Q3 2025 Dolphin Entertainment Inc Earnings Call

Speaker #2: Good day, everyone. Welcome Okay. to the Dolphin Entertainment third quarter 2025 earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation.

Speaker #2: It is now my pleasure to turn the floor over to your host, James Carbonara, investor relations. The floor is

Speaker #2: yours. Thank you, operator.

Speaker #3: Good afternoon. Before we begin, I'd like to remind everyone that during the course of this conference call, management may make forward-looking statements within the meaning of the private securities litigation reform act of 1995.

Speaker #3: These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual results. Please refer to cautionary text forward-looking statements contained in the earnings release published today as well as the most recent SEC filings and reports.

Speaker #3: During the call today, management will also discuss non-GAAP financial measures, including adjusted operating income or loss. The company believes that these will provide helpful information for investors.

Speaker #3: Reconciliation to the most comparable GAAP measures is provided in the earnings release. Now, I would like to turn the call over to Bill O'Dowd, Chief Executive Officer of Dolphin.

Speaker #3: Bill, please go ahead.

Speaker #4: Thanks, James, and welcome, everyone. As usual, I'll start by reviewing key financial and operating highlights from our third quarter and then Mirta will provide a more detailed financial overview before we open it up for Q&A.

Speaker #4: Well, this is the first quarter where we can have a true year-over-year comparison after the super group was finished being assembled with the acquisition of L on July 1st of last year.

Speaker #4: We've long talked about the benefits of cross-selling within the group. How did we do? Answer: Dolphin delivered another record-setting quarter in Q3 with revenue rising 16.7% year-over-year to 14.8 million, and operating income turning positive with $300,000, despite almost $600,000 of non-cash amortization expenses related to our historical acquisitions.

Speaker #4: Furthermore, the first nine months of 2025 have now surpassed the first nine months of 2024 in revenue, despite the Blue Angels generating over $3.4 million in revenues in Q1 of 2024.

Speaker #4: In fact, Q3 2025, this most recent quarter, is the second highest revenue quarter in Dolphin's history, behind only the Blue Angels-fueled $15.2 million in Q1 of 2024.

Speaker #4: Equally important as I just mentioned, the quarter's results were entirely organic. The same agencies delivered this outstanding year-over-year revenue and operating income growth. That same agencies that we had at this time last year.

Speaker #4: This healthy organic growth is the primary driver behind our continued margin expansion, with adjusted operating income of a little more than a million dollars, or $6.9% of revenue, which is up from $4.5% in just Q2.

Speaker #4: This performance reflects both the consistency and strength of our core subsidiaries and the growing scalability of our cross-selling operating model. Another point worth highlighting is how clean our financial statements have become.

Speaker #4: In Q3, the last of our warrants expired. Earlier this year, we recorded the last of our contingent consideration from our acquisitions. And thus, below the line, we're down to just one fair-valued convertible note and our interest expense.

Speaker #4: I remember investors telling me that our P&L was too complicated. In addition to simplifying our P&L with only two line items below the line, the elimination of warrants, puts, contingent consideration, and virtually all fair-valued convertible notes removes the constant fluctuation up or down in our net income or loss from what would be expected based on our operating results.

Speaker #4: We knew this day would come, and here we are. In short, with our below-the-line expenses being reduced to effectively just our interest expense, we now show clearly the operational performance of the business.

Speaker #4: And it was obviously a fantastic quarter. That operational performance continues to be driven by the collective power of our agencies. Every Dolphin subsidiary brings something unique to the table, but together they create something far greater than the sum of their parts.

Speaker #4: This unified strength across entertainment, lifestyle, influencer, sports, and digital and our ability to cross-sell these services and our reach across pop culture continues to be the engine of our growth.

