Q4 2021 Chicken Soup for The Soul Entertainment Inc Earnings Call
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Good day and thank you the same bye welcome to the chicken soup for the Soul Entertainment Fourthquarter 2021 and call at.
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Thank you operator and welcome.
With me on the call today are William David Hanna, Chairman, and Chief Executive Officer, and Chris Mitchell, Chief Financial Officer to review, the fourth quarter and full year 2021 results as well as provide a business update following 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 were 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 Exchange Commission on.
On today's call management will make comments on certain gap base and non-GAAP pro forma financial information and non-GAAP financial measure. The company uses is adjusted EBITDA management believes that adjusted EBITDA provides useful information and 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 to net income or loss, which is the most directly comparable got measure.
For further information on the company's historical financial performance financial condition and operational in other information and risks refer you to our filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2021, which was filed today.
I would now like to turn the call over to William Hanna Chairman and C. E O Bill. Please go ahead.
Thanks, Taylor welcome everyone and thank you for joining us today.
We had a strong finished the year and had a great 2021.
With a number of major accomplishments that strengthened our foundation and establish momentum for us to scale our business in 2022.
I'm going to go through a quick recap of these 2021 accomplishments give some high level thoughts on current industry dynamics talk about how we are scaling our business to capitalize on the opportunities we have.
And then I'll turn it over to Chris who will go into more detail on the financials.
We had a record and to an outstanding year.
Fourth quarter net revenue was a record $336 million, an increase of 78% over the prior year period.
And adjusted EBITDA for the quarter was a record $9.3 million a.
A three fold increase over the same quarter last year.
Our full year performance set revenue.
And adjusted EBITDA Records as well.
Full year of 2021 net revenue totaled 110.4 million above our expectations and is 62 per cent increase over 220, 20th.
I just did EBIDTA reached 21.8 million growing 85% over the prior year.
What's even more impressive is that these growth rates are on top of the strong 2020 performance that we experienced during the Covid pandemic lockdowns.
2021 was also a transformational year strategically.
First we significantly grew our library and content pipeline.
We completed the sonar assets acquisition early in the year, which added more than 1000 titles across an extensive library and more than 4000 hours of high quality programming.
And not to Skip ahead, we also recently doubled our library again with a 10 91 acquisition.
We formed the chicken soup for the soul pillaging room in 2021, which consolidated T V studio activity activity I activities under one group headed by David Ellender.
We were also active and successful in acquiring content through screen media and producing content through a landmark in chicken soup for the Soul Studios.
We increased our viewership in view of retention on our networks.
Ah distribution touch point strategy has been very successful.
On average we continue to add between 400, and 450000 viewers with new touch points.
The Crackle plus network is now available in more than 70 touch points and.
And our average totally months total monthly active users for the crackle plus now exceeds $40 million.
We also launched our new chicken soup for the soul streaming service on several fast channels and on busy Oh as an app earlier this month.
We are now rolling out the chicken soup for the Soul service more broadly opening another avenue for driving revenues from our quality content and growing our viewership base.
Beyond content and distribution, we get began to roll out of our new improved tech platform.
It's been well received by both our viewers that are advertising partners.
The new Tech has now launched on busy O N Samsung and the results are coming in as we'd hoped.
I will add some more color on this in a minute.
And lastly, we enhanced our financial position by strengthening our balance sheet and augmenting our shareholder return profile with an active share buyback program, which we recently increased to $30 million.
All in all we have everything we need to meaningfully scale our business in 2022.
If you've followed us for any amount of time, you know we may not stop there.
To step to set the stage for a conversation around our plans an expectation for 2022.
I want to provide some high level thoughts on the V O D industry.
There are many dynamics at play in the industry right now and they inform our long term strategy.
As many of you know streaming has been a mixed bag for investors in recent months, that's putting it mildly.
Nearly all of the attention has been focused on the S. Five space and the decisions being made by big media names, but.
But we believe that the trends driving those decisions are more about the changing media landscape and viewer habits than their performance in the market.
If you don't believe beneath the surface, you'll see several key trends in about that's five and a bad that support that.
And the S. Five space U S. Subscriptions overall are not materially growing despite the ever increasing number of options available to viewers we've.
We believe the most attractive remaining growth opportunity for as far as overseas.
Additionally, the competitive landscape is dry is driving content investment to either ever higher levels.
The Stakes are high here in the U S signs are emerging that overcrowded lantzy overcrowded landscape is beginning to resolved and increasingly savvy viewers jumping in and out of subscriptions to binge watch the latest big hit.
And recently reported research says more of those savvy viewers are in the millennium <unk> demos, who over the <unk> over the coming years will control the vast majority of purchasing power.
All of this should ultimately lead to consolidation a thesis well supported by the historical evolution of the media industry.
S. Five has succeeded in driving cord cutting, but the slow migration away from linear pay T V.
Doesn't mean, the end of free to air content.
