Q4 2020 Chicken Soup for The Soul Entertainment Inc Earnings Call
Good day, and thank you for standing by and welcome to the chicken soup for the Soul Entertainment fourth quarter 2020 earnings Conference.
For the call.
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I Wonder I like the hand, the conference true speaker of today.
The other craft chicken Investor Relations. Please go ahead.
Thank you operator and welcome.
The on the call today are William J, with Hana, Chairman and Chief Executive Officer, and Chris Mitchell, Chief Financial Officer to review, the fourth quarter and full year 'twenty 'twenty results.
<unk> as well as provide a business update.
Following the discussion there will be a moderated Q&A session open to the participants on this call.
During this call management will make forward looking statements forward looking statements include but are not limited to statements regarding expectations intentions and strategies regarding the future forward looking statements.
They're based on management's current expectations and assumptions and are subject to known and unknown risks uncertainties and other factors that could cause actual results to differ materially from the projected results. Given these uncertainties listeners are cautioned.
Cautions not to place undue reliance on any forward looking statements contained in this conference.
Carl please refer to the cautionary text regarding forward looking statements contained in the earnings release, which also applies to the content of this call additional risk disclosures can be found in the company's filings with the Securities and Exchange Commission.
On today's call management will make comments on certain GAAP based on non-GAAP pro forma financial information.
The non-GAAP.
Measure the company uses is adjusted EBITDA management believes that adjusted EBITDA provides useful information in that it excludes amounts that are not indicative of the company's core operating results and ongoing operations and provides a more consistent basis for comparison between periods.
The earnings release contains a reconciliation of adjusted EBITDA.
The net income or loss.
Which is the most directly comparable GAAP measure for.
For further information regarding the company's historical financial performance, we refer you to our filings with the SEC, including our annual report on form 10-K for the year ended December 31, 2020, which was filed today.
I would now like to turn the call over to.
Two William on Hannah Chairman and CEO Bill. Please go ahead.
Thank you Taylor and thank you all for joining us.
Posted solid Q4 results and capped an important year for our company.
In light of the unprecedented year that we've all been true I.
It's amazing.
What our company actually accomplished.
If you think about these factors.
We lost the 15 million dollar of revenue company revenue customer when Sony Shuttered Playstation view at the beginning of the year.
The advertising business nearly shut down in the second quarter.
Nine of our movies were unable to go into and television series, we're unable to go into production.
Because of Covid and despite all of that we finished 2020 with the total revenue increase of over 20%.
And nearly doubled our EBITDA from the prior year.
Thank you for ordinarily I'd wait to thank the people who work for our company until the end of this.
<unk> bye.
But in light of what they've accomplished I want to express my sincere thanks to them for.
For our employees and our partners for all of their support.
I have been through a lot and they have excelled.
Our strong 2020 results set the stage for what we believe will be a terrific year of growth in 2021.
We're already off to a healthy start for the year from of viewership growth perspective.
And we're continuing to ramp our pipeline of original content.
We're also continuing to rapidly expand our distribution touch points for our Eva networks, as we announced last week.
And we have exciting developments on tap, including the launch of new tech platforms for Crackle and popcorn flex.
Yeah.
He set the stage for next generation viewers.
For experiences.
We hope to deliver as we execute on our plans to build the industry's best Eva.
Before getting into all of the 2021 developments, let me first recap of our Q4 and fiscal 2020 financial results and highlights.
Kress, who is here with me will.
I'll speak to our financial results in more detail.
Fourth quarter gross revenue totaled $20 2 million up slightly from Q3 levels and down from $24.8 million in the last year's fourth quarter.
The year ago figure included $5 6 million of low margin AD revenue from Playstation.
View, which was shut down by Sony in early 2020.
Adjusted EBITDA was approximately $2 8 million and reflects our growing percentage of fully owned content and our continued focus on cost efficient distribution and production.
I should note our Q4 revenue on adjusted EBITDA would have been higher.
Higher.
But under accounting rules are successful and already profitable film Wellies, Wonderland, which we actually delivered at the very end of 2020 is.
As instead being included in our first quarter 2021 results.
The good news is that <unk> will be additive to what has been an outstanding start to the new year.
More on that shortly.
Our crackle plus online network gross revenue grew 35% quarter over quarter.
As we benefited from strong demand for our original and exclusive content, including going from broke spies on point and Robert the Bruce with.
Which accounted for nearly 20% of our AD impressions in the quarter.
When looking at it online networks keep in mind that revenue is somewhat artificially reduced by intercompany license payments, we make to our distribution and production segment.
For the content that Arizona networks.
These payments totaled.
<unk> 7 million in the fourth quarter and $1 3 million in the third quarter respectively.
