Q1 2021 Chicken Soup for The Soul Entertainment Inc Earnings Call
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And part of me. This is the operator of your conference calls or they came on me and thank you for your patience and please continue at the standby.
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Good day, and thank you for standing by and welcome to the chicken soup for the Soul Entertainment's first quarter 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. The part.
Each of paid on that portion of the call you Wouldnt need the press star one on your telephone.
Please be advised that today's conference is being recorded.
The required any further assistance. Please press star Zero I would now like to hand, the conference over to your Speaker Taylor tragic with Investor Relations.
Thank you operator and welcome with me on the call today are William J, <unk>, Chairman and Chief Executive Officer, and Chris Mitchell, Chief Financial Officer to review, the first quarter 2021 results as well as provide a business update on this discussion there will be a moderated Q&A session open to the participants on the call.
During this call management will make forward looking statements or are we looking statements include but are not limited to statements regarding expectations intentions and strategies regarding the future forward looking statements are 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 projected results given these uncertainties listeners are cautioned not to place undue reliance on any forward looking statements contained in this conference call. 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 the Exchange Commission.
On today's call management will make comments on certain GAAP based on non-GAAP pro forma financial information and the non-GAAP financial 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 day.
For comparison between periods the.
Earnings release contains a reconciliation of adjusted EBITDA to net income or loss, which is most directly comparable to the GAAP measure.
For further information regarding the company's historical financial performance refer you to our filings with the SEC, including our report on form 10-Q for the quarter ended March 31, 2021, which was filed today I would now like to turn the call over to William from Hannah Chairman and CEO Bill. Please go ahead.
Thanks, Taylor and thank you all for joining us today.
We have had a lot of good news to share with you recently and I think lots more today.
So let me start by recapping some of what we've gotten done over the last five months.
We reported results for 2020, all year that we're well ahead of expectations and showed tremendous growth.
We closed the largest content deal on our company's history with sonar, adding IP rights to 372 TV series.
<unk> thousand 825 episodes of the.
T D.
700 films to our already robust library.
Presented brand new original and exclusive content at the new fronts, which includes numerous exciting and starz better studied titles like going from broke season too.
Which by the way is off to a good start.
We announced the new TV studio called healthy on to be led by David Hollander.
Which will help grow our pipeline of high quality and on content.
We announced our new streaming are our new wave of streaming service chicken soup for the soul.
And we took important steps to enhance and grow the distribution of our streaming services unveiled the innovative new AD experiences and will be delivering of new and compelling product and user experience both on TV and mobile devices.
Quite a bit has been accomplished.
But in addition to all of those key 2021 developments also want to remind you.
That in December 2020, we gained 100% of ownership and control of Crackle plus.
While also strengthening our relationship with Sony Pictures television.
I raised this point because of the results. We're reporting today reflect what is now a fully integrated consolidated business for the strong content library and production business operating and service.
Of our growing crackle plus streaming services.
The full ownership of our assets at the beginning to create organizational efficiencies.
And EBITDA margin expansion that will drive the profitable future growth we are anticipating.
Because we are now fully integrated you may have noticed in our earnings release that our financial discussion is now focused on total company net revenue as we had promised we would do.
Find more color on the primary drivers of our consolidated business in our filings for <unk>.
This at the say our integrated model the supporting our objective of driving down our cost of revenue and.
And other costs, while positioning us for profitable growth.
In addition, it's allowing more flexibility and growing our business.
Chris will add more detailed all of this in his comments.
For the first quarter, we reported net revenue of 23, and a half million dollars or 75% growth on a year over year basis.
And adjusted EBITDA came in at $4 6 million up 130% year over year for the first quarter.
We saw momentum across our business virtually sold out inventory in the quarter, and we're making great progress in delivering innovative AD formats to our viewers, including presentation credit sponsorships and brand integrations. In addition to the jumbo Tron and free preview ads, we've talked about before.
These efforts continue to gain traction as we move through Q2 and combined with the great content, we have coming the new platform rollout later this quarter and our new chicken soup for the salt streaming service launch.
The stage is really set to build tremendous momentum throughout the year.
So there were a couple of key content performance in Q1, including these <unk> standout.
Willie's Wonderland, which outperformed our already high expectations was the number one horror movie on Amazon for much of the quarter and have the Rotten Tomatoes audience score of 74% I always smile at that movie. It's the it's the most amazing combination of Nicholas Cage and possessed animatronic beings.
Trigger point of film starring Mary Pat for reached number seven on itunes last month.
