CSSE - Earnings call transcript Q1 2022 | Chicken Soup for the Soul Entertainment, Inc.

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Operator

Ladies and gentlemen, hello, thank you joining us for today’s Chicken Soup for the Soul Entertainment First Quarter 2022 Earnings Results and RedBox Entertainment acquisition Conference Call. [Operator Instructions] And to get started with the opening remarks and introductions I am please to turn the floor over to our Investor Relations for Chicken Soup for the Soul Entertainment, Mr. Taylor Krafchik. Please go ahead Taylor.

Taylor Krafchik

Thank you, operator and welcome. Officer call for William Soul review Chicken Chris Chief the Chief Chairman Entertainment; the on for a Mitchell, Officer Soup business results, Executive Soup Financial as first me quarter today Entertainment, as Rouhana, are and and the XXXX With Soul Chicken well to provide for for the update.

Soup the Entertainment for Smith, Chief transaction or RedBox to Joining RedBox review Galen between Soul Entertainment. Bill Executive the is Chicken and Entertainment and call today Chris proposed help on the Officer

Following this be a call. session Q&A participants moderated the on discussion, there will open to the

During this management make forward-looking statements. call, will

Forward-looking statements future. expectations, the regarding include, statements but not to, and regarding limited intentions strategies are

known and risks, other are cause results that and based actual unknown could management’s factors statements differ results. and on projected to materially assumptions from to expectations uncertainties, Forward-looking subject current and are

uncertainties, Given forward-looking of release, any in applies content statements this contained listeners not reliance the to which undue call. text cautioned call. to on these the to the earnings forward-looking contained refer in cautionary conference are this also place Please statements regarding

not document or our prospectus statement file Information statement document such offering be solicitation law company except ongoing made any by file shall jurisdiction. excludes of of This qualification of requirements consistent that if to SEC. amended. and XX the security relevant solicitation any it meeting In of Nor statement, results are that U.S. the connection amounts RedBox SEC sell will be financial the which will intend Additional offer proposed EBITDA. any jurisdiction useful buy the believes Management is the or comments section to and and this our any or or measure is regarding of with the prospectus sale the RedBox. core RedBox risk solicitation documents of is found in proxy or indicative No registration stockholders proposed in of of securities will a management Securities intended we the there No and we any other for statement, or with certain operating sell the and on information company under Securities company periods. of between not provides be to sale file prior be with registration constitute that information. adjusted information information or for such forma and shall for or may statement statement uses of basis Soul during Statement other provided offer, XXXX Exchange The Commission. or and disclosures vote non-GAAP the Entertainment. The the be also prospectus and non-GAAP that securities information the not any may or buy call and to today’s call, filings offer pro means shall that the an of with of and as securities transaction. adjusted definitive substitute the GAAP-based an would constitute that Soup available to statement to a SEC and On a will on RedBox S-X transaction Act a company’s provides in approval. company’s of proxy registration Chicken also a unlawful operations with prospectus can EBITDA Form a the mailed make financial more proxy when Each include comparison

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refer to would over and I the Rouhana, now the also to CEO. call Chairman like to RedBox We turn SEC. ahead. filings William the public with Bill made you please go

William Rouhana

Thank this you, you, for Taylor, morning. everybody, joining thank us and

we but going now which which call deal perfect to go with he’ll we it’s big excited really, deal. really but a a on And to today. imagine tired got of, our RedBox us. of disrupting is our quickly. of have this. quickly. I’m RedBox hard the QX Smith, ecosystem. the say then results, And quite with we’re little working Q&A today. vision lot start like Fed, have through And to of me. And also CEO last more Galen bid talk combination will And a into up acquisition about I that’s new with you excited really of brands, be digital to beloved we’ll much the a to bit shared As company a is may of a with complementary we’ll Entertainment, go I scale something the set of set a sound will the about a And about It’s lot we the the couldn’t be few he’ll because take a a two more not level days. I’m lot

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to So Galen you. over

Galen Smith

Thanks Bill.

