Q1 2023 Dolphin Entertainment Inc Earnings Call
As always, I'm Mark Defense.
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Good day everyone and welcome to today's Dolphin Entertainment first quarter, 2023 earnings call. At this time, all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star and one on your touchstone phone.
You may withdraw yourself in the queue by pressing star 2. Please note this call may be recorded. I'll be standing by. Should you need any assistance?
It is now my pleasure to join the conference over to Mr. James Carpanoora. Please go ahead.
Thank you, operator. And once again, welcome to Dolphin Entertainment's first quarter 2023 earnings call. With me on the call are Bill O'Dowd, Chief Executive Officer, and Merton Negrini, Chief Financial Officer.
I'd like to begin the call by reading the SAVE Harbour Statement. This statement is made pursuant to the SAVE Harbour Statement per forward-looking statements, described in the Private Security's litigation reform act of 1995. All statements made on this call with the exception of historical facts may be considered forward-looking statements.
Within Section 27A of the Security's Act of 1933, in Section 21E of the Security's Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these four looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actful results may differ materially from those expressed or implied in the forward looking statements.
foodabairs, risks, and uncertainties.
For discussion of the risks and uncertainties, which could cause after results to differ from those expressed or implied in the four locking statements.
Please see risk factors detailed in the company's annual report on Form 10K, contained in subsequent file reports on Form 10Q, as well as in other reports that the company files from time to time with the securities and exchange permission. Any forward-looking statements included in this earnings call are made only as the date of this call.
We do not undertake any obligation to update or supplement any forward looking statements to reflect subsequent knowledge, events, or circumstances.
Now I'd like to turn the call over to Bitlow down. Chief Executive Officer serves Delfon Entertainment. Bill, please proceed.
Thanks James and hi everyone and good afternoon and thank you for joining us today.
As always, we'll start with the review of some financial and operating highlights followed by a full financial review and then open it up for Q&A.
So from a financial highlights perspective, we're happy to report to our first quarter revenue grew by 8% year over year to 9.9 million.
Since Q1 is always our lowest revenue quarter because of the seed's inality in our business, and especially with our influencer marketing companies, we expect Q2 revenues to be meaningfully higher, and believe that we will hit our expected year-over-year revenue growth target of 20 to 25% for full year 2023.
basically saying we're on track. We are also pleased that our operating loss per share for Q1 stayed the same as last year despite adding a second influencer firm into our Q1 results. As noted just a second ago we expect our influencer marketing firms to be down in Q1 due to seasonality.
but also expect them to make up the ground the rest of the year to deliver annual profits to Dolphin.
Moving to operational updates.
A clear highlight occurred after the quarter ended with the announcement that Amazon Studios acquired the worldwide rights to the Blue Angels. I know we spoke just six weeks ago, and this has occurred since. If you recall, this time last year, we announced a multi-year agreement with IMAX.
to jointly finance the development and production of a slate of feature-length documentaries for the global market. The first project Greenlit was the Blue Angels, developed and co-produced by JJ Abrams, Bad Robot Productions, and Ziffer Brothers Films.
Blue Angel started filming last summer and has finished production. We expect to film to hit IMAX theaters in the second half of this year.
In terms of financial implications, we expected generate approximately three and a half million of revenue to Dalton from the acquisition agreement, which would result in a 75% ROI.
Before the inclusion of any revenues to Dalton from the ticket sales from IMAX institutional theaters.
This fantastic return on the Blue Angels provides a formidable proof of concept for our Dolphin Ventures model, formerly known as Dolphin 2.0, of taking equity in projects that we market. Dolphin Ventures also saw a boost in Q1 with the announcement that Federer unfortunate 500 executive Ellie Doty.
but also where we receive equity in the product or services we are marketing.
Additionally, as Chief Marketing Officer, part of Ellie's role will be to communicate what we have built and giving an additional platform to both the work we are doing and to the incredible leaders within our Dolphin family.
