Cineverse Corp. Q2 FY2026 earnings call

• Christopher J. McGurk discussed business highlights: $1.1 million Toxic Avenger licensing deal, margin improvement, The Toxic Avenger unrated's performance in ancillary markets with expected IRR of 40%, film portfolio strategy with all-in acquisition and theatrical costs under $5 million, upcoming film releases like Silent Night, Deadly Night and Return to Silent Hill, IP-based family film Air Bud Returns nearing completion, partnership with Guillermo del Toro for Pan's Labyrinth, updated content library valuation at $45 million vs $3.2 million book value, progress in Matchpoint technology sales pipeline with four closed deals, and MicroCo joint venture progress.
• Mark Wayne Lindsey reviewed financials: Slight revenue decrease but strong gross margin growth, net loss of $5.5 million and adjusted EBITDA of negative $3.7 million, SG&A spending managed through cost control and Cineverse Services India efficiencies.
• Erick Opeka discussed operating and strategic growth initiatives: Streaming viewers and minutes streamed growth, key channels like Barney, Dog Whisperer, Screenbox TV seeing significant growth, distribution hybrid model balance, advertising market challenges and preparation for next phase, Matchpoint technology progress with potential partners and long sales cycles, and MicroCo joint venture momentum with leadership team and investor interest.

Total revenues for the fiscal second quarter ended September 30, 2025 were $12.7 million, down 3% from the prior year quarter. Excluding the $1.1 million licensing deal for The Toxic Avenger recognized in future periods, revenues would have been $13.4 million, up 5% from the prior year quarter. Gross margin was 58% compared to 51% in the prior year quarter. Streaming segment: Total streaming viewers in the quarter reached 143.8 million, up 47% from last year; total minutes streamed were 3.4 billion, up 45%; SVOD subscribers grew to 1.39 million, a 6% increase year over year. Distribution segment: Hybrid model delivering strong licensing revenue while preserving key windows on own streaming platforms. Advertising segment: Mixed environment with bill rates and CPM pressured, but direct sold business performed well. Technology segment: Matchpoint technology sales pipeline with dozens of potential partners, including large entertainment companies and major studios evaluating the technology. MicroCo joint venture: Progressing with leadership team in place and funding commitment received.

• Expect investments in technology sales force, Matchpoint deal pipeline, and theatrical release portfolio to generate returns over the balance of the year and beyond.
• Anticipate strong top and bottom line results in the remainder of fiscal year 2026 due to SG&A investments.
• Toxic Avenger unrated expected to have majority impact in Q3 with healthy IRR exceeding 40%.
• Matchpoint technology aims to become the operating system for content libraries worldwide, with potential for recurring revenue from strategic partnerships and acquisitions.
• MicroCo joint venture aims to become domestic market leader of the micro drama business, with positive response from investors and partners.

• Advertising environment mixed with bill rates and CPM pressured due to market adjustments, macro concerns, and tariff uncertainty.
• Matchpoint technology deals have longer and more complex deal cycles, posing a risk to timely monetization.
• Theatrical performance of films like The Toxic Avenger unrated can be uncertain, though ancillary markets can provide upside.

Q: Afternoon. One for Erick. Just Chris, Toxy, not as good in the box, but great in the ancillaries. Obviously, the licensing deal, it is nice to see some of the pay window stuff. Does this influence either your expectations for your upcoming slate based on what happens? Just kind of more of an adjacent category to the traditional, horror And, also, just does it change how you view which films you go after? Obviously, you have your blueprint, but you kind of are it is going to take a little while to sort of settle in to see you know, what fits and and what kind of produces what kind of results. And then for Erick, just on Matchpoint, appreciate the incremental color. Just, you know, want to get a sense on timing of monetization. I know that while you said longer sales cycles, we got a new studio there. Sounds like you guys are looking to also accelerate the growth but it it seems like it is moving along nicely. So just any color you can give us on you know, contribution and sort of where you expect to be, say, like, you know, twelve to twenty-four months from now with Matchpoint would be super helpful.

A: Chris McGurk responded that Toxic Avenger validated the theatrical releasing strategy, noting that mixed genre movies like Toxic Avenger are difficult to make work theatrically and they will avoid such in the future. Erick Opeka and Tony Weedor discussed Matchpoint, noting long sales cycles but strong interest from studios, with expectations that each studio could bring mid seven to low eight figure revenue per year growing based on expansion, and that Matchpoint aims to be the operating system for content libraries worldwide with a significant technology moat.