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Hello, everyone. Thank you for joining us, and welcome to Cineverse Fourth Quarter and Fiscal Year 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser. Gary, please go ahead.

Good morning, everyone. Thank you for joining us for the Cineverse Fourth Quarter and Fiscal Year 2026 Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal fourth quarter ended March 31, 2026, is available at the Investors section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available on Cineverse's website after the conclusion of this call.

Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements. All the information discussed on this call is as of today, June 26, 2026, and Cineverse does not assume any obligation to update any of these forward-looking statements, except as required by law.

In addition, certain financial information presented in this call represent non-GAAP financial measures. And we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.

I'm Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser at Cineverse. With me today are Chris McGurk, Chairman and CEO. Erick Opeka, President and Chief Strategy Officer; Tony Huidor, President of Technology and Chief Product Officer; Sean McCabe, Chief Financial Officer; Yolanda Macias, Chief Motion Pictures Officer; and Mark Torres, Chief People Officer, all of whom will be available for questions following the prepared remarks.

On today's call, Chris will briefly discuss our fourth quarter and fiscal year 2026 business highlights. Then Sean will follow with a review of our financial results, and Erick will provide further details on our 2 recent acquisitions. I will now turn the call over to Chris McGurk to begin.

Thank you, Gary, and thanks, everyone, for joining us on the call today. First, I want to note that we're very happy to have our new CFO, Sean McCabe, here with us on the call today. Sean was our controller previously and returns to the company as CFO having acquired some valuable experience in the ad tech business, which, as you'll hear today, is going to be a big part of our future following our acquisition of Indic and all the related synergies that, that's going to create with the rest of our business.

So let me first review our operating highlights for this quarter. Then Sean will get into more detail about our financial results and guidance. Erick will then explain our post-acquisition strategy going forward as a scaled AI-powered fully integrated technology and service provider to the entertainment industry with assets in the synergy flywheel that we believe none of our competitors can match. After that, we'll take your questions.

So we have a very strong fiscal fourth quarter. We generated $26 million in consolidated revenues, up 67% over the prior year period. This reflected solid performance in our base plus a partial quarter contribution from our 2 new acquisitions, Giant Worldwide and Indic of $11.6 million. We acquired Giant Worldwide in January and IndiCue in the middle of February. So we fully expect an even bigger revenue contribution from those acquisitions when we record their full impact on our next reported quarter. Importantly, a significant portion of those revenues come from durable, recurring, fast-growing technology-based revenue streams from a large array of major studio and streaming customers which was a major rationale for the acquisitions themselves.

Based on preliminary results so far in our first fiscal quarter of 2027, we expect that these acquisitions will be an even bigger positive engine for our financial performance in the next reported quarter and beyond. We also recorded net income attributable to stockholders of $1.1 million, a 51% increase over the prior year period. This was driven by a $4.3 million bargain purchase gain on the Giant Worldwide acquisition and a $2.9 million income tax benefit primarily coming from the Indic acquisition. Both of those upsides are additional strong indicators of the quality of the deals we cut for both companies as well as their upside value creation potential for Cineverse.

Overall, we believe that fiscal year 2026 was one of the most consequential years in our history. We followed up the unprecedented success of Terrifier 3, the highest-performing unrated film in history by quickly and decisively moving to convert that momentum into a structurally sounder and even higher growth company by completing the acquisitions of Giant Worldwide and then IndiCue in the span of 6 weeks during this reported quarter. These deals fundamentally strengthen and change what Cineverse is as a company. We are now a technology-first AI-driven fully integrated entertainment company with 3 powerful and mutually reinforcing growth engines, a proven low-risk, high-potential return, wide release film slate strategy, a scaled streaming and podcast portfolio with a vertically integrated advertising technology and a media services business built around our Matchpoint technology platform.

As I just described, the positive financial impact has been immediate and will only get bigger going forward as we report full quarter results, finish integrating the 2 companies into Cineverse and fully realize significant cross-business synergies across our technology and entertainment ecosystem. The strategic logic of these transactions is clear. IndiCue brings to the table a connected TV monetization platform, serving more than 40 live clients plus an additional 75 publishers onboarding. Giant Worldwide, now a MatchPoint company brings deep and long-standing studio relationships directly into our automated media services ecosystem.

Combined, this creates a powerful flywheel. MatchPoint's automated content supply chain feeds indices monetization engine while IndiCue's advertiser demand increases the value of every channel, film and TV title and partner we serve. This expanded Cineverse flywheel not any single channel film, TV series or distribution deal is the key growth and performance engine behind our fiscal 2027 guidance of $115 million to $120 million in consolidated revenue and $10 million to $20 million in adjusted EBITDA, which we are reaffirming today. Again, a significant portion of those revenues will be durable and recurring and over 50% will be technology based. At the same time, our franchise IP-based wide release film strategy continues to perform exactly as designed, high upside potential with limited financial risk. That's because our strategy fully utilizes the tightly coupled Cineverse ecosystem technology platform and the flywheel I just described.

Our upcoming slate includes the 20th anniversary theatrical rerelease of Guillermo del Toro's Oscar-winning masterpiece Pan's Labyrinth this October, presented in 3D and 4K formats. When first released in 2006, the film received the longest standing ovation in the history of the [indiscernible] film festival. That record still stands. We just took the phone back to can 6 weeks ago, where it was selected as the opening film of the festival. It screened before a packed house at the [indiscernible] theater and received a tremendous ovation and great critical reaction once again.

Next up after Pan's Labyrinth will be a much different type of them. However, it comes from an IP franchise that is also very beloved, this time by family audiences. Air Bud returns in January 2027. After that, we returned to our horror wheelhouse with the latest installment of Wolf Creek in March 2027. All 3 of these films closely follow the Terrifier 2 and 3 blueprints of acquiring known IP properties with large built-in fan bases, high upside potential and low financial risk. These titles will generate recurring revenues for Cineverse by driving viewers and subscribers to our streaming channels and then becoming valuable long-term additions to our library. Expect more news about additions to our film slate that closely follow this formula very soon.

And with that, I'll now turn things over to Sean for a financial review. Sean?

Thank you, Chris. First, a few highlights from our fiscal fourth quarter revenues were $26 million, up 60% from $16.3 million last quarter and up 67% from $15.6 million in the same fiscal quarter last year. The increase was primarily driven by $11.6 million of revenue from our new advertising technology and media services revenue streams from our fourth quarter acquisitions of IndiCue and Giant during their first partial quarter.

Net income attributable to stockholders for the quarter was $1.1 million, a $2.1 million improvement or the net loss of $1 million last quarter. This improvement was aided by $2.9 million of income tax benefits primarily realized from the IndiCue acquisition and a $4.3 million bargain purchase gain on the Giant Worldwide acquisition. Though the bargain purchase gain is nonrecurring, we do believe it is a strong indicator of the quality of the deal price and the value creation opportunity for the company heading into fiscal year '27. Adjusted EBITDA for the quarter was $0.1 million, a decrease of $2.3 million from $2.4 million of adjusted EBITDA last quarter. Our direct operating margin for the quarter was 40% down from last quarter's 69% in the prior quarter is 55%. We anticipate our gross margin to evolve with our fourth quarter acquisitions based on the nature of their businesses, but more critically, we anticipate both margin and EBITDA -- adjusted EBITDA improvement from quarter 1 to quarter 4 of fiscal 2027 as integration and cost savings initiatives are completed.

This quarter, we had a focus on acquisition integration and ensuring we get this right in order to put us on an optimized path as we head into fiscal year '27. As a combined entity, we are reaffirming our previously announced guidance for fiscal year 2027 of $115 million to $120 million of revenue and $10 million to $20 million of adjusted EBITDA. The combined impact of Giant and IndiCue acquisitions represent a financial transformation for the company and are expected to create significant shareholder value. From a liquidity standpoint, we ended the quarter with $3.4 million of cash, our $12.5 million revolver still effective and an ATM facility recently increased to $30 million. While our net working capital as of March 31 is negative $12.2 million. This does include $12.2 million of deferred consideration relating to the Indic acquisition, which the company has the right to pay in equity.

With that, I'll turn it over to Erick to discuss our operating highlights in more detail.

Thanks, Sean. So first, I want to start with a review of where the industry is at and then turn to our operating results. Given the recent acquisition of Roku by Fox and the broader media environment where the industry is heading lines up directly with our direction, and we think it's strongly in our favor.

So 3 shifts are happening at once. First is consolidation is we're all seeing. As companies scale, they're tired of bolting together separate systems for delivery, encoding, ad serving and data that were never built to talk to each other. They all want a single pane of glass, one system that runs the entire supply chain and works tightly together. That is, at its core, with our Matchpoint technology and operating platform now is. We built the operating layer for the media supply chain from ingestion through delivery, through monetization. Most importantly, and this is the part I want to stress, there is no commercially available version of this at scale anywhere else in the market, a company that wants a fully unified technology stack today has 2 options. It's been years building it or come to us. And that's our moat.

The second shift is that the same consolidation is opening lanes for smaller focused companies to scale quickly, and we serve both ends of that. The large platforms consolidating under our stack and new challenges using it to evolve from a single app or content library into a full platform. For example, Gorilla Comedy+ launched a subscription service on MatchPoint this quarter, and we're seeing the same pattern with lots of our other partners. The company decides to go from being a producer and content library into a platform for the fastest and most affordable way to get there. The third shift in the largest is the move to ad-supported streaming an AVOD or AVOD, in particular. According to Nielsen, ad supporting viewing reached 74% of all U.S. time in the fourth quarter, the highest level of the year. And according to eMarketer, ad support and streaming now reaches more than 200 million people in the U.S. on its way to roughly 2/3 of the country by next year.

The whole industry is racing to scale its ad-supported asset base and Fox's purchase of Roku is the clearest signal yet a deal built around owning ad-supported on-demand machine at scale. Every company watching this now knows it needs to scale its own ad-supported business quickly and affordably. This plays into our entire platform, not just one piece of it. Scaling and ad-supported business means preparing, delivering and monetizing far more content than ever before. And this is exactly what MatchPoint and Giant do on the supply side and what IndiCue does monetization and it lets the customer run all of it inside one integrated stack rather than stitching together a dozen vendors and giving up margin and data at every step. These projects are underway now and we're seeing customers plan for considerable scale into the back half of the year. We view this as a positive multiyear trend as the rest of the industry works to catch up with the kind of catalog scale that Fox and Roku are now combining.

We're not observing these shifts from the outside. They're moving towards what we've already built. So we're already seeing this rapidly evolve into a growth engine for us. Our unmatched ability to automate media delivery is letting major studios, channel operators and streaming platform partners pursue initiatives that just weren't achievable before. And this is allowing us to expand and win work with them that Giant could not have done on its own or could we have done in our own. Bearing Giant's 2 decades of Studio Trust with MatchPoint's robust automation capabilities is winning significant work orders that we could never have won alone before the acquisition. And as a result, we've continued to develop a agentic software automation to rapidly keep up with this demand.

Alongside that, we're broadening our customer base and adding new customer logos across the business. On IndiCue specifically, we've cut customer concentration by nearly half since we acquired it. And with several new product innovations and initiatives rolling out over the course of this year, we expect that to keep improving materially. IndiCue's net revenue retention sits at nearly 98% today, which bodes very well for the continued growth of our recurring SaaS revenue as we scale it.

So now to our results. I'll start with engagement because that's where the growth is most visible. We ended the quarter with 1.52 million SVOD subscribers, up 13% year-over-year. More importantly, the engagement underneath that grew far faster. Streaming viewers were up 66% to nearly 130 million and total minutes streamed, rose 58% to 4.4 billion for the quarter. Our engagement growing 4x to 5x faster than the subscriber base is exactly what we want to see because it's that reach and the first-party data that feed discovery monetization and the rest of the business and ultimately provides the revenue growth in future quarters. And it also dramatically expands the top of the funnel for our subscription business.

And on that subscription side, our fandom model is compounding channel by channel. Several of our SVOD channels hit an all-time subscriber high in the quarter. Docurama was up 47% year-over-year and has since crossed 100,000 subscribers in its eighth straight month of growth. Midnight Pulp was up 18% with its Roku subscriber base more than doubling. Meanwhile, our flagship Universe channel has grown every single month since we launched driven first flights to be on Amazon and now by its recent launch on the Roku Channel in May, where we introduced it alongside a new premium channel on Roku so real. So that free-to-paid funnel is working in real time. It's turning our ad-supported viewers into paying subscribers.

The ad-supported side is just as strong, which matters given where the industry is heading. Several of our biggest fast channels delivered their most watched quarters ever. The Dog Whisper was up 84% year-over-year. It's eighth consecutive quarter of growth since launch. And Screambox was up 40%. Midnight Pulp boosted by its launch on YouTube and Twitch grew more than tenfold year-over-year on the ad-supported side. This is the AVOD momentum we talked about earlier, showing up directly within our own properties.

I also want to briefly address our investment in micro dramas. During the quarter, we restructured our investment in [ Mickey Rourke ], which is now rebranded as a Twist, moving from a joint venture into a passive minority stake. We believe in this space and intend to stay involved commercially because of the growth and potential there are real. However, this approach lets us keep our attention and capital focused on our core business and recent acquisitions but retained meaningful upside avoid distraction, avoid dilution and heavy investment in an early-stage joint venture. We think this is the right outcome for both Cineverse and our shareholders. The Twist team is creating traction already, including with Paramount and other potential partners, and we look forward to watching them take on the premium end of a rapidly emerging space, but we leverage our content and technology assets across the entire growing microdrama space. We still retain the ability to invest pari-passu with other institutional investors as that business scales if we choose to do so.

At the same time, we're maintaining cost discipline we committed to last quarter. We completed approximately $2 million in SG&A cost reductions through the end of the fiscal year and remain on track to realize the vast majority of the remaining $5.5 million of our $7.5 million cost reduction program by the end of the second quarter of fiscal '27 while also capturing approximately $2.5 million in annualized synergies from integrating Giant into MatchPoint. As these cuts take hold, believe our studio and streaming operations, inclusive of corporate overhead or near run rate profitability. So we're building for scale, for margin and for durability, as Chris mentioned, in the way this industry is consolidating only sharpens our advantage. We're extremely well positioned for the year ahead.

With that, operator, we can open up the line for questions.

[Operator Instructions] Your first question comes from Dan Kurnos with Stone X.

We looking sharp into '27 here, nice momentum. I guess first question is since you guys have completed and closed the acquisitions. Any kind of initial learnings you guys have had any incremental business opportunities, revenue vectors that you're thinking about? I know it's early. And then on the synergy side, obviously, great to see the synergy number coming up. I appreciate the update there. Can you just give us a cadence on how you think that's going to play out and kind of where you're finding the incremental synergies coming from?

I'll let Erick get into more detail on that. But I got to say our -- both the acquisitions combined are performing better than we thought already, especially now that we're seeing the integration being completed, and we're seeing the full monthly results both of them. So I think our surprise is that the flywheel that we put down on paper, it's actually working better than we anticipated, and we're really thrilled by both acquisitions and how they're working together with Matchpoint, and the rest of our business.

Erick, do you want to add something on additional synergies?

Yes. So sorry if you can hear me there. Yes, Dan. So I'd say as we just came from Stream TV, which is the largest conference in the media streaming media sector globally, actually, specific to the advertising space. And essentially, what we've assembled here with the various assets that we've acquired and put and combined into a platform is as I noted in my remarks, it's exactly what the market is really looking for right now. Scale is important. The days of sort of incrementalizing small libraries to compete, you need massive scale to reap the benefits of AI. You can't have a few hundred titles, you need hundreds of thousands of titles. So partners are really looking how to scale up and you just can't do that with the manual processes that are out there.

So I think the -- our timing was [indiscernible]. And a lot of it was based off of our own experiences as operators in the market, seeing where that opportunity is. And that operator experience sort of gave us an early vision into what the market was going to need, and it's turning out to be quite true right now.

