Cineverse Q3 2025 Earnings Call Transcript

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February 13, 2025
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Operator

Good day, everyone. Welcome to Syniverse's Third Quarter Fiscal twenty twenty five Financial Results Conference Call. My name is Matt, and I'll be your operator today. Currently, all participants are in a listen only mode. We will have a question and answer session following management's prepared remarks, at which time participants can press followed by the number one to ask a question.

Operator

If anyone needs operator help, press 0. Please note that this call is being recorded. I would now like to turn the call over to you

Operator

to the operator looking forward to the Cineversarial Conference Call.

Gary Loffredo
Gary Loffredo
Chief Legal Officer, Secretary & Senior Advisor at Cineverse

Good afternoon, everyone. Thank you for joining us for the Syniverse fiscal year twenty twenty five third quarter financial results conference call. The press release announcing Syniverse's results for the third quarter ended 12/31/2024, is available at the Investors section of the company's website at www.cinavurse.com. A replay of this broadcast will also be made available at the Cineverse website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on this call contain forward looking statements.

Gary Loffredo
Gary Loffredo
Chief Legal Officer, Secretary & Senior Advisor at Cineverse

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 could cause the Company's business and financial results to differ materially from these forward looking statements. All the information discussed on this call are as of today, 02/13/2025. Tuniverse 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.

Gary Loffredo
Gary Loffredo
Chief Legal Officer, Secretary & Senior Advisor at Cineverse

I'm Gary Lofredo, Chief Legal Officer, Secretary and Senior Advisor at Syniverse. With me today are Chris McGurk, Chairman and CEO Eric Opika, President and Chief Strategy Officer Tony Uyidore, Chief Operating Officer and Chief Technology Officer Mark Lindsey, Chief Financial Officer Mark Torres, Chief People 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 fiscal year twenty twenty five third quarter highlights, the latest operational developments, outlook and long term growth strategy. Mark will follow with a review of our results for the fiscal third quarter ended 12/31/2024. And Eric will provide some detail on our streaming business results and operating initiatives before opening the floor for questions.

Gary Loffredo
Gary Loffredo
Chief Legal Officer, Secretary & Senior Advisor at Cineverse

I will now turn the call over to Chris McGurk to begin.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Thank you, Gary, and thanks everyone for joining us today. This was the strongest quarter in the company's history. We recorded $40,700,000 in total revenues of $27,500,000 from the prior year quarter. We generated $7,200,000 in net income, a $9,900,000 increase from the prior year quarter. We recorded $10,800,000 in adjusted EBITDA, a $9,000,000 increase from the prior year quarter.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Our operating margin was 48% within our targeted range of 45 to 50%. And as of yesterday, we had more than $13,000,000 in cash on hand and zero debt with a full $7,500,000 available on our line of credit with East West Bank. These results were driven in large part by the unprecedented success of TerraFire III, but they also reflect strong growth across all of the company's key lines of business. Mark and Eric will speak to our financial results and operating highlights across the full span of our business in just a few minutes. I will focus now on what we believe the future holds for our feature film releasing and marketing business which we believe is uniquely poised to be a major source of new revenue and profits for the company on an ongoing basis.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

After stunning the industry in October when Art the Clown displaced Joaquin Phoenix as the Joker at the top of the box office charts, Terrifier three charged on to become the highest grossing non rated film ever with more than $54,000,000 at the domestic box office topping previous record holder Renaissance, the film by Beyonce. Subsequently Terrifier three has done very strong business in digital sales and Blu ray and DVD topping the sales charts there as well. The film debuts tomorrow on our SpringBox horror streaming channel and we are currently reviewing multiple other pay and streaming distribution channel options. Like all studios, we do not disclose profitability on any individual film basis for both competitive and for participant non disclosure reasons. However, TerraFire III obviously had a huge impact on our results this quarter and should provide significant financial upside in our fiscal fourth quarter and into the next fiscal year.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

