CIDM - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen and welcome to the Cinedigm Corporation Fiscal 2019 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today’s program is being recorded. And now I would like to introduce your host for today’s program, Jill Calcaterra, Executive Vice President. Please go ahead.

Jill Calcaterra

you XXXX us earnings thank third for and fiscal quarter conference afternoon for today joining our Good call. President Financial Participating Chairman in Counsel Loffredo. Jeffrey and Chief Business, Cinema our and Cinedigm’s Networks, Edell; Officer, Gary Chief Executive Head Opeka; today’s Officer, Chris General call and of Digital are Equipment Erick of McGurk;

expectations forward-looking note and on financial call certain this I the hand on based risks, to call Before subject are presented are over statements. contains uncertainties that management’s statements to current management, please These information and cause the assumptions. with to Potential that forward-looking the uncertainties from risks in statements filed reports SEC materially and from the company’s could company’s are periodic described time-to-time. business and differ these results

on February of discussed not is All update duty does Cinedigm of XX, and and events this today, undertakes intend no future to information as call circumstances. XXXX or the

this now, the non-GAAP to addition, presented represents financial certain turn to call like And in measures. call McGurk. would information financial Chris In over I

Chris McGurk

Thanks, on achieved made the OTT was expectations. we Jill our in the growth in significant line call joining quarter generally third In us for business progress We with significant business, today. our thanks several milestones. everyone and which

for TV monthly connected overall ad footprint our quarter-over-quarter we requests, this, today, year. big of us. As In with in up surpassed a active driver X.X ad-supported XXX% million users, tandem last XXX% revenues of versus saw growth future a

now have distribution a also high-margin grown subscription low to and to successfully have We business users active business. than that base more our moved XXX,XXX OpEx

platforms. linear into expand to our subscription our business the During accelerated quarter, in third-party ad-supported we digital plan OTT

And OEM at minimizing which this distribution scale in and We while leverage operating describe detail telco marketing also us to last quarter, areas the OTT noted in we in same cable engagement the revenue, and expanded I large costs. as to our will partners drive plan allows businesses, services shortly. time

capabilities to reducing with entertainment our owners’ distribution lower effectively while expense. technology at and are and content to our leveraging and access time brands enabling market matchpoint content we Additionally, superior operating platform their monetize

transactions ad-supported M&A referred ComicBlitz footprint; Viewster strategic our with quarter. anime interest Netflix to Viewster, general streaming with key global acquisition Anime, of Finally, a all the international progress of of service significant Overall, in this areas digital as a and service. an we leading often began comics; business the in earnest made

XX breakdown categories: First, and network for we film third-party during OTT digital XX key had SVOD. quarter, over total and the into ad-supported on three channel linear, or a launches These distribution, assets. of delivering or XX,XXX AVOD launches platforms television subscription

the channels Group. Plus, digital TV, Xumo For Broadcast platforms channel, platform the Vizio linear, from and launched new TV the we quarter, during Sinclair Watch including Free, Roku X the X Pluto on Stirr, Samsung

we available Cinedigm’s that expect platforms North note and in now in customer and engagement growth are along no our to to our channels approximately pleased digital most shipment are these in available devices, approximately us. embedded app for We of track linear reaching the customers these purchase America new XX% smart are in to and firmware no ad-supported requiring cycles importantly, on on devices. installation of annually, all with On cost acquisition million networks sold TVs XX

this, is industry company’s for trend. by in Because in driven accelerating triple-digit opinion the our priority market see availability nearly assets in TV, growth a and an Xumo the content expanded these key delivering Tubi, X,XXX greatly arena, in exceeding Pluto we players and three to quarter. TV AVOD the results VOD, be revenues is which so ad we connected what general we forecast, year-over-year ad-supported leaders in space, far platforms For to during growth. three the of reflects of internal our our are believe this Preliminary top on the overall

the us We to in the bringing announced acquisition cable OEM, year. channels library additional and In scale in content we are coming Viewster telco Viewster large providers and acquisition more on than with our OEM continuing and quarter, strong a explore than relationships. closed AVOD X. more through our XX provides programming rights of territories, trademarks with global which in Anime, and additional X,XXX footprint assets global February This new broad

