Q4 2025 Alliance Entertainment Holding Corp Earnings Call

Operator: Ladies and gentlemen, thank you for your patience. We will begin in a few minutes. Again, we thank you for your patience. We'll begin in a few minutes. Thank you.

Ladies and gentlemen, thank you for your patience. We will be getting a few minutes again. We thank you for your patience. We'll begin in a few minutes. Thank you.

Operator: Greetings and welcome to Alliance Entertainment Holding Corp's fourth quarter and fiscal year 2025 financial results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I will now pass the call over to Paul Kuntz, a member of Alliance Entertainment Holding Corp's IR team at Red Chip. Paul?

Greetings and welcome to Alliance entertainment's fourth quarter and fiscal year 2025 Financial results conference call at this time, all participants are in a listen-only mode. A question and answer session will follow the form of presentation. As a reminder, this conference is being recorded, I will now pass the call over to Paul couns a member of Alliance and entertainment IR team at Red chip. Paul

Paul Kuntz: Thank you. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking. 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 on 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 may affect predictions.

Thank you. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking. 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.

Paul Kuntz: You should also review the company's Form 10-K 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 EBITDA. Management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment Holding Corp's core operating performance. Please refer to the investor presentation for reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. A press release detailing these results crossed the wire this afternoon at 4:01 P.M. Eastern Time and is available in the Investor Relations section of Alliance Entertainment Holding Corp's website at AENT.com. Your host today, Jeff Walker, Chief Executive Officer, and Amanda Gnecco, Chief Financial Officer, will present the results of operations for the fourth quarter and fiscal year 2025 ended June 30, 2025.

You are cautious not to place on the Reliance on these forward-looking statements, which reflect the company's opinions only as the date of this presentation. Please keep in mind that the company is not obligating itself to revise. Your publicly released, 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 may affect predictions. You should also review the company's form, 10K 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 evidence management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment's score operating performance.

Please refer to the investor presentation for reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure, in a press release dated detailing these results. Cross the wire this afternoon at 4:01 PM Eastern Time, and is available in the Investor Relations section of Alliance Entertainment's website at aent.com.

Paul Kuntz: At this time, I will turn the call over to Alliance Entertainment Holding Corp's CEO, Jeff Walker.

Your host today. Jeff Walker, chief executive officer and demanded. Echo, Chief Financial Officer will present the results of operations for the fourth quarter and fiscal year 2025 and a June 30th 2025. At this time, I will turn the call over to Alliance entertainment, CEO, Jeff Walker.

Jeff Walker: Thank you, Paul, and good afternoon, everyone. I'm pleased to welcome you to today's call. Alliance Entertainment Holding Corp is a premier distributor and fulfillment partner at the center of the growing collectibles ecosystem. With over 340,000 SKUs in stock and fulfillment relationships across 35,000 retail storefronts and 200 online platforms, we connect fans to the entertainment properties and pop culture products they collect, from vinyl, CDs, DVDs, Blu-ray, and collectible steel books to video games, licensed toys, tabletop games, and stylized vinyl figurines. Our business is built to serve collectors, enthusiasts, and retailers alike. We simplify how physical media and collectibles are sold, stocked, and shipped, delivering speed, scale, and accuracy across B2B and DTC channels.

Thank you, Paul and good afternoon everyone. I'm pleased to welcome you to today's call.

Alliance entertainment is a premier distributor and so forth on Partner at the center of the growing Collectibles ecosystem.

With over 340,000 SKUs in stock and fulfillment relationships across 35,000 retail storefronts and 200 online platforms, we connect fans to the entertainment properties and pulp culture products they collect, from vinyl to CDs, DVDs, Blu-rays, and collectible field books, to video games, licensed toys, and tabletop games.

And stylized vinyl figurines.

Our business is built to serve collectors, enthusiasts, and retailers alike.

We simplify how physical media and collectibles are sold, stocked, and shipped.

Jeff Walker: We've built category leadership in film, music, and collectibles over the past two decades through a series of 15 acquisitions that form the foundation for our Capital Light omnichannel fulfillment network. We believe Alliance Entertainment Holding Corp is uniquely positioned at the intersection of retail, content, and fandom. 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. This slide offers a quick snapshot of our performance. Amanda Gnecco will walk through the full Q4 and fiscal year financials later in the call, but I wanted to briefly highlight a few key metrics that reflect the strength of our business model and the progress we're making. In fiscal 2025, we delivered $15.1 million in net income, a 229% increase from the prior year.

Delivering speed, scale, and accuracy across B2B and DTC channels.

And film music and collectibles over the past 2 decades through a series of 15.

We Believe Alliance is uniquely positioned at the intersection of retail content and fandom.

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.

This slide offers a quick snapshot of our performance. Amanda will walk through the full Q4, and fiscal year financials later in the call. But I wanted to briefly highlight a few key metrics that reflect the strength of our business model and the progress we're making

Jeff Walker: Adjusted EBITDA grew 51% to $36.5 million, with gross margin improving from 11.7% to 12.5% year-over-year. Our earnings per share rose to $0.30, more than tripling the $0.09 we delivered in fiscal 2024. These results reflect a more profitable product mix, continued automation benefits, and disciplined expense management across the business. We also made significant progress on the balance sheet. We reduced revolver debt by 22%, improved inventory alignment, and ended the year with $26.8 million in cash flow from operating activities. Our Capital Light model, combined with improving working capital efficiency, has enabled us to unlock stronger profitability without sacrificing growth or flexibility. In Q4 alone, we delivered $5.8 million in net income and earnings per share of $0.11, up from just $0.05 in the prior year.

In fiscal 2025, we delivered $15.1 million in net income, a 229% increase from the prior year.

Adjusted. Even that grew 51%, that 36.5 million with gross margin. Improving from 11.7% to 12.5% year-over-year.

Are earnings per share, Rose to 30 fence more than tripling. The 9 cents we delivered in fiscal 2024.

These results reflect a more profitable product. Mix continued automation benefits and disciplined expense management across the business.

We also made significant progress on the balance sheet. We reduced revolver debt by 22%, improved inventory alignment, and ended the year with $26.8 million in cash flow from operating activities.

Our capital-like model combined with improving working capital efficiency.

Has enabled us to unlock stronger profitability without sacrificing growth or flexibility.

Jeff Walker: Gross margin expanded to 15.8% and adjusted EBITDA margin exceeded 5%, up from 0.9% the prior year, both demonstrating the strength of our product mix, cost structure, and operating discipline. We believe these margins are sustainable going forward, and we expect them to hold as we scale into fiscal 2026 and beyond. This momentum is already carrying into the new fiscal year. Consumer demand remains strong. As we head into the holiday season, we have a highly anticipated release from Taylor Swift on October 3rd that will be a great start to what should be a very strong second quarter fiscal year 2026. Taken together, our infrastructure, exclusive content partnerships, and financial discipline provide a strong foundation for continued scale and profitability. As retailers and licensors seek efficient omnichannel solutions, Alliance Entertainment Holding Corp is increasingly the partner they trust to meet that demand.

