Angel Studios Inc Aktie

Good morning. At this time, I'd like to welcome everyone to Angel's Q3 2026 Earnings Call. [Operator Instructions]

I will now turn the call over to Luk Janssens, Head of Investor Relations. You may begin your conference.

Hello, everyone. Welcome to Angel's third quarter 2026 earnings call. Joining me are Angel's Co-Founder and CEO, Neal Harmon; and Angel's CFO, Scott Klossner.

Before we begin, I would like to remind everyone that certain statements made on today's call, including statements regarding future financial performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Information regarding these risks and uncertainties is included in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. These forward-looking statements represent our outlook only as of the date of this call, and we undertake no obligation to update any forward-looking statements, except as required by applicable law.

During this call, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings press release. These cautionary statements apply to all forward-looking statements wherever they appear in this call, including in the question-and-answer session. Our earnings press release is available on our Investor Relations website at angx.com, where we also encourage you to sign up for our e-mail alerts.

Neal and Scott will take approximately 20 minutes for their opening remarks before we turn the call over to questions. Thank you all for joining us.

And now I'll pass the call over to Neal.

Thank you, Luk, and good morning, everyone. I'm glad you've taken the time to join us this morning, bright and early. We decided to do the call before the market opens at your request, and we are at an inflection point here at Angel. We've proved to ourselves and our investors that we can deliver strong Guild growth and do so with a much more efficient sales and marketing budget.

Angel more than doubled revenue year-over-year to $159 million in the third quarter. For the year, we generated $29.1 million in positive operating cash flow. This is a key contributor to our growth model philosophy. Guild revenue reached $115.6 million, nearly double the prior year quarter. Paying Guild membership grew 86% year-over-year to 2.94 million. These results provide further evidence that our model is working. We're delivering across the different parts of the business and seeing the power of those parts working together.

Let me walk through the progress. First, technology and marketing execution. We built Ad Factory in-house and began testing in March and really started hitting our stride in Q3. Our lean marketing team now uses it for theatrical releases, Guild acquisition, giveaways, brand awareness and merchandise, including preparation for Black Friday. We pair that increased output with disciplined investment. More creative gives us more opportunities to find what resonates and our return criteria determine where we put additional spending.

Second, stories. We set a goal of adding 750 releases during 2026. By the end of September, we were already approximately 91% of the way there, putting us ahead of our planned pace. Today, we're pleased to announce that we surpassed this goal by already 46 releases. That growth comes from partnerships with film and intellectual property owners, our own theatrical titles and television series curated by members of the Angel Guild, specifically for our audience.

Third-party studio films like Paddington and The Pursuit of Happyness, also approved by the Guild, are recognizable stories that broaden what we can offer alongside the original films and series members already associate with Angel. This is what excites us about growing the library. More opportunities for members to find the story they love, discover something unexpected and share a great experience with their families. That's the experience we're building with the Guild. I'm grateful for the care our members bring to voting, for showing up to support our theatrical releases and for monthly and annual memberships that make it possible to pay the storytellers and bring more stories to our audience.

Third, theatrical distribution. We released 8 films in theaters last year. And this year, we will release 10 with 7 scheduled in the second half alone, our fastest release pace to-date. In fact, this month, we have 2 films releasing in November. We've never done that before. Young Washington led the third quarter, delivering $47 million at the domestic box office being a great launching pad for the founder cinematic universe we are building.

Last weekend, Drummer Boy: The Musical surpassed The Greatest Showman's opening weekend domestic box office. And the Drummer Boy album rocketed to #1 on iTunes. If you haven't seen it, it's very worth the trip. Theatrical releases also introduced new viewers to Angel, deepen our filmmaker relationships and add new films and series to the library, supporting Guild acquisition and retention.

Our fourth quarter slate includes Angel and the Badman, Drummer Boy, Hershey and Zero A.D. From a Western to a musical, to the roots of an iconic company, concluding the season with the story of the birth of Christ. It's a slate built for the holiday season when families come together and go to the movies. We're excited about the experiences these films can create for our audience and how they can carry momentum into the growth of the Guild.

Now let me address the pace of Guild growth. We added approximately 335,000 net new paying members in Q3, compared with approximately 269,000 in Q3 2025, and while achieving positive operating cash flow. We ended September with 2.94 million paying members. That's an increase of 1.36 million net new members year-over-year. It's worth taking a moment to put our strong Q3 performance into a wider industry context.

While the premium streaming video-on-demand market contracted in calendar Q3 2026, we actually delivered positive growth. As you can see from this chart provided by Antenna, U.S. SVOD cumulatively lost 1.7 million subscribers. Angel bucked that trend by adding roughly 335,000 net new paying members. Importantly, we managed to deliver this strong performance in a seasonally weak quarter, while reducing Guild sales and marketing intensity by 27% and improving our adjusted EBITDA losses by 90.2% year-over-year. That says a lot about the strength of the Guild and about the foundation we're building for future growth.

Last call, we said that the back-to-school season is softer for streaming engagement and acquisition throughout the market. This year, we took a more disciplined approach to investing throughout that period, aligning marketing spend with the returns available, maximizing return on ad spend. That discipline gives us a stronger foundation to pursue end of the year holiday growth.

Looking ahead, we believe the market opportunity is over 40x domestically and growing over 18% annually internationally. There's a large audience seeking high-quality values-driven entertainment. And at 2.94 million paying Guild members, we're still early, very early in reaching it. This quarter strengthens our confidence in what we're building. The model is working, our execution is improving, and we are seeing substantial opportunity ahead.

Let me share with you an experience we had around Drummer Boy, which highlights the power of our community and of the Angel Guild. Drummer Boy opened in the top 3 this past weekend with $9.3 million in the box office. It tracked well internally with the Guild with a score of 91%, and its Rotten Tomatoes audience score is currently at 94%. My family has especially enjoyed rewatching it repeatedly and engaging with the music. It is so, so fun.

But right before we shipped the files to all the theaters, we had an idea how we could improve the film. And we quickly cut together a new version of the film, and we tested a version A with a version B with 2 separate samples of the Angel Guild. We had those results the following week and found that our idea yielded an 8-point higher Angel Guild score and a double-digit increase in view-through rate. This change has never been possible by any company that releases films to theaters previously. That's the power of the Angel Guild, and it's going to change the entire outcome of Drummer Boy and also the future of how that title will help us grow this community. So what we're building here at Angel is very exciting and it's never been done before.

Scott, please walk us through the financial results.

Thanks, Neal, and welcome. Last quarter, I talked about how our finance team and our sales and marketing teams work hand in glove and how we coordinate in real time on Guild acquisition, measuring spend, directing it to where it earns the best return.

Today, I'll walk through how this process performed exceptionally well during Q3. When we met in January, we told you our intention was to live within our balance sheet means and produce the best Guild growth we can. We delivered on that. This leadership team sets out its ambitions, explains its actions and then delivers.

I want to take a minute, though, to discuss how the quarter unfolded because it's the best example of that discipline. The first half of Q3 looked a lot like the end of Q2 with the beginning of the America250 campaign and members joining the Angel Guild at an accelerated pace. Then in the last 2 weeks of September and into October, market dynamics shifted, and that's a seasonal pattern tied to back-to-school and the broader slowdown in viewing that comes with it. Our paid media partners have also validated the seasonal pattern and its effect on the broader streaming industry. We've seen it in prior years, and we planned for it when we built our 2026 guidance. We stayed on course. We kept marketing to the ROI parameters that we set. And as expected, acquisitions slowed some.

Last year, we spent heavily through the same period relative to our revenue, and our adjusted EBITDA loss was $32.6 million. This year, it was $3.2 million. Revenue more than doubled, while marketing expenses only grew 42%. We stayed disciplined, and you can see that in our adjusted EBITDA improvement and also in $10.3 million of positive operating cash flow. And now we're heading into a seasonally stronger fourth quarter with 4 theatrical releases and a library that's growing at a record pace, as Neal mentioned. And we expect fourth quarter growth to meet our expectations, which are built into our full year guidance.

So let's talk specifically about the Q3 results. Total revenue for the quarter was $159 million, up 108% year-over-year and up 42% from Q2. Recurring revenue from our Guild business was at $115.6 million and is up 95% year-over-year and 27% up over Q2. Now the Angel Guild grew to 2.94 million paying members, and we're very ambitious about where we can take it, especially given how efficiently we're driving that growth. Guild marketing as a percent of Guild revenue continues to improve. We reduced the cost of driving Guild growth from 75% in Q3 2025 to 55% in Q3 2026.

And that does 3 things. First, it helps produce positive operating cash flow of $10.3 million in the quarter. Second, our adjusted EBITDA loss for the 9 months ended September 30 of this year was only $10.9 million, compared to a loss last year of $78.8 million. And third, I can confidently reiterate our full year guidance in 2026 of an adjusted EBITDA loss of less than $25 million.

Now this management team started the year setting an ambitious $113 million reduction in adjusted EBITDA loss year-over-year, and it's been a focus of our teams internally. With an ambitious Q4 ahead of us growing our Guild, we reiterate that guidance.

Other operating metrics in the core Guild business are also performing well. Trailing 12-month average revenue per member was $13.73, up $0.10 from last quarter. And average revenue per member moves with the mix between tiers, promotional activity and members choosing an annual membership. And remember, annual memberships come at a discount to the member, but they also bring in cash upfront and those customers retain better than monthly membership members. That puts our annual recurring revenue at approximately $484 million. We get there by multiplying the 2.94 million Guild members paying an average of $13.73 a month by 12 months.

Now gross margin in the quarter was 63%, compared to 55% in Q3 of 2025 and 54% in Q2 of 2026. A greater mix of theatrical revenue generates a higher gross margin percentage. Net loss in Q3 was $5.2 million or $0.03 per share, compared to a net loss of $38.5 million or $0.25 per share in the prior year period. Q3 revenue grew 108% year-over-year, and marketing expenses only grew 42%. And all of our other operating expenses combined grew at only 18%.

And operating cash flow for the year-to-date is a positive $29.1 million, compared to a negative $52.5 million in the same period last year. And that $81.6 million swing reflects the plan we set out to deliver for shareholders in 2026. This positive operating cash flow will let us keep investing in Guild growth, while operating within our means. We had cash and cash equivalents of $45.6 million as of the end of the quarter, up $1.5 million from $44.1 million at the start of the year. And notes payable stand at $75.5 million, down from $97.2 million at the start of the year.

Now put those pieces together, and you can see how Angel has performed. Disciplined investing in member growth strengthens our financial position, losses shrink and operating cash flow stays positive. And that stronger balance sheet sets the table for continued member growth and investment. And it's the plan we laid out at the start of 2026. And the execution of that plan has produced 3 strong quarters to-date.

And with that, I'll turn it over to the operator for questions.

[Operator Instructions] Our first question today is coming from Jason Helfstein from Oppenheimer.

So clearly, we're seeing nice improvement this year in contribution margin on the Guild, and so I mean, look, we can look at it either as a like straight-up contribution margin or sales and marketing as a percent of revenue. That number kind of has been bouncing around a little bit. So just, I guess, how should we think about contribution margin or sales and marketing as a percent of Guild revenue as we're going to go into the fourth quarter, which you guys talked about as typically a seasonally strong quarter?

And then given that you've now been positive free cash flow every quarter this year, -- and kind of you're guiding to kind of positive EBITDA next year and you should have meaningfully positive free cash flow. Just how are you thinking about longer-term investment in maybe 2020 and beyond? Like, is the goal to kind of keep growing that EBITDA? Or is it prioritized growth and kind of more focus on kind of maintaining profitability but prioritize growth? And then one quick follow-up.

Thank you, Jason. I'll let Scott speak to the contribution margin in the first question. I'll speak to the second one. Our priority, given the fact that there's almost 140 million households in the U.S. alone, 90% of which pay for a streaming service and the market is growing 18% year-over-year internationally. Our priority is growing into that amazing total addressable market with our model. Our message is resonating. We had unbelievable first 3 years of growth with the Angel Guild. And our intention is to continue to grow into that market within our own means. So I don't see our posture changing next year, and we're very excited about how early we are in the growth of this market.

Yes. Jason, on the contribution margin question, it's basically -- the way I would look at it is like this is, Guild revenue is a cumulative number for members that have been with us a year and 6 months and 3 months and maybe only a month. That number compared to the growth of the actual Angel Guild. The reason it bounces around a little bit is because we spend sales and marketing as it is very efficient or not efficient, we pull back, meaning that in Q3, perhaps we may -- we're still going to market into the results, meaning we have targeted metrics that we market into.

If it's a slower period, then we won't market quite as heavily and that revenue that's there from the base of the Guild membership versus how much we spend will move from quarter-to-quarter or month-to-month actually based on how well the metrics are performing in terms of acquisition. And when we go into a quarter that is a high acquisition month, quarter rather, you'll tend to see contribution margin be off a little bit because we will spend more in sales and marketing vis-a-vis that base of revenue that sits in the guild.

So it will bounce around a little bit, but it's somewhat -- it's not massive swings, but you'll see some swing from quarter-to-quarter based on how well we're performing on the marketing side.

And then finally, on the fourth quarter, when we look at 2023, '24, '25, the trend is -- and prior, the trend is clear, leading into the holidays, especially from Thanksgiving to Christmas, that's our big growth time. And then after Christmas, from Christmas to New Year's, is the highest streaming week of the entire year. So we're well positioned because we had so much discipline in Q3. We're well positioned to be able to take advantage of the growth in Q4, and that's what we intend to do.

And just as you think about next year, you've obviously added a lot of library content. Do you think you proportionately, you need to add as much content next year relative to, let's say, what you've added this year or the prior year, given that a lot of this is exposing people to what is new -- potential new members to what's already on the service as opposed to the same rate of kind of adding content? So just how are you thinking about that as you think about next year?

Great question. And just as a reminder to everyone on the call unfamiliar with the model, Angel doesn't have to pay upfront for the titles that we bring on. We sign a revenue sharing agreement. So whether we add 1 title or 10 titles, it's the same to Angel. So the key to us is delivering the very -- the best first title based on what we know about a user and the best second title. That's the key to retention for Angel. That's what we're testing into. That's what drives our technology decisions and our title decisions.

And so the pace at which we've added titles in 2026 actually, we would anticipate increasing with our growth in 2027. Now the pace at which we release in the theaters is a different equation. We don't foresee going to theaters with more than 12 titles in a year. And we're doing 10 this year. That number, we haven't given, and we'll give the slate in April of 2027.

But the number of streaming releases, we anticipate that growing as the Guild size grows and then the number of theatrical releases tapering off.

Our next question today is coming from Eric Wold from Texas Capital.

I just want to follow-up on the last point on the slate for next year. I know you're not going to give a full slate until April for '27. But maybe just remind us how many theatrical releases you've confirmed and announced to this point? And then kind of maybe how that pipeline is shaping up given the strength you've seen in membership growth and success, kind of what you've seen kind of from inbounds on titles that would be more appropriate for the theater versus just going directly to streaming.

Great question. We've got some great titles that have already been announced for next year. There was a release out on Rode to Ruin, starring Michael Keaton and Morgan Freeman. So both top 50 in the world actors on one project together. That's really exciting. We've also mentioned New York Minute with Neil McDonough and his team. We've -- I'm not going to be able to remember all the titles right here on the call because I don't have them in front of me. We've mentioned, I think, 3 or 4 titles so far this year, but we're saving the announcements, the important announcements for CinemaCon.

Got it. And then a follow-up question, update us on the plans now that you kind of -- you're generating positive operating cash flow. Obviously the hope is that that continues. Maybe kind of update us on the plans to expand more broadly internationally? Where are you on those plans? What could we potentially see in '27? Kind of what -- how would you frame any kind of upfront capital upfront spend commitment kind of launch more broadly into those markets?

Great question. So we -- our intention is to grow within our means, and we have the balance sheet to be able to grow consistent with consensus expectations from the analysts without further tapping our credit line. And so our intention is to continue to grow within our means.

Now the business, as you can tell, is -- the free cash flow is really opening up opportunities for us. So I would anticipate more activity around international, but this is very much a crawl, walk, run for us. We've already been doing testing here in the U.S. with Spanish. We released almost all titles in Spanish simultaneous to English. The Drummer Boy because of that last-minute test that we did, we -- the Spanish is coming out, I think mid this month. But -- but that -- so we've been doing that, and that's in preparation to go into Mexico and Latin America. And then we've also been doing some tests in the U.K. and in Canada to make our systems multinational, and we'll continue to crawl, walk, run. And you'll hear about it as we experience more and more success in that space.

So -- but I wouldn't like for -- expecting Angel to go and dump a bunch of money outside of the parameters that we've been operating with that we're not currently -- we don't have any plans to do that.

Our next question is coming from Eric Handler from ROTH Capital.

Neal, I wonder if we could just sort of dissect membership growth a bit here. I've seen, at least based on your online tracker, and on the trailing last 7 days, you've added about 65,000 members, which is the highest number since July. So it's good to see things moving in that direction again. I noticed middle to late of last week, I received my first e-mail promotion in quite some time. It also coincided with the opening of Dummer Boy. So I'm curious, is it movies and theaters that drive more growth? Is it the promotions? Is there a way to dissect that? Or is it just when you have both going at the same time, you get twice the bang for your buck?

So we've been building awareness around Angel over the last 3 years, and those awareness metrics continue to increase for aided and unaided awareness around Angel. And promotions when they're delivered at a time when people are expecting in a promotion and they're in a buying state, the holiday period is a great time for that. We've got Black Friday. We have Christmas, and then we have the New Year's run for streaming. All of those are opportunities for buying activity. And we are very careful in positioning our promotions so that that they're when consumers would expect them and that we have a good balance as we grow.

The majority of our members by far are coming through nonpromotional efforts and through the Ad Factory, and through our theatrical titles and the way that they grow into new genres and new actors. But then these promotions are also helpful for spurts of growth when people are expecting it. Scott?

Yes. I think one thing that's really key here, Eric, and I think you've touched on it, which is because we market into success or market into the metrics, what will occur is that we're capturing demand more than creating demand. There's creating demand efforts out there. Our whole theatrical slate is about creating awareness and whatnot. But we market heavily to circumstances that increase conversion and thus allow us to hit our metrics.

What that means essentially is that when there's demand, we will market heavy into it, whether it's a seasonal demand or a title-driven demand or a theatrical opportunity that we have. Those things will corral and you will see our spending really adjust and go forward when the demand is there. And Neal likes to use the term when the tide is coming in is when we will market heavily and try to acquire customers. When that tide is going out, we'll hold and wait until the opportunity arrives. So that's why you see some dips and some rising in terms of both marketing spend, as I was saying in an earlier question, and secondarily, in terms of customer acquisition.

So yes, it's sort of that combination of things that creates opportunity, and we make sure that we spend into that opportunity.

But to your point, and it was a great -- I'm glad you picked up on this, Eric, is that we did have a breakthrough this year where we're able to figure out because previously, the theatrical releases, we would do a release that would create a marketing splash, but it was all about selling tickets. And this year, we have discovered some approaches, and in our testing, we've discovered ways to sell Guild memberships at the same time that we create that splash. And what that does is it just allows us to make a bigger splash because it's funded by the Guild growth marketing engine and by the theatrical marketing engine. So you do -- you will see on a successful release like Drummer Boy, that actually becomes wind at our back with the Guild membership numbers as well. But then we'll see -- we'll experience more of that as soon as Drummer Boy gets released for Guild members to view. Good question.

That's helpful. And then just as a follow-up, as you add more content to the streaming platform, I'm curious and that platform diversifies across a wide range of genres. Are there any patterns or takeaways you have from what people are most interested in? Or is it just anything you put on there is as long as people like it is going to get consumed?

So Eric, that's a great question. We have noticed that as we're becoming broader that there are different audiences within the Angel Guild and serving each of them, learning about each of them is a very, very high priority for us. And so if somebody -- this is kind of a stereotype, but if somebody likes Hallmark movies and there are some Hallmark style movies that are on Angel, then Angel needs to show them those types of movies. But if somebody is turned off by Hallmark movies, then Angel should show them the titles that are more mainstream, perhaps more gritty or secular.

So determining who the Guild member is and delivering them the titles they want, or if a particular Guild member loves documentaries, then the experience should adjust to them and documentaries should be their primary experience. We're learning to do that, and we've reengineered our platform to make that more possible. We have a lot of work to do there. But that's the insight that we're having is as we grow to 3 million and then to 10 million Guild members, that problem is going to be more and more important for us to get right.

[Operator Instructions] Our next question is coming from Thomas Forte from Maxim Group.

Great. So Neal, Scott, congratulations on the quarter. I have 2 questions on AI. Neal, you've been very thoughtful in the past with your comments on AI and how that's going to change content creation. So I'd appreciate your updated thoughts on that.

And then for my second question, on that internally created ad tech, how is your team leveraging AI to market more efficiently, including on social networks, legacy media, et cetera?

Yes, great question. So our thinking on AI is that AI is going to drop the cost of production and increase the quantity of titles coming to the market. You had slop before AI, and there will be slop moving forward at a greater volume. But then you also have diamonds in the rough before AI, and you're going to have it during the AI era. And determining where those are and getting behind those titles is what Angel is really good at because of the Angel Guild. So that's where titles are heading.

The second thing that we're actually doing is because we purchased some of our shows, the David and Young David, Tuttle Twins, The Wingfeher Saga. Now that those are -- we're all under the same roof, we have enabled all of these partners to use AI tools, to innovate on AI tools to figure out content production, and we're using that to try to teach the rest of the filmmaker community how to do so. So that's another approach that we have currently in the company.

Then finally, and I've mentioned this before that we just -- pretty much everyone here is an engineer. Everybody here has their own AI account that has access to company systems and data in a very secure manner so that the team can implement and innovate on their own processes and solve problems within the company that allow us to scale. We just had an internal report just this last week where we recognized that we didn't have to hire 9 new people because of an innovation that happened in AI.

And so that's been very, very important to us that we just adopt it, that we understand it. And -- now we've predicted that there's going to be an AI film that gets released this year -- by the end of this year or early next that is a full-length feature film that people will love. We haven't seen that film yet, and we're still anticipating that's going to be coming as people figure out and understand these tools.

Now I know there were 2 parts to your question. Will you help me with that?

Yes. So I'll go ahead on the second one, the Ad Factory. Think about the Ad Factory in this sense, because we're very dynamically driven in the sense that we actually are able to test and implement and innovate quickly. It's sort of like the old adage adapt, view, adapt and implement. And what we're doing is using the Ad Factory can actually create many assets at a very swift pace to allow us to see which assets are working the best when we go out there and market. And when we get some that don't market as well, we can quickly adapt and adjust based on that. So that sort of change or that ability to move quickly within our testing capability with our marketing allows us to get the best producing content -- or ad content out to our potential customers quickly and cost efficiently. So that all sort of helps play into our ability to increase our adjusted EBITDA over time with revenue.