But perhaps the biggest long term upside to the company from the success of Terrifier three is that it has opened up a potential new profit line for us releasing and marketing theatrical films by fully utilizing the unique collection of new media assets that we built over the last few years. We demonstrated this to the film industry in stunning fashion by generating $54,000,000 at the box office with just a $500,000 out of pocket marketing spend to open the movie at number one, a previously unheard of seat. The shock and awe within the film industry at this performance particularly at how we were able to hyper effectively utilize our new media assets including our portfolio of streaming channels, podcast network, match point advertising technology and social media strength while spending $0 on national media has led to a deluge of new film releasing and marketing opportunities. As a result, we are now rapidly filling out our go forward theatrical release slate with films targeted at very specific fan bases and with known and successful intellectual property that we can distribute using the same blueprint that drove the success of Terrifier two and three. These films include Silent Night, Deadly Night where we are partnering with European media powerhouse Studio Canal to release a reinterpretation reboot of this classic controversial horror film for this coming Christmas.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Also, Toxic Avenger an unrated update of the classic trauma title produced by legendary pictures the major studio behind global hits like doom Godzilla versus kong Jurassic world and many other massive successes and starring Peter Dinklage Kevin Bacon and Elijah Wood. The toxic Avenger debuted at fantastic success earning a 92% positive score on Rotten Tomatoes and is slated for release on August twenty ninth of this year. And just yesterday, we announced another horror film for our lineup Wolf Creek Legacy. The third installment of the classic gritty Australian Outback horror film which we will be releasing in the next calendar year. It's very important to note that all three of these films have very strong risk reward profiles and upside economics for cinemas.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Total investment in each movie for both acquisition and marketing costs are expected to be less than that of Terrifier three driven again by our unique hyper targeted and cost efficient approach to theatrical market. For example, we anticipate that if Toxic Avenger does only half the box office as Terrifier three, it will generate about the same bottom line financial results for Cineverse as Terrifier three did. Expect more film announcements soon as we continue to fill our release slate with similar properties as well as films and other genres besides horror where we believe we can use our ecosystem to hypermarket against very specific fan bases as well. In addition, both major studios and other independent studios have clearly recognized the success and strength of our new media ecosystem and are already using it to market their own films as well. Focus Features and Neon both advertised films recently across our network and we expect more studios to follow suit.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

This should provide another high potential new and ongoing source of revenues for the company. We also want to thank Damien Leone and Sofalcone who built the Terrifier franchise for creating such an amazing property that helped catalyze all this for Cineverse. Damien is currently working on the script for Terrifier four which we fully expect will be another must see event for the franchise. Finally, our strong balance sheet will help us invest behind growth in our content, technology, streaming, podcast and advertising businesses. That said, we are also exploring new financing options to expand our credit availability particularly for new film releases.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

And we are not considering any potential equity offering to support our current business particularly since we believe we have achieved sustainable profitability and positive cash flow. And with that, I'll turn the floor over to Mark to further discuss our financial results.

Mark Lindsey
Mark Lindsey
Chief Financial Officer at Cineverse

Thank you, Chris. As Chris noted, this quarter was our strongest quarter in history. Even with massive expectations this quarter, we were still able to beat analyst consensus guidance for revenue, $40,700,000 versus $36,400,000 net income, $7,200,000 versus $5,100,000 diluted EPS, $0.34 per share versus $0.31 and adjusted EBITDA, $10,800,000 versus $8,200,000 For the quarter, Centerverse reported record revenues of $40,700,000 compared to $13,300,000 for the same quarter last year or a 207% increase. In addition, compared to our second quarter ended 09/30/2024, revenues increased by $28,000,000 or 220%. While the box office results for TerraFire III were the major catalyst for our record revenue this quarter, the remainder of our business also performed exceptionally well.

