Cineverse Corp.

Please note that this call is being recorded. I would now like to turn the call over to your host, Gary Lafredo, Chief Legal Officer, Secretary and Senior Advisor for Cineverse. Please go ahead.

Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal 2024 Fourth Quarter and Year-End Financial Results Conference Call. The press release announcing Cineverse's results for the Fiscal Fourth Quarter and Year-End March 31, 2024, 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 could 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, July 1, 2024. 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 release carefully as you consider these metrics. I'm Gary LaFretto, 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, Mark Lindsay, 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 fourth quarter and full year fiscal year 2024 highlights, the latest operational developments, outlook and long-term growth strategy. Mark will follow with review of our front results for the fiscal fourth quarter ended March 31st, 2024. And Eric will provide some detail on our streaming business results and operating initiatives before we open the floor to questions. I will now turn the call over to Chris McGurk to begin.

Thanks Gary. And thanks everyone for joining us today on this call. As we have emphasized repeatedly, fiscal year 2024 was an important transition year for the company. Having finally moved beyond any material financial impacts from our legacy digital cinema equipment business, and also having established a recurring cash-generating film franchise with Terrifier 2 in the prior fiscal year, we focused this year on a concerted drive towards sustained profitability to set a strong foundation for our future growth. Our full year and fourth quarter results both reflect the success of that effort. We generated vastly improved operating margins by dramatically streamlining our cost structure, optimizing our streaming channel portfolio, and focusing on higher margin new revenue streams. This resulted in positive and growing adjusted EBITDA and an accelerating trend toward positive and sustainable annual net income. Excluding key non-cash impacts and non-operating factors, most significantly the goodwill impairment that was triggered by our market capitalization being significantly below our book value, we reduced our net loss by $4.8 million, or 58%, to $3.4 million for the full year. And we were virtually breakeven on net income in this last reported quarter. We generated full-year adjusted EBITDA of $4.4 million. an increase of $4.3 million over the prior year. And we accomplished all this despite losing very significant revenues from the runoff of our legacy digital cinema equipment business and lapping the success of the horror phenomenon Terrifier 2, which also produced a very sizable upside last year. We increased our operating margins substantially to 61% from 47% in the prior year. We even hit a 79% margin in the fourth quarter. This was primarily driven by our streaming channel optimization efforts, where we culled lower margin channels, and also from SG&A savings generated by our Centiverse Services India operation. Centiverse Services is a unique competitive advantage for the company, where we can offshore, not outsource, domestic positions to a trusted, battle-tested division of the company. generating very significant cost savings along with improved efficiencies and workflows. At this point, more than half of our total workforce is now located in India, and we intend to continue to leverage this operation by moving even more positions there from our own domestic business and also providing services for other companies. The long-term goal is to make Centiverse Services India a new profit center for the company. not just our own unique cost-saving advantage. In total, we reduced our SG&A by $8.9 million this year and will continue to identify opportunities to further streamline across all of our businesses. Importantly, and fully cognizant of what we believe is a vastly undervalued stock equity price, one that triggered our goodwill impairment since it is well below book value, we began to implement our previously announced stock repurchase program subsequent to year end. We believe that by repurchasing our significantly undervalued shares that we are taking advantage of a key value creation opportunity for the company that will prove itself as we execute our strategic growth and profitability plan. We repurchased 184,000 shares through June 30th and fully intend to continue to utilize the repurchase program to support our stock price on a go-forward basis during non-blackout periods. In just a minute, Mark will discuss our financial performance in more detail, and then Eric will review our operational performance and new developments and initiatives to drive revenue and margin growth in advertising, technology, AI, and podcasts. However, before I turn it over to them, I would like to briefly touch on an initiative that our entire company is very excited about and working to maximize. And that's the upcoming release of the next installment of our horror franchise phenomenon, Terrifier 3. Terrifier 2 caught the film community totally by surprise when we released it theatrically in October 2022. Produced for just $250,000, it ended up doing over 15 million at the worldwide box office, generating buzz in the New York Times, People Magazine, and on the Howard Stern Show, among many others. It was one of the best reviewed horror movies of that year, and generated substantial ancillary revenues in DVD, VOD, and on our ScreenBox core streaming service. Our bloody disgusting horror division led the charge in marketing the movie across social media and through editorial content and other promotions in an incredibly cost-effective way, fully leveraging our over 80 million monthly streaming viewers and all of the other assets of the company. We intend to use that very same playbook to mobilize the entire company to do the exact same thing in marketing and distributing Terrifier 3, which will be released on October 11th of this year as a wide release this time on over 2,000 screens. The difference this time is that we now really know what we have in terms of an art and fan base and market anticipation. USA Today has already named Terrifier 3 as one of the most highly anticipated horror films of 2024. And we prepared a high impact marketing campaign to take advantage of all that built up anticipation, leveraging all of our unique advantages as a streaming and tech based content company. The movie business is always highly unpredictable. However, from what we've seen of Terrifier 3 so far, we are very hopeful that if we mobilize the company like we did on Terrifier 2, we can continue to benefit from a recurring movie franchise that has an incredibly favorable risk-reward profile. We believe this franchise phenomenon can potentially provide significant and ongoing upside, not just for our horror and streaming business, but also as a recurring cash cow for the company that will support our investments in content, channels, and technology. And with that, I'll now turn things over to Mark. Mark?