Q1 2025 Cineverse Corp Earnings Call

Good day, everyone.

Operator: as old conference call. My name is Cameron, and I will be your operator today. Currently, all participants are in a listen-only mode.

Cameron: Welcome to Cineverse's third quarter fiscal 2024 financial results conference call. My name is Cameron and I will be your operator today.

Operator: You will have a question and answer session following management's prepared remarks, at which time participants can press star followed by the number one to ask a question. If anyone needs operator help, press star zero. Please note that this call is being recorded. I would now like to turn the call over to your host, Gary Loffredo, Chief Legal Officer, Secretary, and Senior Advisor for Cineverse. Please go ahead.

Speaker Change: Currently, all participants are in a listen-only mode. You will have a question-and-answer session following management's prepared remarks, at which time participants can press star followed by the number 1 to ask a question.

Speaker Change: If anyone needs operator help, press star zero. Please note that this call is being recorded. I would now like to turn the call over to your host, Gary Loffredo, Chief Legal Officer, Secretary and Senior Advisor for Cineverse. Please go ahead.

Gary Loffredo: Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal Year 2025 First Quarter Financial Results Conference. The press release announcing Cineverse's results for the fiscal first quarter ended June 30th, 2021, is available in the investor section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available on Cineverse's website after the conclusion of this call.

Speaker Change: Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal Year 2025 First Quarter Financial Resource Conference Call.

Speaker Change: The press release announcing Cineverse's results for the fiscal first quarter ended June 30, 2024, is available at the investor section of the company's website at www.cineverse.com.

Speaker Change: A replay of this broadcast will also be made available at Cineverse's website after the conclusion of this call.

Gary Loffredo: Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions, as well as the company's periodic reports that are filed with the FDA. Describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward, All of the information discussed on this call is as of today, August 14th, 2020, and Cineverse does not assume any obligation to update any of these four forward-looking statements, except as required by law.

Speaker Change: Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements.

Speaker Change: These statements are based on management's current expectations, and are subject to risks, uncertainties, and assumptions.

Speaker Change: The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements.

Speaker Change: All of the information discussed on this call is as of today, August 14, 2024, and Cineverse does not assume any obligation to update any of these four LICKEY statements, except as required by law.

as those conference calls.

Cameron: My name is Cameron and I will be your operator today. Currently, all participants are in a listen-only mode. You will have a question and answer session following management's prepared remarks at which time participants can press star followed by the number one to ask a question.

Gary Loffredo: In addition, certain financial information presented in this call represents non-GAAP financial measures, and we encourage you to read our disclosure and the Reconciliation Tables through applicable gap measures, and our earnings release carefully as you consider these measures. I'm Gary Loffredo, Chief Legal Officer, Secretary, and Senior Advisor. With me today are Chris McGurk, Chairman. Erick Opeka, President and Chief Strategy Officer, Tony Huidor.

Speaker Change: In addition, certain financial information presented in this call represent non-GAAP financial measures. And we encourage you to read our disclosure.

If anyone needs operator help, press star zero. Please note that this call is being recorded.

Gary Loffredo: I would now like to turn the call over to your host, Gary Loffredo, chief legal officer, secretary and senior advisor for Cineverse. Please go ahead. Good afternoon, everyone.

Speaker Change: and the Reconciliation Tables through applicable gap measures, and our earnings released carefully as you consider these metrics.

Gary Loffredo: Chief Operating Officer and Chief Technology Officer. Mark Lindsey, Chief Financial Officer. Mark Torres, keep people low, and Yolanda Macias, Chief Cod, all of whom will be available for questions following the prepared remarks. On today's call, Chris will discuss our fiscal year 2025 first quarter highlights, latest operational developments, outlook, and long-term growth. Mark will follow with a review of our results for the fiscal first quarter ended June 30, 2020, and Erick Opeka will provide you details on our streaming business results Thanks, Gary, and thanks, everyone, for joining us here today. This was a transition quarter for Center.

Gary Loffredo: I'm Gary Loffredo, Chief Legal Officer, Secretary and Senior Advisor at Cineverse.

Gary Loffredo: Thank you for joining us for the Cineverse fiscal year 2025, first quarter of financial research conference call. The press release announcing Cineverse's results for the fiscal first quarter and the June 30th, 2024, is available at the investor section of the company's website at www.Cineverse.com. A replay of this broadcast will also be made available at Cineverse's website after the conclusion of this call.

Speaker Change: with me today, our Chris McGurk, Chairman of the Erick Opeka, President and Chief Strategy Officer.

Speaker Change: Tony Weidor, Chief Operating Officer and Chief Technology Officer.

Speaker Change: Mark Lindsey, Keith Financial Officer, Mark Torres, Keith People Officer, and Yelanda Missia, Keith Cotton Officer, of all whom will be available for questions following the prepared remarks.

Speaker Change: On today's call, Chris will discuss our Fiscal Year 2025 First Quarter Highlights.

Gary Loffredo: Before we begin, I would like to point out that certain statements made on today's call contains forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements. All of the information discussed on this call is as of today, August 14, 2024, and Cineverse does not assume any obligation to update any of these forward-looking statements except as required by law.

Grace Cole: The latest operational developments, outlook, and long-term growth strategy.

Grace Cole: Mark will follow with a review of our results for the fiscal first quarter ended June 30th, 2024. And Erick will provide some details on our streaming business results and operating initiatives before opening the floor to questions.

Christopher McGurk: Consistent with the prior four quarters, we again generated significant savings in SG&A during this quarter of $1.3 million, or 17% versus the prior year. Reflecting our previously reported cost savings initiatives, most importantly, our offshoring of domestic employment positions to Cineverse Services India, we've now reduced our domestic headcount by 57 positions, or 39% since we began consolidating operations after we completed our acquisition activities two years ago.

Grace Cole: I will now turn the call over to Chris McGurk to begin.

Christopher McGurk: That offshoring of domestic positions to a battle-tested, efficient operating division of Cineverse in India was the driving factor behind the $8.9 million in SG&A cost savings we recorded in the last fiscal year, and this quarter's results demonstrate the continued success of this key initiative. Those cost savings were the main factor that enabled us to beat our direct operating margin target again this quarter. Recording a 51% margin versus our stated target of 45% to 50%.

Chris McGurk: Thanks, Gary, and thanks everyone for joining us here today.

Speaker Change: Virginia. This was a Transition Quarter for Sentables.

Speaker Change: Consistent with the prior four quarters, we again generated significant savings in FGNA during this quarter of $1.3 million for 17% versus the prior year. Reflecting our previously reported cost savings initiatives.

In addition, certain financial information presented in this call represent non-gap financial measures, and we encourage you to read our disclosure and the reconciliation table to applicable gap measures and our earnings release carefully as you consider these metrics.

Speaker Change: Most importantly, our offshore, of domestic employment positions to center of our services envy it.

Speaker Change: We've now reduced our domestic headcount by 57 positions, or 39%, since we began consolidating operations after we completed our acquisition activities two years ago.

Gary Loffredo: I'm Gary Lifredo, Chief Legal Officer, Secretary of the Senior Advisor at Cineverse. With me today, our Chris McGurk, chairman CEO, Erica Peacca, President and Chief Strategy Officer, Tony Wiedor, Chief Operating Officer and Chief Technology Officer, Mark Lindsay, Chief Financial Officer, Mark Torres, Chief People Officer, and Yalanda Masea, Chief Content Officer of all whom will be available for questions following the prepared remarks. On today's call, Chris will discuss our fiscal year 2025 First Quarter Highland, the latest operational development outlook and long-term growth strategy.

Speaker Change: That offshoring of domestic positions to a battle-tested, efficient Operating Division of Cineverse in India

Speaker Change: was the driving factor behind the $8.9 million in SG&A cost savings we recorded in the last fiscal year, and this quarter's results demonstrate the continued success of this key initiative.

Speaker Change: Those cost savings were the main factor that enabled us to beat our direct operating margin target again this quarter, recording a 51% margin versus our stated target of 45% to 50%.

Christopher McGurk: Our revenues in this quarter were impacted by an almost $2 million decline in digital licensing due to the timing of digital content releases between quarters and the comparison to non-recurring revenues in our legacy digital equipment business that we booked in last year's quarter. Another key timing and transition-related issue that impacted revenues in the quarter was that we did not yet begin to report any upside from our new sales teams and SaaS sales initiatives for our proprietary NASPoint technology. AI-based products and Omni advertising programs, and most importantly, direct ad sales.

Mark will follow with a review of our results for the fiscal first quarter and the June 30, 2024, and Eric will provide you details on our streaming business results and operating initiatives before opening the floor to question.

Speaker Change: Our revenues in this quarter were impacted by an almost $2 million decline in digital licensing due to the timing of digital content releases between quarters and the comparison to non-recurring revenues in our legacy digital equipment business that we booked in last year's quarter.

Christopher McGurk: I will now turn the call over to Chris McGurk to begin. Thanks, Gary, and thanks everyone for joining us here today.

Speaker Change: Another key timing and transition related issue that impacted revenues in the quarter is that we is that we did not yet begin to report any upsides from our new sales teams and SAS sales initiatives for our proprietary matchpoint technology.

Christopher McGurk: This was a transition quarter for Cineverse. Consistent with the prior four quarters, we again generated significant savings in S.G.A, during this quarter of $1.3 million or 17% versus the prior year. Reflecting our previously reported cost saving initiatives. Most importantly, our offshoring of domestic employment positions to Cineverse services[inaudible] We've now reduced our domestic head count by 57 positions, or 39 percent since we began consolidating operations after we completed our acquisition activities two years ago.

Speaker Change: AI-based products, and omni-advertising programs. Most importantly, direct ad sales.

Christopher McGurk: However, we've now built a very robust pipeline in all those areas that Erick will talk about in just a minute, and based on that, we fully expect to begin to record revenue up sides over the next few quarters, those multiple deals that are already in the pipeline. Erick will also speak to the skyrocketing growth and viewership across our channel and podcast portfolio, which obviously bodes very well for a significant rebound in our advertising business as well as an even more expanded sales pipeline. In addition, we remain very optimistic about the release of the next installment of our Terrifier horror franchise, Terrifier 3, which is on target for an October 11, 2024 theatrical release.

