Chicken Soup for the Soul Entertainment, Inc.

Please stand by. Your conference call will begin momentarily. Thank you for your patience. Your conference call will begin momentarily. Thank you. Thank you. Thank you. Thank you. Good day, and thank you for standing by. Welcome to the Chicken Soup for the Soul Entertainment fourth quarter 2021 earnings call. At this time, all participants are in the listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question during the session, you will need to press star and then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star and then 0. I would now like to hand the conference over to your speaker today, Taylor Krafchick, IR. Please go ahead.

Thank you, Operator, and welcome. With me on the call today are William J. Ruhanna, Chairman and Chief Executive Officer, and Chris Mitchell, Chief Financial Officer, to review the fourth quarter and full year 2021 results, as well as provide a business update. Following this discussion, there will be a moderated Q&A session open to the participants on the call. During this call, management will make forward-looking statements. Forward-looking statements include but are not limited to statements regarding expectations, intentions, and strategies regarding the future. Forward-looking statements are based on management's current expectations and assumptions and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from projected results. Given these uncertainties, listeners are cautioned not to place undue reliance on any forward-looking statements contained in this conference call. Please refer to the cautionary text regarding forward-looking statements contained in the earnings release which also applies to the content of this call. Additional risk disclosures can be found in the company's filings with the Securities and Exchange Commission. On today's call, management will make comments on certain gap-based and non-gap pro forma financial information. The non-gap financial measure the company uses is adjusted EBITDA. Management believes that adjusted EBITDA provides useful information in that it excludes amounts that are not indicative of the company's core operating results and ongoing operations and provides a more consistent basis for comparison between periods. The earnings release contains a reconciliation of adjusted EBITDA to net income or loss, which is the most directly comparable gap measure. For further information on the company's historical financial performance, financial condition, and operational and other information and risks, we refer you to our filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2021, which we filed today. I would now like to turn the call over to William Hannah, Chairman and CEO. Bill, please go ahead.

Thanks, Taylor. Welcome everyone. And thank you for joining us today. We had a strong finish to the year and had a great 2021 with a number of major accomplishments that strengthened our foundation and established momentum for us to scale our business in 2022. I'm going to go through a quick recap of these 2021 accomplishments. give some high-level thoughts on current industry dynamics, talk about how we are scaling our business to capitalize on the opportunities we have. And then I'll turn it over to Chris, who will go into more detail on the financials. We had a record end to an outstanding year. Fourth quarter net revenue was a record $36 million, an increase of 78% over the prior year period. And adjusted EBITDA for the quarter was a record $9.3 million, a threefold increase over the same quarter last year. Our full year performance set revenue and adjusted EBITDA records as well. Full year 2021 net revenue totaled $110.4 million, above our expectations, and a 62% increase over 2020. Adjusted EBITDA reached 21.8 million, growing 85% over the prior year. What's even more impressive is that these growth rates are on top of the strong 2020 performance that we experienced during the COVID pandemic lockdowns. Now, 2021 was also a transformational year strategically. First, we significantly grew our library and content pipelines. We completed the Sonar Assets acquisition early in the year, which added more than 1,000 titles across an extensive library and more than 4,000 hours of high-quality programming. And not to skip ahead, we also recently doubled our library again with a 1091 acquisition. We formed the Chicken Soup for the Soul television group in 2021. which consolidated TV studio activities under one group headed by David Ellender. We were also active and successful in acquiring content through screen media and producing content through our landmark and Chicken Soup for the Soul studios. We increased our viewership and viewer retention on our networks. Our distribution touchpoint strategy has been very successful. On average, we continue to add between 400 and 450,000 viewers with new touchpoints. The Crackle Plus network is now available on more than 70 touchpoints, and our average total monthly active users for the Crackle Plus now exceeds 40 million. We also launched our new Chicken Soup for the Soul streaming service on several fast channels and on Vizio as an app earlier this month. We are now rolling out the Chicken Soup for the Soul service more broadly, opening another avenue for driving revenues from our quality content and growing our viewership