CSSE - Earnings call transcript Q3 2018 | Chicken Soup for the Soul Entertainment, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Chicken Soup for the Soul Entertainment Third Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to Investor Relations, James Carbonara. sir. ahead, go Please,

James Carbonara

welcome. Rouhana, on Officer; Chairman Chairman. Seaton, and are and call William Vice J. and With you, the me today Scott Thank Chief Executive

open will appreciate results. We the quarter operations opportunity update moderated Following and the an having be provide the discussion, participants on there Q&A this financial session on to to review the call. third a business the

forward-looking subject statements management Please and the to are to go call, William content issued this the are risks based assumptions of will November contained expectations regarding the current this CEO. differ ahead. the statements. Rouhana, that statements call. Chairman During call uncertainties XX, over text and now release make Bill. turn on which These on results I Please also and to could refer to to and actual cautionary forward-looking the in applies cause to materially. would earnings like

William Rouhana

Thanks very joining James. Good afternoon We third strong had for today. us quarter. and thank you a

year-over-year and months X fourth quarter EBITDA far. to We're times. be adjusted times expecting quarter still by our increased over XX nine our increased the best for Our revenue our

short-form high platform On the and our of year the which sight. adjusted moment, top for million the Pivotshare. XX originally. grow continued business production four SVOD delivered we the the the Heroes, very that, expected, our the of global for Chicken leading we a press announced very production. we release level, Truli.com by very online million for in and revenue at as $X.X EBITDA advanced of now We fourth million the acquisition and of EBITDA Hidden completed for in $X.X acquisition has and and And of our season with we the XX Soul's way, year-to-date to Soup $X.X episodes has we quarter adjusted than of is revenue us year-to-date. of a much we million in long- target in Our third series half-hours video XX quarter At our have third this in of to middle the brought well announced strategy $XX.X rather network in total

for through XX,XXX business our business, this not VOD Comedy, for one-time I'll which quarter our on business may areas our ad call go direct to statement in and We've and each have networks; or seven Popcornflix Espanolflix, our Popcornflix, video-on-demand we recent let's special term. and operations, Frightpix, Kids, the hours you acquisition We refer Popcornflix to that we networks Truli.com. third programming So, know of most an with at of use with VOD. some now had accumulated supported sales video-on-demand that Plus, this may extraordinary be beginning over as online now as A of our networks, call, repeated near

Our $XX per ad requests $XX per to increased XX% month. from million million month year-over-year

that million subscription an plan October, additional acquired to our channel currently time programming, for the at in on I XX% content mentioned We of Truli the family-friendly hours. XXX September our our minutes, in Pivotshare. minutes faith-based to increasing so, XXX Our seven. than an higher Truli XX which more branded or increased network. VOD it's November. We number of X,XXX networks additional XX,XXX gained Kids to to channel, our watch higher and adding hours million our networks and than some brought using channel include in AVOD of In pacing doing library and days created we Popcornflix content Truli first X% to Truli.com was

Soul of branded our the $X already savings subscription we the launch technology into million subscription-based a as for begun We’ve And realize channels. we've integrated Pivotshare reminder, or video-on-demand know, platform needed approximate VOD Pivotshare The you to successfully cost platform. and to As we acquired our provides that global Chicken Pivotshare SVOD business, Soup expected.

billings approximately has of average subscription. paid billings with As a monthly in XX,XXX generates business, per $X.X standalone Pivotshare approximately million $X subscriptions annual and approximately gross

and the platforms. generate XXXX. because Now, hold I’m rights annual digital across our X,XXX library license revenue. film view, our substantial share media, acquiring from little business own existing to to series able TV business. at films and for is deployment derived EBITDA. the Acquiring our acquired We're GAAP already we immediately incrementally content. including cost. way television its newly $XXX,XXX approximately of our distribution our series annual the $X and consequence, on distinguishing advances our libraries and and movies XX% expect Together business, purposes, generates no networks, worldwide we copyright all revenue online And the million the Pivotshare to only of distribution with films, only include the and recognize existing as our television pay approximately balance revenue, and well long-term a theatrical accretive online acquisition our video-on-demand enables this content network own television, We need distribution cable, Nonetheless, and film our and towards from approximately we In of and of to revenue and rapid gross billings, and are for billings of with TV billings own new exceed transformation home it video, per can we or revenue. free currently pay we including additional current we gross