But adjustments aside the takeaway for crackle plus is that we generated strong sequential growth in the quarter.
And that absent P. S used year ago revenue impact, we are generating year over year momentum as well.
In.
In fact, our December 2000, and 2020 results.
The results were up 16% on a like for like basis from December 2019.
Distribution on production also generated strong performance up 12% year over.
Per year in the fourth quarter.
So this for all though this performance was lower compared to the third quarter largely due to the strong contribution from T Bod of.
Of the outpost in that period.
And also wealth.
For fiscal 2020 gross revenue totaled $68.
$2 million.
An increase of 20% compared to 2019.
Despite the previously mentioned factors in my opening comments.
<unk> the lack of new productions P S view and the Covid racked.
Second quarter.
Net revenue was $66 4 million.
<unk> of 20% compared to the prior year and adjusted EBITDA was $11 8 million nearly double the $6 million in 2019.
In addition to solid financial performance. We also took several steps during the year to strengthen our balance sheet and enhance our liquidity position.
I'll also.
Also putting financial and strategic partnerships in place to support our production objectives.
And finally of course near yearend, we obtained 100% ownership of crackle from Sony.
Strengthening our strategic and financial relationship with Sony and facilitating our future growth.
So all in all of it was a strong quarter and a productive 2020.
But we think we're just starting to show the true growth potential of the company.
We continue to make Mac rapid progress on all elements of our <unk> strategy.
Our pipeline of original and exclusive content, including.
<unk> television series development and content acquisitions the of screen media media.
Have positioned us to are two to three new titles per months.
On Crackle, plus and we believe we are in a position to eventually accelerate that to as many as one new title per week.
We believe no one in.
On the Eva business is delivering original and exclusive content at a rate approaching that.
With our content engine ramping we have been increasingly focused on growing viewership.
The biggest part of that effort has been expanding our roster of distribution touch points, including linear and cable distribution.
<unk> partners digital partners on Smart TV manufacturers.
After exceeding our initial targets, we announced last week, an accelerated and expanded distribution rollout with plans to reach to a total of 60 for consumer touch points.
And more to come as we expand our roster of networks.
These touch points include devices like fire TV, Roku TV Apple T D.
Cable platforms like Xfinity Flex and Cox contour.
Distribution platforms like <unk> Plex Zoom Island silo.
As well as Vizio, Samsung and viewed.
We are especially focused on that last group.
And we are expanding our present a presence on smart Tvs, including of Crackle branded button on unexpected two and a half million Vizio smart cash T V wrote moat controls in 2021.
Based on our experienced the date.
We believe that each distribution partnership has the ability to add up to 500000, new monthly viewers overtime.
As these initiatives take hold of the big goal for 2021 is to enhance the experience we delivered of viewers.
After acquiring on the tech backbone to our networks.
From Sony.
About a year ago.
We began developing new platforms for crackle and popcorn flicks that will be introduced this year.
Over time, we will innovate on these platforms to drive and drive new personalized viewing experiences.
Including homepage optimization and targeting.
Ultimately our goal is to transfer on crackle plus into a home for viewers with net networks and premium content, serving their interest across the programming spectrum with the <unk>.
Great solution for advertisers from enhanced audience segmentation and attractive new formats to reach our growing.
<unk>.
These strategies are all part of our mission to build the industry's best Dave on.
And while a variety of players are moving into AD supported streaming. We think we are in an ideal position to create a distinct compelling experience for viewers and advertisers.
We're a pure play Vod business of pure play a bot unearned.
Unencumbered by legacy media models.
And we are the only Avon delivering a substantial amount of original content.
We are not just in other distribution point and many distribution points for a diversified media company.
For a place to repurpose investments in content from the old linear networks are of spot to sell products on some ecommerce platform.
Our competitors are.
We're positioning our networks for what we see is an escalating migration of traditional TV dollars the digital.
That's one of the brands the distribution and the content to attract viewers and advertisers and we are gaining momentum.
Speaking of that momentum we're off to a great great start.
Crackle the same big viewership increases in the first quarter and early sign that our distribution expansion is yielding results.
<unk> for continuing to deliver successful and exclusive programming such as Willie's Wonderland.
Which premiered on premium Vod at $20 price point and the mid February.
And reached number one on Amazon and broke even after just one month.
We are also seeing some early positive momentum with playing with power.
<unk> Nintendo story of documentary series about Nintendo's foundational role in giving rise to the video game console business.
And how they would eventually take the global videogame industry by storm.
We are of very strong content release pipeline of screen media as well as some great new and original.
Digital content.
For Crackle plus.
So we're positioned to report of strong for first quarter to you in about six weeks.
Including year over year growth in viewership and the benefits of Willis.
But keep in mind Q1 tends to be seasonal seasonally weaker.
