Q4 2022 Cinedigm Corp Earnings Call
Speaker 1: Welcome everyone and thanks for joining us on the call today.
First I'm going to briefly review our extremely strong results and then I'm going to speak to the reasons our content and streaming business strategy is clearly working So very well.
At the same time when many players in the industry are struggling to find their footing in this turbulent macroeconomic and business environment.
So we had tremendous success once again this fourth fiscal quarter: more than doubling our total revenues, which were up 104% to $16.9 million- driven by a 109% increase, and add supported streaming revenues, which were also up an incredible 793% on a two -year basis.
Our streaming revenues in total were our highest ever for a quarter.
And our revenues also far exceed Analyst estimates.
Our full year revenues of $56 million were up 78%.
Driven by a 108% increase in our streaming channel revenues, again led by ad supported revenue growth of 147%, strongly outperforming the rest of the industry.
On a two -year basis. Full year streaming channel and add supported revenues were ROC up as well, higher by two hundred and ninety percent in 514% respectively.
Combined with the long planned and successful monetization of our legacy Cinema equipment business, our rapid revenue growth helped generate $7.1 million in adjusted EBITDA for the full year.
That helped eliminate all our debt.
On the bulk of the important digital mediaorrightites, or DMR acquisition, and generate positive net income for the full year.
Now let me talk about the reasons we are generating these strong results: six straight quarters in triple-digit streaming growth, despite the tult in our industry and the overall business environment.
The most important factor driving our growth is that we developed a winning strategy for the streaming content business years ago and have completely stuck to that Vision.
Our vision has always been to approach the streaming content business, which is the highest growth sector of entertainment business, with a diversified, risk-advantaged portfolio approach to content channels and revenue streams, while controlling and leveraging our only technology.
In that way, we plan to take the post advantage of every facet of the massive ongoing sea change as consumers switch their wheeling habits to streaming.
So while many players in the streaming business have only a single streaming channel or a single revenue source.
We built, organically and through acquisitions, a portfolio of 30 enthusiast streaming channels targeted directly at specific high-interest audiences.
These channels are complementary to and not competitive with, the big general entertainment subscription services like Disney Plus and netlix.
We fully owned 15 of our 30 channels, including randor, Dove and screenbox, and have distribution deals for the other 15 with branded entquities such as Bob Ross. We only Madrid and the elest Presley channel announced just yesterday.
This deal mix creates yet another portfolio offer.
When years ago, most players in the business focused on staking the position in the highly competitive and extremely extensive general entertainment subscription channel business. We pivoted to building a position in the ad-supported and fast channel businesses when we recognized a huge oncoming flow of the advertising dollars of stream.
You just saw the result of cinonigm being an early mover, with our ad numbers up 147% this year.
So while all the headlinines glast news about subscription, streaming companies famme out like quibby or s-in-plus because of massive spending and losses, or others like Netflix.
Are scrambling to enter the adverite advertising business while at the same time they all continue to spend billions of dollars to pummel and outspend each other in the general entertainment subscription. moars cinoni is already established in advertising and has been there for a long time. We know what we are doing in the fast-growing advertising space and are growing that business like wildfire.
And we customize the best effective approach.
Subscription: AVOD basnor hybrid with every one of our channels.
And that creates another diversified portfolio effect in our revenue streams.
And over the years, we forge deals with every major streaming platform as well as every major television and device manufacturer in the business, including Samsung LG TCL vzo Amazon Fire, Roku and pretty much everyone else, with a total reach into all one billion streaming devices worldwide.
This broad and robust platform distribution again demonstrates the diversification approach to our strategy.
And another huge factor in our success, which separates us from much of the industry in much of the cost viriral affecting competing streaming companies, is that we built and control one of the largest modern content libraries in the world.
Now at 46 thousand independent films and TV episodes, and growing.
We are not overly reliant on the expensive, risky original development in production business, like others in this industry.
Instead we predominantly acquire industry completed films and television shows in multiple year deals for either small upfront advances or no advanced revenue sharing agreements.
With this approach, not only do we incur much less risk than our competitors, but we also possess a much better understanding of the content's market potential than if we were creating content from scratch.
