Total Revenue of $9.1
Million
Total Direct Operating Margin of 51%
Selling, General, and Administrative Expenses
decreased by $1.3 Million, or
17%
LOS
ANGELES, Aug. 14, 2024 /PRNewswire/ -- Cineverse
Corp. ("Cineverse" or the "Company") (NASDAQ: CNVS), a global
streaming technology and entertainment company, today announced its
financial results for its fiscal first quarter ended June 30, 2024 ("Q1 FY 2025").
Q1 FY 2025 Highlights (all comparisons are to the prior year
fiscal quarter ended June 30, 2023,
or Q1 FY 2024):
For the fiscal quarter ended June 30,
2024, the Company's initiatives to reduce operating costs
continued to have a positive impact on our financial results
contributing to a decrease in SG&A expenses of $1.3 million, or 17% and also helped increase our
direct operating margin to 51% from 46% last year, above our
previously stated target of 45% to 50%.
In addition, the Company began to execute on its previously
approved share repurchase program and acquired approximately 184
thousand shares through June 30,
2024. The previously reported share repurchase program
remains in place and will continue to be utilized as
appropriate.
The Company's Digital content library of approximately 66,000
titles was valued as of March 31,
2024 at approximately $39.8
million, a significant increase over the 2023 valuation and
well above the $2.6 million book
library valuation as of June 30,
2024.
The Company looks ahead in the next few quarters to the impact
of our new sales initiatives, particularly for our proprietary
Matchpoint technology, AI related products and omni-advertising
programs, including our direct sales efforts from our new
advertising team, and also from the release of the next installment
of our horror franchise, Terrifier 3, on October 11, 2024.
Total monthly viewership across our channel portfolio increased
73% versus last year, driven in large part by successful new
channel launches such as Dog Whisperer with Cesar Milan and Garfield and Friends.
Combined with the rapid growth of our podcast business, where
revenues were up 143% versus last year and we now have 44 podcasts
airing, this should set the stage for our new ad sales team to
drive significant growth over the next few quarters, particularly
through direct ad sales.
- Total revenue of $9.1 million
versus $13.0 million, mainly
reflecting a reduction of $2.4
million in Streaming and Digital revenue, attributable to a
$1.9 million decline in the Company's
digital distribution revenue mostly resulting from content release
timing impacts, as well as a $1.2
million decrease versus fiscal 2024 non-recurring revenue
from the Company's legacy digital cinema business.
- These decreases were partially offset by a $0.6 million, or 143%, increase in Podcast
revenue. This success was driven by the growing popularity of the
Company's Bloody Disgusting podcast content.
- The Company's direct operating expenses decreased by
$2.5 million to $4.5 million from $7.0
million, at a direct operating margin of 51% versus 46% last
year and above our previously stated margin target of 45% to
50%.
- SG&A expenses decreased $1.3
million, or 17%, primarily driven by $0.5 million from reduced legal and consulting
costs, as well as a decrease of $0.4
million in compensation related costs, due to the Company's
continued offshoring program to Cineverse Services India.
- Net loss attributable to common stockholders was $3.2 million, or $(0.20) earnings per share, down from net loss of
$3.6 million, or $(0.37) earnings per share.
- Adjusted EBITDA improved by $0.1
million to ($1.4)
million.
- Financial condition overview:
- Cash and cash equivalents of $4.0
million as of June 30, 2024.
- The maturity date of the Company's $7.5
million Line of Credit Facility has been extended to
September 15, 2025.
- Digital content library valued as of March 31, 2024 at approximately $39.8 million in a third-party appraisal,
including the pre-release estimated value of Terrifier 3, compared
to a book value of $2.6 million as of
June 30, 2024.
Operational Developments During the Quarter
- Experienced an exceptional 73% growth in year-over-year
increase in minutes watched.
- Set release date for "Terrifier 3" – the highly
anticipated follow up to runaway hit, "Terrifier 2" – for
October 11, 2024. Announced Iconic
Events as theatrical distribution partner.
- Announced public Beta of the Company's AI-Powered content
search and discovery tool, cineSearch. Subsequently
announced partnerships with Gracenote, Vionlabs and Datatonic to
enhance metadata, recommendations and genAI conversational
capabilities.