The was the in and will at However, feature, of this fourth Reindeer, the And Cleese, year earlier Firth including the on we end John December Australia an release released Littlest beginning starring hit Rachel Hutcherson, U.S. Short. theaters and Mercy, Colin which docket at holiday Weisz, for still November. Josh starring big have several in releases the and the animated Martin of is quarter, Elliot

to we we after business our sponsor with have our content reduces have risk financial line cost reliable been EBITDA, and extremely to network generating short-form of our television us content where video obtained and the successful revenue for production commitments and significant business. Turning and our provides producing approach exceeding online operational production adjusted

aired on including A&E, Life, have eight Netflix. FYI, and The We networks, CBS, Discovery CW, TLC, Family, Discovery major

For programming equivalents of on for this produce target we're half-hour XXXX, XX business. of part deliver to our and

As stated of we earlier, the have four XX programming year. delivery for half-hours in long-form by the currently series and have already scheduled end of production,

X sponsored to these videos and produced half-hour year. each, our At average the minutes have videos XXX an add year. short-form of another We equivalents XX short-form for delivered total this

contracted which in will XX XX sponsored long-form videos addition short-form XXXX long-form to of be in for of the these programming, for of have XXXX, in In programs delivered XXXX. contracted we for were Some half-hours XXX XXXX. already

is Soul's using about the episodes these expect year currently for more We're which episodes Vacation an show four episodes the of for of create Chicken the plan We we'll soon. you in Heroes and our discussions all online of Soul's of Soup launch to of resources network the and networks Chicken Pivotshare that Season X; additional tell accelerate Hidden production, Soul AVOD of technology. Soup a the transformation Chicken brand. We networks of from Broke from Rental on three are shows Hidden are the X; the currently Going of for clarity, of Season for Potential and Rental delivered Vacation Season Soup end Heroes to X; episodes Potential XX episodes series, before for XX of additional nine XX X; for Season SVOD to From to the contract of as in this Season our included year; under equivalent X; using episodes some we and business our networks the in

opportunity to our We to continue company. an to add represent meaningful acquisitions believe that value

over We the Series in are an preferred acquisition consideration flexibility candidates, currency. scalable of to our strong pipeline and a A I'll shares we're continued review We've keeping being for turn as With XXXX detailed using actively we our balance more the a platform of in of Scott our our and Scott? sheet and Seaton growth. monitoring that, got evaluating acquisition financials. selective XXXX; expect call

Scott Seaton

of continue to owned investors revenue $XX,XXX you Over business. to and expect to of other categories; important Bill. million revenue Revenue strictly was the operated VOD for was our the Total last networks quarter in networks' growth the are relative business $XX,XXX Thanks, in is primary Breaking revenue third of three was further is driven this which in our limited which million, understand of is the to increase to quarter the purpose this we The for time, year. XXXX, networks, when favorably driver our for by revenue our first $X.X our compared third reporting, compares online ago primarily all networks, of category revenue categories. the of quarter down year our in which online to to XXXX in by Great. third $X.X our be industry. evaluate players quarter.

through total Soup of episodes which business prior which third production, associated We're media, second $X television year the our said, is zero third agreements distribution to TV balancing $X.X to includes traditional in compared and profit versus $X.X includes million we the revenue a Screen distribution, our million quarter revenue earlier third the $XX,XXX year-ago Our delivering quarter global in of in movies of of XXXX revenue, across of the the TV video generated Soul which generated before the revenue license the XX% revenue process as in Television the our year. quarters short-form between series, Gross acquisition compared of of in Media. year, Original million for in we or line and of XXXX, zero all of prior with do. would for beginning film thereby quarter the Chicken and was series modest quarter.

XX, third third would company's Net the quarter profit quarter period the for million XXXX EBITDA compared amortization to GAAP week income Without $XXX,XXX press of GAAP revenue. Adjusted of above was million film of quarter for of loss cash income million or to required $X.X library the or reconciliation XX% on gross film $XXX,XXX third that we loss last our of loss ended an sold. Our the loss been non-cash cost for be the amortization is which XXXX profit included would period. total A traditional measures November the EBITDA for of have is for the the XXXX compared adjusted operating non-GAAP XXXX. $XX,XXX, issued XX. XXXX. year. of of net of to last $X.X in months a was library Without an to been in the of included film the million, XX% is year-ago Operating September non-cash release three $X $X well this to distribution comparable library revenue, $X.X included of $XXX,XXX the by operating in business, of deduction total XXXX, was compared million, of the gross goods charge, charge, for of amortization which have