Speaker 1: And we have strong-branded content partners like hallmark and the unfl that add to our success in this area.
This strategy gives us the content Rocket feel to build and refresh our streaming channel portfolio, while giving us yet another diversified revenue stream, because we also license this content to every player in this streaming ecosystem, including Netflix, Amazon and Hulu, to name disappeal.
The last element of our long-term business vision was to control our own streaming technology.
We spent the last eight years co-developing with our partners at foundation TV, our Matchpoint platform.
A full stack industry-leading streaming and content distribution platform.
And we acquired foundation TV last year and now fully own all intellectual property pertaining to match point. Today we have a growing and talented engineering team in India building match 0.2, as well as the upcoming senatgors, keeping us at the cutting edge of industry innovation.
Not only this Matchpoint provide us with the state-of-the art streaming platform, but it also saves us millions of dollars, annate and technology and content distribution cost, as well as attracting top-tier brands and partners. No 1: an effective, high-quality streaming channel.
Matchpoint will also help establish yet another diversified revenue stream in the SaaS arena in an lucrative third-party content aggregation business.
So.
In summary, we have successfully implemented every element of our strategic collusion. First, our targeted enthusiasts: screening channel approach.
Second our diversified 30 channel portfolio distribution, footprint and revenue streams.
Third our low risk, high-return control of a massive amount of independent content. And fourth, owning our own state-of-the-art technology.
These factors are why we continue to show such tremendous growth, when business conditions and the lack of a diversified portfolio strategy combined with high content and technology cost has sent many of the other players in this industry scramble.
Closing the year with the DMR acquisition.
We successfully converted into a potential all cast deal spread over multiple years. We have made seven roll up acquisitions over the last 16 months that brought in 15 new screening channels in 15 thousand new hms into the episodes.
This helps scale cnonigm syinonigm up to the 30 channel streaming portfolio and 46 thousand title library I just spoke about.
Given this vastly increased scale, we are now standanding our strategy to implement four new high-return growth initiatives that fully leverage our asset base capabilities and industry-leading natashpoint technology.
As I announced in my shareholder letter a few months ago. These four initiatives are: first, the rollout of synivers, which will provide consolidated access and cross promotion for all of our streaming properties.
Second the aggressive expansion of synonym' podcast network, already with a portfolio of 25 podcast, five million downloads and a goal to get to 100 high-margin podcast in the next 24 months.
Third the rapid launch of our comprehensive in-house advertising solution to capture even more revenue upside in that business.
And finally, the imminent rollout of mat point C point, which will provide additional revenue opportunities via content aggregation and SaaS services.
All of these initiatives have minimal working capital and overhead requirements.
And combined with our nasthan international expansion, particularly in South Asia and Latin America, we expect these initiatives will generate over $5 million in new revenues annually once they reached steady state.
Finally I want to talk about the markets in our stock L.
Obviously geopolitical factors and market sentiments have made it a tough start to the year for most in the capital markets and certainly presentcented on shareholders.
It is especially frustrating for our employees and investors that this has occurred while we are performing So very well.
We remain, by every measure, in the strongest position we have ever been at.
The strategy that I just outlined is unique and it is clearly winning in the marketplace.
With our newpound scale. We now have several new high-return initiatives launching that will further accelerate our growth.
Given all that.
Clearly believe that the market is severely undervaluing our equity.
Speaker 1: And we will continue to work to outperform quarter after quarter, which we believe will ultimately address the issue.
However we continue to evaluate options to take advantage of the situation from an equity standpoint, such as a potential stock buyback program.
With that, let me turn it over to John for a more detailed review of our results in El buer.
Thank you, Chris and high everybody. I'll touch on a few fourth quarter and full year highlights, since Chris has provided a lot of color already on the top line results. Then I'll give a brief look into our plans for the next two to four years.
We generated $56 million in revenue this past year. Let me break it down from the segment perspective, which will help give perspective about analysis of next year. Our streaming and content business generated total revenues in fiscal year 22 of $38 million, with the remainder of our revenues coming from digital cinema, virtual print, FE cinema, bpss and the long plan sales of legacy Cinema equipment, particularly our agreement with AMC. As the VPs program wind down and although we still have 770 digital projections, that sums available for sale.