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We’re you really Bill. Back work with excited to and to his Bill together team.

William Rouhana

for Soup looking entire you you as Thank team working excited really with forward the and Chicken RedBox the is team. Galen. the to I’m Soul

full We’re potential this of will this going complete transaction realize to and the combination.

to that are And these to cable But Cord a is traditional the Looking that’s the right is the cutting QX with is partially and AVOD is content I’ve over subscriber issue an two years accelerate. as to would to we stopped. pay. as is would backdrop, for have industry yourself saying rather addressing time Netflix reasons believe. Media which the and and do, one ads the watch to of digital why you’ve numbers. money. converting is at that like pay show, so I content crossroads for subscriber this are cost know. this because ads. X, new consumers deal. at wall a moving platforms. have this slide free, be down no hit ask go all And bundling all I starting growth just anymore where And got called or mentioned them services consumed as question, you driving place future the And continues, are MVPDs companies don’t continues to SI’s will been ultimately numbers you watch for now you to that aside, this as you

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money. And They’re that’s a about I $XX they’re think year. meaningful. lot a million of

the rebound, to from rates the I we get with of theatrical is combined on over goal is of So And the synergies flow run cash this as the financial million rate, run powerful we slide EBITDA and I revenue that of flow year there exit slot, engine at But have all for all will meaningful expected a were is adjusted in to for between the benefit happening pieces justified of itself be believe significant $XXX and company the the of you’ll transaction. million $XXX see as And business think from my in million to XX, rate run which drive a financials cash know together. releases. might we already for that. XXXX in the $XXX

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a the It’s don’t a you built at to like of the transaction. what pretty knew would want actually company know We you to it be a terrific little I Soup we thank the RedBox of last people. And I’ve in all. So great this part work an should buying a through for know we managed say you do and was more interested to one slide something on questions. And a a want Chicken company, unprecedented gives have tough where than write to leadership, overview time. hard This about didn’t unprecedented I you’ve for the been Operator, transaction. sort gotten if do be you employees’ think tremendous they to employees. will. we just proud. is we But and without market But of it. place us not that RedBox they’ll thing here it Soul pretty I to could of wonderful try articulately Maybe let’s great thank Hopefully a to couldn’t move I people, really been lot we’ve saying. if putting presence. this. you’ve morning. on a with a

Operator

We’ll D.A Davidson. [Operator first you. thank Instructions] Gentlemen, Forte hear from at Thomas

Thomas Forte

a off, I Bill almost sense. Galen, no have makes good such first It’s and deal. question. It perfect So congrats.

William Rouhana

up. Make one

Thomas Forte

pressure Bill, question digital as the not I’ll back you advertising either scaling already consumer some consumers willing All was others the in were been to content myself to right. ask where auto heading on one, far Demand they’re companies with high car right, saturation from packaged U.S. subscription because every on very advertising pay goods force advertising just their spend watching is, quality have space seeing in about the so or I then have selling The ads Video for and on hitting lot. talking and companies early while all world as

for quarter landscape some what your your Why? I industry. by your clearly And results, quarter not So at affected thoughts and trends look the fourth AVODs of XXXX? results same for are first you’re that the the are affecting on when

William Rouhana

for Okay, we so, been we nice were have kind this a for a to first knows lot of a have alone think time, in everybody this of long and of all, long saying it. time, thanks, And it’s statement, Tom. I Yes, times where that finally, mean, get in money. have company not for people work, acknowledged year content money of little order our billion a make amount just any you $XX you it to a back, can’t I need doesn’t business a and certain spend sense.