base. Beyond content and distribution, we began the rollout of our new improved tech platform. It has been well received by both our viewers and our advertising partners. The new tech is now launched on Vizio and Samsung, and the results are coming in as we'd hoped. I will add some more color on this in a minute. And lastly, we enhanced our financial position by strengthening our balance sheet and augmenting our shareholder return profile with an active share buyback program, which we recently increased to $30 million. All in all, we have everything we need to meaningfully scale our business in 2022, though if you've followed us for any amount of time, you know we may not stop there. To set the stage for a conversation around our plans and expectation for 2022, I want to provide some high-level thoughts on the VOD industry. There are many dynamics at play in the industry right now, and they inform our long-term strategy. As many of you know, streaming has been a mixed bag for investors in recent months. That's putting it mildly. Nearly all of the attention has been focused on the SVOD space, and the decisions being made by big media names. But we believe that the trends driving those decisions are more about the changing media landscape and viewer habits than their performance in the market. If you look beneath the surface, you'll see several key trends in both SVOD and AVOD that support that. In the SVOD space, U.S. subscriptions overall are not materially growing despite the ever-increasing number of options available to viewers. We believe the most attractive remaining growth opportunity for SVOD is overseas. Additionally, the competitive landscape is driving content investment to ever higher levels. The stakes are high here in the U.S. Signs are emerging that the overcrowded landscape is beginning to result in increasingly savvy viewers jumping in and out of subscriptions to binge watch the latest big hit. and recently reported research says more of those savvy viewers are in the millennial and Gen Z demos, who over the coming years will control the vast majority of purchasing power. All of this should ultimately lead to consolidation, a thesis well supported by the historical evolution of the media industry. SVOD has succeeded in driving cord cutting, but the slow migration away from linear pay TV doesn't mean the end of free-to-air content. AVOD is stepping into the void, and there is tremendous value there. Ad space has become more scarce, and therefore more valuable, as cord-cutting shifts viewer eyeballs away from traditional platforms. Partly as a result, we believe that AVOD is likely only in the second or third inning in the U.S. with regard to viewer growth, and furthermore, is only in the pregame internationally with the first inning soon to come. Overall, the keys to AVOD success are content that you can't find elsewhere, a great viewer experience, the ability to deliver targeted viewers to advertisers, and the ease of access to your networks for consumers. This is what Crackle has built, especially in the last 12 months. In summary, there is room in the world for scaled players in both AVOD and SVOD, but we think very few are paying attention to the AVOD opportunity. So let's take a look at how we're scaling our business. Our core pillars of growth are content, viewership, CPMs, and technology, or the user experience. And we focus on all of these through both organic growth and opportunistic M&A. Content has clearly become our most important differentiator. All told, we now have a remarkable over 100,000 programming hours in our content library. which together with our production activity, put us on track to more than double our originally projected number of original and exclusive pieces of content per week in 2022. Our programming strategy has always been to put more original and exclusive content on our platform and to grow our IP rights ownership. We do this by acquiring and producing content cost effectively, including through partnerships and co-productions. This is how we'll drive profitable growth, and that picture is already starting to emerge in our 2021 results with much more to come. We believe our company has been an AVOD leader and a growing force in streaming at large by ramping our original and exclusive releases. We now believe we will have more than 100 pieces of new original and exclusive content this year, or two titles per week across our three core streaming services. Viewership of our original and exclusive content, a metric unique to us that we've been reporting to you for some time, is a good way to monitor our progress. As a percentage of overall ad impressions, original and exclusive viewership generated as high as 28% of total ad impressions in December, 24% for the quarter, both of which exceeded our year-end goal of 20%. and that number will undoubtedly increase with our more robust 2022 pipeline. Remember, this is our most profitable content. Beyond our originals, bigger media players are finding our streaming services to be a home for their great content. These include the BBC, who has given us a three-year exclusive AVOD license to the smash hit series Sherlock, and more recently signed a multi-year deal for premium content with Screen Media, whereby we'll add more than 2,500 hours of BBC originals on our services. We also recently added the