Speaker #4: We also continue to advance our ventures and production portfolio, with the particular focus on not expanding our cost base. In Q3, our anticipated feature film "Young Blood" premiered at the Toronto International Film Festival, to overflowing screening rooms, followed by a historic collaboration with the Los Angeles Kings in what we believe is the first major promotional partnership between the NHL and a

Speaker #1: selected Announce our distribution partner before the end of the calendar year . If not in just a few short weeks . Stepping back , our third quarter results represent another key milestone in Dolphins long term trajectory .

Speaker #1: Revenue is at record levels . Margins are expanding , and our balance sheet is stronger than ever . As a long time believer in Dolphins vision , I've continued to invest personally , having purchased a little over 2% of our outstanding shares since just April .

Speaker #1: Furthermore , I have entered into a new ten B5 one plan that extends my buying program through December of 2026 . I continue to believe our stock price undervalues the company's proven performance .

Speaker #1: Strategic positioning , and the significant growth still ahead . Thank you for your time and attention today . And with that , I'll turn it over to Murtagh for a deeper dive into the financials .

Speaker #2: Thank you , Bill , and good afternoon . Total revenue for the quarter ended September 30th , 2025 was $14.8 million , an increase of 16.7% from $12.7 million in the same period last year .

Speaker #2: Operating income was quarter ended $308,296 . For the September 30th , 2025 , compared to an operating loss of $8.2 million for the quarter ended September 30th , 2020 .

Speaker #2: For . Adjusted operating income was approximately $1 million for the quarter ended September 30th , 2025 , compared to an adjusted as operating income of $492,620 for the same period in 2020 .

Speaker #2: For operating expenses for Q3 of 2025 were $14.5 million , including depreciation and amortization of $589,388 and non-cash expenses of $127,365 . compares to operating expenses of $20.8 million in Q3 of 2024 , including depreciation and amortization of 600 and $636,782 and non-recurring or non-cash expenses of $8 million .

Speaker #2: Net loss for Q3 2025 was $365,494 , including depreciation and amortization of $589,388 and non-cash expenses of $177,365 . This compares to a net loss of $8.7 million for Q3 of 2020 .

Speaker #2: Four , including depreciation and amortization of $636,782 and non-recurring or non-cash expenses of eight point $8 million . Diluted loss per share basic for both and fully diluted shares in Q3 of 2025 was $0.03 per share , based on 11,770,195 weighted average shares , compared to net loss per basic and diluted shares in of 2024 .

Speaker #2: Q3 Of $0.80 per share . Based on 10,930,286 weighted average shares . With that , I'll now turn it back to the operator to open the floor for questions .

Speaker #2: Operator , please pull questions .

Speaker #3: Certainly . The floor is now open for questions . If you have any questions or comments , please press star one on your phone at this time .

Speaker #3: We ask that while posing your question, you please pick up your handset. If listening on a speakerphone, to provide optimum sound quality, please hold for just a moment while we wait for questions.

Speaker #3: Your first question is coming from Alan Kelly with Maxim Group . Please post your question . Your line is live .

Speaker #4: Yes . Hi . This is the best quarter I've seen since covering your stock . Considering everything so congratulations ! Starting with the organic growth of 16.7% .

Speaker #4: Could . How do you think about organic growth ? Kind of what of what ? What were the key drivers of that and how you think about that ?

Speaker #4: Maybe going forward ?

Speaker #1: Sure . Thank you . Thank you for the kind words that start Alan , I , I would agree with you . I know Q1 last year was phenomenal because of Blue Angels , but this quarter would be the strongest in history except for that one time event by by large margin .

Speaker #1: And it feels good as we just built on top of Q2 , you know , Q2 was the biggest revenue quarter , I think , in history .

Speaker #1: If you excluded blue Angel . So we feel the momentum and it is organic . It's it's as I was mentioning in my prepared remarks , it's the first time since we've had the super group finish that you could just compare apples to apples .

Speaker #1: It's the same companies . We had a year ago , and the companies we have now without any one time events , no released in movie the quarter , me or no jolt of revenue or or expense one way or the other .

Speaker #1: You know, you're just comparing side by side. And 16.7% revenue growth. Obviously, you can see what happened in the operating income.

