Global Indemnity Group Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 14, 2023

There are 9 speakers on the call.

Operator

Good day, everyone. Welcome to Synabros' Second Quarter Fiscal 20 24 Financial Results Conference Call. My name is Tia, and I will be your moderator for today. Please note that this call is being recorded. I would now like to turn the call over to your host, Gary Laffredo, Chief Legal Officer, Secretary and Senior Advisor for Syniverse.

Operator

Please proceed.

Speaker 1

Good afternoon, everyone. Thank you for joining us for the Syniverse fiscal 2024 Second Quarter Financial Results Conference Call. The press release announcing Syniverse's results for the fiscal Q2 ended September 30, 2023 is available at the Investors section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at Cinevers' website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on today's call contain forward looking statements.

Speaker 1

These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that can cause the company's business and financial results to differ materially from these forward looking statements. All the information discussed on this call is as of today, November 14, 2023. And Syniverse does not assume any obligation to update any of these forward looking statements except as required by law. In addition, certain financial information presented in this call represent non GAAP financial measures, And we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.

Speaker 1

I'm Gary Lofredo, Chief Legal Officer, Secretary and Senior Advisor at Syniverse. With me today are Chris McGurk, Chairman and CEO Eric Opeka, President and Chief Strategy Officer Tony Huidore, Chief Operating Officer and Chief Technology Officer Mark Lindsay, Chief Financial Officer and Yolanda Macias, Chief Content Officer, all of whom will be available for questions following the prepared remarks. On today's call, Chris will discuss our Q2 fiscal 2024 highlights, the latest operational developments, outlook and long term growth strategy. Mark will follow with a review of our results and Eric will provide some detail on our business results and operating initiatives before opening the floor for questions. I will now turn the call over to Chris McGurk to begin.

Speaker 2

Thank you, Gary, and hello, everyone. Thank you for joining us today. We made great strides this We did this by further optimizing our more than 2 dozen streaming channel portfolio, calling lower margin channels, While focusing resources on higher margin, higher return performers and then by cutting costs as we finalize the consolidation of the 8 key content and streaming acquisitions we made over the past 3 years. At the same time, We are also transferring a significant number of domestic employment positions to our Syniverse Services India operation, A unique competitive cost and work efficiency advantage that Center Verse enjoys versus everyone else in our space. I believe the results this quarter show significant progress towards our goal of long term sustained profitability and also demonstrate Our willingness to trade off lower margin revenue streams for higher margins and profits in pursuit of that goal.

Speaker 2

In the quarter, We increased our total operating margin to 64% from 42%. We increased our recurring operating margin to 56% from 30% when excluding our legacy Digital Cinema Equipment business. We decreased our operating expenses by $6,300,000 or 34%. We decreased our SG and A cost by $2,800,000 or 29% via a reduction of 30 employment positions and tight cost controls. We have also put any management variable bonus compensation on hold until we achieve sustainable profitability.

Speaker 2

And we have significant additional positions that we plan to offshore to Cinevers Services India Over the next few months beyond the 29 plus positions that we have already moved there were identified to offshore. All of that will enable us to hit our goal of $8,000,000 in annual SG and A cuts. Scentavar Services India is a very significant advantage for us, providing a huge cost savings and work efficiency upside that we own versus our competitors, and we intend to leverage that to the fullest extent possible. As a result of all these optimization and cost savings initiatives, which significantly exceeded the revenue impact of coaling lower margin channels, We improved our operating profit by $5,300,000 to $600,000 this quarter. And we increased our adjusted EBITDA by $3,700,000 or 2.83 percent to $2,400,000 And we also narrowed our net loss to $400,000 That's net loss attributable to common shareholders.

Speaker 2

That's an improvement of $5,400,000 Clearly, we are on the right track towards sustained profitability and that remains our overriding focus. Mark Lindsay will next add some color to these results and speak to our cash management activities and planning. Erica Pico will then review all of the initiatives we have in place to drive high margin incremental revenues, including our recently announced deal with technology unicorn, Amagi, and our upcoming announcements regarding AI partnerships for streaming search and discovery. Mark?

