Q3 2025 Alliance Entertainment Holding Corp Earnings Call
Yeah.
[music].
Speaker Change: Greetings and welcome to the Alliance Entertainment fiscal 'twenty 'twenty, five third quarter financial results Conference call.
Speaker Change: At this time, all participants are in listen only mode.
Speaker Change: A question and answer session will follow the formal presentation.
Speaker Change: As a reminder, this conference is being recorded I will now.
Speaker Change: I'll pass the call over to Paul Koonce member of Nine's Entertainments IR team at Red Chip Paul. Please go ahead Sir.
Speaker Change: Before we begin the formal presentation I would like to remind everyone that statements made on the call and webcast may include predictions estimates and other information that might be considered forward looking and while these forward looking statements represent the company's current judgment on what the future holds they are subject to risks and uncertainties that could cause actual results to differ materially you are cautioned not to place undue reliance.
Speaker Change: These forward looking statements, which reflect the company's opinions only as of the date of this presentation. Please keep in mind that the company is not obligating itself to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events throughout today's discussion management will attempt to present, some important factors relating to the business that and I guess that predictions should also review the company's form 10.
Speaker Change: For a more complete discussion of these factors and other risks, particularly under the heading risk factors. During this conference call management will discuss non-GAAP financial measures, including a discussion of adjusted EBIT management believes non-GAAP disclosures enable investors to better understand alliance entertainments core operating performance. Please refer to the investor presentation for a reconciliation of each non-GAAP measure.
Speaker Change: The most directly comparable GAAP financial measure.
Speaker Change: Release detailing these results crossed the wire. This afternoon at 401 P. M. Eastern time and is available in the Investor Relations section of Alliance Entertainments website at H E. N T Dot com your host today, Jeff Walker, Chief Executive Officer, and Chief Financial Officer, and demanding JAKO, Chief Accounting Officer will present, the results of operations for the fiscal 2025 third quarter.
Speaker Change: <unk> ended March 31, 2025 at this time I will turn the call over to alliance entertainments, CEO and CFO, Jeff Walker.
Speaker Change: Thank you Paul and good afternoon, everyone I'm pleased to welcome you to todays call.
Speaker Change: Alliance Entertainment is a premier distributor and fulfillment partner at the center of the growing collectibles ecosystem.
Speaker Change: With over 325000 unique skus and fulfillment relationships across 35000 retail storefronts and 200 online platforms.
Speaker Change: Alliance connect fans with entertainment Collectables They love.
Speaker Change: Spanning vinyl Dvds, and Blu rays arcade system license toys tabletop games and more.
Speaker Change: Our business caters to collectors and physical media enthusiasts, a passionate and growing base of consumers who value of tangible high quality products with emotional and cultural significance for retailers, we make it simple to serve this demand both online and in.
Speaker Change: Store <unk>.
Speaker Change: Importantly, our growth strategy has proven over the past two decades, we have completed 13 strategic acquisitions that have enabled us to expand into high growth categories and enhance our position as a trusted efficient partner for the world's top entertainment brands.
Speaker Change: Ultimately our competitive advantage comes down to three things.
Speaker Change: First our exclusive products and licensing agreements.
Speaker Change: I have a differentiated offering and the trailing 12 months.
Speaker Change: Our exclusive agreements accounted for nearly a quarter of our overall revenue and our latest deal with Paramount, which one.
Speaker Change: Into effect on January one has further accelerated growth in this key segment.
Speaker Change: Second our reach across both B to B and direct to consumer channels.
Speaker Change: Laos us to serve the full spectrum of the market from global mass retailers, the niche fan communities with scale speed and precision.
Speaker Change: And third with powerful distribution infrastructure, a capital light operating model and expanding access to thought after IP. We are strategically positioned to gain further market share in the global collectibles in premium home entertainment market.
Speaker Change: We've aligned our strategy around where the market is and where it's heading and that clarity is driving stronger margins improved earnings and long term value creation.