Eli is one of those leaders herself.
Leaders like Shore Fire Media, Dolphins Industry leading music PR firm whose client, Rihanna Giddens, was just awarded the Pulitzer Prize in music.
which followed Shorefire Clients receiving a collective 14 Grammy Awards in Q1, including Song of the Year and Best New Artist.
that many Grammys?
is a reflection of the breadth and depth of short fires roster, which is what allowed its place clients across a wide variety of major promotional vehicles in Q1, including Good Morning America, today's show, the Kelly Clarkson Show, and Rolling Stone, just to name a few.
We have leaders like 42 West, our film and television PR powerhouse who has helped clients and worked on projects resulting in four nominations for the 76 Tony Awards.
four awards at the Sundance Film Festival and five awards at the South by Southwest Film Festival. This year already. Additionally, 42 West's work on the Top Gun Maverick campaign resulted in an Academy Award for Best Sound and six Oscar nominations.
which follows the world-wide box office total of 1.49 billion in 2022. The biggest of client Tom Cruise's career to date. I realize I should have just rounds up to 1.5 billion instead of 1.49. But hey, all right, unsurprisingly, 42 S to short fire media, we're once again honored by the Observer's PRPOW.
stunning custom-made Givenchy dress.
on the steps of the 2023 Met Gala.
and client vice-royd hotels may travel in Leisure's 2023 top 500 best hotels list.
Leaders like B. Social and Socialite are top influencer marketing agencies that represent over 200 leading creator talent with hundreds of millions of followers on social media. Our creators were recently asked to join campaigns for SACS.
Hyundai, Jose Cuervo Tiquila, Revlon, and Pinterest, among dozens of others in Q1.
The social and socialite were named.
top talent managers for creators by business insider.
Lastly, leaders like Viewpoint Creative, Dolphins Respected Creative Relations Agency, and Video Production Boutique.
included a brand image campaign for CBS News New York, Big Red Hot Sauce, and PayPal, of course. Now I'll turn to providing updates on some of our projects. We're Dawson and its shareholders have equity and participate in the upside that our best in class marketing companies regularly enable for our clients.
Starting with Midnight Theatre, as a reminder, Dolphin manages all aspects of publicity and marketing for Midnight Theatre and its restaurant hidden in leaf, while also facilitating talent and commercial relationships within the entertainment and culinary industries. Dolphin also holds a meaningful ownership stake in the venture.
As we ramp up the programming theater throughout the summer, aiming to have a full seven-day a week schedule shortly after Labor Day, we have played host to an array of talent, including Gloria Steinem, New York Cabaret, the Moss.
The Daily Shows Roy Wood Jr., who incidentally just hosted the White House correspondence dinner, the Amy Schumer shows Rachel Feinstein, Broadway's Andrew Barthelman, who co-stars with Jennifer Lawrence in an upcoming comedy film from Sony that by all accounts looks like it could be a summer hit.
to name a few. Go Blue Jays!
We also anticipate putting out our first original production called a brief history of magic in midnight theater in July We're very excited for that as it should allow us to double the number of shows per month this summer This is what we did this winter and spring and so the theater is kicking into gear
Turning back to our multi-year agreement with IMACs to jointly finance the development and production of a slate of feature-length documentaries, you heard at the top of the call that with the sale of the Amazon Studios of our first project together, the Blue Angels, that this partnership could not have gotten off to a better start. We're now looking for and evaluating opportunities for our second documentary together.
We also anticipate doing more work with IMACs for actively sourcing and developing live shows with them that we can broadcast from in-night theater to IMAC theaters nationwide. We expect that a lot more to talk about on this topic between now and our Q2 earnings call.
In summary, it's been a great start to the year with a record Q1 revenues.
And as in previous years, we are confident that Q2 will be even significantly higher in revenues than Q1. And Dolphin Ventures, previously known as Dolphin 2.0, will enjoy a fantastic return on its investment in the Blue Angels with revenues from IMAX institutional theaters still to come.