Because of the AD business.
Power, especially compared to Q4.
And we will be comparing year over year revenue that will have the last vestiges of P. S viewing it.
So that would not will not have a material impact on our profitability comparisons.
As we move into Q2, we expect to begin benefiting from the new programs.
This year on networks.
We will be producing nine new series or movies this year.
With more on the way.
And we will be acquiring as many as 20 new films.
Going from broke season two of the hit the uncommon history of very common things have kicked off and the on time and history of very.
Hamming headaches of tests have kicked off our production this year.
Among our film acquisitions, our Street gang, how we got the Sesame Street.
Recently premiered at Sundance the rave reviews.
The debt starting Megan Fox.
And other projects scheduled for this year, including eat Wheaties starring.
Barring Tony Hal on Elizabeth Banks, and best Sellers, starring <unk> Plaza and Michael King.
It's a great lineup.
On the strategic front, you'll hear about the rollout of new platforms for Crackle and popcorn Flex and we are also working on our next day about lunch.
Throughout the year.
The current we're anticipating viewership gains, resulting from our rapid distribution growth that I highlighted earlier.
All in all of 2021 should be a major milestone year in which we expect to exceed $100 million on revenue.
Which would represent nearly 50% growth over 2020.
And more than three.
300% over 2019.
Meaning that we will of growing revenue by more than three times in less than two years since first acquiring our interest and crackle plus.
In summary, we're extremely pleased to be in the position that we're in after the extraordinary challenges.
<unk> all experienced in 2020.
Our ability to deliver a strong growth year.
Right. Those challenges gives me great confidence of what we plan to achieve in 2021 and beyond.
We look forward to keeping you posted on our progress I'll turn it over to Chris.
Thank you Bill.
Our financial results for the fourth quarter and full year 2020 reflect the successful execution of our online networks and distribution and production business strategies.
It was already discussed the overall highlights so I will focus on a review of our results and balance sheet.
The fourth quarter.
Starting first with the results for the fourth quarter for any.
Gross revenue of $20 2 million compared to $20 million of third quarter of 2020.
It was roughly flat sequentially and compared to $24 8 million in the year ago period, whereas the decline of the yearly of nearly 19% year over year.
Net revenue.
<unk> was $20 2 million up nearly 5% of sequentially and compared to $24 4 million.
Higher year period.
We're down roughly 17% on a year over year basis.
The year on year decline in both gross and net revenue reflects the approximately $5 6 million.
And gross quarterly revenue Crackle received in the year ago period from the Sony's Playstation Vue service with.
With Sony decided to shutter at the beginning of last year.
Despite the impact of the revenue number the impact to our adjusted EBITDA was immaterial given the PS Vue business had very low margin revenue.
We would also like to note. The Q1 2021 will be the last quarter, and which will have P. S view and our prior year comparisons.
Our adjusted EBITDA totaled $2 8 million in the quarter compared to $5 8 million in the year ago period.
As Bill noted Q4 revenue and.
EBITDA would have been higher but we at least Wonderland revenue is being pushed into next quarter's results.
While we actually delivered the film at the very end of 2020, we did not recognize the revenue in the fourth quarter.
That said, we released has gotten off to a great start and will be additive to our first quarter revenue and adjusted EBITDA.
Our online networks business or crackle plus.
Generally the gross revenue of $10 8 million up 35 per cent from $8 million in the third quarter of 2020.
And compared to $15 9 million in the year ago period.
On a comparable basis, excluding intercompany revenue and after the deduction of $5.
$6 million of revenue from the sense of shuttered Playstation view the year over year gross revenue grew from $10 1 million to $10 8 million an increase of 7%.
We sold out for advertising inventory in Q4 as campaigns from larger advertisers remains strong.
And our content resonated with the yours or CPE EMS also continued to improve reflecting our strong content offerings and our ability to better target demographics.
Our advertising inventory continues to sell through at near capacity highlighting the opportunity ahead, and we see the benefits from our investments and dealership.
Chip growth.
Please note that going forward in 2021, we will be reporting our online networks and distribution of production as a single consolidated revenue line.
Which will eliminate the need to call out the intercompany adjustments.
We will of course continued for to provide the investment community.
With color around respective performance of the networks and our distribution and production activities.
Distribution and production generated total revenue of $11 1 million in Q4 of the increase of $1 1 million compared to the year ago period.
For nearly 12% despite the shift.
Income from Williams Wonderland out of Q4, 2020 and into Q1 of 2021.
Gross profit for the fourth quarter, 2020 was $5 8 million or 28, 5% of net revenue.
Compared to $4 5 million in the third quarter or 23, 3% of net revenue.
And compared to $7 6 million in a year ago quarter or 31% of net revenue.