- Podcast network saw exponential growth - yielding a 49% revenue
surge over the last 60 days.
- Announced the capability to provide robust, cost-streaming
workforce solution to Matchpoint customers through the Company's
India-based Cineverse Services
India.
- Expanded wildly successful Bob Ross Universe with
episodes remastered in HD & 4K
for the first time ever – along with exclusive new ambient viewing
content "The Bob Ross Gallery Collection" series.
- Announced Titan Books as publisher for Terrifier 2 novelization
– opening a new revenue stream to super-serve highly engaged fandom
– available October 29, 2024.
- Announced launch of 9 Story Presents: Garfield and
Friends FAST channel on Sling Freestream – bringing classic
family IP to new generation with timing aligned to major motion
picture release.
- Debuted Bloody Disgusting merchandise in exclusive branded Fan
Shops in 1700 Walmart stores nationwide.
- Announced numerous channel launches on Xfinity, Xumo, Zone-ify
and DIRECTV – driving additional distribution to unlock the
potential for revenue growth.
- Announced a new distribution deal with Australia-based Network 10, a division of
Paramount Global, to bring 10 play's FAST channels.
Operational Developments Subsequent to Quarter-End
- The Company's new Matchpoint Sales team has signed its first
long-term Matchpoint SaaS deals worth more than $250 thousand in revenue annually and has
developed a robust pipeline of more than 20 deals for future
potential revenue opportunities.
- Published Extensive Library of Video Content on Spotify.
- 'Dog Whisperer With Cesar
Millan' FAST Channel Goes Live on Pluto TV.
Management Commentary
Chris McGurk, Cineverse Chairman
and CEO, stated, "This was a transition quarter for the Company.
Although we continue to enjoy the benefits of our cost
streamlining initiatives and resultant higher operating margins, we
did not yet begin to record the revenue upsides during the quarter
from our new sales teams and new sales initiatives for our
proprietary Matchpoint technology, AI-based products and
omni-advertising programs, particularly direct ad sales. We
continue to build a robust sales pipeline in all those areas and
fully expect to begin to record revenue upsides over the next few
quarters as we close multiple deals already in the sales queue.
Viewership across our streaming channel portfolio increased by 73%
in terms of minutes watched. Combined with the rapid growth of our
podcast business, this should set the stage for significant revenue
upsides as we see the impact of our new sales team and their new
sales initiatives, particularly direct ad sales, over the next
several quarters. In addition, the next installment in our horror
film franchise, Terrifier 3, is on target for theatrical release on
October 11, 2024. We are marshalling
all the resources of the Company to maximize profits from that
release, not just in theatrical, but in all ancillary distribution
markets as well, including video on demand, DVD/Blu-Ray, and
particularly our Screambox horror streaming channel, where we saw a
substantial increase in subscribers from the launch of Terrifier
2.
"Notably, we extended our $7.5
million line-of-credit with East
West Bank until September
2025, further strengthening our financial flexibility. In
addition, our digital content library was appraised at
approximately $39.8 million, a
significant increase over the valuation by the same third party a
year earlier and far above the $2.6
million book value of the library. This library valuation
alone is also significantly higher than our current market
capitalization, which we believe continues to be severely
undervalued. Reflecting that disparity, we purchased approximately
184,000 shares of Cineverse equity through June 30, 2024 and are continuing to utilize our
previously reported stock repurchase program, as appropriate, since
we believe repurchasing shares is a value-creating investment
opportunity at current pricing levels."
Erick Opeka, President and CSO of
Cineverse, stated, "While we faced challenging year-over-year
revenue comparisons due to the timing of digital content releases
and legacy Digital Cinema non-recurring items, we made substantial
progress in building out our content, advertising, and Matchpoint
sales units during the quarter. We expect to see significant
traction from these initiatives beginning in the current quarter.
We've added six fully operational sales heads and are already
seeing considerable results from their efforts.
