WildBrain Ltd.

Hello, and welcome to Wildbrain's first quarter fiscal 2025 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 your question, press star two. I'd now like to turn the call over to Kathleen Purceau, Vice President, Investor Relations at Wildbrain. Your line is now open.

Thank you, everyone, for joining us today for Wildbrain's first quarter 2025 earnings call. Joining me today are Josh Sherba, our president and CEO, and Nick Gaughan, 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 risks and uncertainty beyond wild brains 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 foreign 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 Sherbaugh.

Thank you, Kathleen, and thanks for joining us today. We have made notable progress on our journey to return our business to sustainable growth, centered on our focus on key franchises and partnerships and the significant profit opportunity they present. This realignment, combined with the investments made in the last few years, paved the way for the robust growth in global licensing, reflecting strong performance across peanuts, as well as in wild brain brands, and our third-party partners at WildBrain CPLG. Further, we saw continued strong growth in our AVOD business. As noted on our last call, we continue to face headwinds in our content production and distribution business. Though we expect production to begin to return to growth as we move through this fiscal year, And in our content distribution business, we continue to leverage our massive multi-language content library and exceptional third-party production relationships, maintaining our spot as a leading global distributor of kids' content during a time when new content is scarce. Turning to the quarter and starting with global licensing, the Peanuts business delivered robust growth with continued strength in the U.S., APAC, and Latin America regions. In addition to Peanuts, many long-standing licensees, new key apparel, licensing and promotional partners continue to sign on and grow our market presence, highlighting the appeal of Peanuts across borders, categories, and generations. Over the last several quarters, you've heard us talk about the investments we've made in APAC and the long runway for growth we knew we could unlock in the region. We've seen that growth manifest in our results over the past several quarters, with this quarter being no exception as we built on our momentum to deliver strong growth. We continue to see meaningful growth potential in APAC for peanuts. Peanuts 75th anniversary celebration plans for calendar 2025 are generating new licensing and promotional opportunities globally. And within APAC, we continue to add new high quality partners for future collaborations. From our growing presence with global retailers like Miniso to location-based experiences like the recently announced Blue Dragon art exhibition touring to five cities, there was a long runway for growth. We'll be announcing even more partnerships and activations for Peanut 75th in the coming months, so stay tuned. Similarly, in Wildbrain brands, much of the work we've been doing over the past year to focus on our key brands and their largest opportunities is paying off. We saw licensing revenue for Strawberry Shortcake double in the first quarter versus last year. In Strawberry Shortcake, we have been activating fandom across Wildbrain's full suite of capabilities. Utilizing the power of new original animated YouTube shorts, we've seen growth of over 600% in views over the past year, highlighting the impact of market-leading channel management and digital content capabilities to attract and grow new audiences. Strawberry is the number one channel for girls in fast channels with over 1.7 billion annual minutes viewed across all fast channels. And on social media, engagement continues to climb across Instagram, TikTok, and Facebook. Maybe even more importantly, organic search views on YouTube for Strawberry are up an astounding 150% over the past year. All this engagement has translated to double-digit growth in the number of licensees for Wild Brain brands over the past year, which in turn resulted in the doubling of licensing revenue for Strawberry Shortcake in the quarter. After quarter end, we also announced a new crossover partnership between Strawberry Shortcake and Care Bears, which is owned by CloudCo. We're co-developing a brand new animated special, which will bring the characters from both franchises on screen together for the first time ever. These two beloved iconic brands from the 1980s share a lot of values and have a multi-generational fan base. So we think this is a collaboration that has excellent potential to further drive engagement and by extension, licensing revenue. Building and launching a brand is a very deliberate and iterative process. We've discussed this before, but it's worth restating. As you get the model correct, the wins and the value compound. We've been able to reinvent Strawberry Shortcake content into different forms over the past few years. Take those learnings and insights and iterate. We have really seen the refinement and approach begin to take hold over this last 18 months, and we look forward to continuing to lean into what fans love, expect, and want from this beloved brand as we aim to continue delivering growth in engagement and profit. On the Teletubbies front, further activations and partnerships continue to roll out. The House of Teletubbies World Tour launched over the summer, celebrating the colorful quartet through iconic pop-ups and events. So far, there have been five activations in cities such as Bangkok, Las Vegas, Los Angeles, and London, with multiple more planned for the US and Asia Pacific going into 2025. Our social media engagement strategy has not gone unnoticed. Since 2022, Teletubbies has amassed more