If you were to add back the noncash film Library amortization expense gross profit in the fourth quarter would have been $12 4 million or 61, 4% of total net revenue as compared to $14 five.
For 59, 4% of total net revenue in the year ago period.
Our adjusted EBITDA for the fourth quarter was $2 8 million compared to adjusted EBITDA of $5 9 million in the same period last year.
Operating loss for the fourth quarter 2020 was $9.
$9 million compared to an operating loss of $10 9 million in the prior year period.
Summarizing the full year 2020 results gross revenue was $66 4 million compared to $55 4 million in the full year of 2019, an increase of nearly 20%.
On line networks generated $35 3 million in gross revenue compared to $41 7 million in 2019.
On a comparable basis, excluding intercompany revenue and after the deduction of 0.3 million and $15 9 million of revenue from Playstation view the year.
<unk> per gross revenue grew from $25 8 million to $35 million an increase of 36%.
Distribution and production in 2020 generated gross revenue of $38 million compared to $16 6 million in 2019, an increase of 129%.
Gross profit for the 12 months ended December 31, 2020 was $14 2 million or 21, 4% of net revenue compared to $14 9 million or 27% up that revenue for the year ago period.
Excluding $23 6 million of noncash amortization of the film library and the the company's of traditional.
Over your distribution business.
Gross profit would have been $37 8 million.
The comparable gross profit for 2019, excluding noncash amortization of the film Library was $24 6 million.
Operating loss for the 12 months ended December 31, 2020 was 44.
$3 million compared to a loss of $26 1 million for the year ago period.
The company experienced significant acquisition related amortization for part of 2019.
And full year of 2020.
Which will be decreasing meaningfully as certain intangible assets had been fully amortized.
Adjusted EBITDA excuse me adjusted EBITDA for the full year 2020 was $11 7 million or <unk> 18 per cent of net revenue compared to $6 million or 11% of net revenue for 2019.
Looking at our balance sheet and liquidity position as of December 31, 2020.
The company had cash and cash equivalents of $14 7 million compared to $9 2 million at the end of the third quarter of 2020, and $6 4 million at the end of the year ago period.
The $14 7 million year end cash balance reflects our strengthened balance sheet and enhanced liquidity position, resulting.
Total equity and long term debt following the closing of our public offering of notes in December of 2020.
In closing 2020 was of uniquely challenging, but ultimately successful year for us.
We were able to respond quickly to the pandemic impacts on the business maintain our financial health.
From a just execute on our strategy.
We delivered an increasing the amount of original and exclusive content as we were fortunate to have completed much of our content for the year and therefore were not immediately impacted by industry wide production shutdowns.
This dynamic was important for us given the large influx of viewers across.
Cross the streaming landscape during the stay at home restrictions.
We continue to diligently manage our P&L and cash flows all of it.
The <unk> the flexibility of our balance sheet.
At the same time, our improving crackle results and viewership growth combined with our disciplined expense management.
Puts.
In an excellent position for 2020 one.
Thanks for joining I'll now turn it back over to Bill.
Yeah.
Alright, operator, we'll take questions.
Alright, as a reminder, ladies and gentlemen ask the question you will need to press star one on your tariff.
Telephone and to withdraw your question. Please press the pound key.
So on bioware component of the Q&A roster.
And on our first question will come from the line of Thomas Forte from D. A Davidson your line is open.
Great first off congrats on the quarter on the year so.
One.
One high level question.
One follow up.
Bill at a high level without debating the individual deals, meaning Quebec and this old house.
Do you see roku as enter entry into content in that manner as validation of your business model and why.
Yeah.
Well of course first of all thanks, Tom and second of all.
Of course, it is absolutely validation than their disclaimer that this is the debt. They just happen to do these two content deals.
For the somehow by accident or something it's hard to really accept.
Why they know that building a network requires original and exclusive content to build loyalty from consumers to get them to come to you first to get them to come back and so they're gonna have to learn how to be in the content business, but.
As I have said many times we've been at this for years now we've developed the systems.
Now as to create a very steady flow of content.
On a low risk way and.
And by the way I don't know if you all picked up in the in this in the.
The original remarks that we are aiming the pick up the pace at which we bring original and exclusive content to our networks to as many as one of the week by the end of.
Settle here.
That will make us pretty unusual in the D. O D space not just in the assets. It's just that in the <unk> space. So we are starting to ramp this up even further.
This is an absolute must in our business and you look at the numbers the 20% of the AD impressions that are original and exclude.
The <unk> generated.
Over the course of 2020 from about 150 <unk>.
<unk> out of over 10000 tells you that viewers are looking for that kind of content content, they cant find anywhere else.
No there is no doubt that debt.
They know about this time.
