Q2 2023 Cinedigm Corp Earnings Call
Thank you for your patience, ladies and gentlemen, this morning's call will begin shortly please stand alone.
[music].
Good day, ladies and gentlemen, today, we are hosting a conference call to discuss syndromes fiscal 'twenty two 'twenty three first quarter results. My name is that Jim and I will be your conference. Operator currently all participants are in a listen only mode people will have a question and answer session at the end of the cool I wished plan participants can press star followed by one on the telephone keypad tend to the queue.
Anyone need to upgrade to help please press star followed by zero. Please note that this call is being recorded.
But today, it's Gary Loffredo.
In General Counsel. Please go ahead.
Good afternoon, everyone and welcome to Tennant.
Fiscal 2023 second quarter results conference call.
Before we begin I would like to point out certain statements made on today's call contain forward looking statements. These statements are based on management's current expectations and are subject to risks uncertainties and assumptions.
The company's periodic reports that are filed with the SEC described potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward looking statements.
All the information discussed on this call is as of today November 15.
Undertakes no duty to update it.
In addition, certain financial information presented in this call represents non-GAAP financial measures and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures.
Our earnings release carefully as you consider these metrics.
I'm, Gary Loffredo, President Chief operating Officer, and General Counsel of standardized with me today are Chris Mcgurk, Chairman and CEO .
Canning Chief Financial Officer.
Rhonda Chief content officer.
Eric <unk>, Chief strategy Officer, and President of Cinedigm networks, and Tony <unk>, Chief Technology and product officer.
All of whom will be available for questions. Following the prepared remarks.
I will now turn the call over to Chris Mcgurk to begin.
Thank you, Gary and welcome everyone and thanks for joining us on the call today.
Before getting into a recap of our strong Q2, 2003 performance, which was led once again by record screaming advertising revenues I'd like to start off by addressing the recent outstanding success of what we call. Our 360 degree business and promotional approach to heart.
Which is the hottest genre in entertainment today.
Cinedigm has always been a leading distributor of horror content.
And as the category continued to outperform in the last couple of years.
We saw an opportunity to take advantage of that trend even further.
Particularly in streaming.
Horror content, it's still under represented and fans are still being underserved.
So in 2021.
Acquired money discussing the biggest name in online tour with millions of followers.
And then we acquired the screen box were screaming chip to further consolidate our position in that lucrative genre.
And just over a year later.
Those investments are now paying off big time.
As you read about over the past months, our acquisition and release of the very low budget and artfully crafted Andy phenomenon Purifier too has led to an unprecedented successful box office Ron.
Incredible amount of buzz around the film.
Central character or the cloud.
Critically acclaimed and the best reviewed horror movie in years terrify or two has generated more than $10 million at the domestic box office. Despite virtually no traditional believes marketing effort increasing its box office for three straight weekends, which almost never happens with a wide release as the film.
Became a viral phenomenon in large part due to our extremely effective PR and social media marketing efforts via Bobby discussed there.
The New York Times, a lot of the film and our viral marketing efforts, calling it quote and unexpected unlikely.
The little horror movie that Kurt.
Forbes was amazed at the film.
Likely quote outperform most of this year's designated award season the leases.
And Yahoo news called quote the sleeper hit of the season.
Released on October six none of tariff higher to success is reflected in this second quarter earnings report.
The financial upside from the film will begin to be reported in our next fiscal quarter and beyond.
However.
Focusing on the success now because it clearly underscores cinedigm is winning business strategy in regard to enthusiasts fan bases and streaming content in general Here's how we are leveraging mcnall across our business.
While still in theaters on Halloween, we also launched tariff higher too on our screen box were screaming chip.
Fueled by continued heavy viral marketing by blending discussing the film has already driven increased traffic on screen box of more than 250%.
With subscriptions up more than 295% compared to the channels previous high Mark.
On November 11, we also released the film onto transactional Vod across a wide footprint that includes Amazon Prime.
<unk> grew to Google play, Microsoft and Red box, where it is performing extremely well and exceeding our expectations.
In December we are shipping the film and DVD and Blu ray to Walmart and best buy among many other outlets and then after that it will be available for additional licensing to streaming and other platforms.
We are also considering other ancillary options to support and extend the pool, including graphic novels podcasts additional editorial documentaries television in Ftes and potential re release into theatrical.