And hyper targeted.

Yes.

So as you can see, we already surpassed the 750 release goal by 48 titles this year. And we were able to go and launch hyper-targeted campaigns around every title that's released. And then we surface the ones that justify greater TLC from our marketing team. But our marketing team is able to go focus more heavily on our main titles, and then these long-tail library titles are getting addressed by our technology and then also by a combination of the technology and the team. So that is -- that's how we're scaling. I'm glad you asked the question, and I hope that was helpful.

Our next question today is coming from Ryan Meyers from Lake Street Capital.

First one for me, if we think about the operating cash flow during the quarter, Scott, maybe can you just talk about how much of that reflects the sort of sustainable underlying cash generation of the business versus just some working capital benefits from deferred revenue and accrued royalties?

Sure. If you look at cash flow quarter-over-quarter this year versus last year, it's not just in the deferred revenue side. The deferred revenue side provides working capital for us to grow. The secondary key is that is a reduction of losses over time based on our marketing as a percent of revenue. So you've seen our net income losses come down or adjusted EBITDA losses, however you're looking at it, come down over time. And that's a function of the effectiveness of our marketing team and marketing into our growth. And that, combined with the amount of members that we have as a base to provide us revenue over time.

And it actually works the same in theatrical that we use the really efficient means in the way that we market on our theatrical releases as well to make sure that we always stay on a cash flow -- at a minimum of cash flow even basis on a release in theaters and in many times profitably into the theaters.

So the key is not just deferred revenue that comes from annual memberships that can provide cash immediately for a year's worth of watching, but also the fact that we've been able to adjust our marketing spend as a percent of total revenue, which brings down the losses. And then that combination of things, along with just continued efficiency on our G&A spend and our continued effectiveness in terms of our being able to grow the Guild membership and provide cash flow positive means of doing so.

Vis-a-vis, again, remember, we mark it into our numbers and some of those include how quickly or how many members come in on basic versus premium, annual versus monthly and the whole combination of things to give us the result that we're looking for. We set out the year to knock basically $100 million worth of losses off of our income statement from last year to this year, over $100 million. And we've been able to do that by continuing to efficiently spend and operate the business and bring in great films and stories that's resonating with our customers.

And bring in more Guild members than a year ago quarter.

Yes.

Yes.

For sure.

Okay. And then just lastly, can you maybe touch on what you're seeing across customer acquisition costs and what some of those payback periods are looking like and maybe how that's trending relative to earlier this year or even last year?

Yes. When you consider content acquisition costs, remember, because we use a...

I think he said customer acquisition. Did you say content or customer?

I said -- yes, I'm referring to customer acquisition costs.

Okay.

I see. If you look at just straight CPMs, I mean, there wasn't a real change in the CPM. We have the same seasonality pretty much that we anticipate from prior years. But the effectiveness of the customer acquisition, again, is benefited by a multitude of things. One are the assets that we're utilizing that are created with our Ad Factory being able to have great stories and films and series helps us support our customer base, make it more attractive to the customer, increasing their marginal utility of owning a membership with Angel being part of the membership.

So as we continue to sort of improve on all fronts, you're seeing that benefit come in the form of operating cash flow and reduced losses year-over-year and at the same time, while growing the Guild.

And so it's been a remarkable year in many ways in the sense that we've come a long way in the last 12 months or even you could say, 9 months, if you're just looking at this year. And it's not just any one thing. It's literally a collaborative effort across the teams both on the theatrical side, on the Guild acquisition side, on the technology side, every part of the business has really had a strong year, and we're just looking to improve upon that every month and every day we come to work.

We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

Thank you. Folks, as I reflect on the call today, I'm pleased with our team's progress. Guild growth in Q3 bucked the industry trend to deliver positive growth. And sales and marketing continued to trend all year that it's getting more efficient. Angel as a whole is growing and getting stronger, while generating positive operating cash flow.

And most importantly, our model remains differentiated and robust, making audiences happier. It's because of curation by the Guild, values-driven films and TV series for everyone and generous revenue share with our storytelling partners. I'm so optimistic about where we can take all of this.

Thanks for joining us today and see you next time.

Thank you.

Thank you. That does conclude today's webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Hello, everyone. Welcome to Angel's Second Quarter 2026 Earnings Call. Joining me are Angel's Co-Founder and CEO, Neal Harmon; and Angel's CFO, Scott Klossner.

Before we begin, I would like to remind everyone that certain statements made on today's call, including statements regarding future financial performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Information regarding these risks and uncertainties is included in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. These forward-looking statements represent our outlook only as of the date of this call, and we undertake no obligation to update any forward-looking statements, except as required by applicable law.

During this call, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings press release. These cautionary statements apply to all forward-looking statements wherever they appear in this call, including in the question-and-answer session.

Our earnings press release is available on our Investor Relations website at angx.com, where we also encourage you to sign up for our e-mail alerts. Neal and Scott will take approximately 20 minutes for their opening remarks before we turn the call over to questions.

Thank you all for joining us. And now I'll pass the call over to Neal.

Thank you, Luk. Good morning, everyone, and thank you for joining us. When we started in 2026, we set out to accomplish 2 things.

First, we wanted to continue growing the Guild, our community of paying members. And second, we wanted to show that as Angel grows, our business becomes more efficient and more valuable. This quarter, we've made meaningful progress on both. Guild growth continues to exceed analyst expectations. Our operating leverage improved, and we're reaffirming our commitment to limit our full year adjusted EBITDA loss to no more than $25 million.

When investors look at Angel, they usually ask 4 questions. What are you building? Why is it different? Is it working? And how big can it become? I'd like to answer those today.

First, what are we building? Investors should think about Angel differently. We're not trying to build another streaming service. There are so many of those or another studio. We're building a first-of-its-kind audience-driven entertainment platform. Everything begins with the Angel Guild.

The Guild helps us discover stories. It helps us to understand what audiences want. It helps us build awareness for every single title we release. It helps filmmakers improve their work before release. And increasingly, it helps us decide where to invest.

Every major decision at Angel starts with one simple question. Does it strengthen the Angel Guild community? Because we've proved something, that's become fundamental to how we think about Angel. Every new Guild member makes Angel better, better for audiences, better for filmmakers and ultimately, better for investors. That's the company we're building together.

Now, why is it different from the rest of the industry? Traditional entertainment companies start with a lot of capital, a lot more than we've got, and they invest billions making content and they spend billions more trying to find an audience for what they made. We start with the audience. Our community tells us which stories matter. It helps us improve the stories we choose to distribute. It builds awareness before release. It validates demand before we commit capital.

Traditional studios don't have a revenue problem. They have a cost problem. We use audiences to decide where to invest capital and do it far more efficiently. That's a different way to build an entertainment company, one that's aligned with filmmakers, it's more capital efficient and increasingly difficult to replicate as our community grows.

The next question that investors ask is, is this working? We very much believe the answer is yes. And this quarter gave us more evidence than ever before.

In 3 years, we've grown to more than 2.85 million paying Guild members. In Q2, Guild sales and marketing was reduced by over 26% over Q2 2025, from 71.6% of Guild revenue to 52.8% of Guild revenue, even as we added almost 400,000 Guild members. That's exactly the type of operating leverage we hoped this model would create. But what's encouraging is that we're seeing momentum across nearly every part of the business.

Take theatrical. People often ask how theatrical fits into Angel. We actually think they're asking the wrong question. We don't think of theatrical as a separate business. We think of it as part of the engine that strengthens the entire platform. Young Washington serves as a great example. It delivered one of the strongest theatrical openings in Angel's history.

But what was even more important and more exciting for us is what happened around the film. It brought new audiences into the Guild with new talent. It will strengthen our existing streaming library. It has expanded awareness of Angel. It attracted new filmmakers to the Angel platform, and it demonstrated how our community can help build momentum long before opening weekend.

And Guild members, I being one of them, we're proud to be part of the release of this great film on the 250th anniversary of the United States of America. That's exactly how we designed the model to work. Every successful release grows the Guild. A larger Guild attracts better filmmakers and better talent. Better filmmakers tell better stories, especially with early feedback from the Angel Guild and better stories attract more Guild members. That's what we call the Angel flywheel.

And we're excited about what's ahead. 6 of our 10 planned theatrical releases are still scheduled for the remaining half of this year. These are in-person, In Real-Life experiences that build our Guild community and that build the Angel brand.

We're also seeing momentum in technology. Each team member across Angel now uses AI tools in their daily work. Over the last several quarters, we've shared examples of how AI has helped us move faster, release more titles and improve productivity across the company. But I actually think the bigger story here is what AI will do for the entire entertainment industry, and it's really exciting. Every week, we meet with filmmakers using AI to dramatically reduce both the cost and time required to produce great films.

As an example, Wonder Project, the company behind Young Washington, used AI to increase the production quality for theaters and to reduce the cost of production. The Angel Guild cares about quality, and they care about the values in the story, not whether it was produced with practical or AI effects.

However, we do believe AI will significantly increase the amount of film and television being created over the next decade. And if this is true, something very interesting happens. As the supply of films grows exponentially, curation becomes even more valuable. What do I watch with all the titles available. That's exactly what our Guild does. They curate. And it's curation audiences trust because it represents them.

Our release cadence is accelerating as well. July was the biggest release month in Angel's history. And so far this year, we've added 115 films, 31 comedy specials and 340 television episodes, including 18 new series, more than halfway toward our goal of 750 total releases in 2026. And that's on top of doubling our library last year.

We're also becoming more than a destination for Angel Originals. We're becoming a destination for a beautiful values-driven library of great stories.

Industry data shows that nearly 90% of viewing happens on old catalog titles. People love discovering something new, but they also love returning to the stories they already know. That's why we partnered with studios large and small to bring curated catalog titles on to Angel. Those partnerships make the platform more valuable for Guild members while also improving the economics of the business.

Supporting these partners actually required us to build enterprise-grade digital rights management that is high-grade antipiracy security for the movies. We were told by a major studio that to upgrade to that level would take over a year. With our AI tools, our engineering team delivered it in under 6 weeks. That's another example of how Angel is operating at scale.

We're also making Angel available where audiences want to watch. During the quarter, we launched on Comcast X1, Xfinity Flex, Xumo and LG, significantly expanding our reach on improved economic terms.

Finally, our filmmaker ecosystem continues to strengthen. Filmmakers have now earned nearly $300 million through Angel. As our community grows, the value of building with Angel grows, too. And I actually remember when many years into their story, YouTube announced a few creators getting paid over $100,000 in a single year, and that was a huge deal, big news in the industry. Look where Angel has come in so little time. Filmmakers have earned $290 million.

When we step back and look across the business, we don't see just individual wins. We see multiple parts of the Angel platform reinforcing one another. The royalties, the talent, the filmmakers, the Guild.

Finally, how big can this all become? Well, in the common baseball parlance, we believe we're still in the early innings. Today, as we stated in our earnings release, more than 90% of households subscribe to at least one streaming service. The average household in America pays for 4 streaming services. That's 117 million households, which is a huge domestic market. And streaming isn't a winner-take-all business. Consumers already choose multiple streamers because each serves a different purpose.

And at Angel, we're not trying to replace or replicate major streaming platforms, Netflix, Disney or Prime Video. Streamers primarily focus on persuading audiences to consume what a few gatekeepers decided to make. At Angel, millions of Guild members help filmmakers know what they would like to see made with their values, boats and their wallets. Guild members are part of a community with purpose, belonging and impact. Again, 117 million households. And when we grow into the international market, the opportunity grows exponentially at such a huge opportunity.

As we look into the second half of the year, our priorities are clear. First, we'll continue to grow the Guild because it's the foundation of everything we do, our Guild community.

Second, we'll continue demonstrating operating leverage as we scale, showing that growth and improved economics can go hand in hand. Third, we'll continue to build Angel in a disciplined cash and capital-efficient way as we execute our long-term strategy. These priorities position us well not only for the second half of this year, but for many years ahead.

Thank you. And now I'll turn it over to Scott.

Thanks, Neal, and welcome, everyone. Angel operates a unique and straightforward business model. Q2 saw that model continue to expose itself in building and sustaining for future profitability. Every facet of our business is directed toward growing the Angel Guild, our paying members. With each passing month, our results continue to demonstrate that the Guild's total addressable market is enormous.

My job is in part to balance cash, adjusted EBITDA and growth as we invest in sales and marketing to bring ever more paying members into our community.

But first, let me start with our second quarter results for 2026. Total revenue was $111 million in the second quarter of 2026 compared to $88 million in the second quarter of 2025, an increase of 28%. This increase is attributable to the growth in our core business the Angel Guild, which achieved revenues of $90.7 million, an increase of 94% over last year's Q2 Guild revenue of $46.8 million.

Our Guild membership grew from 2.22 million members in Q1 to 2.61 million members in Q2. They're representing 17.6% sequential growth and 99% year-over-year growth.

As you may be aware, we began disclosing this key performance indicator publicly on angel.com/impact. As of July 31, 2026, 2.85 million members now choose and enjoy entertainment on our platform. The trailing 12 months average revenue per member now stands at $13.63. This is down $0.06 from the last quarter.

Annual revenue per member was impacted by the size of our successful America250 campaign, which brought in a significantly higher volume of premium and annual members, which contributed to our Guild growth in Q2.

As you're aware, customers get a discount by purchasing the annual membership, which puts some downward pressure on ARPM, but annual sign-ups benefit our cash position. This is reflected in the growth of our deferred revenue on the balance sheet. And this campaign was successful at acquiring members to the Guild in a very cash-efficient manner.

Now that small reduction in ARPM is an investment in the growth of our membership. The growth now reflects a membership that represents approximately $466 million in annual recurring revenue. That's calculated by multiplying our 2.85 million Guild members paying an average of $13.63 a month x 12 months. And this is reflective of a membership growing at an annualized rate of 60% through the first half of this year.

Our gross margin came in at 54% in Q2, and this compares to 69% in the prior year period. The predominant cause of the difference is a shift in revenue mix. Q2 2025 included a heavy concentration of theatrical and distribution revenue at 45% of total revenue, mostly from the box office success of the film, the King of Kings.

Distribution revenue has structurally higher gross margins as a percent of revenue than Guild revenue does. This year, in Q2, the bulk of our revenue, 84% came from our core growing Guild business and theatrical distribution accounted for only 16%.

Now operating expenses, excluding the cost of sales, were $78.5 million in the second quarter of 2026 compared to $81.7 million in the second quarter of 2025.

Sales and marketing expense in Q2 of 2026 was essentially flat at $61.1 million versus $61.5 million last year, but against a significantly higher revenue base.

In Q2, we added 390,000 Guild members versus only 230,000 that we added in Q2 of 2025. We actually accelerated growth and did so more efficiently.

Now on an annual basis, in 2025, we spent 78% of Guild revenues on Guild sales and marketing. And we got the return on that spend. We nearly quadrupled our paying Guild members that year. But we always knew that as we scale, that spending intensity as a percent of revenue would ease.

Through 2026, we brought that Guild sales and marketing expense down to 48% of Guild revenue, a significant year-over-year improvement, while still growing paying Guild members this year by over 600,000 through June or 60% on an annualized basis.

Net income loss was approximately $23.8 million in the second quarter of 2026 compared to a net loss of $15.7 million in the second quarter of 2025. That net loss per share was $0.129 compared to $0.106 per share in the second quarter of 2025.

Neal made clear in his opening remarks that we are reaffirming our commitment to limit our full year adjusted EBITDA loss to no more than $25 million. While for the first 6 months of 2026, we show a net adjusted EBITDA loss for the year-to-date at $7.7 million, and that compares to a loss of $46.2 million in the first half of last year and a loss of $94.6 million in the second half of last year.

And we stated in our Q1 call that due to seasonality in the streaming business by quarter and the timing of theatrical releases and GAAP revenue and expense recognition in both businesses, there will be quarter-over-quarter movements in our adjusted EBITDA, but we are still on track to remain below our adjusted EBITDA loss guidance of $25 million.

Moving on to the balance sheet. We ended the quarter with cash and cash equivalents of $48 million compared to $39 million at the end of Q1. Now we are delivering record-breaking Guild membership and improving efficiency while we also deliver on growth.

Now, let me mention a couple of things about how we're managing that. We have real-time coordination and feedback processes between the Guild acquisition marketing team and the finance team, measuring and directing spend for the best possible outcome. This playbook assures that these teams are in alignment with financial investment, profitability, cash flow, et cetera.

They are hyper-focused on multiple metric goals like Guild acquisition, CAC, same-day return on advertising. This manages acquisition cash flow and all the other metrics while growing Guild membership. It's hard science, and it's executed by really brilliant people. And these metrics are targeted and aligned in coordination with our financial goals on a daily basis. It's not by accident we've seen these results.

The takeaway here is that this real-time feedback loop enables the finance team and the Guild acquisition and marketing team to focus our growth while staying in alignment with our adjusted EBITDA goal.

We drive the greatest financial returns possible while maximizing our key KPI, namely paying Guild membership growth. Some of this is exhibited on our balance sheet with the cash and deferred revenues.

Total deferred revenue at the end of June of 2026 was $83 million. 6 months prior to that, it was $67 million, and a year ago, it was $40 million.

So let me end where I started. Angel operates a unique and straightforward business model, and Q2 saw that model continue to expose itself in building and sustaining for future profitability. Every facet of our business is directed toward growing and retaining the Angel Guild, our paying members.

And our In Real-Life experiences, theatrical releases, premieres and a growing library of values-driven films and shows drives more paying members to the Guild. The enhanced quality and quantity of our library reflects how filmmakers are attracted to our unique revenue sharing model, which in turn drives more paying members to the Guild, which then increases the royalty pool and enhancing filmmakers returns and so on. The Angel flywheel for future growth is spinning and producing results, strengthening our balance sheet and growing our community, the Angel Guild.

Thank you, and I'll turn it over to the operator now for questions.

[Operator Instructions] And your first question comes from Eric Handler with ROTH Capital.

I'm wondering if you could talk a little bit about your sort of marketing patterns. I mean, there's nothing linear about it. But trying to understand the ebbs and flows of when you push with marketing and when you sort of pull back. It seems like there's a focus around the theatrical releases. But sort of can you give some color about how you think about those patterns?

Well, since Scott's been here, he's really worked with the acquisitions and marketing team on this. I'll let him speak to that.

So as we spoke in prior calls, Eric, and thanks for the question because it's really pertinent to this Q2 results. As we -- when we market, we are specifically looking towards 3 things. One is that, we're able to grow effectively, meaning we want that number to grow, and we had amazing results in terms of growth in Q2, and we're really excited about that.

Number 2 is we want to do it at a specific cost. Now that cost is a multiple of our ARPM, so if we added 175,000 members or so more in Q2 than we anticipated or at least that the consensus anticipated, I should say. And with that, comes a cost, which we recognized in Q2 as well. So it has a short-term push down on our profitability, but with a long-term benefit.

But what we do is we actually buy into those numbers, meaning that, if a particular campaign or a particular seasonality that may be occurring, there's different seasonalities, both in cost of advertising and in terms of response, meaning that -- and as our awareness grows and then we start to acquire different sort of genres and our -- the different things within the company grows and the changing demographics out there.

If we're buying into those specific numbers, you may see that number adjust. So we -- if we're seeing great conversion on a campaign, we're going to spend more heavily into that, which will increase our growth, but do so at both a good cost from a GAAP perspective and in a cash-efficient manner. Both of those things have to be true for us to continue to spend hard. And if they are, you'll see the ebbs and flows as they go.

We may see August Q3 is a little bit of a slower quarter for us. So if we're not converting, we may pull back on our spend some, which will slow our growth. But as we efficiently can convert, we will continue to do so. Did you want to add something?

Well, I think you've done a great job with the team as far as having discipline in the costs, but also prioritizing growing into our huge total addressable market. I wanted to just talk about 2 things, Eric, from a big picture standpoint that were breakthroughs for us this quarter.

So one is that, we developed internally our own system. We call it the Ad Factory and another one called the Creative Studio that allows -- has enabled a new level of scale for our marketing efforts and more granularity by using AI tools to help us launch and iterate on ads for this growing number of titles. You saw how much we're ahead of schedule on the number of titles for this year that we've released. And that's been made possible and we're able to take advantage of those opportunities because of this new technology that we've developed here internally. So that's been a big breakthrough for us.

The second thing is that, we've tracked through a third-party, a question about basically aided awareness, which of these streaming services do you recognize and Angel's name is included in that question. And we've gone from some -- around 8% a year ago to 14.9% in our last survey. So the overall awareness of Angel is growing. So our marketing becomes more effective as people become aware of Angel and Angel actually has a streaming service as part of the platform. The community, the streaming service, the theatrical campaigns are all part of the Angel platform that are helping grow our mission. But those kind of breakthroughs where we have those kind of basic awareness here in the U.S. double in a year, it's a pretty big deal for us. And I just want to talk about those things from a big picture standpoint.

That's very helpful. And then secondly, the last 2 quarters, you've seen some nice upside from the content licensing line. Now admittedly, it's a bit small. But can you talk about what sort of triggers the content licensing deals? Is it TVOD? Is it licensing out content to other streamers? What goes into that?

That's a great question. So if you look through the life cycle of an Angel original, like Young Washington, which had a great release, it goes to theaters. As soon as it -- the first place it becomes available after theaters is for Angel Guild members, and it becomes available for premium video on demand, which we have direct relationships with Amazon, Apple, Fandango and other providers, where people can essentially rent or buy the title to watch at home while it's in theaters for $24 or $25 or something like that. And that goes into the content licensing category.

There was a recent announcement we're trying to grow the notoriety of the David IP, and we licensed the title to Netflix, which hit #1 on Netflix and which is very, very exciting because it's -- there's tens of millions that are now being exposed to the David intellectual property. That also falls into content licensing.

The -- we've done deals with Prime and Peacock and Solo Mio was just released on Hulu. We licensed that to Disney. And so all of these fall into the content licensing category.

Your next question comes from Andrew Crum with B. Riley.

Scott, the business has demonstrated some nice year-to-date gains on adjusted EBITDA. And I guess in order to achieve your annual guidance, you'll need to increase the year-on-year improvement more substantially relative to the first half. So can you address what the swing factors are in the second half to delivering against your annual target?

Can I just interject real quick before Scott jumps into that answer? And Scott is the right one to answer. But I just want to reiterate something just from the big picture. So when it comes to adjusted EBITDA and this Scott talked about how we have a customer lifetime value. And then we have a customer acquisition cost and then we have a monthly average Guild member revenue.