The trigger point is an exciting action film that follows Nicola Shaw of <unk>.
Tired of U S special operative, whose dragged back into the darkest Shadows of spy World.
Lifted by our former partner to help find the missing colleague Nicholas.
Nicholas shores.
Sales will be put to the ultimate test.
Good movie.
Senior moment, starring William Shatner, Jim Smith.
And Crystal for Lloyd received rave reviews, and currently has an 88% odd in score on Rotten Tomatoes senior.
Senior moment as the film about retired NASA test pilot, who loses his license after the drag racing is vintage convertible around Palm Springs.
Forcing them to take public transportation or at least Caroline and learns to navigate love and life again, it's it's really good.
I've watched it last Saturday the fun fun enjoyable movie.
As I've said building the best day that has three parts excellent programming and content technology that delivers a seamless viewer experience and data that enhances both the viewer and advertiser value.
So, let's turn now to our recent announcements on how they fit into our strategy, including sonar of Halcyon and the chicken soup for the Salt Lake.
Content for us.
Some of our brings a critical mass of proven high quality content that not only fits our desired audiences. But has also provided additional international opportunities and you'll see that in the Q1 numbers that international is starting to really matter.
It has also positioned us for lunch argue Avon streaming service.
The sonar content adds a strong pipeline of high potential TV series and proven executive talent.
As for its existing content, we will begin migrating the fully owned IP, we acquire from the contents current platform Holmes and onto our crackle plus streaming services when the deal closes which should happen very soon.
Last week, we announced the formation of house the on television of high end premium scripted television studio that will be led by game, but the olander. The veteran media exact executive who read Fremantle for 13 years.
<unk> has a robust drama development pipeline of more than 20 projects embracing library based on original IP sourced in the U S and Europe.
We'll focus on development financing and production in the U S as well as well as forging creative partnerships abroad.
The formation of households will help accelerate our strategy by expanding our original content development pipeline with high end content that will increase our IP rights ownership and provide a faster path to growing our international television production distribution and network activities.
As these efforts accelerate we also continued to execute on our existing content development activities. We introduced the new slate of original programming of the new fronts last week that we're very excited about including promised land and the second season of our big head going from broke.
Promised land is it on all access coming of age story of the 2020 NBA record rookie sensation Jamarat. It follows him from his N V. A debut all the way through his crowding his rookie of the year and shares the amazing experiences of EBITDA.
Debut season.
This is sponsored and presented by Eli Lilly.
Going from broke season too from executive producer of Ashton Kutcher will premier on Thursday may 20th and.
That includes house, Dan Rosensweig CEO of Chegg, along with co host times of rapidly entrepreneur as they help people face extreme debt.
Who face extreme debt overcome crippling financial struggles.
Become Ceos of their on life.
As we announced this week, we've lined up a number of Premier brand integration partners for season, two led by Airbnb and of course, we're thrilled with this development.
But I also want to say this is not a one off.
As we elevate the quality and profile of our original content for having more conversations with leading brands about sponsorship and integration models that drive compelling reach opportunities for the brands, new revenue and production cost offset opportunities for us and a better experience for the viewer.
Fact, we've struck seven such partnership deals in the first quarter.
The youll see those reflected in revenue to come.
But many of those that are currently running ahead of the official debut of season two of going from broke represented by tracks on.
So we're pleased with the progress we've made with the quality performance of breadth of our content in such a short period of time are.
Further integrated content acquisition production and distribution capabilities, including our streaming offerings paired with our enormous high quality library.
Put us in of New League of independent media companies with a growing array of domestic capabilities.
Now, it's time to start focusing on our international opportunities as well.
We're excited to announce we were excited to announce last week the upcoming launch of the new chicken soup for the soul <unk> streaming network.
This new streaming service will give crackle plus three premier Avon brand's crackle popcorn flicks and now chicken soup for the soul.
The new service will reflect our brand mission, what it's been since day one day.
The change the World one story of the time.
And it will include a large selection of scripted movies and TV shows anchored in part by the award winning library from sonar with a focus around inspiring uplifting and informative content.
Streaming service will also carry unscripted programming chronically and the lives of both history makers on everyday heroes.
As well as lifestyle programming showing the showcasing the best home food DIY style and travel experts.
Interesting many companies of becoming out of the woodwork to be of part of this launch.
As we embark on this new initiatives, it's important to emphasize the global power of the chicken soup for the soul brand.
So all of you folks who've been asking why we haven't changed the company name I Hope this helps to begin to answer that question.
We have of multiyear lead in programming NDA of that space.