Speaker 3

Thank you, Chris. For the fiscal Q2 ended September 30, 2023, Syniverse reported total revenues of $13,000,000 which compares to $14,000,000 in the prior year quarter. As Chris noted, this decrease was primarily due to the impact on our advertising revenue from the intentional elimination of Certain lower margin channels via portfolio optimization and reallocating those resources to higher performing and higher margin streaming properties, which is important to our goal of achieving sustainable profitability in the near term. Subscription based revenues increased 52% to 3,500,000 driven by the continued success of our enthusiast streaming services. For example, our screen box channel revenues increased over 3 50% compared to prior year quarter.

Speaker 3

Advertising based revenues declined 28 percent to $4,100,000 primarily due to our channel optimization efforts and Continued impact of the current economic environment on advertising spend. Non recurring revenues related to our legacy digital cinema business were 2,400,000 A decline of 7% from prior year quarter. We don't expect any additional future revenues associated with this business other than nominal equipment sales. Direct operating margin for the period was 64%, an increase from 42% in the prior year quarter. When excluding the impact of our legacy Digital Cinema business, our recurring direct operating margin improved to 56% compared to 30% in the prior year quarter, which is in excess of our previously provided guidance of 45% to 50% for fiscal year 2024.

Speaker 3

Our improved direct operating margin is a direct result of our cost optimization initiatives that Chris referred to earlier. Selling, general and administrative expenses decreased $2,800,000 or 29% from the prior year quarter. Again, this improvement is a direct result of the cost optimization initiatives discussed previously. We expect to gain even greater efficiencies as our offshoring efforts Descentive Services India gained momentum over the remainder of the fiscal year. Overall, total operating expenses decreased 6,300,000 And as a result, our net loss attributable to common stockholders narrowed to a negative 0.4000000 For a negative $0.04 per diluted share, a $5,300,000.61 per share improvement from the prior year quarter.

Speaker 3

Adjusted EBITDA improved $3,700,000 from a negative $1,300,000 in the prior year quarter to a positive 2,400,000 on our balance sheet as of September 30, 2023 and we have $5,000,000 outstanding on our working capital facility. During the quarter, our cash flow use from operations improved by $2,200,000 from a negative $5,100,000 in the prior year quarter to a negative $2,900,000 this quarter. Of the cash usage of $2,900,000 this quarter, $4,000,000 was related to investments in our content portfolio via advanced and or minimum guarantee payments, the largest being for TerraFire III. Year to date, our content portfolio spend was $5,300,000 The important point here about cash is that when excluding our content That our cost optimization strategies had this quarter and are optimistic about their impact for the remainder of the fiscal year. In addition, we are working closely with our bank to increase the size and duration of our working capital facility.

Speaker 3

We feel well positioned to be able to execute on our goal of In terms of guidance, we are currently reviewing our previously issued guidance in connection With finalizing our long range forecast that takes into account the results of our channel optimization efforts, our cost reduction initiatives And the new revenue initiatives we are launching such as our SaaS and managed services technology business. We will report any changes in guidance if warranted once we have completed this process. I also want to point out that we have a 500,000 share stock repurchase program available through March 2024. We believe that we are significantly undervalued with a stock price that is trading substantially below our current book value. We will assess the need to utilize the stock repurchase program once our trading window opens up.

Speaker 3

With that, I'll turn the floor over to Eric to discuss the market environment and our growth initiatives. Thank you.

Speaker 4

Good afternoon, everyone, and thank you for joining us today. I'd like to start off by sharing our financial progress, particularly in the streaming sector. Our digital and streaming revenue declined by 7% to $10,600,000 This stems from our strategic digital licensing and expansion of our subscription base, which was offset by a decline in ad revenues and as previously noted, the calling of multiple lower margin streaming channels. Subscription revenues have seen a considerable increase to $3,500,000 up 50% 52% over the prior year. We reached 1,240,000 subscribers, thanks to our target acquisitions for ScreamBox Horror Channel and the Dove Channel's expansion.

