Chicken Soup for the Soul Entertainment Inc. Q1 2023 Earnings Call

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Good day and thank you for standing by. Welcome to the Chicken Soup for the Soul Entertainment's first quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. After this speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone.

You will then hear an automated message advising your hand is raised. To remove yourself from the queue, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Valia Lewando, Head of Investor Relations. Please go ahead, sir.

hear an automated message advising your hand is raised. To remove yourself from the queue, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Zaya Lewando, Head of Investor Relations. Please go ahead, sir. Thank you, operator.

Good afternoon and thank you for joining us. We'll begin with opening remarks from our Chairman and CEO , William J. Randolph, followed by remarks from our CEO , James Adler.

After that remarks, we'll open the call for questions.

The matters discussed on this call include forward-looking statements, including those regarding the performance and future of fiscal year. 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 risk factors set forth in our most recent annual report on Forum 10K and our most recent quarterly report on Forum 10K.

The company undertakes no obligation to update any forward-looking statement. Please refer to the earnings release 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 Rahman, Chairman and CEO . Bill, please go ahead. Thanks, Isaiah. Good afternoon, everyone, and thank you for joining us. I'm pleased to report that we had a good start to the year with revenue and adjusted EBITDA coming in within our guidance range.

Consolidated revenue for the quarter was 110 million, adjusted either dial was 20 million.

And as many of you know, we only reported the fourth quarter six weeks ago, so there hasn't been a lot of time since that report, but it's probably worth highlighting some of the progress we've made since then.

The media landscape continues to shift and put in a way that pushes more people to free ed supported streaming. I'm sure you all see the news coming out of media earnings.

with studios now simultaneously removing content and increasing prices on their subscription services.

forcing consumers to pay more for less.

It's pain for the privilege of watching ads in most of these cases.

The value proposition of our totally free, ad-supported digital services...

and our low cost physical rentals is greater than ever.

And our kiosk rentals remain the most affordable way to watch premium new release theatrical movies anywhere.

As we progress through the year, we're encouraged by what we see as three ways we're growing.

One is the rebound we're seeing in kiosk rentals. The second is our position as a premier ad sales platform.

And the third is our plan to drive free cash flow through the expansion of our services business. I'll talk some more about that in a few minutes. I said in our last call that we expected the studios to rush to release many films theatrically, and that's what we're seeing. We finally reached the steady state where films are constantly arriving at the kiosks. Looking at the summer, we've got some really interesting things coming. Starting tomorrow, Ant Man in the Lost, Quantumania, Arise in Kiosks. Next week, we'll have both Creed 3 and Shazam Fury of the Gods.

followed later in May by Dungeons & Dragons honor among thieves, 80 for Brady and 65.

In the first two weeks of May, we had two theatrical releases and during the rest of the month, we'll have six additional major theatrical titles in our kiosks with a combined box of some nearly $650 million.

And that's just me.

Arriving in Kiosk and June , we have Renfield, releasing early in the month.

I'm excited about mid-June when we're going to have Super Mario Brothers and John Wick Chapter 4, followed later in the month by Avatar and Evil Dead Rise.

In all, we're anticipating 11 theatrical releases to arrive in the Kiyas and Jude, with a combined box office of nearly $1.6 billion.

In July , we'll have eight theatricals arrive in kiosks, including Scream Six, Are You There God, It's Me Margaret.

And for those of you not keeping count, that's 27th theatrical releases arriving between May and July , with a combined box office of nearly 2.5 million, 2.5 million, sorry.

Those of you who are not keeping count, that's 27th theatrical releases arriving between May and July , with a combined box office of nearly 2.5 billion. 2.5 billion, sorry. And August is shaping up to be just as impressive.

It's exactly what we were looking for when we first took over Red Box. But we've only seen three major event movies from August to February .

So keep in mind that the title counts I mentioned don't include originals or direct-to-video titles, and it's just the big ones. Including those, these new title counts come in from May through July at 48. So keep in mind that the title counts I mentioned don't include originals or direct-to-video titles, and it's just the big ones.

Our second pillar of growth is our position as a premier else and sales platform.

We just came out of a very successful Newfronts presentation a couple of weeks ago, which you'll be able to watch on our website in the coming days. And I suggest you do it. It's very impressive.