And short-form and the in in revenue driven seven year-ago XX, of the Media. Turning million XXXX, compared the reflecting increase in ended Television line million our episodes again on the delivery year-to-date videos. the to million, as million year-ago online revenue period, months in first to months the that Plus results, for became in nine of period. zero and of includes network, to compared increase revenue A to of the due of in $X.X $X.X by broadcast, times and in year-ago months the generated By VOD was XXXX, million to film compared finally, growth $X.X revenue total of increase primarily increase in The nine and September the $XX.X Popcornflix, of was acquisition short-form compared $X.X primarily XXXX, $XXX,XXX XXXX, months across the Pivotshare. which is production available $X.X well distribution businesses. Screen the a of video acquisition growth of Popcornflix businesses, number TV all period. significant YouTube, generated the generated number period. for in an The of as nine of plus networks, of year-ago the first reflects of first to delivery million The in nine

$XXX,XXX year-ago non-cash profit Gross So, on or added licensing increase. of change or XX% $X.X ended million the also to revenue, earned The months profit million year. last our from delivered period. XX% XX, is total percentage gross gross episodes net we the would XXXX, was business, of traditional profit film million million, of the operating to in the to amortization September in Adjusted for loss have $X.X XX required year. film of the an nine to of is substantially compared the months would the charge Operating goods XX% times million for an $X.X our total the GAAP That's sold. non-cash or library in well XXXX, by XX% distribution XX, for compared revenue EBITDA ended cost to year-ago is XXXX, amortization larger. million year-ago Without amortization this which previously revenue non-cash of resulted $XXX,XXX, ended than the $XX.X of of was had net period. months for included $X.X been loss greater have which revenue, film of of library XXXX, be for library $XXX,XXX above Without was revenue for in operating nine $X.X our or the profit last revenue, September September which period. compared charge nine XX,

Turning to sheet. our balance

outstanding not as $X.X XXXX, of XX, offering. to XX, XXXX, form million share, to totaling of XXXX. million and The December today's the had of balance preferred XX XX, record does cash As returned our cash $XX.X a of August million compared December September take of XXXX, X. $X.X $X $X.XX special company in holders holders to of outstanding as of as as of million the $X.X stock to into million dividend cash August of million B We completed account the debt common A XX, of and compared stock a equivalents of and $X.X cash on Class September

$XX total of our For reiterating XXXX, adjusted outlook $XX we’re revenue full-year EBITDA. million of of and million

conducive The of investors line fourth third to seasonal emphasize also encourage expect with We sequentially in significantly quarter strong the results fourth business. a of and results year. increasing in but over achieving revenue linear our the again quarter, up to while our will earnings long trends quarter quarter our the last We composition the from fourth not quarter historical the be to shift composition in and to quarter current deliver fluctuations growth exceed our will the is not as the growth, we believe of term, business sources. significant profitability, of we

I'd call like to back to turn Now, the Bill.

William Rouhana

strong to Thanks, equity this a Scott. Well, we've our acquisition cash, proven net currency all balance of ability of capital, our use returned sheet, got to to shareholders. preferred access excess as value and the we've an a is, ready

analyst Turning to hope without projections. XXXX, even we've and at taken a we additional current look exceed to estimates their acquisitions,

if to are open So, I'd any. the our this concludes prepared call and for questions remarks, operator, like there

Operator

Mike from Instructions] Grondahl comes Thank Security. And you. question [Operator our first with Northland the line of

line is Your open. now

Mike Grondahl

Scott. Plus, you sort three little you some Truli at there and how on grows couple Hi, just your give just a sort Could a what thanks, the of minutes under of then you made bit you've months kind and and Bill just the us umbrella? an of update Popcornflix of saw that last and A progress think and spend of

William Rouhana

Mike. Sure

so we the prior quarter, revenue over the for and look you combination XX $X.X at over numbers by online percent, CPMs, nicely. year, some over jump up for certainly So, tremendous which almost networks, of prior we as serve, revenue were also to you the come bigger the It's in odd if correctly, million through ads think since the number the at starting I jump were quarter the number business, which the of about even a took that's an and things, up is know driven year-over-year. I XX% if driven, remember by a

CPM, you're higher higher ads, more have So, going revenue. to

of pretty I know we is upward line focus this we that results that don't caveat and channels moving but begin growth to will this overall, able more about some be mean we know not so It to was noting in there division the quarter higher from even continues SVOD, the that might particularly fairly a add of by online in business. particular fact is one quarter, though, our reasons very particular is. quarter at This are it and that to it immediately well. was extraordinary add the that repeat the and we line networks that about we and will pace, as by my conversation the I had I impacted where this by even fact be why CPMs, are – optimistic you and reasons that's sales direct our