Thank you for joining us and to that end, I'll now turn it over to Mirta.
Thank you, Bill, and good afternoon, everyone. I will now discuss results for the quarter-ended March 31, 2023. Revenue for the quarter-ended March 31, 2023 was approximately $9.9 million. Eight percent above the revenues for the quarter-ended March 31, 2022.
Overall, operating expenses for the three months that in March 31, 2023 were approximately $12.5 million compared to approximately $11.1 million in the same period in the prior year. Operating expenses are composed of direct costs, payroll and benefits, selling general, and administrative expenses, S-G-N-A.
changes in the fair value of contingent consideration, depreciation and amortization, and legal and professional fees. Direct costs for the quarter ended March 31, 2023 were $219,000 compared to $1.1 million in the same period in prior year.
Payroll costs were approximately $9.1 million compared to $7 million in the same period in the prior year. S-GNA expenses of $1.9 million compared to $1.5 million for the same period in the prior year. Legal and professional fees were $763,000. $1.2 million.
compared to 938 thousand dollars in the same period of prior year.
Operating loss for the quarter ended March 31, 2023 of $2,566,000. Includes non-tash items from depreciation and amortization of $533,096 and a loss from the change in the fair value of contingent consideration.
of $15,485 along with one time a non-recurring audit fee of $300,000. This compares when operating loss for the quarter ended March 31, 2022 of $1,889,60.
which includes non-cash items from depreciation and amortization, a $407,000, $437,000, $238, and they lost from the change in the fair value of contingent consideration of $161,451.
along with one time and non-recurring professional fee expenses of approximately $300,000, primarily related to the 2021 audit.
and in March 31, 2023 of $2,969,320 included non-cash items from depreciation and amortization of $533,996 and a law from the change in the fair value of contingent consideration of $15,485.
along with one time a non-recurring audacity of $300,000. This compares to a net move for the quarter ended March 31, 2022, of $1,717,832, which includes non-cash items from depreciation and amortization of $407,000 to $407,238.
and they lost from the change in the fair value of contingent consideration of $161,451. Along with one time and non-recurring professional fee expenses of approximately $300,000, primarily related to the 2021 audit.
Basic and 40 diluted loss per share was 23 cents per share based on 12,640,285 weighted average shares of spending.
This compares to 20 cents of basic loss per share, an 8,713,700 weighted average shares, and 23 cents fully diluted in loss per share, based on 8,846,567 weighted average shares outstanding in the same period in the prior year.
Unrestricted cash and cash equivalence of $7.9 million as of March 31, 2023, as compared to $6.1 million.
dollars up as of March 31st, 2022. That concludes my financial remarks. I will now ask the operator to open the phone lines for Q&A. Operator, can you please fold for quick?
Thank you. At this time, if you'd like to ask a question, please press star and one on your touchstone phone. You may remove yourself from the queue at any time by pressing star two.
Once again, that is Star One to ask a question.
Our first question will come from Alan Clees with Maxim Group. Good afternoon. Congratulations on the quarter. Hi. Hi. Hi. Questions on the blue angel. So I think I heard you say that you're done with the production.
remind us when the goal is to hit the theaters. How many theaters it goes in for how long and then when it becomes available. And when do you recognize the revenue from Amazon? Thank you. Sure. Yes, this is a big deal. So we should unpack it a little bit.
Certainly didn't expect to have such an amazing result in the first one out of the gate, so thank you for highlighting it, Alan.
The, we did, we just announced the deal. I think a year ago this week in CON, where I'm going tomorrow. And we started filming last summer. We finished filming in March. We're editing it now. We expect to, as of now, the plan is to be in theaters this fall.
late September , October . Of course, those things can move up or back depending on a wide variety of factors, but that's the current plan. It would hit Amazon 30 days after. Or so, it goes into theaters. With a documentary like this, we'd love to capture, you know, a little bit of it.
tailwinds to try and do a flying analogy, maybe a top gun, Maverick certainly helped us with the hype and excitement around the film, which by all accounts is turning out beautiful.
