Q3 2025 Cineverse Corp Earnings Call
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Matt: Good day, everyone. Welcome to Cineverse's third quarter fiscal 2025 financial results conference call. My name is Matt and I'll be your operator today.
Matt: Currently, all participants are in a listen-only mode. We 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. If anyone needs operator help, press star 0.
Speaker Change: Please note that this call is being recorded. I will now like to turn the call over to Gary Loffredo, the Office of the Secretary of Defense.
Speaker Change: Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal Year 2025 Third Quarter Financial Results Conference Call.
Speaker Change: A replay of this broadcast will also be made available at the Cineverse website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on this call
Speaker Change: contain forward-looking statements. 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.
CINIVERSE: All the information discussed on this call are, as of today, February 13, 2025. CINIVERSE does not assume any obligation to update any of these forward-looking statements, except as required by law.
CINIVERSE: In addition, certain financial information presented in this call represent non-GAAP financial measures, and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures and our earnings released carefully as you consider these metrics.
Gary Loffredo: I'm Gary Loffredo, Chief Legal Officer, Secretary, and Senior Advisor at Cineverse.
Speaker Change: With me today are Chris McGurk, Chairman and CEO, Erick Opeka, President and Chief Strategy Officer, Tony Wedor, Chief Operating Officer and Chief Technology Officer.
Speaker Change: Mark Lindsey, Chief Financial Officer, Mark Torres, Chief People Officer, and Yolanda Macias, Chief Content Officer, all of whom will be available for questions following the prepared remarks.
Speaker Change: On today's call, Chris will discuss our Fiscal Year 2025 Third Quarter Highlights.
the latest operational development, outlook, and long-term growth strategy.
Speaker Change: Mark will follow with a review of our results for the fiscal third quarter ended December 31st, 2024.
Speaker Change: and Erick will provide some detail on our streaming business results and operating initiatives before opening the floor for questions.
Speaker Change: I will now turn the call over to Chris McGurk to begin.
Thank you, Gary, and thanks, everyone, for joining us today.
This was the strongest quarter in the company's history.
Speaker Change: We recorded $40.7 million in total revenues, up $27.5 million from the prior year quarter.
Speaker Change: We generated $7.2 million in net income, a $9.9 million increase from the prior year quarter.
Speaker Change: We recorded $10.8 million in adjusted EBITDA, a $9 million increase from the prior year quarter.
Speaker Change: Our operating margin was 48% within our targeted range of 45 to 50 percent.
Speaker Change: And as of yesterday, we had more than $13 million in cash on hand and zero debt.
Speaker Change: with a full $7.5 million available on our line of credit with EastWest Bank.
Speaker Change: These results were driven in large part by the unprecedented success of Terrafire 3, but they also reflect strong growth across all of the company's key lines of business.
Speaker Change: Mark and Eric will speak to our financial results and operating highlights across the full span of our business in just a few minutes.
Speaker Change: I will focus now on what we believe the future holds for our feature film releasing and marketing business, which we believe is uniquely poised to be a major source of new revenue and profits for the company on an ongoing basis.
Speaker Change: After stunning the industry in October, when Art the Clown displaced Joaquin Phoenix as the Joker at the top of the box office charts, Terrifier 3 charged on to become the highest grossing non-rated film ever, with more than $54 million at the domestic box office.
topping previous record holder Renaissance, the film by Beyoncé.
Speaker Change: Subsequently, Terrafire 3 has done very strong business in digital sales and Blu-ray and DVD.
Topping the sales charts there as well.
Speaker Change: The film debuts tomorrow on our ScreenBox Horror Streaming Channel, and we are currently reviewing multiple other pay and streaming distribution channel options.
Speaker Change: Like all studios, we do not disclose profitability on any individual film.
basis for both competitive and for participant non-disclosure reasons.
Speaker Change: However, Tariffire 3 obviously had a huge impact on our results this quarter and should provide significant financial upside in our fiscal fourth quarter and into the next fiscal year.
Speaker Change: But perhaps the biggest long-term upside to the company from the success of Terrafire 3 is that it has opened up a potential
Speaker Change: new profit line for us, releasing and marketing theatrical films by fully utilizing the unique collection of new media assets that we built over the last few years.
