Cineverse (CNVS) Q3 2026 Earnings Call Transcript

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Date

Feb. 17, 2026 at 4:30 p.m. ET

Call participants

• Chairman and CEO — Christopher J. McGurk
• President and Chief Strategy Officer — Erick Opeka
• Chief Financial Officer — Mark Wayne Lindsey
• President of Technology and Chief Product Officer — Tony Weedor
• Chief Legal and Senior Adviser — Gary S. Loffredo
• Chief Motion Pictures Officer — Yolanda Macias
• Chief People Officer — Mark Torres

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Takeaways

• Revenue -- $16,300,000, representing sequential growth from $12,400,000, but a decline from $40,700,000 due to the absence of prior year theatrical results, which included "Terrifier 3" in excess of $20,000,000.
• Net loss -- $(875,000), demonstrating a $4,700,000 improvement over the prior quarter.
• Adjusted EBITDA -- $2,400,000, up by $6,000,000 from the previous sequential quarter.
• Direct operating margin -- 69%, up from 48% in the same quarter last year.
• Cash position -- $2,500,000 at quarter end, with $4,200,000 available on the East West Bank revolver.
• Share issuance -- One million seven hundred twenty-five thousand shares sold at $2 per share for net proceeds of $3,200,000 for working capital and content-related purposes.
• Giant acquisition -- All-cash asset deal valued at $2,000,000, with $350,000 paid at closing and $1,650,000 deferred over four quarters; expected to generate $15,000,000-$17,000,000 revenue and $3,500,000-$4,000,000 adjusted EBITDA in fiscal 2027.
• IndiQ acquisition -- Business combination for $22,000,000 base consideration ($12,800,000 cash at close, $9,200,000 deferred), with total possible consideration up to $40,000,000 if targets are met; included $3,000,000 cash and $750,000 net working capital at closing.
• Expected contribution from acquisitions -- IndiQ to add more than $38,000,000 revenue and $7,000,000 adjusted EBITDA in 2027; Giant plus IndiQ to contribute over $50,000,000 revenue and $10,000,000 adjusted EBITDA to 2027 guidance.
• 2027 guidance -- Fiscal 2027 revenue projected at $115,000,000-$120,000,000 and adjusted EBITDA at $10,000,000-$20,000,000 from consolidated operations.
• Streaming viewership -- Thirty-five million five hundred thousand unique monthly viewers reported this quarter, with SVOD subscribers up 15% to one million five hundred fifty thousand.
• Content library -- Exceeds sixty-six thousand assets, including nearly fifty-eight thousand films, seasons, episodes, and over eight thousand five hundred podcasts.
• Operating efficiencies -- Approximately $1,900,000 of targeted $7,500,000 cost reductions realized to date, with further efficiencies expected in the next two quarters.
• Matchpoint platform -- Capable of ingesting and mastering over fifteen thousand titles monthly; achieved early efficiency gains of 60%-70% in encoding and delivery post-Giant integration.
• Client acquisition -- Four new customers announced for the Matchpoint platform: ATPN, The Asylum, Spark, and Waypoint, categorized as "lower, lower mid-market customers."
• Giant’s market reaction -- In the first month of operating Giant under the Matchpoint umbrella, the company saw a nearly 470% increase in business over the prior year period.
• IndiQ client base -- Currently serves over forty live clients with seventy-five onboarding, including notable names such as IMAX, Freecast, and Canela.
• Acquisition financing -- IndiQ purchase financed via $13,000,000 of convertible notes from existing long-term shareholders, with no warrants attached.
• Guidance basis -- Management stated, "there's definitely some upside there," in potential synergies and growth not included in 2027 guidance; $7,500,000 of cost savings are fully built into adjusted EBITDA guidance.
• AI strategic focus -- Announced Matchpoint Creative Labs as an R&D effort for generative AI, with applications in ad creation and channel branding.

Summary

Cineverse (NASDAQ:CNVS) reported a significant transformation in its business model following the integration of Giant Worldwide and IndiQ after the quarter’s close, resulting in a structural change to its financial outlook. Management highlighted sequential improvements in revenue and profitability, and emphasized the immediate addition of over $50,000,000 in expected fiscal 2027 revenue and $10,000,000 in adjusted EBITDA from the new acquisitions. The company disclosed advancements in platform automation, substantial subscriber and content growth, and strategic capital raising as core drivers for enhanced guidance and future expansion.