Lucid about that they have the learn more about it.
On the debate the deals because you asked me not to the you already know I don't think they were very good so.
Okay.
And then for my follow up question.
It seems to me given you talked about being sold out on inventory.
That's an easy way for.
There is no debt generate growth on top of growth.
The calendar 'twenty one.
By increasing pricing per CPM.
How should we think about your pricing power.
I think there has I think as I've said, there is a pretty big range.
For you know of possible CPM, so that we can charge, depending on our ability to target.
I think there is pricing power.
Net.
I don't think we've hit the point, yet where it's dramatically one sided in our favor.
But I do think there's pricing power, mostly from the ability to.
<unk>, yet to get better and better at targeting.
They know the difference between of are really targeted at the less targeted add as you get twice as much for the really targeted AD on a CPM basis, and we're getting better and better at delivering those.
Over time, and especially with our new platforms that are coming in the middle of the year, we're going to get even.
<unk> to be bad.
And there are a number of other things we plan to do this year, especially in the nature of increased data capabilities that I think will enhance that even further so I look at CPM, the moving upward without a doubt as there's more demand.
For OTT than there has ever been.
I look at the scarcity is a good thing and of bad.
Bettering because we should have more viewership so that we have less scarcity, but we're working on that as you know.
And I think pricing power is.
Moving on our direction kind of.
Inevitably come because there is just way more demand coming into the space as advertisers follow viewers.
Bad debt, unlike anybody else, but one other thing that we have the that makes US unique is that we are not trying to force feed advertisers. Some package of stuff that includes broadcast and cable ads that they already have enough of an order to get OTT ads, we sell on any one only one thing <unk>.
And I think advertisers like.
And so they know they they get treated a certain way, we're not trying to get them something they don't want.
Have a great relationship of advertisers I looked at the list of advertisers for 2000 Twenty's for just so impressive.
So.
Thank you Bill and congrats again on on wonderful year.
Thank you Tom.
Our next question will come from the line of Dan for notices from the benchmark company you may begin.
Thanks.
Let's talk about the advertiser equation for a second.
Maybe just in terms of you actually brought up sort of.
Of.
Data capabilities targeting.
Can we talk a little bit about demos here.
There is going to be somewhat seven trillion dollars.
Stimulus money, that's coming in the back half of the year, you've got a publishing environment that spacing of the cookie Cliff and obviously CTV and OTT fast et cetera are all.
Areas that her audience based targeting so can you just talk about some of the conversations that you're having with advertisers now around what you're bringing to the table, maybe how youre thinking about.
The content that you are providing get youre launching that's may be trying to drive.
The targeted demo that you can bring increased impression.
And some of the categories of advertisers are looking for.
Okay. That's that's a lot of questions all in one Dan.
Net.
There's a lot of stock masquerading as one question. So let me try to take it apart as best I can.
So you know there are some natural demographic things that advertisers seek obviously mail.
Mel age income.
We're able to give them a pretty good view of most of those statistics.
For for many of our viewers, but certainly not all of them and we've got to get better and better at that the number one thing that that we need to do is to continue enroll people when they when they come to our crackle plus.
<unk> networks and part of what we will be doing in our new platform is making it easier for people to enroll and what are the driving more of that but I don't want to I don't want of free.
I don't want to preview too much of the of the of that new platform until we get a little closer to it.
So that's one thing just basic demos.
The other thing is advertisers like to be associated with certain types of content and as I've told you in the past and many others.
They like original and exclusive kind of that they like the idea of being associated with it so they'll they'll pay more for that.
Obviously, they have to have at least premium content and that's where we.
We're positioned as the premium content business and there's a scarcity of that in the world.
It's not like you can create premium content. The way you can create a webpage.
It's a scarce resource you can be targeted unlike broadcast which is very tough to target the way, we could target of our ads and then there's the impact.
Pact of technology Dan.
On the way we deliver it so that's the other thing we can do on the free view add which I think most of you know where you get the opportunity to decide whether you want to interact with it and watch less adds as a result, it gives an advertiser more information it gives the viewer of.
We are experienced and it makes us more money that you can't do in broadcast you can't do that in cable, but you can do it in digital advertising, that's quite a bit more of that sort of.
The ability to use the technology.
To deliver more relevant ads better ads.
And therefore more valuable.
So I gave you a lot of stuff in response to that very broad question. If there's something else you want to know.
You get one follow up how is that.
Alright.
One of the chicken dinner.
So maybe just on the content side, Bill and I guess.
Well all risk of two part follow.
Better and I'll try to limit at the two.
How do you.
We had the question about.
Content acquisition by other <unk> players a lot of stuff going behind the paywall right. You guys are on a unique position given some of your.
Relationship some of your production relationships so.