Speaker 2: We're expecting only minimal contribution from our legacy business next year. As we have been signaling for quite a whilet, our adjusted EBITDA numbers improved both this past quarter and past year.
We reported adjusted EBITDA of a negative four thousand in the current year quarter, which was an improvement of two point one million versus the prior year period.
For the year, adjusted EBITDA was seven point one million, which was an increase of one million versus last year.
Similarly, our net loss of three point one million, or two cents per share, in the fourth quarter improved three point eight million, or three cents per share, versus the prior year quarter.
And we generated net income of one point two million, or one cent per share, versus a net loss in the prior year.
As a result of this strong performance, we ended the year with over 13 million in cash and no debt.
Speaker 2: During the past year we paid down approximately one million in notes and eliminated approximately $4 million in interest expense.
We completed the DMR acquisition at the end of the fiscal year after restructuring the deal as Chris mentioned, lowering the price to 16.4 million, adding a three -year installment payment schedule in building in the potential for an all cash deal. We're pleased that DMR's post merger integration is proceeding ahead of plan DMR with the seventh acquisition of the company's role of strategy, which included sandor' screenbox Bloody, discussed film, Detective and foundation TV.
The DMR transaction is the latest example of how key players in the media and technology space continue to be attracted by symedigmms Matchpoint technology distribution capabilities, content and scale, and seeks to be a part of the company's rapid and strengthening growth narrative.
We are continuing our cost-streaming post acquisition to help affect our goal of becoming cash flow positive by year-end. Additionally, our scale and tech are helping to garner huge operational savings on a continuous basis.
As Chris mentioned, we remain committed to considering all options to support our aggressive growth trajectory and will continue to make smart cost of capital decisions.
In the near term, given the historical growth, all the additional activity over the past year, plus the sale essentially of the digital cinema business, fiscal' 23, should have significant growth in what's now the core business of streaming and entertainment, while digital cinema sunset.
For fiscal' 23. our core business revenue base is 38 million and this is the base we believe our investors should be tracking against for two thousand and 23.
Also notable is that we are wrapping extremely high growth of our base business on both one and two -year basis, as Chris just noted. Despite that, as we have scaled up our business dramatically and continue to expand our streaming initiatives across multiple fronts, we remain comfortable with our long-range target of sustained 50- 50% plus annual streaming revenue growth.
Speaker 2: Revisiting our long-term goals for the next two per to four years. We've already achieved two of them. To recap, these goals clude: at least 50% annual revenue growth in streaming.
Speaker 2: Growing revenue to $15 million by fiscal 2025 through organic and acquired revenue, increasing monthly vieworders to over four million, which we just achieved following the acquisition of DMR.
Growing engagement to one billion connected TV minutes from zpoint five billion per month, which we also achieved, and growing our content library to 75 thousand titles. As Chris mentioned, we're currently at forty-six thousand.
Now I'd like to hand it over to Eric.
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Speaker 3: Right before I talk about this quarter's results with suite networks and our strategic vision for the rest of the fiscal year, I want to reiterate just how far this business has come in a brief time.
Just three years ago, we had four streaming channels that were predominantly subscription based, with a few hundred thousand viewers per month.
And no material advertising business.
We had none of the flywheel components in audience. You need to sustain and engage in audience.
We had small social app and podcast footprints.
Our library, while still substantial, lacked critical abod and tast rights, and we also did not own and control our technological destiny.
Fast forward to today, and this story is a complete 180 degree turn from where we were those few short years ago. Through the hard work, focus and foresight of the cinadm team, we've built a streimming platform that has a scale to compete with the largest players in the industry on a global basis.
Speaker 3: So let's talk some numbers that back that point up. Our business reached 87.1 million monthly viewers across our entire footprint of web mobile, social and connected TV viewers around the world.
That's up over 236% over the prior year quarter.
Speaker 3: As we rapidly approach one million monthly viewers, which I believe we could achieve in this fiscal year. We're approaching a scale only achieved by the largest studios and streamers.
As we focus on monetization, engagement in ARPU. On that user base, we'll continue to optimize our viewership.