Speaker Change: However, we've now built a very robust pipeline in all those areas that Erick will talk about in just a minute.

Erick Opeka: And based on that, we fully expect to begin to record revenue upsides over the next few quarters.

Erick Opeka: as we close multiple deals that are already in the sales queue.

Eric: Eric will also speak to the skyrocketing growth and viewership across our Channel and Pockets portfolio which obviously both very well for a significant rebound in our advertising business as well as an even more expanded sales pipeline.

Christopher McGurk: That offshoring of domestic positions to a battle-tested, efficient operating division of Cineverse in India was the driving factor behind the $8.9 million in SG&A cost savings. We recorded in the last fiscal year, and this quarter's results demonstrate the continued success of this key initiative. Those cost savings were the main factor that enabled us to beat our direct operating margin target again this quarter. Recording a 51 percent margin versus our stated target of 45 percent to 50 percent.

Speaker Change: In addition, we remain very optimistic about the release of the next installment of our Terrifier horror franchise, Terrifier 3, which is on target for an October 11, 2024 theatrical release.

Christopher McGurk: We are marshalling all the resources of the company to maximize profits from that movie. We're concentrating not just on theatrical but also on the highly profitable ancillary distribution markets, including video on demand, DVD, Blu-ray, and particularly our ScreenBox horror streaming channel, where we saw a substantial increase in subscribers following the release of Terrifier 2. If we are successful in all of this, the film should provide a substantial cash inflow to support the rest of our business, particularly in building the content pipeline.

Speaker Change: We are marshalling all the resources of the company to maximize profits from that release.

Speaker Change: We're concentrating not just on theatrical, but also on the highly profitable ancillary distribution markets.

Christopher McGurk: Our revenues in this quarter were impacted by an almost $2 million decline in digital licensing due to the timing of digital content releases between quarters and the comparison to non-recurring revenues in our legacy digital equipment business that we booked in last year's quarter. Another key timing and transition-related issue that impacted revenues in the quarter is that we did not yet begin to report any upside from our new sales teams and SaaS sales initiatives for our proprietary NASH point technology, AI-based products, and on the advertising programs.

Speaker Change: including video-on-demand, DVD, Blu-ray, and particularly our ScreenBox horror streaming channel, where we saw a substantial increase in subscribers following the release of Terrafire 2.

Speaker Change: If we are successful in all of this, the film should provide a substantial cash inflow to support the rest of our business, particularly in building the content pipeline.

Christopher McGurk: Most importantly, direct ad sales. However, we've now built a very robust pipeline in all those areas that Eric will talk about in just a minute. And based on that, we fully expected to begin to record revenue upsides over the next few quarters as we close multiple deals that are already in the sales queue.

Christopher McGurk: Importantly, we also extended our $7.5 million line of credit with East West Bank another 12 months to September 2025. This further strengthens our financial flexibility. We also updated our digital library evaluation with the same third-party appraisers that valued it in 2023. This valued our library of more than 66,000 titles as of March 31, 2024 at approximately $39.8 million, a substantial increase over last year's valuation and several large multiples above the book value of our library, which was just $2.6 million as of June 30th.

Speaker Change: Importantly, we also extended our $7.5 million line of credit with East West Bank another 12 months to September 2025. This further strengthens our financial flexibility.

Speaker Change: We also updated our digital library valuation with the same third-party appraisers that valued it in 2023.

Speaker Change: This valued our library of more than 66,000 titles as of March 31st, 2024, at approximately $39.8 million, a substantial increase over last year's valuation and several large multiples.

Christopher McGurk: Eric will also speak to the skyrocketing growth and viewership across our channel and podcast portfolio, which obviously bodes very well for a significant rebound in our advertising business as well as an even more expanded sales pipeline.

Speaker Change: above the book value of our library.

Christopher McGurk: 2024. This library evaluation alone, excluding all our other assets, is by itself significantly higher than our current market capitalization, which we believe significantly undervalues the company. Reflecting that significant disparity, we purchased approximately 184,000 shares of Center for Security through June 30, 2024 and are continuing to use our previously reported stock repurchase program as appropriate since we believe repurchasing shares is a value-creating investment opportunity for the company. With that, I will turn things over Mark?

Speaker Change: which was just 2.6 million dollars as of June 30th.

Speaker Change: 2024.

Christopher McGurk: In addition, we remain very optimistic about the release of the next installment of our Terrafire Horror franchise, Terrafire 3, which is on target for an October 11, 2024 theatrical release. We are marshalling all the resources of the company to maximize profits in that release. We're concentrating not just on theatrical, but also on the highly profitable and so very distribution markets, including video and demand, DVD, Blu-ray, and particularly our screen box horror streaming channel, where we saw a substantial increase in subscribers following the release of Terrafire 2. If we are successful in all of this, the film should provide a substantial cash inflow to support the rest of our business, particularly in building the pipeline.

Speaker Change: This library valuation alone, excluding all our other assets, is by itself significantly higher than our current market capitalization, which we believe significantly undervalues the company.

Speaker Change: reflecting that significant disparity.

Speaker Change: We purchased approximately 184,000 shares of Cineverse Equity through June 30th, 2024.

Speaker Change: and are continuing to use our previously reported stock repurchase program as appropriate, since we believe repurchasing shares is a value-creating investment opportunity for the company.

Speaker Change: And with that, I will turn things over to Mark for our financial review. Mark?

Mark Lindsey: Thank you, Chris. For the quarter ended June 30, 2024, Cineverse reported total revenues of $9.1 million, compared to $13.0 million in the prior year period. As a reminder, the first quarter of fiscal year 24 was included in material non-returning revenue of approximately $1.2 million related to our legacy digital cinema business, which is not present this quarter. When excluding the impact of the legacy digital cinema business, the decrease in revenue was primarily driven by approximately $2 million to climb in the company's digital distribution revenue, mostly resulting from a delay in content releases during the quarter compared to the prior year quarter and an approximate $500,000 decline in advertising revenue due to our channel optimization.

Mark: Thank you, Chris.

Mark: For the quarter ended June 30, 2024, Cineverse reported total revenues of $9.1 million compared to $13.0 million in the prior year period.

Christopher McGurk: Importantly, we also extended our $7.5 million line of credit with East West Bank another 12 months to September 2025. This further strengthens our financial flexibility.

Mark: As a reminder, the first quarter of fiscal year 24 included material non-recurring revenue of approximately $1.2 million related to our legacy digital cinema business, which is not present this quarter.

Christopher McGurk: We also updated our digital library valuation with the same third-party appraisers that valued it in 2023. This valued our library of more than 66,000 titles as of March 31, 2024 at approximately $30.8 million, a substantial increase over last year's valuation and several large of the book value of our library, which was just $2.6 million as of June 30th, 2024. This library valuation alone, excluding all other assets, is by itself significantly higher than our current market capitalization, which we believe significantly undervalues the company.

Mark: when excluding the impact of the legacy digital cinema business.

Mark: The decrease in revenue was primarily driven by approximately

Mark: $2 million decline in the company's digital distribution revenue, mostly resulting from a delay in content releases during the quarter compared to the prior year quarter, and an approximate $500,000 decline in advertising revenues due to our channel optimization efforts.

Mark Lindsey: We expect this trend to reverse for the remainder of fiscal year 2025 as the economy improves and our new direct advertising sales team continues to ramp up. Despite these top-line revenue results for the quarter, we remain cautiously optimistic for double-digit revenue growth in fiscal year 2025 as the economy improves, interest rates decline, with the expected improvement in the advertising market in a political year is realized and revenue growth from our technology.

Mark: We expect this trend to reverse for the remainder of fiscal year 2025 as the economy improves and our new direct advertising sales team continues to ramp up.

Mark: Despite these top-line revenue results for the quarter, we remain cautiously optimistic for double-digit revenue growth in fiscal year 2025. As the economy improves, interest rates decline, with the expected improvement in the advertising market in a political year as realized,

Christopher McGurk: Reflecting that significant disparity, we purchased approximately 184,000 shares of cent of our equity through June 30th, 2024, and are continuing to use our previously reported stock repurchase program as appropriate, since we believe repurchasing shares is of value creating investment opportunity for the company.

Mark Lindsey: Erick will provide additional details on the operational drivers behind our financial results. As Chris mentioned, our direct operating margin for the quarter was 51%, which is in excess of our previously provided guidance of 45 to 50% for fiscal year 2020. Our improved direct operating margin is a direct result of our cost optimization initiatives referred to earlier. We expect our direct operating margin in future quarters to be in line with our previously stated target margins of 45. SG&A expenses decreased $1.3 million, or 17%, for the quarter compared to the prior year quarter.

Mark: and revenue growth from our technology offerings.

Mark: Erick will provide additional details on the operational drivers behind our financial results.

Erick Opeka: As Chris mentioned, our direct operating margin for the quarter was 51 percent.

Erick Opeka: which is in excess of our previously provided guidance of 45 to 50 percent for fiscal year 2024.

Mark Lindsey: And with that, I will turn things over to Mark for our financial review. Mark? Thank you, Chris. For the quarter end of June 30th, 2024, Cineverse reported total revenues of 9.1 million compared to 13.0 million in the prior year period. As a reminder, the first quarter of this year's 24 included material non-recurring revenue of approximately $1.2 million related to our legacy digital cinema business, which is not present this quarter. When excluding the impact of the legacy digital cinema business, the decrease in revenue was primarily driven by approximately $2 million to climb in the company's digital distribution revenue, mostly resulting from a delay in content releases during the quarter compared to the prior year quarter, and then approximate $500,000 to climb in advertising revenues due to our channel optimization efforts.

Erick Opeka: Our improved direct operating margin is a direct result of our cost optimization initiatives referred to earlier. We expect our direct operating margin in future quarters to be in line with our previously stated target margins of 45-50%.

Erick Opeka: SG&A expenses decreased $1.3 million or 17% for the quarter compared to the prior year quarter.