Avon stepping into the void and there is tremendous value there.
AD space has become more scarce and therefore more valuable as cord cutting ships viewer eyeballs away from traditional platforms.
Partly as a result, we believe at Avon is likely only in the second or third inning in the U S with regard to viewer growth and.
And Furthermore is still the only get is only in the pregame internationally with the first ending soon to come.
Overall, the keys to Avon success or content at you can't find elsewhere, a great viewer experience the ability to deliver targeted viewers to advertisers and the ease of access to your networks for consumers.
This is what crackle has built especially in the last 12 months.
In summary, there is room in the world for scaled players in both Avon and is sad, but we think very few are paying attention to the Avon opportunity.
So let's take a look at how we're scaling our business.
Our core pillars of grow with our content viewership C. P M and tech technology for the user experience.
And we focus on all of these through both both organic growth and opportunistic emanate.
Content is clearly become our most important differentiator.
All told we now have a remarkable over 100000 programming hours and are content library.
Which together with our production activity put us on track to more than double R. Originally projected number of original and exclusive pieces of content per week and 2022.
Our programming strategy has always been to put more original and exclusive content on our platform and to grow our I P rights ownership.
We do this by acquiring and producing content cost effectively including through partnerships and co productions.
This is how will drive profitable growth in that picture is already starting to emerge in our 2021 results, which much more with much more to come.
We believe our company has been an Avon leader and a growing force and streaming at large by ramping our original and exclusive releases.
We now believe we will have more than 100 pieces of new original and exclusive content. This year.
Or two titles per week across our three core streaming services.
Viewership of are owned in her original exclusive content a metric unique to us that we've been reporting to you for some time.
Is a good way to monitor our progress.
As a percentage of overall add impressions original and exclusive viewership generated as high as 28% of total AD impressions in December .
24% for the quarter, both of which exceeded our goal our year end goal of 20 per cent.
And that number will undoubtedly increase with are more robust 20 twenty-two pipeline.
Remember this is our most profitable content.
Beyond our original is bigger media players are finding our streaming services to be a home for their great content.
These include the B B C, who has given us a three year exclusive Avon license to the Smash hit series Sherlock and more recently signed a multiyear deal for premium content with screen media, whereby will add more than 2500 hours a b b C originals on our services.
We also recently add the Spiderman film trilogy from Sony and time to coincide with franchises latest new theatrical release.
Our shellings of the trilogy hit the top of Crackles movies movie charts, not surprisingly and was a key driver of viewership in February .
We're also executing creatively on our media media partnerships highlighted by our recent deal with apex media for inside the Black box series.
This is a big positive as it partners us with a large advertising agency with.
With hundreds of important advertising customers over multiple years.
Who will help us with increasing sponsor integrations.
Other brands working on upcoming series include Png's bounty on comfort kitchen, and Verizon on Smart home nation, but there are many more.
We expect to introduce brand integration opportunities at the upcoming new friends.
Our chicken soup for the soul streaming service launched with thousands of hours of exclusive programming and it's still fully rolling out across distribution touch point.
Just last week, we announced its official launch on <unk>.
And last but certainly not least or.
Ah recently announced 10 91 deal hits are M&A strategy perfectly both strategically and financially.
From a content perspective, it gives us distribution rights to approximately 4000 more quality movies and T V series.
Doubling the size of our content catalog.
Some of the content includes Academy Award nominated Cartel Land Spirit Award winner Christine starring Rebecca Hall, and Grammy Award winner Linda Ronstadt, the sound of my voice.
This deal also comes with established fast and Eva streaming channels that generate approximately 1 billion yearly ad impressions.
10, 91 deal is also immediately immediately accretive to our financial results.
Adding an estimated 10 million of revenue and approximately $3 million of incremental EBIDTA in the next 12 months.
Our expanded content lineup combined with our aggressive distribution rollout positions us to continue viewership growth.
We now plan to reach more than 90 consumer touch point in 2022. This is the second time, we've increased that goal this year.
We're also accelerating progress with our international business expansion, which is still in early stages, but we anticipate will be a key driver of viewership over the long term.
One interesting side note is that our lives large library is allowing us to participate in the rapidly growing fast business Bye segment meant in groups of content that appeal to different dealers, allowing for greater refinement of our content for viewers.
We already had our crackle chicken soup for the soul and truly fast channels rolling out and the 10 91 acquisition ads Echo the world's best connect collection of action sports films unidentified the largest collection of family friendly and faith based movies and documentaries surf now T V. I think you can guess.
What that's about and black picks to our lineup.
Technology enhancements that we debuted in 2021 also continue to roll out across our platforms. The area, where we anticipate these enhancements will be most impactful to our business is through their ability to increase our users time spent on the platform and therefore ad impressions.