824 alone. We've delivered 5.8 million in net, income, and earnings per share of 11 cents of from just 5 cents in the prior year.

Rose margin expanded to 15.8% and adjusted Eva to margin exceeded 5%.

Up from 0.9%. The prior year, both demonstrating the strength of our product, mix cost structure and operating discipline.

we believe these margins are sustainable going forward and we expect them to hold as we scale into fiscal 2026 and Beyond

This momentum is already carrying into the new fiscal year. Consumer demand remains strong as we head into the holiday season. We have a highly anticipated release from Taylor Swift on October 3rd, that will be a great start to what should be a very strong second quarter fiscal year 2026

Bacon together, our infrastructure, exclusive content, partnerships, and financial discipline provide a strong foundation for continued scale and profitability.

As retailers and licensed ORS speak, efficient omnichannel solutions alliances are increasingly the partner they trust to meet that demand.

Jeff Walker: We've built a differentiated platform, not just to participate in the collectibles and physical media market, but to lead it. With the momentum we're carrying into fiscal 2026, we are just getting started. With that, I'll now turn it over to Amanda to walk through our fourth quarter and fiscal year financial results in more detail.

We've built a differentiated platform, not just to participate in a collectibles and physical media market, but to lead it.

And with the momentum we're carrying into fiscal 2026. We are just getting started.

With that, I'll now turn it over to Amanda Gnecco to walk through our fourth quarter and fiscal year financial results in more detail.

Amanda Gnecco: Thanks, Jeff. Let's begin with our fourth quarter results. For the quarter ended June 30, 2025, we generated net revenue of $227.8 million, compared to $236.9 million in the fourth quarter of fiscal year 2024. Gross profit increased 34% year-over-year to $36 million, with gross margin improving to 15.8%, up from 11.4% in the prior year period. This margin expansion reflects our improved product mix and continued benefits from our operational efficiency initiatives. Profitability improved significantly in the quarter. Net income was $5.8 million, or $0.11 per diluted share, compared to net income of $2.5 million, or $0.05 per share in Q4 last year. That is a 130% increase in net income. Adjusted EBITDA grew nearly fivefold to $12.2 million, up from $2.1 million in the prior year period. This improvement was driven by margin gains, automation benefits, and disciplined cost management.

Thanks Jeff.

Let's begin with our full quarter results for the quarter ended June 30, 2025. We generated net revenue of $227.8 million compared to $236.9 million in the fourth quarter of fiscal year 2024.

Gross profit increased 34% year-over-year to 36 million with growth margin improving to 15.8% up from 114.4% in the prior year. Period.

Margin expansion reflects our improved product mix and continued benefits from our operational efficiency initiatives.

Profitability improved significantly in the quarter. Net income was $5.8 million, or 11 cents per diluted share.

Compared to net income of 2.5 million or 5 cents per share in Q4 last year.

That is a 130% increase in net income.

Adjusted EPA grew nearly 5-fold to 12.2 million up from 2.1 million in the prior year period.

This improvement was driven by margin gains.

Amanda Gnecco: At the operational level, our automation investments and warehouse consolidation continue to deliver measurable cost savings, helping drive approximately 1% year-over-year reduction in distribution and fulfillment expenses as a percentage of revenue. Overall, our fourth quarter reflects strong execution, meaningful profitability gains, and improved efficiency, even against a backdrop of modestly lower top-line revenue. Now turning to the full fiscal year ended June 30, 2025, we generated $1.06 billion in net revenue, compared to $1.1 billion in fiscal year 2024. The modest year-over-year decline primarily reflects product mix shifts partially offset by strong performance in high-margin categories like physical movies and vinyl. Gross profit increased to $132.9 million, up from $128.9 million last year, with gross margin improving to 12.5%, compared to 11.7% in fiscal year 2024. Earnings growth was especially strong.

Automation benefits and disciplined cost management.

At the operational level, our automation investments and warehouse consolidation continue to deliver measurable cost savings, helping drive approximately 1% year-over-year reduction in distribution and fulfillment expenses as a percentage of revenue.

Overall our fourth quarter, reflects strong execution, meaningful profitability gains, and improved efficiency, even against a backdrop of modestly, lower Topline Revenue.

Now, turning to the full fiscal year ended June 30, 2025.

We generated $1.06 billion in net revenue compared to $1.1 billion in fiscal year 2024.

The modest year-over-year decline primarily reflects product and mix shifts, partially offset by strong performance in high-margin categories like physical movies and vinyl.

Gross profit increased to $132.9 million, up from $128.9 million last year, with the gross margin improving to 12.5%, compared to 11.7% in fiscal year 2024.

Amanda Gnecco: Net income rose to $15.1 million, or $0.30 per diluted share, more than tripling the $4.6 million, or $0.09 per share reported last year. That is a 229% increase. Adjusted EBITDA grew 51% year-over-year to $36.5 million, compared to $24.3 million in fiscal year 2024. This underscores the progress we've made in expanding margins and improving operating leverage. We also strengthened our balance sheet and liquidity. Revolver debt was reduced by 22%, operating expenses declined by more than 10%, and interest expense fell nearly 14% year-over-year. These actions, combined with improved working capital discipline, enabled us to generate $26.8 million in cash flow from operating activities, further supporting growth investments and financial flexibility. Our ability to deliver stronger earnings, expand margins, and improve cash flow, even in a flat revenue environment, highlights the resilience of our model and discipline of our execution.

Earnings growth was a specially strong.

Net income roles to 15.1 dollars or 30 cents per diluted share, more than tripling, the 4.6 million or 9 cents per share reported last year. That is a 229% increase.

Adjusted evida grew 51% year-over-year to 36.5 million compared to 24.3 million in fiscal year 2024.

This underscores, the progress we've made in expanding margins and improving operating Leverage.

We also strengthened our balance sheet and liquidity.

Revolver debt was reduced by 22% operating expenses declined by more than 10% and interest expense fell nearly 14% year-over-year.

With improved working, capital discipline, and able us to generate 26.8 million in cash flow from operating activities.

Further supporting growth investments and financial flexibility.

Amanda Gnecco: With that, I'll turn it back to Jeff for closing remarks.

Our ability to deliver stronger earnings, expand, margins and improve, cash flow. Even in a flat Revenue environment highlights the resilience of our model and discipline of our execution.

With that, I'll turn it back to Jeff for closing remarks.

Jeff Walker: Thanks, Amanda. One of the most important drivers of our performance and our differentiation in the market is our exclusive distribution and licensing strategy. These agreements give us access to unique, in-demand products that can't be sourced elsewhere, whether it's a limited edition box set, exclusive label content, or collectible formats from major entertainment brands. This will continue to create increased margins and profits in the future. In fiscal 2025, our exclusive partnerships accounted for more than $350 million in revenue, or more than a third of our total sales. These deals not only strengthen our supplier relationships, they also create a competitive advantage around our catalog and reinforce our role as a preferred partner for retailers. A great example is our home entertainment license agreement with Paramount Pictures, which went into effect on January 1, 2025. Under this partnership, Alliance Entertainment Holding Corp is now the exclusive U.S.

