• Total Revenue: $40.7 million, up $27.5 million from the prior year quarter.
• Net Income: $7.2 million, a $9.9 million increase from the prior year quarter.
• Adjusted EBITDA: $10.8 million, a $9 million increase from the prior year quarter.
• Operating Margin: 48%, within the targeted range of 45-50%.
• Cash on Hand: More than $13 million, with zero debt.
• Line of Credit: $7.5 million available with East West Bank.
• SG&A Expenses: $9.4 million, an increase of $3 million from the prior year quarter.
• SG&A as Percentage of Revenue: 23%, compared to 50% last quarter and 48% in the prior year quarter.
• Streaming and Digital Revenue Growth: 48% year-over-year.
• Podcast and Other Revenue Growth: 138% year-over-year.
• Cash Flow from Operations: $5.0 million net cash provided, a $7.4 million improvement during the quarter.
• Working Capital Surplus: $6.8 million, the largest in company history.
• Subscriber Growth: Total subscribers reached 1.38 million, up 6% year-over-year.
• Screenbox Subscriber Growth: 7% increase over the past 60 days.
• Fast Channels Performance: Over 2.1 billion minutes streamed in Q3.

• Warning! GuruFocus has detected 8 Warning Signs with CNVS.

Release Date: February 13, 2025

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

Positive Points

• Cineverse Corp (NASDAQ:CNVS) reported its strongest quarter in history with $40.7 million in total revenues, a 207% increase from the prior year.
• The company achieved a net income of $7.2 million, marking a $9.9 million improvement from the previous year.
• Cineverse Corp (NASDAQ:CNVS) has zero debt and more than $13 million in cash on hand, with an additional $7.5 million available on their line of credit.
• The success of 'Terrifier 3' has opened up new profit lines for Cineverse Corp (NASDAQ:CNVS), leading to a deluge of new film releasing and marketing opportunities.
• The company is expanding its theatrical release slate with films like 'Silent Night, Deadly Night' and 'The Toxic Avenger', leveraging its unique media assets for cost-efficient marketing.

Negative Points

• Cineverse Corp (NASDAQ:CNVS) faces increased SG&A expenses, which rose by $3 million compared to the prior year quarter, primarily due to 'Terrifier 3'.
• The company is exploring new financing options to expand credit availability, indicating potential financial constraints for upcoming initiatives.
• Despite strong performance, the company acknowledges the need to prove the concept of its new marketing model for independent filmmakers.
• The podcast business, while growing, still has a programmatic fill rate of 50-55%, indicating room for improvement in direct sales.
• Cineverse Corp (NASDAQ:CNVS) is targeting a significant increase in subscription growth, which may require substantial investment and carries execution risk.

Q & A Highlights

Q: How does Cineverse plan to approach the number of screens for film releases, and will this vary by film? A: Christopher McGurk, Chairman and CEO, stated that Cineverse plans to release films on 1,500 to 2,500 screens, similar to the strategy used for "Terrifier 3." This targeted approach is deemed sufficient for their specific audience, avoiding the broader reach of 3,000 to 4,000 screens typical of major studios. The focus is on known IPs with established fan bases, ensuring favorable economics and strategic distribution.

Q: Will Cineverse expand into genres beyond horror, or will it remain focused on horror films? A: Christopher McGurk mentioned that while Cineverse has a strong foundation in horror, they are exploring opportunities in other genres such as family, comedy, and urban properties. The aim is to leverage their channel and podcast strengths to market these films effectively, following the successful blueprint used for "Terrifier 3."

Q: What are the financial expectations for acquiring and marketing new films, and how does this compare to "Terrifier 3"? A: Christopher McGurk highlighted that the investment for "Terrifier 3" was around $5 million, including acquisition and marketing. Future projects are expected to be below this cost, maintaining a positive risk-reward profile. The strategy is to keep investments low while achieving high returns, similar to the success of "Terrifier 3."

Q: Can you provide insights into the monetization and revenue potential of Cineverse's Match Point and CineSearch technologies? A: Erick Opeka, President and Chief Strategy Officer, explained that Match Point targets both SMB and enterprise segments, with SMB customers expected to generate lower six-figure annual revenues, while enterprise deals could be significantly higher. CineSearch is in the developmental stage, with commercialization expected in the next fiscal year, focusing on improving search capabilities for OEMs.

Q: How is Cineverse planning to drive growth in its subscription and podcasting businesses? A: Erick Opeka stated that the podcasting business saw a high of 15 million downloads last quarter, with fill rates improving due to bundling with other media campaigns. The subscription business aims for double-digit growth, with increased investments in premium content and customer acquisition to drive this expansion.

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