In terms of incremental synergies, I think one of the big opportunities as we get to learn and understand these businesses, there's what you know, pre-acquisition and then there's what you know on the ground as you're operating these businesses. We are seeing significant opportunities for optimizing these businesses especially a business like giant that is has good processes, but could stand to use a lot of the automated processes that we work with. So we think that is something that we'll be continuing to press over the quarters. Obviously, we know Cineverse has strong international operations at a very good cost basis. which we haven't really begun yet to exploit. So I think those are 2 avenues. And then lastly, combined integrated selling. We have a very large, diverse team now selling a lot of different products. getting those teams to cross-sell is a pretty substantial synergy that is really just starting, and we'll be scaling up over the course of the year.

And just on the revenue side, how do you -- how are the conversations with kind of networks and studios going, especially with Giant? And on the IndiCue side, side of curiosity, do you guys benefit from seasonality in political as we get into the back half of this year, calendar wise?

Yes. So on 2 buckets. First, on the on the large customer, large enterprise studio side. Once again, all of those partners have are in scale-up mode or optimization mode. So studios that we know are in scale-up mode are effectively ramping up and want automated, highly visible solutions to scale their business and make more revenue. And so those -- we're starting to see either both existing customers, which really work with a lot of the major studios already are scaling up. And then with new customers or other studios that need to dramatically overhaul or improve their operations are coming to us. And we anticipate being in business with a lot more of them this year, if it goes -- it breaks away, we think it's going to break. Second part of your -- the second part of your question, Dan, can you repeat that?

Yes. Sorry, just on do you benefit from seasonality and political, as you would typically see with the DSP ad tech type company?

Clearly, we're going to benefit this year. So that could be an upside to our guidance.

Your next question comes from Brian Kinstlinger with Alliance Global Partners.

The studios that you highlighted, how is the [indiscernible] after this combination? I know you've had some trouble with MatchPoint penetrating them, what are conversations like regarding converting to MatchPoint now that the combination is complete?

So I can take this one, and Tony can add some color on that. So when we first started launching enterprise sales on Matchpoint, it's always -- it's the IB manageable. People want to have proof points that product can be trusted in the market to handle scale opportunities. So the good news is with the addition of Giant, we have very strong over 20-year studio operating trust with those partners, and that's led to us being into major RFPs on a variety of different products and opportunities that we think has -- it's really demonstrating our ability to compete with the best in the industry.

But beyond that, we're finding that we're either winning RFPs or look to be winning RFPs simply because most of the people we're competing with don't are competing with our have manual or semi-manual or partial solutions or systems integrators, they don't actually control or own the full stack. So I think that's -- I think that environment has changed pretty dramatically, and it's going to be a big part of our growth this year.

Great. Erick, you mentioned the streaming your numbers and KPIs are all up huge, I think, year-over-year. Yet revenue without M&A is flat year-over-year. Can you speak to the markout dynamics for the legacy business, the pressure on advertising? Is it challenging inventory bills? Just maybe speak to the legacy year-over-year comps?

Yes. So just first of all, Brian, last year, we had the spillover effect of Terrifier 3. We were still generating huge revenues in the ancillary markets after the theatrical release in October. So that made the comparison tougher was the film performance last year. But go ahead, Erick.

Yes. So on the ad market, we're still -- so we saw probably the fastest growth in the fast pace in terms of channel and competition. So you have competitors, some studios have 80, have launched 80-plus channels into the market. on top of adding in Netflix, inventory, Amazon Prime inventory and so on and so forth, every major streamer. So I think the market really hadn't -- hasn't -- is just starting to have absorbed that volume of impressions in the market. And so that has obviously caused, I think, temporarily a depression in CPMs and fill rates.

But we're starting to see that rebound, I think -- we think last year was kind of below. I don't think you're going to see the same level of launch. I think the migration of ad dollars from television is still accelerating and CTV is still double-digit growth. So I think us having the audience and the share puts us in a prime position as that changes. Also us owning an ad tech platform and having experts at monetization, we think that's going to be engine to take advantage of that audience and fill those impressions quite handily as they do already for a lot of their customers.

Great. One follow-up on financials. First, a 2-part outside of political, can you just speak now to the overall seasonality of this new business combination? Maybe December is the biggest piece, what percentage is that? What's the quarter from revenue is generally the weak in seasonality? And then on your EBITDA guidance, what does that equate? Do you think in a range of free cash flow, which includes content costs, capital expenditures and any charges that are cash related to cost cutting?

Sean, do you want to -- well, I think we can -- I think we -- first, I'll tackle the seasonality piece of it. So even though we've expanded the different lines of business, Giant and IndiCue still follow a lot of some of the seasonality that we had overall as a company.

So on the seasonality side, Q3 is still going to be our data, which is calendar Q4, fiscal Q3 is still going to be our heaviest quarter in terms of volume and revenue. It's that will sort of mirror to that. I think we've seen some of the IndiCue trends actually kind of buck Q1 being as slow as we would normally see on advertising. So they've been able to maintain and manage scale and volume in that quarter. So it won't be quite the dip that we would see when we didn't sort of control the ad tech stack. In terms of giant seasonality also does kind of match the entertainment cycle where there's usually typically a big demand going into calendar Q4, our fiscal Q3, it would probably be pulled about a quarter forward as companies prep to deliver lots of content going into that quarter. So that's sort of the seasonality impact.

Sean, I think we can probably follow up with you on sort of the detailed financial questions. But Sean, is there any color that you think we can give them on?

Yes. A question again, Sean, was how does the EBITDA guidance of 10 to 20 match up with what our cash position might be at the end of the year.

Yes. I mean, just keeping it fairly tree to the 10-K for the specific details. But I'd say, generally, with the EBITDA improvement, I think you would see relief from the cash and liquidity perspective naturally as we work our cost savings in and increase the revenue I would say I'd probably leave it at that. But if there's anything else, I think we have our recently increased ATM facility as well, which is a life lining case needed, but I'd say generally, I'd say that you would expect from the guidance that we'd have the -- an improving cash flow and liquidity situation.

Your next question comes from Laura Martin with Needham.

So I'm going to ask 3. The first one is your acquisition road lap, what's missing that would make this value chain you've assembled more valuable? Second, most going to ask about KPIs. Over the next 12 months, what KPIs are you going to be tracking internally and externally disclosing that will indicate to us whether you're successful, whether the strategic pivot of doubling your size has actually been successful? And then third, Erick, I would love for you to talk about micro dramas. I remember having dinner with you and having sort of a dynamic debate. And now it sounds like you're sort of stepping back from the microdrama business and you guys were early adopters there. So I'd really be interested in your learnings and what you learned about, I guess, financial limitations to the return on capital, presumably in the microdrama space. Those are my 3.

I'll let Erick -- this is Chris. Thanks for joining the call, Laura. Just on the microdrama piece, as we got into it, there's just a huge level of investment that's going on in that space right now. From the players that are already in the business, a lot of big Asian media companies on these platforms, and they're spending like $1 million a day to market their platforms and their channels.

Obviously, that ups the stakes quite considerably. And then you've seen a lot of the big Hollywood players get involved. And I just think our gut feeling at the end of the day was we should be selling picks and shovels to that business versus getting involved in an arms race in that business and spending at the levels that the competitors were spending at. We can leverage our technology. We can leverage our content library. We can leverage our ability to market using our ecosystem in a really smart way in that space in order to drive revenues and participate in the business, and we think we can do it in a smarter, lower investment way, particularly at a time when we're trying to assimilate these 2 great acquisitions and drive the business ahead. So that was our thinking in that space.

And I'll let Erick respond to your other 2 questions. Erick, acquisition road map and KPIs.

Yes. So I'll start on the acquisition piece here. first thing as we kind of look at what we see already working is any business that we think could benefit from leveraging our technology to increase margins in brief scale and provide us greater market share. So we think the encoding and packaging space is pretty ripe for that most of those competitors sort of fit the same profile of the one we just acquired, where we think we can -- using technology and combined scale, we could add 20-plus points of margin to those businesses. So we think those fit.

Also, we think as we look at the at the supply chain tasks and capabilities that could plug nicely into our platform. Other technology providers that provide critical automated services but are maybe subscale on their own. So if you think of the various pieces of work whether it's metadata enrichment, AI enhancement of content, other things that you could put into a platform in the same way that's a -- you would -- sales force could maybe verticalize and acquire things to put into their ecosystem. Same goes for us in the media supply chain. So we think either things that bring scale or sort of support this flywheel are going to be on the track.

Really on the KPI front, I think we've been talking about, clearly, we have a couple of different businesses. We're looking at for our software business, some of the usual, especially the SaaS business around the advertising net revenue retention, increase in customer annual spend and particularly on the media network side, looking at our [ TAC ] in that business, which all of those are going to -- are being discussed now in terms of future KPIs to add. And then, of course, in our services and media services business, it would be similar to KPIs, particularly as we're looking at doing a lot of long-term contracts and more complex build-outs with studios, we think those similar SaaS metrics will be applying to those businesses as well. And obviously, looking at software-like margins out of these services businesses. So really close margin look.

And then just to further the last thing on the microdrama side, I think since you and I spoke, there's been about 400 microdrama launches -- microdrama service launches globally or something near that many of those, as Chris mentioned, losing hundreds of millions of dollars a year. We've been down that road in 2014, 2015 in the early days of streaming, and that's why we're, as Chris mentioned, in the picks and shovels business now quite heavily for that business because we just think that's a -- we -- I'd rather be selling content to 400 microdrama services and services been competing with 400 services. So that's sort of the rationale there.

This concludes the Q&A session. We will now turn the call back to Chris McGurk for closing remarks.

Thank you all for joining us today, and please feel free to reach out to Julie Milstead with any additional questions. We look forward to speaking to you all again on our next quarterly call, where we'll see the full impact of the 2 acquisitions that we just made. Thank you all very much.

This concludes today's call. Thank you for attending. You may now disconnect.

Good day, everyone, and thank you for joining us, and welcome to the Cineverse Corporation Fiscal 2026 Third Quarter Earnings Call. My name is Luca, and I will be your operator today. [Operator Instructions] I would now like to turn the call over to Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser for Cineverse. Please go ahead.

Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal Year 2026 Third Quarter Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal third quarter ended December 31, 2025, is available at the Investors section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at Cineverse's website after the conclusion of this call.

Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements.

All the information discussed on this call is as of today, February 17, 2026, and Cineverse does not assume any obligation to update any of these forward-looking statements, except as required by law.

In addition, certain financial information presented in this call represent non-GAAP financial measures, and we encourage you to read our disclosure and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.

I'm Gary Loffredo, Chief Legal Officer and Senior Adviser at Cineverse. With me today are Chris McGurk, Chairman and CEO; Erick Opeka, President and Chief Strategy Officer; Tony Huidor, President of Technology and Chief Product Officer; Mark Lindsey, Chief Financial Officer; Yolanda Macias, Chief Motion Pictures Officer; and Mark Torres, Chief People Officer, all of whom will be available for questions following the prepared remarks.

On today's call, Chris will briefly discuss our fiscal year 2026 third quarter business highlights. Then Mark will follow with a review of our financial results, and Erick will provide further details on our 2 most recent acquisitions.

I will now turn the call over to Chris McGurk to begin.

Thanks, Gary, and thanks, everyone, for joining us on the call today. I'll first give a brief overview of our results and the anticipated impact of the 2 transformative acquisitions, Giant Worldwide and IndiCue that we made after the end of our fiscal third quarter. Then Mark will go into our financial results and outlook in more detail, plus further outline both acquisitions to underscore why we believe they will be very accretive and we were done with very attractive valuations and have deal economics that will dramatically improve our financial growth and profitability outlook.

After that, Erick will get into more detail about how these 2 acquisitions transform Cineverse into a powerhouse, comprehensive AI-powered technology services provider to the entertainment industry with assets and reach that we believe none of our competitors can match.

Then we'll take your questions. Okay. So we have been negotiating the Giant and IndiCue acquisitions for months. And while we realized the dramatic impact both would have on our market position, go-forward strategy and financial outlook, our first order of business, while we aggressively moved to close both deals, was to improve operating results in our base businesses to further set the stage for financial success in the future.

And so in this last fiscal quarter, we concentrated on improving our cost structure and operating margins in our base businesses. And we generated some strong results, improving our direct operating margin to 69%, up from 48% in the prior year quarter and generating adjusted EBITDA of $2.4 million, a $6 million improvement from the prior sequential quarter.

This was a result of our intense and ongoing efforts to manage the cost side of the business, including leveraging Cineverse Services India, even as we ramped up operations on the technology side of the business in anticipation of these 2 acquisitions. And we are extremely pleased that we were able to successfully acquire both Giant and IndiCue.

This one- two punch immediately transforms our company financially by adding significant revenues and adjusted EBITDA. Both acquisitions bring large, durable and scalable streams of recurring revenues to the company and significantly solidify our position as a leading end-to-end AI-powered provider of technology services and infrastructure solutions for the entertainment industry.

They both have an A+ level roster of industry clients and will be easily integrated into our industry-leading Matchpoint technology ecosystems. Both acquisitions also bring very strong, experienced and highly motivated management teams that clearly see the synergies and share our larger vision for the future of Matchpoint and Cineverse.

Like the Cineverse team, they are joining, our new team members have incentive plans based on generating explosive future growth in revenues, margins and profits. And in the case of IndiCue those incentives also include a very significant earnout potential over 3 years. So we believe we are completely aligned with our new team members to generate strong financial results and create significant value going forward.

And already, the integration of Giant has been going very smoothly and the overwhelmingly positive industry response to joining Matchpoint has exceeded our expectations. If there are any doubts about the long-term potential of Matchpoint, those doubts have been roundly dismissed. The immediate response we received within days of our announcement proves the merging Matchpoint with an established media delivery company with highly coveted approved vendor badges is the ideal profile for the type of service provider entertainment companies seek.

In the days following our announcement, Giant received more work orders than they have in the history of the company. And at this early juncture, we confirm our prior expectations for Giant's short- and long-term revenue and profit contribution, and we feel very, very positive about how things are looking so far.

And in addition, IndiCue has consistently outperformed their own internal monthly revenue and profit forecast over the last several months while we were in negotiations. So both of those factors combined with the financial improvement we generated in our base business this quarter give us great confidence in the financial guidance we just issued for fiscal year 2027, which starts this April 1.

We project $115 million to $120 million in annual revenues and $10 million to $20 million in adjusted EBITDA from our consolidated operations this next fiscal year. In the end, these acquisitions were the result of a long-term thesis built on closely tracking our industry's delayed transition to true AI integration and automation.

The content volume needed to compete in the streaming wars accelerated yet the video delivery infrastructure remain manual and slow to market. While costs for video and high volume became untenable. This created the opportunity for a unified intelligent platform with a unique monetization component that redefines the current ecosystem. I believe we finally achieved this.

And with that, I will now turn things over to Mark and then Erick to get into all this in more detail. Thank you.

Thank you, Chris. First, a few highlights from our fiscal third quarter. Revenues were $16.3 million, up from $12.4 million last quarter and down from $40.7 million in the same fiscal quarter last year. If you recall, the prior year fiscal year -- prior year fiscal quarter included the theatrical results of Terrifier 3, which were in excess of $20 million.

Our net loss for the quarter was $875,000, a $4.7 million improvement over the prior quarter. Adjusted EBITDA for the quarter was $2.4 million, a $6 million improvement over the prior quarter. We ended the quarter with $2.5 million of cash and $4.2 million of availability on our East West Bank revolver.

Now let's talk about the exciting subsequent events this quarter. As Chris noted, we closed on 2 acquisitions after quarter end. Giant was an all-cash asset acquisition for $2 million with only a $350,000 initial payment on closing and $1.65 million in deferred payments over the next 4 quarters. This for a business that we conservatively expect to generate revenues of $15 million to $17 million and adjusted EBITDA of $3.5 million to $4 million for our 2027 fiscal year.