Thanks Amanda.

One of the most important drivers of our performance and our differentiation in the market.

Is our exclusive distribution and Licensing strategy.

These agreements give us access to unique, in-demand products that can't be sourced elsewhere, whether it's a limited edition box, set exclusive, label content, or collectible formats from major entertainment brands. This will continue to create increased margins and profits in the future.

In fiscal 2025, our exclusive Partnerships, accounted for more than 350 million dollars in revenue or more than a third of our total sales.

These deals, not only strengthen our supplier relationships, they also create a competitive Advantage around our catalog and reinforce our role as a preferred partner for retailers.

Jeff Walker: and Canadian distributor of Paramount Pictures' full physical media catalog, including DVD, Blu-ray, Ultra HD, and steelbook titles. We are 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. With our complete B2B and DTC sales solutions, we can maximize the ability of movie and TV fans to build their video collection. We also continue to serve as the exclusive distributor for a broad range of partners in music and film, including over 150 movie studios and music labels. These include marquee brands as well as rising independents, giving us a diverse and defensible portfolio of content across formats.

1st 2025 under this partnership. Alliance is now, the exclusive us and Canadian distributor of Paramount's full physical media, catalog including DVD Blu-ray, Ultra HD, and steelbook titles.

We are already seeing a meaningful contribution from this relationship, and we believe there's still significant room for growth as we expand placement and assortment of our refill network.

With our complete B2B and BTC sales Solutions. We can maximize the ability of movie and TV fans to build their Video Collection.

We also continue to serve as the exclusive distributor for a broad range of partners in music and film, including over 150 movie studios and music labels.

Jeff Walker: On the film and television side, the latest season from Paramount Pictures' Yellowstone franchise topped the DVD charts on Amazon for multiple weeks after launch, underscoring both the enduring appeal of premium physical media and Alliance Entertainment Holding Corp's ability to deliver blockbuster content to the market. We also saw early pre-orders for Mission: Impossible - Dead Reckoning - The Final Chapter outpacing prior installments, further highlighting the strength of our pipeline. An exciting recent addition to our exclusive portfolio is our vinyl figure brand, Handmade by Robots, which we acquired in December of 2024. In its first two full quarters under Alliance Entertainment Holding Corp, the brand has already launched its first anime collectibles with My Hero Academia, a limited edition Hello Kitty at San Diego Comic Con, and an exclusive Costco campaign featuring mega-sized horror icons.

These include Marquee Brands, as well as rising independents, giving us a diverse and defensible portfolio of content across formats.

On the film and television side, the latest season from Paramount to Yellowstone, franchise, top the DVD charts on Amazon for multiple weeks. After launch underscoring, both the enduring appeal of Premium, physical media, and alliances ability to delay,

Deliver Blockbuster content to the market.

We also saw early pre-orders for Mission Impossible dead reckoning. The Final Chapter outpacing prior installments, further highlighting the strengths of our pipeline.

An exciting recent addition to our exclusive portfolio is our vinyl figure brand, Handmade by Robots, which we acquired in December of 2024.

In its first two full quarters under Alliance, the brand has already launched its first anime collectibles with My Hero Academia.

Jeff Walker: Looking ahead, we're preparing for significant new releases in the first half of fiscal 2026, spanning beloved franchises such as DC Comics, Disney, Godzilla, Harry Potter, more Hello Kitty, Jurassic Park, Marvel, Peanuts, Sonic the Hedgehog, SpongeBob SquarePants, Star Trek, Star Wars, and Toy Story. These initiatives reinforce our view that Handmade by Robots is well-positioned to become a breakout brand in the licensed collectible space. In addition, we strengthen our collectibles portfolio through a new exclusive distribution agreement with Master Replicas, adding premium products from some of the most iconic sci-fi properties, including Blade Runner, Dune, Doctor Who, Stargate, Star Trek, and Mass Effect. By continuing to add new exclusive partnerships, we are extending our reach across categories and expanding our leadership in high-value, fan-driven collectibles. Across film, music, and collectibles, exclusivity is what sets Alliance Entertainment Holding Corp apart, and it's a win for all parties.

A limited edition. Hello, Kitty at San Diego Comic Con and an exclusive Costco campaign. Featuring mega size 4 icons.

Looking ahead. We're preparing for significant new releases in the first half of fiscal 2026.

Banning beloved franchises such as DC Comics, Disney, Godzilla, and Harry Potter.

More Hello Kitty, Jurassic Park, Marvel, Peanuts, Sonic the Hedgehog, SpongeBob SquarePants, Star Trek, Star Wars, and Toy Story.

This initiative reinforces our view that Handmade by Robots is positioned to become a breakout brand in the licensed collectible space.

In addition, we strengthen our collectibles portfolio through a new exclusive distribution agreement with Master Replicas, adding premium products from some of the most iconic sci-fi properties, including Blade Runner, Dune, Doctor Who, Stargate, Star Trek, and Mass Effect.

By continuing to add new exclusive partnerships, we are extending our reach across categories and expanding our leadership in high-value brand-driven collectibles.

Across film music. And collectibles exclusivity is what sets Alliance apart?

Jeff Walker: Retailers gain access to unique inventory, content owners tap into our scale and fulfillment expertise, and Alliance Entertainment Holding Corp deepens its leadership across the physical media and collectibles market. In addition to exclusive content, our consumer-direct fulfillment (CDF) model is another key growth and margin driver for Alliance Entertainment Holding Corp: this model allows our retail partners to offer a vastly expanded online assortment without holding physical inventory, while Alliance Entertainment Holding Corp fulfills the orders directly to the end consumer. We ship on behalf of major retailers under their brand using our infrastructure, which means we're delivering value to both our partners and their consumers. It's a win for everybody. Retailers reduce inventory risk and expand their digital shelves, consumers get fast, reliable delivery, and Alliance Entertainment Holding Corp benefits from higher margin revenue with greater fulfillment control and operational efficiency.

And it's a win for all parties: retailers gain access to unique inventory, content owners tap into our scale and fulfillment expertise, and the Alliance deepens its leadership across the city, physical media, and collectibles market.

In addition to exclusive content, our consumer-direct fulfillment model is another key growth and margin driver for Alliance.

This model allows our retail partners to offer a vastly expanded online assortment without holding physical inventory, while Alliance fills the orders directly to the end consumer.

We ship on behalf of major retailers under their brand using our infrastructure, which means we're delivering value to both our partners and their consumers.

It's a win for everybody.

Retailers reduce inventory risk and expand their digital shelf.

Consumers. Get fast, reliable delivery.

Margin revenue with greater fulfillment control and operational efficiency.

