National CineMedia, Inc. Aktie

Good day, and welcome to the National CineMedia First Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Chan Park, Senior Vice President of Finance. Please go ahead.

Thank you, operator, and good afternoon. I'm joined today by our Chief Executive Officer, Tom Lesinski, and our Chief Financial Officer, Ronnie Ng. I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts communicated during this conference call may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties. Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's filings with the SEC. All forward-looking statements are expressly qualified in their entirety by such factors.

Further, our discussion today includes some non-GAAP measures. In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurement. These reconciliations can be found at the end of today's earnings release or on the Investor Relations page of our website at ncm.com.

Now I'll turn the call over to Tom.

Thank you, Chan, and good afternoon, everyone. We appreciate you joining us for our first quarter 2026 earnings call. We entered the year with strong momentum from the holiday period, both in attendance and advertiser demand, and our first quarter played out largely as we anticipated. Our results reflected typical seasonality, heightened competition tied to the Winter Olympics, and the impact of the 1-week shift in the fiscal calendar that we highlighted last quarter. Adjusting for that timing difference, revenue would have increased modestly year-over-year, driven by moviegoer enthusiasm for box office hits at both ends of the quarter. On a reported basis, NCM delivered total revenue of $34 million and adjusted OIBDA of negative $10.5 million, both within the guidance ranges we provided last quarter.

In terms of the first quarter, the domestic box office grew approximately 25% year-over-year, with attendance across our network reaching 83 million, up 15% versus the prior year. The gap to the broader box office primarily reflects the 1-week calendar shift in our fiscal period and the impact of the Winter Olympics, neither of which impacted the first quarter of last year. Adjusting for that shift and including Spotlight in the prior year, attendance would have been up approximately 18% on a comparable basis.

Within the quarter, performance was anchored by carryover strength from fourth quarter tentpoles, including the new Avatar and SpongeBob movies, before picking up in the final 2 weekends, powered by Project Hail Mary and early contributions from the Super Mario Galaxy Movie. The late quarter acceleration reinforces our view that 2026 is shaping up to be a more consistent and durable year for theatrical exhibition and positions us well as we enter into the second quarter.

That momentum carried into our advertising results. Demand remained healthy, with 6 advertisers spending at or above the $1 million mark on cinema campaigns in the quarter. Total advertising revenue was $31.9 million, approximately in line with the prior year, driven by strength in insurance, media, automotive, and the pharmaceutical categories. This level of advertiser engagement is a testament to the value of NCM's industry-leading inventory and our demonstrated ability to deliver measurable, impactful outcomes for brands.

We remain focused on strategically expanding the breadth and quality of our inventory, unlocking new opportunities to deepen our engagement with advertisers. In April, we announced a partnership to deploy large digital displays in high-impact lobby placements across 77% of AMC theaters nationwide, focusing on its highest traffic locations. Theater lobbies are a valuable, high-dwell-time environment and represent a natural opportunity for brands to extend their engagement with receptive audiences further across the moviegoing journey. The new lobby format complements our existing networks and expands our access to digital out-of-home advertiser budgets alongside our core premium video business. This digital lobby expansion presents a meaningful opportunity to deepen exhibitor and advertiser relationships and further strengthen our value proposition across the full moviegoing journey.

We are continuing to develop our programmatic capabilities as well, and we continue to see the growing advertiser adoption and deeper engagement across our client base. In the first quarter, we saw approximately 2x more programmatic orders than in the prior-year period, reflecting the effectiveness of the just-in-time nature of this buying channel. However, due to a small number of larger advertisers not returning as they focused their budgets on the Winter Olympics, programmatic revenue was softer versus the prior-year first quarter. This variability is characteristic of a channel that's still maturing, where deal concentration and timing can have an outsized impact on any given period. That said, second quarter programmatic revenue is pacing ahead of the prior year, and the underlying trends give us confidence that we're building programmatic in the right direction for growth in 2026.

Local advertising revenue was $4.4 million in the first quarter. As we outlined on our last call, we are continuing to rebuild a stronger foundation for growth in our local business as we remain focused on the targeted investments in talent, structure, and execution underway to improve performance. While results will take time to reflect these efforts, we are encouraged by the progress we are making, as second quarter booked revenue is already ahead of last year's second quarter, and we remain confident in the long-term opportunity for local.

Turning to NCMx, our proprietary data platform. We continue to enhance targeting, planning, and measurement capabilities for advertisers. During the quarter, we announced a new partnership with VideoAmp, further integrating cinema into a unified cross-platform planning premium video ecosystem. This marks the first time advertisers and agencies can plan cinema alongside linear TV, CTV, and digital video within a single view. We also extended NCMx coverage to our recently acquired Spotlight inventory, an important step in unlocking the full value of that high-end inventory and deepening our appeal to premium and luxury advertisers.

Alongside these continued investments, we've taken proactive steps to better align our operating model with the evolving needs of the business. During the first quarter, we implemented an operational transformation to streamline the organization and accelerate our adoption of AI where it creates the most leverage. These efforts are concentrated in areas that enhance efficiency across our supporting infrastructure while preserving the strength and momentum of our revenue-generating teams and commercial initiatives. Collectively, these actions are expected to generate approximately $11 million in annualized cost savings on a run-rate basis, positioning us for more agile and efficient execution and create capacity to continue reinvesting in the platform for future growth. Ronnie will provide additional details on this in a few moments.

While we continue to evolve the business, our core value proposition remains unchanged, connecting advertisers with highly engaged, sought-after audience demographics in a premium environment on the biggest screens in America at scale. Looking ahead, we remain encouraged by a compelling 2026 film slate designed to reach diverse audience segments. This year's box office performance is expected to be weighted toward the back half of the year, supported by a mix of beloved franchise installments and reimagined classics with built-in audience appeal alongside a broader range of highly anticipated new IP titles. This robust slate, including such films as Toy Story 5, The Devil Wears Prada 2, The Mandalorian and Grogu, and Moana, is expected to draw a broad range of audience cohorts, further supporting advertiser demand.

Further, we are encouraged by strong exhibition industry sentiment at this year's CinemaCon in April, where each of the major studios voiced concerted support for the theatrical business, underscoring the importance of the big screen with the broader entertainment ecosystem. Notably, Amazon reconfirmed its commitment to at least 15 theatrical releases per year, while Paramount and Warner Bros. Discovery reiterated plans to release approximately 30 films theatrically, reinforcing confidence in a consistent cadence of future releases. Taken together, this year's CinemaCon commentary supports a positive outlook for the exhibition landscape. With strong industry tailwinds and continued focus on operational optimization, NCM is well positioned to capitalize on box office strength in the quarters ahead.

Now I'll turn the call over to Ronnie to provide you with more details on our operating results and outlook.

Thank you, Tom, and good afternoon, everyone. As Tom noted, first quarter performance was shaped by typical seasonal softness, increased competition for advertising spend driven by the Winter Olympics, and the 1-week shift in the fiscal period that we discussed on our last earnings call. Each of these factors was expected, and the quarter was broadly consistent with what we projected entering the year.

Total revenue for the first quarter was $34 million, within our guidance range and reflecting the anticipated factors I just outlined. First quarter total advertising revenue was $31.9 million, compared with $32.3 million in the prior-year period. On a comparable basis, when adjusted for the calendar shift and pro forma for the inclusion of Spotlight in the first quarter of 2025, total advertising revenue was approximately flat year-over-year, with national being more affected by the Winter Olympics and local exhibiting strong growth. National advertising revenue was $27.5 million, approximately flat versus the prior year, with strength in the insurance, automotive, and pharmaceutical categories.

Adjusting for the shifted fiscal period and pro forma to include Spotlight in the prior period, national revenue would have been down by approximately 2%. This was primarily due to certain deals within the Spotlight network not returning this quarter. Conversely, NCM's legacy network grew national revenue by 2% compared to the prior year, with utilization increasing over 20%, offset by a decline in CPMs. While pricing for national was positive in the first 2 months of the year, March experienced pricing declines due to budgets that were already allocated to the Winter Olympics, limiting demand at the end of the quarter.

Demand for our Platinum inventory remains strong, reflecting the continued benefit of standardizing our preshow format across the major exhibitor networks last year. On a calendar-adjusted basis, Platinum was up 83% versus the prior year, and revenue per attendee was up over 54% for the same period. Local advertising revenue totaled $4.4 million, down versus the prior year, primarily due to the calendar differences as discussed previously. However, adjusting for the shifted fiscal period and pro forma for the inclusion of Spotlight, local advertising revenue would have been up 12% in the comparable period, and revenue per attendee would have only declined approximately 4%.

Looking at the categories within local, we saw strength within travel and wireless, offset by reduced activity within government, education, and health care. As Tom noted, we are focused on rebuilding this business through a more structured and targeted approach. While this will take time, we believe we are taking the right actions to position local for more sustainable growth over the long term. And we are further encouraged by second quarter bookings, which are already ahead of last year's second quarter local revenue.

Operating expenses for the first quarter were $60.9 million versus $58.8 million in the prior-year period. The year-over-year increase was primarily driven by an increase in attendance-related exhibitor fees and approximately $3.6 million of onetime costs related to our operational transformation. On an adjusted basis, operating expenses were $44.5 million, primarily driven by a 13% year-over-year increase in exhibitor fees related to the increase in attendance, and offset by a 10% year-over-year reduction in SG&A.

To provide a bit more detail on the operational transformation, these efforts are focused on aligning our cost structure with the current needs of the business and creating capacity to continue investing in our highest return priorities. We are targeting the initiative to generate approximately $11 million in annualized cost savings, including synergies from our acquisition of Spotlight. This is measured against our 2025 adjusted SG&A of $89.5 million, pro forma for a full year of combined operations with Spotlight. Given the timing of the program's launch, the complete run rate benefit will be fully reflected in our results beginning in 2027. In the meantime, execution is well underway, and we have already actioned $3 million of the annualized savings to date and the remainder on track to be completed by mid-summer. As a result, we expect to realize up to $6 million of savings in full year 2026.

Operating loss for the first quarter was $26.9 million, reflecting the top line and operating expense drivers I just outlined. Adjusted OIBDA was negative $10.5 million, at the better end of our guidance range. Year-over-year performance reflects higher exhibitor fees driven by attendance growth, partially offset by disciplined cost management and early benefits from our operational transformation.

Turning to cash flow. First quarter unlevered free cash flow was $18.1 million, compared with $5.5 million in the prior-year period, supported by a normalization in working capital from the fourth quarter. At the end of the first quarter, NCM had $51.6 million in cash, cash equivalents, restricted cash, and marketable securities. Our total debt position at quarter end remained at $12 million.

Turning to shareholder returns, beginning with our dividend program. We announced a quarterly dividend of $0.03 per share today, amounting to $2.8 million. This quarter's dividend will be paid on June 4, 2026, to stockholders of record as of May 22, 2026. Turning to share repurchases. NCM repurchased approximately 210,000 shares in the first quarter for a total of approximately $820,000 at an average price of $3.93 per share. Share repurchases have historically been an important tool for returning capital to shareholders, and we are proud of the progress we have made. As we look ahead, our priorities are evolving in a way we believe is firmly aligned with shareholders' best interest as we continue to take a disciplined, returns-focused approach to capital allocation. We are seeing a compelling set of investment opportunities within the business, including rebuilding our local business, enhancing our programmatic and self-serve capabilities, and strengthening inventory across our network, where the return profile compares favorably to repurchases at current levels. As such, we intend to allocate capital accordingly.

Now turning to our guidance. For the second quarter, we expect revenue to be between $57 million and $63 million, and adjusted OIBDA to be between $1 million and $5 million. Our guidance reflects the strong outlook in the overall slate for the second quarter, which is expected to drive a year-over-year increase in attendance and higher theater exhibition fees. Additionally, we anticipate improved monetization in the quarter, driven by our unified Platinum network and stronger local performance. With an improving industry backdrop, a robust slate, and sustained advertiser demand, we remain optimistic about the year ahead. As we move through the year, we will remain focused on driving efficiency through disciplined execution and thoughtful capital allocation, positioning NCM to benefit from the stronger release slate and a more favorable demand environment.