We demonstrated this to the film industry in stunning fashion.
Speaker Change: by generating $54 million at the box office with just a $500,000 out-of-pocket marketing spend to open the movie at number one.
previously unheard-of seat.
Speaker Change: the shock and awe within the film industry at this performance.
Speaker Change: particularly at how we were able to hyper effectively utilize our new media assets, including our portfolio of streaming channels, podcast network, matchpoint advertising technology, and social media strengths.
Speaker Change: while spending zero dollars on national media has led to a deluge of new film releasing and marketing opportunities.
Speaker Change: As a result, we are now rapidly filling out our go-forward theatrical release slate with films targeted at very specific fanbases and with known and successful intellectual property that we can distribute using the same blueprint that drove the success of Terrifier 2 and 3.
Speaker Change: These films include Silent Night, Deadly Night, where we are partnering with European media powerhouse Studio Canal to release a reinterpretation reboot of this classic controversial horror film for this coming Christmas.
Speaker Change: Also, Toxic Avenger, an unrated update of the classic trauma title produced by Legendary Pictures, the major studio behind global hits like Dune, Godzilla vs. Kong, Jurassic World, and many other massive successes.
Speaker Change: and starring Peter Dinklage, Kevin Bacon, and Elijah Wood. The Toxic Avenger debuted at Fantastic Fest, earning a 92% positive score on Rotten Tomatoes and is slated for release on August 29th of this year.
Speaker Change: And just yesterday, we announced another horror film for our lineup, Wolf Creek Legacy, the third installment of the classic gritty Australian outback horror film, which we will be releasing in the next calendar year.
Speaker Change: It's very important to note that all three of these films have very strong risk-reward profiles and upside economics for cinemas.
Speaker Change: Total investment in each movie for both acquisition and marketing costs are expected to be less than that of Terrafire 3.
Speaker Change: driven, again, by our unique, hyper-targeted, and cost-efficient approach to theatrical marketing.
Speaker Change: For example, we anticipate that if Toxic Avenger does only half the box office as Terrifier 3, it will generate about the same bottom-line financial results per Centiverse as Terrifier 3 did.
Speaker Change: Expect more film announcements soon as we continue to fill our release slate with similar properties as well as films in other genres besides horror where we believe we can use our ecosystem to hypermarket against very specific fan bases as well.
Speaker Change: In addition, both major studios and other independent studios have clearly recognized the success and strength of our new media ecosystem and are already using it to market their own films as well.
Speaker Change: Focus Features and Neon both advertised films recently across our network, and we expect more studios to follow suit.
Speaker Change: This should provide another high potential new and ongoing source of revenues for the company.
Speaker Change: We also want to thank Damian Leoni and Soph Alcone, who built the Terrifier franchise, for creating such an amazing property that helped catalyze all this for Cineverse.
Speaker Change: Damien is currently working on the script for Terrifier 4, which we fully expect will be another must-see event for the franchise.
Speaker Change: Finally, our strong balance sheet will help us invest behind growth in our content, technology, streaming, podcast, and advertising businesses.
Speaker Change: That said, we are also exploring new financing options to expand our credit availability, particularly for new film releases.
Speaker Change: and we are not considering any potential equity offering to support our current business, particularly since we believe we have achieved sustainable profitability and positive cash flow.
Speaker Change: And with that, I'll turn the floor over to Mark to further discuss our financial results.
Thank you, Chris.
Speaker Change: As Chris noted, this quarter was our strongest quarter in history. Even with massive expectations this quarter, we were still able to beat Analyst Consensus Guidance for Revenue 40.7 million versus 36.4 million
Speaker Change: Net income, $7.2 million versus $5.1 million. Diluted EPS, $0.34 per share versus $0.31. And adjusted EBITDA, $10.8 million versus $8.2 million.
Speaker Change: For the quarter, Centerverse reported record revenues of $40.7 million compared to $13.3 million for the same quarter last year, or a 207% increase.
Speaker Change: In addition, compared to our second quarter ended September 30, 2024, revenue has increased by $28 million, or 220%.
Speaker Change: While the box office results for Terrafire 3 were the major catalysts for our record revenue this quarter, the remainder of our business also performed exceptionally well. Year over year, our streaming and digital revenues grew by 48% and podcast and other revenue grew by 138%.