Mark Lindsey: Again, this improvement is a result of the cost optimization initiatives discussed previously. We expect our SG&A expenses to remain relatively flat dollar-wise and continue to decline as a percentage of revenue for the remainder of fiscal year 25 as we continue to leverage off-showing efforts in Cineverse services. Adjusted EBITDA for the quarter was negative 1.4 million compared to negative 1.5 million for the same quarter last year, reflecting the continued impact of our cost savings initiatives. We had 4 million in cash and cash influence on our balance sheet as of June 30 and 4.7 million outstanding on our working capital facility, down from 6.3 million as of March 30. As we noted in our last call, we have extended the maturity date of our working capital facility with EastWest Bank to September

Erick Opeka: Again, this improvement is a result of the cost optimization initiatives discussed previously.

Erick Opeka: We expect our SG&A expenses to remain relatively flat dollar-wise and to continue to decline as a percentage of revenue for the remainder of fiscal year 25 as we continue to leverage offshoring efforts in Centiverse Services India.

Erick Opeka: Adjusted EBITDA for the quarter was negative $1.4 million compared to negative $1.5 million for the same quarter last year, reflecting the continued impact of our cost savings initiatives even in a down revenue quarter.

Mark Lindsey: We expect this trend to reverse for the remainder of fiscal year 2025 as the economy improves and our new direct advertising sales team continues to ramp up. Despite these top-line revenue results for the quarter, we remain cautiously optimistic for double-digit revenue growth in fiscal year 2025 as the economy improves, interest rates decline with the expected improvement in the advertising market in a political year is realized and revenue growth from our technology offerings.

Speaker Change: We had $4 million in cash and cash equivalents on our balance sheet as of June 30, and $4.7 million outstanding on our working capital facility, down from $6.3 million as of March 31, 2024.

Speaker Change: As we noted in our last call, we have extended the maturity date of our working capital facility with EastWest Bank to September 2025. As you recall, two quarters ago, we also expanded the size of our facility from 5 million to 7.5 million.

Mark Lindsey: As you recall, two quarters ago, we also expanded the size of our facility from 5 million to 7.5 million. We appreciate our relationship with East West Bank and the confidence they are showing by extending the maturity date and expanding the size of our credit, which increases our financial flexibility and liquidity. The Tathamator, Improving Financial Physician, and Credit Works. During the quarter, our cash flow use and operations was 1.7 million, of which 2 million was related to investments in our content portfolio, the advance, and or minimum guarantee. When excluding our content portfolio spend during the quarter, our cash flow provided by operations was a positive $271,000, showing just how close we are to being sustainably cash flow positive.

Mark Lindsey: Eric will provide additional details on the operational drivers behind our financial results. As Chris mentioned, our direct operating margin for the quarter was 51%, which is in excess of our previously provided guidance of 45 to 50% for fiscal year 2024. Our improved direct operating margin is the direct results of our cost optimization initiatives referred to earlier. We expect our direct operating margin in future quarters to be in line with our previously stated target margins of 45 to 50%.

Speaker Change: We appreciate our relationship with EastWest Bank and the confidence they are showing by extending the maturity date and expanding the size of our credit facility, which increases our financial flexibility and liquidity, and is a testament to our improving financial position and credit worthiness.

Speaker Change: During the quarter, our cash flow used in operations was $1.7 million, of which $2 million was related to investments in our content portfolio via advance and or minimum guarantee payments.

Mark Lindsey: SNA expenses decrease 1.3 million or 17% for the quarter compared to the prior year quarter. Again, this improvement is a result of the cost optimization initiatives discussed previously. We expect our SNA expenses to remain relatively flat and dollar-wise and to continue to decline as the percentage of revenue for the remainder of fiscal year 25 as we continue to leverage off-sowing efforts in centerverse services in the year. Adjust the EBITDA for the quarter was negative 1.4 million compared to negative 1.5 million for the same quarter last year.

Speaker Change: When excluding our content portfolio spend during the quarter, our cash flow provided by operations was a positive $271,000, showing just how close we are to being sustainably cash flow positive.

Mark Lindsey: We expect to be operating cash flow positive for the full fiscal year 2020. I also want to remind everyone that our Board of Directors recently approved a one-year extension of our stock repurchase program to purchase 500,000 shares and warrants on March 1, 2020.

Speaker Change: We expect to be operating cash flow positive for the full fiscal year 2025.

Speaker Change: I also want to remind everyone that our Board of Directors recently approved a one-year extension of our Stock Repurchase Program.

Speaker Change: The program to purchase 500,000 shares now expires on March 1, 2025.

Erick Opeka: Through June 30, 2024, we repurchased approximately 184,000 shares under this program, reducing our shares outstanding from year end. (Inaudible) We continue to believe our stock is significantly undervalued and will continue to repurchase shares under our program during open trading windows and as cash availability permits. With that, I'll turn the floor over to Erick to discuss the market environment and our growth. Thank you, Mark. This quarter, we've made significant strides in moving forward our strategic initiatives, particularly in our streaming technology, content distribution, and monetization. First, let me highlight our streaming performance.

Speaker Change: Through June 30, 2024, we've repurchased approximately 184,000 shares under this program, reducing our shares outstanding from year-end.

Mark Lindsey: Reflecting the continued impact of our cost savings initiatives even in a down rep. New Quarter. We had four million in cash and cash influence on our balance sheet as of June 30 and 4.7 million outstanding on our working capital facility down from 6.3 million as of March 31, 2024. As we noted in our last call, we have extended the maturity date of our working capital facility with East West Bank to September of 2025.

Speaker Change: With a book value of $29 million and a market cap of approximately $13 million, we continue to believe our stock is significantly undervalued and will continue to repurchase shares under our program during open trading windows and as cash availability permits.

Speaker Change: With that, I'll turn the floor over to Erick to discuss market environment and our growth initiatives.

Mark Lindsey: As you recall two quarters ago, we also expanded the size of our facility from 5 million to 7.5 million. We appreciate our relationship with East West Bank and the confidence they are showing by extending the maturity date and expanding the size of our credit facility, which increases our financial flexibility and liquidity and as a testament to our improving financial position and credit worthiness. During the quarter, our cash flow used in operations was 1.7 million of which 2 million was related to investments in our content portfolio, the advance and or minimum guarantee payments.

Erick Opeka: Thank you, Mark.

Erick Opeka: This quarter we've made significant strides in moving forward our strategic initiatives, particularly in our streaming technology, content distribution, and monetization efforts.

Erick Opeka: We achieved remarkable viewer growth with 2.26 billion minutes watched in Q2 2024, up 73% year over year. The surge was driven both by our established brands and successful new channel launches. For example, our Bob Ross channel saw over 800 million minutes watched, up 33% year-over-year. Meanwhile, new channels like Dog Whisperer and Yu-Gi-Oh!

Christopher McGurk: Dr. Kstlinger,

Erick Opeka: First, let me highlight our streaming performance.

Speaker Change: We achieved remarkable viewer growth with 2.26 billion minutes watched in Q2 2024 up 73% year-over-year

Speaker Change: The surge was driven both by our established brands and successful new channel launches. For example, our Bob Ross channel saw over 800 million minutes watched, up 33% year-over-year.

Erick Opeka: have shown impressive growth, with Dog Whisperer experiencing non-stop growth for five consecutive months, and Yu-Gi-Oh! up 132% in June over its May launch. The surge in inventory comes at the right time as we ramp up direct sales and go into our busiest time of the year in terms of our subscriber base, as the driver count stands at approximately 1.39 million, down approximately 3.5% sequentially but up 10% year-over-year. This decline is attributed to the summer seasonal churn we typically see, and we expect to see this number see appreciable increases in subscriber count on the back of the Terrafire Arfisco Q3 rather.

Mark Lindsey: When excluding our content portfolio spend during the quarter, our cash flow provided by operations was a positive $271,000, showing just how close we are to being sustainably cash flow positive. We expect to be operating cash flow positive for the full fiscal year 2025.

Speaker Change: New channels like DogWhisperer and Yu-Gi-Oh! have shown impressive growth, with DogWhisperer experiencing non-stop growth for five consecutive months and Yu-Gi-Oh! up 132% in June over its May launch.

Speaker Change: The surge in inventory comes at the right time as we ramp up in direct sales and go into our busiest time of the year.

I also want to remind everyone that our Board Directors recently approved a one-year extension of our stock repurchase program. The program to purchase 500,000 shares now expires on March 1, 2025. To June 30, 2024, we've repurchased approximately 184,000 shares under this program, reducing our shares outstanding from year-end. With the book value of 29 million and a market cap of approximately 13 million, we continue to believe our stock is significantly undervalued and will continue to repurchase shares under our program during open trading windows and as cash availability permits.

Speaker Change: In terms of our subscriber base, our subscriber count stands at approximately 1.39 million, down approximately 3.5% sequentially, but up 10% year over year.

Speaker Change: This decline is attributed to the summer seasonal churn we typically see and we expect to see this number to see as appreciable increases in subscriber count on the back of the Terrifier 3 release later this year and the usual surge in subscribers that occurred during Q3.

Erick Opeka: Keep in mind, we saw triple-digit subscriber growth following the release of Terrifier 2 in late 2020. It's worth noting that our year-over-year comparisons in digital transaction sales were impacted by substantial revenues that came in from several one-off licensing deals, Terrafire 2, and other content in the prior fiscal year, which we didn't have this year. However, we're extremely excited about the upcoming release of Terrafire 3 and its impact on revenues across all lines of business.

Speaker Change: our fiscal Q3 rather. Keep in mind we saw triple-digit subscriber growth following the release of Terrifier 2 in late 2022.

Erick Opeka: With that, I'll turn the floor over to Eric to discuss market environment and our growth and issues. Thank you, Mark. This quarter, we've made significant strides in moving forward our strategic initiatives, particularly in our streaming technology, content distribution and monetization efforts.

Speaker Change: It's worth noting that our year-over-year comparisons in digital transaction sales were impacted by substantial revenues that came in from several one-off licensing deals, Terrifier 2, and other content in the prior fiscal year, which we didn't have this year.

Speaker Change: However, we're extremely excited about the upcoming release of Terrafire 3 and its impact on revenues across all company lines of business.

Erick Opeka: First, let me highlight our streaming performance. We achieved remarkable viewer growth with 2.26 billion minutes watched in Q2, 2024, up 73% year-over-year. The surge was driven both by our established brands and successful new channel launches. For example, our Bob Ross channel saw over 800 million minutes watched up 33% year-over-year. New channels like Dog Whisperer and UDO have shown impressive growth with Dog Whisperer experiencing nonstop growth for five consecutive months and UDO up 132% in June over its May launch. The surge in inventory comes at the right time as we ramp up in direct sales and go into our busiest time of the year.