Additionally, we continue to introduce new advertising innovations that are driving AD dollars and increasing C. P. S.
With the Vizio and Samsung New Tech launches, we've seen great progress with our user engagement.
Vizio Tech is beginning to have the impact we hoped in February watch time on vizio averaged over 88 minutes per engage fewer a 40% increase.
<unk> uniques were up 25% month over month Z O M. A U as were up 28% month over month.
Start time increased 42 per cent and here's one that went down and we're happy about it that was all 196% decrease in AD exits on the vizio platform and that makes our advertisers happy.
Samsung's much more recently and launched App has started off strong with engage viewer watch time up around 70% since the launch.
We're also on track to add new Tech to Roku fire T V. L G and other major platforms in this quarter Q too.
We expect the continued rollout of our updated apps will mirror these increased lunchtimes.
While we are highly focused on executing on the strategic growth pillars, we remain optimistic and opportunistic about the consolidating media marketplace.
As we look ahead to 2022 from a financial projection perspective, we are expecting 35% top line growth and approximately 50% adjusted EBITDA growth for the full year without any further acquisitions.
Revenue for our first quarter, which is which adds today will commented approximately 25% over last year.
Implied in our 20 twenty-two outlook as an expectation that our top line. It adjusted EBITDA growth will accelerate through the second half of the year as it has in the prior five years.
Dusted EBITDA outperformance relative to revenue growth is expected as a result of the increase investments in our new tech.
As well as marketing and M&A and will primarily that will primarily be reflected in the first quarter performance.
In closing we couldn't be more excited about the future of our business.
Beginning to scale meaningfully and we're looking forward to executing on a great year operationally strategically and financially.
I want to thank our entire chicken soup for the soul Entertainment team for all our hard work I'm Gonna turn it over to Chris who will go through the financials in more detail Chris.
Thank you Bill.
Our financial results for the fourth quarter and full year of 2021 should reflect the tremendous accomplishments we made over the past year.
Which position us to scale the business meaningfully in 2022 and beyond.
Starting with the results for the fourth quarter.
We reported record net revenue of $36 million compared to $29.1 million in the third quarter of 2021 and $22 million in the fourth quarter of the prior year.
This translates to a year over year increase of approximately 78%.
The year over year increase in net revenue was driven by an increase in T ball sails.
An increase in viewership and AD sales related to our new distributions touch point.
Contribution from the sonar library.
And an increase in broke international licensing sales and production revenue.
For the fifth consecutive quarter, we virtually sold out all of our advertising inventory.
Advertisers continue to be increasingly attracted to a strong and growing viewership as we had distribution touch points and increase the pace at which we really high quality content.
This in turn has driven our ability to not only grow existing sponsorship relationships with large commitments, but also engage with new and in some cases larger advertising partners.
Gross profit for the fourth quarter, 2021 was $11.4 million or 32% of net revenue.
Compared to $5.8 million or 29% of net revenue in the same period prior year.
Gross margin in the fourth quarter was impacted by higher than expected technology costs as a percentage of sales as we launched new streaming apps and our investment in content and Justin from the sonar library and the screen Media Library.
Excluding 10.2 million of non-cash amortization of film Library gross profit would have been $21.6 million.
The comparable gross profit for the fourth quarter of 2020, excluding non-cash amortization of the film Library was $12.3 million.
Operating loss for the fourth quarter of 2021 was $19.1 million compared to an operating loss of $9.9 million in the year ago period.
Excluding the $11 $8 million of impairment charges included in the fourth quarter of 2021 operating loss would've been roughly $7.2 million.
Our adjusted EBITDA for the fourth quarter was $9.3 million compared to $2.8 million in the same period last year.
Representing a year over year increase of nearly three times.
This reflects the increasing scale of our business are growing percentage of content, Gary on our network for which we control IP rights and our cost efficient production and distribution model, which we expect will drive further margin expansion overtime.
Summarizing our full year of 2021 results, we generated record that revenue of $110.4 million compared to $66 million $66.4 million in the full year of 2020, an increase of 66%.
The record results for the year were driven by both organic growth and library contributions from the sonar acquisition.
We experienced broke in all areas of the business from strong international licensing sales and success from our Tivo releases to an increase in viewership and AD revenues, particularly from your distribution touch points.
And an increase in production service revenue.
Gross profit for the full year, 2021 was $31.3 million or 28% of net revenue compared to $14.2 million for the prior year.
21% of net revenue.
Gross margin and the year was impacted by higher than expected technology costs as a percentage of sales as we launched new streaming apps and our investment account content ingestion from the sonar library and the screen Media Library.
Excluding 34 million of non-cash amortization of the film Library gross profit would have been $65.3 million the.
The comparable gross profit for 2020, excluding non-cash amortization of the film Library was $37.5 million.
Operating loss for 2021 was $46 million compared to an operating loss of $44.3 million and the prior year.