Angel is in growth mode today. We have a large total addressable market, and we are growing as fast as possible in a cash-efficient manner where we can control our own destiny. So the size of the market is so large that we are very focused at the company on just reaching a larger and larger and larger section of that market.

And then I'll let Scott speak to the specifics of the financials.

Keep in mind, we added approximately 600,000 members to our ranks in the first half of the year. And we did so at a negative $7 million-plus adjusted EBITDA number. Now that -- and if you look at the current number that we post, it's approximately 2.85 million or 2.86 million or 2.88 million rather right now. As we continue to buy into that growth, we're not anticipating -- for example, we could stop growing right now, and we would massively change our adjusted EBITDA guidance. But because we are in this growth mode and we continue to spend into that number, we anticipate for the rest of the year to be at a slightly negative adjusted EBITDA number based on the growth expectations we're having. If we don't -- if we were to stop at 2.88 million where we're at today and at the end of the year, we would be in -- from a profitability standpoint, we look far, far better. And then you'd be asking us why we didn't take advantage of growth in the second half.

And so the reality is that we are going to continue to grow as long as we can do so at the numbers that we're experiencing at this time which according to our calculations, would put us still south of a negative $25 million, meaning less than negative $25 million adjusted EBITDA. And if it's better than that, 1 of 2 things happen.

One is that, we slowed growth because we weren't seeing the numbers coming back to us in terms of targeting efficiency, both on a cash basis, on a CAC basis. And/or secondly, we're starting to see things like a massive theatrical hit may make a difference to some degree or we get a great downstream deal we weren't anticipating. But the business is fairly scientific. As long as we're growing and we can do so at the numbers we're looking at right now, and we keep literally on a daily basis, we're adjusting one way or another.

We've got this massive TAM we're going after, and we're going to grow as quickly as we can with our current balance sheet. We're not expecting to raise cash to do this. We believe we can grow. Now down the road, we may say, hey, we can bring even a greater result if we had some more cash. And we might say, let's go ahead and raise some funds next year or the year after sometime down the road.

But right now, based on our current balance sheet and our current growth expectations, we're continuing to spend into that. The only real swings what I would say that would occur, like I said, would be that we -- for some reason, growth were to slow, which we don't anticipate. And or secondly, that there was sort of like another revenue stream that came on that we weren't expecting. That was higher than what we were expecting like a box office hit of some sort.

Otherwise, I would say, we added 600,000 members with a negative $7 million adjusted EBITDA. If that were to happen again in the second half, I think everybody would be really pleased.

And we yes, and we've got the balance sheet to exceed consensus expectations for Angel for sure.

Okay. And then maybe a follow-up, Neal. As you think about extending into new genres, 2Q featured 2 breakout hits and obsession in backrooms that were spawned through popular YouTubers that seem to appeal to the younger audiences. Now for your business, do you see that as a white space opportunity?

That's a great question. And those were perhaps not Angel titles, but they were good examples of community getting behind a particular launch of a film for a specific YouTuber and kickstarting the release of those films. What's powerful about Angel's model is that, rather that being based on a YouTuber or a specific film or brand, it's based on the trust of the community for the Angel brand. Because Angel, all titles are selected by the Angel Guild members and as people grow to trust the brand and our Guild grows in size, our releases will get bigger and bigger and bigger.

So we think that, that's a -- those are great examples of the anatomy of a successful release. It's just that we've built an economic model that takes advantage of that. Like it's one thing to go and have a flash in the pan box office. And then when you're done, you have to start over again and release another title with another YouTuber. But with Angel, we have this defensible community that gets increasingly difficult to replicate where we're able to deliver those kinds of results over and over and over again.

And occasionally, we'll have a title that once it gets kick-started by the community, it will catch fire in the greater market, and it will do something like what David or King of Kings or Young Washington or Sound of Freedom did. And that's great. That helps us reach new audiences and build the size of that community to a larger community.

Now, when it comes to actually working with YouTubers, we do have some specific efforts and projects and technologies we've been developing to make it easier for people who have YouTube followings to get involved at Angel, and we think that's going to be an important part of the future.

Your next question comes from Thomas Forte with Maxim Group.

Great. So Neal, Scott, Luk and Jeanette, congratulations on the quarter. I have a statement and a long 2-part question, and I'll say it all at once. So first off, is --

Objection compound question. No, I'm just kidding. Sorry, Tom. Go ahead.

Okay. But I didn't want you to start answering before I finish, Neal. Thank you for the interjection. So first off, it was an honor and a pleasure to watch Young Washington in movie theater with my family on the 4th of July to celebrate America's 250th. So thank you for that. And then second, so Neal, you discussed this in your prepared remarks, but I wanted to ask the following. I think there's a lack of understanding by investors on how Angel Studios makes money, including a misunderstanding in the role of theatrical releases play in the strategy. So I think investors believe Angel Studios is trying to make money on its theatrical releases. Otherwise, why else would you spend the time and effort to do that? I think you're clear in communicating that the theatrical releases are a means to market your subscription video-on-demand service and increase your membership. But I think investors still expect you to at least try to make money on the theatrical releases. So I'd appreciate your thoughts on that.

And then lastly, I think there's a structural challenge for the company to overcome and would appreciate your thoughts on the following. I think most investors think theaters and theatrical releases are going the way of the dinosaur. So why do you feel differently?

Okay. These are great questions, both around theatrical and give me an opportunity to speak to those points.

So of course, Angel is going to execute on every single theatrical release with the utmost marketing efficiency and with the intent that they will hit the zeitgeist and become profitable ventures. And we've had that happen a number of times where films have made a profit in the box office, and we celebrate those films when they -- yes, when they give a return in the box office, that's a great, great success. But building a business model around that is like going to Vegas to try to make money. You got to be at the table over and over and over again for a long time to be able to make money. And we just don't want to operate with our livelihood dependent upon that business alone.

Now that said, we do it really, really well. The Media Odyssey podcast said that for 2023 through 2025, we were the highest average per title box office in -- of all distributors in independent films. So our model is working. We're becoming more and more successful at the box office and intend to do so moving forward.

The box office has a couple of other unique things about it. That is, is that we've got a younger generation who's growing up, and they're kind of sick of living on their phones. I mean, there are some people are addicted to their phones, but they are hungry for in-person experiences. They're hungry to meet new people. And so we are very intentional that at Angel about building a brand around being together in-person.

So we have Guild premiers. We have Guild screenings. We have these large theatrical events. And we actually show when people are checking out with their seats where Guild members could be sitting, so they can sit next to a Guild member and get to know somebody new. And that's community.

And the strongest brands in our world today are built on a mixture of digital and physical experiences. And so that's going to be really important. And the numbers bear this out. When I was on a panel, I mentioned this before, but I was on a panel with the IMAX CMO and I think the CFO of Cinemark. And the IMAX CMO said that their biggest demographic and the fastest growing is Gen Z. And then that Cinema United study came out that Gen X -- or is it -- am I getting confused? No, Gen Alpha. The IMAX said Gen Alpha and then the Cinema United said Gen Z is the fastest growing among the theatrical population.

So those are the young people, and they go to movies more and increasingly more than other people do. And so this story that cinema is dying is it doesn't bear out in the numbers. Young people are going, which is the future of the cinema and people are increasingly wanting that in-person experience.

And so Angel, we're leaning into this long term because it's such a growth driver for the larger Guild community. And then I'll just add that really great talent wants to be on the silver screen. And so we're able to get talent to participate in Angel's ecosystem that wouldn't otherwise do so.

So thanks for those questions, Tom. Do you have any follow-up? Or is that going to --

Can I just make one point? I think it's really important.

Yes, go ahead.

So Tom, we read your guys' analytics reports around the theater chains, the IMAX, the Cinemark, et cetera. And as I look at them, it looks like those that are doing it right are seeing growth in their returns and that they're actually getting -- it's a more -- it's a different world, and you have to address it differently. And I think what you're seeing is an evolution perhaps of the way that the theaters present their value proposition to their customers, and it's going to change. But I don't believe it's going away.

Malls did the same thing back in the e-com days is that they had to adjust and there was consolidation. But at the same time, in some places, those things are -- retail is still a real thing. It's not going away. We believe that theaters are still going to continue to thrive. It may be a little bit differently. Maybe there will be consolidation. But we believe in the fact that people are searching for great storytelling, and they like it in different modes. And I think they will continue to see them in theaters. They're going to continue to stream. They're going to -- who knows what's next. All we know is that, it's all about giving value to that customer at the end of the day.

Your next question comes from Jason Helfstein with Oppenheimer.

A few questions. So first, if I'm doing the math right, I think your Guild contribution margin in the first half was something like 38%, it was obviously positive and meaningfully better than last year. So I guess as you think about the seasonality between the first half and the second half, do you generally think about like that marketing efficient? Like how does it move? Do you generally have higher or lower contribution margins in the first half versus the second half? And I've got a few more.

Generally, speaking, it's not going to change too dramatically. You do see some things happening in Q4, in particular. For example, advertising CPMs go up, which makes it more difficult to be as efficient on your marketing spend. At the same time, you do have a greater -- you have more customers out there looking for entertainment. And so you get a little bit benefit of both worlds.

So there may be a slight tweak from one season from one period, the first half to the second half. But if I were to say it would probably slightly go down in the second half because of the cost of marketing, but I don't think you'll see it that dramatically.

Remember, we have a base that we've already acquired, and they're the largest component of that revenue number. So that will continue to go forward. And you'll just see it in the growth in terms of how that works in terms of contribution margin.

Yes, our pricing isn't really changing. You may see some discounting occasionally for a sale that might go on at Black Friday or something, which could have a temporary impact on it, but nothing dramatic, I would say, in the second half.

And then of course we've got -- of course, we've got 7 theatrical releases in the second half of the year and 3 in the first half, which those tend to change the margins.

Yes. That mix is probably the biggest component of the overall contribution.

Right. And then to help us like to that point on the theatrical revenue side, right, which component is probably very hard to predict. Like so those -- and then how do those 7 movies allocate between 3Q and 4Q?

Well, we've got one released, right? We released Young Washington. It's about $46 million, $47 million. And so that -- the majority of that is going to be -- I mean, the theatrical for that is going to be recognized in Q3. And then we should -- we'll have Brink of War and Runner this quarter. And then the next quarter, we've got Hershey and Angel and the Badman and Drummer Boy, that will come out early enough to start recognizing revenue. And then Zero A.D. is going to mostly get pushed. Well, it's December 11.

So we'll -- Q4 should be pretty strong, assuming that we have some good releases. But both quarters, we're going to have a lot stronger theatrical revenues than we did in Q2.

Q2 is a bit of an anomaly.

Yes. And then just answer just to talk -- I don't think anyone is talking about it, but the transfer of the 10 million super voting shares to the Angel Mission Trust. Maybe talk a bit about that and just like how public investors should think about how it kind of impacts them? And then I've got one last technical follow-up.

It's been kind of fun because we're releasing the movie Hershey at the same time, we learned about Milton Hershey setting up a trust for the Hershey Company. And there are trade-offs for a company whose mission is controlled by a trust for sure, in the public markets. But the Hershey Company has replaced their Board and management team twice is our understanding because they got off mission or tried to sell the company or do something that was not in line with the original mission.

And, but the interesting thing is from a public investor side, if you go compare Hershey to other companies from that era, they've outperformed the rest of the market. So being mission-driven can also have great returns. And our goal for this was we loved the Disney Brothers growing up. Our mom read his stories about them. And then we went through a big lawsuit with the Disney Company and just felt like that the company lost its way after the founders were gone.

This was -- we studied as much as we could about companies like Patagonia, Hershey, Rolex and others talked to a lot of people to figure out how to do this and try to maintain the mission of Angel beyond our tenure. And our hope is that we've got this set up as wisely as possible and that it bodes well for the future returns of the company by staying true to the original mission of Angel.

And just last, you've got 2 mergers that kind of, I think, have to be consummated by October 31 of this year, the Toothy Cow and Tuttle Twins. So just can you kind of just remind us like the impact on the kind of balance sheet cash flow statement, et cetera?

Yes, go ahead.

So there's multiple impacts from it. So there will be approximately -- I want to say 10-ish million shares that are being issued in conjunction, maybe it's a little less shares that will be issued in conjunction with those acquisitions. They are 2 of our biggest performing titles that we have on the platform and thereby received some of the highest royalties that come from Angel. So we've done a really intensive sort of analysis of the benefit to our bottom line by acquiring them. And we think they're both accretive to the company in terms of the bottom line vis-a-vis what the cost of the acquisitions can be for the company.

So yes, we've got both of those in play, and they should be like you said, we've got a time line to get those done as soon as possible at this point in time, but we're excited about that opportunity and what that's going to do for the bottom line in Angel.

Your next question comes from Eric Wold with Texas Capital.

Just a couple of questions. I guess, one, any additional insight into the theatrical slate for '27? I know you've announced a handful of titles confirmed already. So I'm not necessarily asking for title names, but just maybe talk about the pipeline that you have that you're working through for '27. Would you expect a similar number of titles next year as this year? And would the cadence be similarly back-weighted next year? Or do you think it'd be more even from what you can tell at this point? And I have one more question after that.

Yes. So 2027 theatrical titles, we would expect to have a similar release quantity in 2027 as we had in 2026. There may be opportunities where we decide to take it to a release a month, but we haven't made that decision yet. In terms of timing, I wouldn't want to speak to whether we're going to weight it as heavily back on the back end until we actually make the announcements.

Got it. Understood. And then one of the benefits you talked about with the growth in the content library, the streaming content library has been obviously making the value proposition for a new member that much higher in terms of why they want to become an Angel Guild member subscriber. I guess, I know the churn is not something you divulge, but any way to kind of frame as generally as you'd like, how you've seen churn hopefully improve kind of change throughout the year as that content library has increased such that the need to kind of grow the subscriber base or kind of the subscriber base is not as dependent on new subscribers as that churn number gets better.

Yes. So this back catalog strategy has some real benefits to Angel on an economic level and from a Guild member value proposition. But we have -- we also -- we've developed -- I mentioned the Ad Factory and the Creative Studio and how those things are helping us scale up marketing around these titles in a way that hasn't been possible before.

So we're not only getting watch time and some retention benefits from these titles, but we're actually finding back catalog titles that are little gems that didn't get a proper marketing push in the day didn't find the right audience for them, and we're finding that audience. So this is really a scalable value proposition for us from a retention side and an acquisition side.

We are seeing improvements in retention from cohort-to-cohort year-over-year, and we're learning the seasonality of retention, and we're learning -- and we're increasingly learning about the strength of our people who have been with us over a year, and it's very exciting.

I would just add one more thing is that we literally -- this is almost like our acquisition strategy. On a daily basis, we are constantly testing and tweaking different things to help with our retention numbers. And one of them is -- or many of them, which Neal just mentioned. But we -- it's definitely -- even though we're not necessarily giving out churn numbers or retention numbers at this point in time, we can tell you that they're improving.

The metrics that enhance retention are improving. We've seen watch times continue to go up, especially as we add more titles and continue to create more variety within our offering. And at this point in time, we're learning a lot about what retains a customer. And it's hard to point to one thing and say it's because of this or it's because of that. But we are doing constant testing, and we're seeing the fruits of that effort.

There is one thing that we consistently see, and we've mentioned on previous calls, if we can get the right first title to the viewer and the right second title to the viewer, those are the largest predictors of high retention. And we've built up since -- I think it's since the last call, we built up our entire discovery team and hired an expert in machine learning to help us with that process, and we've seen gains across the board.

It's particularly when we brought -- because we brought in some new genre titles and new audience titles that might not be traditional for Angel, and then we were able to quickly with these technologies, find the titles in our library that will then be the next best titles for somebody to watch. And as our library grows, this data opportunity is growing as well.

So think of it as just more data points, more opportunities to merchandise to great stories to people of an increasingly diverse set of audiences. That is enabled by this back catalog license strategy.

Your next question comes from Ryan Meyers with Lake Street Capital.

Yes. Just as a follow-up to the last question, I just want to make sure I understand it correctly. Scott, you said you guys are still not giving the membership retention numbers, but they are, in fact, improving. Just really any detail that you can provide us with that year-over-year improvement, what exactly is improving and how we should think about that?

So we've seen significant improvement in the points that Neal brought up that we know the things or we know some of the things that improve retention. So we're seeing greater watch time, longer watch times, more engagement by that cohort and our audience and we are seeing voting. We are making adjustments in the way we vote. We've seen adjustments in the way that we discover and deliver the different things to the customer and seeing how they're responding to them.

So I mean, we're not currently, like we said, giving those numbers out at this point in time. In part -- in large part, it's just because we're in a growing phase of the company, and those numbers may gyrate a little bit from one quarter to the next. But -- and there is some seasonality in terms of retention that occur. And the older your customer base is, not meaning age-wise, but in terms of how long they've been with the company, as that continues to expand, we're now a 3-year that we've had the platform streaming in the way that it is, the Guild growing.

And as the guild grows over 3, 5, 6 and 7 and 8 years, as you have a customer that stays with you, one of the things that are for sure is that if a customer stays with you over a year or 9 months is sort of where the real drop off or the real boom takes place that they just don't ever leave you. They stay. They bought into what you're offering. They like it. They're part of your customer base, your membership, your community, and we'll see that continue to grow.

So the more of these customers or Guild members that we can push into the 9 months or beyond, we keep them there. We're testing, we're seeing that number also improve. So those things are improving over time, and we'll continue to see going forward.

And the time, as we get bigger, it's just a -- it's such a key metric. Again, one of the things that you would see is that if it went the other direction, you would see a lack of efficiency in the way that we're acquiring members because it would become more and more difficult just to replace those. So it's a large component of the efficiency at which we're growing the membership right now.

Got it. And then lastly, just wondering if you can kind of help bridge the gap between Guild membership quarter-over-quarter and Guild revenue quarter-over-quarter. It looks like the actual membership base increased 18% or so and then the actual Guild revenue, I think was around 9%. Can you just walk us through that? Was it just timing, pricing, different promotions? Just kind of help us understand the difference there between the 2.

Yes. So one of the exciting things we did last quarter was we started getting really transparent about the Guild membership and reporting it on a regular basis. So if you've been following that or anyone who has been following that has seen that a lot of our growth in Q2 came in the latter part of Q2. And so while we grew 99% -- almost 100% year-over-year in Q2, we grew 94% in revenue. And that's just because if you back weight some of the growth to the end of the quarter, then you only have so many days to recognize revenue. So the revenue growth for those -- for all that growth will lag a little bit just based on the timing at which they join during the quarter.

And I forgot the second part of the question. What was the second part of the question, Ryan?

No, Neal, that helps. You covered it. It really just comes down to timing. So I think you answered it adequately. So thank you for that.

Recognition requires us to recognize the revenue based on how many days they were with us in the quarter. And so if they're with us 1 day, we get 1 day's worth of benefit for them, even though they're paying for monthly membership. So in the next month, you'll see the full benefit. So because we had back weighted, as Neal said, we back -- we had real heavy growth in the last half of the quarter.

I don't know. You asked -- you made a little comment about promotion. We did the America250 promotion. Scott spoke to that on the call. So that was the largest contributor to the $0.06 drop in ARPM in average revenue per Guild member. But definitely worth the investment to take advantage of that opportunity.

And as I mentioned earlier also, it was a huge benefit to annual memberships. We had a big spike in annual memberships which pushes that ARPM number down as well slightly.

And annual memberships do really well on retention.

Yes, amazing numbers.

And your next question comes from Michael Grondahl with Northland Securities.

This is Michael Rkas filling in for Mike. Congrats on a great quarter. Just wanted to ask with about 2.88 million members today, what is the path to 5 million or 10 million look like? Is this going to be primarily through theatrical releases? Or are you considering new channels and potentially international exposure?

Yes, yes, yes. I mean that's the short answer. Now we -- I mean, we're at 2.88 million Guild members today, which is surpassing what consensus expected for this year. And we did that with only negative $7.7 million in adjusted EBITDA. We consider that a huge win. It took a couple of breakthroughs around the Ad Factory awareness and promotion in order for us to get there. And we're optimistic about the second half of the year, but also realistic that it's going to require some innovation to keep that up this year. But 5 million Guild members, like we're thinking in the tens of millions of Guild members when we're thinking about attacking this TAM. But as soon as we're profitable or free cash flow for -- we'll be leaning into a couple of international markets. And that's around the corner for us.

So huge TAM, getting to 5 million members, we're thinking more about how do we get to the tens of millions of members right now and like what kind of break fees we're going to have, like 5 million members is just a given. We're just on that trajectory just by keeping the cost controls in place and everything that's just going to happen.

We're not giving guidance on when it's going to happen, but we're optimistic. And because we're seeing the scale of what Angel is creating right now is a lot of people see us as niche, and I think the markets are going to start understanding that Angel is a lot broader than they were expecting. Yes.

I would add, this is really important. We have a path to $5 million worth of our current balance sheet based on the returns that we're seeing currently on our marketing spend. And so if we were to stay -- if we stayed on the current trajectory, we would get to $5 million without adding additional revenue streams without necessarily going international at some point in time, which all those things are away.

I would say, when you think about international, I would think far beyond $5 million. And as you think about -- if we do end up doing some live person activities like if different revenue streams become available that we embrace, I would find those as being additive to get in the store number.

And those are all the questions we have from the line. Now, I'd like to send it back to Neal Harmon for closing remarks.

Thank you. The most important thing that we demonstrated this quarter wasn't simply that Angel can grow or that we're growing more efficiently. It's that growth makes Angel better, not just bigger, better, more efficient, more valuable and more difficult to replicate. That's what great platforms do. They don't just simply add customers. Every new customer makes the platform stronger. And we believe that's exactly what we're building. And that's why we're excited about what the second half of this year can bring and even more excited about where Angel can be a decade from now.

Thank you for joining us on the journey.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation.

Good morning. I would like to invite everyone to Angel's Q1 2026 Earnings Call. As a reminder, this conference is being recorded. [Operator Instructions]

I would now like to turn the call over to Luk Janssens, Head of Investor Relations. You may begin your conference.

Hello, everyone, and welcome to Angel's First Quarter 2026 Earnings Call. Joining me are Angel's Co-Founder and CEO, Neal Harmon; and Angel's CFO, Scott Klossner.

Before we begin, I would like to remind everyone that certain statements made on today's call, including statements regarding future financial performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Information regarding these risks and uncertainties is included in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. These forward-looking statements represent our outlook only as of the date of this call, and we undertake no obligation to update any forward-looking statements, except as required by applicable law.

During this call, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings press release. These cautionary statements apply to all forward-looking statements wherever they appear in this call, including in the question-and-answer session.