Erick Opeka: Unlike its predecessor, which began as an event release, Terrafire 3 will have a wide release on more than 2,200 screens, and we expect to see considerable revenue from this release, including theatrical, ESP transactions, rentals, and licensing, which will likely substantially surpass the patterns we saw with Terrafire.

Speaker Change: Unlike its predecessor which began as an event release, Terrafire 3 will have a wide release on more than 2,200 screens and we expect to see considerable revenue from this release including theatrical

Speaker Change: EFT transactions, rentals, and licensing, which will likely substantially surpass the patterns we saw with Terrafire 2.

Erick Opeka: Regarding our ad sales, during the quarter, we've been holding our programmatic price floors for connected TV at higher levels to support our direct sales efforts, which have had an impact on our programmatic revenues in the short term. While this represents a significant portion of the year-ever decline in ad revenue, we believe this approach will yield better results in the long term. We expect this to be corrected significantly as direct sales come online, and we focus on improving yield management and bid density with our inventory for programmatic during the quarter alongside those direct sales.

Speaker Change: Regarding our ad sales, during the quarter, we've been holding our programmatic place price floors for connected TV at higher levels to support our direct sales efforts, which have had an impact on our programmatic revenues in the short term.

Speaker Change: While this represents a significant portion of the year-over-year decline in ad revenue, we believe this approach will yield better results in the long term.

Erick Opeka: In terms of our subscriber base, our subscriber count stands at approximately 1.39 million down approximately 3.5% sequentially, but up 10% year-over-year. This decline is attributed to the summer seasonal turn we typically see and we expect to see this number to see as appreciable increases in subscriber count on the back of the TeraFire 3 release later this year and the usual surge in subscribers that occurred during Q3. Arfiscal Q3 rather. Keep in mind, we saw triple-digit subscriber growth following the release of Terrifier 2 in late 2022.

Speaker Change: We expect this to be corrected significantly as direct sales come online, and we focus on improving yield management and bid density with our inventory for programmatic during the quarter alongside those direct sales.

Erick Opeka: Our efforts to streamline operations and focus on higher margin activities are paying off in terms of improved margins. A direct operating margin of 51% signals that our business model of building deep fan bases in popular verticals and providing scale volumes of relevant library and low cost first window content is working. We will continue to optimize our streamlining efforts, and we currently have plans to further reduce our OPEX by another 5% to 7% over the next two quarters.

Speaker Change: Our efforts to streamline operations and focus on higher margin activities are paying off in terms of improved margins.

Speaker Change: Our direct operating margins of 51% signal that our business model of building deep fan bases and popular verticals and providing scale volumes of relevant library and low-cost first window content is working.

Erick Opeka: It's worth noting that our year-over-year comparisons and digital transaction sales were impacted by substantial revenues that came in from several one-off licensing deals, Terrifier 2 and other content in the prior fiscal year, which we didn't have this year.

Speaker Change: We will continue to optimize our streamlining efforts, and we currently have plans to further reduce our OPEX by another 5-7% over the next two quarters.

Erick Opeka: Combined with our focus on higher-margin technology and licensing sales, we believe we can maintain gross margins in the mid-50% range for the streaming business and show sustainable profitability going forward as revenues increase. On the sales front, we've made considerable progress in building our content, advertising, and matchpoint sales view, which has been the focus of the first part of the year. We've added six new digital sales executives nationwide, and we're already delivering results. Our match point efforts have been particularly promising.

Speaker Change: combined with our focus on higher margin technology and licensing sales we believe we can maintain gross margins in the mid 50% range for the streaming business and show sustainable profitability going forward as revenues increase.

Erick Opeka: However, we're extremely excited about the upcoming release of Terrifier 3 and its impact on revenue across all company lines of business. Unlike its predecessor, which began as an event release, Terrifier 3 will have a wide release on more than 2200 screens, and we expect to see considerable revenue from this release, including theatrical, ESP transactions, rentals, and licensing, which will likely substantially surpass the patterns we saw in Terrifier 2.

Speaker Change: On the sales front, we've made considerable progress in building our content, advertising, and matchpoint sales units.

Speaker Change: which has been the focus of the first part of the year.

Speaker Change: We've added six Seasons Digital Sales Executives nationwide. We're already delivering results.

Erick Opeka: After just a few months, we built a pipeline north of six million potential customers. We expect to significantly increase that once our inbound and outbound marketing efforts are fully underway. I'm pleased to announce we've closed our first SAS-focused deal worth a quarter of a million dollars in annual contract value. We believe this is on the lower end of the kind of deals we'll be seeing moving forward, indicating significant potential for growth in this area.

Speaker Change: Our matchpoint efforts have been particularly promising. After just a few months, we built a pipeline north of six million of potential customers. We expect to significantly increase that once our inbound and outbound marketing efforts are fully underway.

Erick Opeka: Regarding our ad sales, during the quarter, we've been holding our programmatic price scores for connected TV at higher levels to support our direct sales efforts, which have had an impact on our programmatic revenues in the short term. While this represents a significant portion of the year-over decline in ad revenue, we believe this approach will yield better results in the long term. We expect this to be corrected significantly as direct sales come online, and we focus on improving yield management and bid density with our inventory for programmatic during the quarter alongside this direct sales.

Speaker Change: I'm pleased to announce we've closed our first SAS-focused deal worth a quarter of a million dollars in annual contract value.

Speaker Change: We believe this is on the lower end of the kind of deals we'll be seeing moving forward, indicating significant potential for growth in this area. Our licensing sales have also seen substantial growth, and we expect to generate low millions of dollars in new licensing revenue from our sales team in the current quarter alone.

Erick Opeka: Our licensing sales have also seen substantial growth, and we expect to generate millions of dollars in new licensing revenue from our sales team in the current quarter of life. This is a testament to the value of our extensive content library.

Erick Opeka: Looking ahead, we anticipate being sold out of inventory on several verticals in the next quarter and expect significant acceleration in digital, licensing, and matchpoint revenues from deals currently in negotiation. On our podcast network, we continue to see exponential listener growth yielding a 49% revenue surge over the last 60 days. We're extremely focused on monetizing our podcast inventory, which we believe is currently being monetized at just a fraction of its full commercial value.

Speaker Change: This is a testament to the value of our extensive content library. Looking ahead, we anticipate being sold out of inventory on several verticals in the next quarter and expect significant acceleration in digital, licensing, and matchpoint revenues from deals currently in negotiation.

Erick Opeka: Our efforts to streamline operations and focus on higher margin activities are paying off in terms of improved margins. Our direct operating margin is 51%, signal that our business model of building deep fan bases in popular verticals and providing scale volumes of relevant library and low cost first window content is working. We will continue to optimize our streamlining efforts and we currently have plans to further reduce our effects by another 5 to 7% over the next two quarters. Combining with our focus on higher margin technology and licensing sales, we believe we can maintain gross margins in the mid-50 percent range for the streaming business and shows sustainable profitability going forward as revenues increase.

Speaker Change: On our podcast network, we continue to see exponential listener growth, yielding a 49% revenue surge over the last 60 days.

Speaker Change: We're extremely focused on monetizing our podcast inventory, which we believe is currently being monetized at just a fraction of its full commercial value.

Erick Opeka: Our current cell team has ramped up their direct efforts, and we're engaging with numerous third parties to help us rapidly fill the inventory of the next sub-reporter. Meanwhile, we're also expanding our efforts to bring in additional popular shows to further enhance our podcast offer. Turning to our technology initiatives, we're in the final stages of Phase 2 development for CineSearch, our AI-powered content search and discovery tool.

Speaker Change: Our current sales team has ramped up their direct efforts and we're engaging with numerous third parties to help us rapidly fill the inventory over the next several quarters.

Speaker Change: Well, we're also expanding our efforts to bring in additional popular shows that further enhance our podcast offerings.

Erick Opeka: On the sales front, we've made considerable progress in building our content advertising and match point sales units, which has been the focus of the first part of the year. We've added six seasons digital sales executives nationwide. We're already delivering results. Our match point efforts have been particularly promising. After just a few months, we built a pipeline north of six million of potential customers. We expect to significantly increase that once our inbound and outbound marketing efforts are fully underway.

Speaker Change: Turning to our technology initiatives, we're in the final stages of Phase 2 development for CineSearch, our AI-powered content search and discovery tool.

Erick Opeka: We expect a full consumer release within the next quarter. We're also preparing the product for B2B licensing and are already in discussions with several tier one OLE. This innovative platform developed in partnership with Google addresses the biggest consumer problems in streaming search and discovery by providing an enhanced AI-driven search experience that we believe will be a game-changer in the. We're also exploring some exciting new opportunities in AI.

Speaker Change: We expect a full consumer release within the next quarter.

Speaker Change: We're also preparing the product for B2B licensing and already in discussion of the several Tier

Speaker Change: This innovative platform developed in partnership with Google addresses the biggest consumer problems in streaming search and discovery by providing an enhanced AI driven search experience that we believe will be a game changer in the industry.

Erick Opeka: I'm pleased to announce we pose our first SaaS focus deal worth quarter of a million dollars in annual contract value. We believe this is on the lower end of the kind of deals we'll be seeing moving forward, indicating significant potential for growth in this area. Our licensing sales have also seen substantial growth and we expect to generate low millions of dollars in new licensing revenue from our sales team in the current quarter alone. This is a testament to the value of our extensive content library.

Erick Opeka: We're in early discussions with multiple parties to license parts of our extensive content library for AI training purposes. Additionally, we're in talks to represent AI training rights for other content owners, which could potentially add hundreds of thousands of titles to our existing library for this initiative. These developments position us at the forefront of the rapidly evolving entertainment technology landscape in Asia. As we move forward, we're focusing on four key areas to drive top-line growth.

Speaker Change: We're also exploring some exciting new opportunities in AI. We're in early discussions with multiple parties to license parts of our extensive content library for AI training purposes.