Excluding the $11 8 million of impairment charges included in the fiscal year for 2021 operating loss would've been roughly $34.2 million.
Adjusted EBITDA for the full year of 2021 increased 86% to $21.8 million compared to $11.8 million in 2020.
I would like to emphasize that despite heavier than normal technology span of 2021 as previously discussed gross margins increased to 32% in the fourth quarter.
Up from 29% in the prior year period, and 21% and a third quarter of 2021.
And gross margin increased to 28% and the 2024 2020.
One four year up from 21% in the prior year.
Similarly, despite investing significantly in our SG&A to support future growth on a year over year on a year over prior year basis.
And a as a percentage of net revenue improved from 41% to 37% in the fourth quarter and from 48% to 44% in the full year.
Further despite 52, new hires in 2021 on a year over prior year basis comparison.
Compensation expense has a percentage of net revenue improved from 28% to 20% and.
In the fourth quarter.
And from 28% to 22% in the full year.
As we move into the first half of 2022, we expect gross margins and operating margins will be somewhat compressed as we continue to spin heavier than normal on technology and staffing.
Before improving in the back half of the year is the investment that we've been making result in significant growth.
Looking at our balance sheet and liquidity position as of December 31, 2021, the company had cash and cash equivalents of $44.3 million.
<unk> to $66.9 million at the end of the third quarter of 2021 and $14.7 million at the end of the year ago period.
The decline relative to the third quarter related part to share repurchases made during the fourth quarter.
Elaborate on in a moment.
As many of you may recall, we completed a common stock offering in July .
To provide us with $75 million in gross proceeds.
As we continue our balanced capital allocation strategy, we remain well positioned from a liquidity perspective to further build a business, including the flexibility to capture any attractive opportunities. We may see in terms of highly strategic M&A.
We recently did with the acquisition of 10 91 pictures.
Additionally, our board of directors approved a 10 million increase to our stock repurchase authorization. In February . This is in addition to the approximately $20 million. The company has repurchased since November 2021.
During the fourth quarter of 2021, we repurchased roughly 879000 shares for a total of $12.6 million and in the first quarter through yesterday's clothes, we repurchased.
Approximately 765000 shares for a total of $8.5 million.
These repurchases reflect our confidence in the work we've done to build a strong business Foundation and we intend to continue to buy back shares Opportunistically.
Lastly, I wanted to quickly touch on our current sure count to proactively clear up any confusion there may be and help get everyone on the line and calculating our EPS numbers.
As of December 31, 2021, the basic sure Count was 15.02 million shares.
Net loss for the year ended December 31, 2021 was $59.4 million or $3.96 per share.
Paired with a net loss of 44.6 million.
$3.62 per share in the prior year.
Excluding preferred dividends the net loss of 2021 was $15.4 million or $3.36 per share compared with a net loss of $44 million or three.
$3.29 per share in the prior year.
On an adjusted basis, excluding 80 cents of charges related to impairment of content assets intangible assets and goodwill.
As well as 37.
Amortization related to acquired intangible assets.
2021, net loss per share totaled $2.80.
In closing we're excited about the accomplishments, we made and what was incredible successfully incredibly successful 2021.
But we made excellent progress on our key strategic initiatives that position us to further scaled the bitterness throughout 2022.
Our belief is that we.
With these pieces in place, we are well positioned to drive sustainable top line growth.
And improved cash flow and profitability, while capitalizing on the additional growth opportunities that we still see ahead of us.
All of which we firmly believe will drive long term shareholder value.
With that we.
We can open up the call for questions.
Operator.
Thank you and as a reminder to ask a question you will need a pet store and then one your telephone.
To withdraw your question. Please press the pound key and once again, that's star and then one to ask a question.
Our first question comes from Dan Carnose from the Benchmark Company. Your line is open.
Great. Thanks, Good afternoon evening, Bill could finish to the year, obviously the guide for the full year, it's a little bit ahead of consensus too. So that's good to see I just wanted to talk a little bit about the cadence.
We've heard from some of the larger players, but some of the international incidents have been causing some domestic spillover in the AD market, while generally C. T V checks have been N O G. T checks have been good there has been a little bit of category I don't know what you call. It weird just I don't know if that's impacting your numbers at all of your <unk>.
Seeing that I need the the sort of trajectory in cadence for the year is kind of similar but just wonder if there's anything I put a call out in queue want her to have just given the economic backdrop and everything that's going on over there.
I mean, so far not hasn't we haven't seen an impact on what we've bye bye. Thanks for the comment stand we did have a great year in and I hope everybody realizes that now that we've finally gotten the numbers out.
And we're going to have a good 22, I expect it to be a great year the.
We're not seeing we're not seeing any real impact on the business from the international events yet.