We would recognize this.
We would recognize this 3.5 million.
in stages, but by the time it goes on the Amazon service, it would be recognized at least 90% of the revenue if not full 100. And if we're missing that last 10% it would come very shortly thereafter.
So if the films release this year, we should recognize it all during the year. And that's exciting for us.
That's great. So as we look into 2023, and we're thinking about soft adventures, you have.
Could you kind of go through what you've publicly said already of projects that are out there that could hit in revenue for yourself this year?
Sure, yeah, it really is. This blue angels really is kind of kicking off.
You know, being able to recognize revenue from from Dolphin Ventures. So it's an
It's an exciting time. Obviously, blue angels will happen, which is fantastic. I should point out before I forget to.
somebody would kill me that the deal with Amazon is fabulous for us. We also will have additional revenue on the project from IMAX Institutional theaters forever. So that's exciting as well that we share with IMAX of course and the creatives on the film.
But this will have a nice annuity we believe for us. And so that's 75% ROI, not bad, 12 months later. So that's annual. So less than 12 months will be higher. We'll continue to increase over the years. So we're excited about what the next documentary might be.
will include some live streaming out of our theater. That could result in some.
Revenue generally during 2023, midnight theater as a whole will be up running and fully operational very shortly. We've got the restaurant open, we've got shows in there now about three.
many weeks, three nights a week, excuse me. When we have our magic show up in July , that'll give us comfort that we could be more in the four or five night a week range and then shortly after labor day. With that, when that happens, and shortly after labor day, excuse me, we expect to be seven days a week.
So when that does happen, Midnight Theater will be generating meaningful revenue we believe here in 2023 and will be a nice catalyst for us. Be on the lookout for that press release about our
And then we have other dolphin ventures in the works. You know, we do own a stake in craft house cocktails.
Those types of deals, I know many people on the call are fans of, wherein we put up no money, we don't make an investment of cash, but a company gets access to our supergroup. So we get paid a cash fee every month.
in this structure and we get equity in the company that we're promoting or the venture that we're promoting.
Those we without giving a specific number and stealing thunder from future announcements.
I do believe we've identified the next couple of those and are working towards closing and anticipating able to announce the next one shortly or in the coming weeks let's just leave it at that.
ahead of our Q2 earnings call. So our goal there is maybe a year from the holidays that six to eight of those types of ventures in our portfolio. Each will have an exit strategy. Maybe it's selling the company that we're working with. Maybe it's doing a fundraise, etc.
but it would give us an exit within two to three years of it entering our portfolio. And having a slate like that, we obviously expect some of them to have blue angels type of results.
It wouldn't qualify to be a venture for us if it wouldn't result in.
7 figures certainly to dolphin and a few of them where we have high hopes that it could be exits of 8 figures or more. So obviously for a company of our size, no.
$10 million exos is extremely meaningful. So we're excited for that and we're able to ramp that up because of hiring Ellie, putting the management team in place for ventures. We'll have more to say on that over the summer and being able to handle six date of those at once.
and manage them to success. So that's from a 2023 perspective, I'd say those are the big highlights. More IMAX, Midnight Theater, and more ventures that we'll be able to.
share with everyone. Thank you. That's great color.
Thank you, this is Greg Keller.
The right or strike that's going on. Does that have an impact on your business or does it have to be going on for a long time for that to happen?
Yeah, no, we're blessed. We're similar to the movie theaters and we're kind of insulated in terms of...
It would have to go on a long time. Because the projects we've already been hired to promote through the end of this year, we're identifying projects to promote early to middle and next year. Those are already finished films. Much like Blue Angels would be, right?
So it will affect TV production if it goes on throughout the summer. And I wish I could be more optimistic about how quickly this may be over. But I think most of the industry is not optimistic at the moment. But it will not affect our business now.