Operator, please open the line for questions.

[Operator Instructions] The first question is from Patrick Sholl with Barrington Research.

Just maybe just a quick question first on your revenue outlook for Q2 and I guess maybe any commentary on the end of the second half of the year. Just any impact you're seeing just on the macro environment and how that's impacting advertisers on specific categories, especially comparing against the tariffs this past year and the Middle East conflict this year as to how that's shaping up the macro environment.

Let me start in more general response, and then Ronnie can be more specific. In terms of macro things like tariffs and/or what's happening with oil prices, I don't think we're seeing a significant impact from that so far, although we're, I would say, cautiously optimistic that it won't have an impact for the rest of the year. There are certainly some parts of our business that would be more affected by a sustained petroleum cost increase. So from a macro point of view, we haven't really seen it just yet, and we don't expect we're going to see anything material in the second half. But this conflict's only been going on for a short period of time. But I'll turn it to Ronnie on any more specific comments he might have about Q2.

Yes. Patrick, thanks for the question. So I think if you look at the 2 different markets that we're in, both in national and local, I'll start with local first. The local business in the first quarter was quite strong, like we said in the call. First quarter was up 12% year-on-year. The second quarter, we're continuously pacing -- continuing that momentum. And our expectation is the second quarter will do much better than last year. So in terms of the local market, we're seeing strong demand, great execution.

In terms of the national market, again, the NCM network for the first quarter for national was up actually 2% when you adjust for the right calendar periods. And I think right now what we're seeing in terms of pacing in national, it is pacing well. It's pacing ahead of last year. And even though right now, we're not seeing much impact, obviously, we're keeping a close eye on what's going on with the rest of the world.

Okay. And then on the in-lobby boards, can you maybe just talk about the ad formats those would be in, if it would be video or more static type of displays, or maybe just how you're maybe positioning that or selling that as part of the broader ad buy for the people utilizing the big screen?

Yes. So, Patrick, you're talking about the AMC initiative, which we're really excited about. It's going to be rolling out pretty soon. It's going to be in nearly 80% of AMC's theaters. In terms of the format, it is going to be primarily video. That's the business that we're in today on the big screen. We suspect that it will be largely video, and it will follow typically what people are currently doing either in digital out-of-home formats today or in traditional video premium formats. So there may be some new creative done specifically for these big screens. But as we roll it out, we expect this to be completed by the end of the year. We expect there'll be a lot of experimenting with different kinds of creative, including using interactive things like QR codes to link ads back to sponsor websites.

The next question is from Eric Wold with Texas Capital.

A couple of questions. I guess I'll start with a follow-up on the lobby initiative the last question was on. How should we think about that as an ability to unlock additional budgets? Is it -- do you expect it to be completely separate from the budgets that are on the theater screen? And then does this indicate a broader desire to diversify away from theaters eventually? And if you did that, would that need to be done by M&A or something that can be done organically?

So when we look at the lobby, we look at it as a new incremental business. Historically, it's been somewhat of an afterthought for movie theaters and for movie theater advertising companies. With this investment in the size of the screens and in the highest-traffic ones, we see it primarily as an incremental piece. While some will get sold with the big screen, much of it is going to be sold programmatically through digital out-of-home platforms, which will allow us to control literally pricing as well as the actual source in terms of the advertiser. So to answer your question, I would say, it's going to be largely incremental and separate.

Your second question as it relates to diversification, this was designed ultimately as a high-growth medium that's really adjacent to cinema. The lobby is different. It's a high-dwell-time area that we believe can be monetized. Yes, it's cinema goers, but it's cinema goers before and after the movie, often near a restaurant or a bar that might even be in the venue. So this is what I would call an adjacent diversification. And as it relates to M&A types of discussions, obviously, we're always looking at things, but we're not going to be commenting about any M&A specifics on the earnings call.

And then maybe update us on your thoughts of the ability to be involved with political ad spending, especially talking about the local market heading into the midterms. Any sense of what percentage of the network would be open to political ads? How much control the theaters are going to need to have in terms of what ads are shown on the screens politically versus the normal input they have? And maybe just give us general thoughts on if you think that could be a driver.

Yes. So it's an important opportunity for us. It truly varies by exhibitor in terms of who allows what type of political advertising. There's certainly been an openness that's more substantial than it has been in the past. It is very specific to certain markets. There's probably maybe a couple of dozen local markets that are truly desiring a saturation level of advertising. And fortunately, we're in most of those markets with our theaters. I can't really size the opportunity for you just yet. We're making a big push right now with a completely really different type of advertiser. This is not like going to your typical agency on Madison Avenue or a client. But we've been rapidly seeking out the lobbying-type agencies that actually control a lot of these budgets. So it's an area we care a lot about. We know that there's significant money being poured into the local elections. And we think cinema advertising, especially when it's done in a tasteful way politically, will be a great opportunity for us and for the exhibitors.

The next question is from Mike Hickey with StoneX.

On, I guess, the topic of CinemaCon, a lot of industry focus and excitement this year from attendance strength from the younger audiences, Gen Z, Gen Alpha. I think you guys have talked about that before, but it seems like growth-wise, it's elevating here. So just curious how important you think that broader shift is for your business and if you think it's fully resonated with media buyers yet.

Yes. So we've always been a very attractive medium demographically with our core demo, really the youngest of almost any type of medium at just over 30 years of age. The addition of Gen Alpha, which is the even younger demographic, is a really positive trend. Many of these people were affected by COVID and by staying at home during that time. And that resurgence is even going to lower our average demographic, which makes them even all the more valuable. So we're already talking to advertisers about it. It's a relatively new phenomenon. This new information is only, I would say, 3 to 6 months old in terms of quantifying it. But it's a really great trend for our business because the younger the advertiser in terms of going to cinemas, the more valuable they are. And we know there'll be a lot of active responses from our agencies and client partners for this new enhanced younger demographic.

2 questions on guidance. Your revenue growth, very strong, mid-teens for Q2. I think the debate, maybe, Tom, on this, is whether or not the box office grows in Q2. I think I heard you say that you're expecting attendance to grow year-over-year in Q2. If that, in fact, does disappoint, how would that impact your view for Q2? It seems like it could cut both ways, a positive or a negative, depending on how it breaks at the end of the quarter.

I'll respond to that generally, and Ronnie can do it more specifically. Attendance is obviously critical to driving overall impressions in our platform. Getting the attendance forecasted correctly and matching it with advertiser demand is really the secret sauce for our ability to monetize and to drive EBITDA. The attendance in Q2 right now, based on all of the different sources, appears to be really strong. And you never know for sure how these things are going to play out. I've been doing this for a long time in the movie business, and it's tricky to get it right. So I don't know, Ronnie, do you want to add anything more about...

Yes, I would say, like you said, Mike, on our call, we did say that our expectations for the second quarter is that attendance will be up versus the prior year. I think you see in our guidance. The range is, I would say, wide enough that if it falls short, it will be in the lower end of our guide. So we have considered different scenarios within the attendance. But currently, right now, our base case is that we expect increases in the second quarter.

Okay. Last question from us on guidance again, focusing this time on margin. If you look at a comparable level of business on revenue, Ronnie, you'd look back to Q3 '25, you did about $63 million in revenue and delivered $10 million in EBITDA, 16% margin. When you look at the high end of your Q2 guide, you're at a similar revenue range, but $5 million in EBITDA, 8% margin. So can you just walk us through what's structurally different in the business today and driving that margin delta?

Yes. I think one of the differences you have to consider is really the number of attendees. That's really by far the largest driver of expenses. So the implication, while you look back in the third quarter of last year, one of the nuances was that September was actually relatively strong versus prior years, which definitely helped in terms of revenue per attendee for the quarter. And as you know, September is typically like a lower attendance month. So you've got the benefit of that in terms of margin in the third quarter of last year. I think here in the second quarter, even though the revenue levels might seem similar, the attendance levels are different.

The next question is from Alicia Reese with Wedbush Securities.

I was wondering if you could talk a little bit about the expected impact of World Cup advertisers focusing on that and compare that to what you saw with the Olympics. And just what's embedded in guidance? And then if you could talk a little bit about the NCMx, the NCM Boost, Boomerang, Bullseye, Blueprint, all of the progress that you've made so far, where you see progress yet to be made over the course of the year? And then I have one follow-up, if there's time.

Okay. So on the World Cup front, inevitably, cultural moments like the Olympics or the World Cup do affect advertising budgets. And I don't think anyone is kind of immune to money that would ordinarily be spread across a lot of media platforms spreading more into things that are World Cup-related. We actually have a World Cup content in our preshow. So we're doing what we can to help monetize that. But I would say that the World Cup will have some impact on it. It's accounted for in what we believe is the existing forecast. Do you want to add anything more, Ronnie, about the World Cup?

I think in terms of the World Cup, any potential impact is also baked in within our guidance range for the second quarter. So I think right now, in terms of what we're seeing in the overall marketplace, the World Cup has definitely been talked about. But again, we're still continuing to pace strongly. And the impact, again, is more on national versus local. So in terms of the national business, we're pacing ahead of where we are at this point last year.

So on the NCMx front, I think we've been doing a pretty good job documenting the growth every quarter in this business. So literally, the last thing we just announced in today's earnings call was the new partnership with VideoAmp, which is going to further integrate cinema into another unified cross-platform ecosystem. We are currently way ahead of the curve to any of our competitors in this space as it relates to all of the digital products that we're offering that help validate the effectiveness of advertising as a full-funnel solution. So I look at this, we've also added the Spotlight inventory into our NCM mix. So NCMx is really an important initiative that we've been working on for almost 2 years now to really allow people to know that not only is cinema one of the best ways to get attention, it's also one of the best ways to create outcomes for advertisers. So we're really proud of it, and it's certainly drawing a lot of attention to cinema as a full-funnel solution.

Perfect. And to that point, anything to report back on this year's upfronts?

Yes. So the upfronts literally for the major networks start this week. We've already been talking ahead of this, going back almost 3 months. We've been already talking to advertisers about planning for cinema for the upfront market. It's way too early to get any sense of what's going on in the marketplace. Literally, the upfronts started on Monday for the big television advertisers and some of the big digital guys. But we'll provide an update in the next earnings call as to any feedback that we see in the upfront. We're expecting the upfront to be strong, and we have already gotten ahead of the curve on it. So we're optimistic about our share of the upfront growing year-on-year.

This concludes our question-and-answer session. I would like to turn the conference back over to Tom Lesinski for any closing remarks.

Okay. Thank you so much for joining us today, and we appreciate your continued support of National CineMedia. The first quarter reflects meaningful progress on our clear 2026 priorities: growing attendance, monetization, deepening our value to advertisers, and building a more efficient and scalable operating foundation. Underlying demand remains healthy, and we're confident that the steps we're taking will strengthen NCM's ability to capitalize on the opportunities that lie ahead.

Looking ahead, we're entering the balance of the year with a strong and diverse film slate, healthy advertiser demand, and a more efficient and productive organization. The actions we are taking today across utilization, inventory expansion, and cost structure are designed to position NCM to capture the opportunity more effectively and translate it into sustainable long-term growth. We remain confident in our strategy and in our ability to deliver increasing value for our exhibitor partners, our advertising clients, and our shareholders over time. Lastly, thank you to the NCM team for their continued hard work and commitment, and we'll see you at the movies. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the National CineMedia Q4 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the call over to Chan Park, Vice President of Finance. Please go ahead.

Thank you, operator, and good afternoon. I'm joined today by our Chief Executive Officer, Tom Lesinski; and our Chief Financial Officer, Ronnie Ng.