• Opeka stated, "The industry is hopelessly fragmented," and the acquisitions create "a unified automated architecture for the entire media supply chain."
• Lindsey explained that the Giant asset acquisition was executed at just 0.5 times adjusted EBITDA with no leverage or dilution.
• Newly reported monetization and automation capabilities now allow Cineverse to address both distribution and revenue optimization within a single infrastructure platform.
• Management confirmed IndiQ’s underlying revenue concentration was "improving pretty dramatically," with diversification progress noted on both supply and demand sides.
• Plans to report free cash flow are slated for next quarter, with both management and investors participating directly in the recent equity raise, signaling alignment with shareholders.
• Cineverse identified post-acquisition integration as its immediate operational priority, with management open to additional M&A if similar opportunities arise.

Industry glossary

• SVOD: Subscription Video On Demand — a recurring-revenue streaming service where users pay a subscription fee for access to content.
• AVOD: Ad-Supported Video On Demand — streaming content funded by advertising revenues rather than subscriptions.
• FAST: Free Ad-Supported Streaming Television — linear streaming channels with scheduled programming, accessible for free with advertisements.
• SSAI: Server-Side Ad Insertion — technology that dynamically inserts ads into video streams on the server, allowing seamless playback and improved ad targeting.
• Matchpoint: Cineverse’s proprietary technology platform for automating video ingestion, mastering, quality control, delivery, and monetization within the media supply chain.

Full Conference Call Transcript

Gary S. Loffredo: Thank you for joining us for the Cineverse Corp. fiscal year 2026 Third Quarter Financial Results Conference Call. The press release announcing Cineverse Corp.’s results for the fiscal third quarter ended 12/31/2025 is available at the Investors section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at Cineverse Corp.’s website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions.

The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements. All the information discussed on this call is as of today, 02/17/2026. And Cineverse Corp. does not assume any obligation to update any of these forward-looking statements, except as required by law. In addition, certain financial information presented in this call represents non-GAAP financial measures, and we encourage you to read our disclosure and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. I'm Gary S. Loffredo, chief legal and senior adviser at Cineverse Corp. With me today are Christopher J.

McGurk, chairman and CEO; Erick Opeka, president and chief strategy officer; Tony Weedor, president of technology and chief product officer; Mark Wayne Lindsey, chief financial officer; Yolanda Macias, chief motion pictures officer; and Mark Torres, chief people officer. All of whom will be available for questions following the prepared remarks. On today's call, Christopher J. McGurk will briefly discuss our fiscal year 2026 third quarter business highlights. Then Mark Wayne Lindsey will follow with a review of our financial results, and Erick Opeka will provide further details on our two most recent acquisitions. I will now turn the call over to Christopher J. McGurk to begin. Hey. Thanks, Gary, and thanks everyone for joining us on the call today.

Christopher J. McGurk: I'll first give a brief overview of our results and the anticipated impact of the two transformative acquisitions Giant Worldwide and IndiQ, that we made after the end of our fiscal third quarter. Then Mark will go into our financial results and outlook in more detail plus further outline both acquisitions to underscore why we believe they will be very accretive and were done with very attractive valuations and have deal economics that will dramatically improve our financial growth and profitability outlook.

After that, Erick will get into more detail about how these two acquisitions transform Cineverse Corp. into a powerhouse comprehensive, AI-powered technology services provider to the entertainment industry with assets and reach that we believe none of our competitors can match. Then we'll take your questions. Okay. So we had been negotiating the Giant and IndiQ acquisitions for months. And while we realized the dramatic impact both would have on our market position, go-forward strategy, and financial outlook, our first order of business while we aggressively moved to close both deals was to improve operating results in our base businesses to further set the stage for financial success in the future.

And so in this last fiscal quarter, we concentrated on improving our cost structure and operating margins in our base businesses. And we generated some strong results, improving our direct operating margin to 69%, up from 48% in the prior year quarter and generating adjusted EBITDA of $2,400,000, a $6,000,000 improvement from the prior sequential quarter. This was a result of our intense and ongoing efforts to manage the cost side of the business, including leveraging Cineverse Services India, even as we ramped up operations on the technology side of the business, in anticipation of these two acquisitions. And we are extremely pleased that we were able to successfully acquire both Giant and IndiQ.

This one-two punch immediately transforms us financially by adding significant revenues and adjusted EBITDA. Both acquisitions bring large durable and scalable streams of recurring revenues to the company. Significantly solidify our position as a leading end-to-end AI provider of technology services infrastructure solutions for the entertainment industry. They both have an A+ level roster of industry clients and will be easily integrated into our industry-leading Matchpoint technology ecosystems. Both acquisitions also bring very strong, experienced and highly motivated management teams that clearly see the synergies and share our larger vision for the future of Matchpoint and Cineverse Corp. Like the Cineverse Corp. team, our new team members have incentive plans based on generating explosive future growth in revenues, margins, profits.