All of this activity across the entire entertainment spectrum is what our 360 degree approach to <unk> is all about leveraging our capabilities and marketing viral promotion and distribution across virtually every distribution channel and the ancillary market not just in streaming but on traditional platforms as well.
This gives whore uzi as the content, they want when and where they want it in a way most of our competitors cannot do because they lack our reach our assets and our acumen in the genre.
While we will report a more accurate assessment of the films upside impact on our results in our next quarterly earnings report in February of 2023.
Tremendous success of tariff higher too because clearly made a compelling statement about centered on his leadership and capabilities in the lucrative or space and.
And we believe this will lead to more breakout titles in the future.
And beyond the horror genre, we are absolutely committed to bringing this 360 degree approach to our other enthusiasts genre is where we have the same capabilities, including Asian content anime and family content.
Before I move off of terrify or two I would like to commend Damian.
The multitalented created creative force behind that.
We're having the scale and <unk>.
Great. This film and then turning into such a tremendous artistic critically acclaimed and commercial success E&S production partners and the entire cast and crew on the movie Epitomize the true essence of independent filmmaking.
Everyone at Senate arm is extremely proud to be associated with their film.
Now onto our second quarter.
Our results in the quarter underscore once again, our Cinedigm continues to perform very strongly from a financial standpoint in contrast to many other players in our sector, who have faced some headwinds due in large part to their single channel <unk> single revenue model strategies and lack of presence in the fast growing advertising support.
And fast businesses.
We have a diversified business model that captures revenue streams across the entire entertainment business spectrum subscriptions advertising software as a service content aggregation content licensing and releasing.
That sets us apart from our competitors and is driving great results.
And what is seasonally our slowest quarter, the second quarter, we increased consolidated revenue by 39% compared with the previous year quarter.
Grew total streaming revenue by 78% grew AD revenue was 102% our 10th straight quarter of record revenue growth and we increased our paid subscriber count by 48% over the prior year quarter to $1 6 million subscribers.
Our revenue and net income results exceeded the average expectations of the analysts who follow the company and exceeded our own internal efforts spectation.
We generated these stellar results because cinedigm extraordinary executive team is delivering exactly what we have promised.
Now rolled up seven streaming channel acquisitions, including the aforementioned bloody discussing screen box expanding our enthusiast channel portfolio to 30 channels and building our content library into one of the largest modern screening libraries in the world with over 50000 films and TV titles and leveraging our.
Highly automated proprietary match point distribution platform across multiple revenue streams.
John will cover our financial results in more detail and Eric will delve into the early success of our key business initiatives that we launched this year to further drive the business forward, including center versus our flagship channel. The debut in September with several streaming channels and thousands of hours of content across multiple genres.
<unk> is the key.
Key initiatives that will drive Omar goal to become the Spotify of independent streaming video content.
We are very well positioned across our streaming technology and content licensing businesses heading into our seasonally best two quarters of the year and with the success of our horror strategy and tariff higher two included as an additional kicker to our results. We expect to report very strong performance in the next two.
Fiscal quarters and significant topline growth for the full year as we move closer to our goal of sustainably positive cash flow and profits.
And with that let me turn it over to John for a more detailed review of our financial results.
Thank you, Chris and good day, everybody I'll touch on a few second quarter highlights then I'll update you on our outlook for the year before I begin I want to reiterate that our Q2 results reported today do not reflect any of the tremendous success of tariff higher Q, which we look forward to sharing with you on our next earnings call regarding Q3 results in February .
While we've previously laid out our aggressive year over year revenue growth and sustainable profitability expectations. We continue to standby our intention to achieve those objectives and they're making great progress on all fronts.
Our key second quarter financial results for the quarter ended September 32022 include consolidated revenue of $14 1 million compared to $10 1 million in the prior year quarter, an increase of 39%.
Total streaming revenue increased 78% to $8 million.
Driven by another record increase in AD supported revenue up 102% and a 38% increase in subscription revenue over the prior year quarter, Eric will get into the drivers for this increase in his comments overall content and entertainment revenue was $11 $4 million in the quarter and grew by 60.
6% over the prior year quarter.
This was driven by organic user growth increasing market demand for standardized extensive connected TV AD inventory and the launch of new streaming channels versus the prior year period.
Similar to last quarter in Q2 centered on once again delivered total revenue on all component revenues, which exceed our own internal growth plans for the quarter.