But we also have been building the crackle plus lineup.
And with the lineup in place we're focused on driving viewership by continuing to add consumer touch points and launching our new tech platform and consumer interface.
We have launched six new customer touch points in the quarter from the aggregate. They have added $1 7 million monthly active viewers.
As an average of 280000, each exceeding our expectations, especially when you consider a number of them were launched at the end of the quarter.
We're launching a new platform. This summer in partnership with Vizio, with whom we partnered on a remote control, but we think that's the game changer.
There are a few other key components of these changes we've redesigned our connected TV apps with sleek new user interface display changes that make it easier to find something to watch better search and recommendation algorithms more informative titled display pages, and the new linear experience right inside the app.
It really looks great we introduced it at the new fronts.
And if you haven't seen it I suggest you take a look at that presentation.
With our mobile apps, we're introducing a new redesign, whereas the app will look like and serve as the remote control for all connected devices in your home.
Will include a new feet on the homepage that suggests new and relevant content to watch helping consumers with their viewing decisions as well as the new Super cash feature that allows users to browse for content on their smartphones and cash to any connected device in their home.
The game changer.
Besides the see behind the scenes, we're moving our ads from the client side for the server side, which will make for better AD experience by having edge stitch directly into video being streamed.
At the server and not at the client.
Additionally, we are increasing our user sign on incentives, including the new loyalty program program and offering recommendations across our three streaming services crackle of popcorn Felix and chicken soup for the Salt will all work together on viewers behalf.
All of this work is going to deliver a completely new and much more enjoyable experience for our users.
As we execute on these initiatives and underlying focuses around making more and better use of data.
Understanding our viewers enables us to leverage the tech investments, we've made to improve the experience both for people coming to crackle, plus and marketers seeking to reach them.
This in turn supports attractive cpm's for our networks and for the further differentiates us in the streaming landscape.
Few key examples of our efforts include how page optimization and content targeting which will be part of our enhanced technology platform.
New and unique AD experience sort of like Jumbo Tron and preview.
Which are which we've discussed previously on more targeted relevant engaging ad formats.
Among the many press releases, we issued over the past several weeks, there's one I don't want to lose sight.
Our agreement to use tragedies Union's best in class identity in audience solutions for all.
Crackle, plus advertisers, who access robust audience insights about the demographics income and special interest of our viewers the.
The agreement is an example of how we plan to gain better access and make better use of data to drive success for our advertisers and relevance for our viewers.
In closing, we expect 2021 to be a year of tremendous growth.
Our year end conference call, we updated our revenue targets for $100 million on our sonar conference call. We suggested that that was too low and that should be raised by single digit millions.
And now we have incremental confidence that we will even beat that further updated target by at least $5 million.
We're ready to take our business to another level as we continue to build the best day that and this is just the beginning of that process.
We'd like to thank everyone for joining us on the call today, we couldn't be more excited for what's ahead. We appreciate your support on our habits to build the best streaming service and you gave out space.
And with that said I'd like to turn it over to Chris to give you some more details on the financials price.
Thank you Bill.
As you've already heard our operating highlights I will focus on the review of our financial results and balance sheet.
And as Bill discuss Sony converted its ownership stake in the crackle plus to an ownership stake in chicken soup for the soul.
Our relationship with Sony and given us 100% ownership of Crackle plus.
Full ownership, we're no longer required to report crackle plus separately from the rest of our results for Sony.
The allowed us to further integrate crackle, plus and more efficiently manage the business from a consolidated perspective.
At the same time, the integration allows us to achieve synergies and realized savings.
Sharing costs in areas, such as content operations and marketing.
All of which leads to profitable growth.
With the business now managed as one holistic consolidated operations.
We're reporting our financials on a consolidated basis.
As we said on our last conference call.
This is the way I will discuss our financial results today.
However, I would note that we have added a table in our MD&A section and our revenue footnote section of the 10-Q the breaks down on our consolidated net revenue by revenue source, which we believe could be helpful for investors.
With that.
Our financial results for our first quarter 2021 reflect the further progress we've made in executing our growth strategies, which in turn enabled us to build on the momentum we saw coming out of 2020.
Starting from.
First for the results for the first quarter.
We reported net revenue of $23 2 million compared to $20 2 million from the fourth quarter of 2020.
Which was an increase of nearly 15% sequentially, even though the fourth quarter is typically the strongest quarter of the year due to seasonality.
This compares to $13 2 million in the first quarter of the prior year for an increase of 10 million of roughly 75% year over year.
