Cinedigm Corp

Good day, ladies and gentlemen. Today we are hosting a conference call to discuss Cinedigm's preliminary fourth quarter fiscal 2021 results. At this time, all participants are in a listen-only mode. We will have a question and answer session at the end of the call, at which time all participants wishing to ask a question will be instructed to press star 1 and identify themselves before asking a question. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Laura Kiernan, Head of Investor Relations. Thank you. You may begin.

Thank you very much. Good afternoon, everyone, and welcome to CINAHK DIME's fourth quarter preliminary results call. Before we begin, I would like to point out that certain statements made on today's call may contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions. Potential risks and uncertainties that could cause the company's business and financial results to differ materially from those forward-looking statements are described in the company's periodic reports filed with the SEC from time to time. All the information discussed on this call as of today, July 14, 2021, does not intend to update until we file our 10-K. With us today we have Chris McGurk, Chairman and CEO, Eric Opica, our Chief Strategy Officer and President of Cinedyme Networks, Gary Lafredo, Chief Operating Officer, General Counsel and President, Cinedyme and Cinedyme Cinema Equipment Business and Senior Vice President of Accounting, Cheryl Odiardi, as well as Yolanda Macias, Head of Content, all of whom will be available for questions following the presentation. I will now turn the call over to Mr. Chris McGurk to begin.