And in the case of IndiQ, those incentives also include a very significant earn-out potential over three years. So we believe we are completely aligned with our new team members to generate strong financial results and create significant value going forward. And already, the integration of Giant has been going very smoothly. And the overwhelmingly positive industry response to joining Matchpoint has exceeded our expectations. If there are any doubts about the long-term potential of Matchpoint, those doubts have been roundly dismissed.

The immediate response we received within days of our announcement proves that merging Matchpoint with an established media delivery company with highly coveted approved vendor badges is the ideal profile for the type of service provider entertainment companies seek. The days following our announcement, Giant received more work orders than they have in the history of the company. And at this early juncture, we confirm our prior expectations for Giant's short- and long-term revenue and profit contribution and we feel very, very positive about how things are looking so far. And in addition, IndiQ has consistently outperformed their own internal monthly revenue and profit forecast over the last several months while we were in negotiations.

So both of those factors combined with the financial improvement we generated in our base business this quarter give us great confidence in the financial guidance we just issued for fiscal year 2027. Which starts this April 1. We project $115,000,000 to $120,000,000 in annual revenues and $10,000,000 to $20,000,000 in adjusted EBITDA from our consolidated operations this next fiscal year. In the end, these acquisitions were the result of a long-term thesis built on closely tracking our industry's delayed transition to true AI integration and automation. The content volume needed to compete in the streaming wars accelerated. Yet the video delivery infrastructure remained manual. And slow to market. While cost for video and high volume became untenable.

This created the opportunity for a unified intelligent platform with a unique monetization component that redefines the current ecosystem. I believe we finally achieved this. And with that, I will now turn things over to Mark and then Eric to get into all this in more detail. Thank you.

Gary S. Loffredo: Thank you, Chris.

Christopher J. McGurk: First, a few highlights from our fiscal third quarter.

Mark Wayne Lindsey: Revenues were $16,300,000 up from $12,400,000 last quarter and down from $40,700,000 in the same fiscal quarter last year. If you recall, the prior year fiscal quarter included the theatrical results of Terrifier 3, which were in excess of $20,000,000. Our net loss for the quarter was $875,000, a $4,700,000 improvement over the prior quarter. Adjusted EBITDA for the quarter was $2,400,000, a $6,000,000 improvement over the prior quarter. We ended the quarter with $2,500,000 of cash and $4,200,000 of availability on our East West Bank revolver. Let's talk about the exciting subsequent events this quarter. As Chris noted, we closed on two acquisitions after quarter end.

Giant was an all-cash asset acquisition for $2,000,000 with only a $350,000 initial payment on closing, and $1,650,000 in deferred payments over the next four quarters. This for a business that we conservatively expect to generate revenues of $15,000,000 to $17,000,000 and adjusted EBITDA of $3,500,000 to $4,000,000 for our 2027 fiscal year. The ability to acquire assets that will perform at this level for just 0.5 times adjusted EBITDA with no leverage or dilution is the first step of our company's financial transformation. The IndiQ acquisition was step two.

This acquisition was a business combination for 100% of the equity of IndiQ for base consideration of $22,000,000, $12,800,000 of which was paid at closing and included deferred consideration of $9,200,000 due within one year of closing in cash or equity at the company's discretion. Total consideration could increase to $40,000,000 if IndiQ meets certain future revenue and gross profit milestones over the next three years. In addition, the acquisition included $3,000,000 of cash and $750,000 of net working capital at closing. Additional earn-out consideration is payable in cash or equity at the company's discretion. IndiQ is expected to contribute more than $38,000,000 of revenue and $7,000,000 of adjusted EBITDA for our 2027 fiscal year.

We financed the IndiQ acquisition with $13,000,000 of convertible notes with existing long-term Cineverse Corp. shareholders at company-friendly terms, reflecting the investors' strong conviction in our investment strategy and long-term valuation creation of this acquisition for our current shareholders. Importantly, the capital came from aligned long-term investors, with no warrants attached. The additional equity raise was priced at or near market with fundamental investors. The entire Cineverse Corp. team also invested alongside, reinforcing our alignment with shareholders. The combined acquisitions are expected to contribute in excess of $50,000,000 of revenue and $10,000,000 of adjusted EBITDA for our 2027 fiscal year.