Our earnings press release is available on our Investor Relations website at angx.com, where we also encourage you to sign up to our e-mail alerts. Neal and Scott will take approximately 20 minutes for their opening remarks before we turn the call over to questions.

Thank you all for joining us. And now I'll pass the call over to Neal.

Thank you, Luk, and good morning, everyone. It's great to be with you for Angel's First Quarter 2026 Earnings Call. As you may have seen from our earnings release, we achieved a milestone in Q1 with positive adjusted EBITDA of $4 million on revenues of $115 million, both significant improvements over Q4 results. This shows the strength of Angel's recurring revenue model. We'll get into these strong results in more detail later on the call, especially when Scott discusses our financial performance.

But now I want to focus on what sets Angel apart today and what has set us apart from the very beginning. And that is our commitment to having the audience decide to give them the power and to align our filmmaker partners with the audience by sharing the upside. We intentionally set out to redefine the relationship between filmmakers and the audience by inviting guild members to watch, screen and vote on which films and television series are produced and distributed, both on the Angel platform and in theaters. Our community is living on the other side of the screen. They're part of the production process. And we have built a global community of over 2.2 million paying members in just over 2 years. Annualized, that membership base represents approximately $365 million in annual recurring revenue. The Angel Guild now accounts for more than 72% of our total revenue and filmmaker royalties have continued to grow right alongside of this. In fact, filmmakers have earned $255 million in cumulative royalties as of March 31, 2026, over $0.25 billion.

Our growth is driven by aligning artists and the audience. And we believe the untapped total addressable market ahead of us is more than 35x where we stand today in the U.S. alone. Now how do we continue to achieve this kind of growth and success in the TV and streaming market when there are big multibillion-dollar players with huge checkbooks competing with us? I'll tell you, we remain laser-focused on our audience-centric model, which happens to be attracting world-class talent in some of the most watched genres to Angel.

I'll give you a few examples. First, during the quarter, Angel's release of Solo Mio starring Kevin James crossed $25 million at the domestic box office with a rightsized marketing spend. A large streamer offered up a check to buy the film before the release. But the Solo Mio team came to Angel because they believe the film would be best served by being experienced in theaters, that the Angel Guild would champion the release and that they would share in the upside. And boy, they were right. And now Angel, without offering a big upfront check, we get to be the ones to attract new guild members with one of the highest rated rom-coms in cinema history. Theatrical is strategic.

Investors have asked, why are we in the theatrical business if we intend to simply break even on our theatrical activities? And that's an incredibly important question. The theatrical business is all about growing the guild and the guild is the economic engine of Angel. And Solo Mio is just one example. We've signed 10 filmmakers for theatrical releases in 2026 who made a similar bet on themselves, their projects and on the Angel community. Most received competing upfront offers. Without committing upfront capital, our theatrical business helps Angel to compete effectively for premium titles and genres that likely would have been sold to competitors, some with multibillion-dollar checkbooks.

Additionally, each theatrical release is a community building event designed to do 3 things simultaneously. First, to retain existing guild members, help them be happy with their memberships; second, increase the caliber of filmmakers who want to build with us; and third, attract new audience segments to the guild as theatrical titles are released exclusively on our streaming platform after their theatrical run. As Angel films like Sound of Freedom, the King of Kings, and most recently, DAVID are released, premium guild members redeem complementary tickets and have higher retention. Our guild members say that they want to impact the film industry and theatrical releases are visible cultural events that remind them of their broader impact on the culture.

In addition, theatrical titles are consistently ranked as the most popular on Angel's streaming platform. So theatrical improves guild retention, both in theaters and on streaming. Our 2026 theatrical slate also reflects another important trend that world-class talent is now increasingly turning to Angel. Animal Farm, which opens tonight on roughly 2,500 screens, features one of the most unexpected voice casts of well-known stars, including Seth Rogen, Woody Harrelson, Glenn Close, Kieran Culkin, Jim Parsons, Kathleen Turner, and Gaten Matarazzo.

Angel's Summer slate begins with Young Washington, an event which opens July 3, the day before America celebrates the 250th anniversary of the Declaration of Independence. It stars Golden Globe winners, Kelsey Grammer and Mary-Louise Parker, along with Academy Award winner, Ben Kingsley. And if it hadn't been for the advent of the United States of America, Angel and many other companies wouldn't even exist, and this is a fitting tribute to our country.

Additionally, in the slate, The Brink of War starring Jeff Daniels, Runner with Owen Wilson and Alan Ritchson, Angel and the Badman, starring Academy Award winner, Tommy Lee Jones and Zachary Levi, Drummer Boy, Hershey, Zero A.D. with Deva Cassel, Sam Worthington, Jim Caviezel, and Ben Mendelsohn. These films will finish off the year.

Because of the scale and momentum of the Angel Guild, we are creating a powerful flywheel by attracting top talent and new genres. The more premium the filmmaker or popular the genre, the stronger the library becomes. The stronger the library, the higher the growth of the guild. The larger the guild royalty pool, the more attractive Angel becomes to the next filmmaker. That is a durable competitive moat.

Our third objective in theatrical is audience expansion. Each new title allows Angel to target new and wider audiences. In addition to fans of award-winning talent previously announced, new genres spanning action, satirical allegory, historical war epic, cold war thriller, and western, each unlock dedicated audiences to these genres who represent entirely new segments of Angel's addressable market for -- and actually, these titles lower the customer acquisition cost as we bring people to the guild. The guild model is producing real expansion in our TAM with this approach. An Angel theatrical release is a brand awareness and guild retention event, a filmmaker magnet and a new member acquisition vehicle. That's why we do it, and it's that powerful.

And before I highlight the Angel TV series and a few thoughts about our AI improvements, I want to share one final thought about financial discipline when it comes to the theatrical business. We built our own ticketing technology in-house, and we rightsized marketing budgets using our proprietary data. This year's slate of 10 films will put Angel in the same release category as it comes to wide releases as studios that have operated for decades and employ thousands of people. We are executing with just 300 employees, powered by technology and an audience that has already told us what they want to see. And that discipline has delivered higher performance.

From 2023 to 2025, Angel's U.S. theatrical releases have generated the highest domestic box office for independent films in the industry, surpassing well-known distributors such as A24, Neon, Fox Searchlight, and Focus Features. On the Angel streaming platform, our library recently surpassed 1,000 titles. And we are on track to almost double the library from 2025 by adding 500 episodes, 200 films and 30 comedy specials handpicked by the guild by the end of 2026. That's like a new title coming out every day. And as AI collapses the cost of VFX and production, we could even see an acceleration of quality independent titles coming to the market. And Angel's scalable curation model driven by the guild is poised to discover and capitalize on the best titles from the tsunami of storytelling. We think it's going to be a renaissance, and we're excited about it.

Also last year, we set a goal to achieve a 10x productivity increase in key functions using artificial intelligence in our operations. In Q1 of 2026, we haven't slowed down. Our marketing team has built AI tools that are acting as 10x multiplier across the entire organization and across the growing library, improving performance and speed simultaneously. Our customer support team has had breakthroughs using AI to handle basic inquiries, freeing our people to focus on complex issues and dramatically improving our customer satisfaction. Our media operations team actually reduced content scrub time from 1 hour to 1 minute. And those are great operational examples. But as we work to complete the acquisitions of Tuttle Twins and The Wingfeather Saga franchises, we've given their production teams access to Angel's internal AI tools. And last week, Tuttle Twins producer showcased an AI production breakthrough to our internal filmmaker community.

The producers asked everyone to try to identify which scenes in an animated video were generated by AI versus animators. The results were so impressive. I mean the showrunners couldn't even identify it. So we decided to leverage the knowledge to accelerate the series production and reduce animation costs for future episodes of multiple shows. As one of the producers put it, in the last 2 weeks alone, we've gone from major barriers to unlocking so many opportunities to tell stories, the stories we've been too constrained to tell. We believe that this AI experimentation and knowledge sharing are enabled by our decision to acquire our most watched series and will strengthen Angel's competitive position long into the future.

Our ability to provide a diverse range of unforgettable values-driven stories across both television and film is one of the reasons why we believe that our total addressable market in the U.S. is over 35x where we are today. Meanwhile, the global market is expanding and growing over 20% each year through 2034, and we plan to accelerate guild membership growth in international markets after we achieve sustainable profitability in the U.S. The quarter's results have validated the growing strength of Angel's recurring revenue model.

Angel is not a theatrical studio. Angel is not even a streamer, but Angel has used both the theatrical business and its streaming platform to build the most engaged value-driven entertainment community in the whole world. With our expanding library of top talent, over 10% growth of the guild members in just the first quarter, $115 million in revenue and $4 million in positive adjusted EBITDA. This is working.

Scott, will you please take us through the financials?

Thanks, Neal, and good morning, everyone. I'm excited to share with you our financial performance in more detail. As Neal stated, total revenue for Q1 of 2026 was $115 million, up 143% from $47 million in revenue in Q1 of 2025. Similarly, our year-over-year improvement in adjusted EBITDA was substantial. Adjusted EBITDA for Q1 of 2026 was positive $4 million, up $32 million from a loss of $28 million in adjusted EBITDA in Q1 of 2025. Both figures were also above the ranges provided by the company in the 8-K filed on 10 April 2026. Within that total, our revenue mix continues to shift towards the guild as designed. Guild revenue was 63% of total revenue in Q4 and 72% for Q1 of '26. And as we've stated before, that trajectory will continue. Now if we were to have a blockbuster theatrical release, that may skew the percentage in a future quarter.

As of the quarter end, we had 2,220,000 paying guild members, adding over 220,000 members in Q1. If you do the math, 2.22 million members times an average monthly revenue of approximately $13.69, annualized, that represents roughly $365 million in annually recurring revenue. And as we continue to add members as planned, our operational leverage continues to improve. As you can see from the significant change in guild marketing spend as a percent of total guild revenues, 43% in Q1 of 2026 versus 79% in Q4 of 2025. We are attracting members more efficiently. And that's a key data point for the health of our business.

While average revenue per member is holding up well at $13.69, CAC is lower, which means it is cheaper for us to acquire new members. As a result of the growing library, retention continues to get better, customer lifetime values and the results continue to improve.

Now on the theatrical side, Solo Mio drove strong results through the quarter, along with the continued run of I Was A Stranger and, of course, DAVID. We provide theatrical revenue detail in the 10-Q. The theatrical contribution, though, was a meaningful driver of the $115 million of revenue in Q1. But the contribution of these films to guild growth and retention moving forward is the strategic reason for being involved in the theatrical business in the first place. Gross margin for the quarter was 61.8%, consistent with the 60% we reported in Q4 of '25. G&A expenses were $11 million, up 53% year-over-year in comparison to our revenue growth of 143% year-over-year.

Our GAAP net loss attributable to controlling interest was $13.8 million or a loss of $0.08 per share compared to a net loss of $37 million, $0.26 in Q1 of 2025, an improvement of over $23 million year-over-year. We ended Q1 with $38.9 million in cash and cash equivalents, and I want to highlight one number from the cash flow statement that I think deserves attention. We generated $1.9 million in positive operating cash flow in Q1 of 2026. That compares with $9.8 million of operating cash outflow in Q1 of '25. That's an $11.7 million swing in operating cash generation in a single year. And keep in mind it happened in the same quarter, we ran a significant theatrical slate and added 220,000-plus guild members. That is the flywheel translating into real cash economics.

Now on April 13, we successfully closed a $34.5 million underwritten registered offering of Class A common stock, inclusive of the full exercise of the allotment option. This raise meaningfully strengthens our balance sheet for the biggest, boldest slate we have ever brought to the Angel streaming platform for guild members. Investors told us that the need to raise capital to satisfy the Trinity agreement, our debt lender, was an overhang on our stock and was potentially pressuring the share price. Having now successfully raised approximately $32 million in net proceeds in this equity offering, satisfies the requirement and we can now unlock an additional $40 million in debt capital if needed. This capital will primarily be used to strengthen our guild growth initiatives.

We're pleased with how the team is executing across every dimension of the business. The results for Q1 speak for themselves, and we believe this improvement will continue. We're hyper-focused on growing the guild, the engine that drives the economics of Angel. And we believe we're only just scratching the surface of that total addressable market of potential guild members. Theatrical releases will still create some lumpiness in our results. For example, 7 of our 10 slated theatrical releases will be in the second half of the year.

By lumpiness, what I mean is the timing of cost of revenues. We told you in Q4 that the spend on DAVID occurred in Q4, but most of that benefit comes in 2026 and beyond. Similarly, in Q2 of this year, we'll initiate the ad spend for Young Washington with a planned release date, though, in July. So the revenues are anticipated to come in Q3 and beyond. The bottom line is that adjusted EBITDA on a quarterly basis is likely to remain somewhat volatile, but we believe we're on track to deliver our fiscal year '26 guidance of an EBITDA loss of $25 million or less. And now I'll turn it to the operator for questions.

[Operator Instructions] Our first question comes from Thomas Forte with Maxim Group.

So Neal and Scott, congrats...

Tom Forte, it was great to hear your voice briefly, but we are having a technical difficulty. We can't hear the remainder of your question.

Can you hear me now?

Yes, now we can hear you.

Okay. So then I'll talk faster. All right. So just one question for me. So as you broaden your theatrical releases, how do you think about how they advance the mission? For example, I would appreciate how you believe Solo Mio and Animal Farm amplify light?

Great question, Tom. So if we just back out for 1 second, Angel and everything we do is about the guild community, strengthening that community and growing the community. We had a great recording last night of our event. It's called Amplify that will be broadcast shortly, but we had lots of guild members there. And it was really invigorating for me to see people's faces and their gratitude, and this really is a movement. So that's what this is about. Right now, in the 21st century, one of the hottest things out there is called IRL, in real life. And that's the way that people are thinking about building brands and standing out in the AI era. And social media is becoming so noisy -- the Internet is becoming so noisy, how does one stand out. And the filmmakers who are coming to Angel get to stand out by being on the silver screen.

And the Angel Guild members get to celebrate the work that they are doing, the funds that they are contributing to Angel's mission through their guild memberships. They get to celebrate their work alongside the filmmakers in person, in real life. And that's very powerful for the Angel brand. It's an experience that -- it's going to happen 10 times this year with all different kinds of genres, new genres that we've never done before that allow us to also grow our audience into new audiences. So we get to help retain our existing guild members, have them be happy with what Angel is accomplishing with their membership fees.

We get to attract new filmmakers who want to be on the silver screen and want to stand out and want to have an in-person real-life community experience. And then we get to reach new audiences with new genres, new talent. So this is really important for us. And Solo Mio and Animal Farm both were opportunities to tap into new markets. Solo Mio being a rom-com, we've never done that before. It is the highest, if not tied for the highest-rated romantic comedy of all time on Rotten Tomatoes. And just a beautiful movie, Kevin James says it's his best work, and we were proud to take that to the world, and it did extremely well.

Animal Farm also is not -- Orwell's masterpiece is -- allows us to -- well, you asked how do these titles amplify light? Well, that's not -- we fired ourselves from making that decision like the community. I have the same vote as everybody else does in the guild. And so the community voted for Solo Mio. The community voted for Animal Farm, and they felt that they both amplified light. In the case of Solo Mio, it was a joyful rom-com. They had an amazing time. In the case of Animal Farm, it's a conversation that we believe from the comments that the guild felt like needed to be had. And so both of these are allowing us to expand the audience size for Angel, keep the guild happy and then help filmmakers understand that Angel is a home. It's a very broad tent and a home for all different types of genres and talent. Thank you very much, Tom, for that question.

Your next question comes from Jason Helfstein with Oppenheimer & Company.

I'll ask you 2 questions. So one, I guess, Neal, has the IPO given you more visibility with talent? And just maybe talk about how well that and then just kind of the success of your box office release since the IPO, how that's impacted talent relations and the ability to kind of attract talent? And then second, Scott, how are you thinking, I guess, generally about the cadence of net adds and marketing spend for the rest of the year? And I guess, is Young Washington the biggest swing factor as we're kind of thinking about kind of modeling the rest of the year, depending on how that does and kind of what you choose to put behind that?

Thanks for the questions, Jason. So in terms of the box offices this year, our theatrical strategy is about creating a marketing event around and an in-person experience around every single film. We did -- I Was A Stranger. I Was A Stranger brought us brand-new interest in the community. Solo Mio also has -- for example, we just announced a new title called Runner. That was -- that title is a direct result of Solo Mio coming to Angel and the success of that Runner decided also to come to Angel. And that's very exciting because that's a new genre for us as well, new actors that we've never worked with before, Owen Wilson, Alan Ritchson and its action comedy. So that's very exciting.

We had a screening premiere in New York for Animal Farm, and that has a really deep experienced cast. And the relationships that came out of that, we can't announce yet, but there have been lots of relationships come out of that opportunity. So Jason, the -- definitely, the films themselves have been a real draw. As far as the IPO process itself, I think, we've seen an increase in conversation. We've had comedians and other talent come to Angel and say that they have invested in Angel. And so we know that people are tracking Angel and its mission throughout the community. And so I think that ANGX gives people a symbol, something that they can rally behind. And quite frankly, we're performing really, really well as a company. We're growing very, very fast. And so it is a galvanizing effect on Angel's mission and on our partners, something for them to track as far as Angel's success. So thanks for that question, Jason.

And also got Jason to sign up for the guild. So that was the impact what...

Annual...

As far as the cadence of the marketing, we talked after the Q4 release about how we had spent -- the majority of the spend on the marketing for DAVID occurred in Q4. A lot of that benefit -- the most -- the majority of that benefit ultimately will be in Q1 2026 and beyond. There is young -- you pointed out, well, Young Washington is going to be a little bit of a difficult release to project. So luckily, because we're running our data in a very specific way, we won't overspend in terms of the marketing spend. But because the marketing spend will occur in Q2 and then the results and the benefit coming in Q3, we'll see that same sort of cadence that we did from Q4 to Q1 with DAVID.

So DAVID gave us a nice bump in Q1. We should see a nice bump in Q3, but it could be -- it will create mixed results somewhat in Q2 that way in terms of marketing spend for the theatrical. On the guild side, we're continuing to sort of moving -- we're moving efficiently. I mean if you step back for a second, you think about marketing spend and what we're doing overall as the guild grows bigger, last year, if you step back, we lost $132 million in adjusted EBITDA. And this year, we're targeting $25 million or less. That's in large part because the scale of our -- the size of the business is growing. So an individual movie like Young Washington will have less of an effect in future quarters, but it still will have a cadence impact on the sort of a little bit of the lumpiness on the earnings side.

Your next question comes from Eric Handler with ROTH Capital.

Two questions. First, you guys have talked -- last quarter, I believe you introduced the gift to guild as a $6 sort of add-on for families. Curious how that strategy is progressing.

Thanks for asking about that. That's an excellent strategy that the team has been testing where a guild member can essentially add another guild member to their billing information. So grandma could add grandkids if she wanted to. And it's an interesting feature. It's been used. We don't have anything to report on the feature in terms of changing models based on the feature, but we're watching it carefully. And it's an important feature for those guild members who use it. And it's all margin for us because we don't have to spend marketing to acquire that new guild member. So it's a great opportunity. And just to clarify on how the feature works, a premium guild member or a basic guild member can both add someone to their account for $6 a month, and they become a basic member with ads. So that's the function of the feature. Thanks for the question.

Yes. And then as a follow-up. I really liked your CinemaCon presentation and the movies that you've added to the schedule, and these are great ways to sort of raise the profile of Angel among consumers. Historically, what we've seen from other streaming services is movies are great branding opportunities. But if you want to sort of sustain or increase the lifetime value of a member, a lot of that is aided by the TV series. So I'm curious what your TV series pipeline looks like at the moment.

Great question. And we -- as we guided previously, we're planning 500 episodes for this year. I mean, call your average TV show season, 10 episodes, that'd be roughly 50 seasons to be released by Angel in 2026. That's our expectation. There is an unknown, and that is some of the breakthroughs that are happening around AI could accelerate the quantity of independent content coming to the market, and that could change the trajectory for us.

So that's the sense of the scale. On our specific most watched series, we have a new season of Homestead, new season of Tuttle Twins, new season of The Wingfeather Saga, a new season of Wayfinders. We just announced at our event last night, and this will come out on the live stream that we're going to be broadcasting shortly, Seeking Persephone. There's a number of great shows that are coming to Angel, previous shows and brand-new shows as well. So that's an important part of our strategy for retention and for guild member acquisition, and we will continue to lean into that strategy.

Your next question comes from Drew Crum with B. Riley.

So Neal, you addressed broadening your audience reach with the expanding 2026 theatrical lineup earlier. Maybe attacking this topic from a different angle, how do you see your mix of content evolving going forward? And are there genres or gaps in content that you'd like to add?

That's a great question, Drew. Our strategy is to listen to the guild and the audience and what the guild would like for us to deliver for them. But it's also a combination of scale as well. Some genres need scale to support them, right? Superhero blockbuster movies have $100 million budgets, and we're not doing superhero movies. But we're doing an action comedy movie that's got pretty big scale called Runner this year. We're also doing a large-scale historical thriller, Zero A.D., and we anticipate that genres will evolve as Angel increases in scale that any genre that amplifies light will eventually be able to tap into those.

One of the big things that happened was a breakout year for us in 2025 is animation. And traditionally, this is a genre that only large-scale companies can actually execute on. And Angel proved with 2 of the top 10 animated releases that we can execute on that level with animation. So that's very exciting for us to open up a broader like family animation genre for Angel moving forward. And that's going to be important for Angel and our focus on serving families and serving guild members' households is serving that part of the market, which is traditionally underserved. So thanks for that question. I hope that's helpful.

Yes. Super helpful. And then Scott, maybe one for you. You have 2 remaining tranches of debt under your term loan with availability subject to achieving certain conditions. Can you address your need or appetite for accessing these and ability to do so given the accompanying requirements embedded in the agreement? I think one is hitting a minimum recurring revenue figure.

Right. Well, we've already crossed the threshold for the next tranche along the way in terms of the requirement to draw on it should we choose to do so. And then we're not far from the fourth. But I would suggest that the way to look at it would be what you're asking us is what's our sort of cash flow runway look like as we go forward. Q1, we had a positive net operating cash flow. Again, there's going to be a little ebbs and tides from quarter-to-quarter. But again, if you look back and sort of take a peek at where the company is going and where we're moving forward, it's all about growing the guild. And so as long as we are continuing to execute in the way that we are, we perceive that the cash we have on hand will take us -- continue to take us through to profitability. And I think that's the way to look at it in that sense.