I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

All statements other than statements of historical facts communicated during this conference call may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties. Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's filings with the SEC. All forward-looking statements are expressly qualified in their entirety by such factors.

Further, our discussion today includes some non-GAAP measures. In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurement. These reconciliations can be found at the end of today's earnings release or on the Investor Relations page of our website at ncm.com.

Now I'll turn the call over to Tom.

Thank you, Chan. Hello, everyone, and thank you for joining our fourth quarter and full year 2025 earnings call. 2025 was a year of meaningful progress for National CineMedia. We executed against our strategic priorities by continuing to invest in our platform and capabilities, driving increased advertiser demand and further positioning NCM to perform against a broader range of attendance environments. We also strengthened our exhibitor relationships, most notably through a new deal with AMC that was announced in the second quarter.

The momentum we built throughout the year carried through the fourth quarter as we broadened our industry-leading reach with the acquisition of Spotlight, adding a new high-end luxury option to our network. These actions translated into year-over-year revenue growth, supported by healthy advertiser demand for our sought-after audiences and our continued focus on driving growth across the platform.

This strength was also reflected in our fourth quarter results. NCM delivered total fourth quarter revenue of $93 million, in line with our guidance range and growing nearly 8% year-over-year, outpacing attendance trends. Adjusted OIBDA for the quarter was $37 million, exceeding our guidance range and representing an increase of 6% versus the prior year, supported by solid revenue performance and the resilience of our asset-light model. These results were driven by healthy advertiser demand and continued improvements in inventory utilization across our network.

We generated and successfully captured strong interest against the slate of highly anticipated titles, including Wicked: For Good, Avatar: Fire & Ash, and Zootopia 2. This was made possible by our continued investment in strengthening our sales team, expanding our programmatic platform, and advancing data and measurement capabilities to meet modern advertisers' requirements. In particular, our focus on broadening and enhancing audience targeting and performance attribution continues to improve the value of NCM's platform, enabling us to attract new advertisers and deepen relationships with existing ones.

During the quarter, 18 advertisers placed cinema advertising campaigns at or above the $1 million level, reflecting growing confidence in cinema as a core advertising channel. Total advertising revenue increased 9% versus the prior year to $90 million, driven by continued performance in the retail, wireless, and travel categories, alongside growth in the entertainment and media, pharma, and technology categories.

Across the industry, advertiser budgets continue to shift toward premium, high-impact environments that drive engagement and brand recall. That shift was reflected in strong sell-through across our premium national inventory, led by our Platinum and post-show inventory. As advertisers allocate more spend toward high-impact brand-safe environments, these premium options supported stronger monetization of our inventory and fueled a 27% year-over-year increase in overall impressions sold per attendee in the fourth quarter.

We're also seeing tangible benefits from the standardization of our national footprint following our extended agreement with AMC. With a more consistent show structure, we are making campaign planning and scaling more efficient, strengthening our ability to drive demand and improve inventory monetization over time. Given the ongoing industry-wide tailwinds and our superior platform, we believe NCM is well positioned to capture a greater share of advertiser budgets, and we're seeing strong early demand indicators for 2026.

Looking at the domestic box office, performance was mixed this quarter. While the quarterly box office total fell shy of industry expectations, NCM saw meaningful revenue pickup in the middle and tail end of the quarter. This was driven by major franchise releases, including Wicked: For Good and Avatar: Fire and Ash, that supported solid bookings and campaign activities as moviegoers continue to demonstrate their enduring love for cinema in the critical holiday period.

Total attendance across NCM's network in the fourth quarter increased approximately 7% year-over-year to $107 million. With advertising revenue up 9% over that same period, we grew ahead of attendance, underscoring the value of our audiences, continuing appeal of our platform, and progress in efficiently monetizing open inventory across our network. As a reminder, NCM's year-over-year attendance growth also reflects the inclusion of an extra week in our fiscal fourth quarter this year. Despite this additional week of attendance, total advertising revenue per attendee increased in the fourth quarter, reflecting strong demand from advertisers.

Now turning to our programmatic and self-serve initiatives, which are critical components of our strategy in capturing more premium video ad spend and increasing on-screen and in-lobby inventory utilization. Programmatic revenue increased 100% year-over-year as the offering continued to unlock new portions of client advertising budgets, specifically earmarked for programmatic initiatives.

Compared to the prior year period, the total number of programmatic advertisers in the fourth quarter increased 2.4x, reflecting our continued investment in additional supply-side platform partnerships that further broaden access to our inventory and drive continued adoption by advertisers. Additionally, industry standardization continues to advance scalable access to cinema inventory, including recently updated inventory classifications that improve the discoverability of cinema within omnichannel programmatic workflows.

Turning to local. Self-serve also gained further traction following the launch of the upgraded platform earlier in the year. Our generative AI-enabled tools increased creative control and shorten time to market, driving particular value for small and midsized advertisers as well as large advertisers looking to localize their national campaigns for greater impact.

Looking at fourth quarter self-serve performance, we delivered 64% year-over-year growth. Self-serve remains a key driver of our long-term growth strategy, helping drive both national and local demand by making cinema advertising easier to access while allowing our sales team to prioritize larger, more strategic opportunities.

In the fourth quarter, we saw encouraging signs of improvement as the national market stabilization we experienced in the third quarter extended into local markets as well. Local revenue increased year-over-year, reflecting the progress we're making as we reset and rebuild the local business. Importantly, we're seeing that improvement transit into better operating momentum as we refocus the local organization.

We also made deliberate investments in local this quarter, including hiring a seasoned new senior leader to sharpen focus, improve operating discipline, and accelerate execution. We've also reengaged the local sales team around a clearer strategy and increasing day-to-day accountability with a more diversified list of targets and measurable outcomes.

Operationally, we continue to scale local data-driven advertiser targeting, deepen our category expertise, and prioritize key verticals, including government, automotive, home services, and local law firms. As part of that effort, we are increasingly directing higher-value relationship-driven accounts to our sales teams while routing smaller transactional opportunities to our self-serve and programmatic solutions. Our NCMx-powered local data capabilities provide greater visibility into where demand is strongest and where inventory is most attractive, improving planning discipline and execution at the market level.

In addition, our AI-enabled creative localization tool, Bullseye, continues to gain traction. For example, in the fourth quarter, one of the largest national retailers leveraged this capability to produce over 70 different local creative executions within one campaign, generating over 15 million impressions and demonstrating the power of our platform to enhance national campaigns with meaningful market-specific customizations. The campaign also drove measurable performance results with third-party measurement showing a 34% lift in foot traffic to retail locations.

Taken together, we believe these steps position us for continued improvement in local performance as market conditions improve. Our offering remains a differentiator, giving advertisers a highly effective geo-targeted way to reach desirable audiences in a captive opt-in environment at scale. We see local as a meaningful return to growth opportunity, supported by our recent leadership investments, a renewed focus on execution and the positive momentum we saw emerge in the fourth quarter.

This year, NCM continued to connect advertisers with sought-after engaged audiences in uniquely immersive ways. As production studios lean in on sequels and remakes to capitalize on fan favorite franchises, we're seeing particularly strong advertiser demand against these films. In addition to our existing premium inventory, we're meeting that demand through custom title-themed preshows designed to tap into moviegoer enthusiasm.

This quarter, alongside the tent pole release Wicked: For Good, we delivered branded preshow experiences featuring trivia and franchise flashbacks that celebrated fan engagement. These custom integrations enhance the value of our preshow inventory and helped offset the softer-than-expected box office performance.

Given their success, we plan to significantly expand our custom preshow activations in 2026, leaning into popular franchise installments such as Toy Story 5, Spider-Man: Brand New Day, Minions 3: Mega Minions and Dune Messiah. We are also leveraging AI-enabled creative tools to accelerate production and customization, allowing us to respond more quickly to early box office signals and capitalize on breakout hits.

We also made progress in our network expansion initiative this quarter. The strategic acquisition of Spotlight in November brings premium luxury screens and audiences to our platform, expanding our reach and appeal among high-end luxury advertisers while creating new revenue opportunities. Our Spotlight strategy is progressing as planned and is diversifying and deepening our appeal to new advertisers. As we head into 2026, our continued investments are strengthening NCM's ability to compete and win in the premium video advertising market. We remain focused on attracting new advertisers, deepening existing relationships, and continuing to prove the differentiated value of cinema advertising.

The upcoming 2026 slate is robust and balanced and represents a meaningful improvement versus recent years with a more consistent flow of major releases across all 4 quarters. This steadier cadence supports more predictable campaign planning for advertisers, assuming box office performance tracks current expectations and provides longer demand-generating runways for highly anticipated tent poles like the Super Mario Galaxy Movie, Christopher Nolan's The Odyssey and Avengers: Doomsday. 2026 is shaping up to be the first true benchmark year for the industry since the pandemic and the first normal box office year since the industry strike. As the market continues to return, we believe there is meaningful upside for NCM.

Looking to the first quarter, early visibility is encouraging. We are seeing continued contribution from December releases with titles such as Avatar: Fire & Ash, Zootopia 2, and The Housemaid carrying the holiday momentum into the start of the year. As Ronnie will explain in his remarks, NCM's first quarter results will reflect the absence of the first week of January, which was included in our fourth quarter this year. That said, we're encouraged by sustained demand for our inventory, driven by first quarter hits, including Send Help and Wuthering Heights.

Normalizing for the 53rd week, we estimate that total attendance for the fourth quarter would have been approximately 92 million, down 9% versus the prior year. Against that backdrop, NCM reported total fourth quarter revenue of $93.2 million, within our guidance range and up 8% year-over-year. This growth was driven by a strong recovery in demand across key advertising categories, including entertainment and media, pharma, and technology.

Advertisers also continue to adopt our programmatic platform, driving 100% year-over-year growth in programmatic revenue. Importantly, our programmatic platform continues to help fill available inventory and improve utilization across our network, enabling us to keep total revenue per attendee steady while supporting stronger overall performance.

National advertising revenue for the fourth quarter was $76 million, up nearly 10% from $69.2 million in the prior year. In the fourth quarter, we drove a 27% increase in national impressions sold per attendee, reflecting a 72% increase in Platinum impressions sold per attendee and a 53% increase in post-show impressions sold per attendee. This performance reflects healthy advertiser demand for our premium inventory and the continued benefits of the standardization of our national footprint following our amended agreement with AMC.

National revenue per attendee increased to $0.71 in the fourth quarter, supported by the increased advertiser demand and our ongoing efforts to optimize pricing. On a comparable basis, national revenue per attendee increased 10% versus the prior year period. Local and regional advertising revenue for the fourth quarter was $13.8 million, up 2% from $13.5 million in the prior year.

We are encouraged by the year-over-year improvement driven by the continued recovery of local advertising demand, coupled with our team's targeted approach and continued investments in our self-serve offering. We saw particular strength across the gaming, retail apparel, technology, and health care categories. Looking ahead, we expect this positive momentum to continue, supported by our focused local sales strategy.

Turning to our expenses. Fourth quarter total operating expenses were $69.4 million, up from $66.3 million in the prior year, reflecting onetime charges related to cost savings initiatives and spotlight transaction costs. Excluding one-time items, depreciation, amortization, and noncash share-based compensation, our adjusted operating expenses were $56.1 million, up from $51.3 million in the prior year, driven by higher attendance-related exhibitor fees and a slight increase in SG&A.

SG&A was up 5% in the fourth quarter, reflecting the inclusion of Spotlight's SG&A expenses and the extra week in the period as compared to the prior year. These additional expenses were partially offset by our continued cost management efforts. On a comparable basis versus the prior year, SG&A was down approximately 1% in the fourth quarter. Fourth quarter adjusted OIBDA was $37.2 million, exceeding our guidance range and up 6% from $35 million in the prior year, reflecting the strong holiday period demand, lower-than-anticipated attendance, and disciplined expense management.