As a combined entity, post Giant and IndiQ acquisitions, we are providing guidance for fiscal year 2027 of $115,000,000 to $120,000,000 of revenue and $10,000,000 to $20,000,000 of adjusted EBITDA. The combined impact of the Giant and IndiQ acquisitions represents a financial transformation for the company, and is expected to create significant shareholder value in the future. Separately from the acquisitions, on February 12, and closed this morning, the company sold 1,725,000 shares of common stock at a purchase price of $2 per share for net proceeds of $3,200,000. We intend to use the net proceeds for working capital and for general corporate purposes including the financing of content acquisition and development.

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

Erick Opeka: Thanks, Mark.

Erick Opeka: So I want to start with a quick recap of what we've delivered operationally and then spend the bulk of my time on why the Giant and IndiQ acquisitions are so strategically important to where we're positioning Cineverse Corp. for the next chapter. So on the operational side, we continue to see strong momentum across our streaming ecosystem. We reached 35.5 million unique viewers on a monthly basis over the quarter with our SVOD subscriber base growing 15% year over year to 1,550,000. On a monthly basis, we're streaming about 1.14 billion minutes each month. Our content library now exceeds 66,000 total assets including nearly 58,000 films, seasons, episodes, plus over 8,500 podcasts.

Our social footprint has now grown to more than 25,400,000 followers. These aren't vanity metrics. This is reach, engagement, and content gravity that matters when you're building distribution advantages. And, specifically, on the Cineverse channel, our namesake channel, we added approximately 45,000 subscribers in calendar 2025, giving us real momentum heading into our new fiscal year. I also want to highlight our operating leverage. Our direct operating margin hit 69% this quarter, up from 48% a year ago. That's a significant inflection. On the cost side, between personnel optimization, vendor eliminations, and cost renegotiations, we've already realized approximately $1,900,000 of the targeted $7,500,000 in projected cuts across our studio operations and corporate overhead.

We expect to see most of the remainder come through over the next two quarters. You're starting to see the company find its operational rhythm. That foundation is a critical context for what I'm about to describe with these acquisitions. So let me talk about Giant and IndiQ. Because they're not really about getting bigger for the sake of it. They're about filling a specific gap we identified in the market and then building the architecture that solves for it. For years, we've been building Matchpoint as an advanced infrastructure layer for digital video distribution. We invested heavily in machine learning, automation, and what I'd call the operational plumbing that the streaming industry desperately needs.

But the deeper we got into conversations with studios, distributors, and platforms, the clearer it became. The industry is hopelessly fragmented. Content distribution is separate from monetization. Monetization is separate from data. And that fragmentation creates friction, inefficiency, and, critically, it leaves money on the table. So first, Giant Worldwide has been serving top Hollywood studios and streaming platforms for over two decades. Digital preparation and encoding, quality control, standards and practice compliance, delivery across every format. They're trusted by four major studios and top independent distributors, and they hold approved vendor status with those studios and the key platforms. So this isn't something you just get. It is earned over years of reliability, security, and quality.

And it's a substantial moat. But Giant was operating on traditional infrastructure with manual workflows and labor-dependent processes. And, critically, were actually turning away business because they couldn't scale hiring people fast enough to meet studio demand. So as we started integrating Matchpoint’s AI video and audio quality control, automated ingest, frame-by-frame analysis, and transparent mastering workflows, we are already starting to see immediate efficiency gains. We're already achieving 60% to 70% efficiency improvements in encoding and delivery in the short time we've already been deploying them. Matchpoint is capable of ingesting and mastering over 15,000 titles per month and can scale far beyond that. So that's the power of automation at genuine scale. I want to be clear.

We haven't even fully optimized Giant for software-like margins yet. That's a future state. So right now, Matchpoint is solving the scale problem and the whole margin optimization opportunity is still largely ahead of us. So the market opportunity here is substantial. On a global basis, post and media services is a $25,000,000,000 fragmented market, growing at 11% CAGR, and expected to hit globally $74,000,000,000 by 2034. Industry is shifting from these labor-led workflows to AI-powered platform-led workflows. And that transition is happening whether companies are ready or not. So we're positioning Matchpoint to lead it. And the market response has confirmed our thesis. The announcement was the right message at the right exact moment for this industry.

Our first month of operating Giant under the Matchpoint umbrella, we saw a nearly 470% increase in business over the prior year period. And that trend has accelerated into February, as studios and platforms are telling us they really need this. They need the scale. They need the automation. They need it from a partner they can trust. So now IndiQ is the other critical piece. IndiQ built a proprietary connected TV monetization platform. Ad serving, supply side, demand side, SSAI or server-side ad insertion, on a very scalable infrastructure. So we have real control over that stack. They have over 40 live clients today with 75 more onboarding, including major names like IMAX, Freecast, Canela, and more.