There's some really good stuff there. You'll see Redbox streaming, you'll see Crackle streaming, Chickatoo for the soul streaming, and a lot of interesting innovative ad techniques we've launched. We're thrilled with the response to our Crackle Connects platform and we continue to build it out as a leading supplier for independent Avon services and digital out-of-home networks.

In fact, we now represent over 10,000 digital out-of-home screens.

Through our deals with coin stars, add planet retail media group and velocity MSC.

We have the potential in the scale to be a large participant in the digital out of home business.

which in turn can be a tailwind to revenue generation or our kiosks, adding in another revenue stream to our business.

We've also presented a new, a number of new and renewed projects through our branded entertainment group.

series like At Home with Genevieve Garda, just for kicks. A brand new show about the hottest new sneaker drops and new seasons of our original hit series from executive producer Ashton Kutcher, going from broke, as well as inside the black box, pet caves and wedding talk. As you know, we partner with leading national advertisers like the General Insurance.

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Later this year we'll be rolling out interactive ads through Amazon Publisher Direct to Amazon DSP Advertisers.

The ads will connect viewers directly to check out by using their voice or remote control to add items to cart and complete purchases.

We've also announced partnerships with measurement companies up way of a GOPATH to measure positive ad-list in both series and digital video screens respectively.

Our ability to provide exceptional service to our ad rep partners is complemented by the depth and quality of our film and television category, catalog, which may remain on high demand.

And I'm pleased to announce what I'm hoping will be the first of many announcements with Tata2, a leading European-based social media entertainment company.

We'll bring our film, our extensive catalogue of films and television series to their innovative platform as they roll in internationally, allowing us to expand our global footprint.

This is the first platform of scale that rewards audiences for viewing and engaging with content. And I couldn't be more excited to explore ways to incorporate their tech into our networks.

Finally, generating free cash flow remains a priority and will continue.

And we'll continue to be driven by the rental rebound we're seeing, along with continued cost management initiatives.

Additionally, the success we're seeing with our service businesses, both our Kiosk and Adrep, has encouraged us to look at our entire business to identify other opportunities to apply the service model and generate incremental revenue that can be immediately converted to cash flow.

As you know, our kiosk service and ad rep business continues scale, providing greater value for our B2B clients.

Our ad rep clients have grown to 22 leading independent avads and digital ad home networks. We've grown a number of key app service customers to four, including Echo ATM, Kemi, Pokemon and Amazon. With whom we have a long-standing partnership. In addition to these partners, we have a full pipeline of potential new customers.

with many pilot programs in or near launch. The low upfront investment combined with synergy opportunities makes these service businesses very attractive.

And we continue to look at the rest of our overall business to find other opportunities.

to create additional service revenue. In closing, I'm excited by the results we're seeing early in the year and look forward to updating you on our progress in the months to come. Now I'll turn the call over to Jason, who will walk you through the finish.

Thank you Bill and good afternoon everyone. As Bill mentioned, we began the year on a very strong note with both Levin and Adjustity Bidda coming in within our guidance range. First quarter revenue was 110 million, up 275% year over year.

And I adjusted e, but that was 20 million, up nearly 450% year over year. So, quencially, although revenue was down 4% from a reasonably strong fourth quarter, and I adjusted e, but that was 37%.

Performance in the quarter continues to reflect the strength of our multi-platform strategy, especially the monetization of screen media's library. In the first quarter, excluding the impact of acquisitions year over year, revenue increased 33 million more than double the first quarter of 2022, reflecting demand for our premium content library.

As we previously mentioned on past calls, we continue to view screen media's library as extremely valuable assets that generate feature cash flow for our business. Further to our multi-platform strategy, here today our T-Vide business continues to accelerate.

13%

We're excited about the T-Vive growth we are seeing as it is leading indicator of films that will be hitting our Kiosk network in the coming weeks.

In the first quarter, our gross profit was 12%, a 14% sequential increase over the fourth quarter. Our gross margin in the first quarter was adversely impacted by a decrease in kiosk and the gross margin in the first quarter was adversely impacted by a decrease in kiosk.

year over year, largely tripled for lack of films, consequence hitting the kiosks on a consistent basis.

