This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: Good afternoon, ladies and gentlemen, and welcome to the Dolphin Entertainment fourth quarter 2021 earnings call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara. Sir, the floor is yours.
spk08: Thank you. And once again, welcome to Dolphin Entertainment's fourth quarter and full year 2021 earnings call. With me on the call are Bill O'Dowd, Chief Executive Officer, and Myrtha Negrini, Chief Financial Officer. I'd like to begin the call by reading the Safe Harbor Statement. The statement is made pursuant to the Safe Harbor Statement for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call, with the exception of historical facts, may be considered forward-looking statements within Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various risks and uncertainties. For discussion of such risk factors and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, We see risk factors detailed in the company's annual report on Form 10-K, contained in subsequent filed reports on Form 10-Q, as well as in other reports that the company files from time to time with the Securities and Exchange Commission. Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, or circumstances. Now, I would like to turn the call over to Bill O'Dowd, Chief Executive Officer of Dolphin Entertainment. Bill, please proceed.
spk06: Thanks, James. And hi, everyone. Good afternoon, and thank you for joining us today. As always, we'll start with a review of some financial and operating highlights, followed by a full financial review, and then we'll open it up for Q&A. Overall, 2021 will be remembered as a transformative year for Dolphin, both with respect to our balance sheet and operating income. as well as in our evolution to making investments in assets for which we believe our marketing expertise will greatly influence the likelihood of success. Let's start with our financial statements. The momentum from the first nine months of the year carried through to the fourth quarter. Looking at the P&L, we have set another new quarterly revenue record with $10.5 million in revenue, up 57% year over year. Each quarter of 2021 set a Venn record for revenue. Q1 reached $7.2 million in revenues, a record broken in Q2, which reached $8.6 million in revenues, followed by Q3, which set a then record with $9.4 million in revenues. Now we have achieved $10.5 million in revenues in Q4. All of these increases have been entirely organic and a result of the supergroup's growth and cross-selling of services. And with each successive quarter setting a new record in revenue, Obviously, the full year set a new revenue record as well, reaching $35.8 million, which is an approximate 49% increase from the prior year. Next, we look at our operating income, which is the metric by which we gauge ourselves. 2021 was a milestone year in this regard as well, as we turned operating income positive after deducting non-cash items of depreciation and amortization and a change in the fair value of contingent consideration. We are very proud of this achievement, especially since our expenses included investments in our 2.0 initiatives. Finally, I'll make a comment on our balance sheet. While I know that we will be releasing the balance sheet upon the completion of the audit, which we expect to occur in the next few days, I would be remiss if I didn't point out, and believe me that this feels great to say, in 2021, we reached a working capital surplus with more cash on hand than all remaining debt, including long-term debt, which has allowed us to remove our going concern, a tremendous milestone for any microcap public company. Now let's move to some operational updates on our super group, the companies that are making those great numbers happen. We'll start with Shortfire Media, Dolphin's industry leading music PR firm, which had a great 2021 punctuated by a fourth quarter working on clients and projects who collectively earned 27 Grammy nominations, reflecting the breadth of the company's roster across R&B, electronic, global, roots, folk, jazz, blues, gospel, contemporary, Christian, comedy, and other genres. Shorefire's leadership in music PR shows no sign of slowing down. Just last month, helming the red carpet at the Bud Light Super Bowl Music Fest, three nights of all-star talent, including Green Day and Miley Cyrus, Blake Shelton and Gwen Stefani with Mickey Guyton, Halsey and Machine Gun Kelly, and other special guests. Turning to 42 West, Dolphin's entertainment PR powerhouse, they were busy in the fourth quarter as well. From the promotion of the latest James Bond movie to Steven Spielberg's adaptation of West Side Story to End Just Like That, the heart-stopping revival of Sex and the City. If you're watching it, chances are 42 West promoting it. But you don't have to take my word for it. The Observer just released its ranking of the best PR agencies in America 2022, a widely respected list of the 50 most powerful public relations firms in the nation. 