production So sizing be on that’s of there’s in a to there’s forward. going your the back sizing the hear is or people started next a same all lot There to as Netflix amount already going already you’re and to about pull of going It’s escorts lot not talent, meaningfully. business great to independent going budgets, less right the not now be own to year who you’re be cut starting. production, to studios, you get if the has to over got going because be that big right before. money for back producers, going

space, done you’re we If business business employee have term we’ve Tom an a knew you’re we’ve it’s plan see to of work. our overheated kind would I happening, already that is you thing it to coming layoffs. we reality. tech would expected stayed to and true always is long mean, The what an in starting back in and done a

fact the despite spend us people content pushed inflated to in engage didn’t it. do that we so And

really our build side that tracks we no macro create our content are businesses to stuck up much advertisers. sales couple haven’t as factors There with engaged have plan, build sense. now a make We can, relationships are that important. forces, of We our AVOD our as builds in

a is think know I we inflation issue. all real

the we suspecting case, going it we place just places are ferocious cable lot we so the even AVOD is migration and over you sold And are sales aggregate if into a going are I you in percentages. the shrink decimated It’s the as to is. that’s feel to broadcast and today still cutback is spending, leaving the to see likely year the are could you advertisers of And because that out are broadcast way you sold be will if believe I they that meaningful by the are, people is the in what places be it’s tell a recession cable to where in that be that get still Advertising next AVOD in a by interesting out. because think coming. migrating are are are the heat. too. will really

entertainment I to XXXX TVOD be fast a these which actually is most with and businesses think oriented kiosk AVOD and and business, PVOD will have for which scale year networks, our of business So forget the new the this value with business. not the let’s exists the going that part great today. And is

of doing for what release it’s a moment be their then percentage because of sitting who are their money imagine a as increase into add time. to whether conscious And hard eating into to in we’re place And waiting It’s theatrical money, of going really the We’re the to doing. because inflation right to recession we’re right it’s whether better them. there place for overall Its consumers or world. need to cut the right consumers eating that value back increase.

So I to think and years going be XXXX us. XXXX are amazing for

Thomas Forte

Great, thank question. you, Bill. taking Thanks Congrats. my for

Operator

Next go ahead. Jason from Kreyer at Craig-Hallum. we’ll hear Please

line open. Your is

Jason Kreyer

all wanted in course your like you access revenue more I a this focused And over things transaction this expanding lot bit a the particular your of done. year, investment I’m the on platform talk of on in I congratulations, guess little of has you’re ask made little so synergies. And impacts could production if clearly to more Thank recently. of to a this synergies. RedBox you’ve you about and lot those getting curious things. a how and theatrical just content Bill

William Rouhana

couple look what Yes, question. a together, at could Jason. of that’s we became things we a obvious. great started to When do

have synergy to a One and accomplish that’s And year. we cost and lot make RedBox it’s the of And is savings, were a XX was make the a making because less thing, make that we that goals. XX we making lot both not we of this our can which of will movies. a funny

We’re way AVOD just generates the XX through both in make kiosks need that run the the going to a revenue business XX, and that both. through were for

So savings that. there are like

agencies so scale have we We we is have also more business. have care of because ability savings, not the all a now only ad mean know obvious. to sell force outside through sales I we much the higher don’t the as our achieve much. lot But CPMs, have able of we in much supported, ad have to we than generally sales inventory, the RedBox do was which

We are an you for it’s our important it’s worth the those see By NewFronts really watching. website, way, of didn’t video, our on who stop.

sense our get a of on of the side You’ll accomplished content business. we’ve just what

tech was now. going RedBox this build They force. of that going today free we They have in otherwise a lifetime going were the build without once to fortune. service. that have content guess now. a Only TVOD don’t we build have. create have side, don’t TV we sales combination. spending to a don’t is together were to to have. get now. don’t to to They ad now. have kind that and don’t doesn’t can the to Soup They Well really platform to PVOD and I we chicken mean, the going businesses a exist Jason, a They to complete like AVOD this have now. service, what were We to we to to to have On RedBox have to wanted build this have have

time build we two us RedBox have. thought this have of we working us, started long, lot you together time. just We to AVOD match years perfect years So It’s building they’d makes long to first have. knowing it’s the spend take to take build do They’d somebody our spent millions the to library. we else going that have have the and that this of almost way a and try of the this, that sense. They’d dollars hundreds of a for sales time have the force to we content guess I it most networks would was that not to And to just of on the a was any ago.