Speaker 4

This progress underscores the strength and appeal of our enthusiast streaming services and we're going to continue to focus on smart growth by optimizing retail pricing for our services, Expanding distribution and pursuing bundling partnerships. Beyond that, we continue to rationalize content spending. You've seen the major streamers reduce content spend across the board and we're no exception. Going forward, we have shifted away from capital intensive all rights acquisitions and productions To lower cost acquisitions and minimum guarantee and revenue sharing deals. This approach will greatly reduce our need for content investment spend and given our other efforts noted, We'll see minimal impact to top line revenue while boosting profitability.

Speaker 4

Ad based revenues experienced a dip to $4,100,000 a decrease of 28 This decline aligns with the insights Chris and Mark shared earlier. We streamlined our channel portfolio, Prioritized higher margin channels and concluded the wind down of several underperforming ones. Despite the challenges in the ad market, including A prolonged tech migration with a major fast partner, we've navigated these waters with strategic finesse and our partners marketing make goods have helped us bounce back with that partner, Reaching pre transition revenue levels on that platform by quarter end. If we consider some of these factors, our year over year impact as it relates to market softness Within our estimation between 10% to 12% year to date. What we're seeing in the market is a shift from an open marketplace, pure programmatic buying from agencies and brands.

Speaker 4

And this has been due to efforts on supply path optimization to buy directly from content publishers like Cineverse. We think this is great for us and in the short term we'll eliminate many middlemen and resellers. Our short to mid term outlook is much greater sales due to 3 key initiatives. 1st, Shifting all of our open market inventory to PMP and programmatic direct deals. We estimate this will increase revenues on our existing inventory We have up to 30% at higher fill rates.

Speaker 4

2nd, our direct sales efforts. In this quarter, we expanded our ad team and that team is fully up to speed, End market and focused on building relationships and responding to RFPs for next calendar year. Given most of the major brands and advertisers are planning out 9 to 12 months, We expect to see robust results from these efforts starting at the end of this fiscal year and ramping heavily into our next fiscal year. Combined with robust political ad spend in the market and the expected heavy shift from cable and satellite to connected TV, Next calendar year is looking to be a breakout year on ad sales. Our strategy has evolved.

Speaker 4

We're moving away from the pursuit of high Top line revenue and KPI growth at the expense of profitability. Instead, we're focused on efficient profitable growth. Our target areas are those that we can leverage our competitive edge and scale with minimal growth capital. Digital and aggregate digital aggregation and licensing we believe will unlock significant revenues from our library in the upcoming quarters. For our own streaming channels, our strategy is focused on niche markets where we can lead Such as horror, thriller, faith in family and Asian content, we've been consolidating assets and optimizing our team structure to better align with this vision.

Speaker 4

Matchpoint Technology remains a cornerstone of our strategy as the streaming market evolves. We're one of the few platforms capable of supporting the industry shift The various business models and distribution points. Our competitors offer only a fraction of what Matchpoint can do and we're excited to expand on those capabilities. In the spirit of our partnership with Amagi, we've committed to bringing our innovative MatchPoint suite and content services to an even broader market. Our shared history with Amagi since 2017 has set the stage for a strategic collaboration that we think will redefine the streaming technology business.

Speaker 4

As we gear up for major technology conferences and finalize our market strategies, we're confident that this synergy will drive significant revenue growth and solidify our position as innovators in the streaming infrastructure space. We believe that the Amagi partnership could provide low eight figures of annual revenue Once fully up to scale based on our internal forecast and discussions with Amagi, we believe there are substantial customers in immediate need of our solutions and go beyond the large enterprise customers targeted in that deal. We're going to continue to offer companies managed channel services like we're doing today with American Public Media, Comedy Dynamics, Bob Ross Inc, Real Madrid, All3 Media and most recently Dog Whisperer and 9 Story. These partnerships provide us high quality brands at typically far lower risk than launching our own speculative channels with no existing brand identity. I also wanted to address the timeline on channel launches in general as well as provide an update on key forthcoming channels.

Speaker 4

As the fast market has matured and competition for valuable placement The amount of time it takes to get channels up and on platforms has gone up from around 2 months to up to 9 months depending on the platform. While this is far quicker than it ever was in the cable ecosystem, it does mean there will be longer periods between the channels announcement and launch. Additionally, when we partner with a third party, dependent on those parties to produce and secure content, caption the content or remaster it to be suitable for broadcast and streaming. We don't control those elements and sometimes this can lead to delays, but these elements need to be kept in mind as we announce channel deals. As it relates to our current portfolio, we expect Dog Whisper to launch within the current quarter.