Total unlevered free cash flow for the quarter, as defined by cash flow from operations adjusted for cash interest expense less capital expenditures was $6.1 million compared to $28.3 million in the prior year. This decrease was primarily driven by a shift in the timing of receivables collections from select agency partners as well as a tougher comparison to the prior year fourth quarter, which benefited from approximately $13 million in client advance prepayments for advertising scheduled to run throughout 2025.

Now turning to our full year results. NCM's full year 2025 total revenue was $243.2 million, up 1% from $240.8 million in 2024. Total revenue was primarily driven by national advertising revenue, which increased 3.5% to $194.5 million. The increase in national advertising revenue was primarily due to a 21% increase in national impressions sold per attendee and a 3% increase in attendance across our network due in part to the additional week in our fiscal year 2025.

As we focus on increasing utilization across our network, we continue to test price in the market to ensure we are optimizing both utilization and monetization to drive revenue growth. Based on the results we gathered, we strategically decreased national advertising CPMs by 18% year-over-year and are remaining mindful of our monetization rates to ensure NCM's inventory remains both competitive in the market and profitable for the company.

Local and regional advertising revenue for the full year was $34.6 million, down from $39.1 million in 2024. This decrease was driven primarily by the trade-related pullback in the pharmaceutical, travel, government, and automotive categories earlier in the year, which has since normalized. This impact was partially offset by an increase in contract activity and size within the gaming, technology, beverages, retail and apparel, and health care categories in 2025. Full year beverage revenue increased 2.9% to $14.1 million in 2025, reflecting the increase in attendance at ESA Party exhibitors across our network.

Turning to our full year expenses. Total operating expenses were $257.1 million, down from $260.3 million in the prior year. This decrease reflects lower amortization expense, administrative costs, and network operating costs in the year, partially offset by higher attendance-related exhibitor fees. Excluding one-time items, depreciation, amortization, and noncash share-based compensation, our adjusted operating expenses were $204.2 million, up from $195.1 million in the prior year, driven by higher attendance-related exhibitor fees and a slight increase in overhead expenses. Full year adjusted OIBDA was $39.1 million, down from $45.7 million in the prior year, primarily driven by the trade-related advertiser headwinds we saw in the first half.

Turning to our consolidated balance sheet. At the end of the fourth quarter, NCM had $37.6 million of cash, cash equivalents, restricted cash, and marketable securities. We had $12 million of total debt at quarter end, reflecting a draw on our revolver relating to the acquisition of Spotlight in the fourth quarter. Importantly, this was a deliberate and temporary use of the revolver to fund a strategic transaction.

Turning to shareholder capital returns. In 2025, we returned approximately $33.6 million to shareholders, which included $11.3 million through the dividend program we reinstated this year and $22.3 million contributed toward our ongoing share repurchase program. Under the dividend program, we announced a quarterly dividend of $0.03 per share today, amounting to $2.8 million. This quarter's dividend will be paid on March 23, 2026, to stockholders of record as of March 9, 2026.

After a period of seasonally higher use of cash for working capital in the third quarter, NCN resumed share repurchases in the fourth quarter, bringing our full year total to 4.1 million shares repurchased in 2025 at an average price of $5.41 per share.

Now turning to our guidance. For the first quarter of 2026, it is important to keep in mind that there are several factors to consider, which impact the comparability to prior periods. Since this past fourth quarter included a 53rd week, this shift in our calendar year would mean that the first quarter would not have the benefit of the week between Christmas and New Year's.

Secondly, we are expecting reduced beverage revenue due to contractual adjustments and the election by an exhibitor to change the number of beverage spots. If you were to pro forma these changes in beverage revenue for the full year of 2025, then the implied impact to total revenue would be slightly below 2%.

Lastly, the Winter Olympics this year makes February a tougher comparison as advertisers temporarily shift their focus to the quadrennial event. Importantly, our first quarter outlook does not reflect any change in underlying demand. Advertising momentum remains intact with revenue for the complete calendar month of January coming in line with the prior year despite the loss of the holiday week. With that said, for the first quarter, we expect revenue to be between $32.5 million and $36.5 million, with adjusted OIBDA between negative $13 million and negative $10 million.

In addition to the factors I just mentioned, our adjusted OIBDA outlook reflects higher expected attendance-related expenses than the prior year, driven by an increase in moviegoer activity. Looking ahead, we believe the investments we made in 2025 position NCM to capture continued growth in advertiser demand against a strong upcoming slate in 2026. Highly anticipated films, including The Super Mario Galaxy movie, The Devil Wears Prada 2, Star Wars: The Mandalorian & Grogu, and the live-action remake of Moana are driving strong interest from advertisers, and we believe we are positioned to capture that demand as it materializes.

In addition, our asset-light model provides operating leverage that further positions NCM to drive profitable growth as audiences return for these upcoming hits. With positive momentum in our business, a strong 2026 film slate, and a continued investment in our platform, we are well positioned to continue generating strong results for our shareholders.

Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Eric Wold with Texas Securities.

A couple of questions. I guess, first off, you talked about, obviously, with regards to Q1 guidance, no change in kind of what you're seeing in terms of advertising demand and the strength you saw in January. I guess looking further out, can you give us a sense of what you're seeing in terms of forward bookings later in the year versus maybe what you would have seen this time last year? I'm not looking for specific numbers or guidance, but maybe kind of indications around if advertisers are booking further out in the films to be more comfortable with campaigns later in the year or if they're still waiting a little bit closer to kind of planned advertising dates?

So I think we've commented on the upfront in the past and how that's booked already going forward into this year. And our upfront is -- was up year-on-year. So that's obviously a really positive sign correlated to the strength of the upcoming box office slate.

As it relates to scatter, we were only really 2 kind of months into the year. So it's really hard to forecast the Q1 first 2 months going out further. But we are seeing good signs of additional inventory being purchased in Q1 -- I mean, in Q2 and in Q3. So -- so far, the actual demand and the actual performance on the platform looks good, especially compared to last year.

Perfect. And then a follow-up question, obviously, with the strong demand you're seeing, strength you're seeing with both the Platinum and the post-show, especially now with AMC coming into the mix. How much of a benefit could that start to have or is having on kind of average revenue per impression? Has that become -- continues to grow as a portion of revenue? How much of a tailwind could that have on that metric?

Well, I think the AMC piece of the equation that you discussed is critical because obviously, you're comparing year-on-year where we didn't have it. Eventually, that will even out on a comp basis. But clearly, that inventory, both the post-show and the Platinum part of it are obviously much more expensive inventory. So that is definitely going to be a tailwind for us. So it was obviously one of the primary reasons we did that new agreement. So we're seeing the benefits of that. And so far, this year looks really good on the Platinum and on the post-show front, especially with the addition of AMC.

Our next question comes from Patrick Sholl with Barrington Research.

Just with the fourth quarter being a little bit softer than expected, did that create like any sort of issue in terms of like make goods? And I guess, is there any sense of how advertisers would fulfill that over the course of the year?

Yes. So Pat, I think you're referring to the box office in the fourth quarter coming lower than expected. So you're right. There's a few films that obviously contributed to that between Thanksgiving and Christmas. Now going -- exiting out the year, there was a higher amount of ADUs or make good than we traditionally had in other fourth quarters because of that. So which also, by the way, is a good representation of that demand. The tricky part is in terms of fulfilling that 80 to make good for 2026 is that it's not going to be all fulfilled in the first quarter. It will be over the course of the next 2 to 3 quarters, so anywhere between the first and the third quarter.

Okay. And can you provide any more detail just sort of sizing out that week between Christmas and New Year's and the contribution that that provides on a revenue basis? And just how you kind of view the film slate over the course of the year and creating kind of a critical mass of attendees to maintain consistent advertiser demand?

So -- yes. So what I will say about the last week because for us, the -- this year in terms of that week between Christmas and New Year's was really strong, much stronger than the one we experienced in 2024. The total ad revenue was multiples higher for that week. What I'll also say is that if you were to look at the fourth quarter period between '25 and '24 and you were to add that week into '24, the comparable revenue per attendee would have been up in the low double percentage area. So that should give you a sense of how strong that demand was in that last week.

Our next question comes from Mike Hickey with StoneX.

Great job on 4Q here. I guess just thinking about Q2, Q3, Q4, obviously, a pretty big expectation. I think everyone is afraid to put it in the math. I respect that, but the box office looks like we could get some real growth here this year. Just curious how correlated your ad business is, Tom, to the growth of the box. We see the box growing strong. Should we also expect your business to pick up?

And I'm also curious, I mean, are you seeing it on the media buyers? Like are they also excited for the slate, whether it's scatter or upfront, wherever they buy it, are you seeing -- I would imagine that given the demo that you serve, the excitement for the slate that their interest has picked up this year versus prior?

Yes. So there definitely is a lot of excitement in Q2 and Q3. Obviously, it's probably the best set of movies since 2019, and we're really optimistic about the performance of those movies. That enthusiasm we have has translated into the marketplace and advertisers are cleanly lining up for the Q2 and Q3 slate. So we've been talking about the return of a really healthy slate diversified across a lot of different genres. We have that in Q2 and Q3, obviously, some very well-known movies and some new ones.

So I can say that the confidence that we have with the box office and with the mix of titles has translated into what we believe are really good solid bookings in Q2 and Q3. Obviously, there's still the scatter market to play through over the next couple of quarters, but we're really optimistic about what the next 2 quarters look like for us.

Given that backdrop, Tom, and where your stock is, do you still have the balance sheet here to be more aggressive on a buyback?

I think in terms of the buyback, we've actually -- if you look back since the start of this program and plus the dividends that we paid, we've returned nearly $50 million of capital back to shareholders. And like every quarter and every month, we do take a look at our buyback program versus where we see, obviously, where free cash flow would be. So I think we'll continue to review that and utilize every tool at our disposal when the opportunity provides.

I think you said, Ronnie, that you took your CPM down by 18%. I'm not sure I heard that right. Was that for '25? Obviously, maintaining your rate card has been something you guys have done historically. Can you just talk about, if I'm right, if I heard that right, the decision to do that and how that sort of sets you up this year as more of a value product, I guess?

Yes. Right. So Mike, you did hear that correctly for the full -- on a full year basis. And part of that also relates to the strategy around utilizing programmatic in certain spots as well, right? So that will affect CPM to better inventory utilization or increased inventory utilization. So that did factor into that.

The other part of it as well is just being opportunistic in terms of opening up different categories in advertising categories. So certain advertising categories historically have always been lower CPMs. But the truth as well is that they have larger and deeper pockets. So when we actually broaden our advertising base, you'll naturally go into different advertising categories that just have lower CPMs for that market.

Last question, guys. It sounded like the Olympics was a negative for you. Is the World Cup a negative? Is the political spend anticipated here later mid-term? Is that also a negative or those positives?

I think the political monies have the potential to be an upside for us. We've been working heavily on courting that different kind of advertiser for a while now, and we certainly have the opportunity to monetize that. I don't think the World Cup is going to be comparable in my mind in the U.S. advertising impact. The U.S. Olympic advertising and sponsorship and I think it's just -- it's more pervasive and across more categories.

The World Cup obviously will be popular here, but the commitment that advertisers made with the network across all of the Olympics is really substantial. Obviously, we knew it was coming. So we planned around it. We even took advantage of it to some degree. But I wouldn't suspect it will be similar on the World Cup. Certainly, the World Cup is a big deal. But the advertising impact, I think, from the Olympics is more substantial in the industry than on the World Cup in the U.S.

Yes, Mike, I'll also add one thing to that is the Olympics happens in February, in the first quarter, where the total advertising demand across all markets is lower. So grabbing that extra pie or attention and trying to get that away from the Olympic event is just going to be harder versus the World Cup, which is going to be in June.

Our next question comes from Alicia Reese with Wedbush.