Speaker Change: This slide offers a quick snapshot of our performance.
Speaker Change: I will walk through the full Q3 and nine month financial later in the call, but I want to briefly highlight a few key metrics that reflect the strength of our business model and the progress we're making.
Speaker Change: Revenue over the trailing 12 months was relatively consistent with recent years, but with a significantly improved profitability.
Speaker Change: Adjusted EBITDA rose to $26 4 million with margins expanding to 2.5% up from 2.2% in fiscal 2020 four.
Speaker Change: Earnings per share also jumped to 24 cents nearly triple the nine cents, we delivered last year.
Speaker Change: These gains reflect disciplined execution improved cost structure and stronger operating leverage across our platforms.
Speaker Change: Strong working capital management improved margin structure and better alignment between inventory and demand have been positioned us to generate more EBITDA dollars from every sales dollar which is especially important in today's environment.
Speaker Change: We have also made important progress on our balance sheet over the past year, we reduced our revolver debt improved our liquidity position and strengthened inventory efficiency, all while continuing to grow our SKU count and support new product categories.
Speaker Change: That balance expanding our portfolio, while improving capital discipline has been a key area of focus across the organization.
Speaker Change: Looking ahead, our capital position and operational flexibility gives us plenty of room to pursue new lives something opportunities, particularly for our major movie studios looking to monetize physical media and more efficient ways alliance as well because the position to be.
Speaker Change: That solution.
Speaker Change: The financial progress, we're making is rooted in a clear market identity alliances like collectibles company.
Speaker Change: For today's fans and tomorrow's demand pop.
Speaker Change: Pop culture is more than entertainment, it's community, that's alger storytelling and self expression.
Speaker Change: Collectibles are how fans participate in that culture.
Speaker Change: They do not consume.
Speaker Change: Consume content they own a piece of it.
Speaker Change: Whether it's vinyl records box ads games, our character figure in physical collectibles are gaining traction with both mainstream and niche audiences.
Speaker Change: And alliance sits at the center of that movement.
Speaker Change: Equally positioned with the products relationships scale and fulfillment capabilities to drive growth.
Speaker Change: In this dynamic space.
Speaker Change: We've been investing behind that conviction, expanding our licensing partnerships acquiring emerging brands like handmade by robots and winning new distribution rights with top franchises like Paramount.
Speaker Change: With our infrastructure and its pretty experience and exclusive access to iconic IP.
Speaker Change: We are not just following the collectibles trend we are leaving it and we believe the best is yet to come.
Speaker Change: With that I'll now turn it over to Amanda to walk through our third quarter and year to date financial results in more detail.
Amanda: Thanks, Jeff.
Speaker Change: Let's begin with our third quarter results.
Speaker Change: For the quarter ended March 31st 2025, we reported net revenue of $213 million.
Speaker Change: A slight increase from $211 2 million in the third quarter of fiscal year 'twenty 'twenty four.
Speaker Change: Gross profit rose three 7% year over year to $29 $1 million.
Speaker Change: With gross margin improving to 13, 6% up from 13, 2% in the prior year period.
Speaker Change: This margin expansion reflects a more favorable product mix and continued progress on our operational efficiency initiatives.
Speaker Change: We also achieved a meaningful turnaround in profitability.
Speaker Change: Net income was $1 $9 million or four cents per share compared to net loss of $3 4 million or seven cents per share in Q3 of last year.
Speaker Change: Adjusted EBITDA grew 66% year over year, just ballpark $9 million.
Speaker Change: From $2 9 million.
Speaker Change: This improvement was driven by margin gains and disciplined execution across our operation.
Speaker Change: At the operational level, we're continuing to see strong returns from our automation and warehouse consolidation efforts.
Speaker Change: Which helped drive a 10 plus percent year over year reduction in distribution and fulfillment costs.
Speaker Change: Overall, our third quarter reflects solid execution.
Cost discipline and growing profitability, even as topline revenue remained relatively flat.
