CSSE - Earnings call transcript Q4 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 and Crackle Plus Full Year 2018 Financial Results 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 be given at that time [Operator Instructions]. And as a reminder, today's conference call is being recorded. turn over to of James like IR. Hayden now the to conference Carbonara I'd ahead. go Please

James Carbonara

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

of joint a a an Following Q&A financial to recent update our call. appreciate on session the brief to opportunity Plus moderated having this our on will the participants venture, provide open as there We discussion, review as be well the you results. Crackle with

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

William Rouhana

been and Good the give as Thanks of joining questions as today. venture for us and Plus announcement possibly Sony. you we it to can. much the thank focus joint with There everybody we about about Crackle will But yesterday, we'd be call like morning, our information any you James.

we results, Before filing that, we're going today. to brief overview will be which give last year's you of a

transactions, our networks, acquisition including has strategic online and As we grow strategy XXXX, customer a lower discussed network since audience, our Truli through Pivotshare, costs number network in of the to Crackle. IPO our create time Popcornflix, been and our of a of

strategy. have We on this delivered

critical of to them take will networks as and continue create online and mass will our advantage to fragmented more and scale. of We highly business to look network acquire try we we build the online

Our current well business in performed XXXX. AVOD

per $XX.X $XX.X month. increased Our from add up year-over-year, month request million to XX% per million

distribution television business, and own and approximately network licensed at copyrights where across In TV increased hold our from movies rights we series currently film $X.X of distribution XXX,XXX. million we revenue and to own long-term online Our because at grew to television media, XXXX series primarily all the which million business and $XX.X we Screen was in our management. million end $X.X And Media, rebounded area, XXXX. of this XXXX acquired this films. from our the under was revenue In

sponsor to to it able to generate content significant our our produce Discovery business, producing reliable CBS, able content this in network grew has been for FYI, and on A&E, as eight company Discovery business And obtained to XXXX. Turning major revenue including we Family, CW, our adjusted and in business compared continues short-form television in $XX.X have and million we $X.X since approach to we've commitments date, video that to found as been Revenue EBITDA XXXX, To aired have in million we've after Life, segment TLC, networks, our and XXXX. Netflix. online well. in we successfully The

of So and we we of the success. yesterday VOD and on assets Sony, and the were given me in complete the now, course all condition turn the acquisition that is are that our that the is coverage the to press for a we and partner consumers. Crackle key scale these a content advertisers major able addressability long-term factors of in let AVOD announced the various seen of Crackle is a major consolidated where of And The have what business joint venture. will clearly that We own event contributed States. of attract the Crackle you AVOD sure and SVOD VOD businesses I'm are and extensive to vision is many assumption we the diversity available space think share to of to our leading combination industry. our assets United in create who a media

let's turn In to scale scale, obvious. So addressability. Crackle Plus first is and

on active rep have networks, million over owned users we and more millions plus will operated grow XX network, our ad intend each to our on aggressively. We of which

not AVOD broad will million combined to billion users technology if minutes have hours leading, over the The reach a on advertisers to services, service registered over we over in month, addressable partnerships over audience $X.X XXX reach This U.S. programming, XX,XXX makes our one of We the and place. that allow streaming have us content XX $XX us networks. a will and to leading add scale in per enable

choice library for to content, curated, Soup array with assets in a content that accepted refreshed. the Consumers the with Let's media, some Chicken Entertainment and robust offerings The is the have Television, content second same richest can will Sony will turn constantly XX access to is to well hours these industry. content of evidence and Pictures none, we are XX,XXX programming of partners for provide Soul be screen XXX the consumers. we extremely would to best the are networks have statistics from impressive it that be vast overwhelming, of

grow ours more to received is, instead our to that stay believe it us Sony decide in most They way like had stay others to we this? like that enthusiasm the looking They I do think to our to we they approach. did most that, chose our to announced and we since think and and correctly speak can't this entrepreneurial why they idea what they of said in had But than grow have in sell that joint question and I can Crackle building. So the to press I was business it Sony, wanted right you understood there's they of to partnership, Sony think often opportunities single the the tell for important, help it. aggressive ability I've release, and Plus. I for discuss it the

a big said over our opportunity is As this in joint and last Scott, his you. statement interview Variety we we Mike in said, agreed. to he statement, think Hopkins yesterday, his to in