They're projecting $38,000,000 revenue and about $9,600,000 EBITDA for calendar '26, with a 25% margin. And those are the economics of a platform that works. Here's what really matters. IndiQ is the monetization layer we were missing. So Matchpoint gets content to market at scale. But how you sell ad inventory, optimize yield, price, and package ads—that was happening in a completely separate silo. IndiQ closes that loop. Distribution, data, monetization, network as a single system, with a real-time feedback engine. We see performance, can act on it immediately, and improve results for our own content and for some of the largest media companies in the world. So what we've built is something the industry has never had.

Independent, full stack, white label solution that unifies content delivery and ad monetization that's actually integrated, not loosely connected. And the combined teams are already developing new ad tech products on the Matchpoint that neither company could have built alone. I want to spend a moment on why this positioning matters beyond today's customers. There's a structural shift underway in tech right now that's directly relevant. In the AI era, value is migrating away from interface layers and toward platform and infrastructure layers. AI agents don't need dashboards. They need real platforms with real underlying data beneath them. Systems that can execute thousands of decisions per second.

The companies that own the infrastructure and data are the ones that will matter and that's exactly what we've built. So Matchpoint is the platform layer. Giant brings proven infrastructure, trust, and customers. IndiQ brings the monetization engine. Together, combined with our Matchpoint platform, they create a system of record for the entire media supply chain from ingestion through encoding, quality control, delivery, yield optimization. It's not a dashboard that sits on top of someone else's stack. This is an actual operating system. And because monetization is integrated directly into that infrastructure, flowing in real time, that means higher CPMs, better yields, and smarter targeting for advertisers. Better calibrated ad loads for consumers.

And when these systems are disconnected, everyone loses. So we've closed that gap. So to close this out, with these two acquisitions, we've made a deliberate strategic choice. We're building what this industry does not have. A unified automated architecture for the entire media supply chain. That's the moat. And it positions us to serve not just today's market where consolidation means customers need scale, speed, and transparency, and we are meeting that today. But also the future market, where intelligent systems will be making the vast majority of decisions in tandem with media companies. Across the company, our focus remains clear. We're building for scale, for margin, and for durability.

We now have multiple high growth engines that reinforce one another, by technology, data, and a fast-growing audience footprint. And we feel very well positioned for the quarters ahead and for the long term. So with that, Operator, we will now open for questions. Thank you.

Operator: We will now open for questions. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 9 to raise your hand and star 6 to unmute. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. First question comes from the line of Brian David Kinstlinger of Alliance Global Partners. Brian, your line is open. Please go ahead.

Brian David Kinstlinger: Great. Can you hear me? Yes.

Brian David Kinstlinger: Congratulations on the strategic positioning through these acquisitions.

Gary S. Loffredo: My first question is when I look at the filings on IndiQ, their business went from virtually no revenue in 2023 to $10,000,000 and to $32,000,000 each the last few years. Can you talk about the evolution of this business? I think there are three customers that make up the majority of the revenue. And is this recurring and how and, you know, is the growth generally penetrating new customers, or is it penetrating the wallets of those existing customers?

Christopher J. McGurk: Hey, Brian. I think Erick will take that question. I think the concentration has improved quite a bit year over year. So go ahead, Erick.

Erick Opeka: Yeah. Sure. So, you know, I think there is a moment in time that IndiQ really was built for, and that's independent CTV monetization platforms, you know, with the prior acquisitions of companies like SpringServe and Publica, the need for real independent platforms has emerged. It's not uncommon in early stage businesses like IndiQ to have pretty high concentration early on as they leverage strong long-term relationships of the founders and so on. And that's what happened in this case. But that underlying concentration has been improving pretty dramatically, you know, looking at the rearview mirror of the filings. The concentration has only improved both on the supply and demand side.

But I think one of the things that's very compelling and differentiated from, say, other network plays and other things is the combination of the technology and volume of business that's flowing through leads to a much stickier and durable relationship than people that don't own the tech or that partners have not built their businesses decisioning on top of. That durability, you know, some of the core customer base—you know, one represents a large holdco that has beneath that hundreds of different advertisers flowing through it and spending through it. And some of the other players are very large players.

So I think it's important for a business like this to build strong nodes of consistent recurring business that is mutually beneficial and expand from there. And I think, you know, that's exactly what they've done. Also, on the supply side, adding in major CTV partners and OEMs that have dramatically diversified the business over the last few months. So, really, it's having the right product at the right time for a market that needs autonomy and independence from SSPs to be able to allow companies to do the things that they need to do to maximize their returns and yields in a CTV market that's maturing.

