Cineverse Corp. Q1 FY2027 earnings call

• Post-Acquisition Integration Progress: • Post-merger integration of Giant Worldwide and IndieQ (closed Q4 FY2026) is substantially complete, with unified systems, teams, and workflows. The company has shifted focus to capturing cost synergies and growing the combined business. • IndieQ integration is ahead of plan: SaaS customer concentration has been cut by nearly half since acquisition, churn remains consistently low, net revenue retention holds at ~98%, and new SaaS customers, ad network partners, and a new head of business development have been added. • Giant Worldwide is transitioning manual packaging and delivery workflows to the automated MatchPoint platform. Existing Giant clients (Neon, PBS, Pluto/Paramount) have increased delivery output by 45-75% with Cineverse, and converted workflows have delivered 40% time savings compared to manual processing.

• Cost Rationalization & Synergy Initiatives: • Total annual cost reduction and synergy targets of $13 million have been identified, with $7.5 million of this amount to be realized in FY2027. Cost cutting efforts are expected to be materially complete by the end of Q2 FY2027. • Product portfolio simplification: underperforming standalone products are being integrated as features into MatchPoint, eliminating $2.7 million in annual vendor and sales/marketing costs while increasing MatchPoint's value for customers. • Right-sizing actions include $3.8 million in pre-FY2027 headcount reductions, and over $8.3 million in additional cuts (headcount and vendor eliminations) during and after Q1.

• New Product & Growth Initiatives: • Vaudeo, a new proprietary ad tech product that extends audio brand campaigns to connected TV, was recently announced. Management estimates 5-7% of the $3 billion annual podcast ad spend could migrate to CTV in the near-to-mid term, and Cineverse is positioned to capture this opportunity. • The streaming business achieved record engagement: multiple niche channels (The Dog Whisperer, Screenbox, Yu-Gi-Oh!, Midnight Pulp) delivered their most-watched quarters ever, with growth ranging from 48% to over 1000% year-over-year. DocuRama crossed 100,000 subscribers (up 66% YoY), and flagship channel Cineverse hit an all-time high after launching on Roku.

• Theatrical Release Strategy: • Cineverse follows a low-risk theatrical model focused on generating strong ROI while growing streaming subscriptions and adding valuable content to its film library (valued at ~$45 million by an independent appraiser as of 2025), leveraging the company's existing streaming, social, and advertising ecosystem. • Three upcoming releases following this low-risk model are scheduled for the second half of FY2027: Pan's Labyrinth 20th anniversary 4K/3D (October 9), Air Bud Returns (January 22), and a new installment of the Wolf Creek horror franchise (March). Early fan and industry reception for the upcoming releases has been strongly positive.

Total consolidated revenue for the first quarter of fiscal 2027 was $30.6 million, a 175% increase from $11.1 million in the year-ago quarter. New advertising, technology, and media services revenue streams contributed $19.4 million of this increase. Technology revenues represented 60%+ of the consolidated total, making it the company's largest revenue source, with much of this revenue being recurring. Direct operating margin for the quarter was 35%, down from 57% in the prior quarter, aligned with expectations due to 79% average revenue share expenses for the new ad tech segment and under-optimized media services margins. Adjusted EBITDA was $0.5 million, a $2.6 million increase year-over-year and the second consecutive positive adjusted EBITDA quarter. Net loss attributable to common shareholders was $5.8 million, a $2.1 million larger loss than the $3.6 million loss in the year-ago quarter, driven by acquisition-related SG&A, depreciation, amortization, and non-cash fair value adjustments partially offset by $4.3 million higher direct operating profits. Streaming segment performance hit all-time records: 4.5 billion total minutes streamed (up 33% YoY), 122.8 million streaming viewers (up 12% YoY), and 1.52 million SVOD subscribers (up 12% YoY).

• Management reaffirms its full-year FY2027 guidance of $115 million to $120 million in total consolidated revenue and $10 million to $20 million in adjusted EBITDA.
• The majority of the $13 million in targeted annual cost savings and synergies are expected to be realized by the third and fourth fiscal quarters, which are the company's seasonally strongest quarters.
• Management expects direct operating margins to improve significantly after cost synergy initiatives are fully implemented, with the bulk of margin improvement reflected in H2 FY2027 results.
• Vaudeo is targeting a $12 million annual run rate by the end of FY2027, with management noting customer demand could drive faster-than-expected adoption, with meaningful revenue contribution expected starting in Q2 FY2027 ahead of the holiday and political advertising season.
• Management expects 80% of Giant's packaging and delivery revenue to be completed via automated or semi-automated MatchPoint workflows by the end of FY2027.
• Seasonal softness in the advertising business is expected for Q2 FY2027, followed by a strong H2 driven by U.S. midterm election advertising, holiday season demand, and the three planned theatrical releases.

• Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from projections, with additional details available in the company's periodic SEC filings.
• The new ad tech segment carries high revenue share expenses to supply partners that have weighed on near-term margins, and the media services segment requires continued optimization to improve profitability.
• The transition of Giant's manual workflows to MatchPoint is in early stages, and full margin improvement from automation will be realized gradually over the remainder of the fiscal year.
• The company ended the quarter with $4.3 million in cash, relying on its $12.5 million revolving credit facility for liquidity.

Q: Analyst Dan Kernos asks what near-term incremental contribution Vaudeo will deliver, and how much IndieQ will benefit from the H2 political advertising seasonal uptick. / A: Management states Vaudeo has a target $12 million annual run rate by the end of FY2027, based on strong early trial demand and high CPM rates that are drawing interest from large OEM partners. Management expects meaningful Vaudeo revenue contribution to start by the end of Q2, ahead of the busy fall political and holiday season. Political advertising spending is just starting to ramp, with full intensity coming after the summer lull, and Cineverse is well positioned to capture incremental demand from this seasonal uptick.

Q: The $13 million total synergy target is predominantly cost-focused; are there additional revenue synergies expected from the acquisitions, and is the current portfolio now aligned with the company's strategic goals? / A: Management confirms the $13 million target is almost entirely cost reductions, all of which have been identified and are being implemented, with completion planned by the end of September 2026. Vaudeo is cited as a clear example of an unplanned revenue synergy that came from combining IndieQ's ad tech, Cineverse's CTV platform, and Cineverse's existing podcast audience, and management expects additional revenue synergies to emerge as the combined business operates.

Q: Analyst Brian Kinslinger asks how long the transition of Giant's manual workflows to MatchPoint will take, and are studios willing to fully adopt the automated platform? / A: Management notes the transition is in early stages, but industry demand for automation is already strong as content owners shift from small single-title deliveries to large-scale catalog distribution that requires faster processing. The transition is mostly internal work for Cineverse, so studios do not have to make changes to capture the benefits of automation, meaning there is little customer resistance. Management targets 80% of Giant's packaging and delivery revenue being automated or semi-automated by the end of FY2027.

Q: Brian Kinslinger asks for details on the upcoming Pan's Labyrinth theatrical release: expected screen count, total all-in cost, and what box office result counts as a success. / A: Pan's Labyrinth is expected to screen on 1,500 to 2,000 screens via releasing partner Fathom Entertainment, with an all-in investment (including marketing and 20-year distribution rights) of less than $5 million. Break-even at the box office is well below $10 million, so even a modest box office result will deliver strong returns, and the film will also add long-term value to Cineverse's content library. Early audience reception at Cannes and Comic-Con has been very positive, so management is bullish on performance.