Q4 2022 Chicken Soup for The Soul Entertainment Inc Earnings Call

March 31, 2023

Total annual revenue for the company was $253 million up 129% over last year and adjusted EBITDA was $33 5 million up 53% in the same period.

We hit our revenue run rate of $500 million in revenue and $100 million to $150 million of adjusted EBITDA as we planned.

When we started the year, we had about 170 employees seemingly overnight we found ourselves with over 1500, when we acquired Red box.

Integrating a company several times larger than US was no easy feat, particularly one dependent on the return of theatrical releases.

And despite the challenges we faced we were able to position ourselves successfully for continued growth in 2023.

As we look forward there are many opportunities for us to scale our business further and continue growing.

All driven by three pillars, one the red box integration in the kiosk rebound that is currently underway.

To our position as a premier advertising sales platform for the broader Avon industry and three.

Fishing working capital that supports the growth we expect in 2023 and beyond.

As I'll discuss in a moment the return of theatrical titles is firmly underway.

This return however began in earnest months later than we had anticipated when we acquired Red box.

When looking at 2022, there was only a small trickle of big budget wide release hits that broke the year long theatrical trout films like top gun Maverick Black Adam and Black Panther Honda Forever.

But the frequency of the releases was sporadic and very slow we.

We were still seeing extended weeks with no major releases.

To give you some context, that's only three major event films from August through February and as you all know the kiosk the pen equally on the frequency of major releases as they do on the volume of those releases.

The frequency of major releases is finally here.

Waiting for years Big movies are back in the theaters every week.

Beginning in February of this year with the theatrical release of Ant man and the lost quantum Minium, we expect at least one new major wide release every weekend for the rest of the year.

Like the floodgates have opened and the studios are rushing to release as many films as possible.

On available weekend.

In fact, the <unk>.

<unk> thousand 23 theatrical slate is one of the most impressive in terms of content and volume in years.

One of the highest grossing film franchises of all time or slated to release their latest installments this year, including films like Indiana Jones, and the dial of Destiny SaaS.

Fast turn Transformers rise of the brief the Beast and mission impossible.

<unk>.

And there are many many others, we already see the positive impact on rentals as these films move from theatres to kiosks and <unk>.

The average weekly rentals at the kiosks in March or nearly twice those in the month of February rent.

Rentals per kiosk per day, our version of same store sales also jumped in March and are now over 40% of 2019 level and we expect that to continue to grow.

In line with our expectations, we expect to see the early impact of the theatrical rebound be get in Q2 as those films arrive in the home video window. Following a four to six week theatrical run.

And so those doubting the pent up demand for audiences to watch these films in the theater. All you have to do is look at the theatrical performance of recent releases like Creek III screen, six and John Wick Chapter for all of these films set franchise record breaking opening weekend read through.

<unk> had the biggest opening weekend of any sports film in history.

Even when looking at the Super Bowl ads. This year with 11 film travelers shown nearly double the amount during last year's Super Bowl you could see the evidence that the theatrical business is back.

Stuart as studio spend millions on P&A marketing. These films, we stand to benefit from consumer awareness as the film's leaves us the actual window and enter the home video window.

By the way, it's important to highlight the value of the home home video window. We are a dominant player in that window, which includes rentals and sales of physical Dvds and digital Tivo.

An industry study recently showed that studios generated about $7 billion a year from the home video window.

Even during the pandemic studios generated $5 billion a year underscoring the windows resiliency.

We all know studios are obligated to maximize the value of their films for stakeholders, including talent and producers and can no longer justify skipping such a valuable window.

They realize this we stand to benefit because we are an important participant in that window, both in physical DVD antibody.

And as a reminder, we operate one of the largest Steve on platforms in the industry.

The second pillar of growth for the year comes from our Premier AD sales platform through which we are cementing our leading position in the broader advertising ecosystem.

You might have seen our press release yesterday from the Iab announcing this year's lineup at the new fronts and it would've included a name you might not have heard before crackle connects.

I'm happy to announce that we just launched crackle connects.

Unique and fully scale in house media company and represents not only our own AD inventory, but also that of third party clients, what we used to call AD Rep partners.