How do you think about content cost if perhaps some of the larger guys are taking some of the bigger deals off the table and leaving some of the smaller players.
To go after.
Perhaps less of available options.
And then the follow up to the.
That would be your kind of you're combining the business lines I'm. Just wondering if we should be thinking about that is the messaging that you know, there's maybe more flexibility in how you monetize.
Your content going forward.
Yeah.
So where where we still have that same risk.
Averse approach to obtaining content, which we've spent years developing both on the acquisition side and the production side.
In terms of.
The competitive question or the access to good content question.
<unk>.
For a variety of reasons, we seem to be seeing better and better stuff.
If you took a look at the.
The list of things I've read about the screen media acquisitions for this year.
They're they're increasingly.
Very good much better more more talent more star driven more marketable.
Just better and better stuff coming.
Coming to us being acquired by US and then being distributed by US and you know I felt I don't think it's actually an accident that we've now had two really very successful of movies, one and in the.
The outpost and now the second one wellies you know within a few months of each other that's something that never happened before in the history.
Of screen media.
We've got some good momentum on the acquisition side and it's getting better not worse, we have more access than we've had before in part because of the studios are just doing less and less in terms of any kind of independent movie type stuff or smaller movies.
On the production side Theres an increasing.
The need globally for.
International broadcasters to get great programming, the streamers have taken 100% of rights globally, So Disney HBO Max Netflix they insist on owning a 100 per cent of the rights globally on projects and that.
Take the cut off.
The international broadcasters from a flow of quality scripted and unscripted programming that they were count that they used to be able to get by combining with U S networks and helping create things.
That puts us in a great position that puts us in a position with a growing.
Domestic U S network, that's not affiliated with the broadcaster who would try to take all of the rights of way of being able to partner with international broadcasters in order to create higher and higher quality programming and I think what youre going to see as we roll out I think we have the.
Nine of nine or 12 production schedule for this.
This year as we rolled out through those without changing our risk profile of what youre going to see is the impact of being able to attract more broadcast partners is going to significantly increase the ability to create great programming now the other thing that's really affecting our ability to create great programming his talents.
Talent.
The fact that talent is being cut off from participation in.
In the Streamer productions as well so if you're a talented person like of Brad Turner, The Guy, who created 24, and homeland and who works with us on the number of different projects, some of which you'll see coming up.
You don't want to be working.
Working just for our service fee you want to have some true opportunity to make money if you're a show of successful and we still provide that opportunity of talent and so we're seeing an increasing incoming interest out very talented people. If they are really smart and most of them have great.
The great managers and the like.
We will do some combination of working for a streamer for a big fee and investing in their future.
Working with someone like US who can help them have a piece of the action. So on both those fronts both on the international <unk>.
Demand side and on the talent.
<unk> side, we have good dynamics right now in the.
Attracting good or better and better programming.
Without taking any kind of increasing risks down in that and that's the dynamic we like so.
Perfect. Thanks for the color you've left the door open for someone to ask the international monetization question, but I will step out.
Thank you.
Thanks, Dan.
And our next question will come from the line of Jason Inquiry of from Craig Hallum, You may begin.
Great. Thank you Bill you mentioned back in the fall you had already pre sold a lot of inventory heading into Q4, and just given how rapidly add spend came back online kind of curious if you feel like.
The left any opportunity on the table, there and I know part of that was with strengthening relationships, but wanted to just get your puts and takes on that.
As we sit here today and perhaps this is a little bit of a question of kind of the direct sold inventory versus programmatic, but any color you can provide on that that would be.
Yeah, I don't think we left.
Much on the table Jason.
There was.
There were higher CPM as the year went on and there was way more demand you you see.
I mean, we all go back to Q2, you guys may remember that we were all worrying that the world's would never come.
Come back to normal and of course as we went through Q3, we did better and of course Q4, we were up another 35 or 36% over Q3 on the on the <unk>.
Apple to apples comparison.
And then by the end of the year. We were ahead by 16% year over year in December over last year, so that rebound that was taking.
Great.
We're talking about revenue. So you know I think we got the revenue we should have gotten out of the year.
But the one great thing was we blow all the way back through what was last year's level and ended up exiting the year at more than where we were last year not the not just.
Just getting back so I feel like we did okay on that.
The the.
The there it is true we just have a lot of the net we have we do have more demand than we have.
The supply now I will tell you of funny anecdote last week crackle.
Out of.
$2 million in iOS.
Play the single biggest week, our sales force has ever had so the demand is truly there.
On.
We just got to keep growing our viewership and that's why our focus is very much on these distribution platforms.
Beginning to do more marketing, which you saw a little bit of a reflection of in the queue for a number.
And also.