I'm wondering if you could talk a little bit more about the national advertising opportunity as you shift to local. If that is incremental ad dollars from those national advertisers who wish to do more local advertising or if there is a bit of cannibalization maybe on a different CPM rate. If you could talk a little bit more about that detail and remind us if that stays in the national bucket versus the local regional.

Yes. So we're definitely seeing some advertise -- and it's actually situation dependent with whoever the advertiser is, but we are seeing some national advertisers that are looking on a more regional basis, right? So obviously, that would be beneficial to local advertising.

I wouldn't think about it as cannibalization of one bucket versus the other or overall in our total advertising revenue. From our perspective, we'll always do business replace advertising when it's economically beneficial. Obviously, like there are some CPM differences between the local markets, regional markets and national. And in some instances, local market CPMs are actually at a premium to national CPMs. So it's going to be really dependent on what time of the year and what our advertisers are really looking for. But we believe that it's all accretive at the end of the day because it's all increasing demand throughout the show.

Perfect. Yes, that's what -- that was the implication of that. So I appreciate the clarity on it. And then for the political advertising, historically, correct me if I'm wrong, the exhibitors have not allowed political advertising. Has that changed?

I don't want to get into the specifics of it because it's a political issue, just kidding. The truth of it is there is an interest from select exhibitors, not all, to support political. And depending on who we're talking about in particular, some we have -- we can do quite readily. In some cases, there is a approval process required, but we've been working on that for a couple of years now. And I think more and more people are seeing it as an opportunity that's mutually beneficial, assuming it's the right kind of advertising. So we're optimistic about that. And I think in certain select markets, the key markets in swing states and whatnot, that there will be a lot of demand for political for our platform.

This concludes our question-and-answer session. I would like to turn the conference back over to Tom Lesinski, CEO, for any closing remarks.

Thank you for joining us today. NCM's fourth quarter results reflect the hard work of our team and our continued focus on driving higher advertiser demand and efficiently monetizing inventory across our network. As advertiser enthusiasm for our platform strengthens, we are increasingly confident in our strategy and our ability to deliver differentiated value through premium immersive cinema advertising experiences. With a robust and balanced 2026 film slate ahead, we look forward to continuing to connect brands with highly sought-after engaged audiences while strengthening our competitive position through ongoing investments in our platform. Thank you for your support.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the National CineMedia, Inc. Q3 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Chan Park, Senior Vice President of Finance. Please go ahead.

Thank you, operator, and good afternoon. I'm joined today by our Chief Executive Officer, Tom Lesinski; and our Chief Financial Officer, Ronnie Ng. I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended.

All statements other than statements of historical facts communicated during this conference call may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties. Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's filings with the SEC. All forward-looking statements are expressly qualified in their entirety by such factors.

Further, our discussion today includes some non-GAAP measures. In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurement. These reconciliations can be found at the end of today's earnings release or on the Investor Relations page of our website at ncm.com. Now I'll turn the call over to Tom.

Thank you, Chan. Hello, everyone, and thank you for joining our fiscal 2025 third quarter earnings call. As we shared on our last call, advertiser sentiment stabilized through the summer as brands regained confidence navigating the broader economic landscape. We are encouraged to see that momentum carry into the third quarter, where we saw a clear rebound in demand across key advertising categories, including retail, automotive, wireless and government, reflecting a return to normalized spending patterns after the tariff-related pullback earlier this year.

Driven by July's strong slate, including Jurassic World Rebirth, Superman and the Fantastic 4 First Steps, we delivered results in line with our expectations, achieving top line growth despite a softer late summer box office and industry-wide decline in attendance. NCM's quarterly audience was 109 million across our network, down 11% compared with the third quarter of 2024, in line with the third quarter box office.

Our overall attendance was lower, 11 films in the quarter grossed more than 50 million domestically, up from 9 titles last year, highlighting the strength and continued draw of tentpole releases even in a slower market. The successes of July's hit releases underscored the continued cultural relevance of cinema and reaffirm the enduring power of our platform to connect brands with deeply engaged audiences. Importantly, attendance trends improved toward the back half of September, finishing on par with 2024 strong performance, which was the highest level since 2019. As such, we remain optimistic that the strong holiday slate ahead, featuring several highly anticipated titles will reignite theater attendance in the fourth quarter.

Despite the overall decline in both the domestic box office and attendance, NCM delivered year-over-year growth in the third quarter with total revenue of $63.4 million and adjusted OIBDA of $10.2 million, both in line with our expectations and primarily driven by an increase in inventory utilization. This performance reflects the resilience of our business, one that continues to translate audience engagement into meaningful advertiser value even in a weaker industry environment.

Throughout the third quarter, we continued to advance our key growth initiatives, scaling our Programmatic offering, expanding our self-serve platform and strengthening our local sales organization. On the Programmatic front, we continue to see strong year-over-year acceleration. This quarter, we delivered approximately 4x the Programmatic revenue compared to last year, achieving our strongest Programmatic quarter ever.

With additional platforms coming online early next year, we will significantly expand our Programmatic footprint and unlock an even larger addressable market. We anticipate the growth trajectory will continue as advertisers embrace our platform's ability to deliver targeted measurable campaigns at scale. In self-serve, we continue to gain traction with midsized and regional advertisers who value cinema's attention environment and the ease of direct booking. Our self-serve platform continues to accelerate adoption with third quarter revenue up 23% quarter-over-quarter, driven by expanded business development outreach and CRM-based activation.

Behind the scenes, predictive AI models now identify, score and route high-value local leads, powering scalable small and medium businesses and mid-market expansion and helping our teams engage advertisers more efficiently. Together, our Programmatic and self-serve channels are broadening NCM's reach, deepening relationships with brands and positioning us to capture a greater share of the evolving advertising landscape.

Our local sales transformation is also progressing. We continue to work to enhance our team's capabilities, adding senior talent with deep regional expertise and refining our structure to align more closely with market opportunities. These changes are enabling a more data-informed consultative approach to engaging high-value local and regional advertisers, helping us connect cinema scale and storytelling power with the precision of locally relevant campaigns. We believe this refined strategy positions us to reduce churn and attract new advertisers to our platform.

Across our network, NCM's valuable inventory led by our premium Platinum Spot continues to stand out among advertisers who recognize the environment, reach and measurement capabilities of NCM's unique platform. Platinum continues to deliver exceptional results, achieving an impressive 89% ad recall in a recent tech advertisers' campaign, surpassing industry benchmarks and driving strong gains across brand relevance, excitement and preference. These benchmarks reinforce its position as the most engaging and high-impact placement within the theatrical experience.

Additionally, we enhanced our Platinum offering at select theaters by reducing added flexibility within the ad spot, which has driven higher utilization and improved advertiser satisfaction. Our 4DX format is also exceeding expectations, achieving approximately 85% ad recall in a recent automotive advertisers' campaign and generating triple-digit lifts in awareness, reaffirming the power of immersive cinematic experiences in driving superior brand outcomes. Complementing this inventory is our NCMX data platform, which continues to enhance advertisers' campaigns with data-driven targeting, insights and digital extensions.

Last quarter, we announced the launch of our Bullseye product, which is already seeing strong traction in the marketplace and demonstrating the power of localized data-driven storytelling. A recent cellular campaign delivered more than 283,000 verified incremental store visits, representing a 110% lift, underscoring Bullseye's ability to seamlessly integrate into our tech stack and enable scalable, high-impact local activations.

Alongside Bullseye, our Boost solution leverages our proprietary moviegoing data and new geo-triggered capabilities to target consumers near campaign-specific locations, connecting brands with verified audiences in high purchase intent moments to drive measurable off-line actions. Together, these initiatives strengthen our differentiated position as a performance-driven media platform that combines the power of the movies with data-enabled precision.

As we invest in our platform and innovation, we also remain focused on expanding NCM's advertiser base. In the third quarter, we strengthened our full funnel attribution through our partnership with iSpot, a leading real-time TV and video ad measurement platform. This integration incorporates theatrical exposure data into iSPot's cross-screen measurement framework, enabling advertisers to quantify cinema's incremental reach and conversion velocity alongside linear and streaming channels.

Early results are very compelling. The recent travel industry advertisers campaign delivered 3x faster conversion rates than linear TV. 95% efficiency at 10% the cost of TV and more than 8.4 million incremental impressions among audiences unexposed to television. These results validate cinema's role as a high-performing cost-efficient channel within diversified media mixes and reinforce the measurable impact of the theatrical experience in driving both upper and lower funnel performance.

We are optimistic about the months ahead as we entered what is historically NCM's strongest period of the year. Upcoming tentpoles, including Wicked for Good, Avatar Fire & Ash and Zootopia 2 are already driving significant advertiser excitement and early commitments across multiple categories. Demand for Wicked for Good has been exceptionally strong with inventory approaching sellout levels a month ahead of the film's upcoming release date.

The robust lineup, coupled with steady improvements in pacing and demand reinforces our confidence in a strong finish to the year. Importantly, we expect sustained momentum through year-end to further reinforce advertiser confidence in cinema as a high-performing media channel that delivers both attention and measurable impact.

With increased advertiser demand, a healthy box office pipeline and continued traction across our Programmatic and self-serve platforms, we are well positioned to capitalize on expected strong attendance in the fourth quarter and execute against our strategic priorities for long-term growth. With that, I'll now turn the call over to Ronnie.

Thank you, Tom, and good afternoon, everyone. For the third quarter, NCM delivered results consistent with our expectations, reflecting the continued momentum we saw towards the end of the second quarter and stability in the demand for cinema advertising, which led to the highest third quarter monetization in the last 5 years.

As Tom noted, the tariff-driven uncertainty that weighed on earlier quarters subsided during the period, with brands showing renewed confidence navigating the current macroeconomic environment. That stability translated into improved advertiser demand, particularly across several key categories, signaling progress from the pullback we experienced earlier in the year.

NCM's total revenue for the third quarter was $63.4 million, within our guidance range of $62 million to $67 million and up 2% year-over-year. This increase was driven by stronger national advertising demand, improved inventory utilization and continued traction across our Programmatic and self-serve channels, partially offset by lower local and regional spending and softer beverage revenue.

While the third quarter box office underperformed versus industry expectations with inconsistent performance among new releases, the stabilization of advertiser demand drove higher monetization in July and August, offsetting some of the softness in attendance. National advertising revenue totaled $49.9 million, up 6.6% from $46.8 million in the prior year period. This was driven by strong scatter demand and improved utilization of inventory as well as increased adoption of our digital buying platforms, partially offset by a decline in CPMs and lower overall attendance.

Compared to the prior year, national CPMs held firm in the upfront marketplace, but declined in the scatter market due to an increase in Programmatic buying and improved demand in the seasonally slower September month when compared to historical periods. That said, the third quarter marks our strongest Programmatic performance since its launch, growing 82% sequentially.

Additionally, Platinum revenue was up 19% compared to the prior year, achieving the highest third quarter Platinum sales in NCM's history. Platinum monetization grew significantly with revenue per attendee up 33% year-over-year, driven by strong growth in inventory utilization and a slight increase in CPMs, an encouraging sign that our amended AMC deal, which has been in effect for only a short 3 months is already driving results.

Overall, national revenue per attendee was $0.46, up 20% year-over-year and the highest third quarter national ad revenue per attendee in the last 5 years, reflecting the success of our ongoing efforts to optimize pricing and yield through our Programmatic and self-serve capabilities. Local and regional advertising revenue was $9.6 million compared to $11.4 million in the prior year period.

While local markets continue to recover more gradually, we are encouraged by improving activity in government and travel categories, which partially offset lingering softness in health care and professional services. As Tom outlined, we remain focused on strengthening this channel by enhancing our sales talent, new coverage models and data-driven insights that better connect local advertisers with NCM's engaged audiences.