Led by our Chief revenue officer for retail, Tom and President of AD sales Darin <unk> crack well connects will connect brands with consumers.

We also announced today a significant milestone as we accelerate our growth across the advertising ecosystem.

<unk> now represents 20 AD Rep partners and by the way that's up from two last year.

Together, they reach 80 million monthly active viewers.

$60 million of which come from our owned and operated platforms.

Which is up from $40 million.

And $20 million come from our AD Rep partners.

We're excited to capitalize on the growth we've seen over the year, representing our API partners in the AD ecosystem, we look forward to sharing more on crackle connects in the coming weeks, leading to our presentation at new fronts in may.

During the quarter, we saw strong growth across our owned and operated Avon platforms. In December we saw redbox, Dave I'd usage hit an all time high driven by the highly curated content slate, including including the expendable sales film series, which accounted for the best title performance on redox ever Khalid.

<unk> content was also a huge hit with our screen media one film Elliott the Littlest rained here, it's one of my favorites, maintaining its position as a top performing title on Red box <unk> and crackle.

<unk> growth was driven by our ongoing strategy of meeting consumers, where they are across connected Tvs and <unk>.

Crackle in Red box branded remotes.

Finally, the chicken soup for the soul Avon continues to be our fastest growing avon with growth, reflecting the launch of fast channels.

New apps, which I'm pleased to announce just launched on Roku.

Overall direct cpm's were up modestly year over year and fill rates remain in the 80% to 90% range.

December was about 29% over the prior December consistent with the results we saw in Q3.

We remain comfortable with the broader advertising environment, which continues to benefit from the shift of AD dollars from linear and broadcast to connected TV.

And as more viewers and brands converge on any but we are well positioned to continue capturing capturing that growth this year.

Our fast networks continue to perform very well.

Including our owned and operated channels, which are syndicated to third parties like Roku and Samsung.

We recently expanded our offering of third party content by partnering with industry industry, leading media outlets, including including QVC and Allen media whether channel.

<unk> local now, bringing our total number of SaaS channels to over 160 makes us one of the largest having one of the largest numbers of fast channels on any service.

Our <unk> business is already benefiting from the return of theatrical titles.

In fact, this past Tuesday was our biggest day and T that ever driven by the release of Avatar the way of water.

<unk> orders in the fourth quarter were up 6% year over year and up 13% sequentially from the third quarter.

We continue to refine our strategy on our <unk> offering as we do with our kiosks to merchandize previous titles and the frame in a franchise around the release of the latest installments we.

We did this one we merchandise the key at the kiosk and Teva with knives out around Netflix as release of Gladstonian. We also did it with screen and it's a meaningful way to capture audience demand around new releases in fact, Jeff just recently, John Wick chapters, one and three were our top two catalog titles.

And kiosks over the past two weeks, our siding with the theatrical release of John Wick Chapter four.

Turning finally to the third pillar.

We've adapted our approach to taking we've adapted our approach to take into account the challenging macro financial environment, we're living with rates rising rates inflation bank problems among other challenges.

Attack these issues head on first by achieving the synergies we identified when we entered the Red box transaction.

We did not stop there we continued by looking at all of the commitments Red box made to make sure that they were things we thought made sense for the business.

If we found they werent we change them. In addition, we made further cost cuts than we initially anticipated and deferred further expenses such as executive bonuses to tie them more closely to our expectations for free cash flow.

And we've recently licensed content with content that we werent fully utilizing for the tune of $8 million.

Have begun the integration of our AD Rep business networks, and SaaS platforms to generate contribution margin that we used to invest in the growth of our owned and operated networks. This should allow us to continue to grow that integrated business with less capital needs.

And finally yesterday, we did a small public offering to begin the process of strengthening our balance sheet.

<unk> $10.8 million from investors, including our parent company and worked out an arrangement with our parent company to reduce future cash payments starting January one relating to the management of license agreements the rest stock purchase commitment.

In addition, we're looking at certain assets that are not strategic to our go forward strategy, which we intend to sell we believe that this will help us reduce debt more quickly than anticipated and of course, we plan to finalize our working capital loan with our accounts receivable in the near future.

In closing 2022 was a year of transformation 2023 has the potential to be a year of execution and growth.

