WildBrain Ltd.

Hello and welcome to Wildbrain's fourth quarter and full year fiscal 2024 earnings call. Today's conference 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 one on your telephone keypad. If you would like to withdraw from the queue, press star two. I'd now like to turn the call over to Kathleen Persaud, Vice President, Investor Relations at WildBrain. You may begin the conference.

Thank you, operator, and thank you, everyone, for joining us today for WildBrain's fourth quarter and full year 2024 earnings call. Joining me today are Josh Sherbaugh, our President and CEO, and Nick Ghosn, our CFO. Before we begin, please note the matters discussed on this call include forward-looking statements under applicable securities laws, which reflects WildBrain's current expectations of future events. Such statements are based on a number of factors and assumptions that management believes are reasonable at the time they were made and information currently available. However, many of these factors and assumptions are subject to risk and uncertainty beyond WildBrain's control, which could cause actual results and events to differ materially from those that are disclosed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, changes in general economic, business, and political conditions. WildBrain undertakes no obligation to update such forward-looking information, whether as a result of new information, future events, or otherwise, except as expressly required by applicable law. Please note that all currency numbers are in Canadian dollars unless otherwise stated. After our remarks, we will open the call for questions. I will now turn the call over to our President and CEO, Josh Sherba.

Thank you, Kathleen, and thank you for joining us today. Fiscal year 2024 represented a transformational year for both the entertainment industry and Wildbrain. As we're all aware, the content production industry has been in a period of protracted slowdown. Starting back in 2022 with streamers prioritizing profitability over subscriber growth. That slowdown was punctuated and magnified by the dual labor strikes in Hollywood for a large part of 2023. Having seen green lights resume, we know the production business is returning, having bottomed in fiscal year 2024, but with some notable changes in how streamers are moving forward that I will elaborate on in a bit. At the same time, behaviors and how consumers engage with content continue to evolve. Overall, linear television is declining, while consumers move to SVOD, AVOD, and fast platforms. SVOD revenue continues to rise, but perhaps more importantly, YouTube won't rank even the most popular of streaming services, according to Nielsen Data. In fact, ad spending on connected TVs more than doubled in the last three years. And co-viewing on those connected TVs continues to grow as a trend. As a reminder, FAST stands for Free Ad-Supported Television. Think Tubi, Pluto, Samsung, Roku, etc. That is a lot of change for one industry in a relatively short period of time. So what do all of these changes mean for WildBrain? It means we're rapidly adapting to be at the forefront of what the industry needs and what consumers want to position ourselves for growth across the organization. Here are a few changes we've made on a high level. One, we've leaned into key franchise IP and premium projects for our S-Spot partners. Projects like the peanuts feature and the new GABA series, along with development deals, which I'll detail in a few minutes. Two, we've repositioned our globally leading YouTube network to focus on higher quality engagement and increased average view duration. And three, we've rolled almost 150 fast channels and are on track to more than double minutes watched year over year. Now let's expand on those in more detail. When I came in as CEO 16 months ago, we placed a higher degree of focus on our key brands and partnerships. Rather than dilute our resources across too many projects, we focused on our key brands where we have the greatest opportunity to unlock their value. Those key brands have longevity that have endured changes in consumer behavior over time, and we will benefit from their resilience going forward. Our largest and most important brand, Peanuts, is celebrating its 75th anniversary next year, and the brand is engaging fans old and new with new content and new consumer products. As we highlighted earlier this year, Snoopy is the hero Gen Z needs, according to The Atlantic. In content, the Peanuts feature is in pre-production at our studio, and Apple TV Plus announced a second season of Camp Snoopy, ensuring a steady stream of new content, which drives engagement and ultimately licensing. Licensing continues to be a driver of the Peanuts brand. Whether it's a viral Snoopy in a puffer coat selling out across CVS stores, expanding our relationship with Apple by integrating Peanuts into the Apple Watch, or any of Peanut's longstanding licensing relationships like Hallmark, there remains a long runway to add more partners and expand across territories worldwide. Similarly, Strawberry Shortcake turned 45 this year, and she's never been more popular. The heritage