Happy to say.
Okay, that's great. In terms of socializing and these social, how do you feel about...
to integrate the combining of the two and the opportunity with these two powerful companies now.
Well, you know, on working together. Yeah, I mean, in terms of DALT and 1.0, our core business is this combination.
Quite frankly, it's probably the most exciting thing going because...
as listeners of these earnings calls know in the last couple, we bought Socialite the day of our earnings call back in November . We've been working to integrate these, get these two companies ready to merge, which we'll be announcing over the summer, you know, a new name and a new name.
excitement around you know what will be when they are together we thank the largest and most formidable influencer marketing agency in all of entertainment.
with that said, it's only gonna grow because
We're going to invest in the growth of that combined company, more divisions, more segments, more platforms we promote on because influencer marketing.
I don't know if it's the fastest growing area in all of marketing, but if it's not, it's got to be very near the top. And anybody that's followed anything in marketing the last...
five years knows that influencer marketing is going only in one direction. Because when you think about it...
10 years ago it started with Mommy bloggers and five years ago you might have you know Instagram campaigns. TikTok challenged the industry to come in with short form video.
And now think of all the different segments that are promoted online. Right? I mean, it's affected every industry. From books, remember book talks, a thing. Let's talk college athletes.
NIL, you know, I played basketball at Creighton. Those of them that met me in person, now I'm seven feet tall. You know, it's a far different world today than when I played.
in terms of NIL, those are influencers. Video gaming influencers, we really have synergies we can create with our large video gaming business within 42 West and the influencer marketing firms, which we don't do today.
We are heavily, heavily female and beauty lifestyle wellness and the market leader, which is the core cornerstone of influencer marketing today. But in the next three to five years, I'd love to see us be twice as big, three times as big and influencer marketing. This year, influencer marketing will represent 25% of our revenues.
you know, up from zero before we bought B Social, right? And it would be a great success story if in three to five years, influencer marketing is half of our revenues, which is saying a lot considering how strong our PR firms are. So that combination on our core business, that merger and doing it right.
This summer and into the fall will set us up for a lot of growth in the future years. Thank you. On the last call, you said that you had a desire to acquire a company in the live event space.
Subsequent to that, we picked up a company that kind of does things like that and I got educated on what a good business it is. How do you think about how live events could play into what you do? Oh, well.
Chits, you know, it's nothing new for us in that, you know, that type of company was always something we said would be part of our group since 2017, right? It was gonna be the last piece we had because we wanted to have the PR firms in place first.
and the influencer marketing agencies because they will water, they'll be firehoses of water to potential clients for the right life events company that deals in our space because
Live events can mean a lot of things to a lot of people. It can be a very lucrative business, especially though when you've got sister agencies, like they will, you know. Why? Every movie premiere is a live event. Every streaming service show premiere is a live event. You know.
look think of all the different movies i'm going to con you know or blessed to represent martis for sazy he's got killers of flower moon premiering the saturday to caprios in it that's a live event uh... and how many of those we represent every year but how about how about every hotel opening that the door does how about every restaurant opening
the door does. How about everything that can be done at midnight theater? We've hosted, oh my goodness, I don't even know now, it's at 10, 12 premieres. And midnight theater, we're not, we're not fully open. So it's very hard, you know, call it, live events, call it, experiential marketing. I have a very good friend that's listening in on this call now that's a big, big magazine publisher.
I think he's probably made more money from his live events and he asked for his magazines.
You know, that type of, like I say, experiential marketing. It's the other piece of earned media, which is what we specialize in. PR, influencer marketing, and experiential marketing, that...
is the cornerstone of our strategy. One last, just a while, I'm riffing on this answer. 42S is the unquestioned leader, right? Film and TV marketing. We are promoting, proud to say, you'll see a press release out on this.
this week or next week we're promoting the Harry Potter exhibition that's coming to New York we have a friends and family Thursday and I think it's open to the public Friday if I've got that right I'll be over in con well obviously that's a big big exhibition right
I wonder if they're going to do well financially. Hmm, I'll think about it. Now, you know, those types of opportunities, obviously, want to brother zone CIP on that. But whether it's food festivals, music festivals, exhibitions, immersive experiences, think of the Van Gogh exhibits, and everything else I just said before.