Speaker #1: Our adjusted operating income what we . You know measure ourselves by going over $1 million for the quarter . You know , that's that's simply our our operating profit .

Speaker #1: And adding back the amortization costs get you to over 900,000 of that . So we feel very strong . And it's all it's all growth at these companies .

Speaker #1: And a big that driver of is the cross-selling that they're doing . They're working with each other . So we just feel we have we have great momentum .

Speaker #1: And you know , across seven companies , you know , some are going to be doing better than others in any given quarter .

Speaker #1: But most of them are firing , you know . Well and are going to continue that into hearing to Q4 . And so it's just a really good feeling .

Speaker #1: The the better mousetrap . We hope to build when we uplist it to Nasdaq of of building this supergroup of entertainment marketing companies and using their , their growth as a base and that they should be able to cross-sell with each other .

Speaker #1: We should get more clients , we should get different types of clients . We should add , you know , share of wallet from the clients .

Speaker #1: We already do have is is happening and from that base and then be able to go into ventures like Yungblud and and have that optionality of a Blue Angels or a Yungblud .

Speaker #1: It's only going to fuel this . the Blue Imagine if Angels came out in this quarter right ? We would have had revenue over $18 million .

Speaker #1: So yeah , it feels great . And and the growth is for all the right reasons that you want to see growth , right ?

Speaker #1: It was brick by brick across all the companies . Not a not a one off .

Speaker #4: That's great for 42 West . The the well overall I think fourth quarter is a seasonally strong quarter . And you have a bunch of festivals that you participate in in the fall .

Speaker #4: Could you comment on I know like your win clients , you could get paid more . So how does it how look for for the the events that you're involved in

Speaker #4: .

Speaker #1: we have a good we

Speaker #1: have a good Yeah . You know , lineup of films this year . You know still a little too early to know . You know , how long or how well they could perform through festival season or through award season .

Speaker #1: What I will say , though , is that that 42 is very one of the companies doing well for us . They're they had a of fantastic end summer into the fall season .

Speaker #1: September was a very strong month . October was equally strong , if not stronger for them . And it's just carrying into , you know , Q4 , which is , as you said , a very strong quarter typically for , for 42 US in particular .

Speaker #1: And we feel bullish about Q4 this year based upon , you know , 42 , US being our biggest subsidiary and them having very strong start to the quarter .

Speaker #1: So the momentum we had in Q3 will will carry into Q4 for sure .

Speaker #4: That's great . And with the door , you highlighted . Jesse Gerstein rejoining and just . Disrupt agency . Could you comment a little on kind of what those those things represent ?

Speaker #1: Yeah . The door you know , our our PR firms are doing well and the door is and one of them . Thank you for that .

Speaker #1: Yeah . The door is growing anyway as well . But strategies but one of the they're employing are aqua hires , you know , making strategic hires of more senior publicists that already have , you know , a handful of clients that are with them .

Speaker #1: Jesse is one of them . He came back to the door where he where he had been working . And up until a few years ago and and so he's a he's a known commodity , somebody that the team loves and and he brings a book of of business , with restaurants and , and you know , as we rebuild that practice the door's really diversified since Covid .

Speaker #1: You may remember that was the one of our agencies that took the hardest hit in Covid by by far . I think anyone that represented restaurants in New York and LA , Chicago and Covid , it's going to be pretty effective .

Speaker #1: And they've just built back a beautiful business . Lois and Charlie and the whole team at the door . So Adrian Jefferson joining in January with disrupt , is was a key milestone for that for that agency as well .

Speaker #1: Jesse And joining the summer you know the door the doors revenue is is significantly up year over year . And just getting stronger .

Speaker #1: And what a great diversity of clients inside that company . I mean that's the company that can represent everything from John George and his restaurant empire to , you know , Adidas and to Haagen-Dazs and PayPal .

Speaker #1: I mean , they've just had some signature clients throughout the year , and so it's a it's a special agency within our group for sure .