Mark Lindsey
Mark Lindsey
Chief Financial Officer at Cineverse

Year over year, our streaming and digital revenues grew by 48% and podcast and other revenue grew by 138%. In a few minutes, Eric will discuss in further detail the non Terrifier initiatives that drove these improved results. Considering the ancillary revenues associated with Terrifier three, the continued double digit growth of our podcast business, improved content licensing opportunities and expected growth in our direct advertising revenues, we are expecting a material increase in revenue for our fiscal fourth quarter ended 03/31/2025 compared to the prior year quarter. As Chris mentioned, our direct operating margin for the quarter was 48%, which is in line with our previously issued guidance of 45% to 50%. Our improved operating margin is a direct result of our cost optimization initiatives implemented over the last eighteen months.

Mark Lindsey
Mark Lindsey
Chief Financial Officer at Cineverse

We expect our direct operating margin in future quarters to remain in the 45% to 50% range. SG and A expenses for the quarter were $9,400,000 an increase of $3,000,000 for the third quarter compared to the prior year quarter, primarily driven by an increase in expenses associated with the performance of Terrifier three. As this increase was Terrifier three specific, we expect our SG and A expenses to return to a more normalized run rate going forward. Last quarter, we also provided guidance that we expected our SG and A expenses to remain flat and to decrease as a percentage of revenue. SG and A expenses as a percentage of revenue for the third quarter were 23% compared to 50% last quarter and 48% for the prior year quarter.

Mark Lindsey
Mark Lindsey
Chief Financial Officer at Cineverse

Again, this improvement is a result of our continued focus on cost optimization initiatives that we've been discussing over the last eighteen months. Net income for the quarter was $7,200,000 a $9,900,000 improvement over the prior year quarter and adjusted EBITDA was $10,800,000 compared to $1,800,000 for the same quarter last year. We have $6,100,000 in cash and cash equivalents on our balance sheet as of 12/31/2024 with $3,800,000 outstanding on our $7,500,000 working capital facility. As of yesterday, having received most of our terra fire three box office rentals after year end, we had more than 13,000,000 of cash on hand, no debt outstanding and 7,500,000.0 of available capacity on our working capital facility. In addition, as of 12/31/2024, we have a working capital surplus of $6,800,000 the largest in company history.

Mark Lindsey
Mark Lindsey
Chief Financial Officer at Cineverse

When reviewing our quarter end cash balances, again, please remember that the majority of the Terra Fire III cash receipts were received after 12/31/2024. For the nine months ended 12/31/2024, our net cash provided by operations was $5,000,000 a $7,400,000 improvement during the quarter. We expect to be operating cash flow positive for the full fiscal year 2025. In addition, during the quarter, we were able to pay in full the outstanding term loan principal and interest totaling $3,700,000 Subsequent to year end, we reduced our outstanding working capital facility balance to zero. While we are currently debt free with more than $13,000,000 of cash on hand, we are exploring additional opportunities to raise debt capital to improve our financial condition and provide capital to fund our upcoming initiatives, which Eric will discuss in further detail.

Mark Lindsey
Mark Lindsey
Chief Financial Officer at Cineverse

Finally, with a $40,700,000 revenue quarter, a $40,000,000 valuation for our content library, which is almost entirely off balance sheet, we continue to believe that our stock price is undervalued with significant upside even at yesterday's closing price of $4.6 per share. With that, I'll turn the floor over to Eric to discuss our strategic growth initiatives.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Thank you, Mark. Today, I'm going to cover three key areas of our business, an overview of our next generation theatrical strategy, an overview of our digital distribution initiatives, and our technology and advertising business. First, let's talk about our theatrical strategy. Our approach to theatrical is fundamentally different from the traditional studio model. Instead of chasing nine figure tent poles, we're following a moneyball strategy for theatrical releasing, focusing on proven IP and franchises that studios often overlook.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