strategy for the brand continues to resonate. As we've talked about before, engagement drives brand affinity, which ultimately drives revenue. Engagement for Strawberry has been impressive, reaching over 1 billion views on YouTube with strong average view duration. The team has been leaning into YouTube Shorts and saw a spike in viewership to bring in new audiences. And over on Fast, with over 1 billion views, it's the number one channel for girls on all Fast channels. On the back of our engagement strategy, we've driven licensee growth up over 50% and retail sales up 80% as we add shelf space in retailers like Walmart. This has been a very deliberate approach to building our engagement strategy. And while we're happy to see the growth in KPIs like licensee growth, we are even more encouraged with our ability to translate this into meaningful revenue and profitability growth. Teletubbies, another of our evergreen brands, has seen increased global engagement, adding over 1 billion views on YouTube just in the last year. We've seen strong licensee growth, particularly in China. You may remember Teletubbies was the first Western preschool series to be shown on CCTV. So we have the opportunity to build off the heritage audience. In fact, as announced in June, we have placed Teletubbies on numerous additional top platforms in China, including Youku, Bilibili, and iQiyi. We will build on this success in 2025 and beyond with strong revenue and profitability growth as we continue our rollout across Asia Pacific. Our brand new series, You'll Gabba Gabba Land, debuted on Apple TV Plus in August. The series was met with fanfare in traditional media and a rise in social media engagement across multiple platforms. The first 10 episodes dropped in August and another 10 episodes will follow. One of the hallmarks of the Yo Gabba Gabba brand is its vibrant and eclectic music, and a soundtrack for the new series, which features such popular artists as Anderson .Paak and Thundercat, recently launched across major music streaming platforms in partnership with BMG. Our relaunch of Gabba with Apple has generated great momentum, and we're in positive discussions on what's next for the brand, including negotiations with multiple consumer products licensing partners. With the recent launch of GABA, we now have four key brands in various stages of their growth curve. GABA is at the beginning of its relaunch, Strawberry and Teletubbies are in the early innings, and Peanuts is the most established. We will continue to harness the power of our platform to grow these key IPs. In third-party brands, we're seeing an increasingly positive response to our 360-degree capabilities from partners. We offer multiple entry points across the company, providing partners with solutions that allow them to simplify and reduce their own costs. We've been listening more to our clients' needs and tapping into all of our capabilities across the business. Brands like Sega, Lego, and Supercell turn to us for our expertise across the full platform. We know that partners value our expertise across the platform we've built as they add more services and brands. For example, we recently announced the expansion of our partnership with Supercell with the launch of a cross-category consumer products licensing program for Brawl Stars, a mobile game with over $2 billion in lifetime revenue. Similarly, just last week, we announced a new licensing representation partnership with Spin Master to represent their latest hit brand, Vita the Vet, for much of Europe, the Middle East, and Asia-Pacific. We've also expanded our representation of Spin Master's Unicorn Academy brand for additional European territories, the Middle East, and much of Asia Pacific. We will continue to lean into our key partner brands to deliver more opportunities for them to engage with their fans and drive strong growth. In our Avon and Fast business, we also saw strong growth over the past fiscal year. In addition to revenue growth, actions we took over the last 20 months to drive margin in the AVOD network translated to even stronger profitability. Our YouTube network achieved the impressive milestone of 1.5 trillion lifetime minutes watched. A trillion minutes is hard to comprehend, so said another way, that's over 2.8 million calendar years worth of views. AVOD is a critical component of audience engagement and average view duration on our YouTube network. A key metric in measuring engagement has grown more than 30% over the last year. In fact, we are now the single largest kids content offering across platforms. On average, platforms have 25 to 30 kids channels in their lineup. Within the single IP channels, we have 50 to 60% of the market. Any one distributor in the remaining 40% has only one or two channels. Minutes watched on our fast channels in the first seven months of calendar 2024 exceeded the whole of calendar year 2023. That means we're on track to nearly double our fast viewership year over year. We launched our first channels in 2019, and as the leader in fast for kids content, we have a significant first mover advantage. As more brands and partners want to move into this space, the barrier to