With a number of event films and the cadence of films expected over the remainder of 2023, we expect our gross margin to improve in the future.

In our physical kiosk network, we ended the quarter around 30,600 kiosk nationwide.

Daily rentals per kiosk or our version of the same store sales remain strong in April . On average, daily rentals per kiosk from March and April are nearly 20% higher than in January and February . I'm just scoring the positive impact of the return of the actual titles in kiosk.

Operating loss of the first quarter was 38.5 million compared to an operating loss of 10.8 million in the prior year.

The variance is largely driven by the mix of revenues, along with increased compensation expense and higher amortization expense, both related to the merger of Red Box and the acquisition of 1091 media in 2022. the

Our adjusted EBITDA for the quarter was 20.1 million compared to 3.7 million in the prior quarter, representing an increase of 16.4 million or nearly 450 percent, which includes the Equalization of 3.45 million of CSS Management and License fees.

the quarter was 20.1 million compared to 3.7 million in the prior quarter, representing an increase of 16.4 million or nearly 450 percent, which includes the equitization of 3.45 million of CSS management licensees. More to come at that in a moment.

Excluding the impact of the CSSP Equalization, adjusted EBITDA for the third board would have been 16.6 million. Turning to items impacting our financial position. As you will recall, late March, we announced a public offering of our class A Comstock that closed in early April , raising 10.8 million. Also in late March, we entered into a modification agreement with our parent company, chicken soup for the sole LLC.

Recently

Credit Rating Agency, Egan Jones, reiterated its triple B rating on both the company and our senior secure notes, underscoring the strength of our capital structure.

As a reminder, we retain favorable debt terms under our HPS credit facility with no financial covenants for two and a quarter years and the ability to pick interest through February 11, 2024, giving us plenty of runway, giving our expectations around the expected timing of increasing operational cash flows.

We continue to focus on for this dreamlining our organization to result in more cost-effective, coordinated, and efficient approach to our operations. As Bill previously mentioned is remarks, we're evaluating ways to replicate the service aspect that we're adding sales and he asks service organizations.

across other parts of our business to drive future revenue and scale, resulting in increased future cashflow. Additionally, we continue to look at assets that we own that are not strategic to our GoFords strategy, which we may choose to sell and partner with others to raise additional cashflowers in the future.

In closing, we're already seeing the results of our cost cutting initiatives and an increase in the number of event films available in the Kiosk starting in late May. We're still seeing the results of our cost cutting initiatives and an increase in the number of event films available in the Kiosk starting in late May.

And we expect the combination of these factors to significantly increase our operational cash flows. Now I'll turn to the cold back of Riziah for Q&A. Thank you, Jason. Operator, please open the call for a question.

Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced. We ask that you please keep it to one question with one follow-up. Please stand by, will we compile the Q&A roster? Anson.

Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced. We ask that you please keep it to one question with one follow-up. Please stand by, will we compile the Q&A roster? One moment for our first question. Thank you.

And our first question comes from the line of Jason Cryer with Craig Hallum. Your line is now open. Thank you guys. Bill, so you had your first new front presentation as Crackle Connect last week or maybe as a couple weeks ago. You highlighted it earlier, but just wanted to see.

there was any other important takeaways, any feedback that you've heard from marketers since that presentation. And then I'll just ask you my follow up now. So, you know, you've talked about Redbox getting back to about a third of 2019 levels. It looks like by the numbers we track that theaters are already, you know, at least on par or well over 2019 levels. So

Just curious if you look at the relationship between new releases and box office volumes and how frequently customers are utilizing their key asks, would that put you on the right path to achieve those targets?

Okay, let me see if I can do the first one first.

The new friends were great and I really do encourage anybody who has an interest in our company.

to take a look at the

at the video that we've got where I've posted on our website in the next couple of days.

We've got to, we're posted on our website in the next couple of days.

We had a lot of very impressive stuff that we rolled out there. A lot of it was program related, but also a lot of it was ad tech related. A lot of new ad tech that was really exciting for people and encouraged people. And by that I mean advertisers.

to do business with us. The other thing that was, and so that was one takeaway, Jason, that came from the new fronts. There was a real sense that we were doing some innovative stuff in the edtech side, especially with the shopping stuff.

and also some of the contextual understanding of the impact of programming on advertising's impact on viewers.