sometimes like patient, the I you want. sometimes lucky. don’t think around you as and you quite And But work get The if doing all we are net, way both and say, things And opportunity hang to the I we’re our that’s here. contribute to real really meaningful upside so shareholders, well And lucky each really this. there’s for on to got what upside, came here being. of other’s you

look million the XX you we’re EBITDA XX.X maybe after of mean, or these outstanding million XXX deal, numbers only You million going have at XX tops. guys, revenue, to I shares XXX know

where in This them million aspirational, were because You real of cost didn’t EBITDA share. so the know really don’t is were I which to you can might you to I and be in today. me $XX multiple part Jason than But two, lot to math them a do. want $X what is today, And where XX divided We are all value created is cost which shares. that know should so of that. the They have are it is saving. higher cutting. million do are one, didn’t million many but here. we them. don’t number to they But synergies, by be put weren’t things XXX it seems there it that that size all we

Looking how forward. to about you add that? it? Anything you want do on feel Galen

Galen Smith

makes mean, lot think been sense, to create Chicken industrial with are of there companies great forward long there’s between I I and undeniable, easy two the offering a full But business to commercial time the with Soup the ton excited synergies opportunities. really line a two a the the No, of We’ve move for to value. companies here. opportunities I partners think already between see

Jason Kreyer

after about this follow wondering you’ve commentary. one I reaching about Is number your put be that there. Last talked substantially. million imagine way transaction. you can a that just audience ask parameters if Bill big users. your could up quarter, increases if I great to today? how Appreciate XX quantify around that any all to there would But monthly will just

William Rouhana

RedBox not the customers, active plus XX grow. XX.X% the kind we million to grow to there’s did way, loyalty million crackle program mention quarter last networks. that normal sequential in than There’s viewership is that’s quarter viewership the XX quarter viewers in so had viewership continuing By growth the of of year. not way, of a over more normal we first way that fourth and the of By monthly

pay are we’ve who of to demographics not money. to got a in like complementary want and a wants customers pay our lot They who at So to It customer lot But the It’s to ads we’ve We of funny figure many to both they’re course going to looked group. just every kind ways, actually we’ve million? or pay expands likes we But save information amount how Galen? time. watching watching complementary RedBox And looking who some a reasons. for crackle two things. over and don’t of of anything. know for are overlap got don’t bases it’s funny millions for people But Think young people don’t got of who we’ve universe X there’s sure. our now. try interactions sit. kiosks, about month, much out we’re of how considerably. for different a that where huge The of mind

Galen Smith

It’s Yes. significant.

ensuring of we’re different our the use in actors, that with can the lots terms between of of across across consumers of different touch getting are So what all platforms terms we want content types that point and companies. the movies in like, consumers every that of available most data types combined

William Rouhana

in like businesses, will that consumers a we got PVOD about AVOD starting we’ve where what plus place to TVOD be almost so than more we and know And have we’re anything. our

combination. not sure. really unusual But data really this Nielsen quoted, get real an combination, unusual me with imaginary an is stuff, but this real I’m that with So type data will

Jason Kreyer

Perfect. this Well, on Thanks questions. Congrats for Thanks. getting point. into taking

William Rouhana

All right.

us with morning. for this coming You’re welcome. Thanks

Operator

hear Ladenburg Hickman [Operator from Thalmann & Instructions] Next we’ll with Jon Co.

Jon Hickman

Bill. how give term? be Congratulations, interest an fast us bit of off? Hi. like rate the the think the talk little you the, debt you you will about it you near in what idea Could a pay can for think Can you

William Rouhana

we Yes. pay off. fast how it I mean, it’s

proxy John, place you’ll do next would that going sit need can pretty in a that We plan study The pretty say companies truthfully. things know do it. of weeks, months a and see we I that to rate? that down to few long of you. be a combined years. the for not in put fast. us I’m get And for together. couple I remember in to I that’s really order couple the think you interest in projections tell what confident our Chris, with generate time to that meaningful Interest cash our flow. But rate,

Chris Mitchell

the on around whether paying of X% - about on company time depends but cash or the pick depends leverage It we’re the the X.X% think area.