The ability to acquire assets that will perform at this level were just 0.5x adjusted EBITDA with no leverage or dilution is the first step of our company's financial transformation.

The IndiCue acquisition was step 2. This acquisition was a business combination for 100% of the equity of IndiCue for base consideration of $22 million. $12.8 million of which was paid at closing and included deferred consideration of $9.2 million due within 1 year of closing in cash or equity at the company's discretion. Total consideration could increase to $40 million if IndiCue meet certain future revenue and gross profit milestones over the next 3 years.

In addition, the acquisition included $3 million of cash and $750,000 of net working capital at closing. The additional earn-out consideration is payable in cash or equity at the company's discretion. IndiCue is expected to contribute more than $38 million of revenue and $7 million of adjusted EBITDA for our 2027 fiscal year.

We financed the IndiCue acquisition with $13 million of convertible notes with existing long-term Cineverse shareholders at company-friendly terms, reflecting the investors' strong conviction in our investment strategy and long-term valuation creation of this acquisition for our current shareholders. Importantly, the capital came from aligned long-term investors with no warrants attached and the additional equity raise was priced at or near market with fundamental investors.

The entire Cineverse C-team also invested alongside the transaction, reinforcing our alignment with shareholders. The combined acquisitions are expected to contribute in excess of $50 million of revenue and $10 million of adjusted EBITDA for our 2027 fiscal year. As a combined entity post Giant and IndiCue acquisitions, we are providing guidance for fiscal year '27 of $115 million to $120 million of revenue and $10 million to $20 million of adjusted EBITDA. The combined impact of the Giant and IndiCue acquisitions represent a financial transformation for the company and are expected to create significant shareholder value in the future.

Separately, from the acquisitions, on February 12 and closed this morning, the company sold 1.725 million shares of common stock at a purchase price of $2 per share for net proceeds of $3.2 million. We intend to use the net proceeds for working capital and for general corporate purposes, including the financing of content acquisition and development.

With that, I'll turn the floor over to Erick to discuss our operating highlights and the acquisitions in greater detail. Erick?

Thanks, Mark. So I want to start with a quick recap of what we've delivered operationally this quarter and then spend the bulk of my time on why the Giant, IndiCue acquisitions are so strategically important to where we're positioning Cineverse for the next chapter.

So on the operational side, we continue to see strong momentum across our streaming ecosystem. We reached 35.5 million unique viewers on a monthly basis over the quarter with our SVOD subscriber base growing 15% year-over-year to 1.55 million. On a monthly basis, we're streaming about 1.14 billion minutes each month.

Our content library now exceeds 66,000 total assets, including nearly 58,000 films, seasons and episodes, plus over 8,500 podcasts. Our social footprint has now grown to more than 25.4 million followers. These aren't vanity metrics. This is reach, engagement and content gravity that matters when you're building distribution advantages.

And specifically, on the Cineverse channel, our namesake channel, we added approximately 45,000 subscribers in calendar 2025, giving us room momentum heading into our new fiscal year. I also want to highlight our operating leverage. Our direct operating margin hit 69% this quarter, up from 48% a year ago. That's a significant inflection. On the cost side, between personnel optimization, vendor eliminations and cost renegotiations, we've already realized approximately $1.9 million of the targeted $7.5 million in projected cuts across our studio operations and corporate overhead.

We expect to see most of the remainder come through over the next 2 quarters. You're starting to see the company find its operational rhythm. That foundation is a critical context for what I'm about to describe with these acquisitions.

So let me talk about Giant and IndiCue because they're not really about getting bigger for the sake of it. They're about filling a specific gap we identified in the market and then building the architecture that solves for it.

For years, we've been building Matchpoint as an advanced infrastructure layer for digital video distribution. We invested heavily in machine learning, automation and what I'd call the operational plumbing that the streaming industry desperately needs. But the deeper we got into conversations with studios, distributors and platforms, the clearer it became. The industry is hopelessly fragmented. Content distribution is separate for monetization. Monetization is separate from data, and that fragmentation creates friction inefficiency and critically, it leaves money on the table.

So first, Giant Worldwide has been serving top Hollywood studios and streaming platforms for over 2 decades. Digital preparation, and coding, quality control, standards and practice compliance and delivery across every format. They're trusted by 4 major studios and top independent distributors, and they hold approved vendor status with those studios and the key platforms. So this isn't something you just get. It's earned over years of reliability, security and quality, and it's a substantial moat.

But Giant was operating on traditional infrastructure with manual workloads and labor-dependent processes. And critically, they were actually turning away business because they couldn't scale hiring people fast enough to meet studio demand. So as we started integrating Matchpoint's, AI video and audio quality control, automated ingest, frame-by-frame analysis and transparent mastering workflows, we are already starting to see immediate efficiency gains.

We're seeing -- we're already achieving 60% to 70% efficiency improvements in coding delivery in the short time we've already been deploying them. Matchpoint is capable of ingesting and -- to remind you, Matchpoint is capable of ingesting and mastering over 15,000 titles per month and can scale far beyond that. So that's the power of automation and genuine scale. And I want to be clear. We haven't even fully optimized Giant for software-like margins yet. That's a future state.

So right now, Matchpoint is solving the scale problem and the whole margin optimization opportunity is still largely ahead of us. So the market opportunity here is substantial. On a global basis, post and media services is a $25 billion fragmented market growing at 11% CAGR and expected to hit globally $74 billion by 2034. The industry is shifting from these labor-led workflows to AI-powered platform-led workflows. And that transition is happening, whether companies are ready or not.

So we're positioning Matchpoint to lead it, and the market response has confirmed our thesis. The announcement was the right message at the right exact moment for this industry. In our first month of operating Giant under the Matchpoint umbrella, we saw a nearly 470% increase in business over the prior year period. And that trend has accelerated into February as studios and platforms are telling us they really need this. They need the scale, they need the automation and they need it from a partner they can trust.

So now IndiCue is the other critical piece. IndiCue built a proprietary connected TV monetization platform, ad serving, supply side, demand side, SSAI or server-side ad insertion, on a very scalable infrastructure. So we have real control over that stack. They have over 40 live clients today with 75 more onboarding, including major names like IMAX, Freecast, Cannella and more. They're projecting $38 million of revenue at about $9.6 million EBITDA for calendar '26 with a 25% margin.

And those are the economics of a platform that works. But here's what really matters. IndiCue is the monetization layer we were missing. So Matchpoint gets content to market at scale but how you sell ad inventory, optimize yield, price and package ads, that was happening in a completely separate silo. So IndiCue closes that loop, distribution, data, monetization now work as a single system, with a real-time feedback engine.

We see performance, can act on it immediately and improve results for our own content and for some of the largest media companies in the world. So what we've built is something the industry has never had an independent full-stack white label solution that unifies content delivery and ad monetization that's actually integrated, not loosely connected.

And the combined teams are already developing new ad tech products on the Matchpoint stack that neither company could have built on. So I want to spend a moment on why this positioning matters beyond today's customers. There's a structural shift underway in tech right now that's directly relevant. In the AI era, value is migrating away from interface layers and towards platform and infrastructure layers. AI agents don't need dashboards.

They need real platforms with real underlying data beneath them, systems that can execute thousands of decisions per second. The companies that own the infrastructure and data are the ones that will matter, and that's exactly what we've built. So Matchpoint is the platform layer. Giant brings proven infrastructure, trust and customers, IndiCue brings monetization engine. Together, combined with our Matchpoint platform, they create a system of record for the entire media supply chain from ingestion through encoding, quality control, delivery, yield optimization.

It's not a dashboard that sits on top of someone else's stack. This is an actual operating system. And because monetization is integrated directly into that infrastructure, data is flowing in real time. That means higher CPMs, better yields and smarter targeting for advertisers, better calibrated ad loads for consumers. And when these systems are disconnected, everyone loses. So we've closed that gap.

So to close this out, with these 2 acquisitions, we've made a deliberate strategic choice. We're building what this industry does not have, a unified, automated architecture for the entire media supply chain, that's the moat, and it positions us to serve not just today's market where consolidation means customers need scale, speed and transparency, and we are meeting that today, but also the future market where intelligent systems will be making the vast majority of decisions in tandem with media companies.

So across the company, our focus remains clear. We're building for scale, for margin and for durability. We now have multiple high-growth engines that reinforce one another supported by technology data and a fast-growing audience footprint, and we feel very well positioned for the quarters ahead and for the long term.

So with that, operator, we can open the line for questions.

[Operator Instructions] First question comes from the line of Brian Kinstlinger, of Alliance Global Partners.

Great. Can you hear me?

Yes.

Congratulations on the strategic positioning through these acquisitions. My first question is, when I q at the filings on IndiCue, their business went from virtually no revenue in 2023 to $10 million, and to $32 million each of the last few years. Can you talk about the evolution of this business? I think there are 3 customers that make up the majority of the revenue. And is this recurring? And how? And is the growth generally penetrating new customers? Or is it penetrating the wallets of those existing customers?

Brian, I think Erick will take that question. And I think the concentration has improved quite a bit year-over-year. So go ahead, Erick.

Yes, sure. So I think there is a moment in time that IndiCue really was built for, and that's independent CTV monetization platforms with the prior acquisitions of companies like Springserve and Publica, the need for real independent platforms has emerged. It's not uncommon in early-stage businesses like IndiCue to have pretty high concentration early on as they leverage strong, long-term relationships of the founders and so on.

And that's what happened in this case. But that underlying concentration has been improving pretty dramatically, looking at the rearview mirror of the filings, the concentration has only improved, both on the supply and demand side. But I think one of the things that's very compelling and differentiated from, say, other network plays and other things is the combination of the technology and the volume of business that's flowing through leads to a much stickier and durable relationship than people that don't own the tech or that partners have not built their businesses decisioning on top of.

So that durability, some of the core customer base, one, represents a large holdco that has beneath that hundreds of different advertisers flowing through it and spending through it. And some of the other players are very large-scale players. So I think it's important for a business like this to build strong nodes of consistent recurring business that is mutually beneficial and expand from there.

And I think that's exactly what they've done also on the supply side, adding in major CTV partners and OEMs that have dramatically diversified the business over the last few months. So really, it's having the right product at the right time for a market that needs autonomy and independence from SSPs to be able to allow companies to do the things that they need to do to maximize their returns and yields in the CTV market that's maturing. And I think this is sort of the exact right product at the right time for that.

Great. My one follow-up and then I'll get back in the queue. I think you guys want us to keep to 2, is maybe an update on Matchpoint. It looks like in your press release, you talked about announcing 4 new customers, ATPN, The Asylum, Spark and Waypoint, can you size these wins, what they mean in your revenue guidance for next year? And did they include the full stack that you acquired? Or will they grow as you add those new capabilities as part of Matchpoint.

Yes. So I'll defer to Tony on how sort of the business will evolve. But I think with most of our customers, we really have a -- they're coming to us through 1 door for a specific need. Some of them are coming to us for media processing. Others are coming through for quality control. Others are coming through because they need an app platform. And still others now are going to be coming through because they need monetization. So with that base of customers, most of those customers came through because they needed either an app platform solution or an encoding solution.

I think we're following a pretty classic land-and-expand type model where we get the customer in and they have a lot of other integrated services that they can add and layer on. So Tony, I don't know if you can speak to sort of total value of these types of customers without specifics on any 1 specific. I think I'd characterize them as kind of lower mid-market customers but steady, stable customers. Tony, do you want to take that?

Yes. I'll take that. Thank you, Erick. So Brian, I think what you -- what we haven't really spoken a lot about is really the synergy between Giant and Matchpoint. So think of a lot of the work that we've been doing with Matchpoint over the last 2 years has been really on gaining a foothold within the market, market validation, traction.

And we had started kind of on the low end of the ecosystem by doing deals with channel operators, FAST channel providers and so on. And as you may recall from earlier meetings, some of the studio deals, there was interest, but the vetting and the process to get onboarded was a year or 2 years. It's just a very long, slow process. So by doing the Giant acquisition, overnight, we had deep studio relationships with 4 of the largest studios and slew of other large media companies.

So now what we've done is the synergy that the Giant deal brings us is we now have the ability to start selling Matchpoint, not just delivery services, but other parts of the Matchpoint stack to this -- to these big media clients. Some of these clients, one of the studios we were talking to, we were going through the vetting process.

Once we acquired Giant, we no longer had to go through that process. We were an approved vendor. And so think of it that way that Giant really short circuited the vetting process that could have taken Matchpoint a year for us to get into market. So now to Erick's point, we have the ability to land and expand with these big media clients and start selling more services than just what Giant was providing.

So some of these, I would say, our largest studio partner they were spending roughly $1 million a month with Giant. We think we could double that. easily. And that's just for the existing services. There's substantial upside there. It's a little early to say how high the ceiling is, but we think that there's tremendous growth opportunity there.

Your next question comes from the line of Dan Kurnos of Benchmark.

Great. First and foremost, let me just say congratulations. I mean, it took a lot of time, effort and guts to completely change the narrative here. So kudos to you guys for basically shifting the premise, which I think is great and completely derisking the other side of the business. So with that in mind, Tony kind of just answered the first question I was going to ask, but maybe I'll ask it in sort of a broader sense, which is, we got some color from all 3 of you now basically on sort of the synergistic elements of these deals and how they work together.

So within the confines of the guidance that you guys have given, you've got cost cuts, you've got other synergies, you can make -- you can improve Giant margins. Like how much of the combined synergies are we anticipating over the next 12 months? And how much do you think things could ramp if you guys kind of get the execution right, fold this all in and then really show what the consolidated entity can do. So I'm just trying to understand what you guys have embedded in the guide for fiscal '27. And I'll ask a follow-up after.

This is Chris. Dan, I just want to thank you for those comments. But I think probably, Erick and Mark Lindsey, are probably best to respond to your specific questions about fiscal 2027 and the guidance.

Yes. So I'll tee it up. I think I'll give the general sort of basket of these things. I'll let Mark Lindsey talk some specifics about forecast synergies as part of the forward guidance. I'll talk in generality. So if we really kind of think about what is -- how are we stacking up the various elements here to get to those EBITDA and revenue numbers.

First and foremost, just to rehash the cost, the cost reductions in the studio business is really to get that business refocused and aligned on recurring revenue growth out of the streaming business at high margins. Obviously, getting the studio model to a place where it's more predictable, and I think smoother revenue ramps, and 1 of the ways to do that is obviously push the margins as high up as we possibly can, and that will help absorb the natural volatility you see in a movie releasing business.

Hopefully, we increased the throughput of movies to smooth out the volatility on that studio business. But that's sort of job #1 in the studio. So that's realizing about $7.5 million of cost reductions. We also have a plan to move a lot of the content costs that today were being borne by our balance sheet -- off balance sheet into other financing mechanisms, that are kind of industry standard for studios to make that business look even better.

So that's job #1 there. Job #2 is on these 2 acquisitions, what are the immediate synergies that can be provided. So we're talking about IndiCue, Mark Lindsey, you can confirm this. I believe we're looking at somewhere up to, between $8 million and $9 million of potential synergies by deploying IndiCue's capabilities across our media portfolio on the revenue side. Mark, can you speak to that a little bit on the revenue and potential EBITDA synergies as we kind of deploy IndiCue into monetization and improvements in our existing sort of ad-based infrastructure?

Yes, sure, sure. Absolutely. So I'll hit on a few of them. I definitely don't want to reset our guidance because they're good numbers as they are. But there's some significant revenue synergy upsides from both Giant acquisition and IndiCue and how they integrate with Matchpoint. And then as well as the revenue synergies that come from IndiCue and their ability to leverage our existing infrastructure and our ad platform and our various channels.