Jeff Walker: During fiscal 2025, CDF accounted for 37% of gross revenue, up from 36% in fiscal 2024. That growth reflects broader retailer adoption and rising consumer demand for collectibles and specialty products that aren't often stocked in store. Most importantly, this is a scalable Capital Light channel. It allows us to expand SKU count, serve the long tail of consumer demand, and drive continued margin expansion, all without significant working capital investment. As retailers accelerate omnichannel and digital-first strategies, we believe our role as a trusted fulfillment partner will only grow stronger, and we are continuing to invest in the systems, automation, and relationships that make this model even more efficient. Another critical driver of our margin expansion is the efficiency gains we've achieved through automation and warehouse optimization.

During fiscal 2025.

BDF accounted for 37% of gross revenue, up from 36% in fiscal 2024.

Growth reflects broader retailer adoption and rising consumer demand for collectibles and specialty products that aren't often stocked in store.

Most importantly, this is a scalable Capital Life channel. It allows us to expand SKU count

Serve the long tail of consumer demand and drive continued margin expansion, all without significant working capital Investments.

As retailers accelerate, Omni Channel and digital first strategies, we believe our role as a trusted fulfillment partner, will only grow stronger and we are continuing to invest in the systems Automation and relationships that make this model even more efficient.

Another critical driver of our margin expansion is the efficiency gains we've achieved through automation and warehouse optimization.

Jeff Walker: Over the past two years, we've modernized our Kentucky fulfillment hub with advanced systems that increase throughput, reduce labor intensity, and optimize storage. These investments have already delivered millions in annual savings, while enabling us to process higher volumes with greater speed and accuracy. In fiscal 2025, automation was a key factor behind the approximate 1% reduction in distribution and fulfillment expense as a % of revenue that Amanda Gnecco highlighted earlier. Just as important, it has given us the flexibility to scale high-growth categories like collectibles and direct-to-consumer fulfillment without adding significant overhead. In the fourth quarter, we also launched a company-wide AI initiative designed to drive both sales expansion and operational efficiency. This program builds on our existing investments in automation with the goal of improving merchandising, demand forecasting, and fulfillment speed while lowering costs.

Over the past two years, we've modernized our Kentucky fulfillment hub with advanced systems that increase throughput, reduce labor intensity, and optimize storage.

These investments have already delivered millions in annual savings, while enabling us to process higher volumes with greater speed and accuracy.

In Q4 2025, automation was a key factor behind the approximate 1% reduction in distribution and fulfillment expense as a percentage of revenue that Amanda highlighted earlier.

This is important. It has given us the flexibility to scale high-growth categories, like collectibles and direct-to-consumer fulfillment, without adding significant overhead.

In the fourth quarter, we also launched a company-wide AI initiative designed to drive both sales expansion and operational efficiency. This program builds on our existing investments in automation with the goal of improving merchandising demand forecasting and fulfillment speed while lowering costs.

Jeff Walker: Looking forward, technology is not just a cost lever for Alliance Entertainment Holding Corp; it's a growth enabler. From automation to AI, these initiatives support the scalability of our consumer-direct fulfillment channel, enhance service level for our retail partners, and strengthen our ability to capture new opportunities across physical media and collectibles. As demand continues to shift toward specialty products and online channels, our infrastructure is built to handle it with efficiency and margin discipline. To wrap things up, I want to highlight one of the most important drivers of long-term value for Alliance Entertainment Holding Corp: our disciplined M&A strategy. We have a proven track record of building scale through acquisitions, with 15 completed to date. Each has been aligned with our goal of expanding content, capabilities, and margins while reinforcing our leadership in physical media and collectibles. The acquisition of Handmade by Robots is a recent example.

Looking forward, technology is not just a cost lever for Alliance; it's a growth enabler.

From automation to AI, these initiatives support the scalability of our consumer direct fulfillment channel, enhance service levels for our retail partners, and strengthen our ability to capture new opportunities across physical media and collectibles.

As the man continues to shift toward specialy products and online channels, our infrastructure is built to handle it with efficiency and margin discipline.

To wrap things up. I want to highlight 1 of the most important. Drivers long term value for Alliance. Our discipline merger and acquisition strategy.

We have a proven track record of building scale through Acquisitions with 15 completed today.

Each has been aligned with our goal of expanding content capabilities and margins, while reinforcing our leadership in physical media and collectibles.

Jeff Walker: In just over two quarters, we've expanded its retail footprint and licensing pipeline, laying the groundwork for what we believe will be significant growth ahead. While the early results are encouraging, we're only at the beginning of realizing this brand's potential. Handmade by Robots exemplifies our M&A approach, identifying differentiated assets with passionate fan followings and scaling them efficiently through our platform. Looking ahead, we continue to evaluate a robust pipeline of opportunities, including proprietary brands, licensing partnerships, and tuck-in distribution deals. We look at each opportunity with the same disciplined lens: accretion, operational synergy, and long-term strategic fit. By focusing on Capital Light growth, we can leverage our infrastructure and retail relationships to maximize returns. As we move into fiscal 2026, our strategy remains clear: scale high-margin categories, deepen exclusive content partnerships, and strengthen our fulfillment model.

The acquisition of Handmade by robots is a recent example in just over 2 quarters. We've expanded. Its retail footprint and Licensing pipeline, laying the groundwork. For what we believe will be significant growth ahead.

While the early results are encouraging, we're only at the beginning of realizing this Brand's potential.

Handmade by robots exemplifies our M&A approach: identifying differentiated assets with passion and fan following, and scaling them efficiently through our platform.

Looking ahead, we continue to evaluate a robust pipeline of opportunities, including proprietary brands, licensing partnerships, and tuck-in distribution deals.

By focusing on Capital like growth. We can leverage our infrastructure and Retail relationships to maximize returns.

As we move into fiscal 2026, our strategy remains clear.

Jeff Walker: With the margin profile we delivered in Q4, including a gross margin of 15.8% and adjusted EBITDA margin above 5%, we're entering the new fiscal year with a performance baseline we believe is sustainable. This level of profitability reflects structural advantages in our model, and we expect it to carry forward into fiscal 2026 and beyond. This margin enhancement will significantly grow our earnings per share in fiscal 2026 and create a lasting value for our shareholders. Before turning it back to the operator, I'd like to thank our employees, customers, and partners for their support and execution throughout fiscal 2025. We're proud of the progress we made and excited about the opportunities ahead. Operator, let's open the line for questions.

Gail high margin categories, deep and exclusive content Partnerships and strengthen our fulfillment model.

With the margin profile, we delivered in Q4, including a gross margin of 15.8% and an adjusted EBITDA margin above 5%. We're entering the new fiscal year with a performance baseline that we believe is sustainable.

This level of profitability reflects structural advantages in our model, and we expect to carry forward into fiscal 2026 and beyond.

This margin enhancement will significantly grow our earnings per share in fiscal 2026 and create a lasting value. For our shareholders,

Before turning it back to the operator, I'd like to thank our employees, customers, and partners for their support and execution throughout fiscal 2025.

We're proud of the progress we made and excited about the opportunities ahead.

Operator, let's open the line for questions.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of Thomas Forte with D.A. Davidson. Please proceed with your question.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue for participants using speaker equipment and may be necessary to pick up the handset before pressing the star keys.