Turning to our expenses. Third quarter total operating expenses were $65.2 million, down from $69.9 million in the same period last year. Excluding onetime items, depreciation, amortization and noncash share-based compensation, our adjusted operating expenses were approximately $53.2 million, a slight decrease year-over-year, primarily attributable to lower attendance-driven costs. Due to our continued disciplined cost management efforts, SG&A expenses remained relatively flat in the third quarter as we strategically offset important investment dollars elsewhere in the business.

Personnel-related expenses were slightly lower compared to the prior year period and theater access fees decreased year-over-year, reflecting lower attendance levels. Third quarter adjusted OIBDA was $10.2 million, in line with our guidance range of $7.5 million to $11.5 million and exceeding $8.8 million in the same period last year, driven by the modest top line growth. Total unlevered free cash flow for the quarter, as defined by cash flow from operations less capital expenditures, was negative $1.8 million compared to negative $2.4 million in the prior year period, driven by slight year-over-year increases in capital expenditures and system optimization costs, offset by improved adjusted OIBDA.

Year-to-date, NCM has generated total revenue of $150 million compared to $154.5 million in the same period last year. National advertising revenues were flat, while local advertising revenues declined 22%, primarily reflecting macroeconomic uncertainty in the second quarter and offset by the third quarter stabilization in national advertising. Total adjusted OIBDA for the period was $1.9 million compared to $10.7 million in the prior year, driven by the top line headwinds, offset by normalization following prior year cost reductions.

Turning to our consolidated balance sheet. At the end of the third quarter, the company had $32.9 million of cash, cash equivalents, restricted cash and marketable securities compared to $40.3 million at the end of the second quarter of 2025. We had 0 total debt outstanding at quarter end. Our capital allocation priorities remain focused on returning capital to our shareholders, while investing in technology and talent to enhance our advertising platform.

Specifically, we continue to invest in expanding inventory monetization tools, improving our self-serve and Programmatic capabilities and deepening advertiser relationships through new sales initiatives and training. Under the dividend program, we reinstated this year, we announced a quarterly dividend of $0.03 per share today, amounting to $2.8 million. This quarter's dividend will be paid on November 26, 2025, to stockholders of record as of November 10, 2025.

There were no share repurchases during the third quarter as we had accelerated repurchases opportunistically in the first half of the year and manage liquidity through a seasonally higher use of cash for working capital. Year-to-date through September 25, 2025, NCM has repurchased 3.3 million shares at an average price per share of $5.78 for a total of approximately $18.8 million. Since quarter end, we've repurchased over 100,000 additional shares at an average price per share of $4.08, reflecting our continued confidence in the business.

We are optimistic that the advertising momentum from this quarter will continue heading into the fourth quarter. The remainder of the year includes a number of highly anticipated releases scheduled for the holiday release window. In particular, blockbuster events such as Wicked for Good, Avatar Fire & Ash and Zootopia 2 have each generated strong advertiser demand and upfront sponsorship commitments. These releases are expected to drive both attendance and related revenues, positioning us for a strong close to the year.

Turning to our guidance. For the fourth quarter, we expect revenue to be between $91 million and $98 million and adjusted OIBDA to be between $30 million and $35 million. Notably, our fiscal fourth quarter includes an additional week compared to the prior year. As a result, we expect total attendance growth to outpace industry trends and lead to a correspondingly lower revenue per attendee.

We anticipate a strong holiday box office slate with optimism that greater consistency in film release cadence and performance will continue to attract advertisers to NCM's platform for our differentiated offerings and unmatched reach with sought-after audiences. With advertisers already showing heightened interest in the Thanksgiving to Christmas slate, continued recovery at the box office and regaining advertiser confidence against the macroeconomic backdrop, we remain well positioned to capture demand and deliver value for our shareholders.

Operator, please open the line for questions.

[Operator Instructions] Your first question comes from Patrick Scholl from Barrington Research.

I just wonder if you could talk a little bit more about the Programmatic and the ad categories that are adopting that. I guess to the extent that you maybe talk about like just if you're seeing expanded budgets from existing partners or maybe just some of the ad categories that you are seeing, adopt that format.

So, Patrick, thanks for the question. So, we're really happy with the performance of Programmatic. We've been investing in it for over a year now. Our Programmatic business was approximately 4x higher than it was a year ago. And I think importantly, the vast majority of clients who are coming in from Programmatic are new clients. And the categories, I can tell you, are all over the map in terms of different segments.

But I think the most important thing is we're literally reaching people who had never been cinema advertisers before. And as Programmatic grows as an industry level phenomenon, as it continues to grow, we actually couldn't be happier with our investment in Programmatic and the growth we're seeing, especially driving new client relationships.

Okay. And then on the guidance that you provided with -- on EBITDA, with the revenue growth is the renewal with AMC kind of the main driver of like the maybe lower conversion of the revenue growth to profit growth? Or can you just maybe talk about like what sort of revenue increases you kind of need to get that positive trend on EBITDA?

Yes. So Patrick, this is Ronnie here. So thanks for the question. So as we noted in our prepared remarks that this quarter versus the prior year period -- prior year, there is an extra week here. And so, our fiscal quarter year will end this year on January 1 versus last year, it was December 26. So, what you have is this extra week between essentially Christmas and New Year's that will have really high attendance.

And so, because of that, we obviously would be paying more dealer access fees versus the prior year and thus, the margins will reflect that. As comparison, if you were to -- if you look back at last year, if you were to add that extra week, the attendance would increase almost 14%, when you look at last year's fourth quarter.

Your next question comes from Eric Wold from Texas Capital Securities.

A couple of questions. One quick one, just to follow up on that last comment, Ronnie, on the incremental attendance in the extra week between Christmas and New Year. Obviously, typically a high attendance period of the year with people hitting movies and high attendance. Is the assumption that it's just the mix of films and maybe the mix of attendance is just not as valuable of an advertising attendance. And so yes, it's high attendance may be not as valuable to advertisers for you to advertise in front of. Is that the thought process there in terms of the impact on the quarter?

So I think the way to think about it is that, obviously, the fourth quarter is very attractive to advertisers. That period really starts mid-November all the way up to Christmas essentially. And that's the high seasons. We have consistent sellout demand, especially in Platinum, post-show periods are mostly sold out.

And when you get past that Christmas holiday season, that demand tends to soften a little bit despite kind of a lot of more attendance showing up because a lot of families take their kids to the movies. So, the demand is not -- although still high, it's just not anywhere near the same as the weeks leading up to the holidays.

Got it. And then maybe a high-level question, but there's been obviously a lot of press, and this is obviously nothing new. There's always been the question of known franchises versus new IP at the theater. And recently, there's been a lot of press around smaller titles, new IP, not doing well at the theater. Are you seeing any trend from advertisers?

Obviously, the blockbuster films, you mentioned Wicked selling out almost a month ahead of time. And I assume that's the case in most blockbuster films. So with the new IP, are you seeing any patterns from advertisers maybe waiting a little bit closer now to release date and tracking and getting a better sense of tracking, especially now that they have the ability to use Programmatic to latch on to it before they want to maybe commit to a campaign to get a better sense of how that film is likely to do before they want to commit their advertising to it. And if that is the case, how are you kind of planning around that?

I actually think, Eric, it's really not the case. People generally are buying impressions and they're buying forecasts and estimates. People are not really being that specific when it comes to a smaller independent release or a new IP and avoiding it. Generally speaking, people are buying the entire flight across a variety of movies. So, while obviously, there's overperformance on things like Wicked and Avatar and Zootopia, there's not a reverse effect on unknown IP. So we're not seeing that phenomenon. And yes, when a movie does really well that no one's heard of, there is incremental buying happening on it the following week, weekend. And some of that's Programmatic or just bought in our regular scatter market.

Your next question comes from Mike Hickey from the Benchmark Company.

Just curious, Tom, when you look at -- obviously, we've got a pretty good view of '25 here. It's been some opportunities and challenges for you guys. Just when you think about '26, Tom, can you sort of paint the picture? I think you're probably optimistic on attendance, but I'm just curious how NCM from a growth perspective fits into '26, looking at national local, your Programmatic and maybe the key catalysts that we should look forward to in terms of driving growth and leverage from your model?

So, what I would say is that first thing first. So, the fourth quarter is pacing very well, up in a way -- not up -- up a fair amount from the prior year. So I see the momentum from Q3 going into Q4 and the advertisers are back. Any of the tariff issues that we highlighted in Q2 have gone away. So we're looking at really good momentum from Q3 going into Q4, and we expect that to follow in through '26. The box office estimates for next year look actually quite good. I think it's been pretty well documented that it's going to be another growth year in box office and attendance.

So I think, fortunately, the momentum is really good right now and the confidence we're seeing from advertisers and the relationships they're growing, especially with the addition of Programmatic and self-serve. And we're pretty confident that local is going to rebound as well. So, I think the third quarter and the fourth quarter are really setting up for momentum into next year. And we're confident that '26 is going to be a great year for us and for the box office.

Is your decision to put back the dividend here versus maybe a more aggressive buyback or M&A? Just curious, Ronnie, your view on capital allocation here and into '26.

Yes. So, on capital allocation, obviously, we're committed to our dividend, and we continue to do that this quarter. We believe that's an important part of our capital allocation strategy and more a way to reward our shareholders on a more consistent basis. In terms of the buybacks, like we always said, obviously, we're opportunistic when it presents ourselves with that. We were doing that fairly aggressively in the first half of the year, buying up to nearly $19 million worth of stock.

Obviously, we slowed down here, but that's really in cadence with the negative unlevered free cash flow that we're seeing in this period. And we're just mindful of the working capital needs of the company in the third quarter, especially in July and August is typically where we see a lot of uses of cash due to working capital.

I'll say that, though, like we said in our prepared remarks, post the third quarter after September 25, we were -- we did pick up additional over $100,000 -- or 100,000 shares in the market. So I think it's really -- we'll continue to utilize and look at all of the options available to us in terms of capital allocation and then also be mindful about the free cash flow nature seasonally throughout the year as well.

And then last question. How are you guys thinking about your cost structure here? Obviously, you've taken it down a lot. Are you comfortable with where you're at? Or do you think there's opportunities here, AI or otherwise in terms of getting maybe some incremental cost savings into '26?

Yes. I think it's a little early to really talk about '26, but I do think we've taken a hard look at efficiencies in AI. Every year, I think we've done a good job of managing our expenses. We've been fairly engaged with AI opportunities. So more on that soon. But clearly, there's some opportunities for us. I think not just for efficiencies, but also to generate more opportunity. AI is not just a cost savings tool. It's also a lead generation CRM tool that can enhance our ability to reach in clients. So we're looking at that and we'll be able to give you more update on that next quarter.

There are no further questions at this time. I would now like to hand the call back over to management for any closing remarks.

Yes. So I want to thank you guys all for joining us today. NCM continues to attract top advertisers with our unmatched reach among the most sought-after audiences and our differentiated inventory complemented by our industry-wide leading data capabilities. So after navigating a challenging second quarter, our clear focus and discipline in our strategic execution enabled us to deliver solid results as the advertising market stabilized in the third quarter.

Looking ahead, we're well positioned to capitalize on the exciting holiday film slate, and we're very optimistic that we'll carry positive momentum through the remainder of the year. We're grateful for your support, and we look forward to seeing you all at the movies. Thank you.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good afternoon, and welcome to the National CineMedia Second Quarter 2025 Earnings Conference Call. [Operator Instructions] This event is being recorded. I would now like to turn the conference over to Chan Park, Vice President of Finance. Please go ahead.

Thank you, operator. Good afternoon. I'm joined today by our Chief Executive Officer, Tom Lesinski; and our Chief Financial Officer, Ronnie Ng. I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended.

All statements other than statements of historical facts communicated during this conference call may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties. Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's filings with the SEC. All forward-looking statements are qualified in their entirety by such factors.

Further, our discussion today includes some non-GAAP measures. In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurement. These reconciliations can be found at the end of today's earnings release or on the Investor Relations page of our website at ncm.com. Now I'll turn the call over to Tom.