Speaker Change: Now turning to the nine month period ended March 31 2025.
Speaker Change: We generated $835 $7 million in net revenue compared to $863 5 million.
Speaker Change: During the same period last year.
Speaker Change: This year over year decline, primarily reflects timing of shipments and product mix.
Speaker Change: I shall be offset by strong performance in key high margin category.
Speaker Change: Gross profit totaled $96.9 million.
Speaker Change: First is 102 million last year.
Speaker Change: With gross margin holding steady at 11, 6% compared to 11, 8% in the prior year.
Speaker Change: Despite a revenue decline we delivered strong earnings growth.
Speaker Change: Net income increased to $9 $3 million or 18 cents per diluted share up sharply from $2 1 million or <unk>.
Speaker Change: Our cents per share last year that is a 349% improvement.
Speaker Change: Adjusted EBITDA rose nearly 10% to $24.4 million.
Speaker Change: Compared to 22.2 million underscoring the leverage we've gained through cost controls autonation and a more profitable product mix.
Speaker Change: We also made a notable improvement in our working capital.
Speaker Change: Inventory balance declined to $93 2 million.
Speaker Change: Down from 108 million a year ago.
Speaker Change: Accounts payable balance increased to $139 6 million from 132.5 million health.
Speaker Change: Helping to support liquidity, while maintaining strong supplier relationships.
Speaker Change: Our ability to grow earnings reduced debt.
Speaker Change: Optimize inventory and preserve gross margin.
Speaker Change: Are any flat revenue environment.
Speaker Change: I liked the resurgence of our business model and the strength of our execution.
Jeff Walker: With that I'll turn it back to Jeff for closing remarks.
Jeff Walker: Thanks Amanda.
Speaker Change: One of the most important drivers of our performance and our differentiation in the market is our exclusive distribution and licensing strategy.
Speaker Change: These agreements give us access to unique in demand products that can't be sourced elsewhere, whether its a limited there's some box sets.
Speaker Change: Lucid label content or collectible formats for major entertainment brands.
Speaker Change: Over the trailing 12 months, our exclusive partnerships accounted for approximately 250 million in revenue or nearly a quarter of our total sales.
Speaker Change: These deals not only strengthen our supplier relationships.
Speaker Change: So create a competitive moat around our catalog and ria or four and reinforce our role as a preferred partner for retailers.
Speaker Change: A great example is our new home Entertainment exclusive license agreement with Paramount Pictures, which went into effect on January 1st 2025 under this partnership alliances now the exclusive U S and Canadian distributor.
Speaker Change: Paramount's full physical media catalog, including DVD, Blu ray Ultra HD and still book titles.
Speaker Change: We're already seeing a meaningful contribution from this relationship and we believe there's still significant room for growth as we expand placement and assortment across our retail network.
Speaker Change: We also continue to serve as the exclusive distributor for a broad range of partners and music and film, including over 150 movie Studios and music labels.
Speaker Change: Include Mark key brands as well as rising independence, giving us a diverse and defensible portfolio of content across formats.
Speaker Change: A recent and exciting addition to our portfolio is handmade by robots, which we acquired in December.
Speaker Change: This was the brand's first full quarter as part of alliance and we've already made strong progress expanding its retail distribution across our network.
Speaker Change: Looking ahead, we're preparing for significant new releases in the second half of 'twenty and twenty-five featuring iconic franchises such as D. C Comics, Harry Potter Jurassic World Peanuts, Disney Sonic the Hedgehog, Hello, Kitty Spongebob.
Speaker Change: Square pounds and Star Trek.
Speaker Change: These properties are beloved by fans and collectors around the world and we believe handmade by robots is well positioned to become a breakout brand and the license collectable space.
Speaker Change: Across film music and collectibles exclusivity is what sets alliance apart and it's a win for all parties retailers gain access to unique inventory content owners tap into our scale and fulfillment expertise and alliance deepens its leadership across the physical media.