Speaker Change: In a few minutes, Erick will discuss in further detail the non-terrifier initiatives that drove these improved results.
Speaker Change: considering the ancillary revenues associated with Terrafire 3, the continued double-digit growth of our podcast business,
Speaker Change: improved content licensing opportunities and expected growth in our direct advertising revenues. We're expecting a material increase in revenue for our fiscal fourth quarter ended March 31, 2025 compared to the prior year quarter.
Speaker Change: As Chris mentioned, our direct operating margin for the quarter was 48%, which is in line with our previously issued guidance of 45 to 50%. Our improved operating margin is a direct result of our cost optimization initiatives implemented over the last 18 months.
Speaker Change: We expect our direct operating margin in future quarters to remain in the 45-50% range.
Speaker Change: SG&A expenses for the quarter were 9.4 million, an increase of 3 million for the third quarter compared to the prior year quarter, primarily driven by an increase in expenses associated with the performance of Terrafire 3.
Speaker Change: As this increase was Terrafire 3 specific, we expect our SG&A expenses to return to a more normalized run rate going forward.
Speaker Change: Last quarter, we also provided guidance that we expected our SG&A expenses to remain flat.
Speaker Change: SG&A expenses as a percentage of revenue for the third quarter were 23% compared to 50% last quarter and 48% for the prior year quarter. Again, this improvement is a result of our continued focus on cost optimization initiatives that we've been discussing over the last 18 months.
Speaker Change: Net income for the quarter was $7.2 million, a $9.9 million improvement over the prior year quarter, and adjusted EBITDA was $10.8 million compared to $1.8 million for the same quarter last year.
Speaker Change: We have $6.1 million in cash and cash equivalents on our balance sheet as of December 31, 2024, with $3.8 million outstanding on our $7.5 million working capital facility.
Speaker Change: As of yesterday, having received most of our Terrifier 3 box office rentals after year end, we had more than $13 million of cash on hand, no debt outstanding, and $7.5 million of available capacity on our working capital facility.
Speaker Change: In addition, as of December 31, 2024, we have a working capital surplus of $6.8 million, the largest in company history.
Speaker Change: When reviewing our quarter-end cash balances again, please remember that the majority of the Tariffier III cash receipts were received after December 31, 2024.
Speaker Change: For the nine months ended December 31, 2024, our net cash provided by operations was $5.0 million, a $7.4 million improvement during the quarter. We expect to be operating cash flow positive for the full fiscal year 2025.
Speaker Change: In addition, during the quarter, we were able to pay in full the outstanding term loan principal and interest totaling $3.7 million.
Speaker Change: Subsequent to year end, we reduced our outstanding working capital facility balance to zero.
Speaker Change: While we are currently debt-free with more than 13 million of cash on hand, we're exploring additional opportunities to raise debt capital to improve our financial condition and provide capital to fund our upcoming initiatives, which Erick will discuss in further detail.
Finally, with a $40.7 million revenue quarter,
Speaker Change: A $40 million valuation for our content library, which is almost entirely off balance sheet. We continue to believe that our stock price is undervalued with significant upside, even at yesterday's closing price of $4.60 per share.
Speaker Change: With that, I'll turn the floor over to Erick to discuss our strategic growth initiatives.
Erick Opeka: Thank you, Mark. Today I'm going to cover three key areas of our business. An overview of our next generation theatrical strategy, an overview of our digital distribution initiatives, and our technology and advertising business.
First, let's talk about our theatrical strategy.
Erick Opeka: Approach to theatrical is fundamentally different from the traditional studio model.
Erick Opeka: Instead of chasing nine-figure tentpoles, we're following a money-ball strategy for theatrical releasing, focusing on proven IP and franchises that studios often overlook.
Erick Opeka: These films have already established fan bases, strong ancillary track records, and proven box office performance, vastly reducing our risk and increasing profitability across multiple windows.
Erick Opeka: What sets us apart is not just our film selection strategy, but the structural advantages we bring to the table.
Erick Opeka: Our deal structures are fair, ensuring talent creators benefit equally alongside the studio and are aligned to ensure success.