Can't say that we won but so far no and I think we've already indicated that the first quarter's closing up pretty meaningful and for those of you who don't remember the history last year's first quarter was incredibly strong because we had had to defer some revenue from <unk>. So we're having a 25% increase.
Off of what was a very strong first quarter last year.
We're off to a great start for the year and the numbers, we see this year look pretty strong.
So I'm pretty optimistic, but we haven't had that kind of impact Dan that that I've heard of or seen in other places. It may be just because it's such a long queue.
To get onto our networks that we're not noticing.
Any kind of impact I don't see any really big changes in the way.
In the in the.
The dispersal of customers, who are are signing up we've we've had a big really pre.
Pretty substantial jump in sponsor integration activity.
Which was something I think I told everybody I expected to start to see because of the scarcity of ads. So all in all not yet but maybe.
Ah kit I can't tell you how it will turn out obviously, what's going on.
Internationally is horrible.
Yeah, No. Let me it certainly is and I appreciate that color. That's helpful. Can you talk a little bit about the latter point that you just brought up though I mean, you know I know that you guys are starting to move more into the national tight arena with advertisers sort of late last year trajectory, there and obviously integrated sponsorships, especially.
I mean, we fill obviously have a long history with with you and kind of the the legacy of this the company, but sort of grant integration, especially if you're kind of launch chicken soup. There's clearly some opportunity there maybe even overseas as you as you kind of role that out maybe just on those to bump it up to get some color.
Sure so they're kind of related thoughts when you get right down to it branded the sponsor integration strategy, which you know we've had from the beginning which we used to offset our costs of production.
It it's it's always been challenged in the sense that it was viewed as a business it's hard to scale.
But we're seeing that it is starting to scale.
And I'll go back to what I said I do think the fact that it's harder to buy a vibe adds that people would like is causing advertisers to be more flexible in the way they think about.
Reaching consumers and what we've seen I mentioned, a couple of them in the script, Verizon and Smart home nation PNG first time, we've done a PNG integration and comfort kitchen.
And I quite a few others, obviously at some point will will say that we're gonna be going for that we're gonna do going for broke season, three and that will have a bunch of integrations in it as well.
This process is really going pretty well a lot of it is being enhanced by the fact that we're we're gonna run. This is the second half of your question that we're gonna run a number of these programs on the chicken soup for the soul streaming service and so of advertisers liked that idea they love the idea of that.
Of of that demographic they love the idea of being associated with that brand.
That network is off to a really good start, but it's very early days.
But the streaming services have done well they are growing rapidly and now we've got our first real a chicken soup for the soul network out there a streaming service out there on vizio was quite a few more coming very quickly.
So.
I think those are related thoughts in a funny way because we find it easier.
Than ever to convince advertisers that they should be thinking about integrations, especially when somebody is going to run in the chicken soup for the soul streaming service.
Now we've got the Upfronts coming.
Sued or the new front, so I guess, we called in our space.
And I would expect.
Quite a few additional.
Things to talk about with regard to advertisers for the new friends. So.
Long long answer, but a good question.
Great No I appreciate the color that's the closest I'll come to S. T U National and International question for you today Bill So you're off the hook. Thanks for all the color I appreciate it.
From them.
Thank you. Our next question comes from Thomas Forte from da Davidson. Your line is open.
Great. So bill congrats on the corner and year. One question of one follow up let's start with a question you sort of talked about this but I wanted to ask the question. This way. So a number of subscription video on demand services are watching complimentary advertising video on demand services.
To what extent is this a positive for chicken soup for the soul, because it's increasing advertisers interested the category and then to what extent is in a negative because you know I have increased competition on the eve upfront.
Yeah, that's a good question.
So I think Tom it on balance, it's a pretty big positive.
Because it's to the extent there were still advertisers that were teetering on whether or not they thought they should be or had to be advertising and a valid.
They are tumbling over pretty quickly I was on the phone last week with a very large.
Consumer products company talking about opportunities to work together and.
They were you could you could see how they have warmed up to the.
D as Avon and part of the reason is because all the big guys are embracing it with the obvious exception of Netflix.
As part of their strategy, but let's not lose sight of the fact that even with those companies embracing it as part of the strategy.
They're not there aren't going to be enough ads.
They just aren't going to be they're not going to materially affect the overall availability of advertising the demand is still far exceed the availability.
And it's gotta be interesting to see what happens with the S. Five as a result of the fact that they are starting to add the advertising where they do minorities, you've already seen I think probably the 9% or so reduction in as five hours that are that have occurred in the last period last I think it's the last quarter of.
Prior years, there people are turning off of those at spots I think and learning how to manage them better I said that in my in my script, but.
It really feels to me like.
Our our prediction that there would be a limit to how many services people had.
Is coming to fruition, but but the Eva services. So long as we can keep amping up and making our content better and better.
I think it's almost.
Inevitable that will take more and more share of time.