Speaker Change: And collectibles market.
Speaker Change: In addition to exclusive content and our direct to consumer fulfillment model is another key growth and margin driver for alliance.
Speaker Change: This model allows our retail partners to offer a vastly expanded online assortment without holding physical inventory, while our land handles the fulfillment directly to the end consumer.
Speaker Change: We ship these orders on behalf of major retailers under their brand using our infrastructure, which means we're delivering value to both our partners and their customers.
Speaker Change: [noise] approach benefits, everyone retailers reduce inventory risk and expand their digital shelf consumers get fast reliable delivery and alliance benefits from higher margin revenue with greater fulfillment control and operational efficiency.
Speaker Change: During the third quarter direct to consumer fulfillment accounted for an estimated 40% of our gross revenue up from 33% in the same period last year.
Speaker Change: That expansion reflects both growing retailer adoption and increased consumer demand for collectible.
Speaker Change: Sleep products that may not be widely stocked in store.
Speaker Change: What's especially important is that this is a scalable and capital light channel, we're able to grow SKU Count survey long tail of demand and drive margin expansion all without significant working capital investment.
Speaker Change: As the retail landscape continues to shift towards Omnichannel and digital first strategies we.
Speaker Change: We believe our role as a trusted direct to consumer fulfillment partner will only grow stronger and we're continuing to invest in our system automation and relationships that make this model even more efficient.
Speaker Change: Another critical piece of our margin improvement story is the investment we've made and continue to make in automation and warehouse optimization.
Speaker Change: We've implemented advanced automation systems that are delivering real measurable improvements in productivity and cost structure.
Speaker Change: That includes auto store, our high speed automated storage and retrieval system installed in January of 'twenty, and 'twenty, three and our separate Zillow, Kentucky facility.
Speaker Change: It allows us to process more than 2000 lines per hour using a leaner workforce, while also increasing storage density and improving throughput.
Speaker Change: In April of 'twenty 'twenty four we added the first sort X system from Opec's wage has further streamline our fulfillment operations, especially for larger nonstandard items like electronics and collectibles.
Speaker Change: The system has already delivered over 500000 in annualized savings with another 400000 of expected future reductions as we continue to scale it for us.
Speaker Change: Together these improvements have allowed us to optimize our facility footprint, including the closure of 162000 square foot warehouse in Minnesota last may helping to reduce overhead and improve network efficiency.
Speaker Change: These are not one time gains there are structural improvements that enable us to handle higher volume with greater speed accuracy and cost control.
Speaker Change: In fact, the automated Sun was a key contributor to the 10.2% year over year reduction in distribution and fulfillment costs that Amanda referenced earlier.
Speaker Change: And just as important these upgrades to enhance our ability to serve the growing demand in categories like collectibles electronics on direct to consumer shipments all of which require precision speed and scale.
Speaker Change: As we look ahead, we are focused on continuing to leverage automation not just to cut costs, but to unlock smarter growth better service levels and stronger margins across the business.
Speaker Change: To wrap things up I want to briefly touch on one of the most important drivers of long term value for alliance our M&A strategy.
Speaker Change: We have had a strong and proven track record in this area, having completed 13 significant acquisitions to date, each one align with our goal of expanding content capabilities and margin.
Speaker Change: Our approach is highly targeted we'd love for brands with passionate fan following access to exclusive IP or strategic value across our retail on foot settlement footprints.
Speaker Change: The acquisition of handmade by robots is a great example, a differentiated collectibles bran that enhances our licensing pipeline and our position in a high growth category.
Speaker Change: It's also a template for how we plan to continue building value by identifying assets that align with our core and scaling them through our platform.
Speaker Change: Importantly, we're disciplined we evaluate every opportunity through the lens of financial accretion operational synergy and long term strategic fit.
Speaker Change: And when you focus on capital light growth.
Speaker Change: <unk>, our infrastructure and relationships to drive returns.
Speaker Change: We continue to maintain a robust pipeline of opportunities including proprietary brands.