1 moment, please while we pull for questions.

Our first question comes from the line of Thomas Forte with D.A. Davidson. Please proceed with your question.

Thomas Forte: Sure. Sir, Thomas Forte from Maxim Leap. Thank you for taking my questions. I have three, so I'll go one at a time. Sounds like things are progressing really well with the Paramount Pictures deal. How should investors think about your ability to sign similar deals with other studios?

Sure Sir Sir Thomas Forte from Maximum group. Uh, thank you for taking my questions. I have 3. Uh, so I'll go 1 at a time. Sounds like things are progressing really well with the Paramount deal. How should investors think about your ability to sign similar deals with other Studios?

Jeff Walker: Hello, this is Jeff Walker, CEO. Welcome to the call. We're diligently working on that. We see that as a long-term opportunity in the consolidation of physical DVD distribution. We are definitely looking and working on those conversations.

Hello, this is Jeff Walker, I'm CEO. Um, welcome to the call there. Um we're we are diligently working on that. We see that as a long-term opportunity um uh in the consolidation of of uh physical DVD distribution.

So, we are definitely looking and working on those conversations.

Thomas Forte: Excellent. Jeff, my second question is, I think the answer to this one is that you're not very much impacted, but I did want to ask about tariffs. How are you impacted by tariffs, and what efforts are you undertaking to mitigate the impact of tariffs?

Excellent. And then, Jeff, my second question is, um, I think the answer to this one is that you're not very much impacted, but I did want to ask about tariffs. So, how are you impacted by tariffs and what efforts are you undertaking to mitigate the impact of tariffs?

Jeff Walker: Yeah, we're in a unique space in music and video where we have really no impact on the tariffs in that aspect of our business. They're very minimal if there are some in there. On the collectible side of our business, for Handmade by Robots in particular, we do manufacture in China, so we are accruing the current China tariffs. We've been able to manage that within our cost structures and so forth there, so it hasn't had a major impact on that brand. Other collectible products that we buy from the manufacturers and wholesalers and such, we are seeing some price increases there on those products. Ultimately, those price increases come to us, and they go through to the retail price of the product. There have been some increases. We don't feel they've been very significant, but they've really impacted the overall consumer demand and sales of those products.

Yeah, we're uh, we're in a unique space in music and video where we have really no impact on the tiffs and that aspect of our business. Um, they're very minimal. If there are some in there uh, on the collectible side of our business. Um, for Handmade by robots, in particular, we do manufacture in China. So we are um we are occurring the, the current Chinese China tariffs. Um, we've been able to manage that within our our uh,

Uh, cost structures and so forth there. So it has been had a, a major impact on that that brand. Um, and then other collectible products that we buy from the manufacturers and, and wholesalers and such we are seeing uh, some price increases there on those products. And, uh, ultimately those price increases come to us and they, they go through to the retail price of the product and they've been something.

Jeff Walker: While the pricing on them is going to move up a little bit, we don't see a huge decline in the volume in those products.

Increases, uh, we don't feel, they've been, uh, very significant that they've really impacted the overall, uh, consumer demand and sales of those products. Uh, so while the pricing on them is, is going to move up a little bit, we don't see a, a huge decline in the volume in those products.

Thomas Forte: Great. Thanks, Jeff. My last one, and thanks for taking my question. From a capital allocation standpoint, can you talk about your preferences regarding reinvesting in the business, paying down debt, strategic M&A where you have an excellent track record, and then potentially buying back your stock?

A strategic m&a where you have an excellent track record uh and then potentially buying back your stock.

Jeff Walker: I'll start with the paying down debt. We operate with a line of credit and an asset-based line of credit. Every day, all of the cash we've collected for that day sweeps to our line of credit and reduces our line balance and our interest costs there. That's why you also see a fairly minimal amount of cash on hand in our financials. That's really the last day of the quarter's cash on hand. From an aspect of buying back stock, we have a pretty small amount of stock out in the market today, so we really have no desire to buy back stock. I think the cash that the business is generating, we're actively looking at how we deploy that cash into strategic acquisitions as well as some internal investments to help grow the business. We're really reinvesting our cash at this point.

Well, uh, I'll start with, uh, the paying down debt. Um, we operate with a line of credit and an asset baseline of credit. So, um, every day, all of the cash that we've collected for that day sweeps to our line of credit and reduces our line balance and our interest costs there. Um, and so, that's why you also see a fairly minimal amount of, uh, cash on hand in our financials. That's really the last day of the quarter is cash on hand.

Um, from an aspect of buying back stock, uh, we have, uh, a pretty small amount of stock out, in, in the market today. So, uh, we really have no no desire to buy back stock, um, and I think the, the cash that the business is generating. We're actively looking at how we deploy that cash into strategic Acquisitions, as well as, uh, some internal uh, Investments to help grow the business. Uh, so we're we're really reinvesting. Uh, our cash at this point.

Thomas Forte: Great. Thanks for taking my questions.

Great. Thanks for taking my questions.

Jeff Walker: Thank you.

Yep, thank you.

Operator: Thank you. No further questions for now over the phone. Therefore, I'll hand it over to Paul Kuntz for any questions via the webcast.

Thank you.

And uh, no further questions for now over the phone, therefore I'll hand it over to Paul Kuhn for any questions for via the webcast.

Paul Kuntz: Thank you. Great. We actually have had several questions come in already. Our first question: how sustainable is the lift you've seen from the Paramount Pictures exclusive license? Do you expect incremental growth in fiscal 2026, or was fiscal 2025 more of a one-time step-up?

Thank you, great. And we actually have had several questions come in already. Um, our our first question just about sustainable is the lift you've seen from the Paramount Pictures, exclusive license. Do you expect incremental growth in fiscal 26 or was fiscal 25 more of a 1 time Step Up

Jeff Walker: Okay. On Paramount Pictures, our license agreement with them started effective January 1, and we ramped that up in the first quarter of calendar 2025. We got a partial of the business in that first quarter. The second quarter that we just completed and reported, we had all of the Paramount product sales on the Alliance side there. As we move into the current quarter that we're in right now, as well as calendar Q4, we have not seen the number. We are generating those sales, and we were going to see the impact of that in this year. We will also see a small impact in Q1 of 2026, and then we'll be in Q2 of 2026, we'll be comping what we just completed in the last quarter. It's a huge win for us.

Okay, um, on on Paramount Pictures, uh the our license agreement with them started effective January 1st and we ran out that up in the first quarter of, uh, calendar 2025. Um, and so we got a, a partial, uh, of the business and that first quarter, the second quarter that we just completed and reported, uh, we had, uh, all of the Paramount product sales on the Alliance side there. So as we move into the current quarter that we're in right now, as well as, uh, calendar 24. Uh, we have not seen the the number we are, we are generating those sales and we were going to see the impact of that in this year. Uh, we will also see a

Um, a small impact in Q1 of 2026, and then we'll be in Q2 of 2026. We'll be copying what we just completed in the last quarter.

