Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cineverse Corp (NASDAQ:CNVS) reported a 20% year-over-year revenue growth for the second quarter, excluding legacy digital cinema business impacts.
• The company achieved a 40% sequential revenue increase compared to the previous quarter, indicating strong business momentum.
• Cineverse Corp (NASDAQ:CNVS) exceeded analyst consensus guidance on all key financial metrics, including revenue, net income, and adjusted EBITDA.
• The Terrifier 3 film release was a major success, opening at number one at the domestic box office with $19 million in ticket sales and achieving over $54 million in total domestic box office revenue.
• The company has significantly reduced SG&A expenses, achieving a 7% decrease compared to the prior year quarter, contributing to improved operating margins.

Negative Points

• Despite the success of Terrifier 3, the financial results from this film were not included in the current quarter's earnings, which may have limited the reported financial performance.
• Cineverse Corp (NASDAQ:CNVS) still faces challenges in balancing the decision between licensing and streaming options for maximizing revenue from Terrifier 3.
• The company has a relatively small market cap of $42 million, which may not fully reflect its potential value and could limit its financial flexibility.
• There is a risk of over-reliance on the success of the Terrifier franchise, which may not be replicable with other films or genres.
• The company operates in a highly competitive industry with major players that have significantly larger resources and established market positions.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with CNVS.

Q: Chris, given the unprecedented success of "Terrifier 3," how do you plan to position the company moving forward, especially in terms of leveraging this success for future projects? A: Unidentified_3 (Chris McGurk, Chairman and CEO): While we remain a streaming technology and content company, the success of "Terrifier 3" has shown us a new blueprint for releasing films. We aim to leverage our ecosystem to create a new profit line, both with our own acquisitions and by allowing other studios to use our assets. We're exploring properties in horror and other genres where we have strong assets and expertise.

Q: How are you planning to maximize the revenue from "Terrifier 3" in terms of licensing and streaming? A: Unidentified_3 (Chris McGurk, Chairman and CEO): We are currently analyzing our options to balance the benefits of adding it to our Screen Box subscriber base versus receiving a substantial check from pay and streaming services. We hope to make a decision in the coming weeks.

Q: Eric, can you elaborate on the long-term monetization opportunities for your search and ad technologies, especially in the context of the growing demand for AVOD and FAST channels? A: Unidentified_5 (Eric Opeka, President and Chief Strategy Officer): The demand for ad-supported content is significant, and our Matchpoint platform can help companies rapidly scale content delivery. This is crucial for both existing streaming ecosystems and the burgeoning AI content licensing market, which requires rapid and large-scale content ingestion.

Q: How do you evaluate independent movies and titles for potential success on your platform? A: Unidentified_3 (Chris McGurk, Chairman and CEO): We use an exhaustive greenlighting process, focusing on properties that align with our strengths, such as horror. We look for online buzz, known IPs, and concepts that will drive audiences to theaters. Financial caution is key, and we aim to replicate the low-cost, high-return model demonstrated by "Terrifier 3."

Q: Can you explain the revenue model for your AI-powered content discovery tool, Syn? A: Unidentified_5 (Eric Opeka, President and Chief Strategy Officer): The model will likely be a combination of license fees and variable costs, similar to API-driven platforms. There are also opportunities for advertising-based models, depending on the partner's needs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.