Licensing partnerships and tuck in distribution deals that we believe can accelerate growth and deepen our competitive advantage over time.
Speaker Change: To close I want to thank our employees customers and partners for their ongoing support as we execute against our strategy. We're focused on building a business that is scaled profitable and uniquely positioned at the intersection of entertainment Collectables and com.
Speaker Change: Yes, we are.
Speaker Change: Proud of the progress we've made and we're excited about where we're going next.
Speaker Change: With that I'd now like to hand, the call back over to the operator to begin our question and answer session.
Speaker Change: Operator.
Speaker Change: Thank you Sir.
Speaker Change: Ladies and gentlemen at this time, we will be conducting a question and answer session.
Speaker Change: He would like to ask a question. Please press Star then one on your telephone keypad.
Speaker Change: Formation tone will indicate your line is in the question queue.
Speaker Change: You May press Star and then two if you would like to remove your question from the Q4.
Speaker Change: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Again, if you would like to ask a question. Please press star and then one no.
Speaker Change: We'll pause a moment to see if we have any questions on the conference.
Speaker Change: At this stage it is seems to be no fuss no questions on the conference call.
Speaker Change: Or what's the pool for webcast questions. Please go ahead Sir.
Speaker Change: Thank you and we do have some webcast questions. The first question, we had because come in do you have a good relationship with Nintendo with the arrival of the upcoming switch two.
Uh Huh, yes.
John Walker: Yes, we do I. This is John Walker answering them.
John Walker: Yes, we do we're actually very excited with the upcoming Nintendo really is on the hardware and the software.
John Walker: Ah, Yes, we have a pretty significant relationship with them and significant customers on that hardware as well. So we're pretty happy with the allocation that we're getting from Nintendo.
John Walker: And we're also working on some special unique projects with retailers and Nintendo with us being.
John Walker: Being a distributor in the middle of that so.
John Walker: It's it's it's definitely going to help our business here.
John Walker: The current quarter, and then going into all the way through 2020 five is that the council of.
John Walker: Sandoz, New console is definitely going to help help sales throughout this year.
John Walker: Great. Thank you and our next question.
Speaker Change: How is handmade by robot Shelly can you provide an update.
Speaker Change: Yeah.
Speaker Change: As some of you probably know I I love those brands are we've got some great characters coming and it was as we acquired it from from BBVA and we have.
Speaker Change: Been able to transition it over to the alliance platform and we've got so many great new renderings of characters that are coming out here in the second half of 2020 five and we're starting to plan into 2020 six now with new characters and I think they're going to start to see some.
Speaker Change: So some significant a level characters and they're in the market here over the next few months and.
Speaker Change: We're super excited with it.
Speaker Change: Is following our plans and and so forth. So it's it's a.
Speaker Change: It's a brand that we're definitely got a lot of focus and attention on right now.
Speaker Change: Great. Thank you and our next question what do you attribute the decline in gaming rapidly too.
Speaker Change: Well you.
Speaker Change: You know gaming or Oh is that there's a couple of parts in the gaming side I would say hardware are where we're heavy Microsoft distributor and we've had a in.
Speaker Change: In fiscal 2020 five we definitely had.
Speaker Change: Uh huh.
Speaker Change: More of a limited allocation I think Microsoft was pretty tight overall on allocation of hardware, especially through Q4, so that did impact us a you know and we have pretty high comp levels coming out of Q4 of 'twenty four.
Speaker Change: Microsoft kind of leaned in with heavy promotions and in a lot of hardware into the marketplace and it seems that some in 'twenty five so our comps where we're definitely tough for that and then you know we're not playing.
Speaker Change: We've had some good progress with.
Speaker Change: Leases are on the software side you know we were.
Speaker Change: We're anticipating seeing a grand theft auto later this year, but it looks like that's pushed to next may.
Speaker Change: Release will be an enormous released for the gaming industry next year. This time.