Rebounded theatrical releases is already driving rentals higher the integration of our AD supported business as is already well underway.

<unk> business is continuing to grow our short term actions are focused on addressing the macro environment. We're all living in our long term mission remains to build the leading premium entertainment company for value conscious consumers.

With that I'll turn it over to Jason.

Okay.

Thank you Bill and good morning, everybody.

We ended the year on a strong note with fourth quarter revenue of $113 6 million up 261% year over year, and adjusted EBITDA of $14 7 million up 59% year over year.

Sequentially revenue was up 57% from the third quarter. The strong performance in the quarter reflects the continued strength our multiplatform strategy.

<unk> library monetization and digital performance across both our owned and operated platforms as well as our AD representation business.

The performance in the fourth quarter is driven by the strength in distribution and licensing that screen media, reflecting the demand for our premium content library, which more than offset the impact of a limited number of theatrical releases at the kiosks and antibody.

As Bill discussed earlier and the frequency of those releases with sporadic and inconsistent unlike what we're expecting.

The remainder of 2023.

Despite the limited number of title releases in the fourth quarter <unk> revenues were up year over year, driven by an increase in orders, reflecting the strength of top gun Maverick, which was a top order new release titles from October through December demonstrating an impressive consistency unusual for entitled prior to its release.

On the <unk> window.

The other driver titles on <unk>, Black Adam and Black Panther.

As a theatrical slate rebounds in 2023, we expect to see continued growth in both <unk> revenues and orders.

As Bill mentioned, we're already seeing the positive impact of the return on big theatrical titles to our kiosks and March Black Panther will conduct forever drove week over week rentals up 30%.

And on transacting customers up 23% followed by person boots. The last wish a week later that drove rentals up 12% and new transacting customers up 19%.

We ended the quarter with about 32000 kiosks nationwide as previously mentioned, we are constantly optimizing our kiosk footprint, which includes expanding relationships with our most profitable retail partners.

We recently announced an expanded partnership with a leading national value conscious retailer will be adding 1000, new kiosks their stores. This year and additional 500 next year, bringing that bringing their total kiosk count to over 5000.

As always we will continue to identify ways to drive greater profitability and customer reach.

As an example in Q1 2023, we began rolling out the ability for redbox kiosks customers to utilize our loyalty rewards on our <unk> platform driving further digital engagement with redbox customer base.

I'd like to take a moment to provide some context around kiosks rentals and the assumptions that underpin our expectations for the remainder of 2023.

Based on the early rebounding rentals were seeing in March along with the size and scale of the theatrical slate from now through the end of the year, our expectations assume rentals returned to approximately 30% of 2019 levels pre pandemic.

Along with this we are seeing the conversion rates of our kiosk beginning to rides towards a 45% 45% level that they were in 2019.

As the steady flow of films returns to kiosks.

Spec conversion rates to rebound in fact over the past few weeks, we've seen conversion rates jumped to the highest level since we acquired redbox.

Now, let me turn to the fourth quarter and.

In the fourth quarter gross profit before film Library amortization.

Expense related costs and after Red box product cost was $76 6 million or 68% of net revenue as compared to $23 1 million.

In the prior year quarter or 64% of net revenue.

Comparable basis.

<unk> Standalone gross profits was 30% of net revenue in the quarter up from 22% in the third quarter of 2002 and 32% in the prior year quarter.

When combined with Redbox Standalone gross profit margin after product cost.

Of approximately 58% the combined business had a blended gross profit margin of 43%.

Our reported operating margin in the fourth quarter on a comparable basis to Q3 adjusted for nonrecurring impairment charge was 200 basis points higher or 19%.

Our operating loss for the fourth quarter was $47 1 million compared to an operating loss of $19 1 million in the prior year.

This variance is driven by increased compensation expense related to over 1000 additional heads.

Other nonrecurring charges as well as higher amortization and higher amortization expense and management fees, all driven by the acquisitions of Red box and to 91.

Our adjusted EBITDA for the fourth quarter was $14 7 million compared to $9 3 million in the same quarter in 2021, representing an increase of $5 4 million or 59%.

Sequentially from the third quarter adjusted EBITDA was up 53%.