Our adjusted EBITDA was negative $1 million in the current year quarter compared to a positive adjusted EBITDA.
$7 million in the prior year quarter due to a decrease in digital cinema systems sales and eligible EPS system as we wind down that legacy business as well as higher direct and SG&A costs immediately following Q1 acquisition activity, while our M&A strategy implicitly involves capital.
Rising on synergies in both revenue generation and cost savings realizing these synergies.
Typically lag a quarter or two.
Net loss was $5 8 million or <unk> <unk> per share compared to a net loss of 300000 are $3 million or $0 per share in the prior year quarter.
This was also driven by the reduction in legacy digital cinema equipment sales and Additionally included non operating charge.
$6 million for the Companys investment in members company, formerly known as Star is media Holdings limited as.
As well as the previously mentioned increased direct and SG&A costs immediately following that Q1 acquisition activity our balance sheet remains very strong with just under $10 million in cash and our only debt is a small revolving working capital facility. We just took on to provide additional dry powder for key content acquisition.
The aforementioned higher too.
While we continue to monetize the remaining digital cinema assets as we showed with great success in our most recent fiscal year results. We will continue to emphasize the importance of looking at our overall results unencumbered by the digital cinema business as it nears its end of life.
Despite the digital cinema wind down we fully expect to generate substantial full year total revenue growth for the company this year versus last year, where our consolidated revenues were $56 1 million up 78% over the prior year.
On our last earnings call at the end of June we highlighted that our annual streaming revenue more than doubled on our fiscal year ended March 31, 2022, and we expect that streaming growth engine to continue to produce 50% plus year over year annual growth for the foreseeable future, especially given our related updated growth.
<unk>, which Eric will discuss.
Anthony driven synergistic expectations, both topline and Bottomline and streamlining initiatives are already starting to produce benefits as both Chris and I have stated previously we stand by our intention to achieve $75 million.
The annual cost savings in the coming several quarters with that I will hand, it off to Eric.
Thank you John and thanks for everyone for joining the call today.
Before I discuss the significant progress we made during the quarter on our business objectives I wanted to spend a few minutes clarifying cinedigm strategic thinking and our long term position in the market versus our peers.
The promise of digital delivery of media. So far has been a boon for consumer access to content.
A red light.
Revolutionized news and information access 25 years ago, and it changed the music industry Forever 15 years ago.
Today for example, you can subscribe to several different music streaming services and have access to more than 80 million tracks and more than 5 million podcast episodes for.
For a while it seemed video content will be moving in that direction.
We as a company where they are at the beginning of the streaming revolution that began with Apple nearly 14 years ago and help build some of the biggest companies in the business like Netflix Amazon Prime and more delivering tens of thousands of those hours to the services.
But today video streaming is movements, mostly moving away from these broad access model like Spotify and instead moving towards massive tentpole movies $1 billion series extravaganzas in a shift back towards the dreaded bundle.
Our research has shown that major streaming services have simultaneously cut the size of their third party library significantly while at the same time, having incurred increased prices by up to 66% over the same period.
You think shrink <unk> as bad when it comes to consumer goods, the major streamers have them beat.
Users can look forward to less content bundles that you didn't ask for at rapidly rising prices. It will make the old cable model look downright attractive.
The fact, we find most telling and frankly surprising is the top 10 streaming services account for just 4% of available films and series shockingly, 96% of all content ever made is just not readily available to consumers.
This just isn't a quandary of procure.
Peculiar fact, we look at it as not only a business problem, but a cultural one the world's rich motion picture cultural heritage that stake.
And if the moves by the biggest players or any indication, it's going to get even worse.
At <unk>, we're looking at the world differently. Since we began in streaming our focus is all in an enthusiastic services.
Those that are behemoth passionate about a given topic genre or style of media.
When we began on this journey, we started launching specialized channels to help <unk> stream their passions with more than 30 channels and over 50000 hours of movies movies and shows.
We are now entertaining over 80 million people, a month and most of them at very low or no cost.
Fans love this model.
As exemplified this month by our successful release of tariffs higher too.
We're providing access to films that speak to our audience passions, whether they'd be uncompromising or truth speaking documentaries or emerging talent right for discovery.
And this.
Is where <unk> fits in to the mix, what if we took that 96% of film and television shows and made them all broadly available, but under that same enthusiast ethos that I described.