Thank you, Chan. Hello, everyone, and thank you for joining our fiscal 2025 second quarter earnings call. As we begin today's call, I want to take a moment to thank our team for their resilience and dedication to what has been a particularly demanding quarter. In the face of a challenging economic and advertising environment, their commitment and strength are what continue to drive our progress, and position NCM for what's ahead.

At the time of our last earnings call, we were encouraged by strong second quarter pacing while recognizing the ongoing uncertainty in the advertising market. Over the balance of the second quarter, we faced a more challenging operating environment than anticipated, caution among advertisers, especially in key categories like government, consumer packaged goods and automotive, deepened in response to broader tariff-related market uncertainty and evolving government spending priorities.

Further, this quarter's box office performance was driven by a handful of unexpected though welcome breakout hits, including a Minecraft movie, Lilo & Stitch and Sinners. While the success of these films demonstrates the ongoing recovery of the box office and audience enthusiasm for cinema, their overperformance took place during a seasonally slower advertising period, limiting our ability to fully monetize those impressions.

As a result of these headwinds, our second quarter performance did not meet our expectation. NCM's second quarter 2025 total revenue was $51.8 million with adjusted OIBDA of $0.7 million. While this wasn't the quarter we set out to deliver, we're approaching the back half of the year with optimism. We are actively taking steps to better capitalize on box office momentum and deliver against our strategic priorities, positioning the company for stronger performance and long-term growth. We're encouraged by our third quarter momentum. Ad sales commitments are pacing ahead of last year's levels and improved visibility into the pipeline gives us confidence in our ability to deliver a stronger start to the second half.

To better position MCM to compete for growing premium video advertising budgets, we are continuing to scale our programmatic and self-serve offerings. These capabilities are core to our strategy of delivering a more responsive and nimble advertising platform as the industry shifts towards flexible, closer to campaign date solution.

In the second quarter, we continued to expand our programmatic distribution through new partnerships with 2 leading programmatic platforms, providing advertisers with additional efficient paths to purchase NCM's premier inventory. Notably, programmatic advertiser volume grew by more than 50% quarter-over-quarter with approximately 70% of second quarter programmatic advertisers new to NCM, underscoring the growing appeal of our platform to performance-focused buyers.

Looking ahead, we expect to build on this momentum and triple our programmatic footprint by year-end, positioning us to accelerate further into 2026. Additionally, our self-serve platform is also gaining traction with second quarter revenue up more than 30% year-over-year, signaling strong adoption heading into the second half of 2025.

On the local front, enhancing our sales capability remains a top priority. We are focused on onboarding new talent and taking a targeted approach to engage high-value advertisers at the local and regional level. While we recognize this effort will take time, we are confident that a strategic rebuild in local will strengthen our market position and help maximize the local advertising recovery over the long term.

We are also continuing to demonstrate the effectiveness of cinema as a performance advertising channel. To share one example, in the second quarter, a national telecom brand executed a campaign using our new bull's eye product, which featured 253 hyper-localized AI-generated ads. Powered by our NCMX data platform, the campaign successfully delivered double-digit gains in foot traffic to the locally promoted stores within the first 2 weeks of campaign launch. Following this success, the advertiser renewed their commitment with NCM, a powerful signal that when advertisers engage with our platform, we deliver impactful measurable results.

Our premium Platinum ad spot also continues to generate strong demand from advertisers who recognize the value of cinema's high-attention environment and NCM's performance measurement capabilities. Our new agreement with AMC, which we announced last quarter, went into effect in the second quarter and standardized our show format across our exhibitor network, improving our ability to meet demand for both Platinum and post-show ad inventory.

To further drive utilization, we've also introduced added creative flexibility within the Platinum offering at select theaters, enabling more dynamic use of the available ad window. As we continue to invest in the business, we are also committed to accelerating new client acquisition with more targeted outreach and a more agile go-to-market approach. In the second quarter, NCM welcomed 12 new advertisers that placed major cinema campaigns for the first time since the pandemic. As we continue to demonstrate the unique value of cinema as a high-impact advertising channel, we will deepen existing advertiser relationships and strategically expand our client base.

Driven by the successful box office, NCM reached over 115 million individuals across our network in the second quarter, up 24% compared with the second quarter of '24. As cinema continues to reclaim its prominent cultural relevance, we're not just seeing rising attendance, but also a deeper connection between audiences and content. This reinforces our confidence in the continued momentum of the theatrical ecosystem and positions NCM to benefit from the strong content pipeline heading back into the second half of the year.

Looking ahead, early indicators from the third quarter are encouraging. Supported by a strong slate, booked sales are pacing ahead of the same period last year, with demand normalizing across key categories, including auto, wireless, retail and travel. Importantly, the third quarter is historically front weighted with the majority of revenue realized in July and August. This dynamic, combined with the strength we are already seeing in the marketplace, gives us meaningful greater visibility into third quarter performance than we've had at the same point last quarter.

With a more robust sales pipeline and stabilization in the advertising market compared to the second quarter, we have increased confidence in our ability to deliver on our third quarter outlook, which Ronnie will share in a few moments. Overall, we're expecting continued box office momentum for full year 2025.

While the third quarter box office is expected to be down year-over-year due to tough comparisons to last year's third quarter, which included hits such as Deadpool and Wolverine and Despicable Me 4, we expect the strong and well-paced theatrical slate to reaccelerate the box office during the critical fourth quarter holiday season. Highly anticipated tentpoles such as Wicked for Good, Avatar: Fire & Ash, Zootopia and Tron Ares are positioned to drive box office reacceleration as we close out the year.

Combined with standout performances from this summer's blockbusters, including Jurassic World Rebirth and Superman, this consistent cadence of high-profile releases drives the ongoing recovery in cinema attendance and reinforces cinema's appeal as a premium high-impact advertising environment, supporting increased interest from both national and local advertisers as we close out the year.

NCM remains uniquely positioned to capture and convert this momentum. The fundamental differentiators of our offering, broad reach among highly desirable audiences and immersive premium video format and unmatched national scale continue to resonate with advertisers seeking performance, impact and efficiency. As brands look to engage consumers at moments of peak attention and emotional resonance, NCM remains a trusted and proven partner.

With a healthy slate of tentpole movies, improving visibility and a strong start to the third quarter already underway, we are confident in our ability to perform. We're optimistic about the remainder of fiscal 2025 and the steps we're taking to deliver sustainable value for partners, clients and shareholders. With that, I'll now turn it over to Ronnie.

Thank you, Tom, and good afternoon, everyone. As Tom outlined, the second quarter presented a number of headwinds that impacted our results, most notably during the month of May. May saw heightened volatility in advertiser budgets across key verticals such as automotive, consumer packaged goods and government, driven by broader economic uncertainty and shifting public sector spending priorities. In addition, ongoing tariff-related uncertainties have fueled further hesitation, evidenced by several submitted budgets being withdrawn as advertisers reassessed market conditions.

While June showed early signs of stabilization in a more consistent inventory environment, the softness mid-quarter had a meaningful impact on our overall second quarter results. As a result of these factors, total revenue for the second quarter came in at $51.8 million, below our guidance range of $56 million to $61 million and down 5% versus the prior year period.

The scatter market continues to represent an increasing percentage of NCM's revenue mix, equating to 40% of national on-screen revenue in the second quarter. Inventory utilization was up 12%, partially offset by a decline in CPMs. National advertising revenue for the quarter was $41.2 million compared with $41.7 million in the second quarter of 2024. National ad revenue per attendee was $0.36 for the second quarter compared with $0.45 in the same period last year, reflecting the 24% increase in quarterly attendance.

Local and regional advertising revenue totaled $6.4 million in the second quarter, down from $9.8 million in the second quarter of 2024, reflecting the cautious advertiser sentiment we've seen across the broader marketplace. Consistent with first quarter trends, we experienced reduced contract volume and smaller deal sizes, particularly across categories such as dining, automotive, wireless and health care; sectors that have remained sensitive to shifting economic signals.

The year-over-year decrease also reflects the recategorization of certain clients from local to national, which excluding that change, would have resulted in a less pronounced decline. These headwinds were partially offset by growth in the travel and professional services categories, demonstrating that when aligned with the right audience and value proposition, local markets continue to present meaningful opportunities.

We are encouraged by early signs of stabilization across the advertising market as brands adapt to ongoing tariff uncertainty, regain confidence and begin to normalize their advertising budgets. Additionally, a robust slate of highly anticipated blockbusters is set to debut over the balance of the year with advertiser demand already materializing. These tentpole releases are expected to be significant drivers of growth in the second half.

Turning to our expenses. Second quarter operating expenses were $63.8 million, down slightly compared with the prior year. Operating income was negative $12 million compared to negative $9.3 million in the same period last year. Excluding onetime items, depreciation, amortization and noncash share-based compensation, our adjusted operating expenses were $51.1 million, an increase of $4 million or 8% compared to the prior year. This increase was primarily attributable to higher attendance-driven costs with exhibitor fees rising $4.2 million or 16%, while SG&A expenses declined slightly versus the prior year, reflecting our continued cost management efforts.

Second quarter adjusted OIBDA, excluding noncash charges and onetime items, was $0.7 million compared to $7.6 million in the prior year, driven primarily by the weaker top line results. Total unlevered free cash flow for the quarter, as defined by cash flow from operations less capital expenditures was negative $6.8 million.

As a reminder, our fourth quarter 2024 results included approximately $13 million in advanced payments from clients for advertising scheduled to run throughout 2025, of which $4 million is attributable to the second quarter. As a result, these upfront payments will affect year-over-year comparability of free cash flow generation in 2025.

Year-to-date, NCM has generated total revenue of $86.6 million compared to $92.1 million in the same period last year. National and local advertising revenues declined 4% and 25%, respectively, primarily reflecting softer advertiser demand amid ongoing economic uncertainty. Total adjusted OIBDA for the period was negative $8.3 million compared to $1.9 million in the prior year, driven by the revenue shortfall resulting from the weaker ad market.

Turning to our consolidated balance sheet. At the end of the second quarter, NCM had $40.3 million of cash, cash equivalents, restricted cash and marketable securities and 0 outstanding debt. We remain committed to a capital allocation strategy that delivers value by balancing investment in the future of NCM and returning capital to shareholders through our share repurchase and dividend programs. Under the dividend program, we reinstated this year, we announced a quarterly dividend of $0.03 per share today, amounting to $2.8 million. This quarter's dividend will be paid on August 29, 2025, to stockholders of record on August 15, 2025.

To provide an update on our $100 million share repurchase program, year-to-date, NCM has repurchased 3.3 million shares at an average price per share of $5.78 for a total of approximately $18.8 million. This brings our total shares repurchased under this program to 5.9 million shares at an average price of $5.51 for a total of approximately $32.5 million.

We are encouraged by the momentum we've seen so far in the third quarter. The first 2 months, which historically accounted for the majority of third quarter revenue due to the summer box office slate and seasonal audience upticks are driving strong performance with book sales commitments pacing ahead of last year's third quarter results. We also continue to invest in our inventory forecasting capabilities to enable us to price and package our inventory more dynamically, delivering greater value to advertisers while helping us drive higher utilization.

With improved planning tools, increased visibility into advertiser pacing and category demand and continued investment in our strategic priorities, we are confident in our ability to deliver a stronger third quarter. With that said, we expect third quarter revenue to be between $62 million and $67 million, reflecting improved advertiser commitment and sustained theatrical strength. We anticipate adjusted OIBDA in the range of $7.5 million to $11.5 million, supported by higher utilization, disciplined expense management and improving market dynamics.

As we look ahead, we are focused on disciplined execution of our strategic priorities from accelerating investment in programmatic and self-serve to deepening advertiser relationships at both the national and local level. With a robust film slate on deck and signs of strengthening advertiser demand, we believe we are well positioned to drive improved performance in the back half of the year and lay the foundation for sustainable long-term growth.

