Cineverse Corp. (CNVS) Q3 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call highlights strong financial performance, with improved margins and EBITDA, despite a year-over-year revenue decline. Growth in streaming metrics and strategic acquisitions, particularly in Matchpoint, indicate future revenue synergies. The Q&A section reveals positive analyst sentiment towards the company's strategic direction and potential for growth, though some caution is noted due to conservative guidance. Overall, the positive aspects outweigh the negatives, suggesting a stock price increase of 2% to 8%.

Key Financial Performance

Direct Operating Margin 69%, up from 48% in the prior year quarter. This improvement was due to intense and ongoing efforts to manage the cost side of the business, including leveraging Cineverse Services India.

Adjusted EBITDA $2.4 million, a $6 million improvement from the prior sequential quarter. This was achieved through cost management and operational improvements.

Revenues $16.3 million, up from $12.4 million last quarter but down from $40.7 million in the same fiscal quarter last year. The decline year-over-year was due to the prior year's inclusion of theatrical results of Terrifier 3, which were in excess of $20 million.

Net Loss $875,000, a $4.7 million improvement over the prior quarter. This improvement reflects better cost management and operational efficiencies.

SVOD Subscriber Base 1.55 million, growing 15% year-over-year. This growth reflects strong momentum across the streaming ecosystem.

Content Library 66,000 total assets, including nearly 58,000 films, seasons, and episodes, plus over 8,500 podcasts. This expansion supports the company's distribution advantages.

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Operating Highlights

Matchpoint AI-powered platform: Cineverse has been building Matchpoint as an advanced infrastructure layer for digital video distribution, integrating machine learning and automation to address inefficiencies in the streaming industry.

IndiCue acquisition: IndiCue brings a proprietary connected TV monetization platform, ad serving, and scalable infrastructure, closing the loop between content delivery and monetization.

Market positioning post-acquisitions: The acquisitions of Giant Worldwide and IndiCue position Cineverse as a leading end-to-end AI-powered provider of technology services and infrastructure solutions for the entertainment industry.

Global post and media services market: The market is projected to grow from $25 billion to $74 billion by 2034, with Cineverse aiming to lead the transition to AI-powered workflows.

Operational improvements: Direct operating margin improved to 69% from 48% year-over-year, and adjusted EBITDA reached $2.4 million, a $6 million improvement from the prior quarter.

Streaming ecosystem growth: Cineverse reached 35.5 million unique monthly viewers, with a 15% year-over-year growth in SVOD subscribers to 1.55 million.

Acquisition of Giant Worldwide: Giant Worldwide adds trusted infrastructure and clients, enabling Cineverse to scale operations and integrate Matchpoint's AI capabilities.

Integration of IndiCue: IndiCue's monetization platform integrates with Matchpoint, creating a unified system for content delivery and ad monetization.

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Risk or Challenges

Market Position and Strategy: The company is undergoing a significant transformation with two major acquisitions (Giant Worldwide and IndiCue). While these acquisitions are expected to improve financial growth and profitability, there is a risk of integration challenges, including aligning operations, technology, and management teams. Additionally, the success of these acquisitions depends on achieving projected synergies and financial targets, which may not materialize as expected.

Financial Stability: The company reported a net loss of $875,000 for the quarter, despite improvements in adjusted EBITDA. The acquisitions were financed through convertible notes and deferred payments, which could strain financial resources if revenue and profit projections are not met. The reliance on external financing and equity raises also poses a risk to shareholder value.

Operational Efficiency: While the company has made progress in improving operating margins and reducing costs, there is a risk that these improvements may not be sustainable. The integration of AI-powered systems into Giant Worldwide's operations is still in its early stages, and achieving the anticipated efficiency gains and margin improvements may take longer than expected.

Market and Competitive Risks: The entertainment and streaming industry is highly competitive and fragmented. The company's ability to maintain its market position and attract new clients depends on the successful implementation of its AI-powered Matchpoint platform and the monetization capabilities of IndiCue. Failure to deliver on these promises could result in lost business and reputational damage.

Regulatory and Compliance Risks: The acquisitions involve international operations, including IndiCue's connected TV monetization platform. This exposes the company to potential regulatory and compliance risks, particularly in areas such as data privacy, advertising standards, and cross-border transactions.

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Guidance & Outlook

Revenue Projections for Fiscal Year 2027: Cineverse projects $115 million to $120 million in annual revenues for fiscal year 2027, starting April 1, 2026.

Adjusted EBITDA Projections for Fiscal Year 2027: The company expects adjusted EBITDA to range between $10 million and $20 million for fiscal year 2027.

Impact of Acquisitions on Financial Performance: The acquisitions of Giant Worldwide and IndiCue are expected to contribute over $50 million in revenue and $10 million in adjusted EBITDA for fiscal year 2027.