Scott Seaton

I I'll time to is you go Well, fourth opportunity. it order with results, walk impact through enough also have Crackle you our in full compared a primarily The million Total would give $XX was by $XX.X been and terrific over year I across they've for all the in results. XXX% XX-K to the to was increase growth XXXX quarter simply of the our ordinarily driven filed Bill. XXXX. an on Thanks, million update think transaction. businesses. of Revenue

been of networks, Television included of of Without our film above $XX.X film $XXX,XXX XXXX $X.X and of revenue, to well to again revenue of loss to goods amortization XXXX, year. which XX% million XXXX, plus or percentage is $X.X acquisition film non-cash million total in YouTube, by XXXX. gross compared Popcornflix, by which video for our the compared in $X.X Media. TV an which $XX.X XXXX. total compared library business, million we growth The XXXX. non-cash last compared his to of in The of to generated non-cash of in without XX% total in VOD amortization profit profit of line of revenue, and networks and XXXX, of profit revenue million XX Popcornflix, is Operating XXXX, to to million was million resulted sold. an increase million compared distribution required in our of traditional million XX% generated film $X.X charge business, or on or total revenue amortization and online than would be $XXX,XXX So last form or in $X.X generated Gross in GAAP gross library have of would which from for primarily cost was profit income of reflecting have in distribution million expense, XX% revenue the revenue short $X.X XXXX, substantially due library production greater is our had includes Pivotshare. in the operating is year. the XXXX million $XX.X in $XXX,XXX operating change acquisition Screen in for

the acquisition. and for for XXXX, $X gain A So, of compared purchase from bargain to the acquiring million EBITDA adjusted $XX.X was effects Media Screen XXXX excluding million the Plus

Aat XX, as XX XXXX. as to as outstanding XXXX. December of compared million our the XX had cash December to of $X.X December debt balance sheet. of was XXXX cash million million turning So million company $X.X and Outstanding December equivalents to of compared $X.X $X.X XX

what Now, the Crackle to been let's learning into and turn we've there. transaction insights let give you some us

review Our network. has demand the last for six revealed months of video vibrant Crackle a on growing

January, example, be For had and consistently growth also the year position in and the solidified. XXXX, growth over industry Crackles and periods, double to users through Crackle year in in that monetized have fourth digit continued. continues those active both In Daily revenue. grown meaningfully quarter impressions of

video their including free partners one XB. of was leading Just by four participate with days the and upfront ago, Omnicom A&E, chosen to in media Select programmers deals AMC wheel Crackle and

than of company's our that meaningfully be is gives plus the double revenue be confidence which to more revenue. Crackle to around adjusted and around this XX% expected increase EBITDA All us XX% total of its venture joint will

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

William Rouhana

all Philippe the really been of each that days Guelton here help I support which acquisition to industry this strong help very team strong of business. of bright. business, ago have all their does Elana And and at to a and what Officer. We've non-stop they to Operating is ability very, Sofko, us Scott. we growth all working with we're that's why are veterans grow reasons And the data our saw with backgrounds. the done and on months of Thanks very further been excited us contributed one our number am for so business. for they've grow that's the position Crackle a future And our what few to them company veterans backgrounds. Plus of doing think very I Chief about this contributed work us

to strategy. business hundreds said consolidated. we build do plan big aggressively I see opportunity that AVOD to that. earlier, scale a to aggressive small networks acquisition even And The of As through we be need an greater has

pending I venture Screen Crackle, we've environment. pending demonstrated will Media, know arranged think well And having Truli think know serve them. or businesses to in and media at we to we that optimize having us this now the acquisition require and Pivotshare, point, this skill how how we joint required

Let the questions. me now for open call

Operator

our Benchmark. of from you first [Operator Instructions]. Dan Kurnos question comes And Thank