Opportunities may come along that may require cash in some way. But for the most part, as we operate and go forward and grow the guild, the faster we grow the guild, it actually utilizes cash. So as the guild starts to grow, if we see some acceleration opportunities, we may lean into them, obviously, for the benefit of the company long term. But at this point in time, as we look at our business and our current trajectory, we think we have -- we had $40 million on the -- $38 million on the balance sheet as of the end of the quarter. We went -- subsequent to the quarter, we raised the -- well, the net $32 million, and then we do have those tranches going forward. So I think we're looking -- we're in a really solid position in terms of where we are in terms of liquidity.

Your next question comes from Eric Wold with Texas Capital.

So a couple of questions kind of on strategy. I guess with the new genres that you're bringing to theaters this year, how should we think about the marketing strategy around those genres that are new to Angel in terms of new channels, new methodologies, if any, to kind of attract the kind of the potential Angel Guild members that would be attracted to those genres that maybe haven't been going after before?

That's a really great question, Eric. So when we pick up a new genre like Kevin James, Jonathan Roumie, which we've had Jonathan before and some other actors inside of Solo Mio. Each of those actors has a following, and they open up a marketing opportunity for us around their fan bases. And then additionally, rom-com, in general, allows us in combination with our demographics data of our guild members allows us to approach the market in a new way, and that expands an audience size for Angel around Solo Mio.

And that same phenomenon is happening on every title, and we anticipate, for example, when we release Runner in September, Owen Wilson has a following -- or excuse me, yes, Owen Wilson and Alan Ritchson both have their own followings and the action genre has a large following that does extremely well, both in theatrical and in streaming. And so these are basically -- just think of them as a door. And the door that you open is, "Oh, I get a brand-new genre that gives me an audience." And then I get a brand-new set of faces that are recognizable faces for a large audience, and that opens up a new marketing door, which for a time, drops our CAC for new guild members around those markets as we take advantage of that opportunity. Does that make sense, Eric?

Yes. Yes, it does. And then as a follow-up, I guess, on the doubling of the -- or planned doubling of the library this year, how should we think about the cadence of kind of library additions this year? And then are there any expectations for kind of the annual growth in the library that may be necessary in the years ahead to sustain retention?

It's a good question. Now as far as this year, we're on pace with our episodes and specials. We are -- I don't have the numbers right in front of me. I think we're just -- like if we released the same number of films we did in Q1 through the rest of the year, we'd be behind pace for the 200 titles, but we don't -- we're not at all concerned about that. We have some deals that are coming together and titles that are going to come in swaths that are -- we're completely confident in our goal. And so think an acceleration of films throughout the year and that we're on track with our TV shows. And then as far as the subsequent years, there's really a big wildcard. And right now, there's 1,000 independent films produced every year without distribution and about 17% of those are good enough to actually get distribution.

And it's only a small percentage of those that are good enough to be on Angel. And Angel's positioning -- is well positioned to be the first choice for independent filmmakers. And when the tsunami of AI content begins coming to the market, all the rules are going to change, and this is really exciting. Now Rick Rubin -- Jeffrey, my Co-Founder and our Chief Content Officer, was on a podcast with Rick Rubin recently, and Rick Rubin told Jeffrey, he said, "You know what, slop existed before AI and slop will exist in higher quantity after AI. Yelling at AI is like yelling at a paintbrush or a drumstick. They are just tools to make art." And we very much see this that way. And what Angel is positioned to do is we're better positioned to curate those titles.

So if we go from 1,000 independent titles to 10,000, then we're going to be dealing with a lot more quantity, but we're going to be positioned to best curate a beloved library of titles that are values driven for the audience and the audience will have trust in Angel's brand. They'll have a physical association with Angel's brand because of the in real-life experiences. And so we feel like we're positioned.

I wouldn't venture to say at this stage in the world like that we need to grow because we doubled the library last year, and we're almost doubling the library this year. Is that the right cadence moving forward? I doubt it. I think that the world is changing at a rate that -- and content will become more niche and higher quality and there'll be more options available. And those options will be trying to stand out and Angel will, we believe, be their first choice to stand out. So it's going to be an exciting next few years. And if you just stand back and look where Angel has come year-on-year and how Angel is positioned in the marketplace for this opportunity, it's really exciting.

And your next question comes from Ryan Meyers with Lake Street Capital.

First one for me. I'm just curious, so you guys guided to Q1 after the quarter had already closed, reported results well ahead of expectations. Just wonder what those puts and takes of that and what the source of the upside on the first quarter was versus what you guys previously guided in April.

Sure. Ryan, let me speak to that real quick. You're absolutely correct. When we actually began the guidance, we hadn't closed the month entirely. So as we're going through the offering, the biggest sort of differences that came in is we had an unexpected TVOD contract that came to fruition right at the end that we hadn't booked yet and the guild growth was a little higher than expected.

So the Q1, right at the end there, we had a couple of things that came in that made a bigger difference in terms of our revenue, which ultimately fell mostly to the bottom line and changed the guidance -- I mean, the result in terms of the adjusted EBITDA number as well. But those were sort of the 2 main factors that came in right at the end that were -- we didn't have built into our guidance that we gave before we finalized the close. Keep in mind, the timing of these things works. There's a little of that. We gave that -- we started beginning that guidance at the beginning of April. And just by the time it got closed, the month got closed, and it changed slightly.

Okay. That's helpful. And then...

Yes, in a good way.

Yes. Right. And then just thinking about the guild membership base, now over 2 million members versus 1 million or so last year. So we have roughly 12 months of data here. Can you just give us any sort of metrics on what you've seen so far in terms of customer retention or what you're seeing churn currently look like?

Well, we haven't specifically given guidance on that, the CAC number or the retention. But if we step back for a second and just sort of look at the way the company is evolving, I think it gives you some perspective on those 2 numbers, at least at a minimum. A year ago, we spent $30 million in Q1 in guild marketing, and we had $36 million in revenue. In this Q1, we spent $36 million in marketing, and we have revenues of about $83 million. So you can see that the dynamic is changing, at least in terms of the way the company is moving forward.

Again, remember, everything is about guild growth and about growing the guild going forward. And so obviously, CAC and retention become very big numbers. I think we're still at a point yet where we're not going to give specific guidance on that. There's probably some -- still some fluctuation that's occurring in regard to that. As we just talked about, we're actually doubling our library, which will have an impact on retention. It will have an impact on CAC. And we're not -- it's hard to give specific guidance around that where we're at, at this point in time. But it won't be too much longer.

I'm sure we can talk a little bit better -- more about that. But I think the important thing to remember is that from an overall picture, our marketing is getting more efficient, especially as a percent of revenue, and that's what's happening. And that's -- and the library continues to grow and our guild growth numbers, we gave the 200,000 number at the call, and we added another 20,000 in the next 17 days, and we believe that, that will continue to go forward. Neal, do you have something to add?

Yes. Ryan, I just -- put yourself in the shoes of a guild member today versus a guild member at the beginning of 2025. Beginning of 2025, we had 9 theatrical releases. We had Sound of Freedom in our library. We had a few other titles. Now at the beginning of 2026, we have 2 major animated releases. We're up to 17 titles, and we'll be adding an additional 10 titles plus this large streaming library from new genres, new actors and more -- traditionally more like marketable genres like action. And so as a new guild member joining us in 2026, it's a completely different picture than it was before. It's a completely different value proposition. And that is the flywheel that is happening here at Angel and is continuing to accelerate.

And so we're very optimistic -- we have seen improvements in our retention numbers year-on-year, and we expect, based on how we're executing that those are going to continue to improve. And so that is the focus of our business because we get -- with a 1% change in retention, we get huge leverage on that as a business moving forward, and that's our focus. So I'm glad you're -- that we're closing with that question because it's so important.

And ladies and gentlemen, we have reached the end of the question-and-answer session. I will now turn the call back over to Neal Harmon for closing remarks.

Thank you. Everything at Angel is about building a community. The theatrical business and the streaming business are to support a community and what this community would like to achieve. It's also about aligning filmmakers with the audience by sharing the upside and amplifying all of their impact. If I were to summarize our 2 completed quarters as a publicly traded company, in Q4, our acquisitions positioned our most watched series, DAVID, Homestead, Tuttle Twins and The Wingfeather Saga for future guild growth. And in Q1, our scale and deeper use of AI helped transition Angel to sustainable guild growth. We are now a community of over 2,220,000 households strong, with an estimated $365 million of economic power. This is exciting. The scale and momentum of the Angel Guild is creating a powerful flywheel. Thank you for your trust in Angel, and we'll see you next quarter.

At this time, I would like to welcome everyone to Angel's Q4 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Luke Janssens. You may begin your conference.

Hello, everyone, and welcome to Angel's Fourth Quarter 2025 Earnings Call. Joining me are Angel's Co-Founder and CEO, Neal Harmon; and Angel's CFO, Scott Klossner. Before we begin, I would like to remind everyone that certain statements made on today's call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Information regarding these risks and uncertainties is included in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. These forward-looking statements represent our outlook only as of the date of this call, and we undertake no obligation to update any forward-looking statements. Our fourth quarter earnings press release is available on our Investor Relations website at angx.com, where we also encourage you to sign up for our e-mail alerts. Neal and Scott will make about 20 minutes of opening remarks before we turn the call over to questions from our sell-side analysts. Thank you all for joining us. And now I'll turn over the call to Neal.

Thank you, and good morning, everyone. It's an honor to be with you for Angel's Fourth Quarter 2025 Earnings Call, our second call as a publicly traded company. Six months ago, we rang the closing bell at the New York Stock Exchange and began a new chapter as a public company. But the most important thing that happened when we went public wasn't the listing. It was that our core business, our community of then 1.6 million paying Angel Guild members and all the work that we've done together became visible to the entire world. Today, our Guild is 2.2 million paying members strong, and they generate approximately $360 million in annual recurring revenue with corresponding growth in filmmaker royalties. As Scott will explain shortly, we also expect to make big strides in profitability in 2026. To appreciate how far we've come, at the end of 2024, we had 550,000 Guild members, generating $90 million in recurring revenue.

We believe that our total addressable market in the U.S. is over 35x where we are today. And the global market is estimated to grow over 20% each year through 2034. So we're just getting started. Angel was never created in a boardroom. It was created at kitchen tables. We believed that there were millions of people across cultures, faith and generations who wanted stories that honored the best parts of humanity that treated them as citizens capable of recognizing truth, authenticity and excellence for themselves, capable of choosing stories that amplify Light. The last 6 months have reinforced that conviction in so many remarkable ways. The most powerful signal is the continued growth of the Angel Guild. What began as a bold experiment, inviting the audience to vote on what films and TV shows should be produced and distributed has become one of the most engaged entertainment communities in the entire world. The Guild is at the heart of our model, expanding from 1% of our total revenue in 2023 to 37% in 2024 to 65% last year.

We're seeing sustained engagement from people who are not just signing up, they are staying, choosing and championing the values-driven stories they want to watch. In Q4 alone, that translated to $69 million in revenue from the Guild, contributing to total revenues of $110 million, which is more than 3.5x the total revenue we delivered a year ago. And just think about how powerful their collective wisdom has been. Over the last year, guided by their feedback and ideas, we released 8 films theatrically and had 2 of the top 10 highest grossing animated domestic theatrical releases of 2025, DAVID and The King of Kings. We also achieved the highest average domestic box office per title among all independent distributors, surpassing Focus Films, Fox Searchlight, A24 and Neon. These companies have been around for decades. And Solo Mio, which was released in theaters last month, recently became the highest audience-rated romantic comedy of all time. It was an amazing year for the Angel Guild. That success tells us something important about this moment in our culture.

Audiences are no longer content to sit on the sidelines. They want to participate. And most importantly, they want to enjoy stories that reflect their values, the ones they live by every single day and the ones that they want to pass down to their children. In Q4, we launched our animated musical epic, DAVID in theaters, and it was the highest-rated film of 2025. This year, the film drove the second largest wave of new paying Guild members in our company's history, trailing only the Homestead franchise. DAVID represents far more than a stand-alone release. It's a strategic franchise that we acquired and integrated in the Angel platform with a vision of where it continues to enhance retention, unlock licensing opportunities and inspire potential spin-off series and innovative projects. Most importantly, it is poised to attract guild members for years to come. In fact, DAVID is tracking to surpass Homestead as the most significant driver of active Guild memberships in the company's history, a truly exceptional outcome for a film that premiered just 12 weeks ago.

But again, as I said before, our greatest success is getting my kids to listen to something other than KPop Demon Hunters. It has an incredible sound track. And all this success, the theatrical assess and the growth of the Guild directly flows to our filmmaker partners. Filmmakers have cumulatively earned $228 million since inception, and that royalty number grows with the size of the Guild. That is the financial meritocracy model working exactly as designed. When the Guild grows, filmmakers win. It is one of the most important reasons that some of the best storytellers want to partner with Angel, and they're catering what they do to the Angel Guild and this audience. On the business side, we also made meaningful progress improving unit economics for both Angel and our filmmaker partners across major digital platforms. During the quarter, we were accepted into the Apple Partner Program, which lowered our platform fees and is expected to add roughly $300,000 per month to our bottom line.

We also established direct business relationships with the major digital transactional, electronic sell-through and video-on-demand platforms on market level terms, further strengthening our economics of distribution. On the library side, we entered 2026 with a very ambitious goal, 500 episodes, 200 films and 30 comedy specials to be added to the Angel platform, which is nearly double our library at the end of 2025, making Angel one of the most significant and fastest-growing libraries of beloved values-driven films and television series anywhere in the world. We are also actively pursuing partnerships with studios and distributors to bring more of their films to the platform.

The theatrical slate ahead of us is one of the strongest and most exciting we have ever assembled, including Animal Farm directed by Andy Serkis of Lord of the Rings fame and featuring the famous voices of Seth Rogen, Woody Harrelson, Glenn Close, Kathleen Turner, Gaten Matarazzo, and Kieran Culkin, which will be released in May. Young Washington, starring Ben Kingsley, Kelsey Grammer, and Mary-Louise Parker opens on July 3 tied to the 250th anniversary of the United States of America. and Zero A.D., starring Jim Caviezel, Sam Worthington, Gael García Bernal, Ben Mendelsohn, and Deva Cassel, and directed by Alejandro Monteverde will be released in the fourth quarter. These are films with broad cultural relevance and they're timed, time to moments when audiences crave values-driven stories that they can watch with their families. And at CinemaCon in April, we plan to make several more exciting theatrical announcements, so stay tuned.

On the product side, we're building and we've released a number of meaningful improvements in 2025. Our new recommendation engine offers personalized discovery of new films and series for our members. And as we discussed in Q3, increased watch time by 12%. We are also now integrated into search feeds of more connected TV platforms, including Vizio, Samsung and Fire TV, which enables viewers to find Angel titles on their smart TVs and for new audiences to discover all the great titles chosen by the Guild. And with the new Gift the Guild feature, members are now able to gift a Guild membership to family and friends on their own billing information and further grow and expand the Angel Guild. This will support long-term retention while deepening household engagement. But in 2026, when people refer to product or technology, they're actually wanting to talk about artificial intelligence, right? So this one force is collapsing the cost of VFX, production, marketing and software development faster than anyone predicted, and it is rocking the stock market.

So what actually becomes valuable when one AI engineer can replace an entire SaaS platform quicker than a large team of legacy engineers can finish their training or a small team can deliver a film that resembles $150 million Hollywood production in record time and at a fraction of the cost. Or AI agents run flawless search engine optimization and ad campaigns 24/7, while agencies scramble to justify their existence. There's a lot of fear about Angel's impact -- or not Angel's. There's a lot of fear about Angel, too. There's a lot of fear about AI's impact. But at Angel, we know AI will never replace human relationships, at least not until it has a family. So in reality, AI tools used effectively can strengthen the relationships in the Angel community, relationships between real people, between filmmakers and guild members. Let me show you what AI looks like at Angel. Now many of you know that we built our own software platform to support the Angel Guild, ticketing and our streaming technology. And we've been working with AI tools for years.

In 2025, we set a bold goal to achieve a 10x productivity increase in key functions using AI, and we made significant progress. Our engineering team writes most of its code with AI assistance. As a small example, a strike team built and launched the SKETCH app in a matter of weeks, almost entirely AI written. Kids -- and this made me the most popular dad at the family reunion, but kids loved to draw their pictures and bring their creations to life using the SKETCH App, sharing them with their families and seeing their creations in the end credits on the big screen. We also believe like-minded communities that form around the moviegoing experience or the theater or attending a premier, these will become more valuable, not less. In fact, last year, Cinema United found that young people, Gen Z are not only the most frequent moviegoing demographic, but also the fastest growing, increasing from 4.9 to 6.1 visits per year. That's 25% year-over-year growth.

Young people, they look to unplug and share experiences with the community. On the tech front, we're accelerating the pace at which we build for the Guild. In January, a single engineer in order to upgrade our apps and provide better backwards compatibility, rewrote the entire code base for our Apple TV. The new app launched last month and simultaneously improved video playback smoothness, playback quality and app start-up time. 1 engineer, 3 improvements at once, all in the same month. The productivity gains are expanding beyond engineering as well. Our theatrical distribution team built its own internal scheduling application without engineering help. Our media operations team reduced content scrub time from 1 hour to 1 minute. Again, these are not technical people. These are real breakthroughs and they're not temporary.

They are the new pace of work at Angel. Product managers, support agents, finance professionals and most importantly, executives are all harnessing the power of AI to benefit the Guild and filmmakers and everyone else on the team. We're so proud of what this team has accomplished. Imagine we have just barely over 300 people, and we're doing the work of studios in the past that have had thousands of people. Finally, as AI tools become more capable, our partners will be able to produce more projects at a lower cost. Our Guild curation model means we can identify and distribute more of the best values-driven films and television series efficiently without sacrificing quality, transparency or storytelling power. We're about to get flooded with more stories than humans have ever seen.

It's so exciting. And that tsunami doesn't devalue storytelling. It multiplies what great curation is worth, and no one in the world curates like the Angel Guild. So in this ever-changing world of AI, what cannot be easily replicated, human connections, shared identity, community and family trust. That is the Angel Guild. Thank you to our Guild members. Thank you to our investors. Thank you to our filmmaker partners, and thank you to everyone who believes in what we are building here at Angel. The first chapter as a public company has just begun. We can't wait to see the stories we will share in the months and the years to come. Now with all of these efficiencies and innovations, I'm excited to now turn it over to Scott to talk through how all of this is affecting Angel's bottom line in 2026.

Thanks, Neal, and welcome, everyone. I'm going to walk you through the financial details behind a great quarter for Angel. 2025 Q4 revenue was $110 million, up 254% from $31 million in Q4 of 2024. For the full year, we delivered almost $322 million in total revenue. That's up 233% from $97 million in the prior year. As mentioned, our Guild continues to grow and as of today, has eclipsed 2.2 million members. Now if you do the simple math, as Neal stated, take members times an average revenue per month of $13.67 for 12 months, that represents $360 million in annual recurring revenue. Guild revenue as a share of total revenue was 62.9% in Q4. That's up from 46.3% in Q4 of 2024, and this is by design and will continue to increase through the years ahead. Accordingly, Guild membership revenue was the largest driver, contributing $69 million year-over-year in the quarter. Theatrical contributed $31 million powered almost entirely by the film DAVID.

The remaining growth came from digital purchases, rentals, physical product and licensing, each growing and each reinforcing the other. Our trailing 12-month average revenue per Guild member stands at $13.67. This figure will evolve slightly over time as we continue rolling out new features. For instance, the gifted membership feature Neal mentioned, could influence ARPM downward some while still contributing positively to our margins. Now as previously announced, we closed the quarter with 2 million Guild members, up from 1.6 million in Q3 and up from 550,000 at the end of 2024. Today, as I mentioned, we stand at 2.2 million Guild members. Net loss for Q4 2025 was $79 million compared to a net loss of $37 million in Q4 of 2024. Selling and marketing expense was $121 million compared to $38 million in 2024.

Now it's important that I speak to both of these numbers. Q4 featured 3 releases, emblematic of Angel's mission to amplify light. One of them in DAVID was an unexpected opportunity, an epic history-making film to have and to share, but it required a significant investment in Q4 promotion and advertising to bring the film to screens. And given its late release date, December 19, only 11 days of revenue were recognized during the quarter for that film. However, the bulk of the advertising spend was deployed in 2025. Now the returns on this marketing spend and investment, things like international distribution, premium video on-demand and the real prize of Guild membership growth will materialize throughout 2026. Unit economics with our Guild continue to improve as well. We are attracting Guild members more efficiently than ever. Marketing spend remains a growth driver. However, the cost to acquire each new member is improving, and that improvement is flowing directly to the bottom line.

And we expect this to translate into an improved adjusted EBITDA loss in 2026 of no greater than $25 million for the year, representing meaningful progress relative to 2025. Our gross margin percentage was at 60% and G&A expenses grew at only 25% year-over-year compared to our revenue growth of 233% year-over-year. Now Angel ended Q4 with $44 million in cash and cash equivalents compared to $7 million in 2024 at the year-end. Now let me say how pleased we are with the team's execution and the performance of the films and television series that are now part of Angel. We will continue to provide in 2026 and beyond transparency through our quarterly updates, and we will look forward to sharing more as the year develops. Thank you. And with that, I'll turn it back to the operator to open the line for questions.

[Operator Instructions] And your first question comes from Eric Wold with Texas Capital.

So a couple of questions. I guess, first off, Scott, it sounds like, obviously, on the adjusted EBITDA guidance of being no greater than $25 million loss. It clearly doesn't sound like you want to slow down on subscriber growth, but that growth is coming a lot more efficiently. Maybe talk a little bit about what is driving that efficiency. What are you seeing? Is it better targeting, improved choice of where you advertise, stronger retention? I guess, maybe all of the above? And kind of what's driving that more -- that better efficiency? And I have a follow-up as well.

It's good to hear from you. I think the important thing to understand is, look, we've talked a little bit about the flywheel in prior calls and in different meetings as we talk about the business. And what we're seeing is with this amazing slate of films that we have out there and series that we're bringing to the platform, we're seeing better and better retention. We're seeing better content, which leads to more customers coming onboard. It means that as those -- as more customers come onboard, that creates greater royalties for the filmmakers. As we get bigger and larger royalty pool available for the filmmakers, we'll get better filmmakers and better content.

And that just grows and grows and sort of is that flywheel effect. We're seeing that happen. We're seeing the growth of Guild. We added 400,000 members in Q4 of this year. That was a 25% increase. That increase provided much greater opportunity for us to be able to acquire films and series through the royalty pool. And that flywheel, of course, sort of represents itself in terms of the customer offering with a greater customer offering, we're able to look at the retention numbers will be coming -- are coming down -- or excuse me, the opposite. The retention numbers are going up, which then gives us a better ability to invest in acquisition. You don't look at CAC, just the expense piece of the ROI. You have to consider in terms of the CLV, the customer lifetime value.