Speaker Change: And so.
Speaker Change: That's I and I think you know you get the cycles on the hardware. So you know Nintendo is definitely driving hardware right now as well as software sales. So I think with the new Nintendo hardware, we're gonna stay up a pretty strong next 12 months with but then the game.
Speaker Change: Category.
Speaker Change: Thank you, Jeff and our next question you had 2.5% EBITDA margin on a trailing 12 month basis up from 2.2% do you have a long term target margin range for the business and what would need to happen structurally to reach 3% or more.
Speaker Change: Well.
Speaker Change: We are definitely improving our EBITDA margin I think we're also improving our gross margin, while we're able to control our cost, which again I would say, it's a combination of those two improving gross margin and reducing operating expenses at the same time I think we're definitely on track to exceed three <unk>.
Speaker Change: And fiscal 'twenty 'twenty fixed.
Speaker Change: Yeah, where we're focused on getting ourselves back towards closer to that 5% EBITDA margin.
Speaker Change: But obviously, there's work to do to get there.
But we should see that continue improvement on on our EBITDA margin and our net profit margin as well going forward into 2020 six.
Speaker Change: Great. Thank you and our next question what type of import tariffs are having on our lines of business.
Speaker Change: But yeah, that's the debate.
Speaker Change: The Big question. So for US one thing that was a very good thing when those came into place is that music and video are we're not seeing any tariffs on that product. So we have as you see in our financials, we have pretty significant music and video.
Speaker Change: And so that part was not affected at all.
Speaker Change: It was which was really great.
Speaker Change: On the gaming side.
We're not seeing any changes in the software.
Speaker Change: Microsoft did announce a price increase I don't know if they're going to change that now that the Oh, China terrorists came down a little bit.
Speaker Change: But we don't really see that impact in our sales too much on on the gaming side.
Speaker Change: With our handmade by robot business.
Speaker Change: When the tariffs were sitting at 145% that that is manufactured in China and that business was I'm complaining hold during that last month it that way he had those Hyatt Paris.
Speaker Change: We've we're all back full bore right now 100% back on on our plan, we really didn't lose too much time, we didnt ship product during that high tariff. So we got some stuff moving on it's way over now and we kept production going.
Speaker Change: Now with 30% tariff on the handmade.
Speaker Change: We are able to.
Speaker Change: Absorb that within our margin and we're holding our retail pricing the same right now on an handmade.
Speaker Change: And we'll revisit that later as we get into 2020 six since we need to make a small adjustment.
It would be a very small adjustment if we did that with respect to handmade.
We do have our cake business. That's a you know has been pretty significant.
Speaker Change: And we haven't had any impact to date as we have products here that we've been selling through and so forth. So we haven't lost any sales today at and now that we have.
Speaker Change: Clarity on the 30% tariff.
Speaker Change: There will probably likely you have to be a.
Speaker Change: They are a small price increase on those are coated products and we don't really expect a price increase to dramatically impact the sales of the arcades that we sell.
Speaker Change: And one last thing on that on the positive side, our export department.
Speaker Change: As you know.
Speaker Change: I'm really happy with.
Speaker Change: The potential of some other countries, reducing tariffs on U S imports, which ultimately can help our export sales also helps the consumer in those countries with a reduced price on on the music and video and collectibles.
Speaker Change: We fell.
Speaker Change: For international customers and so when you sit there.
Speaker Change: Been able to quantify that benefit yet, but that aspect of improving the export ban the American export business worldwide.
Speaker Change: Should show up as a small benefit for us and our export department.
Speaker Change: Great. Thank you.
Speaker Change: And our next question you've made progress on working capital and reduce debt, but how do you see your financial flexibility evolving over the next few quarters, especially if the right acquisition opportunity emerges.
Speaker Change: Well, we definitely have made a lot of improvements in working capital and that reduction.
Speaker Change: A lot of that working capital is from inventory levels and so forth.
Speaker Change: Right now, where we have a little bit further we can go with inventory levels, but not too much farther as.