42 West was ranked number two in the country. Once again, the highest ranking of any entertainment PR firm. The Observer notes that 42 West, led by CEO Amanda Lumberg, yet again is recognized for its elite PR services for film, television, and corporate PR management, with clients including nearly every studio and streaming service, several A-list talent, and impactful brands like Fandom, Bond, Turner, and Riot Games. Congratulations to everyone at 42 West for such an incredible recognition. Moving along to BeSocial, Dolphin's influencer marketing group. It was a busy quarter that included partnerships with Japanese media franchise juggernaut, the Pokemon Company. BeSocial group talent influencer campaigns also included McDonald's, Capital One, and Skim's clothing line, co-founded by Kim Kardashian. In addition, BeSocial and its influencer network worked on projects for fashionable footwear, Romewares, which made Oprah's favorite things list, as well as Ciroc, Sports Illustrated, Swimsuit Magazine, and fashion collections for Nordstrom. Moving to Viewpoint Creative. Dolphin's respected creative relations agency and video production boutique. Viewpoint brought home four Gold Muse Awards in this year's international competition. Viewpoint's work with clients HBO Max, AAA Northeast, the Leary Firefighters Foundation, and First Look Media won the categories of video TV program, video insurance, video documentary, and video public service and activism, respectively. Finally, we'll talk about The Door, our leading culinary, hospitality, and lifestyle PR firm. During the fourth quarter, the door was busy promoting the New York City Wine and Food Festival, launching Rachel Ray's book, This Must Be the Place, and Dan Richer and Kate Parler's book, The Joy of Pizza. That sounds pretty good. Both of which became New York Times category bestsellers and finding room to promote National Peppermint Bark Day for client Haagen-Dazs. If you're eating, drinking, or making a reservation for it, chances are the door is promoting it. And once again, you don't have to take my word for it. The door also made the observers widely respected ranking of 50 most powerful public relations firms in the nation. The observer notes, the door led by co founder, President Lois and Jerry and O'Neill and co founder CEO Charlie Doug yellow was credited for overseeing the launch of dolphins centered. Dolphin entertainment center T studio last year, along with providing a unique integrated marketing approach for many high profile clients. including Williams-Sonoma, Citarella, Haagen-Dazs, Sir Kensington's, Fast Casual Chain Plant Burger, the Francis Ford Coppola Winery, and the Expo to Dubai. That is tremendous recognition from the esteemed observer, and I'd also like to recognize Charlie, Lois, and the entire DOOR team for playing an essential part in the Dolphin 2.0 initiatives we're going to talk about in a few minutes. All right. As a reminder for anyone new on the call or to the Dolphin story, We define the work of our super group under Dolphin 1.0 as the very best at marketing pop culture. And we define what we call Dolphin 2.0 as using pop culture to market assets that we own. The whole point of assembling the super group of entertainment marketing companies and putting them within a public company is so that we can take ownership positions and assets we create wherein our form of marketing expertise will influence the likelihood of success. Simply put, we want to own some of the types of things that we know we can market better than anybody else. In terms of a business model, broadly speaking, there are two types of Dolphin 2.0 initiatives. Ones where we develop assets in the categories of content, consumer products, or live events, and ones where we receive ownership stakes in other people's companies that have assets in those three categories. Let's talk about this second type of Dolphin 2.0 investment first. I'll start with Craft House Cocktails. In December 2021, we announced a strategic partnership with Craft House Cocktails, a pioneering brand of ready-to-drink, all-natural, classic cocktails created by world-renowned mixologist Charles Jolie and esteemed restaurateur Matt Lindner. Real quality ingredients, balanced cocktails, and authenticity at every level have been hallmarks of the brand since day one. Now, Craft House Cocktails is a company that's almost 10 years old. They have an award-winning product line. and they wanted the super group led by the door to help market their product. They pay us a cash fee every month to do just that, and we also receive an ownership stake in the company in return for the added value of the services and relationships extended by the entire super group. We structured our relationship with Fanjolt, another Dolphin 2.0 initiative that we announced in the first quarter of this year in the same way. Fanjolt is a new online experiential platform creating memorable interactions between fans, and a curated list of premier talent to support their favorite causes. The platform features Rafael Nadal, Aaron Judge, Jewel, Ashanti, Kevin O'Leary, Josh Richards, Jen