WildBrain Ltd. (WILD:CA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows mixed signals: strong licensing growth but declining content revenue and gross margins. Positive cash flow and reduced net loss are offset by inconsistent margins and unclear guidance on AI impact. Q&A reveals optimism in digital and licensing but lacks detailed ROI. Overall, the sentiment is neutral, as positive aspects are balanced by concerns about margin decline and vague future projections.
Key Financial Performance
Revenue for Fiscal Year 2025 $523 million, up 13% year-over-year. Revenue excluding Television was $487 million, up 14% year-over-year. The growth was driven by strong performance in global licensing and content creation.
Revenue for Fourth Quarter 2025 $139 million, up 7% year-over-year. Revenue excluding Television was $129 million, up 6% year-over-year. The increase was attributed to growth in licensing and production revenue.
Global Licensing Revenue for Fiscal Year 2025 $284 million, up 33% year-over-year. The growth reflects a deliberate focus on high-growth, higher-margin brands and effective social and digital strategies.
Global Licensing Revenue for Fourth Quarter 2025 $69 million, up 29% year-over-year. The increase was driven by expanded consumer reach and new licensees.
Content Creation and Audience Engagement Revenue for Fiscal Year 2025 $203 million, down 5% year-over-year. The decline was due to a reduction in distribution revenue, partially offset by stronger production revenue.
Content Creation and Audience Engagement Revenue for Fourth Quarter 2025 $60 million, down 12% year-over-year. The decrease was driven by lower distribution revenue.
Television Revenue for Fiscal Year 2025 $36 million. The segment is being phased out to focus on higher-growth areas.
Television Revenue for Fourth Quarter 2025 $10 million. The segment is being phased out to focus on higher-growth areas.
Gross Margin for Fiscal Year 2025 46%, compared to 48% in the prior year. The decline was driven by a mix shift between production and distribution revenues.
SG&A Expenses for Fiscal Year 2025 $112 million, up 9% year-over-year. The increase was due to investments in growth businesses and unfavorable foreign currency translation.
Adjusted EBITDA for Fiscal Year 2025 $92 million, up 5% year-over-year. Adjusted EBITDA excluding Television was $69 million, up 3% year-over-year. The growth was driven by licensing and digital strategies.
Adjusted EBITDA for Fourth Quarter 2025 $25 million, up 3% year-over-year. Adjusted EBITDA excluding Television was $19 million, down 1% year-over-year. Timing of distribution deals impacted the results.
Net Loss for Fiscal Year 2025 $90 million, compared to a net loss of $106 million in the prior year. The improvement was due to better cash conversion and working capital cycles.
Net Income for Fourth Quarter 2025 $10 million, compared to a net loss of $81 million in the prior year. The improvement was attributed to stronger financial performance across key segments.
Free Cash Flow for Fiscal Year 2025 Positive $50 million, compared to negative $30 million in the prior year. The improvement was driven by better cash conversion and working capital management.
Free Cash Flow for Fourth Quarter 2025 Negative $17 million, compared to negative $7 million in the prior year. The decline was due to timing variances in working capital and production financing.
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Operating Highlights
Strawberry Shortcake: Revenue grew nearly 200% year-over-year, reaching $14 million in high EBITDA licensing revenue. Retail sales surpassed USD 200 million, driven by digital-first strategies and new collaborations like Roblox, Crocs, and fragrance lines.
Teletubbies: Revenue grew over 60% year-over-year. New licensing partners like Pop Mart are expanding product offerings globally, with a focus on the brand's 30th anniversary in 2027.
Peanuts: Achieved strong growth across categories and geographies, especially in Asia and China. Established a new baseline for the brand's performance.
Degrassi: Released a new documentary, generating over 1,800 media hits and highlighting the potential for a franchise reboot.
Asia and China Expansion: Peanuts brand saw significant growth in Asia, particularly in China, positioning the region as a long-term growth engine.
Global Licensing: WildBrain CPLG expanded its portfolio with new partnerships like Supercell and Peter Rabbit, while maintaining strong relationships with major partners like Paramount and Amazon MGM.
Content Creation and Audience Engagement: AVOD and FAST channels grew 55% in Q4, reaching 5.7 billion minutes. Media Solutions business is scaling, with a pipeline that could double revenues year-over-year.
Exit from Canadian Broadcast Business: Strategic decision to exit the Canadian broadcast business to focus on higher-growth, scalable areas.
Simplification and Focus: Exiting the Television business to simplify operations and concentrate on high-margin, high-growth opportunities.
Debt Refinancing and Leadership Refresh: Successfully refinanced debt and refreshed senior leadership to strengthen the company's foundation for growth.
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Risk or Challenges
Economic Conditions: Risks include changes in general economic, business, and political conditions that could adversely impact the company's performance.