Speaker #4: Great . With Surefire Media , I don't know if I've ever asked this , but does it also kind of you have some powerful clients that are that are doing well .

Speaker #4: How does or how do you think about does that how does that help you ? And then how how do you do you just think about how they're performing .

Speaker #4: ?

Speaker #1: Well , you know , it's a good example . You made me think . We say powerful clients . It's hard not to , you know , on one hand , shore fires got hundreds of clients and they're very proud of their breadth and depth .

Speaker #1: And then it's hard not to think of Mr. Springsteen when you say powerful clients . Right . So , you know , there's a good example of cross-selling and working together .

Speaker #1: Right ? You know , the film Springsteen , Road to Nowhere was was obviously worked on by both surefire and 42 West . And just those types of are collaborations occurring on far less high profile projects with great frequency between our .

Speaker #1: Right ? You know , the film Springsteen , Road to Nowhere was was obviously worked on by both surefire and 42 West . And just those types of are collaborations occurring on far less high profile projects with great frequency between our companies fires .

Speaker #1: Bret , though , as you said , is is just very strong . I mean , we put out the Grammys press release today , you know , 35 nominations across our companies , 30 from Shore Fire alone .

Speaker #1: And how many different categories ? My goodness , they're just such a leader in that . And , you know , you read the press release and you're like , man , they've got they've got clients that do everything .

Speaker #1: I learned a fun fact from the Shore Fire team that Tobias Jesso , who's up for songwriter of the year and works you know , with , big name artists like Justin Bieber , he's six foot seven .

Speaker #1: I said , So oh , he can play small forward on our company team , but the the , the growth of surefire , you know , we've talked about it a lot over the years .

Speaker #1: And there's a company that , you know , is has really grown in size since they joined Dolphin in December of 2019 . And just has such a beautiful management team .

Speaker #1: Layers deep. By the way, I think Marilyn Laverty would be the first to tell you that she is the founder and CEO, and again, 42 Usher Fire the Door have just had a strong year.

Speaker #1: Each of them, such as it really drives us when our PR firms are doing well. And it's great to see them recognized.

Speaker #1: I mean , March was awesome with the number one agency in the country by the observer , and that's not an entertainment . That's in any field that really validated what group of this PR firms can do .

Speaker #1: But we it seems like every other week we're being It's a recognized . humbling and rewarding fall for us . And you know , those those awards mean something within the industry .

Speaker #1: And to have a couple more three , fall four more this is really a tribute to what I think the professionals in the industry recognize , which is that these firms individually are best in class in the industries they serve , whether it be movies and TV for 42 or music .

Speaker #1: And sure , fire and hospitality and lifestyle and the door and you know , impact with Elle . But collectively , you know , they're unique in the industry and there just isn't another group like this .

Speaker #1: Across all of pop culture and it's nice to get the awards . And I'm sure for Wall Street , it's nice to see these numbers .

Speaker #4: Thank you . And just to make sure , I heard right , you were hoping for Yungblud to be able to announce something before the end of this year .

Speaker #1: Yeah , and I'm being conservative with that . We had a Yungblud , you young know , I was with Emerson Davis earlier today .

Speaker #1: She she runs our studio development and production for for dolphin and been with me for almost 20 years of being at Allen and a new mother .

Speaker #1: How about a shout out to her four month old daughter Carter , who Emerson brought to Toronto for the film festival where we we premiered ?

Speaker #1: Yungblud . I give Carter all the credit . think she I don't was more than two months old and she didn't cry once .

Speaker #1: I how that's don't know possible , but if you met Emerson , you it might be would think possible Emerson because so cool , calm and collected .

Speaker #1: But we had a we had a great screenings at Toronto , you know , you can get caught up in festival fever . You know , where people , you know , crazy for go films that that it's an overreaction .

Speaker #1: But and so we tried to mute our response because we didn't want to get ahead of our skis , as they say . But , you know , we had overflowing screening rooms .