That is our vision as a company to build <unk> into the Spotify or dare, we say Google or video streaming.
Our goal is to make as much of the world's content available to everyone with a focus on celebrating entertainment culture and new defense.
Long term that means gathering hundreds of thousands of hours of programming and then providing the world's best curation alongside the world's best next generation search tools and recommendations.
Ultimately, we want you and your peers to have fun streaming your passions instead of pulling your hair out every time you search for something.
But beyond being a potentially great business, there's some even bigger things at stake if we succeed at this mission with.
The democratization of access to media empowering creators sharing diverse voices and preserving the world's cultural media heritage.
We as a company are up to the task and we hope as investors you ready to join US on this mission as well.
Now let me tell you how we took our first steps on this journey.
Beginning this quarter.
First we launched the two point out version of match point, our company's proprietary streaming operating system. That's the backbone that does everything that I just described.
Like major League Baseball's ml, Bam, which became the backbone of Disney streaming match point to point out powers, the entire streaming stack from content management streaming apps delivery analytics reporting and other critical operating tasks.
Our new framework is designed to be highly scalable to meet the future growth needs of our ambitions I just described and we're currently moving every single service and every piece of content, we have and have acquired onto the platform.
Next we launched universe.
On September 15th and while in its early stages, we have launched tens of thousand titles across every genre.
And along with more than 30 linear channels.
We expect to rapidly scale. This service over the coming quarters, and we have already signed more than 18000 hours of additional film films and series.
We expect to be making big announcements soon about distribution content.
And new features and capabilities in the coming weeks and months.
A big part of sooner versus a continued support of all of our enthusiasm verticals, which in addition to being robust standalone businesses are also core verticals within the center versus apps as well.
During the quarter, we expanded distribution with key partners, including dish network Sling TV.
Amazon Freebie.
And top out of home network atmosphere.
Additionally, we expanded our channels onto several streaming TV providers, including new deals with silo and frugal.
We also struck the first ever carriage deal for scent averse on Vingo, another fast growing virtual TV provider.
We expect many more of these sorts of deals in the coming quarters to grow the business.
Next we continue to expand Cinedigm as direct AD sales business through our new soon I'm AD solutions group, having made several key hires who are already actively selling this quarter.
Our AD solutions team has also fully re engineered the AD Tech stack, which led to record performance in the quarter increasingly we're being sought out to monetize third party partners have been expanding that business in earnest since embarking on it in the current quarter.
To date as evidenced by our results we have not seen the same softness as an add in AD revenues as seen by some other streamers.
We are obviously not immune to the macroeconomic conditions in the marketplace. We think our rapidly scaling distribution base improved monetization.
And economics growth of the third party AD sales and our position earlier in the growth curve than our peers could mean, a much smaller impact of any macro ad business downturn.
Finally, I wanted to mention the significant growth of our pod casting business over the quarter. We expanded our total show count to 30 unique podcast series in Greenland. Several critical shows that launched after quarter end.
Importantly may fare Watcher society, which rose to number two on the fiction podcast charts.
And number 50 overall on Spotify last month.
We view this business is not only a revenue driver, but also a significant testbed for IP that can be up leveled to movies and shows and distributed broadly. We also look at this as a major base of future monetization as we expand into adjacent verticals like E books, and audiobooks, leveraging the vast IP and IP relationship.
Within the Cinedigm library.
All of this additional distribution expansion of that efforts led to outstanding performance in the quarter on our key business.
<unk> indicators.
Total streaming minutes in the quarter rose to approximately $2 $1 7 billion up 78% over the prior year quarter.
Our total AD supported streaming audience, including web mobile social and connected TV increased to approximately $81 9 million average monthly viewers up 149% over the prior year quarter.
Total subscribers to the company's subscription video streaming services increased to approximately.
1.060 million, representing an increase of 48% of the prior year quarter.
And last we achieved the 20 million social media subscriber milestone during the quarter and launched the company's first social content partnership with Snapchat.
We think that $20 million 20 million member number is significant because of the impact it has on driving attention and awareness for feature film releases as you saw with terrify are too.
And then lastly, we grew our cumulative podcast downloads to over 66 million downloads to date.
And are in talks to potentially expand the IP of that with major partners.
So overall, we put up strong kpis performance. Despite what has traditionally been the slow quarter for us.