So we -- as Brian noted earlier, IndiCue had a significant growth profile. As Chris mentioned, they've exceeded estimates, exceeded their forecast for the last 3 or 4 months. So they're growing rapidly. They're very profitable. There are, we believe, revenue synergies that we're going to have the opportunity to execute on and realize that we don't have built into our guidance. This guidance is clearly numbers that we think we're going to be able to obtain.

So there's some upside there. There's a lot of revenue synergies that are attainable, but we want to put a fairly conservative number out there. And we have bigger numbers for fiscal '28 and fiscal '29 as it will take a few months to ramp up and see those synergies take place and have traction. So without putting specific numbers out there, the $110 million to $120 million, that's including mid-$50 million of revenue combined from the 2 acquisitions and $10 million plus of EBITDA coming from the acquisitions, but we think there's definitely some upside there related to the synergies.

And Erick mentioned, there's about $7.5 million of cost savings that we have fully built into the adjusted EBITDA guidance that we put out there. So while it's aggressive numbers, we think they're very attainable, and there's definitely some upside there.

And then -- and I'll just finish up the last bit on the -- talking a little bit about the margin improvement on Giant. One, so today, if you think about that business model, it's a labor dependent with sort of labor and SG&A costs or depending how it's characterized in some cases, it could be OpEx costs, tracking with revenue. So there is no scale benefit to that business.

If you book more revenue, you got to hire more people where we saw the limits of that, that was happening over the last couple of months with them where just not enough, you can't scale people enough to meet the demands of the industry. We look at and see about 70% of the work can be done for encoding and delivery part of that business which is the lion's share of the revenue, can operate within Matchpoint's automation platform which would kind of flip gross margins from low 30s to mid-70s, give or take.

So that in and of itself is, I think, 1 of the biggest parts of the transformation is not only is the volume, I want to call it infinitely scalable but near so, but it also more than 2x-es the margin out of the business. So we have to build -- obviously, build the mechanisms and systems that make it easy. The good news is porting that over is not exactly the most challenging technological thing in the world. It's more workflow and process in the early days, and it will be more automated in the later part of the year.

But I think that also reflects on some of the cost basis. And then the last piece is we kind of look at these 2 businesses, we don't really need to do -- these are very differentiated businesses. There are some improvements we made on Giant pre-acquisition was an asset purchase. We didn't take all the people, all the cost structure. So we -- on day 1, we improved the cost structure there. There are minor things you do in any business, but that business for the most part, the cost realization. A lot of it's done already.

And IndiCue is a small, lean, highly profitable, smartly structured company that we don't have to do, there's not really any synergies to reap there. So most synergies are going to be coming from optimizations to the business models of the respective companies on either side of the equation.

That is incredibly comprehensive. Thank you for that. Very helpful and don't worry Mark. No one includes revenue synergies and acquisitions, so I think you're fine. The only other thing I'd ask for you guys because I know this is going to be a sort of an unprecedented or at least in recent times, question, which is, how should we think about free cash flow conversion now that you guys are going to have real meaningful EBITDA. And I know we have the really favorable convertible note that's out there, but you guys are going to have to think about now what to do with the cash that you're going to start generating.

I'll tee it up and then Mark, you can kind of dig into that. But the good news on these 2 businesses is not big CapEx, no big CapEx investments really are going to be required. They've been -- they're -- the improvements and the sort of synergies and benefits to growth are coming from over a decade of investment into our software platform.

So we start to realize the benefits of those applying those to other scale economics, and/or they've built out many years more capacity than we'll need to. So realistically, free cash flow flows back into growth initiatives for the company. So I think that's 1 of the core benefits here is we see an environment where there's a lot of companies similar to Giant and IndiCue that are highly accretive and add to the flywheel of this platform as sort of a baby version of what Salesforce did years ago, bolting things on or other things, that can scale this up even larger.

It also allows for other areas of investment and growth of things that we've been discussing internally. So that's a good place to be where we can leverage free cash flow as opposed to, say, dilution for some of these growth initiatives.

That's it, Mark, if you got something, go ahead, but I just -- congrats. So whatever you want to finish up with.

I'll just kind of summarize what Erick said. I mean this is a great position to be in. It's a little bit different than where we've been in the last few years. We're 5 weeks on 1 acquisition, and 2 days or 3 days into the other one. So still some time to get our arms around them. But definitely an opportunity to put some dry powder on our balance sheet, reduce the outstanding balance on our revolver.

As Erick alluded to, there's some unique opportunities out there for us for some tuck-in acquisitions to continue to help grow the company. That will be day 1 accretive that we feel like we can get at a great price. And hopefully, we're in a position where we can utilize cash and/or equity, as a capital to make those acquisitions. So we can talk free cash flow in next quarter and start reporting on it.

So I know you're excited to see that number. So we'll start doing it.

[Operator Instructions] Your next question comes from the line of Laura Martin with Needham.

Can you hear me okay?

We can hear you now.

So congratulations. It seems like you've made transformative acquisitions here. Chris, my first question is for you. So the studios absolutely need to cut cost and then automate their workflows. But I sort of feel like the studio system -- look, I think Wall Street has a consensus that generative AI tools are going to lower the cost of content creation and proliferate content makers, and that's going to ultimately hurt the studios over a longer-term frame.

So my question is when I think about Matchpoint, which I saw a demo at CES and I thought it was fantastic already. It's going to be even better now. Is there -- are there tools and features at Matchpoint that are applicable to the next generation of content creators through run lean, right? There's 5 guys, and they have their great software narrative guys. So is there something here that is applicable to the next generation?

Yes. Well, first, Laura, thank you very much for joining the call. We're very happy that you listened in. Thank you. One of the things that I really like about what we're doing on the AI front is we're putting forth, I think, positive AI tools that help the industry, whether it's what we're doing here with Giant where we're using AI in our technology basically to power fulfillment and drive down costs for the studios or what we're doing on cineSearch with Ava, our Siri for streaming search. They're done in a way that doesn't have any negative impact at all on the creative side of the business, and yet they're positive applications of AI within the industry.

We just made an announcement the other day, and I'm going to turn this over to Tony about how we're going to be developing AI tools on the creative side of the business. So Tony, do you want to respond to that question?

Yes, of course. Thanks, Chris. Laura, thanks for the question. Yes. Obviously, as an AI forward company, we continue to monitor and watch all the key developments within the industry. On Monday, we announced the formation of the Matchpoint Creative Labs. That's essentially our R&D unit for GenAI so we're already working with some clients on taking GenAI and using it for ad creation, which would tie in with IndiCue.

We're also using it for channel branding station IDs and so on. And this is a service that we can provide our Matchpoint clients, they use Matchpoint Blueprint or FAST channels. But we continue to invest in that area. I think in terms of your question, definitely where we are compared to the rest of the industry, we're pretty far ahead.

Agentic AI is something that Erick spoke about during his portion of the of the script. I would say agentic AI and creating an intelligence layer related that sits on top of the data that we manage is a big focus of ours that we'll be doing some announcements later this year. But we get it. We're very invested in this space, and I think we have a very good handle in terms of how we can leverage AI in what we feel is an ethical way that doesn't hurt the business.

But we're here ultimately to build as we say, picks and shovels to help the rest of the entertainment industry move forward, and we think we have a huge foundational head start compared to any of our competitors.

And I'll add 1 thing, Laura. So I think your question really is whether the studios catch up and start to focus on AI and they're sort of an innovator's dilemma play there or if other companies emerge. I think our position is that, it is going to massively increase the volume of total content.

So if anything, a platform that can organize, monetize, route it, is going to become even more critical, apply other tools to make it distributable into beyond just YouTube and other sort of social platforms because we believe looking at the quality leaps, generational leaps that are happening. This is going to democratize the quality available, and the volume of content, but we think that this is -- this will make what we do being able to ingest, normalize the metadata, so it can go into the various sales and monetization channels, doing things like localization, tracking rights, delivery to all the FAST AVOD other platforms, performance tracking, providing real-time data and feedback that can inform the models that are making it.

That's where I think our platform actually is going to add massive value if that is the future universe that happens. And so -- and we believe that's likely. So we think we're in a very good position to handle that explosion of content.

Great. And then my second question, and then I'll stop there is, you guys just made transformative -- you transformed the business with these 2 acquisitions. So what next? Are we done? Are we done with acquisitions? Do you need more stuff? Do you listen to your clients about what they need and they lead the way in what you add or bolt-ons to these acquisitions? What happens next on the M&A front?

So I would add that, number one, we've got a lot of work to do to digest these 2 acquisitions. So the short term is about post-merger integration, making these all work, getting all the teams aligned to the growth that we're putting out there.

But I think the environment that we find ourselves where the media services industry, the processing the packaging data. There are a lot of companies that were private equity and other buyers, corporate and strategics bought these businesses at the peak of COVID, high valuations or under thesis that don't make sense anymore. And those companies are going to become available over the next months and years.

And we think finding the best of the best that have strong assets that fit with our flywheel, stripping out cost structures and the same way we're doing here and automating them to capture scale and more value is a model that we think is worthy of pursuing. And first, we're going to prove the thesis though over the next months and quarters here.

I agree with that, Erick. But I would just say, if you look at these 2 deals, if you drill down into these 2 deals, they're going to be enormously accretive. They were done with great valuations and there are incredible synergies between the 2 companies.

And even though, it's always a challenge to integrate companies together, we think in the grander scheme of things, both companies are very easily integratable into Matchpoint. So -- and the short answer is, if we can find other opportunities like Giant and like IndiCue that we think just have enormous upside. Of course, we're going to do that because it's in the best interest of our shareholders.

There are no further questions remaining. So I'll pass the conference back over to Chris McGurk Chairman and CEO of Cineverse for closing remarks.

Thank you. Thank you all for joining us today. Please feel free to reach out to Julie Milstead with any additional questions you might have from this call. So we look forward to speaking to you all again on our next quarterly call. Thank you all very much.

That concludes today's conference call. Thank you for your participation. You may now disconnect.

Good day, everyone, and thank you for joining us, and welcome to the Cineverse Corporation Second Quarter Fiscal Year 2026 Financial Results Conference Call. My name is Luca, and I'll be your moderator today. [Operator Instructions]

I would now like to turn the call over to Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser for Cineverse. Please go ahead.

Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal Year 2026 Second Quarter Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal second quarter ended September 30, 2025, is available at the Investors section of the Cineverse -- of the company's website at cineverse.com. A replay of this broadcast will also be made available at the Cineverse website after the conclusion of this call.

Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements.

All of the information discussed on this call is as of today, November 14, 2025, and Cineverse does not assume any obligation to update any of these forward-looking statements, except as required by law. In addition, certain financial information presented in this call represent non-GAAP financial measures, and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.

I'm Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser at Cineverse. With me today are Chris McGurk, Chairman and CEO; Erick Opeka, President and Chief Strategy Officer; Tony Huidor, President of Technology and Chief Product Officer; Mark Lindsey, Chief Financial Officer; Yolanda Macias, Chief Motions Pictures Officer; and Mark Torres, Chief People Officer, all of whom will be available for questions following the prepared remarks.

On today's call, Chris will briefly discuss our fiscal year 2026 second quarter business highlights. Then Mark will follow with a review of our financial results, and Erick will provide further details on our business and operating results and new initiatives.

I will now turn the call over to Chris McGurk to begin.

Thank you, Gary, and thanks, everyone, for joining us here today. I'd now like to cover some important business highlights, and then Mark will review our financial performance, and then Erick will cover our operating progress and new business initiatives in much more detail.

We had a slightly down revenue quarter with strong margin improvement. Total revenues were $12.7 million, down 3% from the prior year quarter. During the quarter, we closed a $1.1 million licensing deal for The Toxic Avenger that will be recognized in future periods. With this license fee revenue, the revenues for the quarter would have been $13.4 million, up 5% from the prior year quarter.

Operating margins grew by 7% from the prior year quarter to 58% Net income and adjusted EBITDA in the quarter were impacted by the investments we've been making to build our technology sales force, grow our Matchpoint deal pipeline and fill and market our theatrical release portfolio. We expect those investments will generate returns over the balance of the year and beyond. At the same time, we continue our intense focus to control costs and leverage the savings and efficiencies of Cineverse Services India to manage SG&A spending.

The Toxic Avenger Unrated released on August 29 did not perform as well as we hoped at the box office. However, our marketing campaign is helping the film perform very well in the ancillary distribution markets, particularly VOD, physical and licensing with Amazon and Hulu, and the film will be profitable with an expected IRR of 40%. We own the domestic distribution rights to this film in all media in perpetuity. And so we believe it will be a strong and valuable addition to our over 66,000 title film library.

Now the performance of the Toxic Avenger Unrated is very instructive about the risk-reward profile of our portfolio film strategy as much so as Terrifier 2 and 3 were, two films that dramatically overperformed everybody's expectations at the box office and then in the ancillaries. Because we keep our all-in acquisition and theatrical releasing costs on our films to less than $5 million each and because we utilize our fan-centric streaming channels, advertising technology, podcast network and social media footprint to generate millions of dollars in media value with relatively little out-of-pocket marketing costs our film portfolio has enormous downside protection, while at the same time, our strategy sets the stage for upside breakout performances like Terrifier 3, which opened to #1 at the box office and ultimately did $54 million in ticket sales on an opening marketing spend of only $500,000. I can guarantee you that none of our competitors with their traditional film releasing models would have achieved anywhere near a 40% return on investment on The Toxic Avenger unrated. In fact, I'm very certain that all of them would have lost money on the release.

And our next two releases, Silent Night, Deadly Night on December 12 and Return to Silent Hill on January 23, 2026, follow the same blueprint [indiscernible]. Both are fan-centric IP-based films that have an all-in investment projected to be well below $5 million each and also below our investment level in The Toxic Avenger Unrated.

Also of note, our IP-based family film, Air Bud Returns is nearing the completion of principal photography and continues to generate much buzz on social media, the press and late-night TV. We expect to release this film in late calendar 2026.

Our unique film releasing approach and artist-friendly model have both been attracting more and more quality directors, producers and agents to approach Cineverse as a film distribution partner versus the traditional studios and other independents. Nowhere is this more evident than in our announcement last week that we will be releasing the 20th anniversary edition of Pan's Labyrinth. The horror fantasy masterpiece from an acclaimed screenwriter and Director, Guillermo del Toro, who has had a massive recent critical and commercial success with his visionary film version of Frankenstein. Pan's Labyrinth won three Academy awards and has received over 100 other worldwide film awards. It is widely acknowledged as a classic visionary film with a strong message that is tailor-made for the world today.

When it debuted at the Cannes Film Festival, it received a 22-minute standing ovation, the longest tribute in the history of the festival. The film has been invited back to Cannes for a special anniversary presentation next May, which will kick off our marketing campaign for a late 2026 theatrical release, including large formats. We have a multiyear domestic distribution deal in all media on this movie, making it a terrific addition to our film library.

And as he stated in his video announcing his partnership with us, Guillermo brought this classic beloved movie to Cineverse versus the majors and other independent studios because he wanted to take advantage of our unique nontraditional artist-friendly approach to film releasing. Expect more announcements in the next few months as we meet with more key industry talent and evaluate multiple new film opportunities that fit our releasing model and ecosystem of marketing assets.

And we just received an updated third-party valuation of our content library. The library is now valued at $45 million, significantly above the $3.2 million in book value on our financials. This valuation of just one of our key assets is strong evidence of our belief that we remain very undervalued given our current market cap.

We also made very strong progress in building out our Matchpoint technology sales pipeline with dozens of potential partners, including large entertainment companies and major studios now actively evaluating our technology. We just recently announced we have already closed four of those deals.

And we're also quickly moving forward on our high-potential micro drama joint venture with Banyan Ventures, preliminarily called MicroCo. With a goal of becoming the domestic market leader of this more than $8 billion rapidly growing worldwide business, we are very encouraged by the response to our plans by potential investors and strategic partners and by the creative community. We also have already received a funding commitment from a leading venture capital firm.