Jon Hickman

that reasonable. reasonable Is Yes. it personal your a term. guidance, is then, coming RedBox. million And purchases annual revenues XXX in near modeling just would That sounds somewhere From that for around appear in the assumption? from

Chris Mitchell

At of that probably we that, do the and RedBox contribute than more Soup more when will to end Chicken year that. the than contribute

in you’ll like. we run and $XXX it in to you’re that’s than rate this say roll run then why saying as that million comfortable sense revenue $XXX of to EBITDA XXX But proxy million and million, that’s So but going get Bill going a year more adjusted better this we’re and the million through at rate. the -- me, $XXX to we’re exit a

Jon Hickman

thanks. well, Okay,

Operator

at Our next Brian comes from question Alliance Global. today Kinstlinger

Brian Kinstlinger

question ways, of This timeline in I the Hey, for given changed think touch had thank the one year, rollout focus? many Congratulations. shift about second you. of planned that you’ve ask platform I me to your the in points. was wanted half which the all

William Rouhana

business usual as usual, here. business over No. as

Fire lot progress. In to on go Amazon in We’ve the live. adults I And is of about a our everything fact, great room. else making schedule. that platform got is of believe staying the version we’re exactly

this do will while jobs our We day we together. put company

Brian Kinstlinger

whatever you how the way that your distribution platform. would platform can and sorry, that, on think new compared tech you point that and I follow on I is touch have guess platforms that are points The not up quantify your are doing relevant, KPI Thanks. platform to in the using any

William Rouhana

Yes.

by So position marketing things up you what more it far, I to got very do. what mean. platform And already very may that’s little happens see excited next great mature increase plan. think them a of XX% give it’s a there’s Fire. has we the so start. Samsung of least on we doing real even wrong. to there repeat into But in going Fire, neck now really a afraid Because been too. But was better, that’s, bit to, for There’s to than our today. But even new both It’s coming Brian, spent that. us. of people too. these back. third quote the to we really Samsung the launched be now. and with to it’s but It It let I Amazon the And It’s time a time sense wanted actually guess more certainly I’m days. I that’s platform was was I there’s soared experiences very it. off because at and we the It’s a early. couple But more just in all tech. neck Vizio of customers strong on we have is some numbers Vizio are might exactly not now, to platforms before ever the Amazon since big it. Vizio pretty of I’m coming

Brian Kinstlinger

Thanks. waiting to myself. I’m for crazy. fire It’s Amazon my

William Rouhana

a many I last for last How Thanks too. Me one asking. got you question. at for operator, home. one question if last have sit time you

Operator

Hilton Certainly. go We’ll at Please from hear ahead. [Indiscernible] Capital.

Unidentified Analyst

I the good I approach two I for on Hi, is, the enhance on the what look morning, that if the legacy you business. there? base, And questions. a of guys. it loyal strategy is just AVOD? follow and grow One to question. will, had those customers, to financials. the then question Thanks that? to curious related RedBox it have is Or kiosk at is transition sort of on What’s to the If I’m sort

William Rouhana

pretty I it will source to next addition to to year going to company average and come count year, XX, it’s and increase that see with gather be those about much with starting other for connect And a our being the place in And as we great a the over Part forward, by which point. a this people be didn’t one, on develop, to you you can per of starting is Tom. there’s is releases things. in theatrical represents the kiosk consumers, visit, of to for parts up odd it a to rebounds capital services, information, from millions who question two are the the of market fact the theatrical other business, business, kiosk, rentals really because XXX, kiosk releases so going last meaningful. with DVD some of can Okay, go for dramatic in number of already answering ton upturn business, make wondering generate to a cash thanks The going flow. that as