entry becomes higher and they return to us to leverage our expertise honed over several years and access our deep relationships with these platforms. Our recently announced expanded relationship with Samsung TV Plus and our new fast partnership with Pokemon both crystallized the value of our distribution network and capabilities in this space. These impressive metrics in AVOD and FAST all drive at capturing a large and engaged audience that will flow through to monetization. In AVOD, we monetize directly through ad revenue from the platform and our direct ad sales capabilities. Monetization in FAST is ever-evolving as there is a lot of work to be done in getting ad dollars over to these no-form ads, and kids' content typically lags. That said, We are engaged with technology partners and sales resources alike to build the necessary resources to unlock this large market opportunity. The nature of viewership on fast more closely resembles that of linear, making it a comfortable platform for advertisers to work with. We've moved quickly to establish our fast footprint, solidifying our market position and leadership in this space where consumers are now gravitating towards. The fast market is expected to grow at a 15% four-year CAGR to nearly $6 billion in annual revenue by 2027. We would expect the ad revenue in the kids market to grow even faster as it catches up to more established genres in the space. In the meantime, in both AVOT and FAST, this engagement and audience building demonstrates vibrancy and love for our own and partner IP and will continue to drive high margin licensing opportunities for brands. No doubt, 2024 was a tough year in the content production industry, and we felt that. Looking forward, the production industry is starting to see an upturn as streamers are starting to invest Again, by shifting towards higher-end premium projects for families to capture a larger market share of the audience with each title they commission. This is a big shift in the kids and family content business, but one that we're poised to benefit from and are already capitalizing on. Being a preferred partner to platforms like Apple TV Plus and Netflix. The investments we've made in our premium capabilities over the past few years are beginning to show results, and we will continue to selectively invest to continue attracting new projects and future partners. As demand evolves, so too does the content production market with a more deliberate decision-making process from our partners. We're seeing more testing and quality control than ever before. There is a flight to quality with longer development cycles, ensuring the creative is top-notch, as major platforms aim to deliver best-in-class content to subscribers. We see this as a tailwind for our studio, as our ability to execute on larger budget projects needing premium animation capabilities in the marketplace further positioning us for future growth. An example is Minecraft, the iconic and hugely popular digital game. As announced back in May, we've been tasked with developing a new animated Minecraft series for Netflix in partnership with Mojang Studios, the Microsoft subsidiary that created the IP. Our studio's outstanding work on other series for Netflix, such as Sonic Prime and LEGO Ninjago, showcased our abilities. The development of a Minecraft series is another vote of confidence from a major streamer in our ability to deliver top-quality content for their audiences. Turning to our capital allocation, reducing leverage and simplifying our company and capital structure have been top commitments over this past year. In July, we announced the successful refinancing of our debt. This was a hugely important step as it accomplished several goals. It allowed us to place the proceeds in an escrow account, which will repay the convertible to ventures on September 30th. It also extended our debt maturity out to 2029. And lastly, it materially simplified our debt stack. Nick will provide more detail about this important milestone. Back in September 2023, we spoke about pursuing non-core asset sales. The process set out to accomplish three core objectives. One, to simplify and focus our business. Two, to improve our balance sheet. And three, to drive shareholder value. Those objectives remain unchanged. We spent much of the last several quarters focused on addressing the short-term maturity in our debt stack, which was our primary objective, and we have achieved a successful outcome. With the refinancing complete, we remain focused on simplifying our company and reducing our leverage over time. We have great assets, and we know their value. We have a number of open files on the non-core asset sales and understand that these processes take time. We look forward to executing on a non-core asset sale if and where they make sense. With our unique capabilities, our diversified brands, and now a long runway of our debt maturities, a targeted strategic asset sale that accomplishes our core objectives makes good sense. With great franchises and a strong team aligned together, we are well positioned to deliver value. With that, I'll turn it over to Nick to review our results and outlook.