Speaker 4

The GoPro channel is predominantly new original programming, Which is great for securing carriage in advertising conversations, but longer term production delays from our partner have pushed the launch into fiscal Q4 Calendar Q1. We also expect launches of MeatEater and Entrepreneur in fiscal Q4, calendar Q1 as well. As it relates to Sid Martie Croft channel, we're currently in the process of remastering and restoring the content in 4 ks. Just keep in mind, this is an extensive progress As the content was in standard definition, we are pushing to have this channel live in fiscal Q4 calendar Q1, but that will be dependent on distribution conversations happening today. With Mashpoint, we're also targeting the small and medium business segment directly and have recently hired a new Head of Sales MatchPoint with over a decade experience targeting the exact arena we're covering.

Speaker 4

Beyond that, we're developing new products and capabilities to allow media companies to better monetize their content and streaming services by utilizing the power of AI. This ranges from making difficult, labor intensive and repetitive tasks Scalable and cost effective like captioning, metadata enrichment and quality control to next generation technologies that can help companies We expect to announce the latest fruits of our AI R and D efforts, which we've been developing for this past year over the next few weeks months. The important thing to take away from this is that our underlying technology platform facilitates rapid, high quality processing of video to tackle the biggest challenges the world's tech giants are trying to solve with AI. So we're not only planning new product launches, but also expanding our engineering team With that operator, let's open it

Speaker 1

up for Q and A.

Operator

We will now begin the Q Please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to generate in queue. The first question comes from the line of Brian Kinstlinger with Alliance Global Partners. Please proceed.

Speaker 5

Great. Thanks and congratulations on all the restructuring and what it means For the much stronger fundamentals that it looks like already in the quarter. Sorry, it was a lot of information to write down. If you could share, if you provided us the gross margin of the business excluding the legacy business and what was the operating margin or EBITDA margin, if you will, For again the business that excludes legacy.

Speaker 2

This is Chris. Thanks for your time. But I'll let Mark Lindsey go through those numbers with you. Mark?

Speaker 3

Thanks, Chris. Yes, yes. Thanks, Ryan. So, the gross margin before excluding legacy was 64% this quarter 42% Prior year quarter excluding the legacy business, it's 56% this quarter and 30% in the prior quarter.

Speaker 5

30% is EBITDA or operating margin?

Speaker 3

That's direct operating margin.

Speaker 5

Got it. Okay. And then, if you could I think it's a good time given your announcement with Amagi and the partnership that's Plan to rollout. If you could highlight the revenue model, is it selling subscription to the cinema streaming content platforms? Is it They're able to use your MatchPoint services to curate and transfer content.

Speaker 5

And then the second part of that question, You mentioned low 8 figures in terms of revenue contribution in your prepared remarks. Does that suggest you expect To close next fiscal year with about $10,000,000 of revenue or is that too quick and steep To have it by then.

Speaker 2

Eric, do you want to take that one?

Speaker 4

Sure, sure. So to go through both parts. So first on the, what are we actually selling? So we're tentatively calling this fast kit. So Essentially, if you kind of look at the marketplace today, there's a large number of Amagi calls them video service providers.

Speaker 4

This is going to be hardware manufacturers, telcos, anybody who really was at the musical chairs When Tubi and Pluto were for sale and missed out or just have not don't have the resources or assets to launch a scale Streaming platform, for the like the Roku channel has or others. So we're teaming up with Amagi to essentially offer This is a turnkey where you can get the applications, the back end infrastructure. Amagi has 800 plus fast channels. We have 70,000 hours of programming, and then both of us have monetization capabilities. It really allows companies Very rapidly and turnkey to get into the market, save years of effort to do so.

Speaker 4

And by the way, we look at we evaluated the market. There are many, many companies that The amount of monetization they have in this space relative to what they should have due to their market share, There's quite a large addressable market here. And you combine that with their 8 100 Amagi's 800 plus customers, There's a very, very large market. So the idea here is to have Amagi's 25 to 30 person global sales force It's already engaged in 9 figures of revenue or more we estimate across the board to really start bolting on much bigger meaningful services in this partnership. So that's number 1.