So of company. of that a one cash serves purposes, a it which is is generating flow really lot of couple business the for

is The it’s what point about with a can other lot they’re which another in. interested learn where touch consumers we

to brilliant it’s real Now, also say well, there some value which well. is hidden lady kind And that. is and cash that, RedBox generating its it managed Galen I to that a kiosk, has that real of that into gem business flow company the associated He on. as inside all to of own for we with has really some create upside. meaningful And of enhance that a that’s, aware don’t service is there I very business would as that people have focus business, think

as And million year. they’re whether adopters. to mean, DVDs customers really slow live sold the Galen in sometimes we take these And the of Ultimately, I year The were sold takes X the for people the leave broadband last because business. consequence. around So just well. there. the know who they tend million in as XX idea that’s future that’s we’re to X with it where it who for places of of be sort all just maybe were people course, yet. finally million places tech, of there XX XX out about last of may broadband digital you still as player And States isn’t years of to wonder by there’s be and There is not in way, there to United a those DVD no America, DVDs though, enough floating live it.

adopters digital business. all that the while there people, So in to participate is digital convinced a me the they and participate off in get DVD ad, to they for over habits change a video technology Those first to drop then business, business, spike just get the over people’s gradual thing. there’s slow decades, migrate reasons don’t up their this like and for because things. a people is It and to big in habits any other time reduction, time, DVD takes new ultimately

So that’s it.

Unidentified Analyst

Fair enough.

William Rouhana

Very, things. very exciting, It’s combination really of a actually.

Unidentified Analyst

assumed out hit when revenue don’t know Good. if And may of they sort of to terms then saves? you’ve on I for the the And be in split synergies what sort first you that get then XX synergies maybe million P&L? versus we Chris out look cost involved, kind of phasing should takeout that how your lay would of here between these that granted Just kind of curious about

William Rouhana

want Yes, cost we XX it’s net to that talk the to know, in on in XX have timing? stuff. and revenue. I million you about work Chris, planning about all million

Chris Mitchell

we through implement, we closing be these Yes, timing upon further that we’ll go a But I think, can to working cost tune things the savings are as close. lot of quickly the process. fine

the think plan fully companies of combined a two time execution on aligned looking some been I that. and at have for now

we’re start we’ll in companies savings the those expect implementing So to the I about and independently. on see scale going of the be two the and the side cost on are able away on we’ll back well, quickly work generated content combined that what titles as that to to think revenue synergies talked Bill terms things right

work at of close. to both guidance are some modeling. implement pretty But quickly we post the we on these can synergies think areas time we’ll right help providing So that

William Rouhana

we at or I we’re all that’s very breaking what And And for of current, out, which costs point really this it’s right be looking believe double been obviously a to aggressively money even last Galen going if I’d level, cash flow here. the DVD out remiss triple at to he if or machine. I business cutting making is current should level, means that we’re as it’s weird, year the we point think business not has current the the sizes the be the over

with not going. one cash way and about already. special cost thought savings smart of before. and being flow to amount we And a And that never gone customers of savings real all it’s starting management So keep we’re the together. enormous just growth, from It’s come and from the the really we’re that accelerated day companies like. been things it forward add an RedBox about the they’ve like two has going team and of The

This it. event. big of a That’s It’s as kind that’s know. it all event, exciting for an of So kind is we today.

place. Our company is in a new

will meaningful effectively a and a that We’re now we have a new, use business in we thoughtfully. position

RedBox can’t joining all you, spend everything what meet And each As for for It’s do once can’t we by do you, this all again meet you to this can’t sure. our can job business. wait already with I’m to close platform company. wait future members. we’re and about just quite aboard of everything to to other talk with can today. imagine we us Thank become we’ll you to you wait our extensive. Great Look, with everybody. thanking build platform employees, to you wonderful thinking part a to again team time our is Welcome and of I’ll all

Operator

earnings quarter for and this call. results Ladies XXXX conclude acquisition RedBox does conference the Chicken Entertainment gentlemen, Soup and Soul Entertainment first today’s

Chicken Soup for the Soul Entertainment (CSSEQ) 13 May 222022 Q1 Earnings call transcript