This year.
Year over year increase in net revenue was primarily driven by a seven 9 million increase in international revenues.
<unk> from licensing of international rights to.
The international distribution partners.
For several titles, including going from broke.
Heroes of local Libre and on point.
The increase also includes a $4 2 million increase in T. Bob and Internet streaming revenue was primarily driven by the strong performance of Willie's Wonderland.
The fire and senior moment.
As well as an increase of Avon related direct sales day.
These increases were partially offset by lingering COVID-19 related softness in the areas of video distribution in theatrical revenues as well as the absence of <unk> and PSU related revenue this year.
But at the end of the first quarter of 2021.
Our strength services had substantially rebounded to pre pandemic levels, our distribution pipeline remains strong and the outlook to resume production improved.
<unk> well for the remainder of the year.
As we've noted on prior calls.
Q1, 2021 will be the last quarter in which our year over year comparisons are distorted due to having <unk> in our prior year results.
We sold virtually all of our advertising inventory again in Q1 as campaigns from larger advertisers remained strong and viewers remained engaged for.
Our Cpm's also continued to improve.
Given by our strong content offerings, coupled with innovation and enhancements we've made to the overall ad experience.
We expect to see continued momentum in this area throughout the remainder of the year.
Gross profit for the first quarter 2021 was $7 8 million or 30% of net revenue.
The $5 9 million for the fourth quarter of 2020 or 28, 5% of net revenue.
This compares to $3 3 million in the same period prior year or 25, 2% of net revenue.
Excluding noncash film library amortization expense gross profit in the first quarter would have been $13 9 million for 60% of total revenue as compared to $8 2 million or 62% of total net revenue in the prior year period.
Operating loss for the first quarter 2020 was $5 8 million compared to an operating loss of $10 million in the year ago period.
Our adjusted EBITDA for the first quarter was $4 6 million.
Per to $2 million from the same period last year, a year over year increase of roughly 124%.
Looking at our balance sheet and liquidity position as of March 31, 2021, the company had cash and cash equivalents of $24 6 million compared to $14 7 million at the end of the fourth quarter of 2027.
7 million $7 1 million at the end of a year ago period.
The first quarter.
The cash balance reflects our strengthened balance sheet and enhanced liquidity position. Following the closing of our common stock offering in January of 2021.
In closing we're pleased with the continued momentum we saw on our business in the first quarter and excited about the opportunities we see the built on that momentum as the year unfolds.
We've accomplished a tremendous amount in a relatively short period of time.
Position us really well to evolve the business and further accelerate growth in coming months.
To that end, we're particularly focused on growing viewership with initiatives aimed at enhancing the user experience and platform.
Growing distribution of our streaming services and pursuing larger and more innovative marketing partnerships.
With all of these initiatives in place and a significantly more robust content pipeline. We are confident in the growth that lies ahead.
And as we work to capture that growth, we will continue to take advantage of our ability to integrate all aspects of our business and to manage expenses and the risk in a disciplined way.
With an eye on improving cash flow and enhance the flexibility of the balance sheet.
Thank you for joining I'll now turn it back over to Bill.
Thanks, Chris the operator, we'll take questions now.
Thank you and as a reminder to ask a question simply press star one on your telephone until they go on other question press, the pound or hash key based.
Based on bio will they come back.
Ross Tang.
First question comes from Tom Forte with D. A Davidson your question. Please.
So the first off bill congrats on the quarter to one question one follow up.
Okay.
Date of reopening of various parts of the U S.
I was curious to find out how your local AD sales are doing right now.
They're doing the first of all hi, Tom and thank you.
The local AD sales of doing well I mean, there is generally an upbeat.
Tempo in that part of the business as well that lagged the.
The the.
The international I mean, the national direct sales for a while but I think it's coming back so.
On the reopening is starting to have an impact.
Great and then for my follow up.
If I talked about.
The flushed out your strategy.
Having multiple.
So today, the chicken soup for the soul Crackle and popcorn flick.
Fully fleshed out.
Vision of having more.
And then for Mike.
The point to the extent that you have the specific Avon.
On.
Can you quantify.
Accretion of the CPM rates getting does this give you the ability for you.
On this by more than 10%.
The two that was a two part question time, so let's take when we tried to take of what part of the time.
Do I anticipate adding more.
Megan.
That is really that really depends on a few different issues, but.
But for now the focus is on really driving these three.
We think these three are a complete package with the male oriented popcorn flex of female oriented chicken soup for the soul network of general.