Speaker Change: Additionally, we're in talks to represent AI training rights for other content owners, which could potentially add hundreds of thousands of titles to our existing library for this initiative.

Speaker Change: These developments position us at the forefront of the rapidly evolving entertainment technology landscape in AI.

Erick Opeka: Looking ahead, we anticipate being sold out of inventory on several verticals in the next quarter, expect significant acceleration in digital licensing and match point revenues from deals currently in negotiation.

Erick Opeka: Expanding our distribution of SVOD, AVOD, and fast-streaming channels to our OEM and tech partner networks, expanding our licensing of library to those same partners, growing direct ad sales on our own and operated channels, and growing our new key revenue driver businesses, MatchPoint and Podcast. We believe this diversified approach will be the foundation for a unique, profitable streaming business with a best-in-class market. In conclusion, despite some temporary headwinds, we're seeing positive trends across our business overall. Strong direct operating margins, growing viewership, expanding sales team, and innovative technology initiatives position us well for future growth.

Speaker Change: As we move forward, we're focusing on four key areas to drive top-line growth. Expanding our distribution of SVOD, AVOD, and fast streaming channels to our OEM and tech partner network.

Erick Opeka: On our podcast network, we continue to see exponential listener growth yielding a 49% revenue surge over the last 60 days. We're extremely focused on monetizing our podcast inventory, which I believe is currently being monetized as just a fraction of its full commercial value. Our current cell team has ramped up their direct efforts and we're engaging with numerous third parties to help us rapidly fill the inventory over the next several quarters. Well, we're also expanding our efforts to bring an additional popular shows that further enhance our podcast offerings.

Speaker Change: expanding our licensing of library to those same partners.

Speaker Change: growing direct ad sales on our own and operated channels, and growing our new key revenue driver businesses, MatchPoint and Podcast.

Speaker Change: We believe this diversified approach will be the foundation for a unique, profitable streaming business with best-in-class margins.

Speaker Change: Include in conclusion, despite some temporary headwinds, we're seeing positive trends across our business overall. Our strong direct operating margins, growing the ownership, expanding sales team, and innovative technology initiatives positioned as well for future growth.

Erick Opeka: Turning to our technology initiatives, we're in the final stages of phase two development for CineSearch, our AI-powered content search and discovery tool. We expect a full consumer release within the next quarter. We're also preparing the product for B2B licensing and already in discussion of the several tier one OEMs. This innovative platform developed in partnership with Google addresses the biggest consumer problems in streaming search and discovery by providing an enhanced AI-driven search experience that we believe will be a game changer in the industry.

Erick Opeka: We're excited about the opportunities ahead, particularly as we approach key revenue-generating seasons, continue to roll out new products and partnerships, and prepare for the release of Terrafire. With that, Operator, let's open it up for Q&A. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If, for any reason, you would like to remove that question, please press star followed by two.

Speaker Change: We're excited about the opportunities ahead, particularly as we approach key revenue generating seasons, continue to roll out new products and partnerships, and prepare for the release of Terrafire 3.

Erick Opeka: Again, to ask a question, press star one, and as a reminder, if you are using a speaker phone, please remember to pick up your hand said before asking a question, and we will pause here briefly as questions are registered.

Speaker Change: With that, Operator, let's open it up for Q&A.

Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one and as a reminder, if you were using a speaker phone, please remember to pick up your hands said before asking a question and we will pause your briefly as questions or register.

Erick Opeka: We're also exploring some exciting new opportunities in AI. We're in early discussions with multiple parties to license parts of our extensive content library for AI training purposes. Additionally, we're in talks to represent AI training rights for other content owners, which could potentially add hundreds of thousands of titles to our existing library for this initiative.

Operator: The first question comes from the line of Brian Kinstlinger with Alliance Global Partners. You may proceed. Great. Thanks for taking my question. I wanted to start with getting a better understanding of the revenue trend. First, could you explain the drop in digital distribution? What were the contents?

Brian Bittner: The first question comes from the line of Brian Kinstlinger with Alliance Global Partners, you may proceed.

Erick Opeka: These developments position us at the forefront of the rapidly evolving entertainment technology landscape in AI.

Erick Opeka: As we move forward, we're focusing on forky areas to drive top line growth, expanding our distribution of S-VOD, A-VOD and fast streaming channels to our OEM and tech partner network, expanding our licensing of library to those same partners, growing direct ad sales on our own and operating channels and growing our new key revenue driver businesses, Matchpoint and Podcasts. We believe this a versatile approach will be the foundation for unique profitable streaming business with best and class margins.

Brian Bittner: Great, thanks for taking my questions. I wanted to start with getting a better understanding of the revenue trends.

Brian Nessing: First, if you could explain the drop in digital distribution. What were the content...

Brian Kinstlinger: Delays, what specifically if you could, I think you guys mentioned that a few times, and then is this a one-time event, an anomaly, or is this... This is something we should expect going forward, and this is kind of the base of where your revenue is going to start to grow. Hey, Brian, this is Chris.

Speaker Change: delays. Specifically, if you could, I think you guys mentioned that a few times. And then is this a one-time event, an anomaly, or is this something we should expect going forward and this is kind of the base of where your revenue is going to start to grow from?

Christopher McGurk: I think that Erick addressed that a little bit in his remarks, but I think Yolanda and Erick, if you want to field that question, sure. I'll get it started. So, if you look at the bulk of that number, it's probably about, so if you take out the non-recurring revenue from projection systems, which was about a million dollars or so, and you take out about 500K on the ad-supported side, it leaves about a million and a half dollars.

Erick Opeka: In conclusion, despite some temporary headwinds, we're seeing positive trends across our business overall. Our strong direct operating margins, growing viewership, expanding sales team and innovative technology initiatives position us well for future growth.

Chris McGurk: Hey Brian , this is Chris. I think that Erick addressed that a little bit in his remarks, but I think Yolanda and Erick, if you want to field that question?

Yolanda: Sure, I'll get it started.

We're excited about the opportunities ahead, particularly as we approach key revenue generating seasons, continuing to roll out new products and partnerships and prepare for the release of Terrifier 3.

Yolanda: If you kind of look at the...

Speaker Change: the bulk of that number, right? It's probably about, so if you're taking out the non-recurring revenue from projection systems, which,

Cameron: With that operator, let's open it up for Q&A. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one and as a reminder, if you were using a speaker phone, please remember to pick up your hand said before asking a question. And we will pause here briefly as questions are registered.

Speaker Change: was, you know, about a million dollars or so.

Speaker Change: and you take out the about $500K on the ad-supported side.

Christopher McGurk: We had in the prior year, we had some large specific licensing deals that, in aggregate, were around a million dollars, that we didn't have that same licensing occurring in this quarter. Those were opportunistic one-time licenses that happened in the prior year that we just didn't have this year.

Speaker Change: leaves about a million and a half dollars. We had in the prior year we had some large specific licensing deals that an aggregate were around a million dollars of that that we didn't have that same licensing occurring in this quarter.

Brian Kinstlinger: The first question comes from the line up on Brian Instlinger with Alliance Global Partners. You may proceed. Great. Thanks for taking my questions. I wanted to start with getting a better understanding of the revenue trends. First, if you could explain the drop in digital distribution, what were the content delays, specifically if you could, I think you guys mentioned that a few times. And then is this a one-time event, an anomaly, or is this.., is something we should expect going forward, and this is kind of the base of where your revenues are going to start to grow from.

Speaker Change: Those were opportunistic, one-time licenses that happened.

Erick Opeka: We do have content to license, and we had deals that were pending; they just were not closed during this particular quarter. We'll see those deals in the current quarter that we're in. So that's that, and then the second is that, in that quarter in the prior year, we had multiple titles that were new releases plus sort of the back half of the terrifier bump that we didn't have this year because there was a gap in the calendar and the release year.

Speaker Change: in the prior year that we just didn't have this year. We do have content to license. We had deals that were pending. They just were not closed during this particular quarter. We'll see those deals in the current quarter that we're in.

Speaker Change: So, that's that. And then the second is we, you know, we had...

Speaker Change: In that quarter in the prior year, we had multiple titles that were new release plus sort of the back half of the terror fire bump that we didn't have this year.

Christopher McGurk: Brian, this is Chris. I think that Erick addressed that a little bit in his remarks, but I think Yolanda and Erick, if you want to feel that question, I'll get it started, so if you kind of look at the bulk of that number, right, it's probably about, so if you take it taking out the non-recurring revenue from projection systems, which was about a million dollars or so, and you take out about 500K on the ad-supported side, it leaves about a million and a half dollars.

Erick Opeka: Yolanda can give a little more color on, you know, to the extent of how many titles moved, but, you know, we had titles that moved out due to production delays and other things that were on the schedule. Yolanda, if you have any additional color for Brian on that,

Speaker Change: We did go through a gap in the calendar in the releasing year. Yolanda can give a little more color on.

Speaker Change: to the extent of how many titles moved, but we had titles that moved out due to production delays and other things that were on the schedule. Yolanda, I don't know if you have any additional color for Brian on that.

Erick Opeka: Here's the question, Eric. And I think Brian, you know, it isn't an anomaly. We don't expect that going forward, but you just have to realize that in the licensing business, we're subject to the content pipeline. And there are a lot of timing issues that occur. And we expect to see substantial growth in that business.

Erick Opeka: Here's the question, Erick, and I think, Brian, you know, it is an anomaly. We don't expect that going forward, but you just have to realize that in the licensing business, you know, we're subject to the content pipeline, and there are a lot of timing issues that occur, and we expect to see substantial growth in that business going forward.

Christopher McGurk: We had, in the prior year, we had some large specific licensing deals that an aggregate were around a million dollars of that, that we didn't have that same licensing occurring in this quarter. Those were opportunistic one-time licenses that happened in the prior year, that we just didn't have this year. We do have content to license. We had deals that were pending. They just were not closed during this particular quarter. We'll see those deals in the current quarter that we're in, so that's that.

Brian Kinstlinger: I want to understand what's going on excluding digital distribution. Your revenue for streaming and digital is at a three-year low. You've got more channels that are taking with consumers. You've got 73% increase in viewership. You've got wider distribution you keep announcing.

Speaker Change: Let me take a step back.