So as that customer lifetime value grows with greater retention, it gives us the ability to invest more efficiently in acquisition. And these great films in and of themselves help with the conversion numbers. So as conversion goes up, we're able to, again, acquire more efficiently, more cash effectively to bring those customers onboard and grow the company. As you've seen, we're at 2.2 million members as of right now. We're not backing off on growth in any way, shape or form. This is a growth company, and there's no trade-off to become more profitable. This is -- as we've talked through in the past, this is sort of an artifact of what happens as you gain a great membership base that wants to be a part of the Guild and continues to enjoy the films and series that we're bringing.

No, that's perfect. I guess the follow-up would be, I guess, on the content side, I guess, in the past, you've kind of talked about theatrical content as being really a driver of subscriber growth. And clearly, that was the case with DAVID in the fourth quarter and first quarter. I guess as that -- the Angel Guild becomes increasingly self-sufficient going forward and getting closer to kind of driving profitability on its own, is there a point at which theatrical releases will increase and themselves to be more of a profit driver than more of a driver of marketing towards -- I know they kind of work hand in hand, but would you think of the theatrical side as being more of a -- I don't say stand-alone, but more of a stand-alone profit center, so to speak?

That's a great question, Eric. So we think of theatrical as lead generation and as community building. So it's going to be important in this era. As you know, Gen Z is the largest demographic when it comes to attending theaters. They're also -- they grew up on devices. And they -- it's really important to them for -- to have these experiences in person as a community. And they grew 25% in their attendance to theaters over the last year from 4.9 to 6.1, I believe, and visits per year in theaters. So that's really important. People want to experience things together. And this is particularly important for the Guild. The Guild wants to go and see their work have an impact on the rest of the culture and society.

And they might want to bump into Guild members while they're there in the theaters laughing together, watching Solo Mio. And so this theatrical experience is really, really important for the community side of Angel. But it's also important for the filmmakers. Filmmakers feel like the pinnacle of any filmmaking or storytelling career is to be on the silver screen. And it's one of the key reasons that Kevin James came to Angel is because he wanted Solo Mio. He knew that, that would be experienced better in person. And sure enough, true to form, it was. When I attended, like people were laughing in person, clapping, and it was really, really fun to experience that. We see that as so beneficial to the growth of the Guild and to getting filmmakers excited about coming to Angel that it's critical to the growth of the Guild.

But it's not important for that division to be a profitable business for us. We see those as marketing events. We see those as breakeven events. That's our strategy is to keep them as close to breakeven as possible. And then once in a while, you'll have a breakout that will generate profitability, but that's going to be the exception, not the rule, and it's not part of the strategy. The strategy is to turn those events, whether they are small releases like I Was a Stranger or midsized releases like Solo Mio or large releases like DAVID, every single one of those is going to be measured by new filmmakers it brings in and how well it grows the Guild. That's the way that we track the business. That's the way that we measure the success of theatrical, and that's the way we'll continue to do so.

Your next question comes from Ryan Meyers with Lake Street Capital.

First one for me. If we think about the selling and marketing that you reported in the fourth quarter, can you give us how much of that actually came from the DAVID marketing spend? And then how we should think about that in 2026 as you're targeting that adjusted EBITDA for the full year?

Yes, that's a great question, and I'm glad you asked it. So we -- fortunately, we break out now our marketing Guild line. And then every -- all the rest of the marketing for the other verticals is another bucket in our reports. So that gets you pretty close. So we haven't published that specific number, but it gets you pretty close to where you should be thinking about it. The very powerful thing about selling and marketing expenses in Q4 is the move that we made, Ryan. And so if you follow the history, I think we signed and resolved the litigation item on DAVID October, the beginning of October. And then we launched December 19. So it was like 80 days roughly. It was a bold move for us to pull that off in fourth quarter to acquire that film, acquire all the rights launch it in about 80 days, but it is so exciting and the reason that we have so many great results already so far this year is because we made that decision.

And DAVID is going to give us the opportunity from a derivative standpoint for additional series content, a Broadway musical and video games among other things. But the most important thing about DAVID is that we have the highest Guild-rated title in our history, the highest Rotten Tomatoes audience score of last year like for the entire industry or at least tied with it. And this -- and then it's an animated feature that's 5 plus as rated by the Guild. This is title, we haven't even begin to see where this title is going to take the Guild growth and attract and bring in families into the platform and additional titles along these lines. So it's roughly broken out for you. At least the Guild is very clear for you, and DAVID was a big chunk of the rest of it. And it was an important move. It was a bold move, and it's going to be paying dividends throughout 2026 and beyond.

Okay. Got it. And then just wondering if you can comment now that the Guild has grown the way that it has over the past 12 months or so. Just maybe some early signs of what you're seeing in terms of customer churn there? Maybe how long a lot of the Guild members are sticking with the platform? Just any sort of color and visibility into that would be helpful.

Great. Great question, Ryan. So we don't publish our churn numbers, but I will say that with the growth of the library, we're seeing improvements in our retention. And we -- and it's also giving us more breadth in audience growth, more diversity in audience growth, more scale, which is why we've broken into numbers way beyond what we had originally projected for 2025. And so far, we've already added 10% to the Guild in 2026. So we're seeing improvements on that front. We're actually seeing improvements this quarter, and the report for this quarter will come up on us quickly in terms of marketing efficiency. But it's really important that the reason that we are bullish about both growth and our path to profitability is because these numbers are turning out better than expected and they're improving.

Could I add a point to that? I think it's really important. If you -- if you had the opportunity to meet our acquisition team, the team that acquires content for us, they have found -- one of my favorite meetings of the week is to sit down with the acquisition team because it's amazing to watch the innovation that's occurring, whether it's utilizing AI or just their smarts and their ability to find better ways and they're constantly improving every day, they wake up as the score is 0-0, and they have to win that day. And it's fun to watch. These people are just doing amazing things in terms of their abilities and their capability and what it's bringing to the team. We're adding great content. We're doing great things, but it's really the people behind it that are driving all of that activity and the results, which so far have been -- they've been great, and we're excited about it. And we're even more excited as what's coming because it just -- it's not a -- it's not a linear function. We're seeing geometric sort of progression improvements almost in every area of the business.

Your next question comes from Jason Helfstein with Oppenheimer & Company.

So I have 2 questions. So first, yes, you gave us the breakdown of sales and marketing in the K, so we can kind of get a sense of basically like the variable contribution profit or loss between the Guild and theatrical. I guess as you're thinking with the build to the or the EBITDA guide for 2026, i.e., the better than '25 loss, I mean, how -- obviously, you're not going to give specifics, but does one line versus the other have a disproportionate impact? So if we're thinking about like the unit economic improvement at the Guild versus, let's say, theatrical, is one of those disproportionately moving that kind of EBITDA loss improvement? Or should we think about it even? Or any other color, I guess, as you're thinking about like efficiency of adding Guild members for '26?

Yes, I can address part of that for sure. I think we've talked about it in some -- to some degree in regards to the flywheel and how we are funding investments and unit economic benefit, both in the -- well, particularly in the Guild, and that's why the Guild continues to grow so fast. And at the same time, we're able to look at our guidance in terms of the EBITDA loss that we reflected upon. I think we will continue to see that. It's mostly -- it's happening on both sides as well. We're getting better about understanding our customer in the theatrical. I think to date, we've done 15. How many theatricals have we done?

I think we're over 17 now.

17 now, all right, because all this years, 17. And it's a learning process as you do each one, and we're getting better at them, and it varies. Every theatrical release is a little bit different. But the real sort of changes that we're seeing in terms of the guidance or the profitability of the company or moving towards profitability. The majority of that is coming from seeing, number one, the size of the Guild. It's just spinning off more and more resource that we can then use for acquisition, et cetera. And then number two is that the team has just found some -- the usage of this content that we have, these great films that we're bringing in, the retention numbers that would improve through the series, et cetera, that we've got continues to see it. So that's really driving what's behind a lot of this.

If I could add, Scott, Jason, thanks for your question. We also we -- at the scale of a release like DAVID, we got some key learnings through that process that we haven't been able to experience before that are very exciting around awareness and conversion marketing and that mix and the strategy in which it's rolled out. And it's applicable to the entire business. So we've already taken some of those principles, and we've applied them to the Guild acquisition strategy. And so some of our key efficiencies that we're going to experience in 2026 are due to the learnings and the scale of the DAVID release.

And then a follow-up question. So I guess, post the Warner Bros. Paramount acquisition, they're going to be -- meaning the Paramount is going to be looking for a lot of cost synergies. I assume that's going to mean probably a lot of unhappy talent and how you think about that potentially opens up more doors for you to work with more talent? And I guess, if you had many more doors open of talent to work with, do you feel like you have enough capital to support those projects? Or are you thinking about potentially how you work on bringing more outside capital to support more creative projects, if that was an opportunity?

I love that question. So we just feel like that lots of stars are aligning for Angel in terms of what's going on in technology, what's going on in society culturally. We are -- Angel is a -- has managed to become a uniting force in the world because we're values driven. And for example, there's -- we got some kind words and Amy Redford, Robert Redford's daughter was in the office yesterday presenting and thanking the company for providing such an innovative path to market when Hollywood is facing so many problems right now. And so between Amy Redford and Ben Kingsley and Mary-Louise Parker and Andy Serkis and all the talent that are beginning to come and work with Angel, we just feel like that we have a very big tent and a lot of opportunities as long as the filmmaker partners are willing to serve an audience and serve an audience first, and that's what they need to do. And the people who are coming to Angel are excited about that.

And we're pleased in the way that all of that has turned out because we've started licensing some great titles from Samuel Goldwyn and other names are slipping me. But if you've been in the Guild, you've also seen titles coming through from Lionsgate and there are other titles that are coming through the Guild right now where larger studios are now seeing the advantage and the benefit and the economic power of the Guild. And so we have hopes that some of those titles could one day be on Angel as long as they amplify light. And as our library grows and becomes a beloved, trusted library that our ability to attract filmmakers will improve and then also our ability, like Scott said about the flywheel, our ability to attract broader and broader audiences to the guild will improve as well. So we -- all positive for us, the way that, that's going down, there's a positive side that there might be licensing opportunities there. But there's also the side where the old model is breaking down and people are trying to figure things out.

And it almost feels like that with the AI innovations that are happening that investors are sensing that there's something going on. And it's like if you imagine a wave or the tide that the water is all going out and funding around film production is drying up right now because everyone senses that something is a foot where things are going to actually change dramatically. Now we believe at Angel that AI can be a support to film production. It's going to drop the cost of film production. But there will always be this human element, the element of soul, where people can recognize when there's soul behind the story, behind the actor, behind the script, they can recognize that it's another person, and they sense and fill that.

But what we think is going to happen is that this water is going to recede and all this investment is going to recede. And then somebody in the next 12 months is going to release a film that looks like it's $150 million production, and they're going to do it with a very small team, maybe in a basement and then that title is going to rock the world. And then as soon as the path to doing like soul-filled titles that are also assisted like bring down the VFX production costs and all the other production costs of the titles, then there will be a tsunami of investment in smaller, tighter, more focused storytelling. And then the 1,000 independent films that are produced every year are going to turn into 3,000, 5,000, 10,000. We just have no idea where it's going to grow, but there's a tsunami of opportunity that's coming.

And what Angel needs to do as this investment has receded is take advantage of the opportunities in the titles and that have been coming to us, grow them as far as possible and build our community to the point that we will be the best positioned as a community to build an amazing library and sift through all of that -- all these titles that will be coming and the new investment that will be coming once people have figured it out. And we just think we're so well positioned to do so, and we're embracing these AI tools that these AI companies are losing billions of dollars, and we just feel like AI is on sale. We need to just get as much of this -- of much gains and leapfrog what is possible with the Angel Guild during this window. And then the funding is going to come. As soon as people can see clearly, how do I make sure that my invested dollars in storytelling are used well. And that's coming, and we're excited about it, and it's coming soon.

Your next question comes from Thomas Forte with Maxim Group.

So first off, Neal and Scott, congratulations on an excellent fourth quarter and full year, and congrats on DAVID, Solo Mio. One question and one follow-up. So I think there's a misperception in the marketplace that your films are only religious-based. I've watched your whole theatrical release library. And while some of the content heavily focused on religion, such as DAVID, His Only Son and The King of Kings or has strong religious ties such as Bonhoeffer, Cabrini and Sound of Hope, it's clear to me your efforts to amplify light go beyond religion as illustrated by a growing number of titles, including the Sketch, Sound of Freedom, Solo Mio and the upcoming Animal Farm. So I'd appreciate your thoughts if you believe consumers, investors and content creators are starting to realize that your excellent content goes beyond religious theme work and what, if any, are the implications of that?

Well, Tom, first off, -- you watched our entire library. That's amazing. So for you to pick up on that, pick up on the fact that Angel is broad. It is very broad and values driven is a broad idea the way that you have, very impressed that you've done so. So we -- and it is what you're seeing is happening. You'll see a release right now, Tom, on the Amy Redford project. And then, of course, we've got Animal Farm with Andy Serkis and Seth Rogen and an incredible cast and the guild found amplifies light. And this is just represent -- in fact, if you look at this year, we have -- I was a stranger, was not necessarily faith. It was values.

Solo Mio, it was so fun. It was values-driven romantic comedy. Animal Farm, values-driven. Young Washington, it's a war epic and historical project for the 250th anniversary of the United States of America. And Zero A.D., it's a thriller, like -- but it is related to a religious story. So if you look at just the slate so far this year, and there's more coming at CinemaCon, 4 of the 5 announced titles are values-driven and ones faith, but it's a broad title and that it's a thriller and the story is told in a way that it can reach all kinds of audiences. So I'm glad you picked up on it. I think that, that is accelerating just by virtue of like Animal Farm is a great example. Amy Redford announcement is a great example. And the audience is appreciated as well.

If there's anything that we hear consistently from Guild members and then other people in the audience is that what Angel knows is how to tell a story in a way -- and when they say that, they're actually meaning the Guild is -- they believe that we're making them. But in reality, Angel doesn't make stuff. We just build a community and tool so that the Guild can select stuff that's the best. But people recognize the excellence of what's coming through Angel and how good the storytelling and that they generally speaking, come away from an Angel project thoughtful wanting to do better, wanting to change their lives for the better or feeling uplifted. And that's a core brand element that's just building in power momentum as we go. So glad you picked up on that, Tom.

Great. So Neal, for my follow-up, can you talk about your curation process for theatrical releases? For example, your recent release, I Was a Stranger was an excellent movie, had high scores on both the Rotten Tomatoes, Tomato Meter and Popcorn Meter, but it had a very modest box office performance. Beyond the guild voting for a title, how do you determine which ones are released in theaters?

Great question. So in fact, we've had a number of titles that have been very highly rated in the mid-90s that we haven't taken to theaters and then others like Animal Farm that we decided to take the theaters has a lower Guild score, very thoughtful cautionary tail movie. And -- but what's the difference between them? Well, one is more suited to a streaming release and the other is more suited to theatrical release. People when they go to theaters, they want to experience stuff that feels cinematic. It needs to feel like an event. It needs to be an experience.

And because buying a ticket even the largest audience right now, like the Gen Z population, the largest theater going audience, they were only able to buy a ticket 6x last year. And so that's -- it's an event to go to the theater, and it's an exciting event. And so we need to pick the films that fit the event level status, the cinematic level status that they fit a genre that makes sense there. And we're learning as we go. There's no question, I Was a stranger, delivered on the cinematic experience. And that title, we -- it did like $2 million in the box office. $2.5 million in the box office.

And domestic.

Yes, very timely title and beloved title. -- like we had so many people coming and saying that's the best Angel film that they've ever seen. And it -- but for us, the success is that we rightsized the advertising and marketing of that release. And then we take advantage of that title to attract more people to the Angel Guild like success, success on I was a stranger front in that sense. We rightsized the marketing budget, and then we're now taking advantage of that title as we grow and as that message is so relevant. So -- but the same thing with Solo Mio, which did over $25 million in the box office.

But again, we rightsized the marketing spend and Solo Mio just came to the Guild this week. So those numbers are just barely starting. And so that's the way we think about theatrical. We want to provide a cinematic experience every time. We want to provide an opportunity for our filmmakers to aspire and have the chance to do a theatrical release. We want to make sure that the exhibitors that they know that when Angel does a release that we're going to fill the seats in the opening weekend. And that's possible because of the Guild. And so that's the way we pick it. That's the way we make sure that we're successful and we'll continue to do so.

Your next question comes from Eric Handler with ROTH MKM.

With regards to your guidance, I wonder if you're willing to give some guide rails or some type of comfort range that you have with regards to Guild membership growth or revenue in order to achieve that EBITDA loss of less than $25 million. There's a lot of ways to get there. So hoping you might be able to at least fill in some of the blanks there.

Yes, sure. So Eric, I'm glad you asked that question. And Scott mentioned the flywheel earlier in the call. And as we're getting to the scale that we are, it's providing the chance to become more profitable without sacrificing growth. And I think you're going to see that. I mean, we're very bullish, very bullish about our ability to go after our total addressable market, which is 35x where we are today in the U.S. And then it's growing over 20% a year globally. And for us, it's really important that the moment we've become a profitable company, that's when we're going to start rolling out the -- I mean, that's currently what our plan is to start rolling out the Guild -- like Guild push for other countries and territories and languages.

And so our confidence, I think -- the good news is that we have a report that's coming up very, very soon, and you'll be able to see. So our confidence is high in our ability to deliver on what we've -- on that guidance and without sacrificing any growth. So 2026 is going to be a big year for us, Eric, because so many things are coming together in the way that our community works and then the way that technology is enabling a team of 300 people to do what we're going to pull off this year. So looking forward to reporting on it next quarter and the quarter after that, but we're very comfortable with this guidance.

Eric, it's interesting, and I realize it feels a little bit like a seed change in the terms of -- as you look at 2025 versus 2026, and it is from a numbers perspective. The one thing that hasn't changed is that we're a growth company, and that's where our -- the majority of our investment still goes. That's the majority of what we're still trying to do. We've improved a lot about the company, but part of it is just we're bigger this year. If you look at so far, we were at $2 million at the end of the year. A couple of months into Q1, we're at $2.2 million. We're not pulling back at all in any shape in terms of our growth expectations. We hope to delight all the analysts in the market with our growth numbers at the end of the year. I don't know if that's sort of the range you're looking for, but I would expect to be delighted if I was in the world in terms of how we're going to grow the company. But there's no moment where we sit in the room and say, "Hey, you know what, we really need to slow this thing down." That moment hasn't occurred yet.

Okay. That's helpful. And then as a follow-up, I know last year, you started an advertising tier for Guild membership. It was something -- I know the advertising right now is still very much Angel promotions. But can you talk about, is this something that you expect to use as a lever in 2026?

Eric, thanks for asking about that. So I think you're referring to the basic with ads tier and then the basic tier and then we have the premium tier and the basic with ads tier. And then we actually have a free that we don't focus on. We actually have a free account that also has ads where we have a good size of titles that are available on the free account. This is a fledgling technology and project. It's very much in the skunk work stage. So we don't think about -- so we think about it as a potential for a big breakthrough in 2026, but we haven't built our plans on that piece at all. So all the plans and our guidance on earnings and our confidence about our ability to grow are within what we've built and what we see today. And then that has some potential upside for us, but it's very much in a fledgling stage. And we'll keep you updated on it in the future as it grows. But the reason we're excited about that project is because it opens up the door to like grow the free tier a lot more once we crack that nut. But yes, I wouldn't think about it for 2026 models, if I was in your shoes.

Your next question comes from Drew Crum with B. Riley Securities.

I wanted to ask about the content pipeline. Can you address the source of the step-up in your library for 2026? Does it contemplate any acquisitions? Should we expect a commensurate level of investment in content? And given the commercial success you've seen with DAVID and the fact that you now control the IP, can you share what your plans are for that franchise going forward?

Drew, welcome to the call. We're glad to have you. I think this is your first time. So thank you for your question. So first, in terms of the content library and the source of the content library, it has definitely helped us that we have partners with large libraries that are coming to Angel. And so Samuel Goldwyn, blue sky, what's that?

Lionsgate.

Lionsgate. There will be more announcements about that in the future, we believe. And those libraries allow us to step up the level of titles that are coming into the ecosystem. We also have partners globally that have begun catching on to what Angel is doing. And so the source -- if I can just turn the question to common feedback that we get, every -- we pay out royalties every quarter. And as you can see on angel.com/filmmakers, the total filmmaker revenue share today is like $228 million, and it's just growing as the Guild is growing exponentially, this number just keeps growing. And every time somebody gets the checks, they're surprised by how -- well, we get calls like somebody called us and said, I think you added a 0 to my wire this quarter. When has that ever happened with a filmmaker in recent years. So -- but we had not made a mistake, and we'd actually paid exactly what they were meant to be paid.

But because all these titles have to pass the Guild first, and it's such a high bar to pass the Guild that the ones that make it into that revenue stream that are sharing these royalties that will now be coming from -- we're at a $360 million run rate and the royalty pool grows as our run rate grows, they get to share in that take, and it's a very lucrative process or lucrative event for them to actually get a title on to Angel. So that news just spreads like wildfire and people are coming to us and they're bending over backwards and trying to figure out how do I get my titles on to the Angel Guild and into this library because it is so lucrative. So we don't know all the places they're going to come. We're specifically working on some key partners, traditional studios, long-time players that are -- that have big libraries that are helping us get to those kind of numbers. And -- but the important thing will be for us is to maintain the quality -- maintain or exceed the quality level so that we can continue this flywheel process.

Yes. I think you think of it a little bit like gravity. I mean as Angel gets bigger, it's going to create more inertia for people to bring their content to us, their films and series. And as we talked before, with the way technology is moving, there is going to be more production, and we're going to see that. And as we get bigger, it will keep drawing that in. And it's just going to be a very -- it's going to be a very, very interesting year for us in 2026 and for the whole sector, if you will.

Got it. Okay. And then maybe a follow-up. You mentioned the gifted membership initiative. Is there anything else you're planning to do with the Angel Guild pricing or promotions that would move revenue per member in 2026? Or is that trailing 12-month figure of $13.70-ish a good run rate for this year?

Yes. So that's -- I'm glad you asked that question because we had a breakthrough last year where we introduced the basic account at $18. And that price point with the premium at $20 increased the uptick of premium, and it raised when we reported us up to $13.70. And then we had the Gift the Guild that adds to our -- like our margins in a very strategic way and then also grows the size of the Guild. But that basic with ads account, we provide for $6 when it's paid for by the account holder for somebody else. And that -- so we've got -- we have 2 examples of -- one example of it increasing, one example of it lowering. And so this could move either direction. And so I think that sticking with where your models are is -- or in that vicinity is a safe place to go. And that's the way that we think about the business is that's going to be moving up and down as we play with these levers.