The presentation network, we think that a couple of these <unk>.
Networks, if not all of for all three of them can travel the globe.
We see them as.
Really great opportunities all of them. We think we've got an unusual amount of content that relates to each of them. So we feel great about the portfolio of networks that we've now put on the on the field.
And we get access to other People's networks in different ways, sometimes through AD representation agreements and otherwise.
As a way of.
Having an even more diversified group of.
Of growing networks that we take a share of but for now the focus is on these three.
And it will remain there.
Absent something that causes me to think of decision that's different which would be an opportunity.
So.
That's part one part two.
You know the.
On the C. P M.
Growth.
There's already too much demand, we're not the only one seeing this right now is as the.
AD agencies and advertisers are moving.
Much more rapidly now towards OTT from broadcast and cable and we're.
What we what we talked about today with those seven or eight different presentation.
Type sponsorships that I talked about those are.
Way more than $10 more time than what we what we normally get.
Because of those presentation credits those presentation credits come with a fixed kind of charge that.
The if youre going to present, the entire series of an entire Trey or a.
Or any show on our network, you're asking for special treatment and that requires special payment I don't know how else to put debt and as we've been growing that part of the business. In addition to the normal.
Adds you see.
We're growing revenue.
Yeah.
By monetizing our viewership in a way that's much less intrusive presented by as Youll see in promised land or as you can see on going from broke season too.
Sponsorship is a very different thing for a viewer it's great for the advertisers they get credit for delivering on the AD free experience to the.
The the viewer but it's.
It's great for both parties and great for us its more profitable so I've been saying for a while as you know that we're going to continue continue to innovate in the way we bring advertising to the network. This is just another example of it and there is much more of this coming.
But each of these waves, we innovate or kind of take into account. The fact that we wanted to give more value to our advertisers and make it a better experience for our viewers. So the.
This is not about a 10% increase it's about.
The seismic change in the way you think about advertising and <unk>.
Monetize viewership.
It's very exciting.
Great. Thanks for taking my questions.
I appreciate it thank you.
Our next question comes from Don <unk> with the Benchmark company. Please go ahead.
Yeah good.
Good evening Bill of probably the most complete quarter, you've put together to date it looks like it's all starting to come together.
You know coming of basis for you guys. I guess the question that I had for you first on international since we didn't really get to talk about that too much on the phone are call. It kind of left it open ended on didn't really come up with just can you talk about monetization mechanism. How quickly you think you can pursue that opportunity.
<unk> and what you think kind of the initial candidates out of.
The gate.
Yeah, that's right.
Good question standard and by the way. Thank you for that comment you've been around with us from the very beginning so you've seen the history of the company.
It is the most complete per quarter, we've ever put together.
An astounding quarter.
But theres going to be much better.
Some of the rest of the year.
It's just the beginning of what's going to be of great year for us.
The the international opportunity is really developing much more quickly than I had anticipated.
And I think part of it is a direct result of the.
The launch of the chicken soup for the Salt Lake.
We have been hearing from quite a few companies quite of few media companies around the world about.
Rolling that network out in there in their markets.
The ideal way for us to do and international businesses in partnership.
I think probably country by country with major media companies, especially broadcasters, who are looking to change the way.
Two to basically give the business has a longer life as they try to deal with the reality of of the in their own markets of people migrating.
We can for delivered to an international partner basically Avon in a box here.
Here, you provide us the marketing and the sales use your advertising sales force use your own existing broadcast network to market. The existence of these Eva channels and drive people to our business you own a piece of it that's the ideal mechanism for going in the international from my point of view, we can make that work day and then we can accelerate this.
Very very rapidly because what we have to do on site is reduced to the minimum amount of operational activity and I think this is a model. That's the used by a number of very big media companies. In fact, one of the in A&D I believe.
Really kind of rolled out their entire international strategy on this basis.
And that what price we all know is a huge success.
I think that's replicable.
But probably you know.
We would be the fastest because what's the key element in all of this content.
You've got to have the content, we've got the tact, we've got the content.
We're going to have the data.
Marketing and sales are local activities and that's where we need that's where we all need help now that's one way. This may go.
I don't expect us to launch our own units in various countries without partners.
But theres also a possibility we might do a much bigger deal with a partner across the world.
The international opportunity is real.
You know I'm not going to get into any more detail on that for the moment, Dan because I believe is I believe this is something that we'll be able to talk about in future quarters with much more detail, but it's a real opportunity.
On a much faster than I anticipated and we're ready for it which is the great news because we are done with the basics here in the U S of the new platform.
