Cineverse Corp.

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 Year 2025 First Quarter Financial Results Conference Call. The press release announcing Cineverse's results for the Fiscal First Quarter ended June 30, 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 of the information discussed on this call is as of today, August 14, 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 disclosure and the reconciliation tables to applicable GAAP measures and our earnings release 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 Wiador, Chief Operating Officer and Chief Technology 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 fiscal year 2025 first quarter highlights, the latest operational developments, outlook, and long-term growth strategy. Mark will follow with a review of our results for the fiscal first quarter ended June 30, 2024. And Eric will provide some details on our streaming business results and operating initiatives before opening the floor to questions. I will now turn the call over to Chris McGurk to begin.

Thanks, Gary, and thanks everyone for joining us here today. This was a transition quarter for Cineverse. Consistent with the prior four quarters, we again generated significant savings in SG&A during this quarter of $1.3 million, or 17% versus the prior year. Reflecting our previously reported cost savings initiatives, most importantly, our offshoring of domestic employment positions to Centiverse Services India. We've now reduced our domestic headcount by 57 positions, or 39%, since we began consolidating operations after we completed our acquisition activities two years ago. That offshoring of domestic positions to a battle-tested, efficient operating division of Centiverse in India was the driving factor behind the $8.9 million in SG&A cost savings we recorded in the last fiscal year. And this quarter's results demonstrate the continued success of this key initiative. Those cost savings were the main factor that enabled us to beat our direct operating margin target again this quarter, recording a 51% margin versus our stated target of 45% to 50%. Our revenues in this quarter were impacted by an almost $2 million decline in digital licensing due to the timing of digital content releases between quarters and the comparison to non-recurring revenues in our legacy digital equipment business that we booked in last year's quarter. Another key timing and transition related issue that impacted revenues in the quarter is that we did not yet begin to report any upsides from our new sales teams and SaaS sales initiatives for our proprietary MatchPoint technology David Miller, AI based products and omni advertising programs, most importantly, direct ad sales, however, we've now built a very robust pipeline in all those areas that Eric will talk about in just a minute. David Miller, And based on that we fully expect to begin to record revenue upsides over the next few quarters as we close multiple fields that are already in the sales queue. Eric will also speak to the skyrocketing growth in viewership across our channel and podcast portfolio, which obviously bodes very well for a significant rebound in our advertising business, as well as an even more expanded sales pipeline. In addition, we remain very optimistic about the release of the next installment of our Terrifier horror franchise, Terrifier 3, which is on target for an October 11, 2024 theatrical release. We are marshalling all the resources of the company to maximize profits from that release. We're concentrating not just on theatrical, but also on the highly profitable ancillary distribution markets, including video on demand, DVD, Blu-ray, and particularly our screen box for our streaming channel, where we saw a substantial increase in subscribers following the release of Terrifier 2. If we are successful in all of this, the film should provide a substantial cash inflow to support the rest of our business, particularly in building the content pipeline. Importantly, we also extended our $7.5 million line of credit with East West Bank another 12 months to September 2025. This further strengthens our financial flexibility. We also updated our digital library valuation with the same third party appraiser that valued it in 2023. This valued our library of more than 66,000 titles as of March 31, 2024, at approximately $39.8 million, a substantial increase over last year's valuation and several large multiples above the book value of our library, which was just $2.6 million as of June 30, 2024. This library valuation alone excluding all our other assets, is by itself significantly higher than our current market capitalization, which we believe significantly undervalues the company. Reflecting that significant disparity, we purchased approximately 184,000 shares of Cineverse Equity through June 30th, 2024, and are continuing to use our previously reported stock repurchase program as appropriate since we believe repurchasing shares is a value-creating investment opportunity for the company. And with that, I will turn things over to Mark for our financial review. Mark?