And I think this is sort of the exact right product, the right time for that.

Brian David Kinstlinger: Great.

Gary S. Loffredo: My one follow-up, and then I'll get back in the queue. I think you guys want us to keep to two is an update on Matchpoint—like in the press release, you talked about announcing four new customers, ATPN, The Asylum, Spark, and Waypoint. Can you size these wins? What they mean in your revenue guidance for next year? And did they include the full stack that you acquired, or will they grow as you add those new capabilities as part of Matchpoint?

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

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

Operator: Yeah. I'll take that. Thank you, Erick.

Tony Weedor: So, Brian, I think what you want—what we haven't really spoken a lot about is really the synergy between Giant and Matchpoint. So think of, a lot of the work that we've been doing with Matchpoint over the last two years has been really on gaining foothold within the market, market validation, traction. And we had started kind of on the low end of the ecosystem by doing deals with channel operators, FAST channel providers and so on. And then as you may recall from earlier meetings, some of the studio deals, there was interest, but the vetting and the process to get onboarded was a year or two years. It's just a very long, slow process.

So by doing the Giant acquisition, overnight, we had deep studio relationships with, you know, four of the largest studios and a slew of other large media companies. So now what we've done is the synergy that the Giant deal brings us is we now have the ability to start selling Matchpoint, not just delivery services, but other parts of the Matchpoint stack to these big media clients. Some of these clients, one of the studios we were talking to, we were going through the vetting process. Once we acquired Giant, we no longer had to go through that process. We were an approved vendor.

So think of it that way—that Giant really short-circuited the vetting process that could have taken Matchpoint a year for us to get into market. Now to Erick's point, we have the ability to land and expand with these big media clients and start selling them more services than just what Giant was providing. So some of these, you know, I would say our largest studio partner—you know, they were spending roughly, you know, $1,000,000 a month with Giant. We think we could double that. Easily. And that's just for the existing services. There's substantial upside there. It's a little early to say how high the ceiling is. But we think that there's tremendous growth opportunity there.

Brian David Kinstlinger: Great. I'll get back in the queue with some more questions. Thank you.

Christopher J. McGurk: Thank you.

Operator: Your next question comes from the line of Daniel Louis Kurnos of Benchmark. Your line is open. Please go ahead.

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

So, you know, within the confines of the guidance that you guys have given, you've got cost cuts, you've got other synergies you can make to improve Giant margins. Like, how much of the combined synergies are we anticipating over the next twelve months and how much do you think things could ramp if you guys kind of get the execution right, fold this all in, and then, you know, really show what the consolidated entity can do. So I'm just trying to understand what you guys have embedded in the guide for fiscal 2027. I'll ask a follow-up after.

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

Erick Opeka: Yeah. So I'll tee it up. I think, I'll give the general basket of these things. I'll let Mark Lindsey talk some specifics about, you know, forecast synergies as part of the forward guidance. I'll talk in generality. So if we really kind of think about, you know, how are we stacking up the various elements here to get to those EBITDA and revenue numbers? First and foremost, I'll, you know, just to rehash the cost—the cost reductions in the studio business is really to get that business refocused and aligned on recurring revenue growth out of the streaming business at high margins.

You know, obviously, you know, getting the studio model to a place where it's more predictable and I think, you know, smoother revenue ramps and, you know, one of the ways to do that is obviously push the margins as high up as we possibly can, and that'll help absorb, you know, the natural volatility you see in a movie releasing business. Hopefully, we increase the throughput of movies to smooth out the volatility on that studio business. But that's sort of job number one in the studio. That, you know, that's realizing about $7,500,000 of cost reductions.

You know, we also have a plan to move a lot of the content costs that today were being borne by our balance sheet off balance sheet into other financing mechanisms that are, you know, kind of industry standard for studios to make that business look even better. That's job number one there. Job number two is on these two acquisitions, what are the immediate synergies that can be provided? So we're talking about IndiQ. Mark Lindsey, you can confirm this. I believe we're looking at somewhere up to, you know, between $8,000,000 and $9,000,000 of potential synergies by deploying IndiQ's capabilities across our media portfolio, on the revenue side.

Mark, can you speak to that a little bit on the revenue and potential EBITDA synergies as we kind of deploy IndiQ into monetization and improvements in our existing sort of ad-based infrastructure?