Access to data and of course, we put together a four year, leading content and the age of that space.
Got it.
The full bill.
Look forward to hearing more on that front and then you made a point to really call out.
Advances in sponsorship obviously people are starting to take notice that you are of critical mass and contents.
For now through the rest of the new fronts. We've got the Upfronts. We've got 18 other funds it seems like this year.
But the conversation you're having with advertisers now of.
Just talk about kind.
Kind of the tenor of those conversations and whether you are getting either longer commitments I know advertisers of reluctance to commit anything they can't cancel tomorrow right now but.
Longer commitments bigger commitments kind of brand expansion just to help us get a little bit more granularity on what seems like a positively developing story.
Yeah I think.
The way to think about this is to.
To go back to that point I made about the nature of.
Advertising on a value beginning to change.
The presentation credits are just the beginning of an evolution I think.
If somebody is back to the future really back to Hallmark Hall of Fame type stuff, where advertisers are going to want to take credit for delivering great content, but in an even better way for Avon viewers.
And I see that the and expanding.
Into.
Bigger relationships with advertisers to sponsor entire.
Let's say sub channels, where trays on our networks.
Because they know that getting access to the inventory is going to be very competitive.
The first of all in a world, where as we know of 50% of the hours that are being screened are being streamed on sides, where there's no ad opportunity at all.
So you've got 50% less of what used to be a bigger pie that you've got to get access to if you're on advertiser.
And you want to do it in a way that's <unk>.
You add to the viewers so that they like you're more of it.
I think youre going to see a number of these presentation type relationships grow in scale and scope.
And that's what I think is another part of the very great part about OTT, we can do things very differently than they can on broadcast networks and I see this there's an increasing amount of interest in that among advertisers, having a longer term relationship against the whole category of content, which.
Relevant to their world and we're pushing that and Ernst.
Got you and if I could squeeze just one more in I know, it's been a little bit just on the comment you made bill I think it's really important.
<unk> brought up.
Expanded gross margins.
The Roku channel just based on the fact that Theyre seeing a lot more people willing to sell content, rather outright rather than go Rev share.
Kind of a critical component and if we pull out the <unk>.
Nonsense of amortization in your Cogs was at really healthy.
Margin again in Q1, so how do we think about how that kind of trends over time and how much more does that.
How much more leverage do you think you have in that line because we're just trying to get a sense of the sort of underlying profitability here.
I think we're in.
We're not done by any stretch of imagination.
The.
Yeah.
The drivers have always been the same as we've talked about this one as the original and exclusive content, which continues to perform really well and grows an overall amount and the other is owned library and.
I keep coming back the zero as of great cost of revenue when you own the IP.
On your cost of revenue as is.
You own instead of rent and it's a much better model for us we're going to continue to grow the owned IP portion of what we what we present and that will continue to drive margins of the direction, we want them to be revenue and I think the other thing to be aware of and Chris made this point in his <unk>.
His speech.
The integration now that we're able to drive across our entire business. We're sharing content ops costs, we're sharing marketing costs now across the business, we don't have to keep.
The pristine separation, we had when we had of potential 49% partner and Crackle plus.
Debt required us to track things in a very.
Not integrated way, but the other thing about that to understand it.
We were able to integrate the revenue growth as well.
So you're going to see in some of the future quarters that.
The sponsorships that there are inside of these reductions are driven exactly by the fact that we have the crackle plus networks.
And that combination is going to allow us to increase gross margin and grow revenue at.
At the same time.
So.
This whole thing is coming together the way it's supposed to know all parts of this plan are starting to get knitted together in a way that's driving margin, allowing us to reduce cost because we were able to keep certain costs lower because we've been able to integrate the various parts of the business into one.
And that's all that's contributed to a much higher.
On EBITDA than people expected in this quarter and frankly as we said we expected the business is working extremely well.
So.
Thanks for asking that question.
Thanks for all the kind of a bill I appreciate it and.
Excellent start to the year.
Thanks, Dan.
Our next question comes from Austin <unk> with Canaccord. Your question. Please.
Hi, Thanks for taking my questions. The first one is on the chicken soup for the Soul network.
When does that launch and how many distribution platforms, whether it be on.
Can you talk more generally about go to market strategy, there and I guess, how youll be leveraging the publishing entity to ramp the worse and such.
First of all of Us and welcome.
We saw your research report this morning.
And.
We appreciate your involvement in our and our and our work on our effort to make this a bigger company.
So thank you for that.
The.
The chicken soup for the cell network is just got.
