Cineverse (CNVS) Q4 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Friday, June 26, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer - Chris McGurk
• President and Chief Strategy Officer - Eric Opeka
• President of Technology and Chief Product Officer - Tony Huidor
• Chief Financial Officer - Sean McCabe
• Chief Motion Pictures Officer - Yolanda Macias
• Chief People Officer - Mark Torres
• Chief Legal Officer, Secretary, and Senior Advisor - Gary Loffredo

TAKEAWAYS

• Revenue -- $26.0 million for the quarter, an increase of 67% over the prior year period driven by contributions from recent acquisitions.
• Acquisition Revenue -- $11.6 million, representing the first partial-quarter impact from Giant Worldwide and IndiCue.
• Net Income -- $1.1 million for the fourth quarter, an increase of 51% reflecting a one-time bargain purchase gain and tax benefits.
• Fiscal Year Revenue -- $65.7 million, a 16% decrease from $78.2 million in the prior fiscal year due to exceptionally high results from Terrifier 3 in the comparison period.
• SVOD Subscribers -- 1.52 million, an increase of 13% year over year.
• Streaming Viewers -- 129.6 million, an increase of 66% compared to the prior year quarter.
• Minutes Streamed -- 4.4 billion for the quarter, representing growth of 58% year over year.
• Fiscal 2027 Revenue Guidance -- $115 million to $120 million, representing projected growth of 75%-83%.
• Fiscal 2027 Adjusted EBITDA Guidance -- $10 million to $20 million, as the company realizes integration synergies and cost cuts.
• Technology Revenue Mix -- Over 50%, the portion of total revenue expected to be generated from technology platforms in fiscal year 2027.
• Cost Reduction Program -- $10 million in total identified annualized savings, comprised of a $7.5 million SG&A reduction program and $2.5 million in Giant integration synergies.
• Bargain Purchase Gain -- $4.3 million, a non-cash gain recorded from the Giant Worldwide acquisition.
• Income Tax Benefit -- $2.9 million for the quarter, primarily related to the IndiCue acquisition.
• Cash Position -- $3.4 million as of March 31, 2026, supported by an additional $12.5 million credit facility.
• Debt and Liquidity -- $9.4 million drawn on the credit facility, with a $30 million ATM facility available for additional capital needs.
• Direct Operating Margin -- 40%, down from 55% in the prior year quarter reflecting the integration of higher-volume media services.
• IndiCue Net Revenue Retention -- 98%, supporting the company's outlook for recurring SaaS-based advertising revenue.
• Digital Content Library -- 66,000 titles, which carry an independent valuation of approximately $45 million compared to a book value of $5.1 million.
• Docurama Performance -- 100,000 subscribers reached following eight consecutive months of growth and a 47% year-over-year increase in engagement.
• Screambox Subscriber Growth -- 18% year over year, driven by horror content expansions and new programming slates.
• Dog Whisperer Engagement -- 84% growth year over year, marking the eighth consecutive quarter of engagement increases.
• SG&A Expenses -- $12.3 million for the quarter, an increase of $6.9 million reflecting acquisition-related marketing and integration costs.
• Working Capital -- Negative $12.2 million, which includes $12.2 million in deferred consideration that the company has the option to settle in equity.
• Headcount -- 176 employees, focused on the transition to an AI-driven platform model.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Opeka stated, "That has caused, I think temporarily, a depression in CPMs and fill rates," noting that a surge in FAST channel inventory and competition from major streamers has pressured advertising pricing.
• McGurk noted that the micro drama sector has become an "arms race" with competitors spending roughly "$1 million a day to market their platforms," leading the company to reduce its direct investment and shift to a passive stake.

SUMMARY

Management of Cineverse Corp. (NASDAQ:CNVS) reported a strategic transition toward an AI-driven, technology-first model following the acquisitions of Giant Worldwide and IndiCue. The company is integrating its Matchpoint automated content supply chain with a connected TV monetization engine to generate durable, recurring revenue. This strategy focuses on leveraging proprietary technology to serve major studios and streaming platforms, aiming to move the business beyond the volatility of hit-driven film performance. Management reaffirmed fiscal year 2027 guidance, projecting significant growth in revenue and adjusted EBITDA as integration costs subside and cost-saving initiatives take hold.