There's a lot of stuff that was pioneered by a guy named Bill Harvey a long time ago. Good friend of mine.

where we talked about the importance of content on the way in which people absorb advertising.

certain types of content make people much more receptive to certain types of advertising at least what that's what's been found. And contextual advertising is becoming a bigger and bigger part of today's important to advertisers today. We're on that in a really serious way.

And that was one thing that came out of the new friends. The other thing came out of new friends was the quality of our programming, the diversity of our networks, people's excitement about having a place where they could go to buy from a whole bunch of diversified avads in one shot.

In other words, our ad rep business, I guess as we call it, now Crackle Connects, that people liked, they liked the idea that they could get a variety of different networks in one spot. And that business can, you know, that just continues to grow as a business and an activity. And I love it because it's cash flow. It's all cash flow, it's all contribution margin.

There's no incremental cost to run that business, but there's incremental benefit, both for us and our ad rep partners because selling volume generates higher CPMs, bigger fill rates.

It's better for everybody.

That was the, I would say that's the other takeaway from the new friends. And a few weeks to a couple of months, we'll start getting commitments from people. We'll see how that goes. And of course, as we get them, we'll let you know what we're saying. That's the new friends.

take away from the new friends. In a few weeks, two a couple of months, we'll start getting commitments from people. We'll see how that goes. And of course, as we get them, we'll let you know what we're seeing. That's the new friends. The key asks.

I think I'm going to go back to what I said in my remarks.

We are going to have an incredible array of movies. Literally starting tomorrow. Ant-Man on the last.

Cree-3, Chazam, Fury of the Gods, Dugins of Dragons, are 80 for Brady, 65. Cree-5.

Renfield, Super Mario Bros. John Wick 4, Avatar, Evil Dead, Scream 6, are you their God of Sweet Margaret? This is what we said we wanted, this is what we've gotten, this is where we are.

$2.5 billion of combined box office from July and August is gonna be just as big.

million dollars of combined box office, Trim July , and August is gonna be just as big. It's gonna be just as big as the other month.

The movies are here. We believe people will rent them because they've been renting them on TV. One of the interesting things we've seen is the jump in TV I'd revenue as Jason said in his remarks seems to be...

So it was an early indication of the success of Kiosk. We saw this in March where we had a big jump in in T-Vide Revenue and then a big jump in in Reddles. If this follows suit now with all these movies

You know, this will end up being exactly what we hope to would be. So, I understand Jason that the movie theaters are now back to where they were in 2019 or are closer to it, and that our 30% guess versus 2019 seems very conservative.

But that's all we need in order to make this very successful. So that's what we're targeting.

we need in order to make this very successful. So that's what we're targeting. Thank you Bill. Appreciate it.

Thank you. One moment for our next question, please. Thank you.

And our next question comes from the line of Eric Woe with B. Raleigh Security. Show line is now open.

Thank you. Definitely Bill. A couple more follow-up questions on Red Box. As you've seen.

The number of big theatrical tiles come back to the key-os and kind of the cadence.

of releases get closer to normal. Maybe time for one other trends you're seeing of rental behavior. You're seeing the basket sizes increase or consumers also renting some of the older library titles, a lot of the releases that presumably have better margins. And then...

I know the past during loads and releases, kind of marketing that has shifted be more promotional and discounts and offers to give back to Tiosd. Are you able now to pull that lever back and really kind of promote the titles as opposed to, you know.

Maybe hurt more, just going to discount on the rentals.

Okay, that's a lot of things, Eric. I'll do my best.

I don't think we yet have enough of a clear pattern to be able to answer the first part of your question about whether or not people are buying.

new titles and old titles. I've got a feeling that with all these new titles that are about to hit the boxes it's going to be hard for people to take new titles and old titles because there's so many new titles.

But for the moment, we don't really see a pattern. But we haven't had this kind of cadence of big movies.

We had a little bit of life in March. You saw what happened. Things jumped 43% over February . April's about the same as March. What I hope to see now in the second half of May is this big jump.

from this pacing of big titles.

So I think maybe you're just like a month ahead of where I can really answer the question for you.

like a month ahead of where I can really answer the question for you.