So many different things going on at the same time in terms of the launch strategy, it's pretty simple we're going to start with a few linear channels.
And particularly on Vizio, whereas you know we've got R. R.
Crackle button coming but that crop of button is going to lead you to of world, which will include crackle and popcorn flex and the chicken soup for the cell networks ultimately.
And we will start with some linear some linear channels to start to get people use of the content. We will move to two in addition of those linear channels for a bot it towards the end of the year and then it will go across all of the 37 platforms that we are.
On.
You know that we currently have crackle on and we're pushing the popcorn flex on it will be available on all of those platforms.
Which of course means that we're gonna be telling you at some point, we're going to more than 61, because you guys can multiply 37 times three I know that.
So we'll be expanding our consumer touch points over time.
So the terms of reach and launch that's the plan in terms of.
What is what it means in terms of opportunity.
The the chicken soup for the soul brand that's been around for since 1993, we've sold of 1 billion books around the world.
Hundreds of millions in the United States. There are 40 million households in the U S, which have the chicken soup for the soul book on a bookshelf.
Probably most of you have one in your house, you may or May not know, but you do the.
The books continue to sell at a great pace and its a loved brand across the brand.
That means as advertisers trust us want to be involved with us they like our programming.
And that's really that makes them great allies in the way, we rollout of the business and much of what I talked about it in the last answer.
That individual subsets of.
Of our networks being.
Susceptible to the presentation types of type credits.
It doesn't take a lot of the imagination to think well if we're gonna have of food and of travel and home.
<unk> on each of these.
Each of each of the chicken soup for the <unk> networks that Theres, a natural sponsorship opportunity for that entire line of content for different major companies. So we've got an opportunity here.
Which I believe is how this will come out to really engage in meaningful long term relationships with sponsors that are very different than the up and down nature of the spot in that business that advertisers.
Most people think of when they think about the advertising driven.
Content businesses, so there's really a big a big big opportunity to advance this model and do it in a different way Austin so.
We're excited about it.
Got it okay. Thank you for that.
Can you speak to the trajectories of user growth and maybe time spent across a.
Crackle plus.
Yeah, I'd say that user growth is good.
But and but almost irrelevant ive been arguing for a couple of years, that's not really the primary metric I did want everybody to understand that the strategy of.
Rolling out these new touch points is actually coming out the way we thought it would in fact, we said it was going to be 200 of 500000, new monthly active viewers. The range is actually quite a bit broader than that.
And the and some of the more developed ones have had over a million monthly active viewers the.
Less developed ones that are on the open a couple of weeks or on a much lower numbers, but on average it was 280000 over the first six of the quarter.
Sure.
But the time spent is of critical is of critical critical thing because it's really you need more time to have more ad impressions.
And you do need the selling of impressions despite the helping.
Hoping that we'll be selling more presentations than just the AD impressions of the future.
And they are where we were weak because of our tech wasn't as good as it needed to be a recommendation engine wasn't as good as it needed to day.
And.
It's the all of that's about the change with our new <unk> platform, which I think you may have seen at the new fronts of not you should.
Take a look at that video.
And that's really where we expect to make the big improvements over the remainder of the year by very much improving the amount of time spent.
Overall, and and really that's it that's the key a key thing for us to accomplish this year.
That's the best way for us to grow viewership and the way I mean that crazy. So that's true.
Thanks.
Yes, one last quick one of the library what portion is always content.
The <unk>.
Which portion of his owned is that what you asked me.
Yeah, I guess of the available titles.
Okay well.
2000 movies 2000 television episodes out of 11000.
The total of available movies and 22000 total available TV episodes.
The.
That's the way to look at it.
Got it okay.
Okay. Thanks very much.
Youre welcome.
Our next question comes from Brian Kinsinger with Alliance Global your question. Please.
Thanks, Bill only ask one question I know it might be two parts. So we can get some other things.
Yeah, Hello can you hear me we're on mute you were on mute.
I'm not on mute.
We can hear you Brian it kind of near you.
Thank you Brian.
Hey.
None of the iPhone I'm kidding.
The I'm only going to ask one question you are constantly adding new original exclusive titles you've acquired a huge amount of content recently.
Where are you and I'm sure of the technology platform you are putting in is going to help this but where are you in the evolution to optimizing owned content versus licensed content, especially true recommendations and where is that long term mix and where are you right now.
Yeah.
So we're at the very beginning of the process, which is why the answer to Dan's question about margin at 60% as it kind of get better of the answer is yes.