Spider-Man film trilogy from Sony, in time to coincide with the franchise's latest new theatrical release. Our showings of the trilogy hit the top of Crackle's movie charts, not surprisingly, and was a key driver of viewership in February. We're also executing creatively on our media partnerships, highlighted by our recent deal with Apex Media for our Inside the Black Box series. This is a big positive as it partners us with a large advertising agency with hundreds of important advertising customers over multiple years who will help us with increasing sponsor integrations. Other brands working on upcoming series include P&G's Bounty on Comfort Kitchen and Verizon on Smart Home Nation, but there are many more. We expect to introduce brand integration opportunities at the upcoming new fronts. Our Chicken Soup for the Soul streaming service launched with thousands of hours of exclusive programming and is still fully rolling out across distribution touchpoints. Just last week, we announced its official launch on Vizio. And last, but certainly not least, our recently announced 1091 deal fits our M&A strategy perfectly, both strategically and financially. From a content perspective, it gives us distribution rights to approximately 4,000 more quality movies and TV series, doubling the size of our content catalog. Some of the content includes Academy Award-nominated Cartel Land, Spirit Award winner Christine, starring Rebecca Hall, and Grammy Award winner Linda Ronstadt, The Sound of My Voice. This deal also comes with established Fast and Avon streaming channels, that generate approximately 1 billion yearly ad impressions. The 1091 deal is also immediately accretive to our financial results, adding an estimated $10 million of revenue and approximately $3 million of incremental EBITDA in the next 12 months. Our expanded content lineup, combined with our aggressive distribution rollout, positions us to continue viewership growth. We now plan to reach more than 90 consumer touchpoints in 2022. This is the second time we've increased that goal this year. We're also accelerating progress with our international business expansion, which is still in early stages, but we anticipate will be a key driver of viewership over the long term. One interesting side note is that our large library is allowing us to participate in the rapidly growing fast business by segmenting groups of content that appeal to different viewers, allowing for greater refinement of our content for viewers. We already had our crackle, chicken soup to the soul, and truly fast channels rolling out, and the 1091 acquisition adds Echo Boom, the world's best collection of action sports films, Unidentified, the largest collection of family, friendly, and faith-based movies and documentaries, Surf Now TV, I think you can guess what that's about, and black picks to our lineup. Technology enhancements that we debuted in 2021 also continue to roll out across our platforms. The area where we anticipate these enhancements will be most impactful to our business is through their ability to increase our users' time spent on the platform and therefore ad impressions. Additionally, we continue to introduce new advertising innovations that are driving ad dollars and increasing CPMs. With the Vizio and Samsung new tech launches, we've seen great progress with our user engagement. Vizio tech is beginning to have the impact we hoped. In February, watch time on Vizio averaged over 88 minutes per engaged viewer, a 40% increase. Vizio Uniques were up 25% month over month. Vizio MAUs were up 28% month over month. Vizio Start Time increased 42%. And here's one that went down, and we're happy about it. There was a 196% decrease in ad exits on the Vizio platform, and that makes our advertisers happy. Samsung's much more recently launched app has started off strong, with engaged viewer watch time up around 70% since the launch. We're also on track to add new tech to Roku, Fire TV, LG, and other major platforms in this quarter, Q2. We expect the continued rollout of our updated apps will mirror these increased watch times. While we are highly focused on executing on these strategic growth pillars, we remain optimistic and opportunistic about the consolidating media marketplace. As we look ahead to 2022 from a financial projection perspective, we are expecting 35% top line growth and approximately 50% adjusted EBITDA growth for the full year without any further acquisitions. Revenue for our first quarter, which ends today, will come in at approximately 25% over last year. Implied in our 2022 outlook is an expectation that our top line and adjusted EBITDA growth will accelerate through the second half of the year as it has in the prior five years. Adjusted EBITDA outperformance relative to revenue growth is expected as a result of the increased investments in our new tech. as well as marketing and M&A, and that will primarily be reflected in the first quarter performance. In closing, we couldn't be more excited about the future of our business as it's beginning to scale meaningfully, and we're looking forward to executing on a great year operationally, strategically, and financially. I want to thank our entire Chicken Soup for the Soul Entertainment team for all their hard work. I'm going to turn it over to Chris, who will go through the financials in more detail. Chris.