I'm up to my mind on this, Eric. I understand your point. We've done some interesting new promotions that I think have turned out to be pretty profitable.

One has been a free night when you return to get somebody to take another disc so that they don't leave empty handed. And that seems to have worked pretty well. And we've done one other one where you get a second disc for free, but you know what happens is when people keep them and they pay for them for a couple of nights and it has been a decent promotion. And in the end, that promotion, what appears to be a promotion.

levels pretty closely.

because if I see if I don't see session to start a new increase

Then I might go the other way, Eric. I might do a day where every disc is free for one day.

just to get all you people to go to the key ask for rent. Red.

because we do need to make sure we don't want to miss the opportunity to bring people back. If we just kept people where we are today and the basket size went up and the conversion rate went up, yeah, we'd make these numbers, but shouldn't we try to do better? It's really the question. So maybe some kind of cool promotion might be a good way to get people back who have not come back.

I think we're thinking about both approaches. Obviously we don't want to be giving discounts forever and thereby costing ourselves money. We're going to be giving discounts forever and thereby costing ourselves money.

But there are some things that some promotions might actually do for us that make sense. I hope that answers your question.

Thank you. One moment for our next question. The 51st defen Ow???????? The foundation of the 1 their

And our next questions will come from the line of Brian King-Cineler with AGP. Your line is open. Great. Thanks so much for taking my questions. You made announcements that you're increasing your opinion with kiosks. One way.

with Dollar General, and the other I think was unnamed. So my first question is, can you talk about when you expect each of those moves to largely be complete? And then my follow-up question is, you look back in 2018 and 2019, what was the average contribution from a major title during the first six months?

when it hit your kiosk and how long generally do rentals stay at elevated levels.

Okay. Yes, about dollar general and what else? What was the other one? The other one I think was unnamed because you said you were in the press leave. So basically both of those.

Yes, about dollar general and what else? What was the other one? The other one I think was unnamed because you said you were in the press least so basically both of those. Okay, so.

A thousand of the dollar general k-Oscps should be in by the end of the year, and 500 should go in early next year.

So they go in a couple hundred and then a couple hundred a month for a while and then a hundred or a hundred or a hundred. So it's probably 300 in the first half of the year and 700 in the second half.

Brian , and the other one, I don't have the schedule in front of me, but we can give you later.

I have no idea what happened in 2018 when a new title came out. So we're going to have to go back and try to talk to somebody who has kept those kind of records for us and see if we can find that for you. I understand the question. What we focused on more is what's happened in the last year when a new title has come out. And there we've seen a three-fold increase in...

rentals in the first couple of weeks.

for those titles before those titles were there. So they drive a very significant increase.

over the, over the, before those titles were there. So they drive a very significant increase in, uh, and with that ?????.

very significant. Maybe a different way to put it. Maybe a different way to put it, and then I'll get back, is maybe the last year, year and a half, as a new title has been added to your kiosk.

What has been the average contribution in that day first? A couple of months.

I don't really know how to answer that either.

We've done as we've seen the overall impact. If you mean the overall impact, I tell you an individual title or overall impact, Brian . Individual title, I mean you're adding 48 new titles of which you mention how many are majors. I don't have the exact numbers. So there's a new title add $10 million in rentals during the first month or two to the day.

significantly less obviously I have no idea so my numbers may be way off. I thought that kind of number.

the S on my number maybe way. I thought that kind of number. It's right. Lower.

We now have to go look in order to give you an accurate answer. I don't have that information quite that way. What I have seen is the increase in overall performance has been very dramatic.

And I feel like that's probably the more important thing as compared to the individual titles although in the video genre.

Now I think that when you start to have the kind of cadence that we're about to have, that you're going to have a kind of a...

a build-up of rental activity that compounds rather than just goes title by title.

Because when people come back, if there's something they want to rent, they will rent it. Whereas up until now, they've come back and there's been nothing to rent that they really wanted, that they recognized.

Now when you have...

Take a look at something like this where you're going to have Ant-Man and Creed and Shazam and Dungeons and Dragons all in the boxes.

all at the same time, more or less, for the first time. And people come and rent one, and they come back, and they say, oh, I wanted to see this other one too. They'll rent that, whereas before there was no other one they wanted to see.