And if you're going to bring celebrities to those types of events, which we would look for a company that does that, I think the world's your oyster at that point. So yes, I do think that live events.
should be a part of our future for sure. Great. My last question is not as exciting, but more financial. Not as exciting as Harry Potter, Alan.
Sorry. Just how to think about what your mix of business now. You mentioned.
one cue is the seasonally slowest quarter. How to think about how just in general the other quarters are relatively.
Yeah, you know, as we wait more and more with influence or marketing, we're just going to have to get used to this because
smoothing it out over the year just won't be possible. Q2, Q3, they'll sequentially ramp up traditionally with our PR business, too, by the way. But in PR, I'll call it a dip in Q1. Influencer marketing is, there's no other word for it.
other than seasonality. Because Q4 is through the roof for influencer marketing traditionally because the brands want to hire the influencers for holiday sales. And then the brands show it off their budgets until you get to spring. Coachella and other events, back to live events, traditionally start.
heavy brand marketing season with influencers so Q1 is always going to be down for us and Q4 could you know well Every single year will be our highest revenue quarter It'll be very interesting to see what happens this year since we've got two influencer marketing companies which by then will be one
merged at any but still. So yeah, I think that's going to be true. This year's second half of the year is going to be overweight anyway because of the recognizing probably recognizing the revenue of Blue Angels.
So yeah, I think that's gonna be true. This year's second half of the year is gonna be overweight anyway because of the recognizing, probably recognizing the revenue of Blue Angels. So... ways our
But I think it's a rule going forward. We'll grow year over year every quarter, as we've done for the past three years. We're confident in that because each of our companies learns to cross sell with the other that are stronger, faster, and each year we've added one more component that allows them to cross sell with. Now it's socialite.
So our Q2 should be better than last year's Q2, our Q3 will be better than last year's Q3, etc., etc. But Q4 will always be overweight and Q1 will always be underweight. Q2 and Q3 are often quite similar.
Was that helpful? Yes, thank you so much and congratulations.
Thank you. It's an exciting time. Just don't expect 75% ROI on every venture. Ellie might have a heart attack out.
Thank you. Thank you.
Thank you. At this time, there are no additional questioners. I'd like to turn it back to Mr. O'Down for closing remarks.
Oh gosh, okay, well, first of all, I teach at the University of Miami shout out to all hurricanes to just graduate in those past graduates that are on this call. And there are a few of those as well.
I know the Q1 call I always feel a little guilty because I get to talk to everybody twice in six weeks and you know Usually not a lot has changed Obviously the Blue Angels is Has pride of place on this earnings call I'm very happy that we were able to Together get off to such a great start with our ventures It's it's exciting times and of course having been in this business a long time 27 years and having formed multi-year partnerships with studios and networks in the past
I think having a success like that right out of the gate just cement the relationship we believe we've built with IMAX and I think there's when two good companies with all of our reach together, whiteboard, additional ways to work together.
do it things come out of it. So I'm excited for that and sharing some of those ideas that we'll be executing on over the summer and into the Q2 earnings call. Obviously I've been asked more than once. What's the next documentary? Well, we're going to bask in the glow of this one for a month or two and really make sure that we...
take the right next project together. We have some great exciting submissions. But thank you all for listening. Thank you for giving us the opportunity to tell you our good news. And I'll look forward to the next earning call at about three months.
We have some great, exciting submissions. But thank you all for listening. Thank you for giving us the opportunity to tell you our good news. And I'll look forward to the next earning call in about three months. So thank you everybody.
Thank you, ladies and gentlemen. That concludes today's presentation. You may now disconnect. Ok. Good night.