We're at the very beginning Brian.
We just acquired the second half of our own content right or actually the Havent even finished.
Those of us on our deal as I said very soon.
And that we will have doubled the amount of one door for long term distributed content and that of course will dramatically affect our ability to to lower cost of revenue, but we're not done with either of the production or the acquisition on a daily basis of film and television series nor.
Or are we done with acquiring libraries, because we are the most logical acquirer of any library that has a bad news.
We can continue to put that we can continue to make that much more valuable to us.
And further as you know we're targeting.
One new original or exclusive piece of content every week beginning in 2022.
Which means that we will have ramped up both the distribution side from 10 to 20 movies. The production side beside part with partners to another 20 movies at the 20 series and will acquire 10 or so additional things.
On an AD hoc basis over the course of the year. So we're going to continue to ramp up our new and original content, that's coming through we're going to continue to ramp up of library ownership.
The very beginning of that exercise and it will drive cost of revenue day.
Even further.
Yes.
Great Great results. Thank you.
Thanks.
I think the operator is going to be our last question. So.
Thank you Sir.
Last question will be from Jason on KAR with Craig Hallum. Please go ahead.
Thank you. So bill we spent the last few quarters talking about this this content pipeline that you've built up and obviously, you're starting to see that in the financials. It's just more on the production and distribution side at what point does that pipeline of titles start to hit Crackle plus and then.
I know you don't like to comment on the viewership trends of things, but how does that impact your business. When all of these titles move over to critical I mean, what are the metrics that youre looking for to kind of gain that mind share.
So you have made this point, Jason I mean, very well over the last few months.
I've read your work there has been there is this.
The the content is kind of like a leading indicator as you as you sort of pointed out and as it comes on and an increasing level, we're going to have increasing viewership just because of the quality of the content continuing to improve.
And there is a part there is the pipeline now that that's pretty inevitable I don't know exactly how many new movies. We are bringing on I think it was something like nine or 10 that we announced in and the new fronts and another dozen or so series that we announced but that's not really the end of the process. That's the beginning of it we're on.
We're already seeing.
Lots of new content come on like going from broke season, two of which by the way. It was the number for <unk>.
The.
Show on the network when I looked yesterday.
By the way it Hasnt premiered.
What's up right now are these 10 mini subs.
That are presented by Tracfone or smart track of somebody and those those many of those are sort of like a preliminary two of the real premier of the of the season, which is may 20th.
That kind of content is going to continue to comment on at a pace. The drives viewership just like going for broke season, one day and it's gonna be supplemented by the stuff. That's in the pipeline of things like the outpost and wellies that will be here next year.
And that combination is going to I think the of very powerful.
The driver of additional viewership I also think though that the new tax and the recommendation engine.
And the and the incorporation of data.
We will also have a very big impact on time on site and the.
But the nice thing is we're coming from a great place, we're starting from a base.
That is really good solid base now.
Far I think far in excess of what people really expected.
On.
And we're going to go up from here.
So the.
There's every reason to be.
Very excited about where we are and our ability to grow. This we were in a unique spot I think we can.
Nice to see our <unk>.
So our kind of competitors now admitting that you do need original and exclusive content NDA by business. You know, we're only been saying that for four years all by ourselves.
But it is clearly clearly right. It has the big impact on the business. It is one of the key elements of that three legged stool I talked about.
So it's.
Go ahead, you got one more [laughter] well just correct me if I'm wrong, but we've been talking about this mixture of shift towards profitability in it as some of these titles move over the Crackle plus I would think that that's another positive mix shift for for profitability as I don't believe there's a lot of cost of revenue attached to those titles once they had crackle and my income.
Correct there.
No you're absolutely right.
Another good driver of this cost of revenue.
Down gross margin on EBITDA on top.
So.
Grow viewership drive cost revenue down and that's what we said this year was about we've done both already in the first quarter I think far in excess of what people would have expected.
The it continuing over the rest of the year growing viewership at an accelerating pace driving cost of revenue down.
It means of bigger and much more profitable business.
Hopefully, we'll be able to continue to tell you each time, we get on on one of these calls that.
The future, we see is even brighter than the future we saw before as we've done the last three times we've done this so.
I think thats, where we are.
Alright, Thanks Bill.
Youre welcome Jason.
Thank you everybody for joining us today.
As we as you know we're very excited about our business I think you can probably tell that by the by these comments.
And we look forward to giving you more information as time goes on thanks for joining us.
Thank you and this concludes today's conference call. Thank you for your participation and you may now disconnect.
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