Speaker 4

In terms of The model, as you can imagine with sort of these bigger enterprise deals, it's going to be Depending on what services the partner needs, some partners may want to do their own content acquisitions, may Want to develop the front end and apps, but need back end infrastructure or vice versa. So it's really going to be tailored by partner. I would expect this to be That's similar to Amagi's model of SaaS based consumption. It will be our model and a deal with Amagi will be in market on a similar basis. This will be consumption based model based off of what these partners decide to utilize.

Speaker 5

And then the last part of the consumption.

Speaker 4

Exactly, exactly. So, well, no, they'll be direct build for a variety of services, right? For content based Deals will probably be a revenue share based model as well. So 3rd, in terms of our look at the market, clearly, as you remember, as or I think we've talked about previously, The sales cycle on these, you're talking about people launching and building Applications bringing to market. So you're looking at we typically see a deal cycle like this of typically a quarter or 2, Depending on the partner and how complex of a deal it is, and then the implementation is going to come after that.

Speaker 4

So we think The next fiscal year will really be about ramping up to that number, And that's sort of the number we expect the steady state to be at once this business is ramped. We're hitting the ground running in our fiscal Q4 here. My expectation is that a lot of people In the market are going to want to be able to take advantage of a very heavy ad market this year. So we'll probably have lots of engagements Towards the middle of the year to try to capture calendar Q3, Q4 ad revenue. So I would expect us to see some results in the fiscal year next year.

Speaker 4

Will we realize the full 8 figure amount, it will probably be a longer ramp to hit that, but I think we'll start to see some material efforts coming by mid next Here.

Speaker 5

Great. And then separately, you touched on having your direct Ad sales team, I think in place is what you said, Eric. Can you talk about the progress? Has there been a contribution? How long does it take Before you see the impact of that team building relationships and driving higher margin ad sales.

Speaker 4

Sure, sure. So it's really a 3 stage process, right? Stage 1 is today Prior to just even a few months ago, we were predominantly open marketplace programmatic. In other words, anybody and everybody could buy and sell our inventory. And that one of the things we've been doing since mid to late summer Is transitioning from that, we'll call that the low end of the CTV market, upstream to programmatic direct and private marketplace deals with agencies, brands and DSPs.

Speaker 4

So we've been in the process of going through that Since mid year, and we've made an incredible amount of progress on that. I think that's the first step. It's hard for a direct sales team to go out in the market and sell if they can buy it open programmatic, right? So you have to sort of Move everything upstream in the stack. That's what we've been working and focused on.

Speaker 4

Simultaneously, We've hired up our direct sellers team. And as you I'm sure you know, the cycles For direct sales, most of the brands and agencies are working 6 to 9 months out. There is some, We'll call it scatter opportunities in the back half of this year and early Q1. But I think We'll really start to see the fruits towards the end of our fiscal Q4 efforts on this. We ran a few campaigns.

Speaker 4

We did Ancestry, Jack in the Box and a few others over the last quarter or so, but we've got RFPs flying out the door Pretty constantly at this point now. So I expect next year to be pretty robust.

Speaker 5

Great. One last question, I'll get back in the queue. I think you were very clear on your plans for content acquisition costs to come down like everyone else in the industry. Are there any known significant cash content costs you see in the near term that you can call out? And should we expect The cash flow cost outside of the P and L to be nominal or there will still be some bits and pieces here and there of cash content costs?

Speaker 2

We went through our state of high profile spending over the last quarter. As Eric mentioned, we're looking at Terrifier and spending we did on Sid and Marie Croft and God Whisper. And I think you're going to see a real mellowing of our spend continue for at least the next 6 months.

Speaker 5

Great. Thank you.

Operator

Thank you. The next question comes from the line of Dan Karanos with Benchmark Company. Please proceed.

Speaker 6

Thanks. Good afternoon. Chris and Eric, the whole channel portfolio balancing, let's just call it, that's not new For you guys, I know Chris you've emphasized that in the past as have you Eric. So this is not a big shift. I think the order of magnitude is maybe a little larger Than we might have thought in the quarter, but the way that Eric outlined it, once we get into fiscal Q4, there's stuff Coming back online and obviously the profitability of the portfolio has significantly improved.