Speaker Change: You know, we we need inventory to be able us to be able to sell in and create sales. So.
Speaker Change: We've got our inventory if you will.
Speaker Change: The inventory turns per year, we've got a pretty pretty quick inventory turns per year right now so.
Speaker Change: So we want to say too much more of a reduction in inventory over the next 12 months.
Speaker Change: And then as our debt continues to go down.
Speaker Change: From from profitability in <unk> and a net income that were generating that continues to help help reduce our our debt there.
Speaker Change: As far as acquisitions, we do have pretty significant availability on our line of credit right now and obviously with.
Speaker Change: With our good profitability and so forth there there is our ability to help to finance any.
Speaker Change: The acquisition opportunity that we see and we're constantly in a lot of conversations on at acquisitions and as I mentioned in the.
Speaker Change: Presentation there Lee.
Speaker Change: We're we're very picky on the acquisitions and we will.
Speaker Change: All the different aspects named the lineup so or.
Speaker Change: We followed that in and I think that's important we got to make sure. We we always do get acquisitions here.
Speaker Change: Thank you and another question was direct to consumer fulfillment continues to grow can you talk about what's driving increased adoption from retail partners and whether youre seeing momentum with larger chain or niche players.
Speaker Change: Well a direct to consumer is a core part of our business and.
Speaker Change: And it's really based on the aspect of the selection of product that we have in house ready to go for the websites for retailers digital platforms and you know they they liked that they liked that setup that we have whether it's music video.
Speaker Change: Gaming collectibles arcades.
Speaker Change: The ability for retailers to not hold inventory how that product listed on the sides and take orders send us the order within the next 24 hours that products going out the door to their customer that that's a home run win for all of our E com.
Speaker Change: <unk> partners as far as seeing the sales increasing we have we have pretty sophisticated team of people here at alliance working on with the retailers on their websites to make sure products presented properly products up there on time.
Speaker Change: All sorts of aspects to help help the retailers sell more product on their e-commerce sites and.
Speaker Change: There, there's a lot of work to do in that area and but it it it produces results when landing pages and searches and things like that.
Speaker Change: Enhanced and improved on retail sites for partners.
Speaker Change: And I also want to mention you know, we do a significant amount of e-commerce fulfillment for Walmart best buy.
Speaker Change: Target calls way fair.
Speaker Change: Barnes and noble, even Costco, where do quite a bit fulfillment for them all of those big retailers as we get new products into new lines of products.
Speaker Change: We can get those up onto their retail websites and so forth and it just becomes incremental sales for us.
Speaker Change: And another area that we've been leaning into and had some really great success on our ecommerce site as with our retail division.
Speaker Change: We we have a mail order catalogs and websites, but we've had really good success in this last year with chemo and Shane and and even Instagram sales, so going more towards the social side and these new sales platforms are generating us.
Speaker Change: Pretty significant sales increases and those platforms are the same as all other web platforms, they're leaning on the product that we have in our warehouse and our quick ability to ship out to their consumers. So we're continuing to expand our customer base on until you can see.
Speaker Change: Yeah.
Speaker Change: Thank you and one more question is like can you tell me more about the Paramount exclusive license agreement and what it means for alliance.
Speaker Change: Yeah.
Speaker Change: I'm Super happy with our relationship with Paramount I personally spent a lot of time last year working on this with Paramount and coming through with a great solution that works for both them and alliance and.
Speaker Change: And when it's time for Paramount to move towards a license agreement.
Speaker Change: On all of their D V D a move.
Speaker Change: Their business and have a licensing model and so just like a company like Paramount license by some fans for collectibles and had some T shirts and merchandise and all of those different things that they do on their on their properties and their you know their I P O.
Speaker Change: It was time for them to move.
Speaker Change: That same that same model for D V D and Oh, it's a win for Paramount that freed up are they no longer hold inventory I D V D. They no longer have to be the seller of record too.