Jeff Walker: The other thing that we're really focused on, one last part on the Paramount side, is we're really focused on growing the sales and the sales opportunities there and all the different channels that we touch, from brick and mortar to direct-to-consumer and e-commerce, to expand those sales from what they were previously. One last thing I want to mention on the Paramount side, we are pretty excited about the Skydance acquisition of Paramount. That is our initial indications. Looks like they're going to invest in additional content, theatrical movies, and television there. We do think the slate of products coming through Paramount will be growing in the future. That's an unexpected win for Alliance on that side as well.

So it it's a huge, uh, win for us. And uh, the other thing that we're really focused on 1, the last part on the Paramount side is, uh, we're really focused on growing the sales and the sales opportunities there and all the different channels that we touch, uh, from brick and mortar to direct the consumer and e-commerce to expand those, uh, those sales from what they were previously. And, and then 1, last thing I want to mention on Paramount side. We are pretty excited about the the sky dance acquisition of Paramount. Uh, that is, uh, our initial indications. Looks like they're going to invest in additional content, uh, if theatrical movies and, and television there. So we do think the Slate of, uh, uh, uh, products coming through Paramount, uh, will be, uh, growing in the future. So that's

That's, uh, an unexpected win for Alliance on that side as well.

Paul Kuntz: Great. Thank you. Our next question, the earnings release mentions Walmart selected you as its video category advisor. What does that mean for the company?

Thank you.

And our next mission, the earnings release mentions Walmart selected you as its video category advisor. What does that mean for the company?

Jeff Walker: Yes, this was a big win for us to be selected by Walmart as the video category advisor. This went live just recently on August 11. What it is, is Walmart has a designated category advisor that helps with overall planning in the video category, with strategic planning, space planning, everything to do with how that department's going to operate on the video side. It includes all the studios as far as working together. We were designated the category advisor. It moved over to us, as I said. It is an independent group of people on the Alliance team that manage that because it's managed on behalf of all the studios. It was a big honor for us to get that from Walmart, that they believed in the capabilities that Alliance has and also the long-term strategy that we share with Walmart with respect to physical movies and TV series.

Jeff Walker: We're both very long on continuing to stock and support the fans of physical media in the movie category.

Um, with strategic planning, uh, space planning, uh, everything to do with how that Department's going to operate on the video side, and it includes all the studios as far as, uh, working together. And we were, uh, designated the category advisor. Uh, it moved over to us, as I said, and it's a independent group of of people on the alliance team that manage that because it's managed on behalf of all the studios. And it was a big honor for us to get get that from Walmart that they believed in the capabilities that Alliance has. And also the the long-term strategy that, uh, we share with Walmart, with respect to physical, uh, movies and and and TV series. Uh, we're both

Uh, very long on continuing to.

To stock and support the fans of physical media in the movie category.

Paul Kuntz: Thank you. We have another question that came in. Fantastic results. It seems like your M&A activity is highly curated. Can you share the profile of your current M&A pipeline and what your current capital structure supports such inorganic initiatives?

Thank you. We have another question that came in, uh, fantastic results. It seems like your m&a activity is highly curated. Can you share the profile of your current m&a Pipeline? And when your current capital structure supports such inorganic initiatives,

Jeff Walker: As most of you know, M&A is, I think it's we've done a lot over the years. It's more of an art, I think, than a science. There's definitely science and math and those aspects to M&A. The art aspect is really, you know, what fits with putting the two companies together? What's the strategies there? What's the willingness of the seller? Is the seller a willing seller or a maybe seller? There's just a lot of pieces to put together in trying to get an acquisition over the line. I think we've learned over the years that we stay in acquisition conversations ongoingly, not just with a lot of different people, but sometimes an acquisition conversation may have started three or four years ago, and now is the time for it to happen. There's different aspects with the sellers and with us trying to match all those things up.

Well, as, as most of, you know, m&a is is I think it's we've done a lot over the years. It's more of an art, I think, than than a science. There's definitely science and math. And and those aspects, uh, to m&a, but the art aspect is really, you know, what fits with putting into 2 companies together. What's the strategies there? What's the willingness of the seller is the seller uh, a willing seller or a maybe seller? Um, and there's just a lot of pieces to put together and trying to get an acquisition over the line. I think we've learned over the years that we stay in acquisition conversations ongoingly, not just with a lot of different people. But sometimes an acquisition conversation may have started 3 or 4 years ago and, and Now's the Time for it to happen and

Jeff Walker: I will say that we're actively in a lot of conversations because I think that's the way that acquisitions work, is you really have to be in a lot of conversations at the same time, and then you're in a position where you can execute on the right one at the right time. We don't want to be in a situation where we have very few opportunities and we're overchasing few opportunities. We have a pretty robust net of conversations happening right now, and we're continuously evaluating them as to what fits for us at each different time and what fits with the seller at that time.

There's different aspects with the sellers and with us trying to match all those things up. I will say that we're actively in a lot of conversations because I think it's...

Well that's the way that uh Acquisitions work is you really have to be in a lot of conversations at the same time and the and then you're in a position where you can execute on the right 1 at the right time. Uh, we don't want to be in a situation where um we we have very few opportunities and we're we're over chasing few opportunities. So we have a pretty robust net of uh conversations happening right now and uh we're continuously evaluating them uh as to what fits for us at this at each different time and what fits with the with the seller at that time.

Paul Kuntz: Thank you, Jeff. The next question, with the big jump in earnings per share and adjusted EBITDA, can you walk us through how much of that margin expansion is structural versus cyclical or one-time factors?

You.

The next question.

With the big jump in earnings per share and adjusted EBITDA, can you walk us through how much of that margin expansion is structural versus cyclical or one-time factors?

Jeff Walker: Yeah, they're definitely not one-time factors. It's a structural improvement in the company overall, and it really comes from two areas. You're seeing the margin enhancement, that part on the gross profit that we're generating. That's coming from different licensing agreements and moving into more higher margin products there. On the other side, we communicated some significant cost savings. As some of you might know, we exited a big warehouse facility in Minnesota in May of 2024. That was a big operational savings for us in fiscal 2025. We are exiting this month a smaller facility in Minnesota as well, but it's not going to be as significant of a savings as the large facility was there. From that perspective, we're seeing ongoing economies of scale by running primarily through our Kentucky facility.

Uh yeah, definitely, not 1 time factors. Um, it's a structural Improvement in the company overall and it really comes from 2 areas. You're seeing the margin enhancement uh, that part on the the gross profit that we're generating that's coming from uh different licensing and moving into a more higher margin, uh, products there and then on the other side, we uh, we communicated some significant cost savings and if some of you might know we we exited a a big Warehouse facility in in uh Minnesota in May of 2024 so that uh was was a big uh operational savings for us and fiscal 2025. Um, we are exiting this month. A smaller facility in

From that perspective we're uh we're we're seeing an ongoing economies of scale by running through our primarily through our Kentucky facility.