These films have already established fan braces fan bases, strong ancillary track records, and proven box office performance, vastly reducing our risk and increasing profitability across multiple windows. What sets us apart is not just our film selection strategy, but the structural advantages we bring to the table. Our deal structures are fair, ensuring talent creators benefit equally alongside the studio and are aligned to see to ensure success. At the same time, we're going to leverage our significant media assets, proprietary ad tech, and in house capabilities to dramatically reduce costs and increase efficiencies in the releasing process. This approach drives higher margins for both Cineverse and our creative partners, making us a highly attractive home for filmmakers and IP holders who are coming in droves to the doors as Chris described earlier.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Our ability to do this comes from more than a decade of investment in our technology and infrastructure, including machine learning and AI driven marketing and distribution models. It's a massive moat that our competitors our size simply cannot replicate. Unlike traditional distributors who rely on expensive broad reach campaigns, we use data and automation to precision target audiences, ensuring our marketing spend delivers outsized returns. Under this model, we're rapidly building a slate towards eight to 10 wide and specialty theatrical releases per year, putting us on par with the volume of past and present mini majors. For the coming fiscal year, we'll release at least three to four films, reaching the eight to 10 range within two additional years.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Titles like The Toxic Avenger, Silent Night, Deadly Night, and Wolf Creek Legacy are perfect examples of how we apply this playbook, targeting proven theatrical IP with strong cult fan bases and deploying cost efficient marketing and distribution strategies, leveraging our tech and media assets, ensuring they reach their full potential across theatrical, home entertainment, merch, and streaming. Next, let's discuss our ancillary sales and distribution. For most of 2024, we focused heavily on scaling our Fast and Ad businesses, which has delivered strong results, as Mark had noted earlier. Looking ahead, we're making a major investment in accelerating our subscription business with a focus on doubling its growth rate to the 15% to 20% range by investing in high quality studio titles, cost efficient exclusives and originals, while also leveraging the same marketing machine that we're working with on theatrical. We're also committing meaningful capital to customer acquisition, for ScreenBox, Dove, as well as FanDoor, positioning them as premier destinations for genre specific streaming in their verticals.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

As of this quarter, our total SVOD subscribers has reached 1,380,000, up 6% year over year. ScreenBox has seen a 7% increase in subscribers over the past sixty days, and Terrifier two viewership was behind that, surging 45% in Q3, reinforcing the power of this franchise driven engagement. Meanwhile, our fast channels collectively delivered over two point one billion minutes in Q3 with standout performances from Dove, up 30% year over year. Our anime property Yu Gi Oh! Which was up 1000% in the quarter over its Q1 launch.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

And additionally, our Barney channel continues to excel, which has reached more than four fifty five million minutes streamed, last month alone. To further expand our distribution reach, we launched Bob Ross, Comedy Dynamics, Dog Whisperer, and the Dove Fast channels on Google TV's FreePlay. Additionally, we expanded our content partnership with Fubo, adding two more of our ad supported streaming channels, Dog Whisperer's Cesar Millan and GoPro, allowing us to capitalize on the continued growth of fast platforms. On the transactional side, Terrifier three dominated the EST and VOD and physical media sales charts, ranking as the number one sales title for several weeks, beating major studio releases like Joker and Wild Robot. As of tomorrow, Terrifier three will premiere on ScreamBox for an exclusive SVOD window with active discussions underway for a pay one licensing deal with major cable and streaming platforms to further extend the film's reach and maximize its long term value.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

In addition, we continue to capitalize on merchandising collectibles through our Bloody Disgusting brand, following successful partnerships and launches with retailers like Spencer's and Walmart. This expansion further monetizes our horror vertical beyond streaming and theatrical and will provide additional revenue streams tied to our most engaged fan bases. On the technology front, we continue to grow our MatchPoint business past its early stages, and recent results have been promising. We've expanded our sales team and are rapidly scaling our pipeline of customer targets. As content distributors and OEMs race to expand their libraries and future proof operations for AI driven revenue streams, there's a growing demand for cost effective, high volume solution that can streamline delivery, deliver monetization, enable AI driven content enhancement.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