"Our licensing sales have increased substantially, and our sales
team has gained significant early traction. This includes closing
our first Matchpoint SaaS deal after quarter-end, as well as
securing ad sales from major players like Disney, Universal, Neon,
and Zocdoc during the quarter. Looking ahead, we anticipate being
sold out of inventory on several verticals in the next quarter and
expect significant acceleration in digital, licensing, and
Matchpoint revenues from deals currently in negotiation. We're in
the final stages of phase II development for our AI-based
cineSearch product and expect a full consumer release within the
next 60 days. We're also preparing the product for B2B licensing
and are already in discussions with several Tier 1 OEMs."
Opeka continued, "Our streaming consumption metrics have shown
exceptional growth, with a 73% year-over-year increase in minutes
watched. This surge in viewership provides us with a substantial
inventory of ad space as we approach our busiest seasons, including
Halloween, the election cycle, and holiday advertising. We're
well-positioned to capitalize on these opportunities and expect
this to translate into significant revenue growth in the coming
quarters.
"Lastly, we are pursuing other exciting new opportunities in AI.
We're in early discussions with multiple parties to license parts
of our extensive content library for AI training purposes.
Additionally, we are in discussion to represent AI training rights
for other content owners, which could potentially add hundreds of
thousands of titles to our existing library of more than 66,000
titles for this initiative. These developments position us at the
forefront of the rapidly evolving entertainment technology
landscape."
Conference Call
Cineverse will host a conference call
at 4:30 p.m. ET (Wednesday, August 14, 2024), during which
management will discuss the results of the fiscal first quarter
ended June 30, 2024. To participate
in the conference call, please use the following dial-in
numbers:
United States (Local):
+1 404 975 4839
United States (Toll-Free):
+1 833 470 1428
Canada (Toll-Free): +1 833 950
0062
Access code: 417695
The conference call can also be accessed by webcast at the
Investors section of the Company's website
at https://investor.cineverse.com/events-and-presentations.
Those who are unable to attend the live conference call may access
the recording at the above webcast link, which will be made
available shortly after the conclusion of the call.
About Cineverse
Cineverse's advanced, proprietary
technology drives the distribution of over 70,000 premium films,
series, and podcasts to more than 150 million unique viewers
monthly. From providing a complete streaming solution to some of
the world's most recognizable brands, to super-serving their own
network of fan channels, Cineverse is powering the future of
Entertainment. For more information, please visit
www.cineverse.com. (NASDAQ: CNVS)
Safe Harbor Statement
Investors and readers are
cautioned that certain statements contained in this document, as
well as some statements in periodic press releases and some oral
statements of Cineverse officials during presentations about
Cineverse, along with Cineverse's filings with the Securities and
Exchange Commission, including Cineverse's registration statements,
quarterly reports on Form 10-Q and annual report on Form 10-K, are
"forward-looking'' statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act'').
Forward-looking statements include statements that are predictive
in nature, which depend upon or refer to future events or
conditions, which include words such as "expects," "anticipates,''
"intends,'' "plans,'' "could," "might," "believes,'' "seeks,"
"estimates'' or similar expressions. In addition, any statements
concerning future financial performance (including future revenues,
earnings, or growth rates), ongoing business strategies or
prospects, and possible future actions, which may be provided by
Cineverse's management, are also forward-looking statements as
defined by the Act. Forward-looking statements are based on current
expectations and projections about future events and are subject to
various risks, uncertainties, and assumptions about Cineverse, its
technology, economic and market factors, and the industries in
which Cineverse does business, among other things. These statements
are not guarantees of future performance, and Cineverse undertakes
no specific obligation or intention to update these statements
after the date of this release.