niche you as one will tried one have to we only saying are guys build well. economic profits – while, that had was assets the networks programming, single and were half, and been as it's a what be on know generated where following itself. really us. had deeply to a amount you to know, Popcorn at people we an cover prices sense amalgamated a family needed is which well I've space, organized places in and money, a thought based, doing expected. period relationships a we in a Pivotshare as a that to the extremely month out low there to doing doesn't business able an pick just, be Facebook And Truli, kind they some and is on for of fair essentially, very of sharing only significant it where faith-based acquire them be monetize it when So, and up hadn't years make for subordinated for they a Truli sure as like, of going online exactly very opportunity rock at and obviously solid We’ve a always opportunity of was to category it where arrangement. it's enough, interesting pretty that in basis, programming good but begun very over ran that the to of but we in by we're

of to to success that obviously and to a SVOD us to running, And get the is at that no Truli art going capital move million I deploy in we that great well. we The business And of up we and Ad there terms our so, then cost. got if to to add will of be from, business to do acquisition, an $XX it for now we work Tech that Stack this well, as and we went about have do our to benefited it. but platform guess it's do that in into

I was know. Sorry, long answer, a that Mike,

Mike Grondahl

the out think what No, those shows were quick. XX, the one, guess pretty that’s Rental numbers you to delivered XX, – I and just you Vacation have XX? were the next and I gave added – okay. And Those up of XX XX you Heroes can you've were said, you X then like the Hidden ready,

William Rouhana

XX So, not only did excluding the up they target had be before I we which number actually that series for what will gave the the excluding delivered, even think short-form to would XX of we – they over that's the XX, up videos, likely of to and that year. take you couple we way added sign more year, a contracted, you, the the XX end

you're you'll film in expectations one of overall, these to we currently will in be with videos through deliveries have the So, this EBITDA three fact – also for hoping the point. believe track XX will the that still all distribution -- into all But XX year XX how its online all and the quarter, exceeded get I long-form, numbers put where we of flow see we're together, and the quarter. for that and half-hours you television line networks really they year, we mean year. hope what fourth that's short-form we're revenue best half-hour production businesses the sort When – over stay year, kind on reasons to we that add have are we a contracted equivalents, and delivered and production the that this in actually about across QX, feeling with When these this that which the just we've of are. at will That in various our what be. way translate is will and that the of short-form, of XX currently finished, bunch expectations

So…

Mike Grondahl

Yes. It you, Bill. well. Thank seems to going be

William Rouhana

agree. saying for that. well. I It going is Thanks

Mike Grondahl

Thanks a lot.

William Rouhana

You’re welcome.

Operator

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

is line open. Your now

Lisa Thompson

guys. Hi,

William Rouhana

Hi Lisa, you? how are

Lisa Thompson

Good.

ask questions. two So, let you me

saw [ph] from did First, you I the from Broke, that the that guess Going is new in name? quarter which tuck revenues I

William Rouhana

Yes.

Lisa Thompson

till we off what and far find and it is debuts how is goes it that air? it So, on out

William Rouhana

be because going when I and or the those will to usual finished make air it's announcement, of kind December, it we yet, completely going So, of don't Lisa. can't you by it's on end as get tell where

Lisa Thompson

Right.

William Rouhana

That will great, Only looks plan the say order a of it's – it debt of now with show Broke, what very way. get executive the the series this, overcoming into the problems overcoming Fixer, to is really case we much the their It's the great. lives burden it's that producing very mean meaning every to debt at is are followed but debt and debt own and off that to Ashton those student it's the a and the it, there, it's the of least you great was a the cause part on in outside emotional is By how actual pretty actually we a risk exhibitors actually small the called do Kutcher fix then delve their who But called go I it life sense with where you of build haven't for it's some way, amazing. doing seeing that biggest been like inability in a that amazing. show about in to I've student and Going the the I looking at from better. debt. and and It's kids loser really, single that. by

Lisa. sorry, So,

Lisa Thompson

okay. That's

just imagine… I'm going I to So, quarter it's the possibly can because first guess

William Rouhana

you about with Yes, wouldn't that's that. guess, fair I a argue

Lisa Thompson

have And said haven't anything that about. mystery one then Cool. you Okay. another you

William Rouhana

we when the not be are them. with a a But there like have migrate the comes in production, least of we but fully what are name of the at will who we but this delivered I those when there the be actually a announce we in There play, of approvals, can't frustrations part that actually delivered mystery, meant of total one although is soon, get least end are we by are on sponsors, which balance It half-hours. sponsored role more. be some And to of position the It's it lot be of the right the of approval releases to will we is at actually announce and series causes four Yes. rights or the back who tell episodes we quite year, with a our think start next other time, our we it you And know. of by until will – can now, people of is two to series shareholders, will anxiety can't I year. be we a XX the yet, promise. we people I are the

So, mystery, a of approvals make our things. meant just these it's people, from be the when me it's agreements to nature not require other –

we approvals do, it'll make we the anti-climactic the now this announcement. But call. get be when and we'll after So, will

Lisa Thompson

then have Because won't. if see to it no, – any we to good? be Well it's going

William Rouhana

I'm about this excited Well, one.

