Cineverse Corp.

Welcome to Center Versus Second Quarter Fiscal 2024 Financial Results Conference Call. My name is Tia, and I will be your moderator for 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 star followed by the number one to ask a question. If anyone needs operator help, press star zero. Please note that this call is being recorded. I would now like to turn the call over to your host, Gary Loffredo, Chief Legal Officer, Secretary, and Senior Advisor for Cineverse. Please proceed.

Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal 2024 Second Quarter Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal second quarter ended September 30, 2023. is available at the investor section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at Cineverse's 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. 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 Cineverse 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 releases carefully as you consider these metrics. I'm Gary Lofretto, Chief Legal Officer, Secretary, and Senior Advisor at Cineverse. With me today are Chris McGurk, Chairman and CEO, Eric Opica, President and Chief Strategy Officer, Tony Huidor, 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 second quarter 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.

Thank you, Gary, and hello, everyone. Thank you for joining us today. We made great strides this quarter toward achieving our previously stated goal of dramatically reducing costs, improving margins, and driving towards sustained profitability. We did this by further optimizing our more than two dozen streaming channel portfolio, culling lower margin channels while focusing resources on higher margin, higher return performers, and then by cutting costs, as we finalize the consolidation of the eight key content and streaming acquisitions we made over the past three years. At the same time, we are also transferring a significant number of domestic employment positions to our Centerverse Services India operation, a unique competitive cost and work efficiency advantage that Centerverse 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. 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 $6.3 million, or 34%. We decreased our SG&A costs by $2.8 million, 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. And we have significant additional positions that we plan to offshore to Centiverse Services India over the next few months beyond the 29 plus positions that we have already moved there or identified to offshore. All of that will enable us to hit our goal of $8 million in annual SG&A cuts. Centiverse 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 culling lower margin channels, we improved our operating profit by $5.3 million to $600,000 this quarter. And we increased our adjusted EBITDA by $3.7 million, or 283%, to $2.4 million. And we also narrowed our net loss to $400,000. That's net loss attributable to common shareholders. That's an improvement of $5.4 million. 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. Eric Opica 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?