We on AVOD. services our expand to executing accelerating are already the plans in footprint, growth

to significant Finally, our of we see subscription efforts. continue expansion

third-party footprint. with DISH totaled minimal direct-to-consumer In on on platforms two the TV. our growth of our This approximately impact has across Network to across subscriber the Sling we Comcast reduce today, us expanded and direct-to-consumer subscriber partners, of on XXX,XXX and subscription enabled trajectory active dramatically key our and DISH availability businesses our spend marketing the growth. As subscribers services our quarter, third-party XFINITY

providers their Given to bundles, focus with subscription expect OEMs offerings our in the partners in more industry’s choice in and their we creating providing our bundles to now consumers platforms. existing bring cable expand are to with own numerous telcos, with other and SVOD talks

During the you other comic our subscription manner all on one monthly as licensing platforms predominantly channels, We that it read to offers price. of acquired thousands growing quarter, also platform low plan in ComicBlitz our we to comics same ComicBlitz, mobile globally. can the

additional subscription we Beyond content Cinedigm. and and continue ComicBlitz, to to to services leverage plan M&A partnerships into bring

cost rapid a the of space. of Dispatch, platform anyone framework; three Matchpoint and in Blueprint, CES have productization platform. in key content met service efforts new launch channels bring is customers OTT to essentially I scale. services managed mission entertainment potential channels operational our and film our in that distribution, efforts, the of We OTT platform. OTT our extensively is executing with comprised including of sum to and to matchpoint technological cable OEMs. our on years deliver our our culminated content from to networks, the we incredible areas: Insights, the consumers, OTT and distributors, services TV matchpoint, industry our in leadership well and our and happy the To platform channel platforms quarter of clients the borne in Matchpoint analytics and company’s development more out Regarding in and report XX at effectively are faster a we am global value of in to pipeline our up data considerable world, around creators already

business, areas. from accelerate casting to of we of producers of a target see these on content with entire and of script will highly will for profitably channels on also expanding continue audience. key sector continue support footprint very portfolio independent and on course, strong guide strong continued will installed development while the focused of we the also portfolio on our we our key where have we to that ROI networks and In experienced base the digital in ad-supported subscription We and And the calls, to to the prior we hot AVOD platforms. look performance the third-party expanding aggregator continue noted by channels and red continuing content efforts a Matchpoint revenues all is technology premium in distribution available for distribution be licensor and ecosystem. to M&A have as to final engaged of OTT the linear provide services film product and ensure decisions co-productions, well-defined growing with marketable of our opportunities

physical exceptionally should have ‘XX. and on X have and already profiles. very ‘XX, meaningful secured fiscal look fiscal year a impact margins we titles the digital both This in co-productions with strong favorable For distribution reward risk

also business in on seen media and because have placed favors promotions ourselves from in We a a independent measurable we and direct business cable we film for schedule. the satellite because this ‘XX have attention part slightly fiscal In and release from significant transactional part XX% between year-over-year correlation producers it providers up smaller and transactional content having revenue. VOD despite related in are

growth to Tubi are titles distributing in and XXX% up from up channels our also library outside addition TV XX%. and growth our showing we an seeing individual platforms expanding this to segment with already also solid year-to-date we list platforms, TV Pluto In to of distribute real

AVOD Amazon Facebook services We with from and dive Google. up players free significant new also remote lining from and see

strong part to So, we business to see growth. our this expect continue of

our picture we XXXX select all on-demand release DVD year. in American to We and in quarter, later library a follow rents. with premium mid acquisition in content digital the the rights distribution with the in film expanded holding Blu-ray theaters planned this During release to the North of to

THE We business. also acquired WISH. the Films content and thriller as HUMAN FINAL streaming such fuel these Michael provide important suspense Franti the Documentary OTT STAY our for

front, TV XX Corporation U.S. China we with popular upcoming and over two the for XXX bring content for popular China films. Lion hours to On the the content Chinese Bambu International deals second of a licensing channel, with over our to China closed first significant

that, with over forward for updates future. Bambu I We is the are review financial turn in more the now brief very to results. sharing to coming look of near And pleased how and will our Jeff a with call together

Jeffrey Edell

strong you. Thank In progress. make we summary, continue to

fiscal of were quarter revenues third the XXXX, For $XX.X consolidated million.