That's Matchpoint. We recently announced two new scale customers from Matchpoint, including Multicom Entertainment Group, our first distribution client, and Joysoft, a venture backed streaming service run by experienced entrepreneurs focused on bringing Asian American content to the global streaming ecosystem. Both clients selected Matchpoint due to its robust and expansive set of features and end to end capabilities that will streamline their business. These partnerships validate MatchPoint's ability to support both established distributors and new fast growing media ventures in navigating the evolving content landscape. Additionally, our MatchPoint real our Real Visuals AI initiative that we recently, announced is gaining traction, and we're nearing the close of our first deals with major LLM providers.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

To date, we represent AI training rights for more than three hundred and fifty thousand hours of video and audio content, creating a new revenue stream at the intersection of content and AI monetization. This initiative positions Syniverse at the forefront of an emerging opportunity where content owners can license their libraries for AI training, enhancement, and contextualization, and offering a scalable way to capitalize on the evolution of digital media. Cineverse three sixty is evolving into a next generation SSP, our supply side platform, and we've recently integrated with a major ad buying platform to improve margins and optimize costs and programmatic advertising. This is unlocking new opportunities to merge our technologies for additional revenue and premium value. A key example is CineCore, our proprietary AI optimized movie dataset originally built for CineSearch.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

CineCore enables precise contextual and content based ad targeting even in restrictive environments where user data isn't available. Today, advertisers can't target users based on their favorite films or attributes through an SSP, but we're changing that. By leveraging Synicore, we'll be able to reduce ad costs while enabling highly targeted campaigns with deployment planned for upcoming wide releases and making it commercially available to customers soon after that. Meanwhile, our growing ad sales business is seeing meaningful results. October, was our biggest revenue month to date and on Syniverse March, reflecting strong revenue growth driven by direct and programmatic ad sales.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

We executed our largest direct ad sales campaign to date in partnership with Focus Features and thirteenth Floor Entertainment, the December release of Robert Eggers' Nosferatu. This campaign not only expanded revenue but established a playbook for future brand support and immersive experiences. In the longer term and for this year, we're focused on developing endeavor style partnerships with film studios where they commit to multiple titles upfront in exchange for favorable rates and added value. Under these endeavor partnerships, we expect studios to commit to between six to eight wide release films per partnership. Our direct sales team continues to grow and we're breaking through to new brands.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

While entertainment remains our lead vertical, we're now securing deals with advertisers in retail, fashion, travel, and packaged goods. At the same time, we're expanding our podcast advertising base beyond horror with new content genres launching this year, including comedy, women's lifestyle, and wellness, areas that will be our largest driver of new revenue in 2025. To further drive this growth, we're hiring up a new head of podcast sales to focus on evangelizing the Cineverse podcast network to more brands and buying agencies, accelerating revenue growth beyond the triple digit growth we already have seen this year. Additionally, we're doubling down on entertainment partnerships actively engaging with studios, as I described, to invest in the non horror side of our business beyond our core genre business. To date, we've had a lot of success on that already.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Our advertising customer base has been expanding significantly. Recent advertisers include Hulu, Sony Pictures, Macy's, Paramount plus Mint Mobile, A24, Quince, and Focus Features. In the coming quarter, we anticipate closing deals with additional studios as well as finance and travel brands. Looking ahead, our focus is clear. We will continue expanding our IP driven theatrical slate, scaling our subscription growth through premium content investment, deepening our direct ad sales relationships, and advancing our AI powered technology initiatives to cement Syniverse as a leader in next generation media distribution.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Syniverse is not just another distributor. We are a technology powered media company with a first mover advantage that's becoming increasingly difficult to replicate. As we refine our playbook, we're confident that our ability to deliver high impact, high margin films, scale our streaming business and expand our advertising ecosystem will drive long term value for shareholders. With that, operator, let's open it up for Q and A.

Operator

First question is from the line of Dan Kurnos with Benchmark. Your line is now open. Dan, please check to see if you're on mute.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Hey, sorry.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Can you guys hear me now?