So I think it's really more of a compounding effect from having a good group of titles in the box. I think that's it for this webinar. I hope that you enjoyed it. If you did, feel free to share it with your friends and family. And I'll see you next time.

We have a slide in our presentation deck. I can't say, do you remember what the one is a picture with all of the covers of the...

in our presentation deck. I cast it even with a num, but the one is a picture with all of the covers of the DVDs.

That slide to me is the visual representation of what is about to happen, where you're going to come to our kiosk and instead of seeing one, two, or three.

covers that you recognize. You're going to see 30 that you recognize or that you wanted to say to 11 slide number 11. I suggest everybody look at it because if you can imagine going to a rental

key ask with that screen as the opening screen compared to what there has been for the last year which is one, two or three movies that you would have recognized and then 25 or 26 that you never heard of. It's a completely different experience for the person coming to rent.

So, okay. Thanks, Tom.

Thanks, right. Thank you. One moment for our next question please. Thank you. And our next question comes from Vane Kernos with the benchmark company. Your line is open. Thank you.

Thank you. Good evening. I will take them one at a time. Simple. Thank you. Thank you.

Thank you. APF certification, then pretty invoked lately. The nice new add-on in the release.

access to the Amazon DSP which is to click their opening.

It's kind of interesting what's going on in sort of the broader DSPSS team market right now, but kind of your thoughts on

sort of either the consolidation on both of those sides of the equation what it means for demand sources for you or incremental opportunities. So you'd be sort of a kind of premier partner with the right demand providers.

Either the consolidation on both of those sides of the equation, what it means for demand sources for you or incremental opportunities to be sort of a kind of premier partner with the right demand providers.

This comes back, I think, Dan, to the never-ending question of programmatic advertising versus direct sales, one way or the other.

What keeps us, what I think keeps us interesting to the, what you call demand sources is the fact that we don't really need them.

And now that we're consolidating so many...

And now that we're consolidating so many...

A-VODs in our little network. I don't know how else we describe it in crackle connects. We've become a more and more important potential customer for them. And we're seeing that manifest itself in a couple of different ways. But I probably shouldn't go into it because it's...

Stuff that is kind of, I think it's confidential stuff. We should keep it confidential. But I will say that our relationship with those parties are getting stronger. And it makes sense because we've got 22 partners now who are buying through us.

and a lot of them are buying programmatically as well as direct. I guess in general, Bill, just your thoughts on the impact of the writer's strike, if you were a GreenLift program, it's kind of an interesting dynamic because...

sort of fewer major titles are being ordered as all of the, you know, we've talked about this with a hundred times bill, with the streaming losses. But, you know, the flip side is that, it takes, there's really not been a flow through to legacy libraries because they're having to monetize them more frequently. So the lower, I wouldn't call it lower ends, but I guess the legacy stuff is actually going for less, perhaps it's so, then the

So yes they are. They are trying to do things.

I mean, it's manifested itself in a bunch of different ways, Dan. So a number of these guys have gotten aggressive in the fast business, setting up their own fast networks. And, you know, that actually is, I'm glad you asked me that question because I wanted to focus on the fact that we announced a pretty important deal this morning with AMC to bring some of the most important fast channels that are out there to our fast service, including The Walking Dead.

which a lot of you probably know is a pretty popular show and it's now available for free on our Redbox Live TV service along with Portlandia and some others. But this is a good example of this sort of taking high quality content and using it in a variety of different ways to create money.

And we benefit from that in the fast business and sometimes we're the victim of it in the VOD business, then, you know, in the avod business where they come at us with looking for bigger amounts and we just don't pay for it. But I feel a little bit protected there because of the size of our library and the fact that with 65,000 assets, the guy who runs content for us fell out and I was pretty talented. We'll see if we can found another news. Up until 7,000 of people have families or souls that use gold photos.

can curate that very large library and keep things stealing fresh and looking good and keeping it topical like we do with I think we just did some stuff on the king just to save the queen but now the king king Charles and other things that are timely but also given the size of our library you know allow us to to generate some real money.

very large library and keep things feeling fresh and looking good and keeping it topical like we do with that I think we just did some stuff on the king just to save the queen but now the king Charles and other things that are timely but also given the size of our library you know allow us to to generate some real money so you

They kind of cut both ways. We're a little protected by the size of our library. We're a little disappointed with some of the ASX that some of the studios have had. I think it's going to be interesting to see what Disney does. Now that they're...

really pulling stuff down off of Disney Plus. And if they're going to start making that available in Avon and fast.