Our streaming minutes rose dramatically to two point three billion, up 118% of the prior year qutter and 73% over the sequential quarter, and revenues were up 109% year-over-year in the quarter. These were the highest ever numbers for minutes views in revenue for AVOD in our operating history. The reason is simple: our programming efforts are focused on retaining and engaging high-value visitors over low value fly by visitors who don't stick around to consume.
This concerted effort and focus is clearly paying off with accelerating growth. In Min views, add consumed the most importantly: revenue growth.
Our core focus has predominantly been on the add-supported side of the business, but we continued to grow our overall subscriber business to approximately 97 thousand subscribers, which is up over three hundredcent or 36%, from the prior year quarter.
We expect a higher rate of growth out of this business beginning with the end of fiscal Q2.
Speaker 3: And with the heaviest growth in Q3 and Q4, as we put the finishing touches on our new Matchpoint blueprint platform.
All of our key streaming services will migrate to that platform in q,3- Q4, including fandora screenbox Dove, conuv and others.
Speaker 3: We have been internally test on new platform and it's clear the quality and design and engineering places the user experience and performance on car with Netflix hbomax, Disney Plus and other massive scale platforms.
But beyond that, we've been innovating with new AI machineery features that help consumers more easily discover and find relevant content that they might otherwise miss on the other platforms that predominantly provide users more of the same content. K recommendations with each experience.
Speaker 3: Our research and study in the market indicates users are excited to find and discover amazing talent that's not served up by the usual suspects.
Speaker 3: But the current collaborative filing content recommendation systems and algorithms are simply underwhelming and, in the worst case, of core user experience.
cnuniverse will change all of that.
As Chris mentioned earlier while we've had considerable success combining inorganic and inorganic growth strategy completing seven acquisitions over the last 16 months.
Speaker 3: Given the current share price and overall market conditions, we're leaning into our now considerable asset audience space to drive new organic revenues with minimal CapEx requirements. So let me dive into some of the key updates on that front.
First on the podcasting business. Our acquisition of Bloody discussing is truly paid off and we've been successfully extending their leadership position in the horror and audio rama sectors to scale up the podcast network. The model is simple: while the major players focusused on the top end of the market, today I'm focuses on the middle market of the podcasting.
Quality well-produced shows with faithful audiences by creators that are simply unhappy with their current monetization and distribution partners.
That only do we bring quality, monenzation and distribution of these creators, but our focused on a smaller Bin and podcasts and expertise and enthusiast marketing have've attracted many smaller networks and larger individual podcasts to our network, often stealing them away from very large branded competitors.
We expect to scale this to 150 play podcast podcast network within the next 12 to 18 months and have a mid-range revenue target of one million plus for this business steady state within three to four years.
Next let's discuss our efforts in advertising.
Speaker 3: The back of our, on the back of our 70 plus programmatic ad demand, partner relationships and deep audience extension deals. We're now focused on building a world class direct ad cells and operations team and have made our first key hires, who are, as of today, selling fiscal year Q3 inventory into the market.
Speaker 3: So we should see an impact from that business soon. But beyond that we plan on following the same model for third-party representation as I noted for podcast, basically providing a high caliber of direct ad sales services with strong marketing and support to help ner our partners grow their businesses.
Speaker 3: Having a little trial. Who joined us vwthe ility, discusing acquisition, to the 25 -plus year veteran of the ad space, to the focus on the exact model, to great success at indie, click and later demand media. So we have the cornertor of people in place with extremely complementary skills tied to our strategic vision.
On sverse, as I know in earlier Vision simple rather than compete with established general entertainment avy platforms.
Speaker 3: Instead we're going to focus on auststralia. That worked so well for us as we've scale other parts of our digital business, and that's partnering with major OEMs platforms ISPs, telco and other partners that have scale audience, but today, no presence in the aod universe.
synigm is one of the feut companies in the world with the technology to design integrate program, host and deploy and monetize the scale about service.
Given the fact that we have tens of thousands of titles in the market today, with the completion of match 0.2, combined with one of the largest content libraries in the market, our goal is launching this initiative in scale partners this fiscal year, and our direct-to-consumer version will also be released to market within the next quarter or so.