Making sure that we continue to increase the flow of original and exclusive content because that's a critical part of what drives viewership.
So maybe we can unpack a little bit of that more.
Several times, you've called out the strength of what Youre seeing in Q.
Q1, both from a viewership standpoint, clearly last week being a record for Crackle I think you called out earlier in the quarter that Youre seeing very nice increases in AD prices early in the year. Just what are the key factors that are driving the substantial increases early early this year.
You know.
It's about I don't really know I think it's just the continued migration Jason into the space.
I saw some numbers recently that the first quarter was down in advertising spend.
This year.
But we didn't see that.
I think it was down something like 7%.
When I looked at these some numbers recently.
It hasn't shown up in our <unk> business.
Sure.
But I think this is that continuing migration you know following the consumers of the consumers are.
Or are there more and more of them with US you know and that's that if youre on advertising.
You Gotta go where the viewers on so.
I think that's the number one driver without without doubt.
Got it great. Thanks for the time I appreciate it.
Thanks, Jason.
Our next question will come from the line of.
And Aldo from Canaccord you may begin.
Oh, hi, Thank you can you can.
Can you just speak a little bit about your outlook for your.
AD Rep partners on.
And if there's any expectation there too.
I dunno signed more or have more inventory from the existing.
One's come your way.
Yeah, that's a good question Austin and.
That is one way we can help.
Satisfies the excess demand, we we do have funded nation and crunchy role we represent in the AD Rep space.
Crunchy role on it.
The good.
A couple of weeks.
And in fact, it's funny there they're supposed emerging I guess most of you know the they're under investigation by the antitrust department as to whether that's a good merger I didn't know that anime was of a protected category from kind of from a competitive point of view.
But apparently it could be.
So we do have a couple of good ones, we've talked to we talked to a numbers of number of others, but we need a certain size.
Size.
AD Rep partners to make it worth the effort.
And we don't.
The <unk> the Playstation.
The view deal was a terrible deal from an economic point of view and we just won't do one like that again with that kind of a low margin. So we have of some pretty exacting requirements. If we're going to have our sales force and our and our resellers go to work for somebody else that has to be of certain scale and scope and we need to know that theres going to be some lumpiness.
<unk> of the relationship.
So it's hard to find ones that actually fit that bill unless you've just go buy them. So.
My view is that might be the better approach to to filling the need to the extent, we need to fill it in non organic waste.
Thanks for that.
Is there any.
Is there any expectation that as the world opens up again.
You might see.
The declining usage numbers that might impact.
Your comps this year.
So I I don't.
I think on a comparable basis, that's an issue, but obviously we are in the seasonal business right I mean, besides the advertising demand, which is seasonal Q4 is the highest Q1 is the lowest.
You also have.
Whats called the spring and the summer and people go outside and they watch less T V.
So there are kind of natural waves to two.
To our business that have.
That had nothing to do with Covid or not COVID-19.
So I think we're gonna have the normal natural waves.
That we have but overall I still believe and I think the evidence is with me that.
The amount of.
People, who have moved to the OTT viewership.
Just overwhelms the natural waves and so year over year of the growth continues.
And I think that's really the way, it's going to keep going.
That doesn't mean that I don't think more people will go outside and therefore of <unk>.
<unk> TV when they can of course take well, but they do that every year.
There's really a big pie out there that needs to be split and we're just going to have a bigger piece of it than we had before.
Okay. Thank you very much.
Thanks Austin.
Our next question comes from the line.
Mike Grondahl from Northland you may begin.
Yes, how do you bill.
Hey, the first question is just.
On the 41 touch points you've hit.
What are a couple of it really stick out to you recently in terms of adding viewers.
What are a couple.
As you get to your goal of 60 for consumer.
<unk> points that you really are excited to get to.
Okay. So.
Hum.
I'll answer that question, but I'll answer it slightly differently for example plaques has been on <unk>.
Incredible stand out are they.
They were one of the first ones, we added they've been amazing and.
You guys might note that we recently added then as an add Brett partner to go back to Austin's question from a minute ago. They they fit the characteristics of the somebody we have a good relationship with the long term probable relationship we're already doing other.
The things for them. So that's been a standout flex has been great.
I don't want to give anybody the the wrong idea because I noticed the controversial name, but our <unk> rollout has gone really well as well.
That's been another one that's really.
I've been sort of the actually I've been very surprised that how good it was.
It's gone very very well by the way there've been a couple of stinkers and there too.
But I'm not going to tell you of those were.
But we will get will get those to work low market them, we will.
Do what you do to make sure that you get the right amount of business, there's some take longer than others to develop.
So those two of those.
Start out what was the second half of your question Mike.
Just of the incremental when you go from 41% to 60 for what's one or two there are three that are really important to you and the next wave.