Your line now open. is

Dan Kurnos

streaming just get thought if behind deal side. color too wouldn't and their a can want metrics the this Sony. how the throw guess -- I because just the all for XXX know like media Crackle the to are I that, acquired surprised about trending. TV Pluto be reports wrong is inflated. has and We been use you $XXX start, around Congratulations, got you is from we I just know sounds it million around I massive what that revenue the five-year here guys. some for plan can and process Look, window on out good start

So clearly, there's space. in the value

maybe have grow, can and what how you the you're help thinking Crackle, understand about, directionally to some little much then that just accelerate probably differently make as least Do it, to growth the more that XX to too you asset us at over sounds So a help operating continue a absorb the on and think think grain process accelerate some of rate early about, say assets? you how changes understanding that trends will a the you here, like understand bit wise that can't this asset to next growth try XX what to can months trajectory you of underlying thought lot through but us absorbing and you go basis. help do

William Rouhana

you, Thank I is this for us sure. transformative for agree Dan.

a if now create like be people what you fundamental think original if And also the in And important nothing last to place of video are us our will carving be producing and access to ultimately AVOD The on position amount in very one -- do massive will half up massive probably that over in service consuming But not and of giving have position in of of combination videos to our a of capabilities continue, networks, in XXX,XXX will because large that that the U.S. And are there's not acceleration on a now developed least it own which one in will leading our just It that content plenty of And it in of of time. marketplace thing positions such to B which are be with nothing video more be will company space. like trend. because mass, way, we be the at and just along over there one as, we've daily the without being is to trend active in combined the in networks. taking the be It's not the be is and half have companies that's demand content, movement now scale network. because be be scale. of online driving positioned that of viewers marketplace than are. And will And the to that trend couple who online massively. a a has position we supported, with subscription But denied. will continue Crackles was free we trend mass of competitors risks, few this. A-leading, online of years taking delivered ad on-demand. really our with most will us way AVOD over another to great video we're growth believe meaningful that you critical that really cannot on Crackle who other of the put recipient I our front us a we of will beneficiary by

look us United one to them if believe you XXX,XXX the some see, the top America, you the compared broadcast daily the as would networks, including If of numbers viewers existing networks and cable all. make you at in States of of

we the provide we is very our are reach become that endless scale. go places of really strong, to one content growing, that top few And a advertisers we on video-on-demand position, trend unique So the have can customers. and of is the to in

very, a Dan. combination, very it's good so And

that the go think hundreds our there because these be there cannot the networks, way extremely networks that add will high advertising. because just to strategy of smaller really of trend. of rolling advertisers growth I up But placed which is can compete, no

and we us, responsible to And things. robust, know about most are build spend we that We We grow analyze in proven I acquire that effort assets we and time who a of we review way it acquire. do. carefully. in to will We it take them be the you think actually position have do can judiciously. And think know the make We the things we them and them.

So, the that is I right was we a last we And is we thiss, that are they at. see Sony in to exactly one there's it. here opportunity. belief, that. it with, people big And everything entrepreneurial, and just the to had they of all conversation agree to with. believe that what place. space them, over the think aggressive six have management, This do the agree the with management come what and agree excel And right needs I of the we they right this It's exactly that I see we've said months. things we they with are do are They people

lots yes, So and growth, fast. of very Dan,

Dan Kurnos

don't think at AVOD Bill, anyone you've I think about deal for document talk point, I don't handful deal argue $X by cash for with times your JV and donating let's with assets acumen and So the tuck-in a MAUs EBITDA of became second. can this tiny a just largest strategy really done the a to no you player four more outlay. literally than million

So, how that. could I know anyone with don't argue

know programming you're Sony think forward. Just on with adding they Do as brand public. are what but has live? into more about basis, forward go you to size your expensive. library and you maybe to the talk you you that think into? largest now want I messaging more push original you do Do a to about the going originals, how push for? We you're standalone looking the Can some deal convey

William Rouhana

Okay.