than 1.6 million followers on TikTok and received more than 217 million impressions on Instagram. We've had recent press coverage on the unhinged social strategy that has not only driven engagement but also unlocked new revenue streams through partnerships with brands like American Eagle, Citizen Am Hotels, and Marc Jacobs. We've also seen increases in global engagement on AVOD networks for Teletubbies, with strong growth in network views on YouTube over the past year, along with growth in the number of consumer products licensees, which has translated into strong double-digit revenue growth. In addition to the strong performance in Peanuts, Strawberry Shortcake, and Teletubbies, third-party partners represented by Wildbrand CPLG saw growth across multiple brands. Longer-tenured partners like Sega and Hasbro and newer brands to our portfolio, including Playmobil and Supercell, were all contributors to the quarter, highlighting the robust nature of our portfolio. Our team from Wildbrain CPLG recently attended Brand Licensing Expo, or BLE, which is one of the licensing industry's leading trade shows. I also attended and can report that there was more buzz than ever in our booth and our brands and global capabilities. From the 75th anniversary celebration for Peanuts to our high-quality partners like Supercell, Spin Master, Dr. Seuss, Hasbro, Playmobil, and many more, the excitement around our portfolio and capabilities was real. Turning to content creation and audience engagement, we have a strong slate in our production pipeline with high-quality partners. Projects such as the green-lit Peanuts feature for Apple TV+, the Minecraft development project with Netflix, and our studio's outstanding past work on other series for Netflix, such as Sonic Prime and LEGO's Ninjago, showcase our abilities and underpin the investments we've made to focus on the production of premium content, which is where streamers are prioritizing their spend. In audience engagement, we saw strength in our AVOD network, with average view duration up double digits in the quarter, adjusting out the impact of the new YouTube Shorts. As a reminder, when we realigned our business pillars last year, we split what was formerly known as Spark across both content creation and audience engagement to better orient with the overall business. We broke out legacy Spark performance in fiscal year 2024 as part of that transition. Going forward, these results, which include our digital production business and our YouTube AVOD network, will be included within the consolidated content creation and audience engagement results. In the past, we've remained the distributor with the largest number of kids' single IP channels, and we are the go-to destination for kids' content with almost 150 channels launched, including an additional four new channels launched in Q1. As we mentioned last quarter, we struck an agreement with the Pokemon Company to become the only distributor of the single IP Pokemon Fast Channel in several key regions, including the US, Canada, UK, Australia, and New Zealand. Brand owners like Pokemon increasingly turn to us in this quickly growing industry because of our brand expertise, channel management expertise, platform and industry relationships, robust infrastructure, and analytic insights providing context to drive performance. These are unique capabilities that we possess and continue to build and invest around. So why are we so excited about the FAST opportunity? Well, first, FAST is a medium that more closely resembles the engagement experience of traditional TV, creating an ecosystem that brands are more familiar advertising in. Second, it as a platform allows more programmatic and brand-focused advertising, a format the market has been starved for in the face of linear TV's decline. And third, viewers are flocking there and expect it to continue to grow for years to come. That's about consumption. We see fast as a potentially large long-term opportunity. That said, we expect the build here could take time as advertisers become more familiar and comfortable with the format. The kids market has always had additional considerations, more so than other genres, as we've seen on YouTube. But for all the reasons I just mentioned, we are uniquely positioned to capture the kids' market with the combination of our assets and capabilities. The monetization in Fast, and especially in kids' content, has lagged, but we believe advertisers will catch up as they recognize the attractiveness of the platform and viewership continues to scale. Taking a quick look back, we launched our first Fast channel in 2019 and have been a leader in the space from day one. We've grown viewership on our channels from 502 million back in 2019 to 7.5 billion minutes watched in 2023. And as we told you last quarter, we're on track to nearly double our fast viewership year over year, approaching close to 14 billion minutes in 2024. We are utilizing our first mover advantage and proactively enhancing our media solutions capabilities to capitalize on the growth of connected TVs and further solidify our market position in this growing industry. Turning to our capital positioning, we've spoken about pursuing non-core asset sales. This is something we continue to explore. We set out to accomplish three objectives with this process. 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 achieved a successful outcome. With the refinancing completed, 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 we look forward to executing on these transactions if and where they make sense. With our unique capabilities, our diversified brands and a long runway of our debt maturities, a targeted strategic non-core asset that further accomplishes our core objectives makes good sense. With that, I'll turn it over to Nick to review our results and outlook.