For additional information, please contact:
Julie Milstead
424-281-5411
investorrelations@cineverse.com
CINEVERSE
CORP.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
thousands)
|
|
|
|
As of
|
|
|
|
June 30,
2024
|
|
|
March 31,
2024
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,955
|
|
|
$
|
5,167
|
|
Accounts receivable,
net
|
|
|
9,262
|
|
|
|
8,667
|
|
Unbilled
revenue
|
|
|
4,596
|
|
|
|
6,439
|
|
Employee retention tax
credit
|
|
|
79
|
|
|
|
1,671
|
|
Content
advances
|
|
|
12,226
|
|
|
|
9,345
|
|
Other current
assets
|
|
|
1,413
|
|
|
|
1,432
|
|
Total Current
Assets
|
|
|
31,531
|
|
|
|
32,721
|
|
Property and equipment,
net
|
|
|
2,722
|
|
|
|
2,276
|
|
Intangible assets,
net
|
|
|
18,238
|
|
|
|
18,328
|
|
Goodwill
|
|
|
6,799
|
|
|
|
6,799
|
|
Content advances, net
of current portion
|
|
|
1,655
|
|
|
|
2,551
|
|
Other long-term
assets
|
|
|
1,397
|
|
|
|
1,703
|
|
Total
Assets
|
|
$
|
62,342
|
|
|
$
|
64,378
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
20,247
|
|
|
$
|
20,817
|
|
Line of credit,
including unamortized debt issuance costs of $127 and $81,
respectively
|
|
|
4,690
|
|
|
|
6,301
|
|
Current portion of
earnout and deferred consideration on purchase of
business
|
|
|
3,719
|
|
|
|
3,294
|
|
Term Loan, including
unamortized debt issuance costs of $131 and $0,
respectively
|
|
|
3,103
|
|
|
|
—
|
|
Operating lease
liabilities
|
|
|
338
|
|
|
|
401
|
|
Current portion of
deferred revenue
|
|
|
332
|
|
|
|
436
|
|
Total Current
Liabilities
|
|
|
32,429
|
|
|
|
31,249
|
|
Deferred consideration
on purchase, net of current portion
|
|
|
—
|
|
|
|
457
|
|
Operating lease
liabilities, net of current portion
|
|
|
418
|
|
|
|
462
|
|
Other long-term
liabilities
|
|
|
58
|
|
|
|
59
|
|
Total
Liabilities
|
|
$
|
32,905
|
|
|
$
|
32,228
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
Preferred
stock
|
|
$
|
3,559
|
|
|
$
|
3,559
|
|
Common
stock
|
|
|
194
|
|
|
|
194
|
|
Additional paid-in
capital
|
|
|
546,554
|
|
|
|
545,996
|
|
Treasury stock, at
cost
|
|
|
(12,166)
|
|
|
|
(11,978)
|
|
Accumulated
deficit
|
|
|
(507,315)
|
|
|
|
(504,153)
|
|
Accumulated other
comprehensive loss
|
|
|
(290)
|
|
|
|
(345)
|
|
Total stockholders'
equity of Cineverse Corp.
|
|
|
30,536
|
|
|
|
33,273
|
|
Deficit attributable to
noncontrolling interest
|
|
|
(1,099)
|
|
|
|
(1,122)
|
|
Total equity
|
|
|
29,437
|
|
|
|
32,151
|
|
Total Liabilities
and Equity
|
|
$
|
62,342
|
|
|
$
|
64,378
|
|
CINEVERSE
CORP.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands,
except for per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the
Three Months Ended June 30,
|
|
|
|
2024
|
|
|
2023
|
|
Revenues
|
|
$
|
9,127
|
|
|
$
|
12,980
|
|
Operating
expenses
|
|
|
|
|
|
|
Direct
operating
|
|
|
4,479
|
|
|
|
6,987
|
|
Selling, general and
administrative
|
|
|
6,563
|
|
|
|
7,888
|
|
Depreciation and
amortization
|
|
|
863
|
|
|
|
822
|
|
Total operating
expenses
|
|
|
11,905
|
|
|
|
15,697
|
|
Operating
loss
|
|
|
(2,778)
|
|
|
|
(2,717)
|
|
Interest
expense
|
|
|
(431)
|
|
|
|
(295)
|
|
Loss from investment in
Metaverse, a related party
|
|
|
3
|
|
|
|
—
|
|
Other income (expense),
net
|
|
|
163
|
|
|
|
(504)
|
|
Net loss before
income taxes
|
|
|
(3,043)
|
|
|
|
(3,516)
|
|
Income tax
expense
|
|
|
(7)
|
|
|
|
(20)
|
|
Net
loss
|
|
|
(3,050)
|
|
|
|
(3,536)
|
|
Net income attributable
to noncontrolling interest
|
|
|
(23)
|
|
|
|
(14)
|
|
Net loss attributable
to controlling interests
|
|
|
(3,073)
|
|
|
|
(3,550)
|
|
Preferred stock
dividends
|
|
|
(89)
|
|
|
|
(88)
|
|
Net loss
attributable to common stockholders
|
|
$
|
(3,162)
|
|
|
$
|
(3,638)
|
|
Net loss per share
attributable to common stockholders:
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.20)
|
|
|
$
|
(0.37)
|
|
Diluted
|
|
$
|
(0.20)
|
|
|
$
|
(0.37)
|
|
Weighted average shares
of common stock outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
15,702
|
|
|
|
9,879
|
|
Diluted
|
|
|
15,702
|
|
|
|
9,879
|
|
Adjusted EBITDA
We define Adjusted EBITDA to be
earnings before interest, taxes, depreciation and amortization,
stock-based compensation expense, merger and acquisition costs,
restructuring, transition and acquisitions expense, net, goodwill
impairment and certain other items.