Mark Wayne Lindsey: Yeah. Sure. Sure. Absolutely. So I'll hit on a few of them. I definitely don't want to reset our guidance. Because, you know, they're good numbers as we, you know, as they are. But there's some significant revenue synergy upsides from both Giant acquisition and IndiQ and how they integrate with Matchpoint. And then as well as how, you know, the revenue synergies that come from IndiQ and their ability to leverage our existing infrastructure and our ad platform and our various channels. So we—as Brian noted earlier, IndiQ has had a significant growth profile. As Chris mentioned, they've exceeded estimates—exceeded their forecast the last three or four months. So they're growing rapidly. They're very profitable.

There are, we believe, revenue synergies that we're going to have the opportunity to execute on and realize that we don't have built into our guidance. This guidance is clearly numbers that we think we're going to be able to obtain. So there's some upside there. There's a lot of revenue synergies that are attainable, but we want to put a fairly conservative number out there. And we have, you know, bigger numbers for fiscal 2028 and fiscal 2029 as it'll take a few months to ramp up and see those synergies take place and have traction.

So, you know, without putting specific numbers out there, the $110,000,000 to $120,000,000—that's including, you know, mid-$50,000,000 of revenue combined from the two acquisitions. And $10,000,000 plus of EBITDA coming from the acquisitions. But we think there's definitely some upside there, you know, related to the synergies. And then Erick mentioned, there's about $7,500,000 of cost savings that we have fully built in to the adjusted EBITDA guidance that we put out there. So while it's aggressive numbers, we think they're very attainable, and there's definitely some upside there.

Erick Opeka: And then I'll just finish up the last bit on talking a little bit about the margin improvement on Giant. One—so today, you know, if you think about that business model, you know, it's a labor-dependent with sort of labor and SG&A costs—or depending how it's characterized. In some cases, it could be OpEx cost—tracking with revenue. So there is no scale benefit to that business. If you book more revenue, you have to hire more people. Well, we saw the limits of that—that was happening over the last couple of months with them where just not enough—you can't scale people enough to meet the demands of the industry.

We look at and see about 70% of the work can be done for encoding and delivery part of that business which is, you know, the lion's share of the revenue. Can operate within Matchpoint's automation platform which would kind of flip gross margins from, you know, low thirties to mid seventies. Give or take. So that in and of itself is, I think, one of the biggest parts of the transformation is not only is the volume—I want to call it infinitely scalable, but near so—but it also, you know, more than two-times the margin out of the business. So we have to build obviously the mechanisms and systems that make it easy.

The good news is porting that over is not exactly the most challenging technological thing in the world. It's more workflow and process in the early days, and it would be more automated in the later part of the year. But I think that also reflects on some of the cost basis. And then the last piece is we kind of look at these two businesses. You know, we don't really need to do—these are very differentiated businesses. There's some improvements we made on Giant pre-acquisition. It was an asset purchase. We didn't take all the people, all the cost structure. So we—on day one, we improved the cost structure there. There are minor things you do in any business.

But that business, you know, for the most part, the cost realization—a lot of it's done already. IndiQ is a, you know, small, lean, highly profitable, smartly structured company that we don't have to do—there's not really any synergies to reap there. So most synergies are going to be coming from optimizations to the business models of the respective companies on either side of the equation.

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

Erick Opeka: I'll tee it up, then, Mark, you can kind of dig into that. But, you know, the good news on these two businesses is not big CapEx. No big CapEx investments really are going to be required. They've been—you know, the improvements and the sort of synergies and benefits to growth are coming from, you know, over a decade of investment into our software platform. So we start to realize the benefits of those, applying those to other scale economics. And—or they've built out many years more capacity than we'll need to. So, realistically, free cash flow flows back into growth initiatives for the company.

So I think that's one of the core benefits here is we see an environment where there's a lot of companies similar to Giant and IndiQ, that are highly accretive and add to the flywheel of this platform as sort of a baby version of what Salesforce did years ago, bolting things on or other things, that can scale this up even larger. It also allows for other areas of investment and growth of things that we've been discussing internally. So that's a good place to be where we can leverage free cash flow as opposed to, say, dilution for some of these growth initiatives.

Mark Wayne Lindsey: Yeah. Congrats, guys.

Dan Kurnos: Oh, okay. Go ahead. No. That's it, Mark. If you got something, go ahead. But I just—congrats. So whatever you want to finish up with.

Brian David Kinstlinger: Thank you. Just—I'm just going to summarize, you know, what Erick said. I mean, this is a great position to be in. It's a little bit different than where we've been the last few years.

Mark Wayne Lindsey: You know, we're five weeks on one acquisition and two days or three days into the other one. So, you know, still some time to get our arms around them. But definitely an opportunity to put some dry powder on our balance sheet, you know, reduce the outstanding balance on our revolver. As Erick alluded to, there's some unique opportunities out there for us for some tuck-in acquisitions to continue to help grow the company that will be day-one accretive that we feel like we can get at a great price. And, you know, hopefully, we're in a position where we can utilize cash and or equity as a capital to make those acquisitions.

