National CineMedia, Inc. (NCMI) Earnings

Management highlights

### Box Office and Attendance - Domestic box office grew ~25% YoY in Q1, with NCM network attendance reaching 83 million, up 15% YoY. On a comparable calendar-adjusted basis including Spotlight, attendance grew 18% YoY. - Q1 performance was supported by carryover strength from late 2025 tentpole films (Avatar, SpongeBob) and late-quarter acceleration from Project Hail Mary and the Super Mario Galaxy movie, reinforcing expectations for a more consistent 2026 for theatrical exhibition. ### Advertising Business Development - Announced a partnership to deploy large digital video displays in high-traffic lobbies across 77% of AMC theaters nationwide. This complements NCM's existing on-screen inventory, unlocks incremental digital out-of-home (DOOH) advertiser budgets, and extends brand engagement across the full moviegoing journey. - Programmatic ad orders doubled YoY in Q1, reflecting growing advertiser adoption of just-in-time buying. Revenue was softer YoY due to large advertisers shifting budgets to the Winter Olympics, but second quarter (Q2) 2026 programmatic revenue is already pacing ahead of 2025 Q2, with long-term growth trends remaining positive. - NCM continues to invest in rebuilding the local advertising business via targeted investments in talent, structure, and execution. Early progress is visible, with 2026 Q2 booked local revenue already ahead of 2025 Q2. ### Data and Platform Enhancements - NCMX, NCM's proprietary data platform, announced a new partnership with VideoAmp to integrate cinema advertising into a unified cross-platform planning ecosystem alongside linear TV, CTV, and digital video for the first time. Spotlight inventory was also added to NCMX coverage to unlock full value of the acquired premium inventory and appeal to luxury/ premium advertisers. ### Operational Transformation - Implemented a Q1 2026 operational restructuring to streamline the organization, increase efficiency, and scale AI adoption in high-leverage areas, while protecting revenue-generating teams. - The restructuring is expected to deliver $11 million in annualized run-rate cost savings, with $3 million in annualized savings already implemented, full execution expected by mid-2026, and $6 million in total 2026 savings. Full run-rate benefits will be reflected in 2027 results. ### Industry Outlook - The 2026 film slate is robust and weighted to the second half of the year, with a mix of franchise installments, reimagined classics, and new IP expected to drive broad attendance growth. All major studios reaffirmed strong commitments to theatrical exhibition at 2026 CinemaCon, supporting a positive long-term industry outlook.

Guidance

- Q2 2026 guidance expects total revenue between $57 million and $63 million, and adjusted EBITDA between $1 million and $5 million. The guidance incorporates expectations for YoY attendance growth, higher exhibitor fees, improved monetization from the unified platinum network, and stronger local advertising performance, and already accounts for expected budget shifts related to the 2026 World Cup. - Full-year 2026 expectations remain optimistic, driven by a strong second-half film slate, sustained advertiser demand, and incremental growth from new inventory and operational efficiency gains. Management maintained its prior long-term outlook for sustainable growth as the theatrical industry continues its recovery.

Segment performance

National Cinemedia (NCM) reported total Q1 2026 revenue of $34 million, with an operating loss of $26.9 million and adjusted EBITDA of negative $10.5 million. The only segment is advertising, which is split into national and local sub-segments: - Total advertising revenue: $31.9 million (93.8% of total revenue), flat year-over-year (YoY) on a calendar-adjusted pro forma basis including the Spotlight acquisition. Legacy NCM national advertising grew 2% YoY on a comparable basis, while non-returning Spotlight deals pulled overall comparable national revenue down 2% YoY to $27.5 million (80.9% of total revenue). Platinum premium inventory revenue increased 83% YoY on a calendar-adjusted basis, with revenue per attendee up 54% YoY. - Local advertising revenue: $4.4 million (12.9% of total revenue). On a calendar-adjusted pro forma basis, local advertising revenue grew 12% YoY, with strength in travel and wireless categories partially offset by lower activity in government, education, and healthcare.

Risks & headwinds

- Attendance levels are inherently uncertain and difficult to forecast accurately; lower-than-expected Q2 attendance would push results to the lower end of the guidance range. - Large one-off cultural events (Winter Olympics, World Cup) pull national advertising budgets away from other media, creating short-term revenue volatility that has impacted Q1 results and is expected to impact the second half of 2026. - Programmatic advertising is still a maturing channel, so deal concentration and timing can create outsized quarterly revenue variability. - Sustained increases in petroleum costs tied to global conflicts (such as the ongoing Middle East conflict) and tariffs could impact advertiser spending, though no material impact has been observed to date. - Political advertising opportunity varies by market and exhibitor, with unclear near-term sizing for NCM, as most exhibitors retain control over allowing political ads on their screens.

Analyst Q&A

• Q: What macro impact are tariffs and the Middle East conflict having on advertiser demand, and can you comment on the format and rollout of the new AMC lobby digital displays? /

  A: Management has not seen any material impact from macro factors like tariffs or oil price changes to date, and does not expect a material impact in the second half of 2026, though they are monitoring developments closely. Local and national advertising demand are both pacing ahead of last year, with local continuing its strong Q1 momentum into Q2. The AMC lobby initiative will roll out to ~77% of AMC theaters by the end of 2026, and will primarily feature video advertising, with potential for interactive elements like QR codes.

• Q: Is the new AMC lobby inventory incremental to existing on-screen ad budgets, and is this part of a broader diversification strategy that would require M&A? /

  A: The lobby inventory is expected to be largely incremental, separate from existing on-screen ad budgets, as most inventory will be sold programmatically through DOOH platforms that open access to entirely new advertiser budgets. This is an adjacent diversification to NCM's core cinema business, leveraging the existing moviegoing audience in a high dwell-time environment. Management notes they always review potential M&A opportunities but will not comment on specific plans.

• Q: How is the growing trend of younger attendance (Gen Z/Gen Alpha) impacting NCM's business, and have media buyers fully recognized this trend? /

  A: NCM already has one of the youngest average audience demographics of any major advertising medium, and the growing attendance of even younger Gen Alpha audiences lowers NCM's average demographic further, making the platform more valuable to advertisers. This is a recent, newly quantified trend, so NCM is still communicating the benefit to media buyers, but management expects strong advertiser response to this more youth-focused audience profile.

• Q: Why is Q2 2026 EBITDA margin lower than a prior quarter with similar revenue (Q3 2025)? /

  A: The largest driver of NCM's variable costs is attendance volume. In Q3 2025, attendance was lower than expected Q2 2026 attendance, even with similar top-line revenue, leading to lower variable exhibitor fees and higher margins in the 2025 quarter. Higher attendance in Q2 2026 drives both higher revenue and higher variable costs, leading to a lower margin at similar top-line revenue.