Speaker 6

So I just want to make sure I have kind of the math right. I mean, it feels like, I don't know, dollars 2,000,000 ish incremental call And obviously correct me if I'm wrong on that on the revenue side, but I'm just trying to get a sense between all the initiatives you have planned Because if you strip out the legacy revenue you announced on the quarter today and then take out the base distribution business, You still have about $10,000,000 in roughly And some licensing and digital in there that you intend to grow off of. So I guess I just want to get a sense for How much you think that business grows by before we kind of layer on all of the software SaaS stuff that I do want to talk about afterwards.

Speaker 2

Well, I think a couple of things. Yes. This is Chris. First of all, the channel portfolio optimization, even though I've talked about it in the last couple of calls, what you're seeing this quarter You're really seeing the bulk of the impact really hitting the P and L because we cut some channels in the middle of last quarter and the whole thing. So I've been talking about it, but the impact on our financials, you could say, is more impactful this quarter and new.

Speaker 2

That is a new factor. We're not going to be able to answer your question on this call. As Mark Lindsay said, we're going through a process now Looking at the impact of all of our channel optimization activities and turning it into a long range forecast And layering in all these new revenue upsides that Eric talked about and we're in process of that right now. Think it's probably a conversation that would be better had offline. I don't know if Eric or Mark want to add anything To that, but I mean that's my feeling at this point.

Speaker 4

Derek?

Speaker 3

No, nothing to add. It's too early. Go ahead, Eric.

Speaker 2

Okay.

Speaker 4

Yes. I think the only thing really to add is obviously the timing of the bulk Of the channel portfolio that we have launching is happening in Q4. I think we're still locking that this is one of the challenges The fast market today is think of These channels are probably getting or trying to launch another dozen to 2 dozen channels in Q1 and optimizing the timing and planning of each. So we don't know our exact launch dates yet, if it's going to be early in the quarter or later in the quarter yet. We hope Find out soon, obviously.

Speaker 4

We've got the channels ready to go. We've been testing them and they're ready to be launched. It's just a matter of Us locking the timing. So it's hard to say definitively how much those are going to impact the quarter and what that's going to be As it stands today, but we're going to know pretty soon on that front.

Speaker 2

Yes. And the other thing, Dan, is we've got a couple of Tech deals that we're hoping to announce in the next couple of weeks that we haven't talked about, we can't talk about on this call, they're also going to have an impact. And that's why We're being very careful and we're trying to be very strategic in looking at our long range forecast and hopefully in the next few weeks That will come together. The one thing we are 100% sure of is that we're going to continue to rip costs out of the system. Cinevers India It's a huge upside for us.

Speaker 2

I mean, we're basically transferring jobs over there at 10% to 15% of the domestic cost And we're getting better workflows and efficiencies out of it. And again, I said this on the last call, that's a trusted operating division of the company. We're not We're offshoring it to our own division that's performed pretty tremendously. So we're expecting significant additional savings that are only Improve our margins further and that's kind of the foundation of the plan that we're in the process of putting together.

Speaker 6

Fair. Look, I'm just trying to understand the baseline, right? Look, you're obviously making A healthy profit and tech pivot here, and it doesn't mean that you're Moving away from the streaming and or advertising business piece of it, I just wanted to sort of get a sense. So now we have this is the new baseline, so there's not much more to come off Based on what you've said and then adding more profitable base now, there will be upside to that From whatever happens with the advertising changes that Eric referenced in terms of the ad sales model as well as new channels, timing TBD on all of that stuff. And now as you referenced, Chris, there's obviously the Amagi deal to me is sort of a preface for a broader Tech Push, I would assume is coming.

Speaker 6

And so does Amagi in particular, Do they add tools to the kit? Do they give you expanded capabilities? And just in general, how do you think about Sort of reinvesting or expanding your tool belt when it comes to leveraging the MatchPoint technology?

Speaker 2

Eric and Tony, you want to take that?