Seltzer, Damon John, and Patrick Mahomes is 15 in the Mahomes Foundation, and Tua Tagovailoa's, takes a Miami guy to be able to say that, Tua Foundation. And similar to Craft House Cocktails, with Fangio, we receive a monthly cash fee for our services, and we also receive an equity stake in their company in return for the added value of the services and relationships extended by the entire super group with respect to these types of dolphin 2.0 initiatives we typically look to receive somewhere between five and ten percent of the equity in the respective company in addition to the monthly cash fee with respect to the other types of dolphin 2.0 initiatives wherein we develop assets that we are excited to market We do not receive a monthly cash fee, since we would often be simply paying it to ourselves, but correspondingly, we take a larger ownership position in the product or venture. Examples of these types of Dolphin 2.0 investments would be Midnight Theater and the NFT marketplace we have been building. Let's start with Midnight Theater. On October 12, 2021, we announced the acquisition of an ownership stake in Midnight Theater. contemporary variety theater and restaurant that will anchor the four and a half billion dollar development from Brookfield known as Manhattan West as we've previously shared for dolphin the midnight theater is the most exciting live venue concept we have seen in a very very long time it will be a truly modern variety theater paired with a fantastic restaurant which is a cannot which is a combination that is missing in the cultural landscape today we expect to open the restaurant in June of this year and and be in previews this summer with the theater with a grand opening and a full seven day a week theatrical calendar in the fall. Dolphin will manage all aspects of publicity and marketing for the venue, both the restaurant and the theater, as well as facilitate talent and commercial relationships within both the entertainment and culinary industries. We're hopeful that Midnight Theater creates a relatively straightforward or predictable range of modeling Because even though it has two components, a restaurant, by the way, the restaurant's called Hidden Leaf, and the theater, Midnight Theater, I should add it has a third component, a bar named James Carbonara's Landing Spot. It has many of the variables already defined for the model. Why? Because there's a certain number of seats in each. So you can model out an average ticket price and the number of turns in the restaurant. You can do the same in the theater with an assumption of a number of shows per week, and this will quickly get you to a revenue model. And, of course, we will look to operate the venue at a reasonable profit margin standard in the industry. In success, of course, we will look to add locations around the country and around the world. You can quickly see how this opportunity can become very exciting for a company at the stage of Dolphin in 2022. We invested $1 million into the venture for a stake of approximately 13%. We also invested in options for up to another approximately 25%. As you can tell, we're very excited for Midnight Theater. Now I'll turn to NFTs. As a reminder, last August, we announced our partnership with FTX US, the leading cryptocurrency exchange and wallet provider with over 1 million active users and over $10 billion of average trading volume per day. That was as of last August. I'm sure they're much higher now. Our goal is to create and program global NFT collections targeting all of Dolphin's verticals, including the sports, film, television, music, gaming, esports, culinary, lifestyle, and charity industries. We then brought in award-winning visual designer Anthony Francisco from Marvel Studios, where he was the senior visual development artist responsible for designing iconic characters across the Marvel Cinematic Universe. Following that, in December, we announced artwork had begun on Creature Chronicles Exiled Aliens, Dolphin's first generative NFT collection, which will feature 10,000 unique custom-crafted avatars of an ancient race of aliens designed by Anthony himself. In March of this year, we announced our partnership with Flower Girls. Flower Girls is a fine art female-led NFT collection of 10,000 unique Flower Girls by revered artist Barvara Allay. Talking too fast. Launched in December of 2021, the Flower Girls has surpassed over $15 million in sales to date and is donating 20% of profits from both primary and secondary NFT sales to a variety of children's charities voted on by the community. In February, more than $400,000 was donated across children's charities, including $200,000 to St. Jude Children's Research Hospital, a client that is also on Dolphin Entertainment's extensive roster. The Flower Girls also give an additional 5% of profits towards collecting children's NFT art, supporting and empowering the next generation of artists. Dolphin is activating its entire network of leading marketing and promotional agencies to amplify the Flower Girls charitable initiatives as well as