In the quarter, we continued to realize synergies related to screen Media's original content at the redbox kiosks on the Red box <unk> platform as well as savings related to leveraging crackles AD salesforce from on Red boxes <unk> platform.

And distribution I should say screen media's distribution of Red boxes content just to name a few.

Turning to our balance sheet.

As of December 31, 22, the company had $18 $7 million of cash on hand, and as Bill previously discussed in his remarks, we're focused on increasing recurring free cash flow through.

Enhancing working capital.

By reducing content spend realization of synergies and are expecting an amplified working capital improvement is a kiosk rentals rebound in 2023.

And with that Alternatively, operator.

Kevin can we open the line for questions. Please.

Sure thing, ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile our Q&A roster.

Our first question comes from Thomas Forte with D. A Davidson your line is open.

Great. Thanks.

I'll ask one question and get back into the queue.

Phil basically.

Your results were pretty much as expected your outlook for the year was good as expected, including for the first quarter, but.

But you talked about the capital raise.

And you.

You talked about that you may talk more about.

Capital raises in general So can you can you talk about I guess your current capital structure and how investors should think about your capital needs over the next 12 months.

Especially given the favorable performance both in the fourth quarter and your expectations for the first quarter and full year.

Good morning, Tom So yes.

I wanted to make the I wanted to give you the context of.

The entire approach we're taking.

Two addressing capital working capital those kinds of things, it's a moment in time for everybody in our industry.

Where people are attacking the questions of costs and the questions of content spend and questions.

Working capital and questions.

Capital on the balance sheet as a combined effort.

I think thats the way we need to look at what we're doing we're not just doing one thing we're doing many things all of which are designed to drive cash flow faster and to improve the overall cash.

<unk> the business.

We.

I'll repeat some of the things I said earlier because they are important we took a look at commitments that have been made that were made by red box made sure they made sense.

We combined tech commitments, where we could in order to reduce.

Costs.

If we found something we didnt like we changed it.

Deferred bonuses the way I said earlier, we've tied them more closely to what will be growing cash flow in the second third and fourth quarters.

We have been licensing content.

In order to make sure that we tap what I used to call our savings account and it still is that very large library, we have.

As a generator of cash for us.

In the last few weeks alone $8 million.

We've looked at our AD rep business and put it to put our AD rep business and our SaaS platform and on our <unk> networks, together and running them with the contribution margin that is coming from the AD Rep business and the contribution margin that is coming from the SaaS platform to fund the <unk> networks that means less capital as needed.

For the Avon business.

Alright, we didn't mentioned that for the 2023 year, we're anticipating only about $19 million of net.

Content costs. So if you looked at the $100 million of EBITDA in the low end of the range that we have for the year and subtracted $15 million of interest we have to pay on our notes in our preferreds and $19 million of cash content.

And $315 million in there for working capital ups and Downs, you would have $50 million of free cash flow. This year on the low end of our range. So it's a combined effort of things the public offering we did yesterday at the beginning of just beefing up the balance sheet. As you know we've been working for a while and getting our working capital loan against <unk>.

$110 million of accounts receivable.

That is going okay. So it's all of these things together plus the deferral of the management fee. So that there is more cash flow for the company.

That are the right way to be thinking about.

The business in these times things are different we understand that rates have risen and we need to compensate for that we understand that.

The macro environment is different than it was but we're not alone in that every one of our competitors in every way and even the big media companies are going through the exact same things as we all kind of rightsize our business is our capital structure. So it's not just capital structure. It's also the way we run the business those two things together are the importance.

Thing to bear in mind, just one more thought and I know, it's a long answer but it's a very important question Tom.

The business itself separate from this working capital and capital structure is really doing well.

<unk> business that can the combination of <unk>.

AD sales.

Fast and the <unk> business as that business is doing incredibly well it wasn't no slowdown in Cps.

And there was no slowdown in fill rates in that business is continuing to grow dramatically and we're in a very good spot there.

Kiosks have turned March was a much better month in February .

We're trying to I think what we will try to do is introduce this metric of.

[laughter] rentals per day per kiosk, so that everyone can do a comparative.

2019.

If you look at our plan for the year, that's $500 million of revenue comes from us achieving 30% of what redbox did in 2019.