Speaker #1: I hadn't personally seen that at a screening . And , you know , we had good reception coming out of Toronto . We announced our we partnership with the LA Kings and the NHL .

Speaker #1: After that , we shot additional footage , which was so cool at an LA Kings game not to give anything away , but people will read between the lines and if the Yungblud made the NHL and perhaps which team he might be playing for at the end of the movie .

Speaker #1: But you know , that was that was really cool . And and the reception to that you know , that's just is , not something that that happens with independent films .

Speaker #1: You know , studios may be able to typically strike a partnership with the league , but , you know , it just doesn't happen .

Speaker #1: And as we put in our our independent films and as we put in our press release , I mean , unaware we're of any other example for over two decades .

Speaker #1: So we're very proud of And , you know , the films now completed as of last Friday additional with the footage in and the reception has been been very rewarding .

Speaker #1: So I do believe , you know , we'll say by the end of the year , I think it will happen much sooner and be able to announce a distributor for Yungblud , you know , relatively shortly .

Speaker #1: And a with with a release date . So that's exciting for us . And , you know , we'll knock on wood for success with Yungblud for sure .

Speaker #4: That's great . And then just kind of thinking about how you're thinking strategically , you're doing you're great , but it's a between balance .

Speaker #4: Dropping results to the bottom line and investing also at the same time . For growth . And so I was wondering kind of how you're thinking about that , of investing , you know , you're while also growing and also in the fourth quarter , just the , the government shutdown and some impacts on travel , should we think that that might impact any of your businesses

Speaker #1: been

Speaker #1: very fortunate ? We've . On that second question , Alan , and hearts go out to everyone that is affected . We have not been .

Speaker #1: So I we won't hide behind a and we don't need to hide behind . Our results are so strong . But behind anything that just isn't isn't the case with us .

Speaker #1: We we we've been unaffected and and we got and we're we're relatively unaffected by tariffs . So you know , a little bit of impact in the first half of the year with board game our clients and others that get a lot of their things from China .

Speaker #1: But we've been blessed that way . And knock on wood , it stays that way . In terms of the first one . Yeah , it's always it's always the classic balance act , right ?

Speaker #1: Of , you know , investing in an affiliate program . For example , at TD and setting yourself up for success in 2026 while managing , you know , to the growth we've already experienced last year was a milestone for us because we achieved adjusted income for the operating first time in the calendar year last year , and we're proud of that .

Speaker #1: Now , Blue angels is certainly a part of our business , not apologizing for having Blue Angels at all . But if if we didn't have Blue Angels in 2024 , we would have just just almost made the adjusted operating income .

Speaker #1: We would have been just short . And when I got on the call about it , which was already tremendous growth from the year before , you know , I said , you know , I really did believe that 2025 would be our first full year of of adjusted operating income without without any ventures or films involved .

Speaker #1: And , well , you can see the results . I'm highly confident through Q3 that , you know , it would it would take an absolute collapse .

Speaker #1: And there's a month of something in December for that not to be true. So, you know, we judge ourselves by that metric.

Speaker #1: You know , it's a proxy for cash from operations , you know , like , how are we doing ? And and , you know , we feel very good it .

Speaker #1: about And so we think we've struck the right balance this year . You know , we're going to we're going to be rewarded in , you know , maybe even some here in Q4 .

Speaker #1: certainly But by Q1 with some of those investments that we've made and and yet we still grew along the way . And so once those investments come in , then , you know , all bets are off and then and then , of course , you may remember .

Speaker #1: And for those who are looking at our company in our stock , you know , we have some real cash catalysts for the next three years that will fall into into cash flow for us .

Speaker #1: You know , we're we're now one year from now , we're out of our New York leases . You know , when you buy companies , you buy their leases , right ?

Speaker #1: So we've got three companies with offices in New York . Still , we only need one lease . we'll save some money So there a year from now next .

Speaker #1: The year , this time two years from now , we're out of our LA leases . That's the most expensive lease . Excited about that .