Paul Kuntz: Thank you, Jeff. Somewhat related to the last question, I guess, you mentioned launching an AI program to boost sales and efficiency. Can you explain in simple terms how AI is going to help the business?

Thank you, Jeff. And, uh, somewhat related to the last question, I guess you mentioned launching an AI program to boost sales and efficiency. Can you explain it in simple terms? How AI is going to help the business?

Jeff Walker: Yeah, as we all know, AI is here to stay, and I firmly believe the companies that focus on it and use that technology to help their business grow and advance the businesses are going to be the winners in the future. Over the last six months, we've really hopped on an AI initiative here at Alliance Entertainment Holding Corp, and it's coming from several different areas. The first and foremost is really just implementing. We're using Microsoft Copilot as our AI internally. We're ultimately a Microsoft house here for most of our products, and we've got over 250 people in the organization on Microsoft Copilot right now. We've been doing weekly trainings with Microsoft Copilot and best practices, and we're all learning a lot about that really quickly right now. I kind of look at it and go, you know, we started this about six weeks ago.

yeah, as we all know, AI is here to stay and I, I firmly believe that the company is that

that, uh,

Focus on it and use that technology to help their business grow and advance. The businesses are going to be the winners in the future. And so, over the last

6 months, we've really hopped on an AI initiative here at Alliance, and it's coming from several different areas. Uh, the first and foremost is, uh, really this implementing we're using co-pilot um, as our AI. Uh, internally. This is where ultimately a Microsoft, uh, house here from from most of our products. And um, we've we've got over 250 people in the organization up on co-pilot right now. Uh, we've been doing weekly trainings with

Jeff Walker: What's it going to look like a year from now with all of us working on this on a weekly basis and seeing how each one of us can individually use it in the organization? I'm pretty bullish about what that's going to look like for us a year from now. That aspect is really from the standpoint of helping each person do their job more efficiently. We do also have GitHub going for our programming side. That's in place right now. One of the big projects we're working on, we're going down the path and we're going to integrate HubSpot for our sales and marketing initiatives. It's an implementation we're in the middle of right now, and it's going to help consolidate our sales functions as well as their AI technology helping us drive sales going forward.

Co-pilot and best practices— we're all learning a lot about that. Really quickly right now, I kind of look at it and go, you know, we started this about six weeks ago.

What's it going to look like a year from now, with all of us working on this, uh, you know, on a weekly basis and seeing how each 1 of us can individually, use it in the organization. So I'm pretty bullish about. What? What that's going to look like for us. So you're a year from now and that that aspect is really uh from the standpoint of helping uh each person do their job more efficiently. Um, we do also have GitHub going for our programming side, uh that's uh in in place right now and then 1 of the big projects we're working on. Um we're going down the path and we're going to integrate HubSpot uh for our sales and uh and marketing initiatives. It's a, it's an implementation. We're in the middle of right now and it's going to help consolidate our sales functions as well as uh, their AI technology.

Jeff Walker: A big part of our AI initiative is really, well, how are we using AI to drive sales? As everybody knows on this call, we have a huge warehouse full of products that consumers want, and it's our job to sell those products through more retailers and to more consumers. We're really working to double down on our sales focus right now and help with technology that's going to assist our sales team to be more efficient and expand our sales opportunities. That's how we're focused on AI today. We have a lot of conversations in the organization, a lot of people, senior leadership people in it. I will also say that across the board, our entire team is really excited about what this technology can do and how it can help us make the business better.

Technology, helping us drive sales going forward. And so, a big part of our AI initiative is really, how are we using AI to drive sales? And as everybody knows on this call, we have a huge Warehouse full of products that consumers want and it's our job to sell those products, uh, through more retailers and a more consumers. And so, we're, we're really working to double down on our sales Focus right now and and help with technology. That's going to assist our our sales team to be more efficient and expand our sales opportunities. So that's how we're focused on AI. Uh, today and we're, we have a lot of conversations in the organization. A lot of people uh, senior leadership people in it, and I will also say that across the board. Our entire team is really excited about.

Jeff Walker: We're really happy with how our teams really gravitated to it and focused on it. We're going to see over the course of the next 12 months what the benefits of all that time and energy on AI is going to produce.

About what the technology can do. And what, how it can help us, uh, make the business better. So we're we're really happy with how our teams really gravitated to it and, and focused on it and we're going to see over the course of the next 12 months. Uh, what the, the benefits of all that time and energy on AI is going to produce.

Paul Kuntz: Great. Thank you. Another question. You've made progress diversifying into collectibles, but physical media still accounts for the vast majority of sales. How do you balance investing in legacy categories versus building out higher growth, higher margin segments?

Great, thank you. And another question: you've made progress diversifying in the collectibles, but physical media still accounts for the vast majority of sales. How do you balance investing in legacy categories versus building out higher growth, higher margin segments?

Jeff Walker: We still see the legacy categories. You know, we'll start with vinyl in particular. We're still seeing growth on that. We're still seeing demand. We're still seeing unique collectible products. We're working on some unique initiatives in vinyl that will be coming out here shortly. We see some really good growth in that long-term side, that legacy side. With respect to our video, we're definitely seeing growth in video opportunities for us and so forth there. We're definitely investing in those as well as new initiatives going forward.

Legacy side. Um, and as and then with respect to our video, we're definitely seeing growth and video opportunities for us and so forth there. So, um, we're definitely investing in those, as well as new initiatives going forward.

Paul Kuntz: Thanks, Jeff. What gives you confidence Handmade by Robots can really break out and become a bigger part of Alliance Entertainment Holding Corp?

Thank you.

Robots can really break out and become a bigger part of the alliance.

Jeff Walker: As some of you know, I'm a huge fan of Handmade by Robots. I love the brand. I love the style of it. I love the name. It's a very appropriate name right now with robotics and robots being a huge worldwide growth area. It's a collectible that a robot would make. That business model, we have a good style and design, a good design style, I guess you would say, and a good name brand. The industry that that is in is in licensed IP. We don't create the IP. We don't create the characters. The movie studios, gaming companies, even humans and people are the characters in the IP there. We definitely see just an unlimited opportunity of new characters and new versions of those characters. It's a very creative, robust brand and opportunity.

Well, as, as some of, you know, I'm, I'm a huge fan of the Handmade by robots. I I, I love the brand. I I love the style of it and I love the name. Uh, it's a very appropriate name right now with, uh, Robotics and robots being a huge uh, a huge worldwide growth area. And it's a collectible that that a robot would make and that business model, uh, we have a, a, a good style and design, a good design style, I guess you would say and a good name brand. And the the the industry that that is in is in licensed IP and we don't create the IP, we don't create the characters, they movie studios gaming companies, uh,

Jeff Walker: We are setting up and queuing up for our first Handmade by Robots booth at New York Comic-Con. We will be there with all of our key titles and products that we've got coming out this quarter. We just see it as a great opportunity. We have a very aggressive growth strategy for the brand, and you will continue to see a lot of initiatives coming out of that. I will also say that it is a very strong margin in that licensing brand. We're also developing retail sales from it through the website and so forth. The last thing I want to say is it's an interesting aspect for Alliance Entertainment Holding Corp to do this because we get to focus on the design of the characters and the sales of those characters.