Erick Opeka: At the same time, we're going to leverage our significant media assets, proprietary ad tech, and in-house capabilities to dramatically reduce costs and increase efficiencies in the releasing process.
Erick Opeka: This approach drives higher margins for both Cineverse and our creator partners, making us a highly attractive home for filmmakers and IP holders who are coming in droves to the doors as Chris described earlier.
Erick Opeka: Our ability to do this comes from more than a decade of investment in our technology and infrastructure, including machine learning and AI-driven marketing and distribution models.
Erick Opeka: It's a massive moat that our competitors' R-size simply cannot replicate. Unlike traditional distributors who rely on expensive, broad-reach campaigns, we use data and automation to precision-target audiences, ensuring our marketing spend delivers outsized returns.
Erick Opeka: Under this model, we're rapidly building a slate towards eight to ten wide and specialty theatrical releases per year, putting us on par with the volume of past and present mini majors.
Erick Opeka: For the coming fiscal year, we'll release at least 3-4 films, reaching the 8-10 range within 2 additional years.
Erick Opeka: titles like The Toxic Avenger, Silent Night, Deadly Night, and Wolf Creek Legacy are perfect examples of how we apply this playbook.
Erick Opeka: targeting proven theatrical IP with strong cult fan bases and deploying cost-efficient marketing and distribution strategies, leveraging our tech and media assets, ensuring they reach their full potential across theatrical, home entertainment, merch, and streaming.
Next, let's discuss our ancillary sales and distribution.
Erick Opeka: For most of 2024, we focused heavily on scaling our FAFSA and ADD businesses, which has delivered strong results.
Erick Opeka: as Mark had noted earlier. Looking ahead, we're making a major investment in accelerating our subscription business with a focus on doubling its growth rate to the 15 to 20% range by investing in high-quality studio titles, cost-efficient exclusives and originals.
Erick Opeka: while also leveraging the same marketing machine that we're working with on theatrical. We're also committing meaningful capital to customer acquisition for Screenbox, Dove, as well as Pandora, positioning them as premier destinations for genre-specific streaming in their verticals.
Erick Opeka: As of this quarter, our total SBOT subscribers has reached 1.38 million, up 6% year-over-year. ScreenBox has seen a 7% increase in subscribers over the past 60 days, and Terrafire 2 viewership was behind that, surging 45% in Q3, reinforcing the power of this franchise-driven engagement.
Erick Opeka: Meanwhile our fast channels collectively delivered over 2.1 billion minutes in Q3 with standout performances from Dove up 30% year-over-year our anime property Yu-Gi-Oh which was up a thousand percent in in the quarter over its Q1 launch.
Erick Opeka: and additionally our Barney channel continues to excel which has reached more than 455 million minutes streamed last month alone.
Erick Opeka: To further expand our distribution reach, we launched Bob Ross, Comedy Dynamics, Dog Whisperer, and the Dove Fast channels on Google TV's FreePlay.
Erick Opeka: Additionally, we expanded our content partnership with Fubo, adding two more of our ad-supported streaming channels, Dog Whisperer with Cesar Millan and GoPro, allowing us to capitalize on the continued growth of fast platforms.
Erick Opeka: On the transactional side, Terrafire 3 dominated the EST and VOD and physical media sales charts.
Erick Opeka: ranking as the number one sales title for several weeks, beating major studio releases like Joker and Wild Robot. As of tomorrow, Terrifier 3 will premiere on ScreenBox for an exclusive SPod window, with active discussions underway for a pay-one licensing deal with major cable and streaming platforms to further extend the film's reach and maximize its long-term value.
Erick Opeka: In addition, we continue to capitalize on merchandise and collectibles through our Bloody Disgusting brand, following successful partnerships and launches with retailers like Spencer's and Walmart. This expansion further monetizes our horror vertical beyond streaming and theatrical, and will provide additional revenue streams tied to our most engaged fanbases.
Erick Opeka: On the technology front, we continue to grow our matchmaking business past its early stages, and recent results have been promising.
Erick Opeka: We've expanded our sales team and are rapidly scaling our pipeline of customer targets. As content distributors and OEMs race to expand their libraries and future-proof operations for AI-driven revenue streams, there's a growing demand for a cost-effective, high-volume solution that can streamline delivery.