So, Erick will speak in more detail on all this in a minute. But now I'd like to turn things over to Mark for a financial review. Mark?

Thank you, Chris. As Chris noted, we closed on a $1.1 million licensing deal for The Toxic Avenger Unrated that will be recognized in future periods in accordance with current accounting rules. In the prior year quarter, the company recorded $1.6 million from a similar Dog Whisperer license agreement. Excluding these timing effects, performance across the company's core business line continued to show solid underlying growth. For the quarter, we had a slight decrease in revenue but strong gross margin growth with $12.7 million in revenue, a $0.4 million or 3% decline over the prior year quarter and a gross margin of 58% compared to 51% last year quarter, materially above our guidance of 45% to 50%.

For the quarter, we reported a net loss of $5.5 million and adjusted EBITDA of negative $3.7 million compared to a net loss of $1.2 million and adjusted EBITDA of $0.5 million in the prior year quarter. The decline in both numbers is primarily the result of SG&A expenses impacted by increased investments in sales, marketing and technology to support our expanding theatrical and technology initiatives as well as start-up costs associated with our newly formed MicroCo venture. We fully expect to see strong top and bottom line results in the remainder of our fiscal year as a result of these upfront investments and in fiscal year '27 with the launch of MicroCo.

We had $2.3 million in cash and cash equivalents on our balance sheet as of September 30, with $5.9 million available on our $12.5 million working capital facility. The decline in cash from year-end is directly attributable to the payment of royalties during the quarter, the majority of which was related to the Terrifier related to Terrifier 3 and advance payments associated with our increased theatrical slate.

We would also like to highlight the positioning of our current balance sheet with no long-term debt, no acquisition-related liabilities, outstanding warrants have been reduced to 700,000 shares and $5.9 million available on our capital facility as of quarter end. In addition, our content library valuation has been finalized, reflecting an increase in the value of our library to $45 million compared to the current book value of $3.2 million as of quarter end, reflecting material asset value not included on our balance sheet.

Finally, coming off a fiscal year with record revenues and strong revenue and gross margin growth, this quarter, we believe the SG&A investments that we've made during the first two quarters of the year will lead to strong top and bottom line results for the remainder of the year.

With that, I'll turn the floor over to Erick to discuss our operating and strategic growth initiatives. Erick?

Thanks, Mark. This was a strong quarter across streaming, distribution, technology and our emerging businesses. Starting with streaming. Total streaming viewers in the quarter reached 143.8 million, up 47% from last year. Total minutes streamed were 3.4 billion, up 45%. Fast minutes streamed were 3.2 billion of that, up 47%. And SVOD subscribers grew to 1.39 million, a 6% increase year-over-year.

Several of our key channels delivered their best ever quarters in viewer growth. Our Barney channel more than doubled year-over-year. Dog Whisperer grew nearly 1,000% Screambox TV increased 32% and Screambox SVOD is up 27% since the launch of Terrifier 3. With Toxic Avenger Unrated, we expect to see the majority of the impact in Q3, the current quarter. We secured a co-exclusive licensing deal with both Amazon and Hulu for the film. And as Chris noted, combined with the surge of direct-to-consumer subscribers on Screambox that we anticipate, we expect a healthy IRR that exceeds our baseline expectations of around 40%. We achieved this while minimizing downside risk through our theatrical model, and we plan to follow the same approach for our upcoming slate of horror thriller and independent films.

Our Cineverse branded channel has now grown more than 6,400% since its relaunch in January in viewership. This reflects the strength of our fandom strategy and our ability to convert viewers efficiently into long-term users.

On distribution, our hybrid model continues to deliver. We're capturing strong licensing revenue while still preserving key windows on our own streaming platforms. That balance allows us to monetize content today while growing long-term recurring engagement, and it continues to be a competitive advantage for our company.

Turning to advertising. The environment this quarter was mixed. Bill rates in CPM were pressured as the market continues to adjust the large amounts of new inventory that Amazon, Netflix and others brought online over the last year. Combined with macro concerns and tariff uncertainty, many core CTV advertisers remain cautious, which created choppiness across the category, and it was no different with us. Even so, our direct sold business performed well and repeat partners keep returning because campaigns on our platforms deliver results.

What matters most is that our audience base continues to expand rapidly. Every new viewer in every new FAST channel widens the funnel so that when conditions normalize, we have the scale to benefit disproportionately. And we're heading into that period into a period that tends to be favorable. Political spending begins ramping in our fiscal Q4, calendar Q4 and early fiscal Q1 calendar -- sorry, early fiscal Q1, calendar Q2. And historically, that lifts our entire ad business. Easing interest rates should also bring more confidence in budget back in the market.

So we're also preparing the next phase of our ad stack with the integration of Cinecore, our massive AI-driven metadata repository into C360. This will allow advertisers to target audiences around specific shows, series, genres and fandoms with far greater precision. The value prop is simple. Instead of buying a show directly on Netflix, an advertiser can buy the entire audience that loves that show or similar shows across the Internet at a lower cost with better attribution, and we believe this will be a major differentiator.

Next, turning to technology. Matchpoint had one of its strongest quarters yet. We added more than 20 new customers in the last 100 days and launched Matchpoint 3.0, expanded internationally and are now onboarded with a major Hollywood studio. We also secured new partners in APTN, The Asylum, Spark, and Waypoint and expanded fast distribution across LG, ANZ, Rockbot and Roku U.K. In addition, Matchpoint is currently under evaluation by a second major Hollywood studio as well as a major television broadcaster.

As previously stated, these deals require a longer and more complex deal cycle, but offer significant recurring revenue opportunities for the company and bring significant market validation, which attracts additional large players.

The acceleration is being driven by the state of the industry. As consolidation continues, library distribution needs keep increasing. Studios are under intense cost pressure and everyone is trying to prepare their catalogs for the AI era. Most of the entertainment industry still relies on legacy systems, messy vaults, manual workflows and antiquated delivery infrastructure that heavily rely on external manual vendors. These methods are no longer viable within this new streaming era as they cannot scale to the massive modern distribution demands.

Matchpoint was built for this exact moment. It automates packaging, delivery, metadata, rights intelligence and AI search into one system. So we're now evaluating strategic partnerships and selective acquisitions that could accelerate expansion to ingest, catalog transformation, QC and AI native library preparation. Our goal is straightforward. We want Matchpoint to become the operating system for content libraries worldwide.

And finally, MicroCo continues to build momentum ahead of plan. And I want to emphasize, micro dramas are not a fad. Our research indicates that at maturity, micro dramas could represent up to 20% of professional streaming viewing time. That would make the format central to the entertainment ecosystem and essential for every major streaming platform to be involved with.

And we have a leadership team designed to build this category. Jana Winograde, former President of Showtime, is our CEO; Susan Rovner, who led television at both Warner Bros. Discovery and NBCUniversal is our Chief Content Officer; Lloyd Braun, former Chairman and President of ABC Entertainment behind hits like Lost, and The Sopranos, serves as Co-Founder and Chairman.

The industry response has been overwhelming. We're seeing exceptional inbound interest from producers, creators, brands, studios and institutional investors. The current short-form market is fragmented and no platform integrates professional production, creator tools, AI native workflows, discovery and monetization, and that is what MicroCo will be designed to provide.

We already have significant commitments from a leading venture firm and are actively engaged with additional partners. Developing our development on our initial slate is underway, including live action, creator-driven series, new IP and franchise-based projects. The platform is being built from day one to be entirely AI native, allowing us to move more quickly and deliver a modern experience.

We expect to announce more details soon, including the official name, platform features, partnerships and launch timing. By combining our technology, our AI and metadata systems, our automation capabilities, our fandom channels and this leadership team, we believe MicroCo can create significant industry value and meaningful shareholder value extremely rapidly. Across the company, our focus remains the same. We're building for scale, for margin and for durability. We now have multiple engines of growth that reinforce one another, supported by technology, data and a fast-growing audience footprint, and we feel very well positioned for the next several quarters and for the long term.

With that, operator, we can open the line for questions.

[Operator Instructions] Your first question come from the line of Dan Kurnos with Benchmark.

Yes. One for Chris, one for Erick. Just Chris, epoxy, not as good in the box, but great in the ancillaries. Obviously, the licensing deal, it's nice to see some of the pay window stuff. Does this influence either your expectations for your upcoming slate based on what happens just kind of more of an adjacent category to the traditional horror? And also, just does it change how you view which films you go after? Obviously, you have your blueprint, but you kind of are -- it's going to take a little while to sort of settle in to see what fits and what kind of produces what kind of results.

And then for Erick, just on Matchpoint, I appreciate the incremental color. Just want to get a sense on timing of monetization. I know you said longer sales cycles. We've got a new studio there. It sounds like you guys are looking to also accelerate the growth, but it seems like it's moving along nicely. So just any color you can give us on contribution and sort of where you expect to be, say, like 12 to 24 months from now with Matchpoint would be super helpful.

So, Dan, this is Chris. Thank you. I'll take that first question. Well, I think as I said in my remarks, we really believe That Toxic Avenger validated our theatrical releasing strategy as much as Terrifier 2 and 3 did because it showed the downside protection, the strength of our ability to market movies in the ancillaries as well as theatrical and the utilization of our marketing ecosystem.

I'll repeat again, I don't think anybody in this business that had released a movie other than us would have got anywhere near a 40% IRR on that picture. But it's outperforming in the ancillaries.

I do think one piece of key learning that we got out of this is all of the other films in our release straight are straight down the middle genre pictures, horror pictures, family picture, a fantasy now from Guillermo Del Toro. This movie Toxic Avenger, which we picked up the rights forever for virtually nothing was kind of a mixed genre movie. What was it? A superhero movie, a horror movie, comic book movie, a comedy. It was a little bit of all those things. And I think if there's one piece of key learning that we take away from the release is movies like that are difficult to make work theatrically. So we're going to kind of avoid anything that's max of being a mixed genre movie in the future. Erick?

I'm here. Thanks, Dan. So first up on basically, when we think about Matchpoint, one of the -- first thing I'll unpack the revenue cycle concept. So -- and I'll also -- Tony is also on the call, and I think he can provide some additional color. But I'll -- first, I'll give you sort of the big picture.

As I noted in the call, we are seeing a pretty rapid and overwhelmingly positive response to the product as we take it out broadly to studios, broadcasters and so on. All of them are seeing incredible margin pressure and really need to entertain cost cuts and efforts to sort of maintain their margins as some of those business are level setting, others are maturing and others are entering a new phase of consolidation and technology sort of centricity.

So as we see that happen, all of them are expressing significant interest in using tech to accomplish that. There really aren't really -- there's always been the promise of a unified solution in the market, but none really exists that do what Matchpoint does. And so we're seeing incredible response. I think the biggest challenge is obviously, number one, as these large companies are highly bureaucratic in the cycle time from first conversation to steady-state operation, in its best incarnation in six months up to nine months in its longest incarnation.

And I think I'll let Tony really kind of talk about it more specifically with the studio that we're working with, but other prospects on that front. I would also say we are also in a lot of other businesses that have a high degree of cycle time that are much faster turn, as you can see, with new management in that unit that's experienced in the industry, we've been able to bring in 20 customers in a little over a quarter and change.

So I think we're going to continue to see that. And then the last thing I'll add is, as you noted, we do see an opportunity in the market. Most of the competition in this space are at relatively low margins but have strong established customer bases. So there is a thesis that there could be either partnership or M&A opportunities in the space that would effectively allow us to take relatively low cost and lower-margin businesses in the low 20s margins, 20% to 30% gross margins and take them up to the 80% to 90% software gross margins that we could get out of Matchpoint for most of the business lines.

Tony, I don't know if there's anything else you want to add on the sort of the cycle time and the prospects on the larger customer base.

Yes, sure. Thank you, Erick. Yes, absolutely. As reported a quarter or two ago, we entered a pilot with a major studio. And as you would imagine, given the uncertainty within the Hollywood studio system with consolidation, several studios being acquired or potentially being acquired, it has created sort of an ecosystem or this inertia within the industry where everyone is a little afraid of moving, not knowing where things are going.

But in spite of that, as Erick pointed out, they're all under pressure to reduce costs, grow revenue, expand into new territories and launch their services more widely. All of them rely on traditional legacy vendors who do this manually. So time to market is an important factor for them. And that's -- as we've discussed many times before, that's what Matchpoint excels at.

So with the major studio that we just recently onboarded, it took us months just to get into their financial systems. We're through that. We're in the process of finishing our first order. This was essentially a validation that we can actually do what we said we can do. That is going well. The feedback that we've gotten from the studio is if this goes as well as they're seeing, they're completely interested in expanding the relationship and taking away from some of the competing vendors that we're competing against.

So what we see is the strength in the automation, the cost savings, the time to market, all the efficiencies that Matchpoint brings to us is of tremendous interest to the studios. At the same time, one of the challenges is what we do is so different that the second studio that is evaluating what we do, they understand what we're doing, but it changes how they do everything. but they see the benefits. And so that is a process that is taking a little longer.

But the upside to that is once we get accepted, this is -- we're not just a vendor, we really become part of their supply chain. And that is critical for what we're trying to do, where what we will do will be ongoing recurring revenue, deepen the plumbing of a major studio. We expect that each studio could bring mid-7 to low 8-figure revenue per year and growing based on expansion. So our goal is, as Erick pointed out, is to really be the operating system for the studio system. We feel there's no one else in the market that has anything close to what we do, and we feel we have a huge competitive advantage.

One area that we are working on is offering more professional services, custom development for the studios who are still trying to transition from legacy systems to automation. And that's an area that in the past, we've not really focused on because of the high cost and low margin. But when we combine that with the automation, we really feel that we have an all-in-one solution to the studios who need a level of getting them up to speed in order to leverage the automation that we bring.

So, with that in mind, I think the -- to Erick's point, the feedback we get and have received across the market has been extremely strong and robust. It's -- I won't even go through all the comments and feedback we get, it's stellar. And no one has seen anything that comes close to what we've built, and that gives us a huge technology moat that we feel very bullish about the future of Matchpoint.

There are no further questions remaining. So I'll pass the conference back over to Cineverse's Chairman and CEO, Chris McGurk, for closing remarks.

Thank you all for joining us today. And please feel free, if you wish to reach out to Julie Milstead with any additional questions you might have. We look forward to speaking to you all again on our next quarterly call. Thank you very much.

That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Good day, everyone, and thank you for joining us, and welcome to the Cineverse Corp. First Quarter Fiscal Year 2026 Financial Results Conference Call. My name is Eden, and I will be your operator today. [Operator Instructions] I would now like to turn the call over to Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser for Cineverse. Please go ahead.

Good afternoon, everyone. Thank you for joining us for the Cineverse Fiscal Year 2026 First Quarter Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal first quarter ended June 30, 2025, is available at the Investors section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at the Cineverse website after the conclusion of this call.

Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements.

All the information discussed on this call is as of today, August 14, 2025, and Cineverse does not assume any obligation to update any of these forward-looking statements, except as required by law. In addition, certain financial information presented in this call represent non-GAAP financial measures, and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.

I am Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser at Cineverse. With me today are Chris McGurk, Chairman and CEO; Erick Opeka, President and Chief Strategy Officer; Tony Huidor, President of Technology and Chief Product Officer; Mark Lindsey, Chief Financial Officer; Yolanda Macias, Chief Motions Pictures Officer; and Mark Torres, Chief People Officer, all of whom will be available for questions following the prepared remarks.

On today's call, Chris will briefly discuss our fiscal year 2026 first quarter financial highlights, the latest operational developments, outlook and long-term growth strategy. Mark will follow with a review of our financial results. Erick will provide some details on our streaming business results and operating initiatives, and Yolanda will cover our upcoming theatrical slate before opening the floor for questions. I will now turn the call over to Chris McGurk to begin.