• CEO McGurk reported that the company now operates three "mutually reinforcing growth engines" consisting of wide-release films, streaming/podcasts, and vertically integrated advertising technology.
• President Opeka noted that the company's Matchpoint platform serves as a unified system for content ingestion and monetization, which management views as a competitive moat.
• Cineverse restructured its micro drama investment, moving from a joint venture to a passive minority stake in A Twist to focus capital on core business operations.
• Management expects fiscal year 2027 technology revenues to exceed 50% of the total mix, reflecting a shift toward higher-margin infrastructure economics.
• The upcoming theatrical slate includes the 20th anniversary re-release of "Pan's Labyrinth" in 3D and 4K, along with franchise titles "Air Bud Returns" and "Wolf Creek: Legacy."
• President Opeka cited "Fox's purchase of Roku" as a market signal regarding the importance of owning ad-supported streaming machines at scale.
• The company completed $2 million of its $7.5 million SG&A cost reduction program by March 2026, with the remainder targeted for completion by the end of the second quarter of fiscal 2027.

INDUSTRY GLOSSARY

• AVOD: Ad-Supported Video on Demand; content accessible for free in exchange for viewing advertisements.
• CPM: Cost Per Mille; the cost an advertiser pays for every 1,000 advertisement impressions.
• FAST: Free Ad-Supported Streaming Television; linear-style television channels delivered over the internet without a subscription.
• Fill Rate: The percentage of ad requests that are successfully filled with an advertisement.
• Matchpoint: Cineverse's proprietary AI-powered technology ecosystem used for content distribution and monetization.
• Micro drama: Short-form, episodic video content designed for mobile viewing and quick consumption.
• SVOD: Subscription Video on Demand; services that allow users to access content for a recurring monthly or annual fee.

Full Conference Call Transcript

Operator: Everyone. Thank you for joining us. Welcome to Cineverse fourth quarter and fiscal year 2026 earnings conference call. I will now hand the conference over to Gary Loffredo, Chief Legal Officer, Secretary, and Senior Advisor.

Gary Loffredo: Good morning, everyone. Thank you for joining us for the Cineverse fourth quarter and fiscal year 2026 financial results conference call. The press release is available at the investors section of the company's website at www.cineverse.com. Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements based on management's current expectations and subject to risks, uncertainties, and assumptions. All the information discussed on this call is as of today, June 26th, 2026.

With me today are Chris McGurk, Chairman and CEO; Eric Opeka, President and Chief Strategy Officer; Tony Huidor, President of Technology and Chief Product Officer; Sean McCabe, 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, Chris will briefly discuss our fourth quarter and fiscal year 2026 business highlights, Sean will follow with a review of our financial results, and Eric will provide further details on our two recent acquisitions. I will now turn the call over to Chris McGurk.

Chris McGurk: Thank you, Gary, and thanks everyone for joining us on the call today. First, I want to note that we're very happy to have our new CFO, Sean McCabe, here with us. Sean was our controller previously and returns to the company as CFO, having acquired valuable experience in the ad tech business, which as you'll hear today is going to be a big part of our future following our acquisition of IndiCue and all the related synergies that will create with the rest of our business. We had a very strong fiscal fourth quarter. We generated $26 million in consolidated revenues, up 67% over the prior year period.

This reflected solid performance in our base business, plus a partial quarter contribution from our two new acquisitions, Giant Worldwide and IndiCue, of $11.6 million. We acquired Giant Worldwide in January and IndiCue in the middle of February, and we fully expect an even bigger revenue contribution from those acquisitions when we record their full impact in our next reported quarter. Importantly, a significant portion of those revenues come from durable, recurring, fast-growing technology-based revenue streams from a large array of major studio and streaming customers, which was a major rationale for the acquisitions themselves. We also recorded net income attributable to stockholders of $1.1 million, a 51% increase over the prior year period.

This was driven by a $4.3 million bargain purchase gain on the Giant Worldwide acquisition and a $2.9 million income tax benefit primarily coming from the IndiCue acquisition — both additional strong indicators of the quality of the deals we cut and their upside value creation potential. Overall, we believe that fiscal year 2026 was one of the most consequential years in our history. We followed up the unprecedented success of Terrifier 3, the highest performing unrated film in history, by quickly and decisively completing the acquisitions of Giant Worldwide and IndiCue in the span of six weeks during this reported quarter. These deals fundamentally strengthen and change what Cineverse is as a company.