Looking forward with the tailwind of tariff fire to expanded distribution and a traditionally strong third quarter. We remain excited for both the near term and long term prospects for our streaming business with that let me turn things over the operator to take your questions.
Thank you.
A reminder, if you'd like to ask a question today. Please press star followed by one on your telephone keypad now.
So just a moment to compile the Q&A roster.
Okay.
The first question today comes from Dan kind of from benchmark. Please go ahead. Your line is open.
Yes, great. Thanks.
Good afternoon, maybe just start with clarifier.
Obviously, a part of the play success for you guys.
Yes.
Youre still evaluating the economic impact, maybe either Eric or Chris can you guys do it.
Talk through sort of the flow through to the bottom line from that movie, whether it's monetize through all your different monetization channels at a blended margin of that sort of looks like and then subsequently.
Hence they're hard to come by we all know.
And I know you guys want to expand sort of that replicate that success.
Confident are you that you can do that in either other genres or even within or how does it scale and how do you kind of recreate what.
Success.
Well thanks, Dan This is Chris.
Let me.
Let me take that question, we're not we're never going to be explicit about financial results and expected financial results about any specific piece of our content film or television.
Thats up there too.
Disciplined.
The film or television program itself, but let me just tell you that.
The thing that really sucks terrify urquhart versus other film releases.
Fact that we spent a de minimis amount of money marketing the movie and almost all of the marketing was known virally.
And I will tell you, it's probably going to reach $11 million at the box office and a box office to marketing ratio.
Probably one of the most successful films of all time, so clearly without.
Without that marketing spend the traditional marketing spend.
Have a disproportionately positive impact on our bottom line you should just take that out of the equation.
<unk> got the theatrical piece, then you've got screen box.
<unk> added a substantial number of subscribers already based on the exclusive one.
The film on screen box, which started on Halloween I think I told you that we were up almost 300% versus our previous best subscriber.
Subscriber Mark already.
And at 499, a month and.
And with the content, we have coming up on screen box over the next few months, we think we're going to hold a substantial number of those subscribers. So that clearly is going to have a big big impact.
We ship we're shipping.
The huge amount of Dvds, and Blu rays into the physical distribution market. This month.
As well and we just went to transactional video on demand.
A number of platforms, including Vudu, and Amazon Prime and as I mentioned in my remarks, it's doing really really well.
It's outperforming what you would expect based on the box office for the film.
And then we will have additional licensing opportunities after that and we hope to develop a whole state.
Ancillary content around the movie, including graphic novels, podcasts, and Ftes, maybe be a documentary et cetera, et cetera, et cetera, so without getting.
Listen here it is.
Going to have a very significant impact.
Our revenues and a disproportionately positive impact on our bottom line.
Because of the.
In fact that we didn't spend millions of dollars in marketing.
The movie out there.
To your second point.
We're extremely encouraged that there will be more successes like purifier too in our future because we've added through these acquisitions that we've done through our own capabilities.
Real expertise in an academic and identifying what's going to work in the marketplace and the genres, where we have released tons of movies, where we have streaming channels.
We think we have capabilities and expertise in data that our competitors don't have so youre going to look for additional successes in horror.
We think we have that same capability in EMEA and Asia.
And we have that same capability and family films.
We don't think that this is going to be a one off event, but we're going to have more successes like this in the future across the spectrum of our channels.
Got it Thats very comprehensive thanks, Chris I appreciate that.
And then maybe also for you or for Eric I guess, you gave some color just around the initial rollout.
Relic channel I guess I'm, just trying to get a sense in this market.
Obviously increasingly shifting towards Avon and fast, which shouldnt be surprised anybody.
How you are thinking about you just wanted to get it out.
As quickly as you can how are you thinking about the content backstop, how are you thinking about monetization and sort of a choppy environment.
Help us understand sort of.
Kind of the plan on an averse going forward and how you think about maximizing the opportunity you have to kind of rollout this umbrella.
Greg I'll, let Eric answer that but first let me just.
Put a point here when you talk about fast and AD supported don't discount. The fact that we just crossed the 1 million paid subscribers this quarter.
Because we have a different subscriber business than than what people think of when they think of streaming with Netflix and Disney plus spending millions and millions of dollars to acquire subs.