Market Opportunity and Growth: The global post and media services market is projected to grow at an 11% CAGR, reaching $74 billion by 2034. Cineverse aims to lead this transition with AI-powered platform-led workflows.

Operational Efficiency Gains: Integration of Matchpoint's AI technology into Giant Worldwide's operations has already achieved 60%-70% efficiency improvements in encoding and delivery processes.

Monetization and Ad Tech Development: The IndiCue acquisition adds a monetization layer to Cineverse's operations, enabling real-time feedback and optimization for ad inventory and yield.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you talk about the evolution of IndiCue's business, its revenue growth, customer concentration, and whether the growth is from new customers or existing ones?

A:IndiCue's business has evolved as an independent CTV monetization platform, benefiting from the need for autonomy and independence in the market. Initially, it had high customer concentration due to leveraging strong, long-term relationships, but this has improved significantly. The growth is driven by both recurring business from existing customers and diversification with new major CTV partners and OEMs.

Q:Can you provide an update on Matchpoint, including the significance of new customers and their impact on revenue guidance?

A:Matchpoint has gained traction with new customers like ATPN, The Asylum, Spark, and Waypoint. These customers are entering through specific needs like media processing or app platforms, with potential to expand services. The acquisition of Giant has accelerated Matchpoint's market entry and synergy with large studios, enabling significant growth opportunities. One studio partner spends $1 million monthly, with potential to double. Revenue guidance includes these synergies but remains conservative.

Q:What are the anticipated synergies and growth potential from the recent acquisitions, and how do they impact fiscal 2027 guidance?

A:The acquisitions are expected to bring $8-9 million in synergies from IndiCue's capabilities and $7.5 million in cost reductions in the studio business. Giant's integration into Matchpoint could double margins from low 30s to mid-70s. Fiscal 2027 guidance includes $110-120 million in revenue, with $10 million+ EBITDA from acquisitions, but excludes additional revenue synergies, which are expected to materialize in fiscal 2028 and 2029.

Q:How should we think about free cash flow conversion and its utilization now that the company is generating meaningful EBITDA?

A:The company anticipates strong free cash flow due to minimal CapEx requirements for the acquired businesses. This cash flow will be used for growth initiatives, reducing revolver balances, and potential accretive acquisitions. The focus is on leveraging free cash flow rather than dilution for growth.

Q:Are there tools and features at Matchpoint applicable to the next generation of content creators, especially smaller, leaner teams?

A:Matchpoint is well-positioned to support the next generation of content creators by providing tools for automation, monetization, and distribution. The platform can handle increased content volume and democratized quality, offering services like metadata normalization, localization, and performance tracking. The company is also investing in ethical AI tools to enhance content creation and distribution.

Q:What is the company's strategy for future acquisitions following these transformative deals?

A:The company will focus on integrating the recent acquisitions in the short term. However, it remains open to pursuing additional opportunities that align with its strategy, particularly in the media services industry. The goal is to find accretive acquisitions with strong assets that fit the company's platform and growth model.

Q:Review of Unclear Management Responses

A:Management avoided providing specific numbers for revenue synergies from the acquisitions, stating that guidance remains conservative. They also did not detail the exact free cash flow figures, deferring such discussions to future quarters.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

CNVS Transcript

Cineverse Corp. (CNVS) Q3 2026 Earnings Call Transcript

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Cineverse Corp. (CNVS) Q2 2026 Earnings Call Transcript

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The earnings call highlights several challenges: a 3% revenue decline, increased SG&A expenses leading to a net loss, and liquidity concerns with only $2.3 million in cash. The box office underperformance and competitive pressures in technology and micro drama ventures add to the negative sentiment. Despite some positives like streaming growth and improved margins, the overall outlook is clouded by financial and strategic uncertainties, leading to a likely negative stock price reaction.

Cineverse Corp. (CNVS) Q1 2026 Earnings Call Transcript

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The earnings call reveals financial challenges, including a net loss and cash flow concerns, despite revenue growth. The company's investments in new ventures and initiatives like MicroCo carry significant uncertainty and risk. The Q&A highlighted management's lack of clarity on key strategic initiatives, which may raise investor concerns. While there are positive aspects, such as streaming growth and direct advertising success, the overall sentiment leans negative due to financial strain and uncertainty around new ventures.

Cineverse Corp. (CNVS) Q4 2025 Earnings Conference Call Transcript

Positive6-27

The earnings call summary reveals strong financial performance, with significant revenue growth and improved margins. The company is expanding into new content areas and has a promising pipeline for cineSearch and Matchpoint. However, some uncertainties remain, such as regulatory challenges and operational transitions. The Q&A section indicates management's confidence in margin targets and growth potential, despite avoiding specific timelines. Overall, the positive financial results and strategic initiatives outweigh the risks, suggesting a positive stock price movement.

CNVS Report

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