So we can talk free cash flow in next quarter and start reporting on it. So, you know, I know you're eager to see that number. So, you know, we'll start doing it.

Operator: Just a reminder, if you are muted locally, please remember to unmute your device. Your next question comes from the line of Laura Martin with Needham. Your line is open. Please go ahead.

Erick Opeka: Or just

Operator: reminder to unmute your line locally.

Laura Martin: Hi, guys. Can you hear me okay?

Dan Kurnos: Can hear you now.

Laura Martin: Great. Okay. So congratulations. Seems like you've made transformative acquisitions here. Chris, my first question is for you. So the studios absolutely need to cut costs, and they need to automate their workflows. But I sort of feel like the studios—look, I think Wall Street has a consensus that generative AI tools are going to lower the cost of content creation and proliferate content makers and that's going to ultimately hurt the studios over a longer-term frame. So my question is, when I think about Matchpoint, which I saw demoed at CES, and I thought it was fantastic already. It's going to be even better now.

Are there tools and features of Matchpoint that are applicable to the next generation of content creators to run lean? Right? There's five guys, and they have their great software narrative guys. So is there something here that's applicable to the next generation?

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

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

Tony Weedor: Yeah. Of course. Thanks, Chris. Thanks for the question. Yeah. You know, obviously, as an AI-forward company, we continue to monitor and, you know, watch all the key developments within the industry. On Monday, we announced the formation of the Matchpoint Creative Labs. That's essentially our R&D unit for GenAI. So we're already working with some clients on taking GenAI and using it for ad creation, which would tie in with IndiQ. We're also using it for channel branding, station IDs, so on. And this is a service that we can provide our Matchpoint clients. They use Matchpoint Blueprint or FAST channels. But we continue to invest in that area.

I think in terms of your question, definitely, we are—compared to the rest of the industry—we're pretty far ahead. Agentic AI is something that Erick spoke about during his portion of the script. I would say, Agentic AI and creating an intelligence layer that sits on top of the data that we manage is a big focus of ours that we will be doing some announcements later this year. But we get it—invested in this space, and I think we have a very good handle in terms of how we can leverage AI in what we feel is an ethical way that doesn't, you know, hurt the business.

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

Erick Opeka: And I'll add one more thing, Laura. So I know, I think your question really is whether the studios catch up, start to focus on AI and there's sort of an innovator's dilemma at play there. Or if other companies emerge. I think our position is that AI is going to massively increase the volume of total content. So if anything, you know, a platform that can organize, monetize, route it, is going to become even more critical, you know, apply other tools to make it distributable into, you know, beyond just YouTube and other sort of social platforms.

Because we believe, you know, looking at the quality leaps—generational leaps that are happening, this is going to democratize the quality of available—and the volume of—content. But we think that this will make what we do—you know, being able to ingest, normalize the metadata, it can go into the various sales and monetization channels. Doing things like localization, tracking rights, delivery to all the FAST, AVOD, other platforms, performance tracking. Providing real-time data and feedback that can inform the models that are making it. That's where I think our platform actually is going to add massive value if that is the future universe that happens. And so—and we believe that's likely.

We think we're in a very good position to handle that explosion of content.

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

Erick Opeka: So I would add that, you know, number one, we've got a lot of work to do to digest these two acquisitions. So the short term is about, you know, post-merger integration, making these all work, getting all the teams aligned to the growth that we're putting out there. But I think, you know, the environment that we find ourselves—where, you know, the media services industry, the processing of the packaging data—there are a lot of companies that were, you know, private equity and other buyers, corporates, and strategics bought these businesses at the peak of COVID at high valuations or under theses that don't make sense anymore.

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

Christopher J. McGurk: You know, I agree with that, Erick. But I would just say if you look at these two deals, if you drill down into these two deals, they're going to be enormously accretive. They were done, you know, with great valuations and there are incredible synergies between the two companies. And even though, you know, always a challenge to integrate companies together, we think in the grander scheme of things, both companies are very easily integratable, you know, into Matchpoint. So the short answer is if we can find other opportunities like Giant and like IndiQ that we think just have enormous upside, of course, we're going to do that because it's in the best interest of our shareholders.

Laura Martin: Thank you very much.

Operator: There are no further questions remaining, so I'll pass the conference back over to Christopher J. McGurk, Chairman and CEO of Cineverse Corp. for closing remarks.

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

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

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