That business for us, which we got into early on we're not we're spending virtually nothing to acquire those subs. So it's an extremely profitable business for us because we're so successful in these enthusiast verticals that we have out there with subscriber growth is really happening organically.
And that's a meaningful number of subscribers and it's still a meaningful business for us that continues to grow. So I just wanted to point that out, but let me let me turn it over to Eric to answer your question about the universe.
Yes.
The focus really is on partnerships at this stage.
As we announced last quarter I think the beginning of this quarter.
That we're reporting here go partnership.
Our expectation is to announce more.
Partnerships, where <unk> comes bundled with OEM devices, other streaming services and platforms and so on.
We think thats a cost effective way to grow.
The base <unk>.
<unk> has a greater array of content is not available on other services.
So we think it sells itself once you get it into the hands of consumers. So that's going to be are our primary focus.
Number one is leveraging those partnerships.
Number two is we have a very substantial application base out in the market today we.
We have tens of millions of apps already out there.
We can leverage that app base to drive.
As we update the portfolio of streaming services.
Having the ability for people to sample sent averse and if they like it download.
The app from within.
Within other apps and the <unk> family.
To be leveraging that and then lastly, when we have 80 million people.
Captive across our footprint every month.
Heavily marketing to that audience is going to be a cost effective way to scale and grow the sub base.
And beyond that we that doesn't mean, we're not going to make traditional investments.
<unk>.
Customer acquisition.
The.
Yes.
Further partnership with Oems is not off the table.
<unk>.
Further.
Paid marketing placement and other things to drive business in a smart way.
Secondary to leveraging the assets, we have will be the model.
Got it Super helpful. Thanks, Congrats on the phone and look forward.
What comes next.
Thanks, Dan.
No.
The next question comes from Brian <unk> from Alliance Global Partners. Brian . Your line is open. Please go ahead.
Great. Thanks, so much for taking my questions and lots of exciting things to talk about.
Wanted to first follow up on clarify are too.
Maybe Eric.
Chris if you can share.
Your plans and strategy now maybe on an annual basis, if you've formulated yet given the success on plans for wide releases and smaller releases on an annual basis is there a target yet.
<unk> target.
Are you thinking about that right now.
The answer Bryan and thanks for your question is it depends.
Sure.
We don't.
We don't have a set plan to take movies wide like we did with purifier too it really depends on the potential of the movie.
We never want the company to get into the game that the major studios and the other independents are and where.
They spend so much money marketing movies in wide release.
<unk>.
With purifier too as a matter of fact, we took it out as an event released the first weekend and it did so well that we went wide accurate rich.
It was a very smart approach again, we avoided.
The cost of going wide and deep.
More than a thousand theaters and yet we've got a great result, and it's going to end up being very very profitable for us.
As I.
And my answer to the last question as we move forward, we're going to continue to have a very robust business releasing films.
And a limited release.
And that day and date, Vod, and we'll probably be doing.
One or two wider release movies hopefully in the same way, we did it with taro prior to and a smarter much more profitable way than the traditional leasing business.
So.
I hope that answers your question.
Yeah, Great and then.
<unk>.
And.
I understand it's new it's just been launched and you talked clearly about the ways to monetize it how should investors think about that.
The timeframe when this becomes.
Meaningful noon, whether you think it becomes meaningful to revenue generation is that a couple of quarters away and then as platforms may be take on <unk>.
<unk>.
Lead to churn for individual channels, just wondering how that impacts anything.
Sorry, the last part.
Well I guess I am curious for someone who took X universe has the Bob Ross channel. It has the Elvis Sheila has a whole variety of channels and does that mean, if I have those channels I'm going to get rid of those agreements with <unk>, and then and so theres a little bit of cannibalization, but youre universe more than offset that I'm just trying.
To think about the puts and takes.
So yes, so so I think.
The answer there is so if you if you really think about where we're going to take center versus.
As I described during the call. The idea. There is this is this goes far beyond <unk> 50000 title Library right. We have a great library, but the reality is we're we're but one piece of a vast content ecosystem that just isn't readily available it would be like if spotify.
Only had the top major labels and left off.
$40 million 50 million tracks off of Spotify. It would just be an incomplete platform. So our goal really long term is to make this platform the place where.
If it's not the major streamers, it's going to be on <unk> right. We want to build that base up so we're starting with our our 50000 titles gives us a huge leg huge starting point and we added another 18000 licenses.