Speaker Change: It's a big retailers.
Speaker Change: And so we took that over January 1st and went live with that we did bring over a team of people primarily in sales and operations from Paramount.
To help lead that up and.
Speaker Change: And then for Alliance, where we're now responsible for.
Speaker Change: And marketing and we are working with.
Speaker Change: Third party company that manufacturers all the the Dvds for us.
Speaker Change: And.
Speaker Change: So where that where the seller of record of that too.
Speaker Change: It's a walmart to their stores to Amazon and we do all of the sales are of that across all channels, including Barnes a novel stores Dot Com Walmart Dot com target dotcom anybody who is purchasing now are paramount.
Speaker Change: D is is oh buying that through alliance and Paramount has a fantastic catalog you know, we all know Forrest gump in top gun, and Titanic and mission impossible and all the the catalog ones that they have as well as this first quarter and end of this.
Speaker Change: First half of this year, we we did the release of Gladiator too we did sonic three already this year, we've got a new product for Yellowstone that's going out later this month here in may with pretty significant D V D.
Speaker Change: And I want to say the last part on this is it it's really a good move to really extend the life of D V D and the physical format. It.
Speaker Change: At the end of the day, it's becoming less.
Speaker Change: Core of our business too.
Speaker Change: He is overall and for alliance and retailers and consumers.
Speaker Change: Want to collect their favorite movie on a physical format and not just a digital version watching it on a you know.
Speaker Change: On T V.
Speaker Change: We're going to continue to extend the life and the Collectability of physical D V D going forward and it's it's a big win.
Speaker Change: Her Paramount and it's a big win for alliance and at the end of the day, we we do the manufacturing of the product we pay for the product manufacturing.
Speaker Change: And then we pay a royalty agreement so we pay a royalty on a quarterly basis to Paramount for the sales that we do so that's a huge win for alliance that's a huge win for Paramount.
Speaker Change: And we're super excited.
Speaker Change: As you know we have a very broad range of customers and a lot of different sales channels and we're really.
Speaker Change: Motivated to expand where we have D V D available different places where people can buy their favorite DVD or a collectible.
Speaker Change: K are still book version of that D V D. So.
Speaker Change: It's going to contribute some significant.
Speaker Change: Revenue and earnings for Alliance.
Speaker Change: Going forward here and they will make a big impact in our fiscal 2020 six numbers as well.
Speaker Change: Thanks, you for one more question did come in well go into that one.
Speaker Change: Did any specific titles have an outsized impact on the surge in EV sales this quarter.
Speaker Change: Well overall all of the Paramount business created a surge and a movie fails and we did have significant like good sales with.
Speaker Change: I'm glad you are too.
Speaker Change: And Sonic three.
In the quarter.
Speaker Change: But it's it's pretty it's pretty consistent I think there's you know right now in this quarter, we gotta Yellowstone one that's a pretty significant one so.
Speaker Change: I think you know there's really good consistent catalogue business with respect to Paramount There and then you know there's there's kind of consistently a couple of key new releases on a quarterly basis. So I don't think that's.
Speaker Change: Just some anomaly here for this particular quarter.
John Walker: Great. Thank you, Jeff and that was the last question that we had come in any closing remarks, you'd like to leave the audience.
Speaker Change: Well, we're we're super excited with where we're going right now we got some good growth in our profitability and our.
Speaker Change: We've got some great new initiatives, we're focused on here for fiscal 2020 six and.
Speaker Change: I think it's gonna be a great year in 2000 and fix for US that's what that's what we're focused on and we're coming in with a.
Speaker Change: You know, finishing up here, our fourth fiscal quarter or halfway through it right now and we're looking at a pretty robust 26 for us live.
Speaker Change: With these new aspects that we've been talking about on this call.
Speaker Change: And that's it.
Speaker Change: Thank you, Sir ladies and gentlemen that then concludes today's conference. Thank you for joining US you may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: Mhm.
Speaker Change: Yes.