Speaker Change: I want to understand what's going on excluding digital distribution. Your revenue for streaming and digital is at a three-year low. You've got more...

Speaker Change: channels that are taking with consumers, you get 73% increase in viewership.

Brian Kinstlinger: You've got several new products and services you've announced for the last year and a half. So what am I missing that, excluding digital distribution, that revenue seems to be? I would expect it to be growing in need of the headwinds to grow, which are offsets to higher growth. Maybe, at a higher level. Yeah, I would I would say it, you know, most of our salespeople just started within the last quarter and a half. The typical ramp period for those salespeople is, you know, usually around two quarters, where we really see them start to hit their stride, which we are starting to see now. Matchpoint is the same thing, right?

Speaker Change: You've got wider distribution, you keep announcing, you've got a several new product and services you've announced last year and a half. So what am I missing that excluding digital distribution that revenue seems to be, I would expect to be growing needs to be headwinds to growth.

Christopher McGurk: Then the second is we had in that quarter in the prior year, we had multiple titles that were new release plus the back half of the terrifier bump that we didn't have this year. We did go through a gap in the calendar in the releasing year. Yolanda can give a little more color to the extent of how many titles moved, but we had titles that moved out due to production delays and other things that were on the schedule.

Speaker Change: are offsets to, you know, higher growth, maybe a higher level picture.

Speaker Change: Yeah, I would say, you know, most of our salespeople just started within, you know, the last quarter to quarter and a half, you know, the typical ramp period for those salespeople is, you know.

Speaker Change: Usually around two quarters will we really see them start to hit their stride, which we are starting to see that now. Matchpoint is the same thing, right? We have...

Erick Opeka: We have a very robust pipeline. We closed our first deal. I think we're about to close our second deal any day now. And, you know, there are many more deals like that in the pipeline. It just took longer than we had anticipated to get those sales processes and systems stood up.

Christopher McGurk: Yolanda, if you have any additional color for Brian on that. There's the question, Eric, and I think, Brian, it isn't anomaly, we don't expect that going forward, but you just have to realize that in the licensing business, we're subject to the content pipeline, and there are a lot of timing issues that occur, and we expect to see some substantial growth in that business going forward.

Speaker Change: A very robust pipeline. We closed our first deal. I think we're about to close our second deal any day now. And, you know, there's many more deals like that in the pipeline. It just took longer than we had anticipated to get those those sales processes and systems stood up.

Erick Opeka: So I think, you know, in terms of viewership, you're right, right? We've had a pretty significant surge in viewership in the last quarter or so. And really, starting last year, we had been less aggressive in squeezing monetization out of programmatic to sort of protect our CPMs for the oncoming direct sales team. And so it's really a delicate balancing act, right?

Christopher McGurk: Let me just take a step back, because I want to understand what's going on in excluding digital distribution, your revenue for streaming digital is a three-year low. You've got more channels that are taking with consumers. You've got 73% increase in viewership, you've got wider distribution, you keep announcing, you've got several new product conservators that you've announced last year and a half. What am I missing, that excluding digital distribution, that revenue seems to be, I would expect it to be growing, it needs to be headwinds to growth, or offset to higher growth, maybe a higher level.

Speaker Change: So I think, you know, in terms of the viewership.

Speaker Change: you're right right we you know we've had a pretty significant surge in viewership.

Speaker Change: in the last quarter or so.

Speaker Change: and really starting in last year, we had been less aggressive on squeezing monetization out on programmatic to sort of protect.

Erick Opeka: We could either, you know, we could really increase revenues in the short term and, you know, lower our CPM floors and goose revenue. But that comes at the expense of higher margin, higher CPM revenue from packages the sales team sells. Conversely, if we keep them, you know, if we keep them too high, we, you know, in the short term, we have revenue, revenue, you know, challenges out of our programmatic business. So I think we're trying to strike a balance. You know, we were maybe a little too aggressive in protecting CPMs early on as that team was ramping up.

Speaker Change: are CPMs for the oncoming direct sales team. And so it's a really a delicate balancing act, right? We could either, you know, we could.

Speaker Change: short-term really increase revenues and, you know, lower our CPM floors and goose revenue, but that comes at the expense of higher margin, higher CPM revenue from packages to sales team sales. Conversely, if we keep them

Speaker Change: If we keep them too high, in the short term we have revenue challenges out of our programmatic business. So I think we're trying to strike a balance.

Christopher McGurk: I would say most of our salespeople just started within the last quarter to quarter and a half. The typical ramp period for those salespeople is usually around two quarters where we really see them start to hit their stride, which we are starting to see that now. Matchpoint is the same thing, right? We have a very robust pipeline. We closed our first deal. I think we're about to close our second deal any day now.

Speaker Change: You know, I think we were maybe a little too aggressive in protecting CPM's early on as that team was ramping, so I think we're finding the good balance now. That team is spelling broad base on the channel packages, so we're less.

Erick Opeka: So I think we're finding a good balance now. Their team is selling broad-based omnichannel packages, so we're less CPM sensitive, and so we're playing with that and increasing the revenue there by being more opportunistic on CPM, so I think. If I want to sum all this up, it really comes back to, we had a lot of sales teams ramping up and getting on board. We have good pipelines of revenue coming, and I truly believe we're bouncing off the bottom of revenue now and going into a pretty robust period of growth. One more question for me. I'll get back in the queue.

Speaker Change: CPM sensitive and so we're, you know, we're playing with that and increasing the revenue there being more optimistic than CPM. So I think.

Christopher McGurk: And there's many more deals like that in the pipeline. It just took longer than we had anticipated to get those sales processes and systems stood up. So I think in terms of the viewership, you're right, right? We've had a pretty significant surge in viewership in the last quarter. So and really starting in last year, we have been less aggressive on squeezing monetization out on programmatic to sort of protect our CPMs for the oncoming direct sales team.

Speaker Change: If I want to sum all this up, it's really...

Speaker Change: It really comes back to, we had a lot of sales teams ramping up and getting on board, we have good pipelines of revenue coming and I truly believe we're bouncing off the bottom of revenue now and going into a pretty robust period of growth.

Erick Opeka: Dog Whisperer obviously has been, sounds like a home run for you guys, and I think you're almost as equally as excited about GoPro. If I have the two channels, right, that are on the list right now, I mean, you have other, How much revenue can someone in a range reasonably expect from a top-earning channel of yours when fully ramped and distributed widely? Tom.

Speaker Change: Okay, one more question from me, I'll get back in the queue.

Speaker Change: Godwist for obviously has been, it sounds like a home run for you guys and I think you're almost as equally as excited about GoPro if I have your channels right at our Adelaide right now. I mean, you have others. How much revenue?

Christopher McGurk: And so it's a really a delicate balancing act, right? We could either, we could short-term really increase revenues and lower our CPM floors and goose revenue, but that comes at the expense of higher margin, higher CPM revenue from packages of the sales team sales. Conversely, if we keep them too high, short-term we have revenue challenges out of our programmatic business. So I think we're trying to strike a balance. We, I think we were maybe a little too aggressive in protecting CPMs early on as that team was ramping.

Speaker Change: Can someone in a range reasonably expect from a top earning channel of yours these days?

Speaker Change: when fully ramped and distributed, you know, widely.

Erick Opeka: So typically, generally speaking, you know, a high-end successful channel of the type that we're doing would be in the low to mid-seven figure range. I think Dog Whisperer is a unique property because we, in addition to having channelization rights, we have licensing rights, we have, you know, some other consumer goods rights, we have digital distribution rights. So I would say that one would be, you know, on the higher end of that scale.

Speaker Change: So typically it is generally speaking, you know, a high-end successful channel of the type that we're doing.

Speaker Change: would be in the low to mid seven figure range. I think Dog Whisperer is a unique property because we, in addition to having channelization rights, we have licensing rights, we have.

Christopher McGurk: So I think we're finding the good balance now. That team is selling broad-based omnichannel packages, so we're less CPM sensitive. And so we're playing with that and increasing the revenue there, being more opportunistic on CPM. So I think a lot, if I want to sum all this up, it's really, it really comes back to we had a lot of sales teams ramping up and getting on board.

Speaker Change: you know, some other consumer goods rights. We have digital distribution rights. So I would say that one would be, you know, on the higher end of that scale. For things that are channelized only, you're looking at probably lower seven figures on the revenue front.

Erick Opeka: For things that are channelized only, you're probably looking at lower seven figures on the road. That varies, obviously, depending on the success of the channel, the rate of distribution, and so on, but that's, generally speaking, where these things perform. Thanks so much for all the information.

Speaker Change: That varies obviously depending on the success of the channel, the rate of distribution, and so on, but that's generally speaking where these things perform.

Christopher McGurk: We have good pipelines of revenue coming, and we're, you know, I truly believe we're bouncing off the bottom of revenue now and going into a pretty robust period of growth.

Speaker Change: Okay, thanks so much for all the information.

Operator: Lee, the next question is from the line of Dan Kurnos with Benchmark, and you may proceed. Yeah, thanks. Good afternoon.

Speaker Change: You're welcome.

Christopher McGurk: Okay. One more question for me, I'll get back in the queue. You know, dog whisper obviously has been sounds like a home run for you guys. And I think you're almost as equally as excited about GoPro. If I have two channels right that are catalysts right now, I mean, you have others. How much revenue can someone in a range reasonably expect from a top-earning channel of yours these days? When fully ramped and distributed, you know, widely?

Speaker Change: The next question is from the line of Dan Kernos with Benchmark, you may proceed.

Daniel Kurnos: Erick, I just want to follow up on your commentary just around the marketplace. The upfronts are over now, by and large. And, yeah, we all know that programmatic CPM floors got slashed.

Dan Kernos: Yeah, thanks. Good afternoon. Eric, I just want to follow up on your commentary just around the market place. The upfront are over now by and large.

Daniel Kurnos: And, you know, I totally appreciate what you're trying to do with direct sales, which we've seen a lot in the industry. But obviously, Netflix and Amazon and others have been pumping a ton of supply into the marketplace. And so, you know, we're starting to see some monetization from you guys. It's obviously early.

Dan Kernos: And yeah, we all know that programmatic TPM Floors got flashed.