So, to take lurking try a apart. them there, I'll of questions couple there's

very Over and there. they various what time, who looking terms think in players a add very time. to getting migrating at period them all, what they allows know of which put a are take content can rationalize when to of are will who will we're strategy. over that's be additional I aggregating into there, to probably First networks go more But and deal identifiable turn of access for have them barbell that a place lots size, they're audience will together where estate, And aggregate, we of us. process people There of people find networks, we small out little. those group real and increasing really

the The really other who end where of have out the barbell players, to larger go is next. and try figure going to they're

I'm this And course, I of we would think we will, do, we all And area. have A this create but potential has when change great in other opportunities. companies But much will the consume hard of there know to space, we transactions more in of event, bigger tell, And we'll this our There that look space. be people. is there either that those a leader, represent a have looking very many to appropriate a an next will large people are an have the the we this is which the all we important many of as because work partner with for we expect be it's those be something I that there value way few is to to video, be, in future, them shareholders. at have even into thing now time, opportunity servicing to this. we're entering than will know to for the over has people such I an kind be as

in now bit is place let's talk a really about that doubt, for a but no little we're exceptional, So content.

shows in of that movies libraries. are we have television you and know, our collective As thousands

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say very our We AVOD five a partnerships, have one also a is FilmRise partners have as here film we we XXX -- content XX years. important that we to right where for library we have, content of have

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too. that, So, we're pretty at I getting think good

Dan Kurnos

So do in content I just the step ask that ask, other production just aside that, a grow AVOD networks form Bill. you people some to do last for my more before segment you that and short form now. the about try and think become your standalone? of TV on Does is questions, that let How, segment still or

William Rouhana

access quarter, like were than knew business expertise, networks. two cost stuff give of VOD happened obtain that beginning But was businesses always advantageous what to content for to on us an business, the like needed we to back to anybody lower obtain than our these some series, creation two money, on of and we've take That could and hoped, those expertise want in moved the as and developed always this our fourth they've to where have to both both on and hold Heroes that From demand from want also its was us advantage. amazing it accelerated to of it, the competitors. we back Hidden groups Places our and because said to now television Dan basis. others more take us. opportunity at have Going put give growth looks those coming much it's distribution the doesn't a of exactly and and we not is We continuing we monetize content And expertise to Broke we've into what's And I we expertise, make us. can our where look the film go advantage, being didn't video the designed like content, us and do mean own our start elsewhere. X, sponsors risks, content

ultimately all comes still in lowers will and do programming way is advantage to back of to our we because cost. First, a that us that for these our them,

as people to least the strategy always two it's mean VOD activities But these understand this same still now can meant our business. been. are So what is support we at by

Dan Kurnos

one last just then And for me.

side, that whether contribute about Plus extent On synergies potential the you utilize ability maybe your to to whether it's whether the talk there, feel will personnel, cost to how its tech, can it's to you much A comfortable profitability?

William Rouhana

at a looked and we ways were at. that achieved one believe line those a we went be of we costs business Well, how And vibrant is one of costs. When customers. of are was growing key their in what with close. at was those of revenue environment And profitability But it actually that joint that that tech parts And items into were that partner Crackle, relationship And found requirements expense and technology in, lot most in we very item us seeing would have that pulling reduce to with reduce the venture. venture's to together other going joint and was we of where overall able platform our was the and work we of we ways how look will quickly the to than we there it with we way there of Sony run provide and an companies before significantly using costs our forward. our we that. move our also going reduce in so Sony look our into to and each key we differently so to shared good costs, our one there was our amazed items find

we'll in, than begin and if and what and of by-market They've to ultimately. feel right our quite EBITDA acquisition, part brand thing. important platforms. running the lowest a for our in as build lower much to see that's way to have like and be interested the others. among Plus had them acquisition to a than people. things. which this few A Crackle them A we business that of what market A and cost able is through Plus building of social customers finished, the I is building with as question quickly. the to now as content and been Soup we're cost of customers. Soul have very of raised marketing, second question other a a at a starts going growing we know But time is Right we'll out of period from ownership But with. very year them to our it. billions business reach you The the they the Plus ground a be And in us much costly they're to to because other doing So, had was series to and actual ways now, go this other relationships of the on a hit networks a market you media will frankly last after look versus consolidation we're positive We less cost. way, find in the Chicken the it's able be at big customers we This We're by market acquiring cheaper immediately

would of you evolve, will part to expect that continue So business I our would.