Operator, please open the line for questions.

[Operator Instructions] Our first question is from Eric Wold with Texas Capital Securities.

A couple of questions. I guess, first off, the midpoint of the revenue guidance for Q3 indicates an increase year-over-year even with an expectation for box office and attendance to be down with a tough comp against last year, which clearly demonstrates your ability to drive ad share even in a tough environment. I know you're not giving full year guidance or Q4 guidance, but any reason to think this shouldn't continue through year-end when this ad demand would be combined with a strong film slate and any potential for kind of year-end ad budget flushes?

And kind of on that last point, what are your thoughts around as you kind of dollars that kind of weren't spent maybe in the first part of the year in the second quarter around kind of uncertainty with tariffs and kind of where the economy was? What are you kind of hearing your thoughts and kind of historically how this kind of played out as you kind of move through the year and kind of how those dollars have kind of loosened up?

Well, it's a good question, and it's exactly what should be focusing on. I think what we're seeing is a more relaxed amount of budgeting, which we didn't see in the middle of the tariff debate. And the pacing that we're seeing in the third quarter is very, very good compared to last year. So in my view, we've gotten at least a significant amount of confidence back related to what seemed to be a little bit of an issue in the second quarter.

And granted, it was in very limited categories in the second quarter where that was happening. It was mostly government and automotive and CPG. But the third quarter doesn't seem to have had any impact for that. It's a little hard to say right now how the fourth quarter is shaping up. We know that there's obviously some great movies, and we've got a lot of traction already in our pipeline on Wicked For Good and Avatar and some of the others.

So I think barring any major tariff; what I would call, issues; or economic ones related to the tariffs; we're feeling pretty optimistic, obviously, about the third quarter and that momentum continuing into the fourth quarter.

Got it. And then just last question. I know at the start of the year, I guess, on the fourth quarter call, you noted an expectation for strategic investing this year around the sales team, marketing, but so far in the first quarter and the second quarter, selling, marketing and administrative have been flat to down and we really haven't seen that play out. Is that -- should we expect that to be more back half weighted? Has that kind of been pushed out? Kind of what are your thoughts on how that's -- how should we think about that for this year now?

So Eric, that's a great observation about how we're managing our expenses versus as the business is trending throughout the year. With that said, it's something that our team really focuses on is how we are monitoring our operating expenses, how we're investing into our team versus kind of what we're seeing in the current market. And we are investing into certain things that we called out earlier this year. Obviously, we're also trimming in some parts of the business that we find more efficiencies on, and we're continuing to do that, right? So there's some offsets versus some of the investment, and that's how we're continuing to invest into sales in the current environment.

Got it. So we should expect if things do improve in the back half of the year that maybe some of the stuff that wasn't spent in the first half of the year, maybe play out a little bit more in the back half?

Yes. The way I would say is we're just going to have to see on the pace of the improvement and to make that determination. So we don't -- we obviously have a set plan, but quite frankly, we kind of change that plan as things play out. So I wouldn't say it's definitely for sure that we're going to continue to invest. We're just going to have to see how the rest of the year continues to go.

The next question is from Mike Hickey with the Benchmark Company.

Just the first one on the 3Q guide. Nice to see strength there, especially in a difficult box. Just curious, Ronnie, if any of that is sort of a spillover from 2Q, maybe some deals that got paused just because of the economic uncertainty or the lost in the tariff wash or if that's sort of a clean Q3 in terms of what you're seeing in terms of demand that we could extrapolate into Q4 and beyond?

Yes. I think most -- what's embedded in our guide when we're looking at it and quite frankly, obviously, the third quarter is really front half weighted, right? So really, the majority of the revenues earned in July and August, not so much in September. What we've seen thus far in the business is mostly new business for the third.

So that's -- I think what's actually the most promising part about it is it's not necessarily budgets being withheld for a very, very long time and then also you see a rush, and that's why you see the upside in the third versus the prior year. These are a lot of brand-new businesses that actually got placed specifically in the third quarter.

Great to hear. Also nice to hear your programmatic, looks like it's starting to get some traction here. Just curious like I think last quarter, maybe it was 2% of your business. You look at the broader digital landscape, thinking back to your Analyst Day, Tom, I think it was sort of like a normal 25%, 30% spend from the buyers. So it's an important piece of the puzzle that hadn't quite been polished and ready and now it seems like it is. Just checking if that's true, why it's working now and sort of what feedback you're hearing from your media buyer partners in terms of utilizing programmatic moving forward?

So starting at the most macro level, the programmatic world, depending on what you're looking at in terms of a database, it can represent 50% to 60% to even 70% of an advertiser open to buy dollars. So clearly, investing in programmatic 2 years ago, and rolling it out as rapidly as we can and continuing to roll out against all the platforms was a prudent idea. And I think most meaningfully is the percent of new buyers or new advertisers that we're getting out of programmatic is really significant. In fact, that's even higher than we had forecasted.

So we're not -- we can't give you a number just yet on where we are on programmatic. But I can tell you that all the metrics that we're looking at, particularly the new advertisers that are coming in, the increases quarter-to-quarter and the strong adoption of the platform by our advertisers is really encouraging. And it's particularly, I think, going to help on our self-serve side on local as well.

So we've been talking about programmatic on these calls for over 2 years. And it's certainly, I think, paying off in the way we hoped it would. And I think it's going to be even more significant, obviously, going into next year.

And last question, can you sort of talk to us about maybe ways that you can think about increasing your visibility? I mean, Tom, when you look back on your business, you used to have a big upfront and that would add, if I remember right, maybe 60% to 70% of your revenue. And now just as digital is, I think, in general, you're seeing a larger mix to scatter. And then you have disruptions on tariffs and the economy. It just seems like it must be much more challenging for you guys to sort of guide your business in that environment, where buyers can sort of move in and out very quickly.

So are there ways that you see Catherine and your team in terms of trying to build better visibility with your media buyer partners in terms of steering the street and obviously, your business as well?

Yes. I think that's a really important topic. And clearly, when the upfront was a bigger part, not just of our business, but of everybody's business, there was, I would say, less face time involved because so much of the percentage of your buy was coming in, in advance and getting committed. What we've done is created an entire new business group in our sales team that's now exclusively charged with finding new business with new clients. And this team, which is growing literally every quarter, their sole job is to get out and make sure that the new advertisers are aware of our platform.

Our current team is much more responsible for going after our existing customers as well as for the advertisers. And we do a lot of big events. We sponsored the Cannes Lions fairly recently. Prior to that, we had a big event at Sundance. So I think the awareness levels are actually quite good. And I think the trust in the platform and the data metrics around it are very well known, and we're obviously reinforcing those. And I think that's why we're having such a nice bounce back in Q3 as the pacing goes.

So I can tell you, we're all advocates for this industry. It's what I spend a lot of my time on personally. And there isn't a week that goes by where we're not advocating either directly to new clients or existing clients, making sure that cinema stays at the top of mind, particularly in light of the streaming guys becoming more and more significant.

The next question is from Alicia Reese with Wedbush Securities.

I have a few actually. So I wanted to start by asking regarding third quarter guidance, what is baked into that in terms of CPMs, either year-over-year or sequential decline flat versus utilization expectations? Can you share that with us?

Yes, sure. So for the third quarter, obviously, you look at the middle of the guide, we are pointing to a year-on-year improvement versus last year in terms of total revenue. The attendance, I think if you look at estimates out there, it looks to be down for the third quarter. So we are expecting improved utilization on a year-on-year basis and also CPMs to be relatively stable on a year-on-year basis. We've seen definitely better utilization thus far for the quarter, in particular, obviously, here in the July month that's passed. So that's what's baked into the guide in terms of the KPIs.

And the inventory forecasting capabilities you're talking about seeking to improve, is that going to require a significant investment? Or is that relatively light investment? And the result of that presumably is just better utilization such that as when CPMs eventually improve coming out of the current tariff situation, we would assume that that could drive some nice revenue gains perhaps. Can you give us a little more color on those statements?

Yes. So on that, it's actually -- that tool specifically is actually part of the number of things that we highlighted at our Investor Day, and also in the beginning of the year in terms of CapEx-related investments. So it is -- we're not done with that yet, by the way. So we're still working to implement that system into our existing system, which is a little bit complicated. So we're not getting the full benefit of it right now. So I think that's still to come.

And once we do that, it's really finding or improving utilization in seasonally slower months, right? Because that's actually the harder part. So I would suspect it's definitely for us, by doing this, it's really a play on improving utilization, increasing ad loads really throughout the year is the biggest lever.

And lastly, I wanted to ask about the local market expansion opportunity with the Bullseye AI tech. A comment you made on the -- in your prepared remarks suggested that there's additional investment that could be made to expand that or perhaps it's just a big push in that. So I'm curious, is that -- do you need to expand the tech there, expand the sales personnel? Or is that just a sales push across the addressable market to really ramp that up?

So it's a combination of all those things. It's not a direct heavy investment really. We have found resources that have allowed us to do this kind of personalization at a very efficient rate. There is clearly an education involved with our sales team that we have the capability of doing significant personalization of advertising and localizing it, pushing out nearly 300 ads in a very short time period for our clients who had given us the order a week before, was something we couldn't have done without technology and without the help of AI.

So it is a transition and a change for our sales team, particularly locally to be able to have the skill set and the understanding of what we're capable of. But there's nothing like having a case study. And in this case study, we executed on that, something we hadn't done before. And then the client was so pleased they renewed literally the following week. So that type of program is getting literally pushed out to all of our local people, and they're excited about it, and I'm sure we'll get more business out of it from our local advertisers.

It seems like you're really early innings on a pretty exciting opportunity there.

Yes, we're really happy about it. I mean we're truly ahead of the curve even compared to -- definitely compared to the traditional media companies. But what we're doing, innovating, particularly at scale in a movie theater environment with that kind of personalization using automation is sort of a first of its kind. So we're quite proud of that. And honestly, it's a testament to the -- our team, particularly the sales team and our team that does all of our analytics and strategic work around that, that they've really been staying on top of this, and it's paid out. So we're happy about it.

The next question is from Patrick Sholl with Barrington Research.

Kind of a follow-up about the comment that you had about being mindful of CTV. I was just curious, as ad-supported plans have become more popular with that, to what extent is that impacting either -- do you see that impacting your utilization or CPMs and that not having as, I guess, unique a footprint in terms of reaching the younger audiences?

Are you -- can you -- you were talking about CTV at the beginning? It kind of broke up for a second, Pat. Is that what you were referencing? Is that what you said at the top of it?

Yes. I'm sorry. Yes, just maybe can you talk about like just as the ad-supported plans for the CTV services have increased popularity, what you're sort of seeing just in terms of your CPMs and utilization in the marketplace?

Yes. So I think CTV is only one competitive bucket that we're competing in. And obviously, we're focused on that as one that's a growing bucket. And it's a relatively younger demo, but it's not as young as our demo. So we're more than anything looking at watching and participating in that transition. And we're building out another programmatic platform that specifically addresses our ability to deliver within that CTV world. So far, it's hard, honestly, to measure a specific category impacting our platform. But more than anything, we've had our eye on CTV. We want to be able to compete programmatically in the CTV space. So we are going to be on those kinds of platforms in the very near future.

This concludes our question-and-answer session. I would like to turn the conference back over to Tom Lesinski for any closing remarks.

Okay. Thank you for joining us today. We appreciate it. We are continuing to take decisive steps to adapt to this changing marketplace, including investing in our operations, deepening our client relationships and strengthening, of course, the overall core business. Box office is showing real signs of vitality, and we're now seeing that momentum reflected in increased advertiser engagement. What gives us confidence is not just where we're headed, but how we're getting there with discipline, agility and a clear strategy for the future growth. So we're grateful for your ongoing support, and we look forward to seeing you again soon at the movies. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.