Yes. I would add to that, just consider this, we grew the Guild by 25% in Q4. When you have that many new members coming on, the mix of premiums versus the basic tier versus the basic with ads tier. Those things -- it's hard for us to predict exactly which ones are going to move -- which way the customers are going to come in. And especially when we're at 200 million members, it will have a very different sort of response to the acquisition every month. But right now, we're growing so fast as a percent of our total that, that number will move a little bit.

It may go up slightly, will go down slightly. As far as key initiatives, Gift the Guild will have an effect on it. It will be interesting to watch. Having the basic tier without ads will change things this year. We don't know exactly by how much, the other direction. So it's a number that's going to vary some. I don't expect anything major. And at this point in time, as we look at the forecast and we talk about things, it is not contemplating any sort of price changes within the tiers in terms of the projections for the rest of the year.

And our last question for today comes from Omar Mejias with Wells Fargo.

Neal, I appreciate your comments on AI as this certainly remains at the top of investor minds. And we've seen other streamers and studios starting to lean into AI either through M&A or in-house efforts. You talked about operational improvements and efficiencies, but could you give some examples of how some of these AI creation tools could generate more content for Guild members at a faster pace while at the same time, sort of reducing content spend on a per title basis?

Yes. So Omar, thank you for your question. Glad to have you on. So as far as -- so let me just first at the outset, say, Angel is a community with a purpose. That's what our company is, and we build technology to support that community and enhance the relationships between the filmmakers and the Guild members and the Guild members with each other and within their own families. Like that's -- we're doing that, and we're telling stories that amplify light, and we're going to scale that. And we're going to accelerate the rate at which we scale that, and we're going to strengthen the relationships between those people because of the gains that we can get this year and beyond using AI.

We're not turning into an AI company. There are some great AI companies out there who -- Anthropic and OpenAI and Groq and others that are spending billions on this technology, and we just see this technology as like it's like magic that we can get like gains from our team that it's just absolutely incredible what we're able to pull off with a team of 300 people, and it's going to be really exciting to see how far we can scale with our existing team. Now that's the operational side. And you're asking specifically about the production side, but I think AI is a hot thing. We're not saying we're going to become an AI company. But we are going to use AI to -- and our proprietary data to give us an edge in the marketplace and to serve this Guild community.

Now our role isn't to actually create content. We don't produce content in Angel. And there's innovation happening all over the world. Many people have seen the video with the fake -- the Seedance video with the fake Brad Pitt and Tom Cruise fighting. There's a great clip online of a mother and a daughter who are acting out of scene on their kitchen -- like on their coffee table and then it turns into a raft on an ocean and they're going through and they're essentially taking the outfits and the VFX and the ocean and AI is providing all that, but the 2 people are actually delivering the performance.

So when we talk about the tsunami of content that's coming, we think that these technologies are going to -- they're going to dramatically drop the cost of like customs sets, special effects, all the stuff that used to be the barrier to entry for this industry, those things are all going like this in cost. And so as a result, if it's that inexpensive, then you're going to be seeing savants and people rise up out of small towns out of the middle of nowhere, countries where you wouldn't even ever imagine where people will create stuff that will blow the world's mind. And we just think that we're about to see a creative renaissance because of this technology. A lot of people are worried about it, but we're -- you can -- we were talking to Amy Redford yesterday, and she was telling our company that in their stories, the hero is curiosity and the villan is fear. And the fear, we feel like is totally unjustified.

We're cheering on the investment into AI. We're taking advantage of it, and we're encouraging our filmmakers to do it. We actually started a program here at Angel where like our animated partners, they can use our technology to help them iterate on their animated projects using like artificial intelligence. We're trying to facilitate those conversations and we're adopting this technology rapidly all the way like everywhere through our company. What we envision is that Angel will be a team of 300 teams, not 300 people. And we've got to facilitate this tsunami of content that's going to be coming to the market as people figure out how to tell these stories. And we believe it's happening in the next 12 months that full length feature films that are crafted by individuals, storytellers that are very talented that they'll be able to utilize those tools. And once that happens, it's just going to be -- it's going to be exciting what's coming.

That's very helpful. And then maybe a quick one for me on -- I think you guys talked about some innovative acquisition strategies driving membership growth. Can you elaborate on where are some of these strategies and the runway ahead you have?

Are you referring to like title acquisition strategies?

Guild membership growth.

Good. Good, good. So membership growth, yes. So -- so now you'll see, as you look through our history, as we have grown the library that it's really critical to the growth of the Guild like the growth of the library and the growth of the Guild are interdependent. And so think about every single title as a new market. It's a brand-new market. So I Was a stranger, which is about refugees who escaped from Syria and then immigrated to the U.S. It speaks to a new market and it has actors in it that are -- some of -- most of them -- there's a couple of recognizable people in there, but every project will have a recognizable actor and that it will serve a topic that will serve an audience. So now we have an opportunity to go after a market because of a new title, and that's what we do.

And now we have tools like AI tools that can help us -- you used to have to hire agencies to go and buy ad campaigns and do all the SEO work, and now you can just unleash a team of agents and analyze the data around the titles and launch those campaigns way more efficiently and then go and build an audience around a specific title. So we add a new title. We use the technology that's available to us to go and spread that title and reach its audience as fast and as efficiently as we can. And then that title adds to the Guild to the breadth and the diversity of the Guild. And then the Guild selects the next title, the future title, which brings in a new actor, a new genre, a new director that also enhances our ability to do that. And just think about us like hyper-optimizing on every step of that flywheel process using these tools in order to grow the Guild. Is that helpful?

And that is our last question for today. So I will now turn it over to Neal for closing remarks.

Well, thank you all for your thoughtful questions. And those of you who joined us for the first time this quarter, we appreciate you being here this morning. What you're seeing in all of these numbers isn't just growth, it's validation, validation that audiences have been waiting for stories that reflect their values and validation that community-powered stories that amplify light can compete at the highest levels of the entertainment industry. We're not a legacy studio trying to adapt. We're something brand new. The Guild, which is currently at 2.2 million people who vote with their wallets and their voices, is our competitive moat that no algorithm or acquisition can replicate. We have the slate, the technology, the team and the community to make 2026 a defining year, and we are laser-focused on the path to profitability and growth. And we're doing it without compromising the mission that brought every one of us to the table. Thank you again for your time, your trust and your belief in what we're building, and we'll see you next quarter.

Good afternoon. At this time, I'd like to welcome everyone to Angel's Q3 2025 Earnings Call [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Jeanette Masters, Investor Relations. You may begin your conference.

Hello, everyone, and welcome to Angel's Third Quarter 2025 Earnings Call. Joining me are Angel's Co-Founder and CEO, Neal Harmon; and Angel's Chief Financial Officer, Scott Klossner. Our third quarter earnings press release is available on our Investor Relations website at angx.com, where we also encourage you to sign up for our e-mail alerts.

Neal and Scott will make about 30 minutes of opening remarks before we turn over the call to questions from our sell-side analysts as well as questions pre-submitted by our Guild members. Thank you all for joining us. Let me pass the call over to Neal.

Thank you, Jeanette, and good morning, everyone. It's an honor to speak with you today on our first earnings call as a publicly traded company. Scott and I are delighted that we're getting started with a great set of third quarter results, where our most important measure of success our Guild membership is 1.6 million, up more than 500% year-over-year and up 19% sequentially. Also, today, we're announcing acquisitions of the highest performing franchises on the Angel platform and a successful AI-driven discovery technology in the Angel app, which has positively impacted watch times by 12%.

These watch times are the most significant driver of Angel Guild retention, but more on all of this shortly. This moment marks the culmination of a journey years in the making, the successful completion of our listing resulting in Angel's debut on the New York Stock Exchange. It reflects the strength of this community, our mission to tell values-driven stories and the power of our unique audience-first model.

As Jeanette mentioned, I'm joined today by Scott Klossner, who brings a wealth of experience in his 35-year career as an executive across capital markets, M&A and financial leadership at multiple public companies. And he's been instrumental in preparing Angel for life as a public company. I'm grateful for his partnership and steady hand.

On behalf of our leadership team, I also wanted to express sincere gratitude to everyone who helped us get here, our Guild members, our early supporters, our investors and our entire team. Your hard work, faith and dedication have made today and every milestone possible, and this is just the beginning. About 2 months ago, the Angel team was welcomed by the New York Stock Exchange, marking the milestone of our public debut. It feels like the starting line.

Don't underestimate the importance of this milestone in our journey. It elevates the Angel brand, increasing our reach. It allows us to grow the Angel Guild more rapidly, our recurring revenue business. It supports engagement of the Angel Guild, which is our differentiating edge in the over $100 billion per year global TV and streaming market that is growing in excess of 20% annually.

Angel was founded on a fundamental belief that telling values-driven stories will inspire families and communities around the world. Our company is a response to an increasingly out-of-touch Hollywood studio model. At Angel, 1.6 million members of the Angel Guild, not remote Hollywood gatekeepers, decide what films and television series get produced and distributed in theaters and on the Angel platform, which inspires mainstream audiences.

Our Guild members put their money where their eyes, heart and values are. The Angel Guild details the kind of programming they crave and acts as virtual co-producers on every project. This fast-growing community is at the heart of everything we do. As of the end of third quarter, our Guild is 1.6 million paying members and continues to grow at an exciting pace. But for those new to the Angel story, it's worth highlighting just how significant this growth has been because paid marketing for the Guild launched in the second quarter of 2023.

And by the end of 2024, membership had reached just shy of 550,000 and accounted for just over 1/3 of total revenue. Today, just 11 months later, members now contribute to 77% of our revenue, underscoring the power and the scalability of this community-driven model. The Angel Guild does 3 things that define our business model: boats to select films and TV series; second, rallies and theaters to support theatrical releases and spark cultural movements; and third, funds in part future films and TV shows through their monthly memberships.

Together, they are helping us reorient the Hollywood studio model to one that is audience-centric and mainstream. In our model, we don't guess what audience want to pay to see. They tell Angel and filmmakers what they want to see and back it up with their dollars. Evan Shapiro from the Media Odyssey podcast believes that this is the future of Hollywood and also that Angel is pioneering it.

In less than 2 years, we found 1.6 million people who agree with us, and we believe that this represents only a fraction of the total audience that can become part of our Angel Guild. I'll tell you what, we cannot wait to welcome all of you. Our approach is confirmed by independent data. The average Rotten Tomatoes audience score for Angel theatrical releases is 93%, significantly above those of any major distributor or streaming platform globally.

Allowing audiences to decide which films and television series can come onto our platform is going to be massively disruptive. Every Guild member also makes a pledge, what we call the Pledge to Amplify Light, which says, when I vote, I pledge to help choose excellent entertainment that is true, honest, noble just, authentic, lovely or admirable. That pledge is more than words. It's our reason for being.

It's how a fast-growing global community aligns around a shared mission. It's what unites us. It's why we started this company. For shareholders, the Guild isn't just a curation machine, it's a recurring revenue engine. Membership fees provide consistent recurring income that helps fund new projects, support filmmakers and build long-term shareholder value. There is power behind a story that resonates. I've met countless billionaires who after decades of building businesses decide it's now time to make a movie.

But they understand that film is more than entertainment. It's culture, it's legacy. And this desire to leave a mark isn't unique to billionaires. It's universal. The Angel Guild makes that possible for regular people. We partner with those who share the same passion to create stories that inspire and endure and Guild members get to interact with filmmakers and they get to see films be produced and come to the silver screen.

And one of the most rewarding things for me to see is how fast the Angel brand has grown. I can wear an Angel T-shirt in an airport anywhere in the world, and someone will stop and thank us for what we are doing. That recognition isn't the result of traditional marketing spend. It's the result of a movement that aligns around values-driven family-friendly storytelling that's making our world a little bit better place.

This quarter was a foundational one. While it followed a naturally lower theatrical release period as the back-to-school season concluded, there was a strong demonstration of the stability and scalability of our recurring Guild revenue and the resilience of our community model. Revenue reflected the smaller slate of new releases, but the underlying metrics that matter most, engagement, retention and Guild membership continue to grow. That's the key story for investors.

Our business isn't solely defined by the timing of film releases or the seasonality of entertainment, but by the enduring relationships we facilitated by building this technology to connect audiences and filmmakers. Every new Guild member contributes to a growing base of high-margin recurring revenue that compounds over time. And as the Guild grows, their joint decisions become smarter, smarter at picking the winners for mainstream audiences. We call it audience intelligence. While Sound of Freedom showcased the potential of the model for scale, the Guild itself has now grown to more than twice the size of the revenue of our previously biggest hits. The Guild is an engaged, vibrant community that continues to expand and strengthen our long-term foundation.

Looking ahead, we have a strong theatrical lineup that we expect will meaningfully contribute to both top line growth and Guild expansion in the fourth quarter. Last month, we announced our first significant strategic development that reflects our commitment to long-term intellectual property ownership and brand-defining storytelling. This was the acquisition of the DAVID franchise in partnership with 2521 Entertainment.

DAVID is an epic animated film and TV series based on the timeless story of DAVID's journey from Humble Shepherd to King. It tests the limits of faith, courage and love, culminating in a battle for the soul of a Kingdom. It's Angel's most highly anticipated theatrical release, and it's the largest crowd-funded film in history. It's the kind of film that makes our work at Angel totally worth doing.

This animated epic features original music by acclaimed musicians, Phil Wickham, Miri Mesika and Lauren Daigle and is set to premiere in theaters on December 19, 2025, just in time for Christmas for all our families. I'm thrilled to share that DAVID has already earned nearly $3 million in theatrical presales in just 3 weeks, the highest in Angel's history, outpacing even King of Kings and Sound of Freedom.

Also, this is actually the highest ever reported for an animated theatrical musical in such a time frame this far out from the movie's release. And perhaps our greatest achievement, at least in our home, is giving my children to seeing something other than KPop Demon Hunters.

They've got DAVID now, the DAVID soundtrack playing on repeat, and it's been part of our strategic release to release all the songs for DAVID, which are available for streaming right now. As previously mentioned, this morning, we announced the definitive agreements to acquire our 3 highest-performing series on the Angel platform, Tuttle Twins, Homestead and The Wingfeather Saga. Homestead is a premium post apocalyptic thriller film and television series.

The film starring no McDonough and Season 1 of the series draw audiences into a fractured America struggling to survive after a nuclear blast delivering suspense with a deeply human story of faith, family and resilience. We are releasing additional episodes of Season 1 shortly and will soon begin production on Season 2.

Homestead differentiates itself with strong production value, high rewatchability and measurable pull to the Angel Guild for both acquisition and retention. It stands as the strongest member acquisition title in the Angel library. In fact, Homestead is growing faster than Season 1 of our previously highest performing series based on the new Testament. Earlier this month, Season 4 of the hit animated television series, Tuttle Twins premiered and my little boys made me very aware of it.

The series takes families on an adventure that teaches liberty and virtue through laughter and imagination. Tuttle Twins is the most watched TV series on Angel. And we're very excited. Season 3 of The Wingfeather Saga based on Andrew Peterson's best-selling fantasy series is also now streaming exclusively on Angel, and my boys have asked me to watch it tonight with them. It remains one of the most successful crowd-funded family animated series ever produced.

The important takeaway from the acquisitions I just touched on comes back to the Guild. Strategically, these 3 acquisitions give Angel intellectual property and highly successful franchises, compounding the long-term value of our library and increasing the retention numbers of the Guild. Whichever the genre, whether fiction or nonfiction film or television series, Angel delivers the values-driven entertainment that our Guild tells us they're looking for in theaters and on the Angel platform.

And in addition to DAVID, and these 3 other series, we have a diverse lineup of coming releases. I Was a Stranger is a powerful story of resilience and hope set against the backdrop of the Syrian Civil War. It has been featured in more than 50 film festivals worldwide and received the Amnesty International Film Award. It's a beautiful film and is set to debut in theaters on January 9, 2026.

Then on February 6, we plan to release Solo Mio, our first romantic comedy starring the incredibly talented Kevin James. We're also preparing to launch Season 18 of Dry Bar Comedy, our flagship funny for everyone franchise with more than 6 billion views, praised by Jay Leno and featuring specials such as Adam Carolla Comes Cleaner, Dry Bar Comedy has a library of 400 hours of family-friendly entertainment, much of which is available exclusively on Angel.

Wayfinders' highly successful pilot episode sparked tremendous excitement within the Angel Guild, and we're eagerly anticipating a Season 1 debut on the Angel app on December 16, 2025. The series exemplifies exceptional storytelling that found its home at Angel after creative differences with a major streamer, proof that great stories thrive where filmmakers are free to stay true to their original vision.

This momentum segues perfectly into how the Guild serves as the key driver of our recurring revenue stream while taking a moment to expand on additional revenue lines. We currently have 4 primary revenue streams, each one reinforcing the other. Angel Guild memberships, theatrical releases, licensing and other revenue. Angel Guild memberships are monthly and annual membership fees that provide a growing base of recurring revenue.

Both basic and premium tiers include voting rights and early access to releases with premium offering, complementary theatrical tickets and merchandise discount. We have recently introduced basic plus without ads. Second, theatrical releases bring revenue from releasing our original films through direct relationships with exhibitor partners. Every ticket sold generates a share of box office receipts with international distribution typically routed through local partners.

Theatrical's purpose at Angel is to give the Guild a moment to celebrate and to attract new filmmaker partners as theatrical releases help retention. Third, licensing our films and TV shows to major platforms like Amazon, Apple and Netflix. Longer term, we intend to extend those rights into -- we intend to extend our rights into derivative experiences such as video games, live productions and themed attractions. And fourth, other revenue is a small catch-all for merchandise and physical media sales in our direct-to-consumer online store as well as wholesale partnerships with retailers.

This diversified model reflects how the Angel Guild powers not only our creative pipeline, but also our economic engine. As our membership base grows, each of these categories benefits from higher engagement, cross-promotion and cross-pollination ultimately creating a reinforcing cycle of growth, loyalty and recurring revenue.

So while the timing of theatrical releases and other factors may create quarter-to-quarter variability, as I noted earlier, our long-term focus and strength is clear. Base hits and blockbusters both help Angel expand and strengthen the Angel Guild. Every investment we make in our technology is designed to deepen the relationship between artists and community. We're innovating ways for members to interact directly with filmmakers, vote on projects and participate in the success of stories they crave.

That connection will allow Angel to scale both sustainably and profitably in the years ahead. During third quarter, Angel expanded our library across key platforms, including Samsung, Amazon and Apple, which, by the way, reduced in-app purchase fees from 30% to 15%, saving over $3.5 million annually. Angel also strengthened partner relationships with Roku, LG and others with improved revenue terms and record TV performance. Approximately 30% of Guild membership sign-ups come from these channels.

On web and mobile, key optimizations boosted engagement and revenue redesigns to onboarding, sign-up flow and pricing increased Guild sign-ups by 9%, revenue by 6%. Mobile enhancements included over-the-air updates and flexible checkout options, and they continue to improve the overall experience. Our simplified submission process and automated upflows enabled a record 150 concurrent film submissions by filmmakers. New membership plans and parental controls expand options and personalized experiences for our audience.

These initiatives reinforce Angel's commitment to innovation and delivering exceptional experiences to viewers and filmmakers alike. Finally, and this is huge. Our teams are already seeing breakthroughs from adopting AI. We ran a sophisticated A/B test. Traditional discovery is the control, AI-driven discovery is the experiment.

The result, the AI version boosted average watch time for Guild members by a full 12% and remember, watch time is the most significant factor to increase retention. To summarize, Angel's value isn't just measured by quarterly box office results, but by the strength, growth and recurring nature of the Guild that powers them.

To our early supporters, team, filmmakers and the entire Guild, thank you for your courage, creativity, engagement and faith. You've proven that when people unite around a mission to tell values-driven stories, we can transform an industry. And maybe, just maybe, we can make the world a better place for our children. With that, I'll turn over the time to Scott to walk through our financial results in more detail..

Thanks, Neal. Good morning. It's a privilege to be here to walk you through the details behind what was really a historic quarter for Angel. As Neal outlined, our results this quarter highlight both the strength of our model and the scale of the community supporting it. It's important to understand how balancing rapid growth with responsible investment to position the company to take advantage of this enormous opportunity.

I believe the Q3 results reflect the success of our strategy. Our Q3 top line was $76.5 million in revenue, which is a 280% increase over 2024 when we did $20 million in the third quarter. For the first 9 months of 2025, revenue grew 223% to $211.6 million, up from $65.5 million last year. The Guild revenue accounted for 77% of total revenue in this quarter as compared to last year when it accounted for only 45%. Total Guild membership as of September 30 reached 1.6 million members. That's up from 1.3 million, a 19% increase in the second quarter and up over 500% year-over-year, contributing an additional $50 million in revenue from the Guild for the quarter over last year.

Trailing 12 months average revenue per Guild member, ARPM, per month is currently $13.70, and this is a new metric we are disclosing publicly. What's important to note in all these numbers is the foundation we are building. We're continuing to see our investment in member acquisition, delivering significant top line growth and momentum.

This level of growth we're seeing is the result of the value proposition to our members, leading to significant value creation for our shareholders. Cost of revenues was $34.3 million compared to $8.1 million in the same quarter last year. This is due to more memberships and the transaction fees related to that growth, along with the higher royalty payments to filmmakers as they benefit from their performance, which in turn fuels Guild growth.

A true financial meritocracy for our filmmakers is key to the Angel strategy. Selling and marketing expense was $64.7 million, up from $16.6 million in the same quarter last year. And as long as we can efficiently grow the Angel Guild, you'll continue to see this investment. Along with Guild investment, we had 2 theatrical releases during the period as well, contributing to the increase in selling and marketing expense.

General and administrative expenses were $10.1 million and research and development totaled $4.2 million in the quarter. We are seeing significant economies of scale as G&A expenses are relatively flat year-over-year to date. Now as a public company, we feel -- we will feel pressure to expand G&A, but we'll work to be efficient in our support of the company and its growth.

Our investment in growth of the Guild over 500% year-over-year led to a net loss of $38.6 million in the quarter or $0.25 per share compared to a net loss of $13.9 million or $0.10 per share in the same period last year. This includes expenses related to our merger and the process of trading on the New York Stock Exchange.

As to the balance sheet, Angel ended the quarter with $63.3 million in cash and cash equivalents compared with $7.2 million at the end of 2024. As to IP acquisitions, as we did with the DAVID film and the other franchises we are acquiring, we continue to remain opportunistic as amazing films and our television series come along that fulfill an economic and strategic benefit to Angel.