expand community benefits and increase value for Flower Girls holders. Dolphin will also leverage its unique position to explore meaningful and exciting new opportunities for brand growth across all lifestyle and entertainment verticals, including but not limited to scripted and unscripted television series, digital and traditional publishing, consumer products, music, gaming, and events. And of course, we will promote the living sugar out of future Flower Girls NFT collections. as a partner in the venture. So you can see that we have worked hard over the past several months to allow us to take advantage of our efforts in the NFT space. This coming summer, we expect to have other Flower Girls announcements in Q2 and to launch Creature Chronicles Exiled Aliens for Sale in Q3. Each of these collections will have a retail value in the seven figures, which allows each NFT collection to represent significant potential upside for Dolphin once we go on sale. So I'll pause there. In summary, we're extremely pleased with these first four Dolphin 2.0 initiatives, and hopefully today's conversation provided some additional detail. Just one year ago on December 31st, 2020, we had not yet started exploring Dolphin 2.0 initiatives. We always talked about January 1st, 2021 is the starting line for Dolphin because by then we would have scale with our super group. We had six companies that had been acquired and that we would begin to explore what we wanted to make investments in. By December 31st, 2021, we had launched the first three of these Dolphin 2.0 initiatives. The NFT marketplace was being built. Midnight Theater had been, we had acquired an ownership stake. and we obviously entered into the strategic partnership with Craft House Cocktails. We added a fourth initiative subsequent to year end, which is the Fan Jolt social media app. In closing, I would like to also reiterate that these 2.0 investments are on top of a growing 1.0 business that has led to record revenues for four quarters in a row, including more than 57% year-over-year revenue growth in the fourth quarter. We are profitable and growing with a pristine balance sheet. And now we are at a point where we can see Dolphin 2.0 flourish. This was our thesis when we uplisted to NASDAQ four years ago and began assembling Supergroup. Thank you for joining us on this ride. And to that end, I'll now turn it over to Mayor Tenegrini, our Chief Financial Officer.
spk03: Thank you, Bill. And good afternoon, everyone. I will now discuss results for the year ended December 31st, 2021. Revenues for the year were approximately $35.7 million as compared to $24 million for the year ended December 31, 2020. Overall operating expenses for the year were approximately $41.2 million compared to approximately $26.7 million in the prior year. Operating expenses are composed of direct costs, payroll and benefits, selling general and administrative costs, changes in the fair value of contingent consideration, depreciation and amortization, and legal and professional fees. Direct costs for the year ended December 31st, 2021 were approximately $3.9 million compared to $2.6 million in the prior year. Payroll and benefit costs for the year ended December 31st, 2021 were approximately $23.8 million compared to $15.9 million in the prior year. Selling general and administrative expenses for the year ended December 31st, 2021 were approximately $5.8 million compared to $4.8 million in the prior year. Legal and professional fees were approximately $2 million compared to $1.2 million last year. Operating loss was $5.4 million, which included non-cash items from depreciation and amortization of approximately $1.9 million, and changes in the fair value of contingent consideration of approximately $3.7 million. This compared to an operating loss of approximately $2.6 million in the prior year, which included non-cash items from depreciation and amortization of $2 million. Net loss was approximately $6.4 million, which included non-cash changes in fair value of liability of approximately $3.1 million and approximately $0.3 million of a gain on extinguishment of debt. This compared to a net loss of approximately $1.9 million, which was positively impacted by non-cash changes in the fair value of liabilities of approximately $0.9 million, a gain in extinguishment of debt of approximately $3.3 million, and a loss of approximately $1.5 million on the deconsolidation of the max steel variable interest entity for the year ended December 31st, 2020. Basic and fully diluted loss per share was 85 cents per share based on 7,614,774 weighted average shares outstanding. This compares to $0.35 basic loss per share based on 5,619,969 weighted average shares and $0.58 fully diluted loss per share based on 6,382,000 937 weighted average shares outstanding last year. Cash and cash equivalents as of December 31st, 2021 were $7.7 million compared to $7.9 million last year. That concludes my financial remarks. I will now ask the operator to open the phone lines for Q&A. Operator, would you please pull for questions?