money sure that of the find second brands recall film brands reach which where creation, strategy, we customers acquired, wide of making our that to and part the our we You will business, through our we also and using with see those marketing acquisition more we discussed the have that. as relationships distribution costs through other reduce our as ultimately in are way was, believe as lower to future we've that's costs but content which the lower the brand costs bring do on you and customers content I'm why VOD will the our finding customers

like through about feel that come this it happening picture I way say is would, thing and that. lot I that together can a faster I please to only starting imagined a in this we I'm it. So, The than is

think the we've right done moving at ourselves seeking job there quickly. good times, pace industry I and required. and out are in things fast understanding out are positioning paced the a place happening that's are which very These and a

that years maximum well advantage public strategy implement went We positioned we talking are now to take of since and to less two about we've the been business that than ago.

everybody, XXXX. two remind August than less of to years ago, Just

So, beginning. not quite transformation. It it's been a is over. questions, Dan. It's just Thanks for your

Operator

next Grondahl Northland of Mike question Security. our comes Thank you. from And

open. is line now Your

Unidentified Analyst

questions on Greg congrats my Thanks for taking for the is This and on morning. Mike. deal. Good

could more the little you if commentary wondering from expectations Just Crackle a Plus? on provide ROI for

William Rouhana

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Unidentified Analyst

expected year revenue to year? roughly, is the portion just then I guess mix and percentage And next video-on-demand then what of maybe or this be

William Rouhana

shifts Now, VOD business our to overwhelmingly business.

as double more this You the we said our press joint revenue. will know, venture release, in than

it -- you add be TV to will if revenue, the more be way contributor for our business than revenue Original VOD alone, and production when break the our a business, So it look TV just form short that down, by our going And forward of business. half business is to take existing at sure. form our you the long likely will smallest and

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Unidentified Analyst

or And call TV shows content. in I guess, any distribution there Are out lastly, then on your specific to production follow-up just businesses? to or movies

William Rouhana

which earlier, I what fact Heroes, Well, in our that its Emmy nomination said excited the about business, received production Hidden season. in I we've we're for repeat an very is fourth

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the more Sony in And to fact provide which content, in will library. than an they forward extensive past. it have way we library, continue committed side, have Crackle is is Sony, and content by the provide going to the On the

in So, our to for more really a be lot I and stuff will people that attracting helpful online of more consumers networks. good think

Operator

And our Zacks. question you. Thank comes Lisa Thompson next of

now is line Your open.

Lisa Thompson

have When a some going here, So this that those to do going pity think that do on I'm is model. have you questions to close? people us so of ask to you

William Rouhana

it in move but and issues, mostly regulatory to consensus. a Well, just There's we're month do should close to I'm yes, no And think closed. get it May. it might closing. close, could there of paperwork lot drag I in of April, -- assignments the are till it the But expecting it

Lisa Thompson

you going X-K going that. And to be financial an there file is to What in us? on said you're information for

William Rouhana

X you're least XX you days beat do required at the normal our you to that very that is blown will not financials. full that X-K But financials. full we'll we after timing. blown timing might announced, so due contained with meet best days requirement, trial will We'll but to as So the first X-K about, think Lisa, its X-K is that. do know I the

Lisa Thompson

or is should So start in mean you $XX do some the interim, to revenues, I -- million add here? there give number? where I can us like month a

William Rouhana

ready that think I not we yet. Well, do are to

you to As close. have we know, a need

been think I will revenue. double our we've than So more pretty that this clear

think I So I have on a my calculator. two

So fully how could more is overtime. multiply that process itself to But I this reveal know figure a that that can so I you will think out.