That'd be good stuff to get our arms around so we'd certainly try to figure out how we could participate in that.

Water is really started at all, as I think everybody knows, by taking their library and saying, we're going to make money, which of course is a very smart idea in a business. And I see Disney following pretty closely, so.

There's a lot of cross, there's a lot of cross stuff that's going on there.

Nothing like being applauded, Bill, for making $50 million and streaming and losing a billion dollars in legacy.

that's a conversation for another time. Thanks for the college, I'll appreciate it. And I'll keep you started here. Thanks Dan. Thank you. One moment for our next question. Thank you.

And our next question will come from the line of Mike Rondall with Northland Security. Joanne is now open.

Hi, this is Mike with you, John from Mike Groundall. Thanks for taking our questions. Maybe first, just on that new licensing deal amount. What does that weighs? So nice car. Anything inside of you? Yes. On your?

Hi, this is Mike with 2 John from Mike Groundall. Thanks for taking our questions. Maybe first just on that new licensing deal amount this afternoon. Is there anything to call out there that's?

Different from other deals and structure or they use your base, geography, et cetera. So yeah, I'm glad you asked that question. I'm actually pretty excited about the relationship for those of you who don't know who tattoo is. They're a very fast growing, highly valued, well respected.

social media, avod slash social media company out of Europe , which is rapidly expanding around the world. They needed content and they came to us and we made a, you know, we made a deal for them to rent parts, you know. Some limited use at our library for money over time, but I think the more important thing is.

We really think highly of their service and I hope that we're going to be able to, I'm thinking we're going to be able to incorporate what they do into what we do. And the reason that's exciting to me is if you look at,

the way Disney and others are charging more and then providing less.

This Tata2 approach rewards people for engaging with content.

It gives them a way to earn coins and and use less coins to obtain items at a discount and

something's for free. It's really the flip of charging more and giving less. It's charging less and actually rewarding people for being loyal viewers of your network and I'm thinking we will end up trying very hard to be the first and maybe only

Ava that actually is able to use their service in this country. And that's really what I'm hoping for in that relationship. Hopefully we'll get back to you on that in the next few days. But...

But it's kind of a normal licensing deal, other than that. Other than the fact that it really will follow them all around the world, and there'll be a way that we can expand internationally without having to invest in the kind of money that we would otherwise have to invest if we were doing it on our own. So.

It gives us a sort of a network to ride around the world, which we're excited about. Yeah, that's helpful. And then maybe just on the internal ad rep, sales team, general thoughts, they're on capacity that kind of keeps brought to grow this year.

When you say capacity, you mean the ability to continue to handle more of these avids or something different? Yeah, just the criminal sales team could ask you there. Yeah, well look, the sales team, the interesting thing about selling ads is there's not really that many places you sell them when you get right down to it. There are a handful of really big agents. Yeah.

that really make a difference. And our people call on various agencies. So if they have more to sell, it's not like they call on a different party. They call them the same party, but they have more to sell. So their ability to sell is only limited really by what they have to sell, not by their time.

So we could add many, many more avods to our world, represent their ads and go to the same buyers and just sell larger amounts of advertising, which of course is our goal. And that's really what happened if you look at our business over the last couple of years. We've added more and more ad revenue. So I'm not so sure if anybody heard and asked anything. I know, they could have said this flying on earth they couldn't are not 500.

in part because we've had more and more ads to sell and we've had that both because our own and operated networks were growing. We were adding the fast networks and we had additional inventory from our ad rep partners and the combination of those three things leads to greater revenue and greater profitability in the A by business.

I don't think we have much of a capacity issue at all. It feels to me like it'd be quite easy for this group of people to sell a lot more. They're really good at what they do.

And they're led by Darren Aula, then he reports to Philippe Galtona, as the chief revenue officer. And those are extraordinary executives who really do a wonderful job. So.

I think there's plenty more to come.

Thanks. Well, I've got three more minutes. So do we have another question? No more questions. Thank you for all of your questions. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.

Thank you.

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