Regulatory Challenges: The company faces risks related to compliance with securities laws and potential changes in the Broadcasting Act, which could affect its operations and strategic flexibility.
Television Business Exit: The decision to exit the Canadian broadcast business following the removal of channels from Rogers and Bell simplifies operations but may result in short-term revenue loss and operational challenges.
Content Distribution Revenue: A reduction in distribution revenue and timing delays in deals pose risks to revenue growth in the Content Creation and Audience Engagement segment.
Licensing Growth Sustainability: While licensing revenue grew significantly, sustaining this level of growth, particularly for Peanuts, may be challenging in the future.
SG&A Costs: Increased SG&A expenses, particularly for franchise marketing and growth investments, act as a short-term headwind to profitability.
Industry Headwinds: Ongoing challenges in the traditional distribution market and broader industry constraints could impact revenue and growth.
Free Cash Flow Variability: Free cash flow is subject to material timing variances, which could affect financial stability.
Strategic Execution Risks: The company is undergoing significant changes, including asset sales and leadership restructuring, which carry execution risks.
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Guidance & Outlook
Revenue Growth: For fiscal year 2026, WildBrain expects revenue growth of approximately 15% to 20% in its core business, excluding television.
Adjusted EBITDA Growth: Adjusted EBITDA growth is projected at approximately 15% to 20% for fiscal year 2026 in the core business.
Global Licensing: Continued growth is expected across the portfolio, including owned brands like Peanuts, Strawberry Shortcake, and Teletubbies, as well as third-party brands represented by WildBrain CPLG. Peanuts is expected to build on its social media strategy and expand in key markets, while Strawberry Shortcake and Teletubbies are anticipated to grow in new territories and through new licensing partnerships.
Media Solutions: The Media Solutions business is expected to grow meaningfully, with potential revenues doubling year-on-year due to a strong pipeline and expanded advertiser base.
FAST and AVOD Platforms: New third-party revenue opportunities are anticipated, particularly with brands like Pokémon leveraging WildBrain's established presence in the market. Monetization is expected to improve over time.
Content Creation: Growth is expected to continue, driven by new Peanuts feature and episodic content for partners like LEGO.
Television Business Exit: The company plans to cease operations of its television business in Q2 of fiscal 2026, simplifying the business and focusing on higher-growth areas.
Free Cash Flow: Free cash flow is expected to be down year-over-year in fiscal 2026 due to the cessation of the television business and the absence of timing benefits seen in fiscal 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Where is the company planning to deploy money and what ROI is anticipated?
A:The company plans to invest in digital marketing and content for core brands like Strawberry and Teletubbies, as well as in their Media Solutions team to improve monetization on platforms like YouTube, AVOD, and FAST. They anticipate significant revenue and EBITDA growth from these investments, though they do not calculate percentage ROIs but focus on the size of the opportunity.
Q:Can AI adoption generate savings or incremental revenue opportunities for the company?
A:The company sees opportunities for AI in automation, particularly in creating social content for platforms like YouTube, AVOD, and TikTok. They are also exploring AI tools to assist artists in their traditional studio. While AI-driven automation is expected to cap SG&A growth and reduce costs in the future, its impact will be more significant in fiscal '27 and beyond.
Q:Can you provide more details on segment contributors to growth outlook?
A:The Licensing business is growing well despite some headwinds from SG&A investments and a shift away from high-margin passive licensing revenue. The Content segment shows growth, but its margin profile varies year-to-year. Distribution is also growing, though some deals involve lower-margin shows. Overall, growth is seen across all segments, but margins are inconsistent due to the mix.
Q:What is the company's perspective on the broader industry and potential market changes?
A:The company acknowledges a historically difficult content market for kids but has pivoted to focus on core IP, licensing revenue, and digital distribution. They are optimistic about potential market changes, such as consolidation and increased investment in kids and family content by major players like Apple and Netflix. They believe underinvestment in this area will correct, adding to their already strong and sustainable business.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numerical details or brackets for segment growth contributions, instead offering general directional insights. Additionally, while they discussed AI and automation's potential, they did not provide concrete data or timelines for its financial impact.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AVOD
Content Creation
Degrassi
FAST
IP
Licensing
Media Solutions
President
SGA
Teletubbies
WildBrain CPLG
activation
agency
audience
brand
cash flow
channel
confidence
consumer product
content
distribution
engagement
fan
focus
franchise
headwind
industry
kid
licensing
margin
medium
momentum
partner
party
portfolio
quality
reach
sale
segment
timing
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The earnings call shows mixed signals: strong licensing growth but declining content revenue and gross margins. Positive cash flow and reduced net loss are offset by inconsistent margins and unclear guidance on AI impact. Q&A reveals optimism in digital and licensing but lacks detailed ROI. Overall, the sentiment is neutral, as positive aspects are balanced by concerns about margin decline and vague future projections.
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Frequently Asked Questions
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