Speaker Change: and, you know, I totally appreciate what we're trying to do with direct sales, which we've seen a lot in the industry. But obviously, you know, Netflix and Amazon and others have been pumping the kind of supply into the marketplace.

Christopher McGurk: So typically, generally speaking, you know, a high-end successful channel of the type that we're doing, you know, would be in the low to mid-7 figure range. I think dog whisper is a unique, is a unique property because we, in addition to having channelization rights, we have licensing rights, we have, you know, some other consumer goods rights, we have digital distribution rights. So I would say that one would be, you know, on the higher end of that scale, for things that are channelized only, you're looking at probably lower 7 figures on the road, in front. That varies, obviously, depending on the success of the channel, the rate of distribution so on, but that's generally speaking where these things perform. Okay, thanks so much for all the information.

Speaker Change: You know, we're starting to see some of the monetization out of you guys. It's obviously early, probably you would like to be a little bit further ahead than where you are, but I just want to understand what gives you confidence.

Erick Opeka: Probably, you would like to be a little bit further ahead than where you are. But I just want to understand what gives you confidence knowing that you have more niche properties. But what gives you confidence that you're going to see sort of this nice rebound with this consolidated, you know, direct sales and programmatic effort going on? Sure, sure.

You're welcome.

Speaker Change: knowing that you have more niche properties, but what gives you confidence that you're going to see sort of this nice rebound with this consolidated, you know, direct sales and programmatic effort going forward?

Erick Opeka: Well, so if you think about, you know, if we were just competing on spots and dots, you know, just selling ad inventory, you know, look, we're not Netflix, right? We're a specialty enthusiast player. We have some compelling verticals.

Speaker Change: Sir, sure. Well, so, if you think about, you know, if we were just competing on spots and dots, you know, just selling add-in and pour it.

Speaker Change: You know, we're, we're not Netflix, right? We're a specialty enthusiast player. We have some compelling verticals, but we're not, we're not competing with the big scale general entertainment streamers on A.

Erick Opeka: But we're not, we're not competing with the big-scale general entertainment streamers on a Connected TV, Inventory to Inventory Comparison, right? What we are doing is working with brands and developing. I'd say more bespoke and more custom campaigns that involve things like, in addition to inventory, omnichannel, podcast, display, other forms of audio, little email, social, and even things like events and other things. So, we think that approach protects us because those kinds of initiatives are important to brands. They're especially for entertainment brands, like gaming movies and so on, which is, I think, our bread and butter.

Speaker Change: Connected TV, inventory-to-inventory comparison, right. What we are doing is working with brands and developing

Daniel Kurnos: The next question is from the line of Dan Kurnos with Benchmark, and you may proceed. Yeah, thanks. Good afternoon. Erick, I just want to follow up on your commentary just around the market place. The upfronts are over now, by and large. And yeah, we all know that programmatic TPM floors got slashed, and I totally appreciate what you're trying to do with direct sales, which we've seen a lot in the industry. But obviously, Netflix and Amazon and others have been pumping a kind of supply into the marketplace. And so, you know, we're starting to see some of the monetization out of you guys.

Speaker Change: I'd say more bespoke.

Speaker Change: and more custom campaigns that involve things like, in addition to inventory, involve omni-channel, podcasts.

Speaker Change: display

Speaker Change: Other forms of audio, little email, social, and even things like events and other things. So we think that approach is, you know, protects us.

Speaker Change: Because the kind of those kinds of initiatives are important to brands, especially to entertainment brands and gaming movies and so on, which is I think that's our bread and butter.

Erick Opeka: So, those brands really are left, and we're not really seen as a place; they look to go in and buy CTV inventory for this and the other. That's a piece of the mix, but our direct sales teams are really selling comprehensive packages of opportunities that include things like sponsorship and everything else. So, when you look at it from that perspective, you know, you can't buy that kind of experience for your brand or your film release or your video game on an open exchange. You just can't do it.

Speaker Change: So those brands really are left, and we're not really looked at as a place, hey, let's go in and buy CTV inventory for this, that, and the other. That's a piece of the mix, but our direct sales teams are really selling comprehensive packages.

Erick Opeka: It's obviously early, probably you would like to be a little bit further ahead than where you are, but I just want to understand what gives you confidence, knowing that you have more niche properties, but what gives you confidence that you're going to see sort of this nice rebound with this consolidated, you know, direct sales and programmatic effort going forward. Sure, sure. Well, so, if you think about, you know, if we were just competing on Spock and Duff, you know, just selling ad inventory, you know, look, we're not Netflix, right?

Speaker Change: of opportunity that includes sponsorship and everything else. So when you look at it from that perspective,

Erick Opeka: And that's why we think, and you know, the demand for that is increasing. We're going into arguably our busiest season of the year. You know, we're probably one of the top brands in the horror vertical, for example, will be sold out of all available inventory for that market to, you know, fortune 500 brands, movie studios, you name it that are focused on that. We're getting sponsorship revenue for some very large brands for events and things like that. So, you know, I am very optimistic about that approach. If we were just competing on programmatic, it would be, I think, you're right. That would be a much harder battle.

Speaker Change: You know you can't buy that

Speaker Change: Kind of experience for your brand or your film release or your video game.

Speaker Change: on an open exchange, you just can't do it.

Speaker Change: So that's why we think, and the demand for that is increasing. We're going into arguably our busiest season of the year.

Erick Opeka: We are a specialty, enthusiast player. We have some compelling verticals, but we're not competing with the big scale general entertainment streamers on a connected TV, inventory, inventory comparison, right? What we are doing is working with brands and developing. I'd say more bespoke and more custom campaigns that involve things like in addition to inventory involved omnichannel podcast, display, other forms of audio, a little email, social, and even things like events and other things.

Speaker Change: You know, our, you know, we're probably one of the top brands in the horror vertical, for example.

Speaker Change: will be sold out of all available inventory for that market to fortune.

Speaker Change: 500 Brands, movie studios, you name it, that are focused on that. We're getting sponsorship revenue for some very large brands for events and things like that.

Erick Opeka: But, you know, we're starting from a much lower base, and I think we can do lots and lots of sales and lots of growth for many years focused on this part of the industry that our team is just incredibly experienced and has been selling for, you know, collectively, you know, over 100 years of experience among everybody that's going to be doing it. John, it's really helpful. And then speaking of all of a smaller base, I mean, the podcast is going to break a million dollars, a quarter, this quarter, and how big do you think that will get? And you mentioned politics in your commentary.

Speaker Change: You know, I'm, I am very optimistic about that approach. If we were just competing on programmatic, it would be, I think you're right, that would be a much harder battle. But, you know, we're starting from a much lower base and I think we can do lots and lots of sales.

Erick Opeka: So we think that approach is, you know, it protects us because the kind, those kinds of initiatives are important to brands. They're especially to entertainment brands with gaming movies and so on, which is, I think, our bread and butter. So those brands really are left, and we're not really looked at the place, hey, let's go in and buy CTV, inventory for this, that, and the other. That's a piece of the mix, but our direct sales teams are really selling comprehensive packages of opportunities that include things like sponsorship and everything else.

Speaker Change: and lots of growth for many years focused on this part of the industry that our team is just incredibly experienced and has been selling for, you know, collectively, you know, over 100 years of experience among everybody that's going to be doing it.

Speaker Change: Got it. And that's really helpful. And I'm speaking of all of our smaller base. I mean, the podcast is break and then only in a quarter, this quarter, and how big do you think that gets? And you mentioned political in your commentary. Is that something you guys can actually tap into because this year is obviously going to be bonkers?

Erick Opeka: Is that something you guys can actually tap into because this year is obviously going to be a bomb? Yeah, yeah. So I think we're, we're, approaching that number, our podcast, and we have a podcast and other bucket that we break out. In terms of that, I think that that number is pretty close to that number, if not exceeding it at this point. You know, keep in mind, right, I think, and we've discussed this previously that, you know, the amount of monetization that's happening out of the podcast business today, up until very recently, was 100% programmatic. We've just started to get our first campaigns online, so we've been doing campaigns with, you know, the usual direct consumer brands, movie studios, and other things.

Erick Opeka: So when you look at it from that perspective, you know, you can't buy that kind of experience for your brand or your film release or your video game on an open exchange, you just can't do it. And so that's why we think, and the demand for that is increasing. We're going into, arguably, our busiest season of the year. You know, we're probably one of the top brands in the horror vertical, for example.

Speaker Change: Yeah, so I think we're approaching that number, our podcast, and we have those podcast and other buckets that we break up in terms of that. I think that that number is pretty close to that number if not exceeding it at this point.

Speaker Change: You know, keep in mind, right, I think and I think we've we've discussed this.

Erick Opeka: We'll be sold out of all available inventory for that market to, you know, Fortune 500 brands, movie studios, you name it, that are focused on that. We're getting sponsorship revenue for some very large brands for events and things like that. So, you know, I am very optimistic about that approach.

Speaker Change: Previously that...

Speaker Change: You know, the amount of monetization that's happening out of the podcast business today.

Speaker Change: Up until very recently was 100% programmatic.

Speaker Change: We've just started to get our first campaigns online, so we've been doing...

Speaker Change: You know, campaigns with, you know, the usual direct consumer brands, some movie studios and other things. So that business is just starting to lift off.

Erick Opeka: So that business is just starting to take off. I would, if I had to be conservative, I'd say we're probably monetizing, you know, one directly less than 10% of that total inventory today. So there's a tremendous amount of upside growth out of that. We're also, you know, in the process of changing programmatic partners. We believe that could, you know, have a substantial material increase on the programmatic piece alone, right? I think we've outgrown our current programmatic partnerships.

If we were just competing on programmatic, it would be, I think you're right, that would be a much harder battle. But, you know, we're starting from a much lower base, and I think we can do lots and lots of sales and lots of growth for many years focused on this part of the industry that our team is just incredibly experienced and has been selling for, you know, collectively, you know, over 100 years of experience among everybody that's going to be doing. I got it. It's really helpful.

Speaker Change: I would, if I had to be conservative, I'd say we're probably monetizing, you know, one directly left in 10 percent of that total inventory today. So there's a tremendous amount of upside growth.

Speaker Change: Out of that. We're also, you know, we're in the process of changing programmatic partners. We believe that could, you know, have a substantial material increase on the programmatic piece alone, right? I think we, you know.