Uh, you know, even even humans and people are in the characters and the IP there. So we definitely see, um, just an unlimited, uh, opportunity of new characters and new versions of those characters. And it's a, it's a very creative robust, uh, brand and opportunity. Um, and we are, uh, setting up and queuing up for our first Handmade by robots, uh, booths at New York Comic Con. So we'll be there, uh, with all all of our key titles and and, uh, products that we've got coming out this quarter. Um, and uh, we just see it as a great opportunity. We have a very aggressive uh, growth strategy for the brand and uh, you will continue to see a lot, a lot of initiatives coming out of that. I will also say that. Um, it is a

A very strong margin in that licensing. Brand, we're also developing retail sales from it through the website and so forth. And the last thing I want to say is.

Jeff Walker: We already have a huge warehouse and operational system to manage the product coming in and the product shipping to customers and all of that. It's a very different situation for Alliance Entertainment Holding Corp to do it versus somebody to start up and you have to deal with all the backend aspects of the business. When you look at the scale and scope that Alliance Entertainment Holding Corp has and the ability to bring on a brand like this and scale that brand, we're only scaling the brand. We don't have to scale our warehousing and our operations and all that kind of stuff. That stuff's already in place and scaled for us. You can see that what the opportunity then is when you get a new brand like Handmade and you can focus on licensing, designing characters, and selling those characters.

It's, it's an interesting aspect for Alliance to do this because we get to focus on the design of the characters and the fails of those characters. And we already have a huge warehouse and operational system to manage the the product coming in and the product shipping the customers and all of that. So it's a very different situation for Alliance to do it versus somebody to start up and you have to deal with all the backend um aspects of the business. So this is uh when you look at the scale and scope that Alliance has and the ability to bring on a brand like this and scale that brand, we're only scaling the brand, we don't have to scale our warehousing and our operations and all that kind of stuff that's just already in place and scaled for us. So

Jeff Walker: That's the part of the business that we have to focus on there. We don't have to worry about setting up an accounting department, a warehouse, and all those other functions that a standalone business would have to do. One last piece that also goes towards where we look at in some aspects of acquisitions, you know, are there other brands and other things that could fit into the model that I just spoke about? We're super excited about it. We've got a lot of people on the team working on it, and we're definitely seeing the sales come from that.

You can see that what the opportunity then is when you get a new brand like Handmade, and you can focus on licensing, designing characters, and selling those characters. That's the part of the business that we have to focus on there. And we don't have to worry about setting up an accounting department or warehouse and all those other functions that a standalone business would have to do. And so one last piece is, is that also goes towards.

Where we look at in some aspects of Acquisitions. Uh, you know, are there other brands and other things that could fit into the model that I just spoke about. So I'm we're super excited about it. We've we've got a lot of people on the team working on it and uh, we're definitely seeing the sales come from that.

Paul Kuntz: Excellent. Thank you. We have, it looks like, one final question here. You said exclusive partnerships accounted for over a third of revenue. Can you explain why exclusivity is such a big advantage for Alliance?

So, thank you. We have what seems like one final question here. You said exclusive partnerships accounted for over a third of revenue. Can you explain why exclusivity is such a big advantage for Alliance?

Jeff Walker: Yes. Little backstory, right?

Operator: Came up as we started the business as a one-stop, and a one-stop is a distributor wholesaler that is buying products from all the manufacturers, and then you're selling to all the retailers, and you're in a dogfight with all the other wholesalers that are doing the same thing. As you move down the road, as Alliance Entertainment Holding Corp has moved down the road into the different exclusive divisions, then you become the exclusive seller. When you look at, let's say, Universal Music or Sony Music or, you know, Lionsgate Video, they're the manufacturers and sellers of that product. If you want to buy it, you buy it from them. Fast forward that to Alliance Entertainment Holding Corp.

Uh, little backstory came up as we started the business as a 1 Stop and a 1 Stop is, uh, distributor wholesaler that that is buying products from all the manufacturers and then you're selling to all the retailers and you're, you're in a dog fight with all the other wholesalers that are doing the same thing and as you move down the road, as a Alliance has moved down the road into the different exclusive divisions. Then you become the

Operator: When we have Alliance Home Entertainment with a Paramount Pictures product, and we have AMPED Distribution, our indie distributor on the music side, and all those titles that those divisions sell that everybody who wants to buy those titles buys it through Alliance Entertainment Holding Corp, then you can see how important that aspect is. I'll even go into the Handmade by Robots. Why did we want that? We were selling Funko and other collectibles into retailers and across the board, all over the world. We still do that. We still are a big wholesaler for collectible products. When we got Handmade by Robots, now we're the exclusive supplier of that. If a big retailer wants to buy it direct, now they need a vendor ID, they need to open a vendor ID for us in their collectible department and so forth there.

The exclusive seller. So when you look at, let's say Universal Music or Sony music or well, you know Lionsgate video, um, they're the they're the manufacturers and sellers of that product. So if you want to buy it, you buy it from them. And so fast forward that to Alliance. When we have Alliance Home Entertainment with a Paramount, uh, product and we have amped our in our Indie distributor, on the music side, and all those titles that those uh, divisions, sell that everybody who wants to buy those titles, buys it through Alliance, then you can see how the, you know, important that aspect is

Operator: It's a really big driver on that exclusivity side. We're going to continue to focus on that aspect where we can gain exclusivity of products because that opens up all the, you know, it also last part is it opens up all the big accounts. Amazon, Walmart, Target, Costco, and so forth, all the big retailers, they buy direct through the companies that have the exclusive distribution of product. Those companies and those sales through those big retailers all come through you, and that's the opportunity from the exclusive side.

And I'll even go into the Handmade by robots. Why did we want that? Well we were selling Funko and other Collectibles into retailers and across the board all over the world and we still do that. We still are a big wholesaler for collectible products and when we when we got Handmade by robots, now we're the exclusive supplier of that. So if a big retailer wants to buy a direct, you know, now they they need a vendor. I, you know, they they need to open a vendor ID for us and in their collectible department and so forth there. So it's it's a really big driver uh of uh, on that exclusivity side. So uh, we're going to continue to focus on that aspect where we can gain exclusivity of products because that opens up and all that. You know, it also

Last part is it opens up all the big accounts. So, Amazon, Walmart, Target, Costco, and so forth. All the big retailers, uh, they buy direct through the companies that have the exclusive distribution of products. And so those companies, and those sales through those big retailers, um, all come through you. And that's the opportunity from the exclusive side.

Operator: Thank you. We have reached the end of the question and answer session. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your time.

Thank you.

And we have reached the end of the question-and-answer session, and this also concludes today's conference. You may disconnect your lines at this time.

Operator: Thank you, everybody. Thank you.

We thank you for your time. Thank you, everybody.

Thank you.