The 55 major event movies coming one every weekend.

We're saying all we're going to do is get back to 30% in 2019, if we do that we get $500 million of revenue at $100 million of adjusted EBITDA. So I think it's the overall plan time that people need to understand not just one piece of it.

Yeah.

Great. Thanks, I'll get back in the queue.

Okay Tom.

Well remember for our next question.

Our next question comes from Eric Wold with B Riley Your line is open.

Thanks, Good morning.

So bill it's sort of a hit on that last comment you made kind of a follow up on a couple of questions around the rental trends on red box.

Getting back to 30% of 19 levels, depending on a full year basis. This year I guess, one I guess.

What would you expect kind of exit the year on kind of what did you kind of give us a run rate business kind of exiting last year kind of what would you expect.

That run rate to be kind of exiting next year as you can get a sense of that.

Actually this year is to get a sense of the trajectory heading into next year and then two.

On an apples to apples basis, what is kind of the.

The pricing on the average transaction value Youre seeing now versus maybe take a price increase late last year when top gun Maverick came out so.

So what do we think about that and kind of how sensitive or consumers right now two price increases such that.

Could you take it further if you mean.

I didn't hear the last thing that you said, Eric could you just repeat that.

Thank you for questions right now do you think so if you needed to take price or wanted to take price further.

What is your ability to do so.

Yes, I think.

It's hard to tell we didnt see any noticeable change from the price rise that we did but it was really it was 25.

No.

Even though it was 11%.

It didn't seem to have much of an impact.

I think we'll have a way better sense of that as we go into this next few weeks and months and we have this really steady flow.

Great stuff.

If somehow it doesn't materialize.

I have to say I think it's going to be above what we have planned but if it doesn't.

Then maybe one of the factors could've been the price rise for all I know.

I don't think we'll do another price increase.

For a bit maybe next year sometime.

But it depends I think it depends overall, Eric on inflation in general.

If inflation.

Drops and sort of calms down as I know all of us are hoping for in a macro level.

And then it's less likely but if it continues.

At a fast pace then we should we should we should keep up we really should keep our.

Keep our share.

It is.

The question you asked about leaving the year. So we've modeled as I said the business so that it will achieve 30% of 2019.

By the end of the year, what we would think would happen in 2024 would be we would rise to 50%.

So and Thats, where we think the business will end up being around 50% of that level.

At $50 at the 50% level the EBITDA from the kiosks alone will approach a $150 million a year plus the EBITDA that we're generating across the rest of the company, which as you know.

Has been considerable so.

Yes.

We never think we've never thought the business would go all the way back to where it was in 2019, but what's interesting to me is when I look at the.

The same store sales numbers as I said in my in my part of the talk there.

These same store sales numbers are already starting to approach.

40% of 2000 and more of 2019.

And so maybe maybe we didn't maybe we understated it a bit.

<unk>.

It's hard to tell.

When you if you went into a redbox kiosks over the last six months you would have seen a few movies you recognize tap done Black Panther Black Adam.

One or two others, but you would have seen 30 other movies on the homepage that generic never heard of.

And so that's a very difficult environment for our consumers than when they walk into a red box and they see.

Only movies, they've heard of and all of these franchise movies that are coming in so many more will all end up on that front page over the next few months.

And that should drive as Jason said in his talk.

A rebound in conversion rates from the <unk> to the 45% level that that it was in the past.

And it should drive an increase in the basket size, we've seen a couple of upticks in basket size over the last few weeks as particular releases have come out.

But it's not yet consistently moving towards two five times its somewhere between where it was in the two five times that it used to be but if you did the math and you go from 20% conversion rate to 45% conversion rate and you go from one five.

This basket to two and a half what you would what you would realize as the business should more than triple from where it is today three three times is actually the number without any new customers coming back yet.

Yet we've only modeled it to double from where it is today so in looking at the 2023 plan.

There are a lot of reasons to believe we could even do better than that.

I hope that helps Eric, but I know, we throw a lot of things out there, but I think they're all important statistics.

No very helpful. Thanks Bill.

One moment for our next question.

Okay.

Our next question comes from Dan Carlos with the Benchmark Company. Your line is open.