spk04: Absolutely. Thank you. Ladies and gentlemen, if you have any questions or comments, please indicate so by pressing star 1 on your touchtone phone. Pressing star 2 will remove you from the queue should your question be answered. And lastly, while opposing your question, please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Once again, that's star 1 if you have a question or a comment. First question is coming from Alan Klee with Maxim Group. Your line is live.
spk09: Yes, hi. Congrats. Good beat on my numbers for the quarter. Good momentum. So the questions that I have, starting off, if I look at what your revenue was for the quarter, was all this revenue from the supergroups or was any of it from the 2.0 so far?
spk06: All of it was from the supergroup. We haven't recognized any 2.0 revenue.
spk09: until this summer got it okay um and then you said just in time the timing of just to make sure i got Got it correct. Did you say that Midnight Theater, the restaurant will start in June and then the theater in the fall, Flower Girls will be in 2Q and Exiled Aliens will be in 3Q?
spk06: Yeah, Alan, that's right, except one more caveat to that. The restaurant will open, and first of all, thank you for the kind words at the start of your comments. We're very happy with our quarter as well, so thank you. The Midnight Theater, the restaurant, we anticipate opening in June. We'll start the theater in previews. We have a variety of different acts we're booking now for the summer. It's a fully... uh, immersive theater experience. Uh, it'll be a really great spot for music, for, uh, Broadway cabarets, for comedy acts, for a wide magic acts, a wide variety of entertainment. Uh, we'll be doing previews of different types of acts over the summer. We have some pretty exciting announcements coming over the next several weeks. And then the whole theater will have a grand opening in the fall. with a full seven-day-a-week schedule of entertainment to go with the restaurant. So that's the timing for Midnight Theater, yes. And then in terms of the NFT collections, we've been building our ability to and have now finished our ability to sell NFT collections, taking a credit card. We're excited for that. We have the Flower Girls Partnership that we're extremely excited by. We expect a Flowers Girl announcement. We're excited to share here in Q2. Maybe be on the lookout for that. And then we expect to have Exiled Aliens, the Creature Chronicles collection from Anthony Francisco, finished and on sale in Q3.
spk09: And when you said you expected seven-figure revenues from the NFTs, was that referring to the Exiled Alien drop and the Flower Girl drop, each one of them?
spk06: Yes. Each collection will have a total retail value in the seven figures. So that's the... expectation, you know, from your mouth to God's ears, Alan, as we embark on this journey. But Flower Girls, the first collection, did sell out. They achieved a $2 million initial sale of the, excuse me, $2 million of the revenues from the initial collection. And then they've generated over $13 million of secondary sales since for a total collection of revenue of over $15 million.