In the current quarter as well so.
The amount of content that we've acquired and what we bring is already bigger than any other streaming service, but two to make it Google or Spotify level of utility.
We're going to be adding hundreds of thousands of titles.
Over the next several years.
So in the long term that doesn't our strategy is as is in parallel we still think all of these enthusiasm verticals are great businesses have different distinct use cases and business models that are generating a ton of revenue by themselves.
Then sooner versus sort of a different play where we leverage the content we have.
But it does not at the expense of the other platforms.
So we think for the for the foreseeable future those two business approaches can coexist.
In fact, we're going to in the coming quarters start to.
Really kind of focus in.
And simplified branding and other things so that our whole ecosystem really reinforces universe beyond just being 30 discrete channels if that makes sense.
Yep Okay.
On the a little bit more on a micro level.
Speaking of enthusiast stairs Elvis enthusiasts, there's real Madrid does yes, we haven't heard much about those channels I am curious because there was a lot of promise for them and their art enthusiasts.
Can you speak to any stats on the Elvis channel how it played out and then on real maturity, we haven't heard much about the technology.
They're on the improvements, we're making to better monetize it.
That'd be helpful.
Sure.
So on the linear business.
Don't break out any of the individual channels at the dollar level, but what I can say on both of those channels as we've seen significant strides.
In revenue growth on both of them since they launched.
For in particular for real Madrid, with all of the interest around World Cup.
And the channels programming sort of pivoting to.
General Soccer news information more information about the business in general looking at the highlights and things like that.
The channel is actually done I know, we've always had a a.
Long standing issue with monetizing during games, because you don't there's no cuts like an American football or there's a cut every 10 minutes.
We have been working on the Tac.
We can control it and roll it out on our own apps.
We're still waiting for other partners to facilitate that tab at work on there, but that doesn't mean, we're not advertising on the channel we're advertising.
90% of the other time.
That is on the channel and those that monetization has been effective and growing substantially.
So we think.
Both of those channels have a lot of prospects on the Elvis front.
Think we had a big wave.
With the initial launch of the movie and now it's really about us sustain.
Sustaining that wave with new programming and content, which we're working on right now.
Great.
You talked about.
Advertising discussion around the market not just connected TV, but elsewhere.
How are you.
<unk>.
Seeing CPM is there some pressure is there not really because there is a shift to SaaS.
SaaS and advertising supported.
Television.
Starting on TV streaming and.
Our fill rates just as strong right now.
Well I think the big thing to think about.
And I would love to compare us to in the same breath is.
Pluto.
But keep in mind Pluto.
Has the might of Viacom the combination of non Pluto assets.
Non non specific Pluto assets the entire Viacom interactive assets are in that mix.
And that's.
It looks like they had their first year over year revenue decline.
That's just simply the law of big numbers and them being at a much further along stage in their growth curve than we are.
We're we're we're Pluto was five or six years ago in terms of the growth curve. So we have a lot more growth to go before we start to hit headwinds and hard year over year comps law of big numbers type thing.
That's number one the second piece is if you kind of look where we are in the value chain for streaming.
We think we're very well positioned.
Even with any sort of macro headwinds across advertising in general.
As players look and say Wow expensive brand advertising at $35 to $60 <unk>.
<unk>, maybe not the most cost effective move for us, but how do we still stay top of mind and let's look at more cost effective alternatives in the spot and.
And programmatic markets, So that's where that's where parties can really make hit.
Hit 80 million people across our platform.
Premium connected TV inventory and a big swath of that.
Advertising against high quality movies and shows.
And brands.
That.
And but for far less than they would be paying.
To via to Paramount or.
Netflix or others. So we think.
That said that doesn't mean that we still have a tremendous amount of headroom.
We're in the.
Low teen CPM on average, we think there is 30% to 40% headroom improvement even.
With the macro conditions and still be competitive.
And that doesn't even take into account we've made tremendous success on the direct sales side on the direct sales side.
We had one of our best months ever in October .
Just a few months after we launched the service so we think.
<unk> kinds of trends all combined make us poised very well to compete in an environment, where some of the biggest players are crying uncle.
Great that those details are super helpful. Last question I have just smaller piece of your business, but nonetheless, a focus to grow and create and monetize.
66 million downloads on podcasting is pretty impressive.
I know, it's early you've got 30 podcasts talk about.