Yeah, so some of them.
Smart Tvs.
Number one.
Two of place across the board debt we are.
Really excited about you already saw what we did with vizio, you'll see further evidence of us working with them closely we think they're terrific.
On that wasn't a plug for them as a public company. They really are a good partner to us.
So vizio has been great.
We have of well, we're looking very we're working very hard on the Samsung relationship LG there'll be further developments, there and those of the ones that excitement because I as you as you probably remember that's my view of where the.
The future of <unk>.
Smart TV smart TV.
If there is going to overwhelm in my mind things like the Roku stick in the fire the fire stick because.
When you open up the Smart T V. You throw away on the fire stick or of Roku stick of Europe. If you are a consumer you don't need it anymore. So we are really trying to be very very aggressive in the way.
Zero of shake territory, so to speak.
On the smart TV.
The offerings and get involved with the smart TV providers. That's the number of without that's the one that excites me the most of those people.
Got it got it and then lastly.
On Willie's Wonderland any sort of range.
And the new that you can give us we know what slipped from <unk>.
<unk>, but it sounds like it has done really really well.
How do we think about debt.
Well the first of all don't use the past tense.
Because it is still doing really really well for sure.
It has done it has done and is continuing to do really really well.
It's very popular I'm not exactly sure why Nicolas cage battling possessed animatronic beings notice I can say that better now after the 12th time of saying it.
Is is so interesting to people, but they like it and it's actually done.
Reasonably well even in theaters, which.
For one thing, we generally shy away from but.
It had a great per screen average we've made some nice money on its supplemental money, it's doing very very well in the in the premier of Vod, but its going to S. T now and it's going to drop to a lower cost coming soon I expect that to continue to generate a lot of incremental revenue.
What.
Which of sign it's probably going to give us.
Three to four times, what we spent on a number of remember we own that one.
In partnership with the landmark company, which we are a majority shareholder of so.
That one of the goodness, it's a really going on.
Got it great congratulations.
Got it thanks, Mike.
Yes.
And on our next question will come from the line of Brian singer from Alliance Global you may begin.
Hi, everyone of us Jacob on for Brian.
Can you quantify the number of users that have watched crackle content for the first time.
And then you Miss the over months and what percentage of total impressions are coming through with this relationship so far.
You're just a little early with the questions since the remotes don't actually.
The get to consumers until the second quarter.
So.
We will.
Try to answer that question.
Then [laughter], but for now obviously the answer would be zero, so they're not there yet.
No worries.
Now how would you view trended from Q1 compared to for Q.
The viewership has been going up overall impressions have been okay up a little bit.
So generally awkward, but you know Q1 Q for a pretty different in terms of their their tendencies.
<unk>.
Because of the seasonality associated with.
But they've been fine.
Alright, that's all for me thanks, guys.
Okay.
You're welcome.
There's going to be the last question operator.
Alright, all of our last question from being from the Rhino, Jon Hickman from Ladenburg.
The beginning.
Yeah.
Hi, I'm, just kind of a really mundane.
Accounting question, what kind of prompted the reversal in the.
The return line the.
Yeah. So you know, it's the funny thing, but we.
Maybe I have to guess John every quarter on how many D V D's will come back.
And we we guessed wrong Les came back than we thought we all are of reserved hmm. Okay. So that's just the I mean, that's you're guessing every quarter and the year and every at the end of Q4 average.
The true up at some point.
We had became clear you know really I think the outposts debt it because out of the outlets just kind of really raise ridiculous across every single.
The place we.
Distributed it whether it was T bought or S bot or D. D. D of just kept going and if you'd put a normal reserve on on the film like the.
And most of your got all of our reserve without a doubt so.
So that's what happened I mean, it's a lot of you know it's the it's a good thing out of bad thing so.
Okay, then I'll ask someone else's question, what about international revenues.
[laughter].
You know the we.
The output we have had a growing international distribution business and it is continuing to growth I know I didn't ask that question in the third quarter of somebody asked me how do I think we were going to do in the fourth quarter on the distribution and production business and I said I thought it was gonna be okay, because even though the outpost.
We had the great hit and three Q I felt that there was a pretty diversified.
Set of international sales out there that we're going to basically make up for it and I would have been right.
For the willies delivery issue.
So unfortunately, we delivered wellies it you know.
The second on new year's Eve and the apparently that's not 2020 anymore. It's now according to the Accountants, that's 2021 so.
Of you guys all the time to teach the teach me about the new calendar that exists out there on where that for that's the reality.
Anyway, Thanks, John operator, saying, what kind of on and.
And everyone.
That's going to wrap this.
Hey, Thank you all for joining us we appreciate it.
And I hope to talk to you all soon.
Take care.
So the this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Up today.
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