We are now a technology-first, AI-driven, fully integrated entertainment company with three powerful and mutually reinforcing growth engines: a proven low-risk, high-potential-return wide release film slate strategy; a scaled streaming and podcast portfolio with vertically integrated advertising technology; and a media services business built around our Matchpoint technology platform. The strategic logic of these transactions is clear. IndiCue brings a connected TV monetization platform serving more than 40 live clients, plus an additional 75 publishers onboarding. Giant Worldwide, now a Matchpoint company, brings deep and longstanding studio relationships directly into our automated media services ecosystem.

Combined, this creates a powerful flywheel — Matchpoint's automated content supply chain feeds IndiCue's monetization engine, while IndiCue's advertiser demand increases the value of every channel, film, TV title, and partner we serve. This expanded Cineverse flywheel is the key growth and performance engine behind our fiscal 2027 guidance of $115 million to $120 million in consolidated revenue and $10 million to $20 million in adjusted EBITDA, which we are reaffirming today. A significant portion of those revenues will be durable and recurring, and over 50% will be technology-based. Our franchise IP-based wide release film strategy continues to perform exactly as designed.

Our upcoming slate includes the 20th anniversary theatrical re-release of Guillermo del Toro's Oscar-winning "Pan's Labyrinth" this October, presented in 3D and 4K formats. When first released in 2006, the film received the longest standing ovation in the history of the Cannes Film Festival — a record that still stands. We just took the film back to Cannes six weeks ago, where it was selected as the opening film of the festival and received a tremendous ovation and great critical reaction once again. Next up after "Pan's Labyrinth" will be "Air Bud Returns" in January 2027, then "Wolf Creek: Legacy" in March 2027.

All three closely follow the Terrifier blueprint of acquiring known IP properties with large built-in fan bases, high upside potential, and low financial risk. These titles will generate recurring revenues by driving viewers and subscribers to our streaming channels and becoming valuable long-term additions to our library. With that, I'll now turn things over to Sean.

Sean McCabe: Thank you, Chris. A few highlights from our fiscal fourth quarter. Revenues were $26 million, up 60% from $16.3 million last quarter, and up 67% from $15.6 million in the same fiscal quarter last year. The increase was primarily driven by $11.6 million of revenue from our new advertising technology and media services revenue streams from our fourth quarter acquisitions of IndiCue and Giant during their first partial quarter. Net income attributable to stockholders for the quarter was $1.1 million, a $2.1 million improvement over the net loss of $1.1 million last quarter, aided by $2.9 million of income tax benefits primarily from the IndiCue acquisition and a $4.3 million bargain purchase gain on the Giant Worldwide acquisition.

Adjusted EBITDA for the quarter was $0.1 million, a decrease of $2.3 million from $2.4 million of adjusted EBITDA last quarter. Our direct operating margin for the quarter was 40%, down from last quarter's 69%. This quarter, we had a focus on acquisition integration and ensuring we get this right in order to put us on an optimized path into fiscal year 2027. We anticipate both margin and adjusted EBITDA improvement from quarter one to quarter four of fiscal 2027 as integration and cost savings initiatives are completed. As a combined entity, we are reaffirming our previously announced guidance for fiscal year 2027 of $115 million to $120 million of revenue and $10 million to $20 million of adjusted EBITDA.

From a liquidity standpoint, we ended the quarter with $3.4 million of cash, our $12.5 million revolver still effective, and an ATM facility recently increased to $30 million. While our net working capital as of March 31st is negative $12.2 million, this does include $12.2 million of deferred consideration relating to the IndiCue acquisition, which the company has the right to pay in equity. With that, I'll turn it over to Eric.

Eric Opeka: Thanks, Sean. Let me start with a review of where the industry is at, then turn to our operating results. Three shifts are happening at once. First is consolidation — companies are tired of bolting together separate systems for delivery, encoding, ad serving, and data that were never built to talk to each other. They all want a single pane of glass, one system that runs the entire supply chain and works tightly together. That is, at its core, what our Matchpoint technology and operating platform now is. We built the operating layer for the media supply chain from ingestion through delivery through monetization. There is no commercially available version of this at scale anywhere else in the market.