Thanks, Gary, and thanks, everyone, for joining us on the call today. On our last call, Tony Huidor reviewed our technology business in some depth following our recent reorganization, where Tony became our President of Technology and Chief Product Officer to help turbocharge our tech business. On this call, Yolanda Macias, who recently became our Chief Motion Pictures Officer, will review our theatrical business in some detail as well since we have so rapidly built it into a surging new product line for the company. However, before Yolanda goes through that theatrical business review, Mark will detail our financial performance, and then Erick will outline our operational progress and the new initiatives across our businesses. And I will start before them by briefly reviewing some points that I believe are very important for our shareholders.

First, we had another strong quarter from a revenue standpoint with significant growth across all our key lines of business. Operating margins also increased markedly from the first quarter of last year. Investments in SG&A and marketing to support our expanding theatrical releasing business and build out our technology, product, business development and sales team impacted our adjusted EBITDA and net income. However, we expect to begin to see some strong returns from these investments beginning in our fiscal second quarter that we are currently halfway through. Mark will get into more detail on all that in just a minute.

Second, The Toxic Avenger Unrated hits theaters in 2 weeks on August 29th. We are pleased with the reaction to the film so far, particularly the response to the movie cast and director at Comic-Con, where we got major studio level panel placement in the main hall and lots of attention. Yolanda will get into more detail on the release and marketing strategy in a few minutes. But now I want to emphasize the economic comparison of this film to Terrifier 3 from a Cineverse standpoint. Like Terrifier 3, our all-in investment to acquire and release The Toxic Avenger is less than $5 million. That in and of itself generates a really favorable risk-reward profile for us with an extremely low ultimate box office breakeven of between $5 million to $10 million and significant upside beyond that.

However, the risk/reward profile on Toxic Avenger gets even better than that since we completely bought out the film from the producers for all North American rights in perpetuity. That means we completely own the entire stream of studio and producer revenues and profits that The Toxic Avenger will generate in all media domestically forever. And we don't have to share that with anyone. Obviously, that's an extremely advantageous position that I have never seen replicated for a major studio production such as this one.

Third, we added a great high-potential new film to our slate that we're very proud to have acquired, Air Bud Returns. We believe this amazing beloved family film and TV franchise formally set up at The Walt Disney Company for over 2 decades under the creative guidance and ownership of producer Robert Vince, has a built-in audience that is all prime for a wide release theatrical revival in late summer of 2026. Our recent announcement that Buddy, the Golden Retriever is returning to the big screen has already garnered a huge positive reaction from fans in the media, both traditional and social. The announcement was featured on Good Morning America, The TODAY Show and People magazine, among many, many other outlets.

Finally, just yesterday, we announced a 50-50 joint venture for MicroCo, a new studio and platform for Microseries, a market projected to reach $10 billion by 2027. Our partner for MicroCo is Lloyd Braun's Banyan Ventures. Lloyd is the former Chairman of ABC Entertainment and the former Chairman of WME. Joining this venture as CEO is Jana Winograde, the very talented former President of Showtime Networks; and also Susan Rovner as Chief Creative Officer, the also very talented former Chairman of NBCUniversal Television and Streaming.

The goal here is to be a first mover domestically in this rapidly growing new market by taking advantage of the demonstrated capabilities of this elite leadership team while fully leveraging Cineverse's unique set of streaming, content, technology, marketing and AI assets to create no less than the Netflix of Microseries in a low-cost, AI-native fan-forward environment. All the investments we have made over the years in technology, AI, content and streaming have given us a tremendous advantage in dramatically lowering entry cost to this business as well as accelerating speed to market and scale. Erick will explain all this in more detail in just a few minutes.

In many ways, we are entering this Microseries business for the exact same reason we entered the wide release film business because we have assembled a unique set of next-generation assets that create a compelling competitive advantage versus everyone else in the business. These assets enable us to break all the traditional rules and economic models that burden everyone else in the industry and should lead to significant value creation. And with that, I'll turn things over to Mark for a financial update. Mark?

Thank you, Chris. As Chris noted, we had a strong top line revenue and gross margin quarter with $11.1 million in revenue, a $2.1 million (sic) [ $2.0 million ] or 22% increase over the prior year quarter and a gross margin of 57% compared to 51% last year, materially above our guidance of 45% to 50%. For the quarter, we reported a net loss of $3.5 million and adjusted EBITDA of negative $2.1 million compared to a net loss of $3.1 million and adjusted EBITDA of $1.4 million in the prior year quarter. The decline in both numbers is primarily the result of our SG&A expenses impacted by increased investments in sales, legal, marketing and technology to support our expanding theatrical and technology initiatives for the remainder of the fiscal year.

We fully expect to see strong top and bottom line results in the remainder of our fiscal year as a result of these upfront investments. We had $2 million in cash and cash equivalents on our balance sheet as of June 30, 2025, with $8.9 million available on our $12.5 million working capital facility. The decline in cash from year-end is directly attributable to the acquisition of content and the payment of royalties during the quarter, the majority of which was related to Terrifier 3. Subsequent to year-end, 1.9 million warrants to purchase shares of our common stock were redeemed for $5.9 million (sic) [ $5.8 million ] in proceeds or $3 per share, leaving approximately 700,000 warrants still outstanding.

We would also like to highlight the positioning of our current balance sheet with no long-term debt, no acquisition-related liabilities outstanding. Outstanding warrants have been reduced to 700,000 and $12 million available on our capital facility as of today. Finally, coming off a fiscal year with record revenues and strong revenue and gross margin growth this quarter, we believe the SG&A investments that we've made this quarter will lead to strong top and bottom line results for the remainder of the fiscal year. With that, I'll turn the floor over to Erick to discuss our operating and strategic growth initiatives. Erick?

Thanks, Mark. So this was a quarter of acceleration across all our key business lines, streaming, advertising and platform services. Our strategy is working, and we're starting to see results. Starting with streaming, we delivered 4 billion total minutes viewed, up 38% year-over-year and 20% sequentially. FAST minutes streamed were 3.8 billion, a 39% increase over the prior year. Total streaming viewers climbed to 214 million, up 24%. Subscriber count grew to 1.4 million, an increase of 5% year-over-year and 1% over the prior quarter. Screambox is up 27% since the release of Terrifier 3 on the streaming service. And the Cineverse channel has grown more than 4,300% since January off a small base, but clearly gaining traction.

We saw a strong uptick in free trial starts in the quarter, many of which are now converting to paid in the current quarter, and we're leaning into that momentum. Over the next 2 quarters, we expect to pursue aggressive growth through new partnerships, bundling strategies and marketing execution in the period.

On advertising, performance was mixed. Headwinds from open market programmatic remain, though we are seeing signs of recovery as brands and agencies begin to restore spending heading into the back half of the year. The real strength came from our direct business, which grew 57% year-over-year. That growth was driven by both new and returning advertisers, including Expedia, Mint Mobile, ZipRecruiter, Warner Bros. Pictures, Sony Pictures, Hulu, Neon, Audible and Universal Pictures, among others.

Cineverse continues to be a must-buy for entertainment marketers. Our advantage is scale, targeting and breadth of formats. We're not just offering CTV, we're delivering a full funnel reach across mobile, podcast, display and live events. C360, our proprietary ad platform, is now a core part of that strategy. Subsequent to the quarter end, in July, we just delivered our strongest month ever in terms of campaign volume and advertiser adoption. What makes C360 powerful is that it gives us reach not only across our own owned properties, but across the open web. Advertisers can reach our fandom audiences across a stunning 98% of U.S. ad supply. What does that mean? That means advertisers can target Cineverse audiences wherever they are on ESPN, Hulu, CTV platforms and more anywhere. That's what allows us to scale while still offering precision.

On licensing, we continue to land high-value deals while preserving windows on our own platforms. That hybrid approach is delivering both revenue and strategic control. We've been capturing mid-7-figure revenue across partners while driving growth on services like Screambox and Cineverse. We're monetizing through both first-party and third-party channels, and that's a real advantage.

Now let's talk about the micro drama announcement. With MicroCo, we're not entering the space to compete with other apps. We're building the platform that's going to define the category. There are dozens of apps operating independently, but none offer a complete experience for fans, creators and advertisers, which is pretty surprising given this is -- given the scope of this being a $10 billion market. MicroCo is going to be that infrastructure layer.

What makes MicroCo different is our strategy to match the cost effectiveness of the space, short form, mobile first with rapid production while raising the bar on quality. That's what's been missing, content that feels built to last. So our leadership team and partners reflect that ambition. Jana Winograde, our CEO, was the former President of Entertainment at Showtime, where she greenlit and launched the network's most successful streaming series, including Yellowjackets. She previously led business ops for ABC's Network and Studio, which gives her a rare hybrid view of creative and operational leadership.

And Susan Rovner joining in October as Chief Content Officer is one of the most accomplished network and studio executives in the business. She's overseen more than 18 series that reached the 100-episode mark, including Gossip Girl, Flash, Shameless and Supernatural, among many more. And Lloyd Braun, Chair of the Board, is behind some of the most successful shows in modern television, including iconic and successful series like The Sopranos, Lost, Desperate Housewives, Grey's Anatomy and Jimmy Kimmel Live!

So this is not a team that's just chasing trends. We're going to be setting the standard for an emerging space. And with our Matchpoint technology, content library, fandom network and ad platform and some amazing platform innovations forthcoming, we're going to be building the infrastructure, distribution and monetization that the space has been missing. So we believe MicroCo can fully unify this entire micro drama ecosystem in the same way Amazon Prime has unified it for long-form content, aggregating great content, enabling creators and delivering discovery and monetization at scale.

So while we're proud of what we've built so far leading up to this announcement, we know there's a lot more to do. And the team across Cineverse continues to operate with urgency, focus and a commitment to execution. So now we're putting them to work during the next phase of growth. And with that, I'll turn it over to Yolanda to discuss our theatrical business.

Thank you, Erick. As part of the next-generation studio, the Motion Picture Group is building our strongest slate of wide releases in the company's history. This supports our strategy of IP with addressable and identifiable audiences who match Cineverse's internal media assets while offering the creative community an opportunity to reach their fans with a much better risk-reward profile than anywhere else in town. The next release from our fan-first slate is The Toxic Avenger Unrated directed by Macon Blair, which is reimagination of Troma's 1984 classic and is coming to theaters over Labor Day weekend on August 29th.

Also following our trend, of wide unrated releases is Silent Night, Deadly Night, directed by Mike P. Nelson and which will undoubtedly shock audiences in time for the holidays on December 12th. On January 23rd, gamers and fans of creepy storytelling will experience the next installment of the iconic horror game franchise Return to Silent Hill, and it is the 20th anniversary of the original 2006 film. This joins our other previously announced wide release and the third installment of the franchise Wolf Creek: Legacy.

Going beyond horror, we recently announced expanding our theatrical slate into the important and popular family category, Air Bud Returns, the iconic franchise created by Robert Vince, who will continue to resonate and delight fans across generations. The marketing campaign launched first on the TODAY Show last Friday, where we announced that your Golden Retriever has an opportunity to be in the next Air Bud movie. The search is on. And look for another exciting announcement very soon about a major film theatrical reissue that is coming to Cineverse and to fans in 2026.

All wide releases leverage our unique theatrical strategy blueprint to release in an effective and efficient manner as proven with Terrifier 2 and Terrifier 3. We target and reach major studio level awareness across all our internal media assets, efficient paid media spend and major brand partnerships. As Chris stated earlier, these projects have total investments in acquisitions costs and P&A of less than $5 million and ultimate box office breakeven of less than $10 million. That's why they have such a favorable risk/reward profile versus all our major independent studio competitors.

We will continue to prove that our independent and innovative approach will generate positive results for filmmakers and receiving participation overages earlier than the traditional studio paradigm. Comic-Con was a huge marketing and press success for The Toxic Avenger and Silent Night, Deadly Night. Talent interviews, haulage panel discussions and exclusive fan screenings were very well received, and talent has been incredibly supportive with these efforts.

Reactivating the iconic Moviefone number for the first time in a decade, Cineverse partnered with Moviefone and launched a fan forward experience on August 1st with Peter Dinklage's voice as Toxie reading Showtimes. The press pickup exceeded our expectations, and AdAge named it one of the most creative campaigns you need to know about. Toxie is the hero we need now, and there is no better time for him to come to the big screen than now.

As these releases show and the strategies to distribute and promote them support, we are champions not only for filmmakers, but also for our fans. We listen to them and deliver the films they want to see in the format they want to see them. We will continue to be bold and bring compelling pictures to theaters, including unrated pictures in which fans can see the filmmakers' vision in all its glory.

In addition, we are disrupting Hollywood studio economics by delivering greater and faster back end to filmmakers. We will continue to identify and acquire proven IP from franchises, books or games or reissues of cinema masterpieces that beg to be offered as a unique experience to existing and new fans. The beauty of a known IP is the addressable and highly engaged audiences that you can match and align with our expansive network of channels, podcasts and editorial sites like Bloody Disgusting.

In addition, we are releasing award-winning limited theatrical independent movies on less than 100 screens. These theatrical releases are prestige films acquired from festivals with a strong following and it marks Cineverse support of indie filmmaking. For example, this November 14th, we will release, The Things You Kill, winner of Best Director at Sundance Film Festival 2025. A Useful Ghost, winner of Critics Week Grand Prize of Cannes Film Festival will make its North American debut at the Toronto International Film Festival. Both critically acclaimed films may receive a best international feature film nomination for their country of origin, and of course, we will support the FYC campaign.

Finally, the Teddy Award-winning animated comedy out of the Berlin Film Festival, Lesbian Space Princess, will be theatrical released on October 31st. In summary, the Motion Picture Group is targeting highly engaged fandoms and creating event viewing and unique experiences across all windows of distribution. We are engaging legacy and new fans with our multi-touch point campaigns supported by our technology and media assets at a fraction of studio cost.

We expect to build wide and limited theatrical releases to roughly 14 pictures per year over the next several years. We will be announcing other exciting IP releases and reissues as early as next week and in the coming months. And with that, operator, let's open it up for Q&A.

[Operator Instructions] Your first question comes from the line of Dan Kurnos with Benchmark.

Great. Hopefully, you guys can hear me okay. So just, I guess, 2, first on the MicroCo announcement. I mean, Chris, and Erick, both you guys gave a lot of color, but why you guys -- why partner with you? It's obviously a huge market. We've got Netflix talking about it, YouTube talking about it, we've got Mountain on the DSP side getting in there. The long tail of SMB is huge here. So, a, why you guys? B, how much money do you put to work in the space if it's a 50-50 joint venture? And c, how do you think about monetizing it?

And then just on the expense side, if you guys could just give us some color on where you invested and how the leverage is going to occur in the coming quarters, would appreciate it.

Well, Dan, this is Chris. You did a good job there of getting like 15 questions in with your one question, one follow-up, but good on you.

Just in terms of the micro drama, Microseries initiative, I think it emphasizes one compelling point. People are coming to us now, not just filmmakers, but other businesses and people in the industry who now understand that we built a collection of assets that nobody else has. And again, whether it's launching a wide release movie business in a smarter way, we think, than everybody else with virtually no risk, or a Microseries business where we've already spent 10 years investing in kind of the infrastructure, the technology, the AI, the streaming, the podcast, our marketing operation, C360.

So we've done most of the heavy lifting already to basically be the first domestic company to launch into the space, which, as we said, is going to be a $10 billion business in 1.5 years. So I think Lloyd and company, who are all incredibly experienced and have been around the block, wanted to be involved in a game-changing new business that had already done really well overseas. And I think they saw that we could really be sort of their secret weapon and helping them leverage all their creative talents and their relationships, but to do it in an incredibly smart, cost-effective way and do it really quickly and really be the first mover in the space. So generally, I think that is why they came to us. I'll let Erick get into more detail on your 14 other questions.