As total cinema end revenues cost and reaching consolidated the contracts a the at in declined of business for this their terms. various stages as our result deployment equipment contracts quarter decline of of of combination recruitment contracted XX-year expected, as are the

million quarter X months XXXX expenses decreased net largely equipment, and mix $X.X in business. cost physical by year For majority quarter X fulfillment and royalty revenue the particularly business, reduced or for legacy pre-unit the result to volume and change by the months due balances the the decline expense compared was decrease to for Also million caused the due primarily low third costs cinema a fiscal compared in increase business. payoff of the decreased as which entertainment quarter, The to distribution prior the interest to operating of third full compared to last physical to XX% debt our the expected to in lower ended the of XXXX. the of EBITDA $X.X decreased $X.X convertible lower compared the fiscal XX% ended $X.X adjusted in to million in third to in offset million, million down XX% which the the the is prior period, year. fee $X.X print in $X.X formal million particularly decrease balance. virtual the primarily of quarter the is The ‘XX Direct debt content XXX% December

was $X.X ‘XX XX% XX ago. months of to fiscal the in loss million The is Our it million, quarter million a XX% a sequentially the or quarter fiscal our $XX.X result to $X second much improve and improvement efforts content loss was our improvement entertainment third XXXX than X% the of third fiscal system’s loss net compared to $X.X lower quarter of decreased million cost for common nearly compared debt shareholders of total more of primarily continued to of our and lower the structure expense now towards attributable debt the the the full our streaming. depreciation interest and streamline OTT reduction balance, XXXX. impact from business improvement business, shift of is in is due the The to the offline, margins performance cost in

continues legacy digital cinema total fiscal to runoff completed of number business expected. systems quarter, the business Our to sold Subsequent the equipment as cinema bringing systems the third projection sale of XXX we XXX. to to-date

recognize the due these to quarter expect fourth in to significant We revenues sales.

I mentioned now to we I area the turn the coming process to are the call systems will firm of available the As Chris. advisory that, in back the selecting expect With more sales remaining in help to before, in announce monetize and the expertise months. with

Chris McGurk

it our we channel Jeff. increasing make to our summary, by additional strong portfolio OTT progress our in launching footprint Thanks, in expanding of library platforms. and In content across continue

Our out and be revenue to our matchpoint portfolio. addition look product to OTT are strong rolling a services and

We base our partnerships through platform by versus channels, rapidly licensing margin in market actives, deals and last evidenced presence user year. up the now growth, AVOD high are our X.X building monthly million new also growing high as XXX%

that to our like accelerate addition, accretive you will have. ComicBlitz, now that, take growth curve. smart Anime and Operator? we can In And Viewster we for may questions with continue and more any look Viewster further acquisitions

Operator

Certainly. [Operator Canaccord question Our of Instructions] first Genuity. from line Austin Moldow comes the from

question please. Your

Austin Moldow

congrats and quarter. nice Hi, for questions on taking my thanks a

be viewing bringing are platforms most most best a know walk said is I or best data of out long maybe the your distribution want but time we a million. with the about I base, what OEMs to I any hearing of AVOD kind for wondering there am – the channels can the it’s which the that lot a lot number, through different and would what X.X helpful? or could viewers are I and interested viewers engagement a in share behavior maybe or start super just characteristics are direct, kind you user am into lot of you question So, qualitatively us with feeding maybe that customers know? if of which of you whether

Chris McGurk

thanks have and Opeka, question. confidentiality here Networks caution got terms little our do that just careful bit This and to that perhaps disclosure, Erick I be Right, is of we will is Chris. President a I he just will in will question is again Austin. answer to your of answer what

Erick Opeka

thanks. Hi, Sure, Austin.

without into we firmware digital that, tending and number. that what in portion and of driven a talking about factors largest by the represent I on is baked that clearly television. are So, growth the linear information, sort say we that’s of terms look of and scale platforms, specific that sort segment things and you certain first OEM fastest engagement, to integrations see for of And we disclose on predominantly can’t of the being digital growing activity basis can tell and linear the these in particular because really at

no install start consuming to users and there can So apps is immediately.

that AVOD to and platforms their consumption due a Tubi installed very scale quite bit like drive Following tend of to others base. just large a

So that’s little a there. give directionality you

Austin Moldow

schedule quarter, helpful. take engagement de minimis And or start are ramping monetizing just maybe we don’t or it for if there where as to of you super off here? that. meaningfully the are, sort you for time on know from seeing period monetization That’s basically before of I sort – mind last to on commenting it’s comment still of for a that Thanks is you

Erick Opeka

channels cycle forth be sense on the typically flow of we platform takes to helpful speaking of to platform, It days a the base. give on to Well, all our sort the XX entire days platforms. these monetization to see content it I addressable from think and any but generally varies from would way it launch so XX out to for

channel very are users small one lot So, cap platforms then with it of these to and footprint the of a careful or flow.