Thanks, Laura. Welcome, everyone, and thanks for joining us on the call today. Before I begin, I wanted to address the delay in filing our 10-K, which we expect will be filed very soon. We're obviously not happy about it, and we apologize. We pledge to become much timelier in our financial reporting over the next few quarters because we owe that to our investors. The challenges we experienced in reporting on a timely basis are partly due to our growing pains, as we have made such a major transformation in our business to streaming, which is growing extraordinarily fast organically and with five acquisitions that we have made over the last few months on top of that. Given all that, we clearly need to step up in finance to enable timely reporting, and we will fix that. And we don't want this delay to take away from the fact that we had a tremendous fourth quarter, perhaps the best in our history. So rest assured, our results had nothing to do with the delay. So now I'll provide an update on our corporate strategy and key investment highlights. Then I'll turn things over to Eric for a more in-depth review of our streaming business results. Then Gary will cover the continued remarkable progress we have made over the last few months in eliminating debt and strengthening our balance sheet. Then we'll open the call for Q&A. And finally, I'll provide some closing remarks. So we're thrilled to tell you about our preliminary results, which we believe represent the best overall quarterly business results in our history. The dramatic growth in our streaming revenues, a huge shift in our overall revenue composition to streaming, and the strongest balance sheet we have ever had. This performance was made possible by the entire battle-tested and capable media and technology team at Synodyne, led by our C-suite, and who all represent the single biggest asset we have at Synodyne, our people. To summarize where we stand now as a company, we have successfully completed the transition of Synodyne from its legacy digital cinema equipment business to a high-growth, independent streaming entertainment channel and content company. Underscored by the mix in our revenues this quarter, where our streaming and digital revenues represented 75% of total revenues versus 48% in the fourth quarter last year. And all of our key performance metrics were outstanding. Our streaming channel revenues were up 197% year over year. Our ad-supported streaming channel revenues were up 331% year over year. Our subscription streaming channel revenues were up 117% year over year. And we generated our fourth record quarter in a row for digital content sales to key streaming customers like Amazon and Hulu. Eric will speak to these specific results and KPIs in more detail in just a minute. While we expect to continue this rapid growth in streaming revenues in the next fiscal quarter and beyond, we will also continue to execute our successful streaming asset roll-up acquisition strategy that should help drive revenues from our digital streaming business at an even more accelerated growth rate. This will be driven by our technological capabilities, our distribution muscle, a broad portfolio of streaming channels, and our extremely strong balance sheet. We believe our strategy puts us one step ahead of potential competitors. as it enables us to acquire accretive independent streaming assets while rapidly growing the business organically. We are in an enviable competitive position as we have a multi-year track record as a digital technology innovator, a demonstrated capability as a force in launching and managing streaming channels and distributing digital content to the entire streaming ecosystem. We are long-term partners with every major media and technology player involved in streaming and have a strong track record of playing well in the sandbox with each and every one of them. I believe it is also very important to note that not only is there a huge potential market for our portfolio of enthusiast streaming channels, this targeted strategy we are implementing and our current channel portfolio itself are perfectly complementary to the big general entertainment subscription services investors focused on like Disney Plus and Netflix. So we are not competing with those services at all. Instead, we are a complimentary channel offering serving super-enthusiast viewers on every key streaming device and platform. Now, I realize we have some new institutional and retail investors on this call, so I'd like to take a quick step back and provide a little background on Synodyne to level set everyone. I think this will help put this pivotal quarter's tremendous performance into the context of the larger picture. Under an experienced senior leadership team, Cinedigm has been an innovator in the digital transformation of the entertainment industry for two decades now. And over the past few years, we've transformed from a digital cinema equipment company to being a leading independent streaming company of channels and content driven first and foremost by technological innovation. As our digital cinema business wound down, we invested significantly in growing our fan-centric, enthusiast audience that consumes our 16 live streaming enthusiast channels while building a library of more than 35,000 film and TV assets. This strategy was implemented under the direction of our Chief Strategy Officer and President of CineDime Networks, Eric Opica, who you will hear from in just a minute. Now, the primary source of our revenues, 75% of the total in this fourth quarter, is our streaming and digital business segment. This business generates revenues through ad-supported streaming video on demand called AVOD, subscription streaming video on demand called SVOD, free streaming ad-supported linear television called FAST, and digital content sales of films and TV series to streaming service providers like Amazon, Netflix, Tubi, and every other key platform. And this is all delivered through our world-class, proprietary, innovative streaming platform, MatchPoint, run under the leadership of Tony Huidor, our Chief Technology and Product Officer. And it's all focused on fan-centric, enthusiast content, run under the leadership of Yolanda Macias, our Chief Content Officer. And as we conclude our transformation, And under the leadership of Gary LaFretto, our COO, we recently sold a large portion of our legacy digital cinema assets to AMC Entertainment for $10.8 million to be paid out in chunks over two years. This helped our debt reduction initiative, and I'd like to report, as of today, all of our debt has been entirely eliminated, and we have the strongest balance sheet in our history. That's almost a $50 million debt reduction to a zero-balance balance. in just 15 months. We obviously believe that it's quite an achievement. Now I would like to quickly lay out what we view as Cinedigm's key investment highlights. First, the company is leveraging a diverse enthusiast content streaming channel portfolio with a very loyal fan base that is focused on a huge total addressable market. To name just a few of our launch and upcoming channels, we have an indie film label with Fandor, horror content with Screen Box and with Bloody Disgusting, family entertainment with the Dove Channel, and iconic entertainer channels, including Bob Ross and now Elvis Presley. The total addressable market for this content is estimated to be $3 billion for the U.S., enthusiast market alone, which means we now have about a 1% share of this market and a lot of opportunity to grow our market share as we acquire the most attractive, independent, enthusiast content available. The streaming category is growing at a healthy double-digit rate globally, according to PWC and Mirai Asset Securities, among many others. That's being driven by AVOD and SVOD primarily, as digital advertising spending continues to increase and cord-cutting by younger generations who subscribe to their favorite content rather than to unwanted packages. It's also driven by consumer preference toward third-party channels and content platforms, a rapid rise in consumption of fast content, and media consumption across multiple devices, platforms, and brands. Second, Synodyme is well positioned in this changing media and entertainment landscape, and we are driving growth through technological innovation, which is a major competitive advantage for us. We have a world-class proprietary streaming technology platform that enables the company to deliver great streaming experiences at massive scale. Our SaaS-based distribution platform, MatchPoint, completely automates film and TV distribution while creating and curating new channels for streaming platforms. This technological advantage makes us the go-to partner for brands, content companies, and cable channels seeking new streaming distribution platforms. And finally, by executing on our key business initiatives, we expect to deliver sustained growth, thereby generating value for you, our shareholders. These key initiatives are focused around four main buckets, content, technology and distribution, audience, and financial performance metrics. For content, we are executing on a roll-up strategy by completing several content-related acquisitions, enabling us to super serve consumers driving significant fast AVOD and SVOD growth. Eric will speak to this further in his remarks. For technology and distribution, as I said, we've dramatically expanded our streaming content business through the Matchpoint platform, which we fully control with a recent acquisition of our India-based technology partner, Foundation TV. We plan to launch and scale our channel portfolio by ultimately building an umbrella or channel hub. We've established key partnership deals, including connected TV platforms, large OEMs, cable companies, and other tech platforms. And we are licensing film and TV content to every key player in the streaming ecosystem, including Amazon, Apple, Netflix, and Google. For audience, we are growing our monthly active users significantly across our entire channel portfolio, which is key to creating a long-term shareholder value. And finally, For financial performance metrics, we are monetizing our legacy digital cinema business. We eliminated, as of today, 100% of our debt and have enhanced our liquidity dramatically. We are well-positioned to drive our cash flow through achievable growth targets while we balance that objective with rapidly growing our top line in market share. And with that, I'll now hand things over to Eric Opica to speak to our streaming business and strategies.