Sure. Thanks, Chris. And the other thing of why us, I think you look at the kind of business we've built already out of the fandom business, where effectively, we've taken some very compelling assets individually, built them into a platform on the horror side with the Bloody Disgusting, Screambox ecosystem, which is now able to spawn and release wide theatrical movies, where we've built a very substantial ad business around it. We see the same dynamics in the micro drama space.

So when -- we're not just building another brand to compete with all of the other brands. We have -- we really have a plan to do what we did with Bloody Disgusting and that type of thing, immense fandom, multi-platform, lots of revenue, home of record for the information and data. And this model leverages all the things that we've been working on, including Synacor, including Matchpoint, including C360. So we think we can build competing products, not just to -- our game is not just -- we're going to build our own original content on top of it. But the way -- in the way that Amazon Prime sells channels, has an ad-supported business, a marketing business, has IMDb and other businesses. We're going to do the same thing for the micro drama sector so that these businesses are not only are they providing a base of fandom, but lots of monetization around them.

So we're not just building once again yet another micro drama app, 1 of 40 or so out there in the market, we're building the home base for the micro drama industry and the fandom around it.

In terms of your question on investment, we have -- there's a lot of options. We have a very, very strong team. And you can imagine we've had considerable interest from large -- small, medium and large players that really like what we're assembling here. So we'll have more details on that as the financing strategy culminates. Our goal now is really to internally between our partners, bootstrap and fund this to launch and then evaluate the other investment opportunities. I think this is the kind of business that can go very large and very big depending on how much capital we deploy.

And if the capital needs, we think are beyond what we're able to do, we're more than willing to bring on additional equity partners into the endeavor. I hope that gives you a little bit of color without -- I can't get into the exact specifics just yet.

Your next question comes from the line of [ Kevin Pimentel ] with Alliance Global Partners.

This is Kevin for Brian Kinstlinger. On the June earnings call, you highlighted that Matchpoint was closer to monetization with the big studios evaluating the technology. Is there anything more you can share on the progress here? And can you help manage expectations for sales cycle and feedback from studios?

Yes. Thanks, Kevin. This is Chris. I'm going to turn that over to Tony, who's basically in the midst of filling up our tech pipeline right now, and he can give you an update on where we stand and maybe a little bit better sense of sort of the time line.

Thanks, Chris. Kevin, thank you for the question. I think as we communicated at the last earnings call, we've made significant inroads in terms of bringing Matchpoint to market. One of the challenges that we had previously was really getting Matchpoint in front of the decision-makers, the champions at the studios. With the recent hiring and announcement of Michele Edelman and the sales team that we've built around that, I'm confident that we now have the right sales team to really grow this business out rapidly.

The traction and the robust response, positive response we've received from the studios has been tremendous. I would say that over the last quarter, our pipeline has easily more than tripled in terms of potential deals, some of these deals, obviously, the larger studios are going to take a little longer to close. The deal cycles are longer. But the revenue potential is far exceeds the smaller deals that we've currently announced.

We will continue to do small deals because the deal cycles are smaller. So that's the meat and potatoes of the business. But our goal really is to continue to target larger big whales that we think will drive meaningful revenue to the business. We're pretty bullish. I would say that we're also making some traction with cineSearch. We're in a process of entering a pilot with a major TV OEM, one of the top 5 global TV manufacturers.

So once again, I think as we've said before, Matchpoint is really the sphere that gets us in front of the big clients, Matchpoint Dispatch. And then from there, we upsell the other services and products that we've developed. The product portfolio that we have is bar none, far superior to anything any of our competitors are out there pitching. We're seeing movement in the industry in terms of competitors to Matchpoint. We're seeing some other competitors fall out of the business, go under, be sold. So it really has opened up tremendous opportunity for us. So we feel very bullish on where we stand on the technology sales side.

Great. And then could you go into a little bit more detail on the strategy to drive strong revenue contributions from podcast?

Erick, do you want to take that?

Sure. So I think the first phase of the podcast business was building up a scale audience, which we've done just given the base of the podcast we have. I think the second phase of this was bringing in the sales capabilities to effectively shift from programmatic and third-party sales deals, which have a high hit to gross margin under those business models. So we brought in a dedicated team of sellers. We're fully staffed up now.

And we've been -- these sellers have been -- the first part of -- they've been around less than a quarter. So obviously, getting them going around to their base of contacts, we brought in a team that's extremely experienced in podcast monetization coming from SiriusXM. And so they're making great progress. We've already seen significant low to mid-6-figure deals coming in under this team.

So we think -- combining this with the bigger push we're making on C360, we think the combined mix of direct podcast sellers plus the rest of our team selling CTV, podcast and other parts of our ecosystem is really a good one-two punch. And so that's really the game plan over the next few quarters. It takes a new sales team about a quarter or 2 to really get up to their full potential, but we're already seeing them. So I have really strong belief that they're going to be ready for the back half of the year, which is the prime selling period.

There are no further questions remaining. So I'll pass the conference back over to the management team for closing remarks.

Yes, this is Chris. Thank you all again for joining us today. And please feel free to reach out to Julie Milstead with any additional questions you might have. We look forward to speaking with you all again on our next quarterly call. Thank you.

That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Good day, everyone. Welcome to Cineverse's Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. My name is Emily, and I will be your operator today. [Operator Instructions] Please note that this call is being recorded.

I would now like to turn the call over to your host, Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser for Cineverse. Please go ahead.

Good morning, everyone. Thank you for joining us for Cineverse's Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal fourth quarter and year ended March 31, 2025 is available at the Investors section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at Cineverse's website after the conclusion of this call.

Before we begin, I would like to point out that certain statements made on today's call may contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements. All the information presented on this call is as of today, June 27, 2025, and Cineverse does not assume any obligation to update any of these forward-looking statements, except as required by law.

In addition, certain financial information presented in this call represent non-GAAP financial measures and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. I'm Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser at Cineverse.

With me today are Chris McGurk, Chairman and CEO; Erick Opeka, President and Chief Strategy Officer; Tony Huidor, President of Technology and Chief Product Officer; Mark Lindsey, Chief Financial Officer; and Mark Torres, Chief People Officer, all of whom will be available for questions following the prepared remarks.

On today's call, Chris will briefly discuss our fourth quarter and fiscal year 2025 financial highlights, the latest operational developments, outlook and long-term growth strategy. Mark will follow with a review of our financial results for the fourth quarter and fiscal year. Erick will provide some details on our streaming business results and operating initiatives. And Tony will provide updates on our technology initiatives before opening the floor for questions. As the market opens at 9:30 A.M. this morning, we would like to conclude our comments and Q&A by that time.

I will now turn the call over to Chris McGurk to begin.

Thanks, Gary, and thanks, everyone, for joining us today. As you recall, in February, we reported our third quarter results. That quarter was the best in the company's history with over $41 million in total revenues, an increase of $27.5 million from the prior year quarter. And we also recorded net income of $7.2 million, a $9.9 million increase from the prior year. And we've continued that very strong financial and business momentum in our fourth fiscal quarter, generating impressive growth in all our financial performance measures and beating consensus analyst guidance on all key metrics.

In the quarter, we generated total revenue of $15.6 million, a $5.7 million, or 58%, increase over the prior year. Net income was $858,000, a $15.5 million increase over the prior year. Adjusted EBITDA was $4 million, a $2.4 million, or 158%, increase over the prior year quarter. Total direct operating margin was 58% -- 55%, well above our stated margin target of 45% to 50%.

Our full year fiscal 2025 results were equally impressive. Total full year revenues increased by 59% to $78.2 million. Total full year net income was $3.8 million, and total full year adjusted EBITDA was $13.9 million, a $9.5 million, or 216% increase over last year. These strong results were driven by growth across all the company's key lines of business particularly streaming, digital and podcast revenue. But most importantly, by the unprecedented success of Terrifier 3, the most successful unrated film release of all time. Our goal now is to build a high-growth, high-profit, low-risk year-round wide theatrical releasing business by following the same acquisition releasing and marketing blueprint that works so well on the Terrifier movies and astonish the entertainment industry. I will speak more about that in just a minute, and Erick will go into much more detail about all the operating successes and new initiatives we've been pursuing across our other lines of business. But first, let me speak about an important reorganization we just implemented.

First, to rapidly capture the growth and financial upside of our most important underlying assets, our proprietary streaming content management and AI technology, we have set up our technology business as a separate business group and put Tony Huidor in charge as President and Chief Product Officer. This move was designed to focus all of Tony's considerable talent and experience in technology and business development on immediately turbocharging this business, with a focus on Matchpoint licensing and the development of new AI-based products such as cineSearch, our industry-leading AI search tool that we developed with Google.

Tony is not only tasked with keeping the company at the forefront of industry AI innovation, but also ensuring that Cineverse becomes the first truly AI-forward entertainment company in every operating process across every function of the company. In a few minutes, Tony will speak about all these key technology initiatives and the strong progress we're making in the marketplace with our Matchpoint and AI products.

Second, we also reorganized our entertainment content business to create a dedicated Theatrical Motion Pictures division. Yolanda Macias is now the company's Chief Motion Pictures Officer. In this role, Yolanda will focus 100% of her considerable experience and expertise to leverage the success of Terrifier 2 and 3 by building and releasing a wide release slate of theatrical movies that are well poised to successfully follow the Terrifier blueprint. We believe this business, given our unique new media assets and releasing formula, can be a major potential source of ongoing value creation for the company.

We've already made great progress in this area based on the high potential slate of franchise IP properties we have secured for our release lineup over the remainder of this fiscal year, which I will describe in more detail now. Our next franchise release is The Toxic Avenger, a contemporary rendering of the classic trauma horror comedy. The film was produced by major studio Legendary Films, which counts the tremendously successful Dune movies and Godzilla versus Kong among its recent megahits. The film was directed by Macon Blair and stars Peter Dinklage, Kevin Bacon and Elijah Wood. We have domestic rights for the film in perpetuity, and we'll be releasing it on August 29.

Like Terrifier 3, our all-in cash investment in this film for acquisition and release marketing will be less than $5 million. However, it's important to note that this film will generate approximately the same level of financial return to Cineverse as Terrifier 3 if it performs at only half of Terrifier's box office level, given the parameters of the economic field we made on the film.

Additionally, our lifetime box office breakeven in the film is well below $10 million, underscoring again the favorable risk/reward profile of this property. And the film is very well made, directed and acted, and currently has a 92% positive score on review aggregator, Rotten Tomatoes. Like Terrifier 2 and 3, it will be an unrated release.

After that, on December 12, we will be releasing Silent Night, Deadly Night, the reinterpretation of the classic controversial Christmas horror film that was banned from theaters years ago. We are releasing the film domestically and have partnered with international entertainment powerhouse, STUDIOCANAL, which is releasing at overseas. The film has finished principal photography and is currently in post production. Total acquisition and releasing investment with this film will also be below $5 million.

Next up will be Return to Silent Hill. The latest film installment of the enormously successful and popular video game horror franchise, which will be released on January 23, 2026. This firm will also carry a total investment of less than $5 million. So we will have at least three wide release films in this current fiscal year, all with investments of less than $5 million, all based on very well-known franchise IP, all with very specific and reachable fan bases, and all perfectly poised to leverage the unique set of assets we have built at Cineverse. Our streaming channel, our podcast network, our social media platforms, our AI-based research tools, our targeted ad sales technology and to use them all to follow the blueprint that was so successful in powering the performance of the Terrifier movies.

Expect more wide release film announcements in the next few months as we build our slate for fiscal year 2026. In addition, we continue to generate significant new advertising businesses by other studios using our ecosystem to market their theatrical releases as well. Yolanda will give a detailed update on all this on our next earnings call in August.

And with that, I'll turn things over to Mark for a financial update. Mark?

Operator, I don't think we can hear Mark.

Mark, we are unable to hear you. If I could please ask you to check that you are not on mute.

Can you hear me?

Yes.

Thank you, Chris. As Chris noted, last quarter was a record quarter for us, and we have been able to follow that up with a very strong quarter which is seasonally our toughest quarter in our fiscal year. We are able to beat analyst consensus estimates for revenue, net income, diluted EPS and adjusted EBITDA for both the fourth quarter and the full year.

For the quarter, we reported revenues of $15.6 million compared to $9.9 million for the same quarter last year, or a 58% increase. Net income and adjusted EBITDA were $0.9 million and $4 million, respectively, for the quarter, reflecting significant improvements over the prior year quarter. Again, very strong results for a seasonally low quarter, especially considering the depressed direct and programmatic advertising environment in the first quarter, which is a direct result of companies pulling back on their discretionary advertising spend due to the ever-changing tariff environment.

Our direct operating margin for the quarter was 55%, which is above our previously issued guidance of 45% to 50%. Our improved operating margin is a direct result of our cost optimization initiatives implemented over the last 12 to 18 months, as well as our ability to grow revenues while controlling variable costs. We expect our direct operating margin in future quarters to remain in the 45% to 50% range.

SG&A expenses for the quarter were $5.4 million, a decrease of $1.4 million compared to the prior year quarter, and 35% of revenues, a material improvement from 69% in the prior year. As I stated last quarter, we expect to continue to see our SG&A expenses decline as a percentage of revenues as we continue to focus on top line revenue growth while maintaining an efficient cost structure, bolstered by our ability to offshore operations to our Cineverse India location.

We had $13.9 million in cash and cash equivalents on our balance sheet as of March 31, 2025 with $0 outstanding on our $12.5 million working capital facility. In addition, as of March 31, 2025, we have a working capital surplus of $3.6 million, continuing to reflect our improving financial position over the last 12 to 18 months. For the year, our net cash provided by operations was $18.5 million, a $29.1 million improvement over the prior year.

Finally, with a strong fourth quarter and record revenue for the full year, and a $40 million valuation for our content library portfolio, which is almost entirely off balance sheet, we continue to believe that our stock price is undervalued with significant upside, based on yesterday's closing stock price of $4.18 per share.

With that, I'll turn the floor over to Erick to discuss our operating and strategic growth initiatives.

Thanks, Mark. I'd like to spend a few minutes reviewing our platform businesses and growth initiatives across distribution, streaming, advertising and podcasting. So let's start with our distribution and content licensing businesses.

This past quarter continued to be a solid one for Terrifier 3 on the ancillary side. Transactional and home entertainment revenues continued to exceed expectations. And during the quarter, we closed several windows of licensing deals with both Amazon and Peacock for the film. Compellingly, we were able to preserve a window on our own services while maintaining market value licenses on third parties. This concurrent windowing approach not only maximizes revenue, but enables us to continue to grow our streaming services as well. Since the Home Premier of T3, Screambox subscribers have grown 31%, while preserving valuable third-party license revenues in the mid-7 figure range over the next 18 months.

We also expanded our footprint with major fast channel launches on Google TV Freeplay, international rollout of our flagship brands, including Dog Whisperer, and broader domestic distribution as well. As noted in the earnings release, we closed several traditional content licensing deals across genres and saw a meaningful uptick in our catalog revenues as well.

Our team also announced new podcast licensing agreements and content expansions with the Cineverse Podcast Network continuing to grow rapidly, thanks to a more diverse content slate and increased advertiser demand. We now have 62 current shows and 4 new original series in development slated for release in the current fiscal year. Podcast revenues were up 57% over the prior year due to the rapid expansion of our slate and the impact of our ad sales strategy. We think we can maintain this robust rate of growth as we scale up the current series and ad efforts.

On the comedy front, we're making major progress with our partner WITZ as recently announced, the team behind the Stand Comedy Club in New York City and other major ventures in comedy. We're seeing strong early interest from brands and agencies, and we'll be announcing our inaugural content lineup this mid-summer. We currently have a dozen new shows in the works and we'll be announcing the slate later this summer. Comedy remains the largest and most monetizable podcast category in the U.S., and it represents over 23% of all podcasts listening according to Edison. We're also exploring other emerging segments like health, wellness and family, where brand demand is accelerating, but there's a real lack of scale in the market.