Adjusted EBITDA is not a measurement of financial performance
under GAAP and may not be comparable to other similarly titled
measures of other companies. We use Adjusted EBITDA as a financial
metric to measure the financial performance of the business because
management believes it provides additional information with respect
to the performance of its fundamental business activities. For this
reason, we believe Adjusted EBITDA will also be useful to others,
including our stockholders, as a valuable financial metric.
We present Adjusted EBITDA because we believe that Adjusted
EBITDA is a useful supplement to net income (loss) from continuing
operations as an indicator of operating performance. We also
believe that Adjusted EBITDA is a financial measure that is useful
both to management and investors when evaluating our performance
and comparing our performance with that of our competitors. We also
use Adjusted EBITDA for planning purposes and to evaluate our
financial performance because Adjusted EBITDA excludes certain
incremental expenses or non-cash items, such as stock-based
compensation charges, that we believe are not indicative of our
ongoing operating performance.
We believe that Adjusted EBITDA is a performance measure and not
a liquidity measure, and therefore a reconciliation between net
income (loss) from operations and Adjusted EBITDA has been provided
in the financial results. Adjusted EBITDA should not be considered
as an alternative to net income (loss) from operations as an
indicator of performance or as an alternative to cash flows from
operating activities as an indicator of cash flows, in each case as
determined in accordance with GAAP, or as a measure of liquidity.
In addition, Adjusted EBITDA does not take into account changes in
certain assets and liabilities as well as interest and income taxes
that can affect cash flows. We do not intend the presentation of
these non-GAAP measures to be considered in isolation or as a
substitute for results prepared in accordance with GAAP. These
non-GAAP measures should be read only in conjunction with our
consolidated financial statements prepared in accordance with
GAAP.
Following is the reconciliation of our consolidated net (loss)
income to Adjusted EBITDA (in thousands):
|
|
For the
Three Months Ended June 30,
|
|
|
|
2024
|
|
|
2023
|
|
|
|
(Unaudited)
|
|
Net
loss
|
|
$
|
(3,050)
|
|
|
$
|
(3,536)
|
|
Add
Backs:
|
|
|
|
|
|
|
Income tax
expense
|
|
|
7
|
|
|
|
20
|
|
Depreciation and
amortization
|
|
|
863
|
|
|
|
822
|
|
Interest
expense
|
|
|
431
|
|
|
|
295
|
|
Stock-based
compensation
|
|
|
470
|
|
|
|
409
|
|
Loss from equity
investment in Metaverse, a related party
|
|
|
3
|
|
|
|
—
|
|
Other (income)
expense, net
|
|
|
(163)
|
|
|
|
36
|
|
Net income
attributable to noncontrolling interest
|
|
|
(23)
|
|
|
|
(14)
|
|
Transition-related costs
|
|
|
27
|
|
|
|
468
|
|
Adjusted
EBITDA
|
|
$
|
(1,435)
|
|
|
$
|
(1,500)
|
|
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SOURCE Cineverse Corp.