Deliver monetization and enable AI-driven content enhancement. That's MatchPoint.
Erick Opeka: We recently announced two new scale customers from Matchpoint, including Multicom Entertainment Group, our first distribution client, and Joysoft, a venture-backed streaming service run by experienced entrepreneurs focused on bringing Asian American content to the global streaming ecosystem.
Erick Opeka: Both clients selected MatchPoint due to its robust and expansive set of features and end-to-end capabilities that will streamline their business. These partnerships validate MatchPoint's ability to support both established distributors and new, fast-growing media ventures in navigating the evolving content landscape.
Erick Opeka: Additionally, our MatchPoint RealVisuals AI initiative that we recently announced is gaining traction and we're nearing the close of our first deals with major LLM providers.
Erick Opeka: To date, we represent AI training rights for more than 350,000 hours of video and audio content, creating a new revenue stream at the intersection of content and AI monetization.
Erick Opeka: This initiative positions Cineverse at the forefront of an emerging opportunity where content owners can license their libraries for AI training, enhancement, and contextualization, and offering a scalable way to capitalize on the evolution of digital media.
Synod verse 360
Erick Opeka: is evolving into a next-generation SSP, or supply-side platform, and we've recently integrated with a major ad-buying platform to improve margins and optimize costs in programmatic advertising.
Erick Opeka: This is unlocking new opportunities to merge our technologies for additional revenue and premium value.
Erick Opeka: A key example is CineCore, a proprietary AI-optimized movie dataset originally built for CineSearch.
Erick Opeka: CineCore enables precise contextual and content-based ad targeting, even in restrictive environments where user data isn't available. Today, advertisers can't target users based on their favorite films or attributes through an SSP, but we're changing that.
Erick Opeka: By leveraging CineCore, we'll be able to reduce ad costs while enabling highly targeted campaigns with deployment plan for upcoming wide releases and making it commercially available to customers soon after that.
Erick Opeka: Meanwhile our growing ad sales business is seeing meaningful results. October was our biggest revenue month to date.
Erick Opeka: and on Cineverse 360, reflecting strong revenue growth driven by direct and programmatic ad sales.
of Robert Eggers Nosferatu.
This campaign not only expanded
Erick Opeka: revenue, but establish a playbook for future brand, support, and immersive experiences.
Thank you. Bye.
Erick Opeka: In the longer term, and for this year, we're focused on developing Endeavor-style partnerships with film studios, where they commit to multiple titles up front in exchange for favorable rates and added value.
Erick Opeka: Under these Endeavor Partnerships, we expect studios to commit to between six to eight wide-release films per partnership.
Erick Opeka: Our direct sales team continues to grow and we're breaking through to new brands. While entertainment remains our lead vertical, we're now securing deals with advertisers in retail, fashion, travel, and packaged goods.
Erick Opeka: At the same time, we're expanding our podcast advertising base beyond horror with new content genres launching this year, including comedy, women's lifestyle and wellness, areas that will be our largest driver of new revenue in 2025.
Erick Opeka: To further drive this growth, we're hiring up a new head of podcast sales to focus on evangelizing the Cineverse Podcast Network to more brands and buying agencies, accelerating revenue growth beyond the triple-digit growth we already have seen this year.
Erick Opeka: Additionally, we're doubling down on entertainment partnerships, actively engaging the studios as I described, to invest in the non-horror side of our business beyond our core genre business.
Erick Opeka: To date, we've had a lot of success on that already. Our advertising customer base has been expanding significantly.
Recent advertisers include Hulu, Sony Pictures
Macy's, Paramount Plus.
Mint Mobile, A24, Quince
and Focus Features.
Erick Opeka: In the coming quarter, we anticipate closing deals with additional studios as well as finance and travel brands.
Erick Opeka: Looking ahead, our focus is clear. We will continue expanding our IP driven theatrical slate, scaling our subscription growth through premium content investment, deepening our direct ad sales relationships, and advancing our AI powered technology initiatives to cement Cineverse as a leader in next-generation media distribution.
Tenoverse is not just another distributor.
Erick Opeka: We are a technology-powered media company with a first-mover advantage that's becoming increasingly difficult to replicate.
Erick Opeka: As we refine our playbook, we're confident that our ability to deliver high-impact, high-margin films, scale our streaming business, and expand our advertising ecosystem will drive long-term value for shareholders.