fully it takes then typically to and to an can optimize So addressable. typically up And ad serving to service. quarter the XX be a on rates supported it days fill about ad

faster generally XX what can look of ramp depending to much up we out at monetize. the it it kind partners to do addressable partner, it quicker. sometimes and footprint on a see hit fully can and to speaking, we realize then than to XX platform full that’s and fully scale Sometimes that can and days the about get But it quarter days

Austin Moldow

can question is between just the of the Great. That’s sale them quickly and how clean story also current general, as much thinking selling all for getting thinking really possible high up about your timing helpful. trying of – balancing My sell management in amongst you last the I’m as Systems to the on Projection and other all – on as getting of these you’re mainly, kind side sales, to prices perhaps cleaning balancing as the what possibly while then – interested is story? in

Chris McGurk

with line responds answer way that pleased is very but runs before Obviously, – to to and he that I so Chris, the I we made Gary the think also, who XXX that the by more see Thanks. from we’re fare the far. significant of question, you’re the on deals It’s revenues disclose can’t the I’ll pricing deals, than up, Yes. specific some we’ve – let going business but

Jill Calcaterra

X,XXX [ph].

Chris McGurk

but quarter, your most our to-date. And No, sold we going book fourth I’ll that in of Gary? question. answer Gary we’re to XXX let

Gary Loffredo

Sure.

negotiations, be total trying sold for systems dynamic disclosing and by mostly fourth the so we’re for sales XXX exact close our did and the of for and as these Group. a price You mostly Chris We’ve competitive far, specific where hit systems reasons not number we’re a in sales, the to reporting we’ll reporting said as weigh. XX-Q be these revenue them we’ll sales projector. quarter But in future

these price. them to We price. we is know fair And We’re and not worth. what that systems at what the weighing selling less release terms, we’re special going a a We intend versus don’t comfortable toward weigh price with. fair fair them than are sell price for but we that quickly more to we’re selling know getting

– our will sell time. So, earning are in VPFs There we’ll of ordinary take an are them we them course. and still some still

Austin Moldow

appreciate Really the it. Got yes. congrats, color, and

Chris McGurk

Austin. Thanks,

Operator

question [Operator Zacks from Investment. next comes Thompson line you. of from Instructions] Thank the Our Lisa

please? question Your

Lisa Thompson

afternoon. Hi, good

Chris McGurk

Good Chris. afternoon, it’s Lisa,

Lisa Thompson

Hi, Chris.

Chris McGurk

Hi.

Lisa Thompson

So, the the clarify in let them sales of XXX fourth on sold me projector just you quarter?

Chris McGurk

Gary, question? do you to want the answer

Gary Loffredo

Yes. We sold XXX in the fourth quarter.

Lisa Thompson

And, yes, Okay. I we’re $X that’s guess, talking so ish million around ballpark, right? the

Chris McGurk

– Well, I we we don’t don’t – think

Gary Loffredo

our our report the number, in be total in the Yes, next number will XX-K.

to quarter quarter. then have through more get the We and any there and the if fourth see close sales is

Lisa Thompson

everybody by just having end anticipating or year should you do sales something every go quarter want this is projector? of to a No,

Gary Loffredo

with – goals. their their timeframe that has a it’s exhibitor are and issues their capital and driven specific constraints, more every We it’s budgetary almost projector, talking but their by

Lisa Thompson

Sorry?

Gary Loffredo

in exhibitor are we our that projector. almost discussions So, active every has with

Lisa Thompson

Okay. test to flow? going is But – of so a you’d have how this

Gary Loffredo

No, it a to like and I we’re want the we at can that said a sell we fair price, at we’ll when arises them. price opportunity with, comfortable terms sell come so to

Lisa Thompson

As that revenues expect the fourth quarter, we far is as X? gone I, should now, Phase in

Gary Loffredo

there’s we’re for so – No, they limited I, still stopped. full from but have major revenue reached the paid that studios years, have all XX collecting Phase

of ended. So, revenue has the majority the

Lisa Thompson

be little But something? a there will

Gary Loffredo

little yes. a be will something, There

Lisa Thompson

Okay.

it, back Content there? about were where design the I and to exactly XXX% or said Can what you to go talking Okay. you wanted OTT statement that, was what you something. grew

Jeffrey Edell

by Group ahead OTT this overhead last is itself and we have and is the quarter-on-quarter. This Yes, basket. unallocated and Entertainment that’s about quarter-over-quarter, year-over-year, corporate and the we Group that’s we the the Content year model so when have specifically, Entertainment and so remember, have talked we of the Content then alone, the that’s just XXX%, the leases, yes, area, forth, XXX%

Lisa Thompson

a distribution that revenue is business minus in Content physical the that’s And or subset? the all

Jeffrey Edell

the is EBITDA. This

Lisa Thompson

The EBITDA?