Let's discuss our streaming channels business. Our platforms delivered strong engagement in Q4 with over 3.2 billion minutes streamed across our owned and operated services, up 45% over the prior year. Subscription revenues grew meaningfully, and we saw a 4% year-over-year increase in subscribers, bringing our total across the portfolio to approximately 1.42 million. This was fueled by continued momentum from Screambox, which now ranks among the top 4 services in North America, and from our new Cineverse channel on Amazon, which has shown significant subscriber growth and has been growing at 30% per month since launch. We plan on expanding this platform beyond Amazon in the coming quarters and believe it will become one of our top streaming services over time, especially with access to the high caliber of wide and specialty theatrical programming that we're now releasing.

In addition to Cineverse, we now have 4 flagship services that have scale potential. Screambox, Dove, Fandor and Midnight Pulp. These platforms make up the bulk of our subscriber base, and we're going to focus our investments in growth on these 4 properties in the short to midterm. Our genre-specific and movie-centric model not only support subscription growth, but it acts as a flywheel that supports our theatrical and ancillary businesses as well.

On the FAST front, while we continue to grow viewership as noted, we've seen a glut of supply with huge growth in available competitive channels from studios outstripping the audience growth in the market. This factor has put some pressure on CPMs and fill rates for open market programmatic in the short to midterm, combined with the macro environment, as Mark had described. We think over the long term, the market will absorb this oversupply, but as we support and maintain this channel base during this period, we're focusing our efforts in the ad space more on direct sales, our platform C360 and on private marketplace deals. And that's been a good turn for us.

On the direct advertising front, Cineverse continues to become a must-buy destination for entertainment marketers. We now work with 4 of the top 5 movie studios and all major indies, on wide release campaigns and have added several new key brand partners in Q4, including Sony Pictures, Expedia, Hulu, Display, Warner Bros. and Rocket Money. We've expanded this list to include Progressive, ZipRecruiter, Universal Pictures, Mint Mobile and more in the current quarter.

Unlike competitors that are focused exclusively on CTV, given our brands and platforms, we offer a full 360-degree strategy that includes CTV, mobile, display, podcast and live events. This holistic offering provides superior outcomes for advertisers and allows us to command more strategic partnerships. While programmatic remains under pressure, our performance in direct and PMP channels continues to outperform budgetary benchmarks.

C360, our proprietary ad platform, remains a major focus as well. Q4 marked our strongest quarter to date for the service with year-over-year revenue growth of 290%. Importantly, C360 now directly connected to The Trade Desk will integrate with Cinecore, our proprietary film data set comprising of millions of titles and billions of metadata points. We believe it's the most expensive domain-specific data set for film in existence. Originally developed to support cineSearch, it's now central to how we will revolutionize targeting and film advertising. So there'll be more on that to come in future quarters.

Lastly, I want to talk about where we're headed in the near term. Podcasting continues to be one of our highest margin, fastest growing businesses. In addition to horror and comedy, we're going to continue to invest in the new verticals as we discussed. We've already hired a dedicated podcast sales team and are considering further expansion given the early momentum we're already seeing in the space.

We're also seeing strong growth in YouTube and social video. Across our brands, we now manage nearly 24 million social followers. According to Nielsen, YouTube is a #1 platform by watch time in all of media commanding 13% of full TV viewing. And over the last 9 months, with minimal to no CapEx investment, we've built a low 7-figure business placing our premium content into this space and believe that with our vast content library, there's significant growth and upside leveraging this #1 streaming platform in the world.

Additionally, we're exploring other high-growth, high-revenue formats like scripted micro dramas and short-form content. According to business research insights, the short-form video market is currently at $34 billion globally, and growing at 32% annually. With our scalable content pipeline tech platforms and existing reach, we believe we're well positioned to capture a meaningful share of this emerging category in the near to midterm. And finally, on content licensing, both traditional and AI-based remains a key focus.

Our theatrical slate will be the main driver of this with titles like The Toxic Avenger; Silent Night, Deadly Night; and Silent Hill. We'll have a robust slate that will also drive value -- licensing value of our vast catalog. And given our focus on IP-driven popular content that appeals to wide swaths of people and demos, and not just coastal audiences, we're in a strong position to secure an output deal with a major streaming company against our future releases.

On the AI front, we're in numerous dialogues to license our content for AI training and expect to see traction on that front later this year. At every level, we're focused on high-quality, high-margin growth and maintaining the existing margins that we've painstakingly built. We're excited about where Cineverse is headed in fiscal year '26 and beyond.

With that, I'll turn the floor over to Tony to discuss our technology initiatives.

Thank you, Erick. I'm excited to share an update on our technology business. As you know, the company recently announced a new organizational structure in which the company's technology assets were placed under a new division named Cineverse Technology Group. The underlying reason for this was to accelerate our sales effort by investing more resources to an area of the company where we hold tremendous value.

As many of you know, over the past several years, we have announced various deals with several small channel operators and video distributors. These deals were intended to allow the company to walk before we run by putting Matchpoint through real-world tasks before fully taking it to market as a SaaS product. We use these deals as a way to put Matchpoint through our hardening process where we can onboard real-world clients to help us identify the areas that we needed to further improve. We have learned a lot from these deals and are grateful to our partners for helping us improve Matchpoint.

With this work complete, Matchpoint has reached an advanced level of maturity with robust capabilities that finally allow us to target who we feel are the ideal customers, the major Hollywood studios and major media companies. With that, we now have a seasoned sales team that has extensive expertise in the media supply chain of the business as well as deep contacts into the Hollywood community. These factors have allowed us to effectively reach the right decision-makers at major Hollywood studios as well as key media companies and broadcast networks. We plan to present Matchpoint to every major studio before summer's end.

In the last 45 days alone, we have presented Matchpoint to 3 major studios, 2 broadcast networks and a leading e-commerce giant. The reception we have received has been growing and, frankly, quite humbling. For so long, we have overestimated the pace of innovation underway across the entertainment industry. We now see how these large media conglomerates still struggle with the very basics of operating a major streaming business at scale. We have found that major studios and film distributors still rely on manual workflows, fragmented system, a patchwork of external vendors and massive internal teams to deliver content, often taking weeks to release a single title. This is a result of these large media companies preferring to hire third-party vendors to solve their operational problems rather than developing proprietary technology. This legacy way of doing business is no longer sustainable and requires a new approach.

As a result, this places Matchpoint in a very unique position about offering a complete end-to-end media supply chain specifically developed for the video streaming era. Media companies are accustomed to using various vendors and when cobbled together offer an ad hoc solution that at best meets some of their needs, but not all. Matchpoint, on the other hand, has been specifically developed to meet all the needs of a modern streaming company, including many nuanced edge cases that most technology vendors don't understand or can effectively solve. There is no comparable system in the market that can match our ability to deliver tens of thousands of titles per month with no human intervention.

Knowing this is why Matchpoint has been so well received by large media companies. In addition, the company's new organizational structure of having a separate entertainment and technology division has eased any concerns of being a competitive threat. As a result, the studio gates have opened wide. Matchpoint is currently being evaluated as part of 2 RFPs that are underway. In addition, of the 3 major Hollywood studios that we have already presented Matchpoint to, one studio has fast tracked their evaluation process is moving forward with the pilot that should lead to a commercial trial.

During this process, we will be required to integrate into their internal supply chain so that Matchpoint can serve as their content fulfillment solution for distributing their movie catalog worldwide. We anticipate that this implementation alone can result in upwards of mid-7-figure revenue for the company on an annual basis.

Discussion with other studios and media companies have centered along similar lines. These media companies are under tremendous pressure to scale their streaming business, cut costs, reduce headcount, and leverage AI for workflow efficiencies. As many of you know, these are all the areas in which Matchpoint excels.

Moving forward, our strategy is to focus on selling Matchpoint Dispatch as a way to get into the door and establish a relationship where we can prove ourselves. These media companies are the ideal customers for our Matchpoint products such as Insights and cineSearch. Having Dispatch as our flagship product gives us a strategic advantage when pitching our suite of Matchpoint products.

Moving on to cineSearch. As you all know, we recently announced that we completed development of cineSearch. We are proud of the progress we have made and are extremely proud of this achievement. We have achieved what no other company -- media or technology company has been able to do. The accuracy and breadth of the content recommendations that one receives via cineSearch are far superior to anything else in the market.

Although Google and OpenAI can generate suitable results on their own, their understanding of cinema is broad, but shallow. Google and OpenAI lack the true understanding of the intrinsic nature of a film. This is where cineSearch excels and provides us with the depth of understanding that large AI models lack. Moving forward, cineSearch will be licensed as a full product offering. In addition, we will license Cinecore as a stand-alone data set. We are excited to bring cineSearch to market at a time when the streaming industry continues to suffer from poor user experience tied to weak search capabilities and inadequate content recommendations. We feel we have a competitive advantage and maintain a head start of several years above any of our competitors.

Lastly, I want to talk about the role that AI will play in the future of Cineverse. For some time, we have been strong proponents of AI and have leveraged AI for years as a means to make Matchpoint more efficient and to help streamline our internal operations. Given the success we have seen with leveraging AI, we have kicked off an internal initiative to fully transform the entire company and fulfill our vision of becoming a next-generation studio. We envision the future where each department is utilizing agentic AI for automation and to better scale the departments out. But our goal is to create an internal network of AI agents that communicate directly across every department, so that we can maximize efficiencies across departments and further streamline how the company operates. Lastly, we have additional products under development and excited to share more on that soon.

With that, operator, let's open it up for Q&A.

[Operator Instructions] Our first question today comes from Dan Kurnos with Benchmark.

I'll try to keep it tight per your requests to finish up here. Look, just fantastic into the year. We've got wide releases in the next 3 quarters coming out. I guess, Chris, high level, just if you guys are successful or see early signs of success, how much more are you willing to lean in?

And I know Erick kind of intimated that you're talking with some of the streamers, but how do we think about pay windows and licensing opportunities, especially for the licenses that you own?

Yes, I think as we continue to fill out our slate, as Erick said, we really have an overriding objective to set up a pay output deal, and we've started some discussions in that regard. I think what you'll see over the next few months is we'll be announcing more films that are similar to the 3 -- the 4 actually, if you include Wolf Creek that we have in our release slate right now.

And it will also be expanding from our focus on horror into family films, another area that we had great strength in the past. And also we're looking at more of a fantasy film as well. And actually some Black Cinema content and comedy, as Erick mentioned. And I think once we put those pieces into our release slate, I think that's when we'll get really serious about negotiating a pay deal.

And just on the profitability because it really matters like it was great in the quarter. You've -- I don't want to lose sight of the offshoring. I know that Mark in his comments said sort of 45%, 50% op margin. You crushed it this quarter with north of that. How do we think about it in quarters where you have a successful owned license film for wide release? And is there any chance that, that margin could creep up over time?

Yes, I forgot what the margin was in our last quarter. Maybe Mark can mention that. But I think with Terrifier in the market, we put up a really, really solid operating margin. So we feel good about the 55% number that we put up, and we feel really good that we'll meet or exceed our operating margin target of 45% to 50% going forward.

Chris, margin last quarter was 49%.

Yes.

Our next question comes from Brian Kinstlinger with Alliance Global Partners.

Great to hear about all the great details on the slate of movies. So I want to focus on some other growth areas. I'm hoping you can frame for investors how to think about cineSearch and Matchpoint. With Tony's comments, how should we think about maybe the pipeline of opportunities? What do deal sizes look like? And maybe when should we expect this will have a significant impact on your overall results?

Thanks, Brian. I'll let Erick and Tony to respond to that.

So I'll frame the top line. So I think, as Tony mentioned, and I'll let Tony go into more detail here. I think as it relates to the overall sales pipeline, the opportunity set of the companies we have, we're now focused more on the enterprise side in the future. In the past, we have been focused on smaller entities as more of a proof of concept. Those kinds of entities are pretty small. It takes a lot of them to generate meaningful revenue. So they're good for testing, but they're not really efficient for scaling the business.

Tony, why don't you detail sort of the opportunities that generally, in terms of the number of properties in the pipeline, what do you think the average deal size could end up being?

Sure. Thanks, Erick. Yes. I would say, as Erick pointed out, we were really focused on these -- on small operators. We have one shot to come to market. We didn't want to risk it. So we aim for smaller operators so that we can learn what needed to be fixed and get everything right before we took it to the big media companies.

Of the 5 major studios, I would say on average, each of those studios is probably $5 million and up. It really depends on whether they use the platform for domestic distribution worldwide, the partner that we're currently working towards a pilot. Their initial expectation is we start with the back-catalog launching worldwide. And then if this goes well, it can expand into other parts of the company, including their streaming service and then as well as their international operations. So that $5 million can easily scale much higher. But so far, what our expectation is mid-7 figures, and if there's 5 of them, and as I said, we've presented to a good share of them so far. The reception has been very, very robust.

After the big studios, we have obviously the big networks and the big media companies. So there's plenty of other potential clients on that list. So we expect that over time within the next few years, we should have a very strong foothold within the business. And I think from there, that is where, as we say, land and expand. We sell them Dispatch. We sell them cineSearch. We sell them any of the other services or analytics. And these are all areas where all the big media companies are struggling. So we find ourselves in a very unique position in that we have technology that really sets us apart from everyone else.

Great. That's wonderful. And just I wanted to follow up just on podcast. I don't know what revenue wise, the segments haven't been out yet. But with your push in to direct hire, and I know one of the initiatives was to better monetize podcasting.

Maybe you can provide some more details on, again, direct sponsorship and sizes of those deals and how you maybe frame also monetization of broadcasting over the next 12 to 18 months versus where it is today?

Sure, sure. So first of all, so just thinking about the monetization strategy here, it's really twofold. One is if you think about our efforts in the podcast business, the big advantage that we have there is podcasts are new, fresh content and new releases. So that provides, I think, a premium need for advertisers over FAST channels that are predominantly library. And we're actually seeing podcast CPMs, higher than CTV CPMs, sometimes by even $10 or more higher on a direct basis. And that just reflects the quality and the value of the portfolio we're starting to put together.

So number one, it's -- we think the portfolio we're building towards a more premium, higher quality. So our focus is on assembling shows that have 0.5 million to 1 million monthly listeners at a minimum per podcast. I think that's very different for some of the other networks out there that are kind of vacuuming up every show, no matter how small or big it is. So that's number one, and that plays well with advertisers.

Number two, we're doing this on a direct basis with -- in addition to bundling it, as I described during our commentary, we've hired up a direct team. We hired some sellers out of the SiriusXM universe who have hit the ground running and doing quite well. So the average deal size we're getting as we're getting larger brands like Progressive and others, can go into the low 6 figures per deal. That's not every deal. You're doing mid-5 deals quite consistently for brands. But interestingly, we're starting to see bigger, more brand and less performance-oriented, which I think is a really good space for us when you think about it from that perspective because branded tend to buy just in bigger packages than performance who are testing.

So as we kind of think about the trajectory with our focus on more brand-oriented larger advertisers, given we were at 100% programmatic last year, we think the CPMs on the direct are more than double. And given the velocity, I think we could probably accelerate into the back half of the year to 2x or more what we did last year. But a lot of that is highly dependent, obviously, on macro conditions and other elements, how the ad market continues to play out. But so far, it's looking very solid. And we think just adding more salespeople, we could expand it even further.

There are no further questions remaining. So I'll pass the conference back over to the management team for closing remarks.

Yes, this is Chris. Thank you all for joining us today. And please feel free to reach out to Julie Milstead with any additional questions you might have. And we look forward to speaking to you all again on our next quarterly call. Thank you very much.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.