Excellent and then my second question is again, you sort of talks about this but I wanted to ask you specifically given that you continue to spell out your inventory how should we think about the opportunity for you to increase your C. P M rates.
Well they are increasing and continue to increase.
We had I believe the fourth quarter, what we hit the all time record for our.
For our services and I think it was in November which would make sense because that's the quarter of the that's the month of the greatest demand and the year by a large.
So I think that will continue to be CPM increases.
My view of this is.
It's one that's one of the metrics, we're trying to drive as you know Tom one is how many viewers.
If anybody noticed we finally admitted we broke 40 million monthly hacked of viewers.
And we broke up by a pretty good number but I didn't want to go to the top number because I still think that number is gonna bounce around a bit.
And then of course, there's the tie.
[noise] time on site and we gave you some pretty.
Important numbers about the results on both the <unk> and the Samsung roll out of the New Tech and then there's the new services you know.
Chicken soup for the Soul and then there's the new.
Fast services.
And all of those factors as you know Tom go into the growth overall of the Avon business.
Cpm's as one of his one.
One other and so it's theirs favor a bowl.
Every one of those as in a favorable trend right now so they they add to each other and they generate that's big cause for optimism I mean.
There's a lot of good trends there that we just articulated and by the way the distribution touch point strategy is a homeland it just complete.
Completely completely worked.
And it's continuing to work.
Thanks for taking my questions, though.
You're welcome.
Thank you.
Next question comes from Jason Prayer from Craig How your line is open.
Hey, guys. Good afternoon, Bill So your reference that you've doubled the content over the past year. I think you also said that the content, we'll double again with the 10 91 acquisition.
Obviously revenue isn't gonna grow hand in hand, with the content investment that you've made but I'm trying to just get an understanding of what other areas of investment you're gonna approach in 2022 that will help catalyze that that revenue growth.
Well I think as Chris said.
Hi, Jason.
As Chris said in his in.
And is.
Part of the talk.
We've been continuing to invest in further rollout of new Tech further roll out of new streaming services and I would say that if you listened to the.
To the portion of my talk where we were discussing the.
Fast businesses, we're we're embracing those as well and seeing some pretty significant.
Impact from that and it all comes from the fact that we've got this very robust.
Owned and or controlled content and we can use it.
Both for ourselves and also to monetize it with others in ways that are not competitive to our <unk>.
And the combination of those two things of course is what's driving the growth overall so.
But as far as when you use the word investment I would say that we are kind of at the point now where it'll be rare for us.
Two.
Step out and take on additional content unless it's something extraordinary like the BBC deal.
Where we picked up the exclusive rights for three years to one of the most important series of all time. So what are the most popular series of all times with one of those with a star who was about as hard as you could possibly be on the planet.
So.
And then 2500 other hours of really top notch content by the way much of which.
Is exclusive to us.
Some people have asked us if the if any of the other content is exclusive and the answer is yes.
So it's gonna be more we're gonna be able to be more choosy more picky about the way we spend Jason in terms of the content side of the house, because we now have plenty.
And I think I I tried to say this a couple of years ago to people and it's it's still the case.
Over time.
All of the players.
Players will end up imitating our strategy just take a look at to be they'll they'd be the first to tell you they're doing they're watching what we're doing and doing it. They just announced they did Mar Vista, they announced they're going to have.
No I think they said 80 pieces of original and exclusive content this year or next year or something like that will be over 100.
But but the implications of that are that if you're not currently in a relationship with an Avon, it's gonna be harder and harder to get your stuff on anybody in a meaningful place and.
And that's going to change the dynamics in the business for us favorably in terms of our ability to pick and choose really top notch content at a lower cost.
So.
I Hope I answered your question I think I did but tell me if you did.
<unk> you did that was helpful. Thank you one one follow up for me. So you it alluded earlier to that to upfronts or new fronts.
I'm wondering if you can just preview any expectations, there whether that industry expectations, and how that will positively influence chicken soup or or perhaps you can maybe upfront kind of some tease out some initiatives that you may be looking to rollout.
Yeah.
I'll get yelled at Jason if I give you everything that I'm thinking about right now because you know.
Of the part of the new friends as you have to <unk>, you want to be introducing new things. So suffice it to say that a good good chunk of the focus will be on the new tickets for the song streaming service and all of the.
Incredible content opportunities that we we we have there.
I mean, the last time, we talked about content I want to remind everybody. We predicted we'd have one new piece of original and exclusive content each week.
That's 52.
We're gonna break 100 this year so we.
We have really managed to get that into high gear to get the combination of production and acquisition working and I doubt, we need much more than that.
But I can't I don't want to give I don't want to give too much away, Jason about what's going to happen at the new friends. Because then it would make them less exciting and those are very important to us. So.
We will look to learn more about those in the next month or so.
Thanks, Thank you Sir you're.
You're welcome.