spk09: Great. Okay. And then any commentary on the outlook for 2022? I mean, when I look at you, I would – simplistically, I would think that your supergroups business should be better as the economy opens up, the door recovers. There should be some – and cross-selling that – that should probably be up year over year and then for for a 2.0 it's it's kind of just the timing of when it's all going to kick in but but if there's anything you could add of of the and if there's any seasonality to think about in the business sure yeah no thank you we think so too you know first quarter is always the slowest um for many of our subsidiaries so
spk06: It wasn't really surprising that last year the same was true. The first quarter was the lowest. But the growth has been steady. And as I mentioned at the top, it's all organic. And there were no acquisitions that affected those numbers. Our last acquisition was effective as of January 1st of last year at the vendor helper. So it really, quite frankly, we feel validated. It proved the thesis well. for Dolphin 1.0 that our acquisitions can cross sell with each other. And the fact when you have the leading or the leaders in their respective fields, I mean, let's just brag about 42S for a hot second to be ranked the second most powerful PR firm in the country, right? In any industry, again, the leader in entertainment, then you're going to receive your fair share of the growth of the industry. And You know, the advent of these streaming services, I think probably everybody on this call subscribes to more than one streaming service. As we like to say back in 2018 and 2019, when we were putting the super group together and I was on the road, you know, there's going to be all this content coming. Somebody's got to promote it, right? So this organic growth, the cross-selling, it's working, we're growing. And then why we think we built the Better Mousetrap was that we could take our profits and invest in owning some assets that we could take a you know obviously we'll have much bigger upside if we own the assets that we're promoting and i'd be remiss if i didn't point out the craft house cocktails example i mean here's an example of what we can also do there are a lot of companies out there that have consumer products or live events that would want this group of marketing leaders to market their product so you know we can better monetize our services by taking a cash fee every month like we would normally do and taking an equity stake in the venture to be able to access the 42 West and the shore fires and the B socials, because they know that, that if we market their products or services, that they're more likely to achieve their goals, whether it's to, you know, do a fundraising round to sell the company, to just grow the company, um, have some type of liquidation event in the future. So that's exciting for us. Those types of deals are equally exciting. Um, for us. And, and then when you add to that, the huge optionality of something like a midnight theater or an NFTs business, then that's what we mean by, we think we have a better mousetrap. We have the optionality of big swings like biotech companies or others, but we're not bleeding cash along the way. We're actually making cash along the way. So that's, I think our outlook for 2022 is the satisfaction of getting to this point, you know, 2.0 is going to generate revenue in just a couple of months. Midnight Theater is open. Flower Girls will have an announcement. We'll have Creature Chronicles on sale. That's all very exciting for us.
spk09: That's great. And on average, the margins will be higher than your company average for 2.0. Is that reasonable?
spk05: Yeah.
spk09: Than Super Groups. I mean, 2.0 will be higher than Super Groups?
spk06: yeah yeah i mean we have a very very solid provide services business right as as we can see and people that know our story have seen this being built over four years but as someone who made who did 20 years of content ownership right talking before in success if you own the asset you're marketing you're just going to make a much much higher margin by definition right um you can provide great marketing services for james bond but i promise you the people that own james bond are making more than we are just pick an absurd example right well it's the same across every every layer if it's a food festival if it's a music festival if it's a consumer product if you own the product you're going to make a lot more and and there's certain and i guess that's the underlying assumption of our thesis too alan there are certain products where the marketing makes a bigger difference to whether they're going to succeed. Think of marketing liquor, or think of marketing beauty and cosmetics products, or think of marketing perfume, or think of marketing whatever you have as an example in your head where having the ability to market it and create consumer adoption is far more valuable than, say, doing the same thing for an automobile. Right. I mean, the quality of the product matters a lot on the automobile. Right. So I think that's what we're looking for. And, you know, use our marketing to the greatest monetary advantage for ourselves and our shareholders.
spk09: For the NFTs that you can create a brand that becomes an annuity that you do continuing stories, continuing drops, what do you think is reasonable for how many drops can be done a year?