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Yes. We do.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Okay, good. All right. Sorry about that. Spent about a minute talking to myself. Wonderful.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Congratulations on

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

the

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

quarter. Fantastic. Obviously, Chris, appreciate the color on Toxic Avenger. Let me just ask you a couple things in general here. One, and Eric, also the incremental color on the building slate.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

So first, how do we think about number of screens on release here? Obviously, you guys have canal, so there's potentially some global ramifications to this, which you didn't have with T3. So first question, just size of screens, number of screens, and is that going to vary by film? Or are you guys going to look to kind of build a sort of consistent distribution platform by film size and screen release as you guys build out the film library?

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Yeah, thanks Dan. This is Chris. We're looking to follow a release pattern on these films very similar to what we did with Jarrahfire three. Trying to get it out on 1,500 to 2,500 screens which we think is the right amount for these very targeted films. We see the big studios and their wide releases sometimes with 3,500, four thousand screens but they do 90% of their business on 1,500 to 2,500 screens.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

So we're going to take a much more targeted approach on these films and targeted an average of about 2,000 screens going forward. The good news is that we've got this huge pool of content that we're looking at right now and we've been very selective with the choices that we've made. You saw the first three, Toxic Avenger, Silent Night, Deadly Night and now Wolf Creek Legacy. And we're really looking as I said for properties that we can clearly follow the same playbook that we executed on Terra Fire. Known IP, successful IP where we know there's a fan base and a very targeted fan base that we know we can get to.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

And I think you saw based on what I said in my remarks, the economics of these movies we're able to pick and choose as well and we've cut some very, very favorable deals. Toxic Avenger for instance has a budget that's many times greater than the budget on Terrifier three, but our investment level would probably end up being less than what we invested in Terrifier three for acquisition and for marketing costs and a really good movie. And our upside is a lot greater because basically we bought the distribution rights in perpetuity and we don't have a big participant where we're sharing the upside economics with. So, we think we can do more deals like that going forward, and expect more announcements in that regard soon.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Should we think,

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Chris, that, or is there an opportunity to kind of just work out in another genre? Would David Scott at something in another genre? Or would you save that more for just advertising

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

channel?

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

I didn't hear the first part of your question. Sorry, Dan.

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

Sorry. I asked

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

if you guys would expand into another genre, if you

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

think that this is is this all gonna be

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

in horror? Or would you expand it to another genre or keep that mostly

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

in the advertising side, if

Daniel Kurnos
Equity Research Analyst at The Benchmark Company LLC

you were gonna move out of the horror genre?

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Well, obviously we kind of made our bones in the horror genre so we're getting a lot of properties coming our way. But we're looking at properties in the family space as well, comedy, urban properties where we think we've got strength from our channel footprint and our podcast footprint to hypermarket just as we did in Terrifier three and where there's a known fan base and known IP. So I'm very hopeful that in the next few months as we make announcements you'll see that we're rounding out our portfolio in other genres but with the same kind of really favorable economics that I've been talking about. And in areas where we can exact very closely follow the blueprint for success in terms of marketing that we have with TerraFire.

Operator

Thank you for your question. Next question is from the line of Brian Kinstlinger with Alliance Global Partners. Your line is now open.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Great. Thanks. I got a few questions What a great quarter and congratulations on your success. You talked about picking on some debt. I assume this is due to the pipeline of opportunities in front of you given the success of Terrify that we talked about.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Can you talk about the ranges of prices for relevant horror content, especially for these films you're going to remake? Can you share maybe the average price you paid so far? And is the return on invested capital that you're looking at that you target?