With that operator, let's open it up for Q&A.
Thank you very much.
Speaker Change: 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. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered.
Speaker Change: First question is from the line of Dan Kernos with Benchmark. Your line is now open.
Dan, please check to see if you're on mute.
Thank you. Thank you.
Hey, sorry, can you guys hear me now?
Yes. We do. Okay, good. All right. Sorry about that.
Speaker Change: spent about a minute talking to myself. Wonderful. Congratulations on the quarter. Fantastic. Obviously, Chris, appreciate the color on Toxic Avenger. Let me just ask you a couple things in general here. One,
Gary Loffredo: and Erick, also the incremental color on the building slate. So first, how do we think about...
Gary Loffredo: number of screens on release here. Obviously, you guys have canal, so there's potentially some global ramifications to this, which you didn't have with T3. So, first question, just size of screens, number of screens.
Gary Loffredo: and is that going to vary by film or are you guys going to look to kind of build a sort of consistent distribution platform by film size and screen release as you guys build out the film library?
Thank you for watching.
Yeah, thanks, Dan. This is Chris.
Chris McGurk: We're looking to follow a release pattern on these films very similar to what we did with Terrifier 3.
Chris McGurk: You know, trying to get it out on 1,500 to 2,500 screens, which we think is the right amount for these very targeted films.
Chris McGurk: You see the big studios and their wide releases sometimes with 3,000, 3,500, 4,000 screens, but they do 90% of their business on 1,500 to 2,500 screens. So we're going to take a much more targeted approach.
you know, on these films.
Chris McGurk: and, you know, targeted an average of about 2,000 screens going forward.
Chris McGurk: You know, the good news is that we've got this huge pool of content that we're looking at right now, and we've been very selective with the choices that we've made. You saw the first three, Toxic Avenger, Silent Night, Deadly Night, and now Wolf Creek Legacy. And we're really looking, as I said,
Chris McGurk: that we can clearly follow the same playbook that we executed on.
Chris McGurk: Terrifier. You know, known IP, successful IP, where we know there's a fan base and a very targeted fan base that we know we can get to. And I think you saw based on what I what I said in my remarks
Chris McGurk: The economics of these movies were able to pick and choose as well, and we've cut some very, very favorable deals.
Toxic Adventure
Chris McGurk: You know, for instance, as a budget that's many times greater than
the budget on Terrafire 3.
Chris McGurk: But our investment level will probably end up being less than when we invested in Charred Fire III.
for acquisition and for marketing costs.
Chris McGurk: and a really good movie, and our upside is a lot greater because basically we bought the distribution rights in perpetuity.
Chris McGurk: and we don't have a big participant where we're sharing the upside economics with. So we think we can do more deals like that going forward and, you know, expect more announcements in that regard soon.
Speaker Change: or is there an opportunity to kind of just in another genre, would you take a shot at something in another genre or would you save that more for just the advertising channel?
I didn't hear the first part of your question.
Speaker Change: Sorry, I asked if you guys would expand into another genre if you think that this is all going to be in horror or would you expand it to another genre or keep that mostly the advertising side if you were going to move out of the horror genre?
Speaker Change: Well, obviously, we've kind of made our bones in the horror genre. So we're getting a lot of, you know, properties coming our way, but we're looking at properties.
in the family space as well.
Comedy.
You know, urban properties.
Speaker Change: where we think we've got, you know, strength from our channel footprint in our podcast footprint to, you know, hyper hypermarket, just as we did in Terrifier three, and where there's a known fan base and known IP. So I'm very hopeful that in the next few months, as we make announcements, you'll see that we're rounding out our portfolio and other genres.
Speaker Change: but with the same kind of really favorable economics that I've been talking about and in areas where we can very closely follow the blueprint for success in terms of marketing that we have with TerraFire.
Thank you.
Speaker Change: Thank you for your question. Next question is from the line of Brian Kinslinger with Alliance Global Partners. You can always open.
Brian Kinslinger: I've got a few questions. What a great quarter and congratulations on your success. You talked about taking on some debt. I assume this is due to the pipeline of opportunities.
Brian Kinslinger: in front of you, given the success of TerriFY that we talked about.
