, but we're managing ourselves now with the current reality, which is those two things are not really available at scale.
<unk>.
Yeah that's.
That's really great to hear it so I mean like a very exciting a few quarters coming up and if I could just ask a very final question I know it might that might be early or I understand it's not something you can share yet but have there been any updates to other potential additions to the supergroup to finish off the roster.
I think I got twice a day Ti maybe talk about how they plan to have six.
Businesses on a roster by play quite I'm, So could you give us other way.
Update on that.
For sure Yeah. So it's a question for you going to know I guess on <unk>.
Well, we do want six companies in the core group I stated on the Q2 earnings call that our goal was to book.
He six company.
Inside the supergroup by the end of the year I still believe that to be.
A real is the goal and.
We're working very hard for that.
With that said as I mentioned on the Q2 earnings call you know at some point the on the original six for a company, which is a lot of the debt production company would be one that we'd be looking to add.
It still doesn't feel right to us. This is the right time to do that we're still probably.
A few months away from having visibility as to a lot of events will see equally return but.
But I do think we can add a very exciting company by the mid year.
And hopefully on the vertical that will be a complimentary to what we already own. We're very we're very excited for this and and as I mentioned, Ben just to kind of quarterly run rate. We up listed three years ago, we talked about the initial three years.
During a period of <unk>.
Acquiring companies for a deeper.
A core group that we could build on in subsequent years.
At the end of it for years, and we will start in 2021 looking to own some of the assets that we're promoting and I think when we transition for the next few weeks then that's the point on which he gets really exciting.
For.
The Ceos of our Companys reason why they joined our Super group in the first place and the ability to flex on muscles.
With some other things that we we choose to invest in so.
In many ways.
2021.
It's going to be the most exciting year. This journey for us even though so many great things were accomplished in 2020.
Okay that sounds great. Thank you so much and again congratulations on their quoted as other question that thank you.
Sure. Thank you.
Thank you Tom for the end of the Q1 is that I would like to turn the call back on with the management for closing comments.
Sure well that was quick [laughter] well the.
I think you on the other thing I'd, probably say is for those I know that some other technical investors have enjoyed seeing the progress on our balance sheet.
Just to kind of circle back on that and then in Q3 for those following.
With the acquisitions, we made over the first two years on the journey, we had a working capital deficit.
A little over 15, and a half million on December 31st.
Net working capital deficit as of September Thirtyth is now down to 2.4 million less than 2.4 million.
Net.
Over 13 million dollar improvement obviously.
In addition.
That includes current liabilities for lease liabilities of 1.8 million.
So we're very very close on I would expect that we turned that around on the first quarter to next year finish.
That's a trajectory in.
In addition, where we're sitting on 9.2 million the cash at quarter's end that is after the purchase price. So so I'm feeling very strong.
Our results consistently improved quarter to quarter, we beat those are internal and consensus analyst expectations. In every major metric. So we feel very blessed we hope the last six weeks of the year finished strong sir.
On a journey to this point and I appreciate everyone on coming to the call in and listen I know it'll be a long stretch for we speak again.
Okay. So <unk>.
Well, we'll make hopefully a couple of nice announcements in the interim and look forward to speaking again soon thank you all very much for your time.
Thank you. This does conclude today's teleconference. You may disconnect your lines on that thank you for your participation and have a great day.