Speaker #1: the cost And savings that will come that . Again , we from just don't need that much space in a post-Covid world . And and then third , you less know , we're than three years out .

Speaker #1: You know , it'll come on before we know it . You know , our our only commercial bank loan will be paid off .

Speaker #1: Principal and interest on September 29th , 2028 . That'll free up well north of $2 million of cash year a . Just on the on that .

Speaker #1: That plus the leases should free up north of $3 million for sure a year . Again , if we don't grow at all .

Speaker #1: So that's an extra quarter . Obviously . Plus . So as we as we achieved adjusted operating income this quarter of $1 million , you know , that that would just add to that .

Speaker #1: So you know , it's it's the biggest reason why we so think we're undervalued today . And I just started at ten B5 plan to buy stock and send a signal to the market .

Speaker #1: I'm buying every week because I believe in this company . And the results we're that posting , not the ones we will post in the future .

Speaker #1: And so I bought 2% of all outstanding shares since April , and I'm still buying . So , you know , I think that sends a pretty strong signal .

Speaker #1: I hope it would .

Speaker #4: Yeah , I would agree . And my in entire career you're only company I've ever known that the CEO has entered one of these plans for buying the stock .

Speaker #4: I had for selling plenty , but no , it's quite . And it's . Is it is the it like term of a certain amount .

Speaker #4: Like each time or is it ? I don't know if we need to know those .

Speaker #1: Yeah . Yeah . I had to learn to Alan . So we set it up to be $5,000 a week and you know , and I've extended it or sorry , it's it's technically entering a new one all the way through December of next year .

Speaker #1: So , you know , 5000 a week may sound like one thing , but when you say , well , that's $260,000 a year , you know , hopefully that's making a statement .

Speaker #1: And from April of 25 through at least December of 26 , so I had never thought of it this way before . But , you know , quick math tells me that's over $400,000 .

Speaker #1: And just making a statement and we're , we're we're feeling very bullish about what we've done already . And then what we're going to do with this continued growth .

Speaker #1: So very exciting for us.

Speaker #4: This is great . Okay . it for my questions . Congratulations . Nice nice results . Good talking to you .

Speaker #1: Thank you very much .

Speaker #3: additional There are no questions in this queue at time . I would now like to turn the floor back over to Bill O'Dowd for his closing remarks .

Speaker #1: Well , thank you you . thank Those who are on the and call and on the and those who webcast will listen in the future .

Speaker #1: You know , I think I think our our excitement is well heard at this point about the company and , and the commitment we've made .

Speaker #1: Myself personally with that . 1051 plan . And then we just decided to let the numbers do the talking . They speak for themselves .

Speaker #1: proud . I'm very I'm very thankful And , very grateful to the leadership at each of the companies . They're the ones who are receiving these awards , and they're the ones that are collectively working together to to post numbers .

Speaker #1: And if any one company is going through time a tough or , you know , a particularly challenging quarter and no , no one's in a dramatic just if situation , but they if they're off , we have , you know , other team members that pick them up and overperform and and you balance across seven companies and diversified revenue it's and it's diversified client base .

Speaker #1: It's highly . Or I should say very much what you want . And and we're very proud of 16.7% year over year with the same and adjusted and the operating that income is doing what it's doing .

Speaker #1: So a very clear trajectory . we see what's going We know to happen in the year . And in two and in three years .

Speaker #1: So a very clear trajectory . we see what's going We know to happen in the year . And in two years , And we're very excited to be here .

Speaker #1: So it's always great to have a good Q3 we live with these numbers for the next four and a half months , and be very proud to introduce them to new to our company anybody during that time period .

Speaker #1: But we also expect a strong Q4 , we can judge me on hopefully that statement at the end of March and forward to talking to look everybody So thank then .

Speaker #1: you very much for your time today .

Speaker #3: Thank you everyone . This does conclude today's conference call . You disconnect your may phone lines at this time and have a wonderful day .

Speaker #3: Thank you for your participation .