A company that wants a fully unified technology stack today has two options: spend years building it or come to us, and that's our moat. The second shift is that this same consolidation is opening lanes for smaller focused companies to scale quickly, and we serve both ends of that — large platforms consolidating onto our stack and new challengers using it to evolve from a single app or content library into a full platform. For example, Gorilla Comedy+ launched a subscription service on Matchpoint this quarter. The third shift and the largest is the move to ad-supported streaming.

According to Nielsen, ad-supported viewing reached 74% of all U.S. time in the fourth quarter — the highest level of the year. According to eMarketer, ad-supported streaming now reaches more than 200 million people in the U.S., on its way to roughly two-thirds of the country by next year. Fox's purchase of Roku is the clearest signal yet — a deal built around owning the ad-supported on-demand machine at scale. Scaling an ad-supported business means preparing, delivering, and monetizing far more content than ever before.

This is exactly what Matchpoint and Giant do on the supply side and what IndiCue does on monetization, letting a customer run all of it inside one integrated stack rather than stitching together a dozen vendors and giving up margin and data at every step. Now to our results. We ended the quarter with 1.52 million SVOD subscribers, up 13% year-over-year. More importantly, the engagement underneath that grew far faster. Streaming viewers were up 66% to nearly 130 million, and total minutes streamed rose 58% to 4.4 billion for the quarter.

Our engagement growing four to five times faster than our subscriber base is exactly what we want to see, because it's that reach and first-party data that feed discovery, monetization, and the rest of the business. Our fandom model is compounding channel by channel. Docurama was up 47% year-over-year and has since crossed 100,000 subscribers in its eighth straight month of growth. Midnight Pulp was up 18%, with its Roku subscriber base more than doubling. Our flagship Cineverse channel has grown every single month since we launched, driven first by its debut on Amazon and now by its recent launch on The Roku Channel in May. That free-to-paid funnel is working in real time.

The Dog Whisperer was up 84% year-over-year in its eighth consecutive quarter of growth, and Screambox was up 40%. Midnight Pulp, boosted by its launch on YouTube and Twitch, grew more than tenfold year-over-year on the ad-supported side. On the micro drama investment — during the quarter, we restructured our investment in MicroCo, now rebranded as A Twist, moving from a joint venture into a passive minority stake. This approach lets us keep our attention and capital focused on our core business and recent acquisitions while retaining meaningful upside and avoiding dilution and heavy investment in an early-stage joint venture.

We still retain the ability to invest pari passu with other institutional investors as that business scales, if we choose to do so. We completed approximately $2 million in SG&A cost reductions through the end of the fiscal year and remain on track to realize the vast majority of the remaining $5.5 million of our $7.5 million cost reduction program by the end of the second quarter of fiscal 2027, while also capturing approximately $2.5 million in annualized synergies from integrating Giant into Matchpoint. As these cuts take hold, we believe our studio and streaming operations, inclusive of corporate overhead, are near run rate profitability. Operator, we can open up the line for questions.

Operator: Your first question comes from Dan Kurnos with StoneX.

Dan Kurnos: Since you've completed and closed the acquisitions, any initial learnings or incremental business opportunities? And on the synergy side, can you give us a cadence on how that's going to play out and where you're finding the incremental synergies coming from?

Chris McGurk: Both acquisitions combined are performing better than we thought already, especially now that we're seeing the integration being completed and we're seeing the full monthly results. The flywheel we put down on paper is actually working better than we anticipated. Eric, do you want to add something on additional synergies?

Eric Opeka: What we've assembled here with the various assets combined into a platform is exactly what the market is really looking for right now. Scale is important — you need hundreds of thousands of titles to reap the benefits of AI, not just a few hundred. Partners are looking to scale up and can't do that with manual processes. Our timing was prescient, based on our own experiences as operators in the market. In terms of incremental synergies, we're seeing significant opportunities for optimizing these businesses. Giant has good processes but could benefit greatly from the automated processes we work with. We haven't yet begun to exploit Cineverse's strong international operations at a very good cost basis.

Combined integrated selling is also just starting — we have a very large diverse team now selling a lot of different products, and getting those teams to cross-sell is a pretty substantial synergy that will be scaling up over the course of the year.

Dan Kurnos: How are the conversations with networks and studios going, especially with Giant? And on the IndiCue side, do you benefit from seasonality and political advertising in the back half of the year?

