WildBrain Ltd.

Hello and welcome to Wildbrain's fiscal 2022 first quarter earnings call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during that time, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star two. I'd now like to turn the call over to Nancy Chan-Palmatier, Director, Investor Relations at Wildbrain. You may begin your conference, ma'am.

Thank you, Operator, and thanks, everyone, for joining. Speaking on the call today are Eric Ellen Bogut, our CEO, and Aaron Ames, our CFO. Also with us and available during the question and answer session are Josh Sherba, our President, and Danielle Neith, our EVP of Finance and Chief Accounting Officer. But first, we have some standard cautionary statements. The matter to discuss on this call includes forward-looking statements under applicable securities laws with respect to WildBrain, including but not limited to statements regarding investments by the company, commercial arrangements of the company, brand plans and strategies, the impact of COVID-19 on the company and its business, the business strategies and operational activities of the company, the markets and industries in which the company operates, and the future objectives and financial and operating performance of the company and its assets. Such statements are based on factors and assumptions that management believes are reasonable at the time they were made and information currently available. Forward-looking statements are subject to a number of risks and uncertainties. Actual results or events in the future could differ materially and versely from those described in the forward-looking statements as a result of various important factors, including the risk factors set out in the company's most recent MD&A and annual information form. Please note that all currency numbers are in Canadian dollars unless otherwise stated. For the question and answer session that will follow, we've asked that each analyst keep to one question with one follow-up so that everyone has an opportunity to ask questions. If you'd like to ask an additional question, please rejoin the queue. I'll now turn the call over to our CEO, Eric Ellenbogen.