spk06: Well, the funny part about that, that's a great question, Alan. And we have a lot of experts in-house on how it works in the analog world for marketing collectibles to the consumer. The truth is no one knows. I mean, the NFT collections started really less than a year ago today. So, you know, you're always going to get a transparent answer. And the truth is we're going to experiment. We think that the market can hold at least two drops per year per brand. And we'll see if we're right. And part of that is going to be how well you can engage the community. These people are buying NFTs to participate, many of them, in online communities around the brand. And where we think we have a big advantage is that we can deliver a lot of community benefits. We have experiences we can share with our communities. We have prizes and giveaways we can supply that, quite frankly, very few others, if any, can provide. because of backstage or, um, invitations to venues and et cetera, et cetera. So, uh, and then what we're also excited about with something like flower girls is there's, there's a great brand, right? It's, it's got great art, it's family friendly, it's charitable. And what can you do with the word flower girls? Um, you know, there are a lot of brand extensions for, for that type of, of community. And, And many of those brand extensions, and I don't want to give away anything that we may be working on or will have to announce shortly, you know, fall into the areas of expertise of our companies. So that's exciting for us, and that's why we selected that female-fronted NFT collection to partner with. We're very excited about that collection, and they've done very well. They sold out, like I said.
spk09: That's fantastic. So for Midnight Theater, I'm just trying to remember. Midnight Theater is a 160-seat venue, and then the restaurant is 75 seats plus seats. 20-seat private dining, 40-seat bar, lounge. Are there any public companies you could point us to just to think about like reasonable, like you said that we could model this based on number of seats and assumptions. Do you know if there's any industry rule of thumbs that you could point us to for that?
spk06: Yeah, and without getting into specific guidance pre-opening or anything. Right. It's a tricky one. I'm excited to talk a lot more about midnight theater over the subsequent earnings calls. I will say, if you think about, you know, for lack of a better word, I'll say, you know, cool spots like that, you know, do you look at certain groups that have that type of pedigree, whether it be Tao, obviously that was bought by Madison Square Garden, or others that could create locations around the country and around the globe. Where we think we have a difference, of course, is that our venue will have that high-quality restaurant, high-quality bar, but it's got a theater, right, for live performance. And as you can imagine, we think we're uniquely positioned to not just promote the acts that come in there, but facilitate the relationships with the industry or the industry's. So there really is no direct comp because, you know, you could say in the old days, House of Blues, but I'm not sure they would have thought of themselves in the same vein on the restaurant and bar side. And they were for music only. You know, so what would you consider to be something similar? But we also think that's the huge opportunity, right? The many people on this call are in New York City. You know, very, very few places can offer, you know, a full night out in one location. you know, and we can. And, of course, it's within a drop-dead gorgeous complex. I mean, it takes two city blocks with Brookfield built. It's incredible. And right across the plaza from us is the other restaurant that's Danny Meyer's restaurant that just got nominated for a James Beard Award, right? But if you want entertainment and a high-quality restaurant in the same venue, then we think we have something unique. But I think when you start modeling around those types of comps, I think you'd get pretty close.
spk09: Okay. Great. And you have so much on your plate. Does producing movies still fit in there or is that a maybe or how do you think about that?
spk06: Oh, Alan, I think you just have to wait a very short period of time for that vertical to open up for us. Okay. Going back to 2.0, you know, we've, we've been consistent in saying that the four legs of that stool for us will be taking ownership stakes and other people's companies. So that's craft house. That's fan Joel. It will be our own content, which hasn't started yet, but patients, it will be our own consumer products, which has started. And to us, that's NFTs in a, in a weird way, midnight theater, because midnight theater practically encompasses all the categories. And then of course our own live events. So I think it's fair to say that we expect the content vertical to open up shortly and the live events probably closer to the end of the year for obvious reasons. We're coming out of COVID. We're feeling good. The music tours that our clients have booked are holding. Music festivals are opening up. So the world's hungry for live entertainment. So we think we can get into live events by the end of the year and content sooner.
spk09: Great. And I know you're not really giving guidance, but any thoughts on, like, how you're thinking about the financial discipline of managing revenue growth relative to expense growth?