Brian Kinslinger: Can you talk about the ranges of prices for relevant horror content, especially for these films you're going to remake? Can you share maybe the average price you've paid so far, and is the return on invested capital that you're looking at?
that you target.
Yeah, thanks, Brian. This is Chris again.
Brian Kinslinger: I think I mentioned on this call in the past that, you know, our total investment on Terrafire 3 for both acquisition and marketing
was less than $5 million or around $5 million.
Brian Kinslinger: You know, all three of the properties that we're talking about now are below that, and our expectations are going to be below that. And I think, you know, that's the range that we're talking about. And I think...
That creates a really unbelievable positive risk-reward profile for us.
Brian Kinslinger: Your other question was, and I think the pool is big enough now that we're going to be able to fill up a release slate of, you know, 8 to 10 movies on a steady state basis and stick to those economics. We have no desire to stop.
Brian Kinslinger: into the bigger budget film arena. We don't need to, okay? We just have one of the highest return movies in the history of the film business. And we spent less than $5 million and we spent less than a million dollars in marketing, all in, and got 54 million at the box office.
Brian Kinslinger: If we can do, you know, half that or a fraction of that on these other properties, we're going to do really, really well because of the favorable economics that we're looking at here.
Brian Kinslinger: So, I don't know if that answers your question, but we're feeling very good about our space and the kind of results we'll be able to generate with that sort of economics.
Great. I'll add, and then I'll, yeah.
Brian Kinslinger: I was going to say, I'll add, you know, the other side to this, too, is, as you saw with our partnership with Studio Canal,
You know, we'll even bring in partners earlier.
Bye!
Studio Canal effectively, for example, on Silent Deadly Night.
eliminates.
Brian Kinslinger: half of our risk in the project by that partnership, right? So, you know, we're taking this, and like I said earlier on the call, a money ball approach where we're focused on ROI. And while, you know, we hope that some of these break out and we will have the ability to...
Brian Kinslinger: to push them and ride them if they happen to break out to terrifier type levels.
Brian Kinslinger: You know, it happens. Our competitors have these breakouts happen. But I think, you know, our goal is to have these, as Chris described, these that we're, you know, we're going for singles and doubles. We're not swinging for the fences on every movie, hoping to have a terror fire.
Brian Kinslinger: And again, I said this on the last call, maybe I didn't say it.
Brian, because we're releasing movies, it was such an efficient.
Brian Kinslinger: low level of marketing spend and getting the kind of results that we got on Terrafire 2 and Terrafire 3. It creates a much better economic situation for our producer partners, filmmakers who want to come to us, because they don't have the usual, you know, 5 to 20 million dollars of marketing in between them and their participation.
Brian Kinslinger: And so that's been recognized in the business and it's led to, you know, all these opportunities for us.
Brian Kinslinger: coming our way. And, you know, obviously we like that. We also like the idea that we sort of, you know, it helped develop a model that we need to prove the concept going forward, but hopefully it's gonna enable.
Brian Kinslinger: independent filmmakers to get their films released theatrically and get access to more eyeballs. The marketing spin piece has always been, you know, the big bugaboo in the independent film releasing business, and hopefully we've cracked the code here.
Speaker Change: Thank you. I just wanted to touch on two other pieces of your business.
Brian Kinslinger: I wasn't quite sure on Cinesearch how that's progressing in terms of monetization. And then on MaxPoint, you announced two deals.
Brian Kinslinger: and I guess can you help frame for what the revenue opportunity for customers like these are? Can you give a range of opportunity?
Thank you for watching. We'll see you next time.
Brian Kinslinger: Sure, sure. Well, I can tell you, so first I'll tackle Cinesearch, you know, we're, you know, when we have revealed that product to the market, when we talk about Cinesearch, the consumer-facing piece that's in demo, anybody can test it out, kick the tires.
That's, we're not...
Brian Kinslinger: We're not selling that commercial version of the product. What we are selling is the back-end and capabilities.
that allow OEMs and others to...
Brian Kinslinger: effectively vastly improve their search results and capabilities. So that piece we're in active conversations with a lot of parties today.