Thank you. Our next question comes from Michael Morris from Guggenheim. Your line is open.
Thank you good afternoon, everyone. Thanks for all the the the detail in your prepared remarks, Bill you you did spend a lot of time referencing tech and the important <unk> the investment there I'm, hoping maybe you can remind us.
And a bit more detail what the tech investments have been and how it is impacting the consumer experience and maybe a little bit of of where we are in the investment cycle I'm on those items compared to the monetization potential of what you're doing there.
And then secondly, maybe for Chris could you expand a little bit on the the booked impairment and mcwhorter what was the driver of of the the the charges that you took what would that the assets on the content the goodwill side that's.
That you've made the changes too. Thanks, guys. Appreciate it [laughter], Mike you May have given me an opportunity once Chris comments on that last part of your question to give you my latest philosophical disagreement with gap, but before we get to that.
Four we get to that let me try to answer your first your first question.
In the tech space, it's really been too big initiatives over the last year. One is really an inside kind of initiative, which is the ingestion process getting that up to speed you don't build a library of the sort we have without actually needing big pipes to move that to move the digital content around even within our own world.
And that's been a very significant portion of our spend over the last year and that's about done.
We're almost done with that I'd I'd say.
Say, 90% plus through that.
The other big spend has been on improving the tech platform for the viewer experience and you see that and you see that as successful as the numbers I cited from the Vizio and Samsung at least the early days.
And that and that has been where I guess, let's see we've had at least three releases on vizio, maybe four as we work through you know each little iteration. Because every time you do as a software release, there's there's a bug or or two or 10 or 100, and you you need to work your way through those make.
Sure they get cleaned up and that you then take the next version and we've been I think I think we're in version I think we're in the third version of the fourth version of that but we now feel very good about that and so the spend shifts from.
Call. It perfecting, although you never perfect software perfecting your your underlying network to rolling it out across the other platforms. The Samsung rollout is the first B b.
After the vizio, one, but as I said in my talk.
Talk we will.
Rollout to Roku and fire and I forget the other ones that I listed elgie in a couple of others. This quarter this quarter being cute too I'm in tomorrow, I'm, sorry, I'm, not no longer and I'm no longer in Hum.
Mm no longer inbar try them nowadays Errol.
But the.
So so that is also very far along like one of the reasons, we talked about Q1. The way. We did was we wanted everybody to understand that there was there will be a little bit of the residual drag on the EBITDA is not gonna be bad it's still going to be quite positive, but that it'll it'll be a little bit less robust than it would have been if.
We weren't investing but as we rolled through the year as you can see from this year as we get rolling through the year, we start to really generate a very different kind of EBITDA with scale. So I'm very very bullish on the year for that and part of it is because much of the tech spend while it never goes away.
Much of the tech spend that is not about scaling is behind us.
So a lot of the pre.
Free scale investment that just drags you down but it doesn't add revenue.
Is over there's lots more to spend to roll out, but the rollout should AD revenue and should be much more closely tied to it and that's part of the reason why we are optimistic about the last half of the year the way we set.
So I think that answered your question.
But if it didn't tell me and then I'll turn it over to <unk>.
No that was very helpful. I appreciate that okay, Chris short term alright on the content impairment side.
I think you can break down the impairments into three basic buckets.
The first of which is the development bucket and that's a relatively small amount of the total.
Any development work that you've done that's been on your books for more than three years, if it hasn't turned into something that's green, but you've got to write it off.
So there's a little bit of that and then the rest of it is broken down into the two other buckets and I would say, it's one bucket as the screen media library.
You have to look at the titles and if you feel like.
A title is impaired based on its tenure ultimate.
You have to write down.
Conversely, if you see a title that.
You feel was.
Underestimated initially in terms of revenue potential.
You're not allowed to write it up so that kind of speaks to.
Bill's philosophical.
Issue with the process, but that is a process that gap requires so I would say again.
Again.
After the small amount of development project was written off the rest of it is broken down fairly evenly between the two buckets of the screen media titles.
There's a lot of titles as you might imagine that goes back many years.
As well as the CSS original to see if that's original or the.
Productions that the company started with.
Built up a good number of series like the hidden heroes as an example.
We just had.
Had some impairments based on.
Those original ultimate that I would say that we've learned a lot over the course of a good number of years now doing those types of productions.
And we we.
We build that into our current tenure elements with production work.
But.
What I would view as a fairly conservative process you have to go through and we did it and this was the results so Mike why do I dislike.
Besides the fact that it's stupid, which is obvious that you could only write down things and not write things up.
Without being too specific in the last few weeks alone. We've received proposals one individual pieces of content and I'm not going to exaggerate maybe give you the actual number whereas the offers are 1800% higher than the content cost is on our balance sheet.
We don't get to write that up.
This is nonsense, it's absolute nonsense, but.
That's what I you guys know I'm not a big fan of gaps to begin with I have made that point over and over again.