Jeffrey Edell

The or and CEG the EBITDA original generated business, OTT nothing I do unallocated. with from distribution mean, physical to

Lisa Thompson

Okay. describe little Can bit? And compare how a that revenues? does to that you

Jeffrey Edell

– terms news is of we’ll the see it the is but on Q in the EBITDA interesting revenue ahead we’re down slightly, publishing, well, down if revenue that performance. Revenue we’re is, is way

Chris McGurk

Because of business. goal mix EBITDA in focusing effective cetera. all our been that the et And more that greenlighting et co-productions that cetera, program, of the in things our on for calls a the about on these always content, focus we’ve more has to talked line changing

Lisa Thompson

little Okay. And a year? bit to physical looked just last say compared can you distribution how

Jeffrey Edell

you in terms of physical The of terms revenue – – in or mean business

Lisa Thompson

Yes, revenue.

Jeffrey Edell

of can call, separately. we Yes, go over some our on that Lisa,

Lisa Thompson

Okay.

Jeffrey Edell

again, we buildings a revenue is these revenue from is so down. But declining at business our fact things, we’re more X% physical catalog doing. for that talking straight of cetera. are upon bit, are just what physical size physical Content anywhere down to focused side depending XX% et the we that we’re from even – have to business though decline to itself now studio Remember, the the our And on deals the the continues

Lisa Thompson

Right.

Jeffrey Edell

able That to some of should buffer that be decline.

Lisa Thompson

Okay, Is the China. anything about you right to right. bringing in there talk movies works didn’t now? And anything

Chris McGurk

you year. in to on, We’re conversations partners. our for who’re get release on [ph] non-Chinese with see, really that a your forward deals now. provide U.S. closing going eyes for right for films as distribution to is Chinese later it, see in companies, in sport with content. leftover number We managed focus right to launch going But China on service we’re efforts Hollywood got Chinese yes, there deals We’ve be BAMBU can big our release entertainment we’re working we’ve as can for selective. the about still keep open the the announcements yes, for XX our content and closing and working only Remember, of you in to trying China going

Lisa Thompson

of that Okay. talked quarter out. number you do And back saw movies some Jeff good or of some last to about you had coming – well I for them? Is reviews anything going a particularly

Jeffrey Edell

putting of but with terms were of amount did – now came pretty one out that there new – any the actually we movie we’re that It’s the that films pretty we’re no there. films of driver of well, No, linear we in was out of the revenue. many

So, plan over one or the XX. the we’re getting two X to we’re the to going quarter – from anywhere and next year be for guidance every would

Chris McGurk

for We the [ph] the focus early production Yes. on and or year where to And investment about we’ve acquiring extent it next had that business we film. are they a film. will as some films portfolio. we to last Finnish co-productions, again talked said, of on is the is stage and X of have And again, going identified on excited better. getting think about actually I time the already those are year as get the us a that for in And X X for more to return is over suppose in involved I hopefully we I add FT better

Lisa Thompson

like to to clarify Bambu, in way? same meaning go into channels that launched And a just distribution when you other is be that, Okay. going your just the to on channel going it’s

Erick Opeka

here. is this Yes, Erick

our the So allow is goal distributed versions and any us that that reach. to device take trade broadest we channel

lower So, acquisition. anticipate out like or subscription the allow channel sampling ad-supported as cost the in an in that in that fashion the hybrid allow reach We the and it called model user us industry of and commonly the for it’s going and freemium broadest market. model we

Lisa Thompson

Okay.

expect places everything those on else? TV Tubi will to other see XFINITY we So, it and and on it like all

Erick Opeka

third-party Yes, heavy is all channel distribution would future that Exactly. launches strategy Bambu part and of do. a we

Lisa Thompson

my questions. you. Thank forward look all I it. That’s to great. seeing Okay,

Chris McGurk

you. Thank

Operator

conclude you. back would program remarks. today’s hand McGurk Thank to This program. does like Chris session any to for of now question-and-answer the I the further

Chris McGurk

to forward again to just in support quarter your everyone thank results us our continued us reporting on I with June. for fourth and and we for call want joining the today in Okay. look

you So all. thank

Operator

and participation conclude the today’s Thank does in program. you, for gentlemen ladies This your conference.

day. disconnect. now Good may You

Cineverse (CNVS) 13 Feb 192019 Q3 Earnings call transcript