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Yes. Thanks, Brian. This is Chris again. I think I mentioned on this call in the past that our total investment on Terra Fire III for both acquisition and marketing was less than $5,000,000 or around $5,000,000 All three of the properties that we're talking about now are below that and our expectation are going to be below that. And I think that's the range that we're talking about.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

And I think that creates a really unbelievable positive risk profile for us. Your other question was and I think the pool is big enough now that we're going to be able to fill up a release slate of eight to 10 movies on a steady state basis and stick to those economics. We have no desire to step up into the bigger budget phone. We don't need to, okay. We just have one of the highest return movies in the history of the phone business and we spent less than $5,000,000 and we spent less than $1,000,000 in marketing all in, and got $54,000,000 at the box office.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

If we can do half that or a fraction of that from these other properties, we're going to do really, really well because of the favorable economics that we're looking at here. So I don't know if that answers your question, but we're feeling very good about our space and the kind of we'll be able to generate with that sort of economics.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Great.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

I'll add yeah.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

I was going to say I'll add, you know, the other side to this too is, as you saw with our partnership with StudioCanal, you know, we'll we'll even bring in partners earlier, you know, StudioCanal effectively, for example, on satellite deadly night eliminates, you know, half of our risk in the project by that partnership, right? So, you know, we're we're taking this, you know, like I said earlier on the call, a money vol approach where we we're we're focused on ROI. And while, you know, we hope that some of these break out and we will have the ability to to to push them and ride them if they happen to break out to terrifier type levels. You know, it happens. Some our competitors have these breakouts happen.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

But I think, you know, our goal is to have these fit as Chris described these that we're, you know, we're going for singles and doubles. We're not swinging for the fences on every movie hoping to have a Terrifier.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

And then again, I said this on the last call, maybe I didn't say because we're Brian, because we're releasing movies, it was such an efficient low level of marketing spend and getting the kind of results that we got on Terra Fire two and Terra Fire three. It creates a much better economic situation for our producer partners, filmmakers who want to come to us because they don't have the usual $5,000,000 to $20,000,000 of marketing in between them and their participation. And so, that's been recognized in the business and it's led to to all these opportunities for us coming our way. And obviously we like that. We also like the idea that we sort of helped develop a model that we need to prove the concept going forward.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

But hopefully it's going to enable independent filmmakers to get their films released theatrically and get access to more eyeballs. The marketing spend piece has always been the big bugaboo in the independent film releasing business and hopefully we've cracked the code here.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Thank you. The, just wanted to touch on two other pieces of your business. I wasn't quite sure on Synasearch how that's progressing in terms of monetization. And then on MaxPoint, you announced two deals. And I guess, can you help frame for what the revenue opportunity for customers like these are?

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Can you give a range of opportunity?

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Sure, sure. Well, I can tell you so first of all, tackle CineSearch. We're when we have revealed that product to the market, when we talk about Synapsearch, the consumer facing piece that's in demo, anybody can test it out, kick the tires, that's we're not selling that commercial version of the product. What we are selling is the back end and capabilities that allow OEMs and others to effectively vastly improve their search results and capabilities. So that piece, we're in active conversations with a lot of parties today.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

We're in development of the second version of the technology that powers that. We expect it to be completed within the next quarter or so. So we think commercial opportunities for that as we get out of the early developmental stages, the R and D stages of this to full commercialization, will start to happen in the next fiscal year. In terms of Matchpoint, when we talk about average customer size, you know, we are we're targeting a couple different segments. The SMB segment is a clear segment for us, as well as, we are also targeting enterprise.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

So the average customer value is going to vary depending on the size of customer we target. We've been talking internally about SMB customers being on the lower 6 figures annual sort of target target range. And, you know, enterprise customers can be many, many multiples above that depending on the implementation. The enterprise deals tend to have a more custom or specialized implementation. So I would expect those to be significantly higher than SMB side.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

That's super helpful.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

They could range they could range back to millions of dollars.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Yes. Yes.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

I looked back and you have been discussing increased investments to drive subscriber growth. And I know podcasting as well. Those are two important pieces to your business. Now I see the trends and number of people and I'm not sure even downloads, but where are we in terms of revenue contribution from those as we evaluate the better inventory fill rates? I haven't seen that in the last couple of quarters.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

And are you talking about the podcast business or are you talking about the other

Erick Opeka
Erick Opeka
President and CSO at Cineverse

side of

Erick Opeka
Erick Opeka
President and CSO at Cineverse

the business?