These are few in number compared to the Angel Guild library, but we believe have the potential to accelerate growth and provide enormous value to Angel and our members. We also continue to invest in technology to extend our reach, scale the business and strengthen the ecosystem. These are intentional and responsible investments carefully aligned with the mission of Angel to grow the Guild and deliver high-quality values-driven entertainment to the world.

Unlike traditional studios that rely on high-cost in-house content production, our audience-first approach, along with our distinctive filmmaker royalty partnership model allows us to scale efficiently by funding and distributing projects based on real audience demand and filmmakers believing in their fine product. This approach reduces execution risk and capital intensity.

Now just before our public listing, we also closed a $100 million credit facility with Trinity Capital, providing additional flexibility to fund continued growth of the Angel Guild. As of the quarter, we had drawn $40 million on that facility. And since 2021, we have been holding Bitcoin as part of our treasury strategy. That balance is reflected in the Q at $34.6 million. This equates to about 1.8 Bitcoin per million shares of Angel.

And to provide the company with greater flexibility and with Angel now shelf eligible, we have filed a shelf registration of $400 million and expect to file an at-the-market ATM offering shortly after the government reopens. We believe that having this in place is a matter of sound corporate governance and prudent capital planning, providing optionality as strategic opportunities arise.

And before I close, I'd like to address our approach to guidance. We're in a period of exceptionally high growth and with that comes a number of dynamic variables, including the timing of theatrical releases, Guild membership momentum and film and television-related investments that can shift from quarter-to-quarter. While things will change and evolve to provide guidance now would be premature given the pace and variability of our expansion.

Like entertainment platforms that have gone before us in their early years, our focus is on scaling efficiently before shifting toward formal targets. We will continue to provide transparency through our quarterly updates. And we're a fast-growing company prioritizing disciplined execution and sustainable growth.

In summary, the third quarter marked a historic period for Angel Studios, an exciting beginning to our journey as a public company. Our results demonstrate the power of the Angel Guild model, a recurring revenue engine fueled by a passionate global community.

We have millions more members to add to the Guild as we believe Angel curated films will serve the majority of families in America, seeking excellent value-driven stories to share with each other. We have a lot of work ahead to meet our goals. And as value-driven entertainment continues to expand globally, we're uniquely positioned to lead that movement. Thank you. And with that, I'll turn it back to the operator to open the line for further questions.

[Operator Instructions] Our first question is coming from Jason Helfstein from Oppenheimer.

Congratulations on your first earnings call and joining the public markets. So Neal, maybe just one for you and then a few financial questions for Scott, and then I'll get back in the queue. So help us to think about like, for example, like the DAVID franchise. I don't know if you're going to disclose how much that acquisition was. I assume you look at this as an incremental driver of subscriber acquisition. Maybe just talk through like how you think about the ROI of this type of franchise. And then I'll ask a few questions to Scott.

You bet. So the DAVID acquisition was $80 million, and it was done in conjunction with 2521 Entertainment, who's been a great long-term partner. And strategically, it was about the combination of a film and a series. And the -- this is the highest Guild-rated title in our history and the series, they're 5-minute shorts and have performed exceptionally well on our service.

And so when you look at -- when you actually see the DAVID movie, you'll find that the quality of this movie, it was produced by talent from Pixar, Disney, DreamWorks, the script was reviewed by the writer for the -- the head of story for some Pixar movies. Anyway, it's just phenomenal work. And as I've done early screenings, people are like, wow, they think it looks like a $200 million movie.

And so between the fact that it's the highest level of work that we've ever done and then we have the potential to turn it into a series and have all of the IP rights associated with derivative works and such, this is a long-term play and a real great opportunity for 2026 because we'll do the release of the film at the end of the year in fourth quarter, which is the second best quarter for theatrical releases.

And then it's the best quarter historically for streaming. And so we'll be able to take advantage of the Young DAVID series right here during the fourth quarter, and then we'll be able to take the momentum from the theatrical release and carry that as it goes on into the Guild and into other windows into our 2026 results. So very excited about that. There'll be more to come on that in our report next year.

That's great. That's actually a perfect segue. So Scott, I guess, I understand you're not giving guidance and understand the logic there. But just maybe help us think a little bit about seasonality for net adds between 3Q and 4Q. I mean just -- Neal just said how 4Q is typically a strong time for streaming, but just elaborate there. And then I'm going to do just then 2 more after that, and I'll get back in queue.

I'm sorry, Jason, could you repeat that again?.

Yes, yes.

But I'll repeat the question, Jason, so you can hear it while they turn it up. So he was asking about how many net membership adds we'll have in fourth quarter in terms of -- like how do we think about seasonality of the quarter and how it will affect net adds?

Yes. So generally, as Neal mentioned, fourth quarter is the strongest streaming month or quarter of the year, generally speaking. It's 4 and 2 are generally the 2 strongest. As we move towards the holiday season and as people start to come on and as we release more and more of the content that we have, obviously, we have the Big DAVID release, which we talked about, we anticipate that's a number that will grow as it goes into the fourth quarter.

It's an effective month for us. We measure everything in the way that we acquire acquisition, both. We're looking at what our costs are, how much we have to invest, what's our return on those assets on and on and on. And so we see -- as we're doing that and we're measuring, we will lean in as we're getting response from the customer base. But we would anticipate to see fourth quarter being a strong quarter for us for sure.

If I could I add something there, if you don't mind, Jason. The release lineup for streaming, we've got Wingfeather Saga that came out a couple of days ago, the first 2 episodes, Tuttle Twin Season 4, Homestead is coming out here in November. Wayfinders is coming out in December, Young-DAVID like the lineup for the titles that are hitting the platform in fourth quarter, they're our biggest IP, our biggest titles with brand-new content. And I think that, that bodes well for the net adds in the fourth quarter.

Yes. Great color. And then I just want to ask a bit about the content licensing revenue in the quarter. What were the dynamics that drove the sequential increase there? And maybe tie that back, I think the gross margin was like despite theatrical similar to 1Q, gross margins were below 1Q levels, and I think it ties back to content licensing.

So just talk about the dynamics that are impacting the sequential increase in content licensing revenue and like kind of like how that flows through and the swing factors around gross margins on a consolidated basis?

Yes. Generally speaking, the mix of theatrical and Guild as it's evolving over time, we're getting more and more Guild revenue as a percentage of our total revenue. Guild revenue includes things -- excuse me, Guild COGS includes things like transaction costs, the Guild tickets that we provide for our premium members and those things. So that the actual Guild gross margin is slightly -- is somewhat lower than theatrical.

In theatrical, some -- as we recognize revenue from theatrical, a lot of those costs have been taken out by the theater and then we get our cut from the theaters as those -- as that occurs. So if we have a huge release in the theater or multiple releases in the theater, you'll see gross margins going up somewhat.

And as the Guild grows and becomes a bigger and bigger piece of the big -- the whole pie, you'll see some variability in the gross margin that way. It's not -- the ARPM that we measure doesn't change dramatically from month to month. There can be some variability in it. But for the most part, the gross margin is more affected by mix of theatrical and gross margin than anything else really.

And if I could add, on content licensing, one of the big innovations that happened this year was we got direct relationships with a lot of distributors, Apple, Amazon, Fandango and others for premium video on demand. And that had a sizable impact on the content licensing revenue item.

Neal also mentioned -- I'm sorry.

Okay.

Go ahead. I was just going to say Neal mentioned in the call a little bit that we're actually, as we're gaining more and more volume in a lot of our activities with our vendors, there will also be some benefits to scale throughout the expense structure of the company over time. We talked about some of the Apple benefits that we've gotten from the deals we've been able to cut from them.

Your next question today is coming from Ryan Meyers from Lake Street Capital.

Congratulations on the first earnings call as a public company. First question for me. I appreciate the color that you guys gave us on average revenue per member. Just can you talk us through this? Maybe what you guys are targeting here? Is this kind of $13 to $14 a target range for you? Or is there opportunity for that to get higher?

Well, there's always opportunities in many ways. ARPM over the measurement that we're using is over a 12-month period. So you won't see high volatility from month-to-month or quarter-to-quarter in general. But the things that would affect that would be that -- which is the mix of premium to basic plus to basic with ads. As those things adjust over time, you'll see some movement in that.

We would like to -- and also the percentage of customers or members that are coming in on an annual basis because we discount -- there's a discount for annual memberships. So those things will move the number. It could -- as the volume grows and as the Guild grows over time, that mix will adjust and change. So we're not actually targeting a specific number.

We don't see a huge movement at the moment, but adding this third tier will be -- we're A/B testing this all the time. And so we have some idea what that will do, which will -- obviously, if you add a third tier at a higher amount, it would imply that there would be some upward movement in that number.

But again, it's one of those things like if ARPM is slightly dropping, but volume is increasing massively, at the end of the day, it's about that the ability to generate the revenue from the members. But it shouldn't move too hard. I think where it's currently at is it's a math problem driven by those factors that we just talked about mostly.

Okay. Got it. Makes sense. And then just thinking about marketing spend for the quarter, it came in at about $65 million. Any sort of commentary you can give us as far as how we should be thinking about that for maybe the fourth quarter and then the balance of 2026?

Yes. I think, again, there's going to always be some volatility in that number, particularly as we offer theatrical releases. When you see a DAVID go out of it, if it extends beyond -- if it goes from a double to a triple to a home run, you'll see us lean in on marketing expense in that -- in those instances. So there will be some -- that could cause some significant variability in that number.

We measure, we A/B test. We're always looking at the data. So as we are looking at our ability to acquire customers at the cost and it's efficient, we will continue to lean in as we see things like, well, as you mentioned, as ARPM starts to move in terms of we see the different tiers that are coming in, it affects customer lifetime value.

We will always lean into the most effective and efficient sort of space or band for us to operate in. I wouldn't think of $65 million as a static number, though. I think that will move particularly depending on the different theatrical releases we have.

And then we expect incremental increases I mean we're now -- to be helpful, we are now tracking the average revenue per member, and we're breaking out the marketing for the Guild and the revenue for the Guild to help investors to understand how that's incrementally growing in terms of marketing spend and Guild memberships and overall Guild revenue.

Next question today is coming from Thomas Forte from Maxim.

Great. So first off, Neal and Scott, congratulations on going public. I have deep respect for your mission and also enjoy your movies quite a bit. One question, one follow-up. Now that you're a publicly traded company, how has that impacted your ability to attract members to the Guild?

I love that question. Thank you, Tom. So ANGX is a symbol. And if there was ever a company that merits being a public company, it's Angel. We had almost 70,000 investors when we went live on the New York Stock Exchange. And this is a number. It's a symbol of the movement and of the success and impact of the movement. And it allows a lot more people to enlist in the movement. It was really interesting to see because we had raised $55 million leading up right up to the public listing.

And then we saw volumes in excess of that in a day's time on the exchange. The public markets offer incredible scale. We were able to do a deal with Trinity Capital as part of this process and raise other capital for growing the Guild. So this should all be positive towards our Guild growth opportunities ahead. So...

Wonderful. All right. And then for my follow-up, super impressed. How are you able to attract Kevin James to Angel Studios for his upcoming release, Solo Mio? And then as part of attracting him, are you obligated to spend a disproportionate amount of money on marketing compared to your other films?

I'll let Scott cover the marketing question, and then I'll talk about how we attracted him.

Yes. There are times when there's some contractual requirements on advertising without speaking specifically to Kevin's deal. But for the most part, advertising is driven in part by the most part, by its performance in the theaters and how it's performing both in presales and in the early part of the -- as it's released into the theaters and how it's performing in the theaters.

But that will be -- the biggest driver of that number will clearly be -- it's never an inordinate amount. We never make deals where we're guaranteeing some sort of $30 million investment. It's always in sync with how the film is producing so that we can keep that in check vis-a-vis the revenue that we engage.

Yes, that's important to our model when we do a deal is that marketing spend is rightsized for the release. So now attracting Kevin James, today, Angel has 2 sides to its network and market, and we have a differentiated edge in each side. So we've got the audience and then we've got filmmakers. And Kevin James was attractive because of both of these components.

On the audience side, the Guild helps us make the decisions as to which films and TV shows. They're engaged, they're invested and they put their money where -- and their feet where their decisions are. They show up in theaters to help support the release of films. That creates a platform for filmmakers that they can't get anywhere else. And so when Kevin James wants to be on the silver screen and he wants a lot of people that are getting behind the opening release on February 6 next year, well, Angel is his best opportunity.

We have 1.6 million Guild members who now know that the Guild trusts this story, that it's highly rated and they'll vote with their feet. So secondly, on the filmmaker side, the way we do things differently is we do -- we share in the net with our partners. And this provides the benefit that we don't have as much capital outlay and costs to operate and scale our business as most do. But it also to the filmmaker side, it benefits them because if they truly believe in their work, which Kevin James is an amazing actor comedian and he does, and he should because Solo Mio scored off the charts.

So he's saying -- so the traditional streamers, they pay too much for the duds and too little for the successes, and he believes he's going to be a success. And so he decided to go with Angel. He gets a platform to launch it, huge community and he gets to share in the upside. So those 2 are the reasons that Kevin and other A players are coming to Angel.

And I think there's a constant theme here, which is that as a company, we're more like a tech company in the sense that we are constantly trying to align our revenues with our expenses as opposed to having massive sort of dislocations between one and the other over time.

Correct. Because the Angel app -- we actually sell the tickets direct to the audience for Solo Mio, and we can rightsize the marketing spend around that.

Next question is coming from Eric Handler from ROTH Capital.

Two questions. First, I wonder if you'd be willing to give sort of like a breakdown between your various tiers for your members at this point? And then as a follow-up to that, I know it's still very early with basic plus advertising. What are sort of your early reads on including advertising as part of the package?

Yes. Really good question. Thank you, Eric. So we haven't published the breakdown. However, what's been really encouraging is we did basic with ads and then distinguish basic, which -- and then we have premium at the top tier. By introducing a basic without ads, that has helped us increase the premium account.

And so that's very exciting for us. But we haven't published the actual breakout of those numbers. But we're constantly testing these things, and you'll see evolution over time as we hone in on the message and on the right offering for new Guild members.

Fair enough. And then, Scott, I wonder if you could just sort of give your key milestones or goals that you want to achieve in 2026.

So as we look at the company, obviously, when we talk around the company about what is it we want to do next year, we always fall back on all questions lead to growing the Guild. And that's the essence of what we're trying to do here. We're trying to build a company and an opportunity where we can provide the kind of content that we want our families to share for the rest of their lives without giving any specific guidance.

Typically, what we're looking to do is continue to invest in the Guild like we've been doing. We'll see the economies of scale start to grow even in terms of vis-a-vis the marketing expense as we grow that Guild base and it gets larger and larger and larger. If you look at membership in our sector, you see that members who are with you the longest tend to stay with you. Once they've gone past about a 90-day or even a 6-month period, they stay with you much, much longer.

As that base of those who have been with us continues to grow and becomes a bigger part of our foundation, we would see that provide economies to our expenses and give us some operational leverage to improve upon that. It's a constant every day. We're looking to improve upon that, get stronger and start to scale our business a little bit more every month and every quarter.

Next question is coming from Steven Cahall from Wells Fargo.

A couple of strategic questions and a housekeeping one. So on the theatrical side, we've seen a lot of growth in premium large format like IMAX type screens, which seems to have a good kind of virtuous circle of folks returning to the box office. So curious for your theatrical releases, how you're thinking about premium large-format theaters.

Relatedly, when you think about how to go to market on streaming, there's a model of being more niche where we often see penetration reach levels but on smaller services like Starz or Crunchyroll. And then there's licensing to scale players where you have a lot less control, but often the numbers of viewership can get pretty big.

I'm thinking platforms like Netflix or Disney. So how do you think about scaling your streaming platform within this overall industry structure, which is kind of constantly changing? And then just a housekeeping one on deferred revenue. I think it's moved up a little bit since the beginning of the year. Just wondering if you could comment on what's driving the deferred revenue increase.

Great. Thank you very much, Steven. Would you cover the deferred revenue, and I'll cover the other part.

On the deferred revenue, it's just -- deferred revenue is just based -- it's driven by the amount of our annual memberships vis-a-vis our monthly memberships. So as it depends on -- sometimes it's the offers that we're providing. We may have a Black Friday sale or something else on annuals that would push that number. That would increase the deferred revenue compared to the revenues over time.

And so that's literally the way we look at it. It has to do with the 12-month amortization on the revenue recognition on annual revenues. And that will vary a little bit based on different -- sometimes it's consumer behavior and just the time of year that they're inputting and it depends on the type of offerings that we have.

We actually draw customers in based on the different content that we provide. And so that will change in some variability. Series will have a different response than a feature film might. And that, again, will impact annual memberships, which then have to be amortized over the 12 months that they're with us.

Thanks, Scott. So the big IMAX screens, we very much think about that on a per title basis on whether a film justifies being on that kind of a screen. And we were having discussions about -- and in fact, when we -- before moving Zero A.D. into 2026 and then moving DAVID here into the fourth quarter, we were having discussions with IMAX about Zero A.D. in IMAX because Zero A.D. is just this amazing breathtaking experience and deserves to be on IMAX screen.

So it's very much on a per title strategy and whether that makes sense for IMAX and for Angel. On your question about the size of the market and the way we think about the market, I don't want to -- without offending the coasts because most of the decisions in this industry have traditionally been made in New York and California. From my perspective and those now millions of people who are coming to this movement, the coasts are serving like 10% of the audience.

Those are the people who go to the theaters regularly, 10% of the audience goes to the theaters, and they have a world view that mirrors Hollywood. And we look at that as more fringe. That's the way that I see it, Steven. But the numbers also support that. So Angel is -- Angel's mission is to tell stories that amplify light, which is the broad umbrella. And faith is a subcategory of that umbrella.

And HarrisX did a global faith and entertainment survey where they found that 73% of global entertainment consumers consider their religion and their faith very important to them, and they want more of -- it's basically a proxy for light. So we think of that HarrisX survey as kind of the floor for the total addressable market. And when we look at that HarrisX survey for the U.S. market, it's at 77% of Americans.

So if I just did some simple calculations for you, and we just took Netflix, for instance, and their installed base, I think August, they reported 82 million total households subscribed to Netflix. So let's call that great market penetration in the U.S. If we took the faith base that would be over 62 million households.

Now I -- the question I have is how far can Angel expand above that because Angel has a broader tent approach to the way we do this because we're values driven. When we look at the global market and the way that it's moving by 2034, Oppenheimer did a report for us that said our global addressable market is over $300 billion.

So this is very mainstream, and I think people will discover that over time, even though the industry likes to think of Angel as serving a niche, it's very much serving the desires of mainstream audiences throughout America and throughout the world who don't -- who just want to be represented better and Angel lets them decide what Angel distribute. So this model is extremely disruptive, and we're very excited about the future.

Those are all the questions we have from the line. We now want to take a few questions from your Angel Guild members that have submitted -- pre-submitted questions online. Let me start with the first one. Is Angel Studios committed to walking the path of courageous value-driven storytelling? Or will it eventually be pressured into the same market and political compromises that have [ hollowed out ] Hollywood? In becoming public, it worries me that you'll compromise the core message on your movie, series and animations. How can you assure us that won't happen?

Well, just to be really direct, that's up to you because at Angel, you get to decide what we can distribute. So we have to have your permission. As the CEO of Angel Studios as a founder, I can't publish something on the Angel platform without your permission. So that power is in your hands at Angel. The Angel brand represents all of you, and that will continue.

Now you might ask yourself, okay, fine. But now that you're a public company, perhaps the company could be taken over by larger companies and that the mission can be veered off. Well, the unique way in which we went public was to address this very question. So we have almost 70,000 people who are cheering for us, rooting for us and literally made all of this possible by investing in Angel and then another like 150,000 people who have invested in Angel projects.

And, well, they asked over and over again, if you guys go public, are you going to lose the mission? How can you hold on to the mission? How do you make sure that the public markets don't veer us off course? So what we did is we gave the original founders and the people who helped us way back in 2016 and a group of people who helped us in 2021, we gave everyone super voting shares.

So they get 10 votes per share. And so those original people who believed in us when there was no reason to believe because the situation got very bleak for Angel in the early days in a big, huge lawsuit and helped us get through that. We gave them and the founders the power to decide the future of the company.

And so we're going to -- that's -- the reason that we're here is for that mission. The reason that we're here is to make the world a better place for our children and grandchildren. We believe that will actually be very profitable as a media and technology business, and that's where we intend to go. So thanks for that great question. And you can be assured that Angel is rock solid on our mission.

Let's move on to your next Guild member question. This member asked, I've been a Guild member for 6 months in my family, and I love the Tuttle Twins in particular. I was wondering how can I share access with my friends and family.

I love this question as well. So we have a couple of opportunities to share as Guild members. So just in time for the holidays, we've got ways that you can gift Guild memberships in the Angel store on the website. And -- and we also introduced a brand-new feature where you can share pretty much anything in the Guild like you can on YouTube, except it makes it so that when you share, they don't have to have a Guild membership.

So just go to the Tuttle Twins episode in the app on your phone that you want to share, click the share for free access link and then give that link to your friends and do this -- like do this often. This is the way that we can spread the movement.

And what we see is a great uptake from those people who are shared for free where they end up joining Angels. So you can share without having to share your password, the way you may do -- may have previously done on other streaming platforms, but we wanted to make that easy, available for all Guild members to expand the movement.

Let's take our final Guild member question. I'm a film producer and also a Guild member and appreciate what Angel is doing. How do we get in touch with you about a project we could work on?

Another good question. So -- and filmmakers of all sorts are very welcome. If you go to angel.com/filmmakers or just go to angel.com and click on the menu, and there's a place there to learn more about filmmakers. This gives you everything that you need. It gives them answer, it gives them estimates as to royalty payments. It explains how the Angel model works, how it benefits filmmakers, how Angel gives unprecedented creative control to our partners.

And we just facilitate technology that connects the artists with their community. And so that was a great question. And we're very excited about the number of submissions now that are coming in, and we're building this timeless library of stories that amplify light. All right.

Back to you for any closing remarks.

Okay. Thank you. So thanks, everyone. I think the headline here is simple. The Angel community is redefining the future of film and television and our 1.6 million Guild members growing more than 500% year-over-year are a testament to that fact and that we're on to something great. This strong third quarter earnings release is our first as a publicly traded company on the New York Stock Exchange. And with everything we have in the pipeline, we hope to come back and deliver many more.

We're on the roads in the coming weeks, meeting institutional investors at a range of tech and media conferences, and we would love to meet as many of you as possible. So I encourage you to get in touch with our Investor Relations team, Luke [ Johnsons ] and Jeanette Masters to book your meeting with us. Thank you for joining us today, and we will see you all soon.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.