Brian Kinslinger: We're in development of the second version of the technology that powers that. You know, we expect it to be completed within the next quarter or so. So we think...
you know, we are
Brian Kinslinger: We're targeting a couple different segments. The SMB segment is is a clear segment for us.
as well as we are also targeting enterprise.
Brian Kinslinger: So the average customer value is going to vary depending on the size of customer we target. We've been, you know, talking internally about SMB customers being...
you know, on the lower six figures annual.
Brian Kinslinger: sort of target range, and enterprise customers can be many, many multiples above that, depending on the implementation.
Brian Kinslinger: The enterprise deals tend to have a more custom or specialized implementation, so I would expect those to be significantly higher than the SMB side.
That's super helpful. They could range to millions of dollars.
I looked back and you have been discussing
increased investments to drive subscriber growth.
Brian Kinslinger: and I know podcasting as well. Those are two important pieces to your business. Now I see the trend, the number of people, and I'm not sure even downloads, but where are we in terms of revenue contribution from those as we evaluate the better inventory fill rates? I haven't seen that in the last couple of quarters.
Speaker Change: Are you talking about the podcast business or are you talking about the subscription business?
what the revenue contribution is in the podcasting business.
Speaker Change: I'm not sure if I heard how where downloads or viewership are And maybe then you can discuss how inventory fill rates are improving to drive stronger monetization of your podcasting
Yeah sure, so on the podcasting business
Speaker Change: We, you know, the viewership numbers bounce around month to month, but, you know, the high water mark.
in the last quarter was about 15 million.
Speaker Change: 15 million downloads, so pretty significant audience size and up from where it was trending the prior quarter. I think we were averaging 12 and a half or so.
Thank you.
Speaker Change: On the fill rates, you know, there's two pieces to that. There's the programmatic side, you know, I think
Speaker Change: We're still in the 50-ish percent to 55% fill rate on that, on programmatic.
Thanks very much.
Speaker Change: We've been bundling our campaign, our inventory into 360 campaigns. So our fill rates have actually gone up substantially as podcasts.
Speaker Change: have been a bigger part of the sales mix for our sales team. So, you know, for example, when we do a movie deal for a studio movie, we're bundling, you know, typically the engagement is
Speaker Change: on the bigger engagements, we're producing some kind of live event or premiere.
Thank you.
bundling web, social, CTV, and podcast into one campaign. So...
The podcast business has been lifted by that.
Speaker Change: inclusion as part of a bundle, as part of a whole media mix. Our advertisers love it. It's highly differentiated from pure play CTV, which is in, I'm sure you know, is
Speaker Change: in wide abundance and high availability right now and not very differentiated. So this is a very differentiated approach that's driving up CPMs just simply because we're bundling it into a high teens level plus CPM to low 20 CPM when we do those deals.
Speaker Change: We expect, as we bring on direct podcast sellers, which we've expanded that team pretty dramatically so far,
that the podcast visits will.
Less and less of it will be programmatic over time.
Speaker Change: You know, my target for the next 18 to 24 months is to push that to well below, you know, 50%. And I think we're already showing a path to that.
Speaker Change: Great, and then just quickly on subscriptions, can you give us a sense for...
Speaker Change: revenue contribution. I think last year you were, I'd have to look at my model here, about three and a half ish per quarter in revenue. Are we much higher than today? Are we a similar path as you? You've highlighted the intent to increase your investments and drive that growth.
Speaker Change: So, you know, you can kind of back into that number, but that's.
That's the focus.
Speaker Change: for this year is really to make that a growth catalyst. We had spent, we'd put most of our...
Speaker Change: capital towards, you know, scaling the theatrical, the emerging theatrical business and some other initiatives, but we're, we really see the subscription business as a, you know, a very good investment and a deployment of capital for this year given some of the market dynamics we're seeing.
Great, thank you guys.
Thank you, Brian.
Speaker Change: Thank you for your question. There are no further questions remaining, so I'll pass the conference back to the management team for any closing remarks.
Chris McGurk: Thank you. This is Chris. So thank you all for joining us today. And as always, please feel very free to reach out to Julie Milstead with any additional questions you might have. And we look forward to speaking to you all again on our next quarterly call in June. Thank you.
Speaker Change: Thank you for watching. Please subscribe to my channel. And I'll see you in the next video.
Speaker Change: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.