Lisa Thompson

Cool.

you let in in not you me direct something, some so or exceptional sort said something. distribution, ad just like So, – online, sales clarify of had

William Rouhana

Yes.

Lisa Thompson

you can that. you quantify Can

straight the draw it to a got that line So future, with the when to rule my I take project out?

William Rouhana

hundred thousand dollars. was several It

we make could detailed. – too that But sales don't them. I business want get if would to we've said direct know, you always get improve significantly So, you this –

and – which been we've material expect than two far, to you this repeat And was was done you then that actually don't one more it it so given quarters I ago think we quarter, both quarter, one, times, I've one or did told helpful. I itself. – that's this Now, again

it average think be decide sure still trying it but do can possible to miss, that you we XXXX% hit it's and into on and obviously be it business. get we that, actually makes for think, rhythm impact now, not do, and do again, quarter, to will the would we're do where contributor was material a we think we'll it's because was probably can what going by be I consistently quarter every I it I'm you it a repeatable, a important material part. of the an but whether part EBITDA about right over will mean, we everybody but from So, it think a would to that that I exceeded we everybody this came XX% on – sale thinking expected noticed, that EBITDA that

can extent, continue do to the be So, we'll outperform it, we and keep trying. to should able to we

Lisa Thompson

Okay.

As far The Elliott, distribution, theatrical those as you Mercy specifically, called releases? out are and

William Rouhana

limited don't movies is potential that do risk done the We on a money by Yes. transactional see We've really meaningful theatrical is the and those as and movie returns really, year those take quarter a way significant upside. They're for and on about the a and years lot the availability TVOD stars, couple well. the in had and for Christmas do had money a have we've of because and years fair on releases, we but have not two day both and years is day they theatrical we were �� with of Colin in releases. video-on-demand on probably Firth those make these and Elliott reindeer. Weisz, on and it's these But releases, both what amount that the biggest a movies of Mercy pretty some really TVOD movie we spend movie, interest major significant will. Rachel There's The

it at I So, mean so makes putting time, [ph]. Christmas upset out

So, we're kind hopeful… of

Lisa Thompson

matters this they [indiscernible]? doing there we just is or can well any of outside from are the if find out exceptionally way So, that

William Rouhana

we have wait will information till from we we TVOD you. … You get Because is, tell the don't platforms, but

Lisa Thompson

Right.

William Rouhana

us. That's available only to

one I every see XX or platform Top it. something. and go could it you shows in mean, if I the to So, that's way on do up mean, the

Lisa Thompson

we wouldn't nothing it]. – have [concern then have would so any But with to we

William Rouhana

up check that, some else one jumps over would the able to time of the Amazon doing other got fun at could on their figure of it one Anybody and much big bored it – on know the see ones, it than spend hands, call but who's to But if time the be – the don't iTunes you out. will over and I too that. be holidays how

Lisa Thompson

we could watch we them, them. see like Or at least if

William Rouhana

That really you should do good because they're both movies.

Lisa Thompson

Alright.

William Rouhana

recommend I think. you highly that I watch And that them,

Lisa Thompson

Or going are tell at? be they you me Where can't to that?

William Rouhana

Every – imagine. platform, that you know iTtunes, Amazon, could every platform Apple's you TVOD

Lisa Thompson

Cool.

you, didn't talk that? some to an I think, So, just bother Analyst times? having about you Day Do you – consider about I

William Rouhana

certainly ever … I don't Lisa, would saying those words, but we remember not

Lisa Thompson

Really?

William Rouhana

We certainly reject the would not idea.

some that we, some year got as be. XXXX and of a early great in, think for hope, you would becomes just to can direction we've I give as we how are really color time how could I going good be it evolve next clear great on the that

that might like sort There time it Day, can on a be I a would to to significant before themselves sense year-end. number have themselves but are Analyst going need we let very an before of such sort make that that. to So, out think consider things good out something they

Lisa Thompson

Cool. Great. That's something I questions. That all to. look my forward will be you. Thank

William Rouhana

Thanks you. we're that. believe, a to Thank call for going I today. joining it day with us operator, And

Operator

a thank in so today's and Thank Ladies Everyone, gentlemen, you today's may conclude disconnect. conference. for you day. And program. great participating much. does have you This all

Chicken Soup for the Soul Entertainment (CSSEQ) 19 Nov 182018 Q3 Earnings call transcript