Thanks, Good morning Bill.

Maybe just start on the SaaS side.

We've heard.

Some commentary around potential green shoots in open web programmatic.

I think theres been sort of an uneven recovery Q1 that wasn't great for.

CTG, our OTT in general, but it sounds like things are still getting better although everybody is kind of holding their breath for the back half of the year I know you gave some good color around.

CPM and fill rates, but just now that you have.

You fixed.

Some of the distribution and App issues.

We know what's kind of embedded in the guidance, but just any color you can give just on the marketplace, what youre seeing sort of in March and then heading into summer.

That front would be helpful. Thanks.

Okay.

So I I do know that everybody is worried but.

About the advertising environment, but I would point out that everybody is worried about the bank's everybody's worried about inflation everybody seems to be worried about everything right now.

I see a lot of signs in the AD market.

Of the kind of slowdown in connected TV that may be occurring in broadcast and cable.

There is there has been.

Really January is a little bit weak, but it's always a little bit weak. It's the worst months of the year generally February was better March was better yet.

<unk>.

We're back to exceeding year over year numbers.

But I think from my perspective, Dan.

Slightly different analysis that that I do which is the.

With the growing footprint that we have the increase in SaaS channels.

The really great success of the chicken soup for the soul, Avon, which will now be amplified meaningfully by its bias.

Arrival.

On Roku finally.

That that amplification of growth.

In the <unk> networks in the and then going from <unk> to 'twenty AD Rep partners I'm going to have a hard time changing them to third party clients in my vocabulary, but thats, what the guys want me to do.

That the combination of that growth the growth of SaaS growth.

Third party clients.

The growth of the <unk> businesses.

Are really driving our increases more than.

The share of the of the marketplace that we're that we're getting although I did see it.

I did see a study yesterday that showed we were clearly number five as we've always thought in market share, but not too far behind freely actually pretty close.

No.

I think we will keep growing this year.

Just because we keep expanding the footprint because we have more territory, we'd be asked because we have more assets.

So im little less worried about what that means for the year's numbers. If it's a stronger advertising environment will probably do better, but I think what we're doing in the overall way we're running the business.

Is the is the reason we are growing it's not just the market itself that is growing with US. We're also taking market share and approaching the business differently then.

Then others have I have to say.

This crackle connects which is our name for our third party client business is.

It's really poised to be a very very.

Profitable.

Cash generating.

Business for us.

And I think the arrival of Netflix and Disney.

Two the industry has helped us because it's forced some of the smaller a bonds to look for a way to sell their direct ads and none of the other top five.

Companies will sell someone else's ads for them. So it gives us a pretty unique position and it's why we've gone from 2% to 20 in such a short period of time and they are actually are quite a few more.

Of these companies that are.

That are in conversations with us about.

Joining the club so to speak so.

I hope that I hope that answers it Dan, but it's a slightly different perspective than just about the market.

Well no I mean, I wanted to get into that because the dynamics of the market have obviously changed looks like.

Obviously.

Pete <unk> slowing, but it's still growing over the air is growing faster than that but the conversation around SaaS and right management has obviously accelerated as well to the point, where back rates and especially international and I thought you guys do something with KC right.

You've kind of built.

Sort of an amalgamation of.

Right that you have that you don't have I don't know where you sit on that.

The large companies now from a content perspective there.

Scaling back on the number.

<unk> products.

And they are paying more for quality.

Because they all obviously have to right size their own balance sheets that can only bleed billions of dollars for so long. So in that regard I'm curious you talked about lower content spend.

Just love to get an update from sort of a rights perspective, an incremental distribution opportunity as well as <unk>.

On the content side, it sounded like sort of the base case for library content actually content costs are actually coming down.

On the syndicated or legacy library side.

So I'm just kind of curious how that factors into your viewpoint.

Yeah. So.

As you know we accumulated library in a variety of ways over the last five years building it up to over 21000.

Films and television shows that we have long term rights or intellectual property ownership.

And.

I always said too.

To you and everyone else I view this as a savings account someday.

May not continue to buy but will actually license and harvest and what youre starting to see signs of that in everything we're doing so the KC global deal is a great example of it. Thank you for mentioning it Casey Global is a fantastic company across Asia, and they needed certain rights in order to launch.