Erick Opeka: And then speaking of all of a smaller base, I mean, the podcast is break a million, a quarter, this quarter. And how big do you think that gets? And you mentioned political in your commentary. Is that something you guys can actually tap into because this year's obviously going to be bonkers? Yeah, yeah. So I think we're approaching that number, our podcast and we have a podcast and other bucket that we break out in terms of that.

Speaker Change: Dick, are growth rates in that business that sort of person, where we, we've not grown our current programmatic partnerships, and I think we're looking at expanding those and taking them to the next level. So I think you'll see a lot of growth there as well.

Erick Opeka: And I think we're looking at expanding those and taking them to the next level. So I think you'll see a lot of growth there as well as on PoliticalPiece.org. I'm sorry, on the political side... You know, we are getting political through programmatic, you know, you know, most of the time. If you kind of look out there at the marketplace, this market is really probably one of the most focused demographically and regionally that's ever been done before. You know, I think local markets are tending to take a big chunk of the lion's share of this election. It's less about swaying independent voters, but we are seeing our piece.

Erick Opeka: and political piece, Erick.

Erick Opeka: I'm sorry. On the political side.

Erick Opeka: You know, we are we are getting political through programmatic You know, it's you know, most of the if you if you kind of look out there at the marketplace this market is

Erick Opeka: I think that that number is pretty close to that number if not exceeding it at this point. Keep in mind, right? I think and I think we've discussed this previously that the amount of monetization that's happening out of the podcast business today up until very recently was 100% programmatic. We've just started to get our first campaigns online. So we've been doing campaigns with the usual direct consumer brands, some movie studios and other things.

Speaker Change: Really, probably one of the most focused demographically and regionally that's ever been done before.

Speaker Change: You know, I think local markets are pending to take a big chunk of the lion's share of this election. It's less about swing independent voters.

Erick Opeka: We are getting a piece. We'll see a lift from that in programmatic, particularly. I don't know that we'll see the same lift that you would see out of, say, you know, the broadcast conglomerates or others that are far more about regional targeting, but we will get a decent lift.

Speaker Change: But we are seeing our piece. We are getting a piece. We'll see a lift from that in programmatic, particularly. I don't know that we'll see the same lift that you would see out of, say, broadcast conglomerates or others that are far more about regional targeting.

Erick Opeka: So that business is just starting to lift off. I would, if I had to be conservative, I'd say we're probably monetizing, you know, one directly less than 10% of that total inventory today. So there's a tremendous amount of upside growth out of that. We're also, you know, we're in the process of changing programmatic partners. We believe that could, you know, have a substantial material increase on the programmatic piece alone, right? I think we, you know, our growth rates in that business have sort of pushed, we've outgrown our current programmatic partnerships and I think we're, you know, we're looking at expanding those and taking them to the next level. So I think you'll see a lot of growth there as well.

Daniel Kurnos: I think internally we've been forecasting that, you know. You know, we looked at prior years, and I think we saw something like a 10 to 15% lift from that. I don't know exactly how that's going to go this year because it's anyone's guess how much is spent and where it's spent, and how it's spent, but we should see a lift like that, like we did in previous years. Got it. And just, have you invented, or does your guidance include any monetization from CineSert? at all

Speaker Change: But we will get a decent list. I think internally we've been forecasting that, you know.

Speaker Change: you know, we looked at prior years and I think we saw something like a, you know, 10 to 15 percent lift out of that. Don't know exactly how that's going to go this year because it's anyone's guess how much is spent and where it's spent, how it's spent, but we should see a lift like that like we did in prior years.

Speaker Change: Got it. And just, have you embedded, does your guidance include any monetization from CineSearch?

Daniel Kurnos: And then lastly, on the OPEX side, obviously, a lot of progress there. You said five to seven percent more. Just curious if you got if that's just from the offshoring and if there's sort of any other plans after that or there's more of a balance. I think Chris has said a balance of reinvestment going forward once the revenues scale. Yeah, I think so if you kind of look at our optics today, you know, I mentioned during the remarks about five to seven percent. That's already been identified.

And political piece, sir. I'm sorry. On the political side, you know, we are, we are getting political through programmatic, you know, you know, most of the, if you, if you kind of look out there at the marketplace, this market is really probably one of the nor most focused demographically and regionally that's ever been done before. So, you know, I think local markets are tending to take a big chunk of the lion share of this election.

Speaker Change: at all. And then lastly, on the OPEC side, obviously a lot of progress there. You said 5 to 7 percent more.

Speaker Change: Just curious if you got, if that's just from the offshoring and if there's sort of any other plans after that or there's more of a balance, I think Chris has said a balance of reinvestment going forward once the revenue scale.

Speaker Change: I love you.

Speaker Change: I mentioned during the remarks about five to seven percent. That's identified already of things that are already underway. That's predominantly switching a variety of technology vendors. I think we've, you know,

Erick Opeka: Things are already underway. That's predominantly switching a variety of technology vendors. I think we recognize somewhere in the neighborhood of, you know, 1.6 to 1.8 million dollars of OPEX savings, which should equal that percentage range. Those are already identified.

It's less about swing independent voters. But we are seeing our piece. We are getting a piece. We'll see a lift from that in programmatic, particularly. I don't know that we'll see the same lift that you would see out of say, you know, the, you know, broadcast conglomerates or others that are far more about regional targeting. But we will, we will get a decent lift. I think internally we've been forecasting that, you know, we've looked at prior years and I think we saw something like a, you know, 10 to 15% lift out of that.

Speaker Change: We recognize somewhere in the neighborhood of, you know, 1.6 to 1.8 million dollars of off-exagens, which should equal that percentage range.

Erick Opeka: There is a good chunk of it already underway, and so we would expect to realize that over the next two quarters or so. There are, you know, infrastructure changes and other things that we need to make, but this is from, you know, heavy iron compute systems, SaaS products, and other things that are core infrastructure that we're just migrating just due to the scale we have. We're getting lower prices on things, so those are already underway.

Speaker Change: Those are identified, a good chunk of it is underway already, and so we would expect to realize that over the next two quarters or so. There's infrastructure changes and other things that we need to make.

Speaker Change: But this is from, you know, heavy iron compute systems, SAS products, and other things that are core infrastructure that we're just migrating, just due to the scale we have, we're getting cheaper prices on things. So those are already underway.

Don't know exactly how that's going to go this year because it's anyone's guess how much is spent and where it's spent, how it's spent. But we should see a lift like that, like we did prior, for years.

Erick Opeka: You know, we're, the other piece of that, and I think you heard that in Lindsey's remarks, is that we're holding fast on SG&A. We think we can maintain and operate our business sufficiently for the foreseeable future at the, at sort of the SG&A percentages we're at. So, really, we'll see SG&A decline as we hold this as revenue increases as well. So, all in, you know, I think the gross margins are looking very strong for this business with the five to seven percent change. I think we'll be comfortably into the low 50s on the streaming side of the business, which is now the bulk of revenue.

Speaker Change: You know, we're the other piece of that and I think you heard that in Lindsey's remarks is we're holding fast on SG&A

Erick Opeka: And just, have you embedded, does your guidance include any monetization from CineSearch at all, and then lastly on the off-ex side, obviously a lot of progress there. You said five to seven percent more, just curious if you got, if that's just from the off-suring, and if there's sort of any other plans after that or there's more of a balance, I think Chris has set a balance of reinvestment going forward once the revenue scale.

Lindsey: We think we can maintain and operate our business sufficiently for the foreseeable future at the end.

Speaker Change: at sort of the SUNA percentages were at, so really we'll see SUNA decline as we hold this as revenue increases as well.

Speaker Change: So all in, you know, I think the gross margins are looking very strong for this business, with the 5% to 7% change, I think we'll be comfortably into the low 50s on the streaming side of the business, which is now the bulk of the revenue.

Erick Opeka: Yeah, I think, so if you kind of look at our off-ex today, I mentioned during the remarks about five to seven percent, that's identified already, things are already underway, that's predominantly switching a variety of technology vendors. I think we've recognized somewhere in the neighborhood of $1.6 to $1.8 million of off-ex savings, which should equal that percentage range. Those are identified, they're a good chunk of its underway already, and so we would expect to realize that over the next two quarters or so, there's infrastructure changes and other things that we need to make, but this is from heavy iron compute systems, SaaS products and other things that are core infrastructure that we're just migrating, just due to the scale we have, we're getting cheaper prices on things, so those are already underway.

Erick Opeka: Thanks for bearing with me, Erick. I appreciate it. You're welcome. I hate to be a...

Speaker Change: Thanks for bearing with me, Erick. Appreciate it.

Erick Opeka: You're welcome.

Operator: There are no further questions remaining, so I'll pass the compass back over to the management team for closing remarks. Hi, this is Chris. Thank you all for joining us again today. And please feel free to reach out to Julie Millstead with any additional questions you might have. And we look forward to speaking with you all again on our next quarterly call. Thank you. That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Erick Opeka: Edge there.

Speaker Change: There are no further questions remaining, so I'll pass the conference back over to the management team for closing remarks.

Speaker Change: Guys, this is Chris. Thank you all for joining us again today, and please feel free to reach out to Julie Nostead with any additional questions you might have. And we look forward to speaking with you all in our next quarterly call. Thank you.

Speaker Change: That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Speaker Change: Thank you very much.

Speaker Change: [inaudible]

Erick Opeka: The other piece of that, and I think you heard that in Lindsay's remarks, we're holding significantly for the foreseeable future at the S-GNA percentages we're at, so really we'll see S-GNA decline as we hold this as revenue increases as well, so all in, I think the growth margins are looking very strong for this business with the five to seven percent change, I think we'll be comfortably into the low 50s on the streaming side of the business, which is now the bulk of the revenue.

Thanks for bearing with me, Eric, appreciate it, you're welcome, thanks, Dan.

Christopher McGurk: There, no further questions remaining, so I'll pass the compass back over to the management team for closing remarks. Yeah, this is Chris. Thank you all for joining us again today, and please feel free to reach out to Julie Nostag with any additional questions you might have, and we look forward to speaking with you all in on our next quarterly call, thank you.

That concludes today's conference call, thank you for your participation, you may now disconnect your line.