Thanks, Nancy. Good morning. And thank you for joining us today. Before I get into the substance, I want to thank our IR, Marcoms, and management teams for their contributions to our Investor Day on October 5th. And the feedback has been terrific. We had over 300 registered for the event. And we really appreciate that investors and others took the time to log in and listen to what we had to say about the work we've done over the past two years, turning the company around, realigning our team, our process, our culture, and the investments we're making to significantly grow our business for the long term. And for those who were not able to watch live, or even those who were, I invite you to watch a video of the event, which has been posted to our investor relations website, along with the presentation deck. So now to the business of today. As you've seen from our release, we're off to a great start in the current fiscal year with a continued return to growth. We delivered double-digit growth in both revenue and EBITDA over Q1 of last year. And importantly, Spark revenue increased by 73% in the first quarter over last year. And it was driven by improving advertising rates and our focus on higher value views. Our consumer products business was quite strong too. It was up 25% driven by a global rejuvenation of the peanuts brand and fueled by the steady output of new content. So this growth is a result of our focused work and investments over the last two years. And that work continued in Q1 as we launched Wild Brain Spark on its next phase of evolution. And I've spoken to all of you at length about Spark on our past calls, but I'd like to take a moment here just to lay out the differences, what differentiates Spark from other companies playing in the YouTube sandbox. In short, it's our scale and our ownership. Spark is the largest kids and family network on YouTube, and that scale is built on our proprietary content, and I really need to sort of come back and underscore that point. That library content, proprietary content, most of which is broadcast TV quality, is the cornerstone of the SPARC network, and it yields to us valuable data and insights. And this scale, together with our 360-degree approach to content monetization, are exactly what sets us apart, and in a virtuous circle, continues to drive further growth by bringing in top IP partners to Spark. These partners are attracted not only by our scale and massive audience reach, but also by our value adds of digital production, ad tech, data insights, direct ad sales, and paid media, all of which are fueling greater monetization. This underscores why we're getting longer-term, larger deals, and economic stakes in partnership IP. But we have a few examples. Our partnerships in EmojiTown and Akato are both off to great starts building engagement for these new digital-first properties. The EmojiTown channel, which is comprised of content, all of which is produced by Spark, ranked number one for viewership on all of YouTube, in the first month launch in June 2021, becoming the top-performing brand or influencer YouTube channel in the U.S. and U.K. across digital-first media. And for Aikido, very much like our Emojitown deal, where we handle licensing and sharing consumer products back-end, as well as produce the content and manage it on YouTube, consumer products just hit retail in North America and key European markets. And the early results are quite promising. According to industry data for September in the UK action figure category, and it's in terms of velocity, Kato is number two, beating out Transformers, Marvel, and Star Wars. So let me just put this in a larger context, a development which we believe will highly favor us. YouTube is apparently disfavoring and demonetizing low-quality kids' content. And what that means is it's content that is either heavily promotional, encourages negative behavior, or is sensational or misleading. And we've always said we welcome the flight to quality. And we believe that as YouTube continues to favor high-quality content like ours, we are going to realize even greater benefits from our network. So it's on that very foundation of quality that we're building for the future. And indeed, we're doubling down on Avada and Spark as a driver for our multi-platform and integrated IP strategy. designed to maximize the opportunities and synergies across the global wild brain business and also to open up new streams of revenue. So this type of curation allows us to create fully integrated write strategies for our own content, like Strawberry Shortcake, Teletubbies, Caillou, as well as for partnership content that I just referenced, Emojitown and Akedo, among others. And so from the earliest stages of content development, we can establish a holistic strategy that ensures the rights for that IP are exploited across the best touchpoints from AVOD, SVOD, linear broadcast, gaming, music, marketing. And simultaneously, we can build integrated brand management programs to maximize engagement and awareness and also develop licensing programs to extend that IP off-screen and into consumer products. So our recent launch of Strawberry Shortcake, which I discussed with you in our last call at some length, also at Investor Day as we laid out the brand plan, is indicative of this always-on strategy. And it's with content already rolling out on YouTube, Roblox, linear broadcast, and SVOD will follow soon thereafter. And this all sets the stage for our consumer products rollout for the brand, next year and beyond. Another example is the work we're doing with Teletubbies. Last month, we launched a new Teletubbies music album called Ready Steady Go, produced by Wild Brain Spark and distributed across top music platforms such as Spotify, Apple Music, Amazon Music, YouTube Music, and it's also supported by original music videos that are on YouTube that were created entirely by Spark. So this is just one of many activations we're working on, not only to reinforce the Teletubbies as a beloved kids brand, but also to connect with Gen Z who loved the Teletubbies when they were preschoolers. This generation has a great emotional connection to the brand from their childhood, and they're now re-engaging with the Teletubbies as pop icons. We're planning to deploy many more such creative activations for our brands in the years to come, aligning all the capabilities of our platform to build affinity for our IP and to drive our consumer products efforts. One recent example I'd like to share with you of the type of expansion we're targeting is our new GameFam agreement. So GameFam, if you don't know, is the leading professional game publisher on Roblox. and Roblox is spreading like wildfire. And through our owned and operated Spark ad sales team, we're now their exclusive provider of direct ad sales services. Roblox is one of the top digital gaming platforms in what's called the metaverse, which for our purposes here, and for that matter, Facebook's, is a fancy word for an immersive and highly interactive 3D gaming environment. And Roblox is one of the most popular 3D gaming platforms with over 43 million daily active users, 67% of whom are under the age of 16. Game Fam's titles on Roblox have been visited more than 5.5 billion times and are played for an average of 150 minutes, million minutes, excuse me, every day. Game Fam owns three of the top ten games on Roblox, and it's why they partnered with us on the recently launched Roblox game for our Strawberry Shortcake brand. With Game Fam, we're taking Spark's capabilities in ad sales and COPPA-compliant brand-safe advertising into an adjacent media space where huge numbers of young people are spending massive amounts of time. This is an exciting new opportunity and still early days. We're already signing advertising deals under this partnership. Turning to consumer products, Peanuts continued to pose strong numbers in Q1 as more new content rolled out on Apple TV+, driving greater and greater awareness for the brand. And I want to put some context around this and perhaps recap the remarkable content that we've rolled out in the last two years. since Apple TV Plus launched Peanuts. In that time, we've launched two new Peanuts series, The Snoopy Show, Snoopy in Space. The second season is premiering, incidentally, this Friday. We've also launched two new documentary films about Peanuts, produced in partnership with Imagine Documentaries. And we've delivered the first of many new family specials in the pipeline, titled For All Lang Syne, which is coming out this December. in celebration of New Year's Eve. But this is by no means the full scope of the new peanuts content in our pipeline. And as noted in our analyst's day, this deal is still in its infancy. Excuse me. And we have a robust slate of projects that will continue to engage and delight fans for many, many years to come. This robust rollout of new peanuts content over the past two years has amplified the brand in so many, many new ways. It's reconnecting with the existing adult fans, as well as reaching new audiences around the world, and especially a whole new generation of kids. When we acquired the Peanuts brand back in 2017, one of the challenges and opportunities that we identified then was that kids were not highly engaged with the brand. We knew, however, that parents love to share brands they cherish from their childhoods with their kids. And our content plan for the brand was designed specifically with that in mind. And today, parents are introducing their kids to Snoopy and the gang on Apple TV+. Peanuts certainly has a magical quality, but to maintain its popularity and success, any brand needs to remain current by reaching today's kids where they actually engage with brands. and be that on leading SVOD platforms like Apple TV+, or Netflix, or AVODs like YouTube, TikTok, or gaming platforms like Roblox, which I referenced earlier. And that's our always-on strategy, making brands available wherever, whenever fans want to engage with them. What we know is that as we switch on more and more of our evergreen brands from our deep content vault, brands like Strawberry Shortcake, Teletubbies, Yo Gabba Gabba, Caillou, Inspector Gadget, Grassi, and others, we can create new high-quality content to tap into the magical quality those brands have for their fans and reinvigorate them for new generations. It's also important to note that longevity is important, evergreen quality. Looking around, I see a lot of properties in the market today that are one-hit wonders. They're the Beanie Babies and Cabbage Patch Dolls of today. At Wildbrain, we're working with numerous, multi-generational, emotionally connected brands that have withstood the test of time. And our 360-degree strategy and structure are designed specifically to build and harness brand equity through high-quality content and brand management that drives engagement with our IP all the way from screen to the retail shelf. And I mean that virtual or otherwise. And as I've said in the past, we're just getting started, switching on the brands in our vault, and the opportunity ahead is unlimited. Stay tuned. Lots more to come. And with that, I'll hand it over to Aaron for a look at the Q1 numbers.