Where do you hope to add content there.
How do I think about.
Revenue.
From that the contribution either on a go forward basis or on an existing basis on that type of downloads. If you are able to share.
Okay.
Yes, so we haven't we haven't broken out that business.
Specifically in terms of revenue, but I will tell you that.
It is now.
At these volumes it certainly.
Yeah.
Yeah.
At a full year run rate is a multimillion dollar business for us at this stage of the game.
We think the the <unk>.
Implications, obviously, it's an AD based business today.
We think to two key ways of monetizing in the short term obviously, it's it's.
And we're having a tremendous amount of success direct selling that inventory.
What's unique is while we have connected TV inventory and people can hit a programmatically if they want to do.
360 campaign of.
Web app.
Connected TV.
Social and podcast and a specific content vertical we have the ability to do that and that's a great example is in this last quarter.
Well, while we were writing the horror wave will not flat forget there were tons of other fantastic horror movies as well and they were all advertising with us.
So I think thats that kind of a model and approach that 360 degree approach that we talk about how we can turn things into it.
Turn properties into hits likelihood Clarifier also works for us to be able to monetize for ourselves and for other people.
Leveraging all the different assets. So that's the that's the immediate impact on podcasting fee on the longer term vision is.
If we're generating new IP normally when you develop movies and shows we have a team of development people burning cash trying to create ideas pitching ideas.
Jim's banging your head against the wall with US we go from concept into production in a matter of weeks and months and if the shows ahead, we have the opportunity to turn that into.
Into movies and shows with a proven track record in.
In the marketplace and a built in fan base. So we think theres an opportunity long term.
To not.
Not only produce these things ourselves with potentially work with much bigger partners upstream as we prove the value and creating and generating IP.
Thanks, so much for answering all my questions.
Thanks, Brian .
The next question comes from Terry Hackett from Hackett Management Sorry. Please go ahead. Your line is open.
Good morning, gentlemen.
I'd like to stay on the macro scale here with a couple of thoughts and questions.
First of all management is to be congratulated I don't think the market appreciates how important.
Your pivot was.
A few years ago to aggregating the channels of the genres.
It was a great move and I think you've effectuate it very well.
Nor do I think they understand how the wind down of the system sales is distorted the revenue side of things.
So I was wondering.
When are we done with having to compare system sales to revenue.
And we can just basically deal with newco and what it is doing so well.
And the second thing is that you've talked about the seven 5 million in cost savings over the last two quarters.
And.
If you look at that.
And divided by the number of shares and if you look at your great revenue gains that you've had it will have it just seems to me the crossover point on positive cash flow and income has got to be in the very near horizon.
And so good job and I, just kind of get a macro field what you. Thanks, Chris.
Yeah. Thank you Terry.
Those are all really good points.
And I agree that our investors needed to continue to wake up to some of the points that you've made and I think what youre going to see over the next couple of quarters should get everybody's attention.
Yes, So I think it was a smart move that we launched this enthusiast business years ago.
Because we view that as sort of perfectly complementary to what was going on at a macro level and streaming with Netflix and Disney and everything else. So we're not really competing with those services and I think the second thing that we did that was very smart as we've talked about is.
Led by Eric and Tony Igor We made a pivot into the AD supported business and the SaaS business back in 2017, when everyone was just still focused on subscription and that obviously is paying huge huge dividends.
We're still going to have some impact from digital cinema over the rest of this fiscal year, but I think in the next fiscal year, it's going to be totally behind us and we won't have to worry about net complication.
Going forward and I think your point on the cost savings is very well taken.
We made some of those cuts this quarter our performance this quarter doesn't fully reflect.
The cuts that we've already made in the operational streamlining that you're going to see more and more of it impact our results starting next quarter and I think hopefully people will be.
I'm surprised and excited.
By how our financial performance is really coming together on both the top and the bottom line starting with next quarter. So thank you for those comments and questions Terry.
Okay.
Since there are no further questions I would like to turn the conference back over to Chris Mccann for closing remarks.
Thank you operator again, thanks, everyone for joining us today and for your continued interest in Senator.
Please follow up with drilling those that with any other questions. You may have you can reach here at Investor relations at centered on Dot Com. We look forward to speaking with you again, when we report our third quarter results for the fiscal year 2023.
In February .
This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Okay.
Yeah.
Okay.