Our new channel they came to US we were able to enter into an agreement with them is probably the first step towards a broader partnership with them and we're getting.

Revenue, we didn't get before the <unk> deal was an early example of that.

By the way locomotive, which has a slightly different approach to international.

It is also generating revenue and rain and they do which is the show that locomotive made for Netflix or India is a big hit.

And I expect it's going to be renewed for season two shortly.

So we are monetizing content in lots of ways, but we've always said that that was what we wanted to do.

Specifically in the SaaS space. This is a really interesting.

Development the way, it's evolving and you are right. The bigger companies are starting to look at their libraries and go away in a minute I don't need exclusivity on everything that's something we've been saying for how many years.

We're off monetizing we're better off monetizing the content, we have and in as many ways as possible.

And that is what they're starting to do but that's always been our strategy. If you go back to the way we control cost of revenue on our networks and our own networks have the lowest cost of revenue of any of the big ones.

We do it by making sure that we monetize the rights, we don't need to use on our own networks and getting capital getting money back against that which reduces the net cost we have in the content and when we put it on our networks. It means most of it's going to be going to be profit. So.

These strategies that youre seeing the bigger companies.

<unk> are really things we've done from the beginning now I would say we've done it from the beginning because theyre small scrappy and we needed to but it's also what we believed was right. So.

<unk>.

That's that's what we're seeing.

Alright, Thanks, Bill I appreciate it.

Thanks, Dan.

I think we only have time for one really short question operator, sure wouldn't want to wrap up one moment.

Our next question comes from Mike Grondahl with Northland Capital. Your line is open.

Hey, Bill, it's Mike three really hi, Mike.

For fourth quarter can you breakout revenues between redbox.

Chicken soup legacy.

I don't think I saw it in.

You guys had I believe like a $40 million cost synergy goal with the acquisition kind of specifically where are you.

Towards that goal.

I'll leave it at those two.

Okay.

Why don't we will breakout the numbers for you.

A separate one on one because I'm already over time, but the quick answer to your question on the synergy or the.

They are achieved I expect them to be.

Them ultimately to be higher than the one that was the most important was pulling back the rights.

To sell the ads for Redbox, Avon and Red box fast given that to our own sales force saving 35% increasing.

Cpm's and increase the fill rates the combination of those three things is a very important.

Sure.

Very important number towards the $41 million we identified.

<unk>.

I know, it's 930, the market's going to open so I want to thank you all for attending today.

We look forward to speaking with you all soon thanks everybody.

Hello, Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

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Good day, and thank you for standing by and welcome to the chicken soup for the Soul Entertainment fourth quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session will need to press star one on your telephone you will then hear an automated messages by some of your hand is raised to withdraw your question.

Please press star one again.

I would now like to hand, the conference over to your speaker today <unk> head of Investor Relations. Please go ahead.

Thank you Kevin.

Good morning, and thank you all for joining US we will begin with opening remarks from our chairman and CEO William J <unk> Hana followed by remarks from our CFO Jason Meyer.

After their remarks, we will open the call for questions.

Matters discussed on this call include forward looking statements, including those regarding the performance of future fiscal years.

Such statements are subject to a number of risks and uncertainties actual results could differ materially and adversely from those described in the forward looking statements as a result of various factors.

This includes the factors set forth in chicken soup for the Soul Entertainment's. Most recent annual report on Form 10-K and in our most recent filed recently filed quarterly report on Form 10-Q.

Company undertakes no obligation to update any forward looking statements.

Please refer to the earnings release under the news and events tab in the Investor Relations section of the company's website for a discussion of certain non-GAAP forward looking measures discussed on this call.

With that I'll turn the call over to William <unk>, Hannah Chairman and CEO Bill. Please go ahead.

Well, thank you Sarah and welcome everyone and thank you for being flexible as we had to adjust the timing of the call in order to take advantage of the opportunity.

Two.

Raise a bit of capital as you saw in our filing this morning, and I'll discuss that in greater detail in a moment.

But first let me talk about a little bit about the past year two.

2022 was a year of transformation not only for our industry, but for our company as well.