It doesn't matter, it's not really it's really not a big deal, but still are overall library is way more valuable than it's ever been it's we've got.
For men. This number of really important titles in there now lots of award winning shows Fantastic stars.
To me that's silly, but.
What am I, who am I, we gotta get new gap polices, what we need.
Gotcha, sorry, they'll just.
Go ahead, Mike can I just that's just just since you brought that up at that that offer is that does that an offer for to to license. It to another service is it. So I'm trying to maybe require an individual type people that was really the actual acquisition offer people come to us all the guy and go can we buy your can we buy this or buy that we have intellectual property, that's very very value.
Evil.
And but that would just.
Kind of sticks in my Craw, because it's like it exactly the same time.
These folks are writing off some small number of millions of our library. We're getting offers for individual pieces of content that are more than the total amount of the right off it's doesn't make any sense to me.
Just find it ludicrous our libraries incredibly valuable.
We have one of the largest film and television libraries now in the world.
And it's high quality programming and we own much of the intellectual property underlying it.
And we have long term rates on most of it.
It's an unusual amalgamation of asset value and in fact, if you look at the way some of the distribution companies are being sold today with libraries that are a fraction of our size, they're selling for more than our market cap.
Which is another ridiculous thing by the way if you want to talk about ridiculous things are market cap is one of the most ridiculous thing I've see but before I get on that one let's let's let the next person and the last person to ask a question because we're running out of we're running out of time.
Thanks, Bye based on the answers I appreciate it.
Thank you and we'll take our last question from Brian Complainer from Alliance Global Partners. Your line is open.
Great. Thanks, so much bill nice corner each of your 70 touch point sure. So have so many content partners. You you go on Amazon T V or any other and there's so many apps what additional statues the company taking track to compete for new viewers and create brand awareness broke crackled.
Plus my follow up and then that's all for me is can you talk about how the load rates I'm not sure if I heard that improves on the new Tech platform I V O N Samsung compared to what historically been your load rates and what's the plan timeline for all touch points to be migrated.
Okay, that's a lot of stuff Brian .
Let me do my best.
[laughter].
Alright so.
Let's talk about promotion and marketing first.
I'm Gonna go back to what I always say.
It's the content.
It's all about the content.
If you take a look at.
February for example, where we had the three spiderman the old Spider man titles on our network.
I'm not going to pre announce the results, but suffice it to say it was an unbelievably good luck.
Because the content was there and people wanted it and they came they watched that and they watched other things and they found it we didn't even really have to promoted the distribution platforms promoted it for us Brian .
Because they recognize that it's the content that drives viewership and so that kind of promotion that we normally would have to buy we've got quite a bit of a quite a bit of it for free.
You watch what happens with Sherlock.
Sherlock is a long term opportunity to lock up.
Piece of programming, that's one of the most popular pieces of programming and history.
And we are the only ones will have it for three years, the only place you're going to be able to see that series in our country is going to be on our cracker plus networks.
That's what drives viewership.
It's the content if I was bill Clinton I'd say it was the contents stupid, but it's the content.
So that is what it is and.
Everything else is secondary.
Now admittedly the chicken soup for the soul brands of Big brand and we have millions and millions of fans and we will use every bit of that fan and outreach from our books and our other businesses.
To drive people to that network.
And that will be I think very special.
But it's the content.
That's what matters.
Now that.
You had asked about some statistics for various.
For the rollout of both Vizio, and Samsung and I'll repeat.
Most of what I, what I sat here.
Busy at a 40% increase in time on site, 25% increase in uniques, 28% increase in monthly act of viewers.
And start start time increase of 42% and the one I liked best which I'll repeat because I thought it was fun was the the 196% decrease in AD exits.
Which I think is really fabulous that just means the ads are being lauded seamlessly quickly, they're not irritating people and they come and they go and people stay that's really special watch peacocks uptime and see if you can make it through a whole show without wanting to throw something at the television when it when they start to try to load what are their ads and you get that stupid little yellow thing.
And it goes around and around and around.
I mean, it's this is this is a one of the parts of our business. So people do not like and.
And I don't blame them and then Samsung is already up 70% can engage viewer watch time, but it's very very early Bryan it's only.
A few a.
A few days really that tough at that it exists so.
But those are really good starts with the new tack and we are as I said rolling out the rest of it very very rapidly.
And I gave you the list of what's coming this quarter.
By the end of this year, we won't have we won't have any touch point that don't have our new tech on.
So great. Thank you.
You're welcome.
With that let me thank everybody for joining us today I know, we went a little long but.
We had a lot to tell Ya and there's been a lot going on in this company is you know.
Was really a fabulous year and other than the stock price things are pretty good. So I look forward to speaking to you all and.
In the future as well. Thank you operator, thank you all and thank you listeners.
Thank you.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day [music].