spk06: Sure. Well, I mean, if I could give Merit and the team at Dolphin a big pat on the back, I mean, we were on this call a year ago and said, we're going to manage ourselves to make the 2.0 investments in 2021 out of the cash that we were generating. And I feel really good about where we ended when you, you know, on that PNL, you know, subtracting the non-cash items of depreciation and amortization and the change in the fair value of the contingent consideration. We, you know, we landed income, operating income positive after making the investments in the NFT marketplace and others. So I feel good about that. I think we will start to see our revenue exceed um, you know, continue to grow is what I'm trying to say. Sorry. Uh, the operating income continue to grow. And then, you know, with some of these opportunities, it's always been, um, just what are the opportunities that present themselves to us? And, and, and do we want to, do we want to take them? And if so, um, how we manage our own cash accordingly, but, um, we're, we're profitable and we're growing and I think we'll continue to stay. So even while we're making these investments. Obviously, within a very short period of time, the 2.0 investments we expect will generate outsized returns, right? So it would just be a matter of investing a fraction of what we're making. Right now, we're choosing carefully because we're growing our profits in this year and last year, this year, and next year as we are making the first of the investments.
spk09: Excellent. Okay, that's it for me. Thank you so much. Congratulations.
spk06: Thank you, Alan, very much.
spk04: Are there any remaining questions? Please indicate so by pressing star 1. Up next, we have Greg Greenberg, private investor.
spk01: Greg, your line is live. Greg, can you hear us? Your line is live. Greg seems to be having technical difficulties.
spk04: Greg, please press star 1. That will put you back in the queue. All right. Up next, we have Brian Swift with Security Research Associates. Brian, your line's live.
spk02: Hi. Last year, you had a lot of non-cash type charges, which I assume were from investments made prior. You said you only did one deal in January of this year. Other than the fact that you may do more deals in 2022, How do you envision those types of charges? Is that like a non-recurring thing or are we going to see more of that? Because it kind of made your year-end statement look like you're losing a lot of money instead of the positive cash flow that you talked about.
spk06: Thank you for the question, Brian. We had some of those fair value instruments that are expiring or ending. We had the puts end after last year, and that created large fair value swings in any given quarter or any given year. When we bought the companies for the super group, we provided the bulk of those acquisitions had earnouts, and that's the contingent consideration. Proud to say how well the companies did in making their earnouts, which is what you want to see, I think. But they create non-cash swings as well. So we're pretty much through that. After last year, there's only one company left with an earn out that will be earned. We anticipate by the end of this year. So a lot of these non-cash items are expiring almost. And it's quite possible that all of them will by the end of this calendar year. So we're almost through. Those non-cash items, depreciation and amortization will stay with us, as you can imagine, for a while. But the bigger numbers that created the bigger swings, like in last year of the non-cash items, we should be finished by the end of this year.
spk07: Okay, that's good. All right, thank you. Sure. Thank you, Brian.
spk04: Okay, up next we have Greg Greenberg.
spk01: Greg, can you hear us? Your line is live. Greg, please check your mute button. Okay, going to be having technical difficulties. We can't hear you from our side, Greg. If there are any remaining questions, please press star 1 at this time.
spk04: Okay, we have no further questions in queue. I'd like to turn the floor back to Bill O'Dowd for any closing remarks.
spk06: Well, thank you. And Greg, if you're out there, feel free to reach out to James Carbonaro and be happy to line up a call with you. I'm sure it's frustrating not to be able to get the tech to work. And obviously, James does a great job for us, and it was our honor to name the bar in the theater after him. Just kidding. But thank you again to everyone that has followed our story. Obviously, we were very proud of the last year, hit some really nice milestones on a financial perspective. But that's only the start. 2.0 is why we built this company. We're excited for the investments we've made. We're excited for both types of 2.0 investments, the ones where we take smaller ownership stakes in other people's companies and the ones where we take a more active role and a larger stake in developing assets. And we think that combination of a profitable company, a profitable base that's growing with those types of upsides is what makes us a little different and hopefully something that gets people excited to invest in and be a part of the journey. So thank you for those who are, and I'll look forward to speaking to everybody again in just a few short weeks. So thank you, everybody, for the time. Bye-bye.
spk04: Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
Disclaimer