Lisa Thompson

they are seasonal to a look or growing it business, be just sequentially? Does

William Rouhana

business not a within seasonality for little of in end the a type pretty revenue been you've here. used businesses thing the There's our business for revenue But that's past And recurring bit a advertising now generates they of when seasonality, and where all Christmas in advertising narrower understandable peaks regular band looks and any the This we holiday was EBITDA quarter, the of we but that certain half cash and is stuff, much that ranges it build way. than within in business started. our the other with of to a valleys. material fourth -- We operate have driven in aspired terms constant to a there're like in flow. business generates

Lisa Thompson

EBITDA your positive. the as about me Do joint for let a company you the clarify just whole? comment or being So for venture mean

William Rouhana

already venture is company the For positive the EBITDA and joint adjusted will…

Lisa Thompson

Oh, I know.

William Rouhana

will considerably. the simply to that Well, joint that fact venture add

Lisa Thompson

will be… Okay, so right that after

William Rouhana

business on time. a We things -- quite of know, Right others you can growth. grow this you way. sense. it operate that's because a for grow you as your because of very long be working been this, a businesses after we've pay investing believe And in should business way efficient what know ahead that's run that we as rather that, we I they'll a lot attention, and profitably their should you in with disagree the but But than makes invest fine.

in the shareholders of are as I been And it we largest very our is growth think it. of that's far being we achieve and way money money. after our do we know, to all, shareholders' all a able responsible custodians we've good how substantial this company, by

the we that understand things, to puts of And things right And and handle to size this certain because business. Crackle, how able takes operate so we at differently. we way, look understand were

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so the and companies added the all year. number If this we sell. comparisons talk country, spending be way, your when a about this if to a amounts multiples you trend. the be because call AVOD of if you really because you're can this everything driving same anybody the they of to must consolidate. fragmented right growth to spend who What's guy, monthly By of a particular spent please buyer available this big of you money we also do a that. time us can marketing did, look trend active across right what's at The else. the an on buying you group small is I operator, last control a is us services the network not calls the out, now, industry is highly is will market small we to money. And as And that is overwhelming of companies give of now where AVOD builder, users opportunity is need

to us buy you your advertisers network, need money. You any giving before stop

You what's cannot choose going and to group, of among need attract hundreds the a advertisers. be pick consolidated and bigger They of more part to networks. that's because

that drive going that and we business spending moment the two of in I difference to you really over am do will it's people promised we what in forward do So time that's today. makes what's a minutes going the this. in light of like business building that responsible

or if one Lisa, your I give So that I you question… answered more,

Lisa Thompson

fourth one Okay, and more address to to quarter. the give revenues for I'm the going just you shortfall in

You shipping. held said back account two that in you series Does everything? for

William Rouhana

The didn't and business been than We three of the at hold was that one only part if three business part the which is quite the now only distribution you of better of that well. in was two Actually, up our part we better we film smallest responsible online the look has let's series did the the unpredictable, the that that as business part, did most our to business, did production. go least live is our back for predictable difference, largely happily which is always the and projected, television projected. business -- the than segments, networks, expectations

really So and And and happening our doing do call, that work And therefore fact individual given gone. regular and better in that recurring of focus. taken revenue it's you're conference forward, a it for more it's succeeded you a out rather taken because where or risk valuable longer that's we that sure the were all overtime to driven, that going are striving different to could we've us, to make a the not will we asterisk place project now that. this is be happening, that had business projects be as no I or said out this risk was -- really a last something rounding business, with that the all business of the than of timing, error associated the a projects on an stream, as has we things

Lisa Thompson

QX? QX in will or And see those we two

William Rouhana

Crackle, Of course, on probably premier. know I'll you are let they they when

Lisa Thompson

put even on Okay, them not going you're to TV? so

William Rouhana

probably Crackle… They're on

Lisa Thompson

so Thank all for Okay, you that. right. all much

William Rouhana

up, Okay, we With gone have think I our wrap thanks operator. everybody. time. planned that, We've to over

Operator

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

Chicken Soup for the Soul Entertainment (CSSEQ) 29 Mar 192018 Q4 Earnings call transcript