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

I mean, the subscription business, I'm curious, what the revenue contribution is in the podcasting business. I'm not sure if I heard how where downloads or viewership are. And maybe then you can discuss how inventory fill rates are improving to drive stronger monetization of your podcasting.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Yes, sure. So on the podcasting business, we the viewership numbers bounce around month to month, but the high watermark in the last quarter was about 15,000,000, 15,000,000 downloads. So pretty significant audience size and up from where it was trending the prior quarter. I think we were averaging 12.5% or so. On the fill rates, you know, program, you know, there's there's two pieces to that.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

There's the programmatic side. You know, I think we're still in the 50 ish percent to 55% fill rate on that on programmatic. But we've been bundling our campaign, our inventory, into three sixty campaigns. So our fill rates have actually gone up substantially as podcasts, have been a bigger part of the sales mix for our sales team. So, you know, for example, when we do a a movie deal for a studio movie, we're bundling you know, typically, the engagement is,

Erick Opeka
Erick Opeka
President and CSO at Cineverse

on

Erick Opeka
Erick Opeka
President and CSO at Cineverse

the bigger engagements, we're producing some kind of live event or premier, bundling, web, social, CTV, and podcast into one campaign. So the podcast business has been lifted by that, inclusion as part of a bundle, as part of a whole media mix. Our advertisers love it. It's highly differentiated from pure play CTV, which is in I'm sure you know is, in wide abundance and high availability right now and not very differentiated. So this is a very differentiated approach.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

That's driving up CPMs just simply because we're bundling it into, you know, high teens level plus CPM to low 20s CPM, when we do those deals. We expect as we bring on direct podcast sellers, which, you know, we've expanded that team pretty dramatically so far, those that the podcast business will less and less of it will be programmatic over time. You know, my my target for, the next eighteen to twenty four months is to push that to well below 50%, and I think we're already shown a path to that.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Great. And then just quickly on subscriptions, can you give us a sense for revenue contribution? I think last year you were I have to look at my model here, but 3.5 ish per quarter in revenue. Are we much higher than that today? Are we at a similar path that you've highlighted the intent to increase your investments and drive that growth?

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Yes. So, I think that's where we have been. That's the rearview mirror kind of look. I think our target for the year would be to get that to double digit plus growth. You know, I think, you know, we were clocking in at kind of 76%, seven %, for the prior year.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

I think the goal is to get that up to 15% plus. So, you know, you can kind of back into that number. But that's the focus for this year is really to make that a growth catalyst. We had spent we'd put most of our capital towards scaling the theatrical, the emerging theatrical business and some other initiatives, but we really see the subscription business as a very good investment and a deployment of capital for this year given some of the market dynamics we're seeing.

Brian Kinstlinger
Director of Research, Managing Director, Head of Technology Research at Alliance Global Partners

Great. Thank you, guys.

Erick Opeka
Erick Opeka
President and CSO at Cineverse

Thank you, Brian.

Operator

Thank you for your question. There are no further questions remaining, so I'll pass the conference back to the management team for any closing remarks.

Chris McGurk
Chris McGurk
Chairman & CEO at Cineverse

Thank you, this is Chris. So, thank you all for joining us today. And as always, please feel very free to reach out to Julie Milstead with any additional questions you might have. And we look forward to speaking to you all again on our next quarterly call in June. Thank you.

Operator

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Executives
    • Gary Loffredo
      Gary Loffredo
      Chief Legal Officer, Secretary & Senior Advisor
    • Chris McGurk
      Chris McGurk
      Chairman & CEO
    • Mark Lindsey
      Mark Lindsey
      Chief Financial Officer
    • Erick Opeka
      Erick Opeka
      President and CSO
Analysts
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Earnings Conference Call
Cineverse Q3 2025
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