But we WOn't be starting from a standfstill. syniverse will take over the footprint of a similarly named DMR general entertainment service called cinnahouse, which some of you may seem the early desktop version we launched for testing SEO optimization, legal and trademark purposes.
The forthcoming match point power.ed sennver' app and website have not yet launched, but are coming soon.
Finally on the SaaS front, as we reiterated frequently, we're not trying to compete with SaaS providers like vo of rcove and others.
Speaker 3: We look at our approach as a smaller scale version of what majorly baseball advanced media did with Disney plus, namely focused on providing a highly scalable streaming platform.
For syniverse our own properties and then select key scale partners. However, we think that, like NL banddid with WWE and LS.
Speaker 3: We'll offer our platform to these high-quality scare partners where we estimate there will be material revenue consideration.
We are exploring several exciting partnerships on that front and we hope to talk more about it in the coming quarters.
Let's talk content briefly our.
Speaker 3: S effort to build our library of premium content and drive the streaming business included growing our feature films in the library by over 6000 assets, an increase of 131% over the prior year and, beyond that, our television episodes, which we consider one of the most important parts of the library room, by more than 8200 titles, up 52% over the prior year.
On the original content side, we acquired exclusive rights to two action breillers started Neil mcdonunna, who of yellow speonem and residentle of captain America fame, that were released in theaters in at home.
We acquired exclusive north of American rights to seven days. A new romantic car comedy starring cararen Sony, known for Dead cool, and geraldine is wanaon, known for blockers, and Executive produce by the depl Brothers.
And the film won an independent spear award as best new feature.
We also acquired Boston George aaddoc Senate series about George jumn, one of the most notorious traffickers, and inspiration for the film below starring johny dep, which will be released in the fand or exclusive.
Speaker 3: We also entered in license agreements with Warner Brothers for multiple seasons of Freddie's Nightmares, which is now exclusive on Screambox as of February this year, which has led to an extremely material subscriber loop.
Speaker 3: And lastly, we extended our long-term relationship with the NFL and released the lats Super Bowl championship program to a broad audience.
On the technology front, we launched several new initiatives, including an P initiatives with fand or selects and Bloody discususted bloodpacks as a means to access and evaluate this emerging technology and we hope to do more there. On the AR side, we an ounced to deal with and real one of the largest manufacturers worldwide of light AR glasses for the North American launch. We included conttv are flagship sports network real Madrid and Bloody discususting, as well as the entire conttv content library on demand basis as sort of an initial for a into the metamverse.
And then finally, we positioned the company for long-term technology leadership with the launch of Matchpoint debut, a new service that Gi filmmakers, distributors and content owners ability to use our industry-leadating digital the distribution platform Matchpoint, to self distribute their content.
Thank you, Laura. Welcome everyone and thanks for joining us on the call today.
First I'm going to briefly review our extremely strong results and then I'm going to speak to the reasons our content and streaming business strategy is clearly working So very well.
At the same time when many players in the industry are struggling to find their footing in this turbulent macroeconomic and business environment.
We strong results. And then I'm going to speak to the reasons our content and streaming business strategy is clearly working So very well.
At the same time when many players in the industry are struggling to find their footing in this turbulent macroeconomic and business environment. So we had tremendous success once again this fourth fiscal quarter, more than doubling our total revenues, which were up 104%.
To begin.
Thank you, Laura. Welcome everyone and thanks for joining us on the call. todayfirst I'm going to.
Briefly review our extremely strong results and then I'm going to speak to the reasons. Our content and streaming business strategy is clearly working. So very well at the same time when many.
yearsin the industry are struggling to find their footing in this turbulent macroeconomic and business environment. So we had tremendous success once again this fourth fiscal quarter: more than doubling.
Thank you, Laura. Welcome everyone and thanks for joining us on the call today.
First I'm going to briefly review our extremely strong results and then I'm going to speak to the reasons. Our content and streaming business strategy.
Is clearly working So very well, at the same time when many players in the industry are struggling to find their footing in this turbulent macroeconomic and business environment. So we had tremendous success once again. This fourth fiscal quarter, more than double.