Speaker 4

Sure, sure. So I'll say generally and Tony can talk more Specifically about Amagi, what Amagi brings to the table. But I think the biggest game changer for us is you have Arguably, the largest infrastructure player in the streaming market and fast market today, With a very large global sales force selling our product, they can take it to market much faster Yes. Then it would take us quite a long period of time to hire up a comparable sales force for what Amagi has. And then the second piece is what Amagi brings to the table in terms of assets beyond the sales force, The portfolio of 800 plus channels that they can bring to bear in the market and The huge customer relationship base that they have, we have a pretty decent customer relationship base, but theirs is oriented to much larger enterprises than we are today.

Speaker 4

So those assets really Accelerate all of the efforts. It doesn't mean that we're not internally focused on the small and mid market segments to complement that. But I feel like they'll push a revenue drive much faster than we'll incrementalize from the small end.

Speaker 7

Just to add to that, I think one way of looking at it is, most of the big media companies We have been investing in fast. That's where the immediate opportunity is. But now as all the big studios have released their own standalone services, Having applications available to the consumer has become an important part of everyone's strategy. And that's the area where we have a head We've developed Mass Point over the last 8 years specifically for servicing apps and video on demand and that's where we see the rest of the industry moving Using Fast as kind of the entry point, but really expanding into next generation services where it's an app Or larger catalogs of direct video on demand content.

Speaker 6

And last one for me, just Now that the actors' strike is over, everyone thinks that content spend will start to increase next Spring, at a albeit it will take some time to ramp and perhaps with a slightly less quantum than In the prior years where the streamers got a bit giddy, I'm just curious how you think that factors into any of the Initiatives do you have, whether it's on sort of the more traditional streaming side or on the Matchpoint Does that act as somewhat of a catalyst to the market or does it change how you might address if you think the market evolves in its Advertising focus, which Eric, yes, admittedly right now is more direct PG, but may return to more open PMP in a more Healthy environment with better visibility barring whatever happens in the economy.

Speaker 2

Eric, you want to take that or Yolanda?

Speaker 4

Sure. I could take it. So I think for us as it relates to our business, Excluding Terrifier and a few other projects that we have going We're going to be in the market for finished product. So I think, Number 1, it's not going to I think the good news is, I think we already had a waiver for TerraFire III Even before the strike ended, so we were going to production was going to begin on that Regardless of the strike, and we're not we're really long term not in The big theatrical movie game. So for us, go forward, we'll be We're really going to be focused on acquisitions and pickups and less on the production side.

Speaker 4

We think We can get a lot of value with a much smaller outlay licensing titles rather than investing in heavy, heavy Obviously, with the exception of some of these really key Terrifier is a no brainer. There's other things that we're working on that we're committed to that are great investments. But we think that's going to be a much smaller piece of our business going forward anyways.

Speaker 8

I just wanted to add that the strike allows for our new releases for talent to be able to promote them and to affect their social media. So Everything Eric just explained is absolutely correct in terms of our content strategy, but it really unlocked that valuable the talent promotion tool.

Speaker 2

I also think, Dan, kind of philosophically, We've positioned ourselves as an artist friendly independent studio that puts the artist first. And I think Terrifier was an example of that to the industry where we released An unrated uncut movie because we wanted to bring the director's vision to audiences in the U. S. And people noticed that and That's been our philosophy. And if anything that these strikes emphasize is that the major studios Don't particularly put artist friendly at the top of their list of things that they want to be known for, okay.

Speaker 2

So I think In a weird way, the strikes actually helped our position in the industry because we were Waving the flag for paying artists and treating artists the right way and bringing their labors of love to audiences around the world All along. So I think from a philosophical standpoint and a positioning standpoint, it helps us as well.

Speaker 6

Okay. I appreciate all of the color guys. Thanks very much.

Speaker 5

Thanks, Tim.

Operator

Thank you. There are no additional questions left at this time. I will hand it back to the management team for closing remarks.

Speaker 2

Great. Thank you, operator. This is Chris again. Thank you all for joining us today and feel free to reach out to Julie Milstead With any additional questions you might have. We look forward to speaking to you all again on our next quarterly call.

Speaker 2

Thank you very much.

Operator

That concludes today's conference call. Thank you. You may now disconnect your line.

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