Eric Opeka: On the large enterprise studio side, all of those partners are in scale-up mode or optimization mode. Studios that we know are in scale-up mode want automated, highly visible solutions to scale their business and make more revenue. We're seeing either existing customers scaling up or new studios coming to us because most of the competitors they're dealing with have manual, semi-manual, or partial solutions, or system integrators who don't actually control or own the full stack. That environment has changed pretty dramatically and it's going to be a big part of our growth this year.

Chris McGurk: On seasonality and political — clearly we're going to benefit this year. That could be an upside to our guidance.

Operator: Your next question comes from Brian Kinstlinger with Alliance Global Partners.

Brian Kinstlinger: How are studios reacting to this combination? I know you've had some trouble with Matchpoint penetrating them. What are conversations like regarding converting to Matchpoint now that the combination is complete?

Eric Opeka: When we first started launching enterprise sales on Matchpoint, you need proof points that your product can be trusted at scale. With the addition of Giant, we have a very strong over 20-year studio operating trust with those partners. That's led to us being in major RFPs on a variety of different products and opportunities. Beyond that, we're finding that we're either winning RFPs or looking to win RFPs simply because most of the competition has manual, semi-manual, or partial solutions. They don't actually control or own the full stack. That environment has changed pretty dramatically and is going to be a big part of our growth this year.

Brian Kinstlinger: Streaming viewer numbers and KPIs are all up huge year-over-year, yet revenue without M&A is flat year-over-year. Can you speak to the market dynamics for the legacy business?

Chris McGurk: Last year we had the spillover effect of Terrifier 3 — we were still generating huge revenues in the ancillary markets after the theatrical release in October, which made the comparison tougher.

Eric Opeka: In the ad market, we saw probably the fastest growth in the FAST space in terms of channel and competition. Studios have launched 80-plus channels into the market, on top of adding Netflix and Amazon Prime inventory, and every major streamer. The market is just starting to absorb that volume of impressions. That has caused, I think temporarily, a depression in CPMs and fill rates. We're starting to see that rebound, and we think last year was kind of the low. The migration of ad dollars from television is still accelerating, CTV is still double-digit growth, and us owning an ad tech platform and having experts at monetization positions us well to take advantage of that audience as it changes.

Brian Kinstlinger: Can you speak to the overall seasonality of this new business combination? And what does the EBITDA guidance equate to in terms of free cash flow?

Eric Opeka: On seasonality — even though we've expanded our lines of business, Giant and IndiCue still follow some of the seasonality we had overall as a company. Q3, which is calendar Q4 and fiscal Q3, is still going to be our heaviest quarter in terms of volume and revenue, and IndiCue will mirror that. IndiCue has been able to maintain and manage scale and volume in Q1 better than we would normally see, so it won't be quite the same dip. Giant seasonality also matches the entertainment cycle, with big demand going into calendar Q4, typically pulling about a quarter forward as companies prep to deliver lots of content for that period.

Sean McCabe: Generally, with the EBITDA improvement, I think you would see relief from the cash and liquidity perspective naturally as we work in our cost savings and increase revenue. We also have our recently increased ATM facility as a lifeline if needed. Generally, you would expect from the guidance that we'd have an improving cash flow and liquidity situation.

Operator: Your next question comes from Laura Martin with Needham.

Laura Martin: Three questions — first, your acquisition roadmap, what's missing that would make this value chain more valuable? Second, what KPIs will you track internally and disclose externally that will indicate whether the strategic pivot of doubling your size has been successful? Third, Eric, I'd love your learnings from the microdrama business and why you're stepping back from it.

Chris McGurk: On micro dramas — as we got into it, there's just a huge level of investment happening in that space, with big Asian media companies spending like $1 million a day to market their platforms and channels. Our gut feeling was we should be selling picks and shovels to that business versus getting involved in an arms race and spending at the levels competitors are spending. We can leverage our technology, content library, and ecosystem in a smarter, lower-investment way to drive revenues and participate in the business.

Eric Opeka: On acquisitions — any business that we think could benefit from leveraging our technology to increase margins, increase scale, and provide us greater market share. The encoding and packaging space is pretty ripe — most competitors fit the same profile as Giant, where using technology and combined scale, we could add 20-plus points of margin to those businesses. Also, other technology providers that provide critical automated services but are maybe subscale on their own — things like metadata enrichment, AI enhancement of content. Either things that bring scale or support this flywheel are going to be on track.

On KPIs — for our software business, especially the SaaS advertising business, we're looking at net revenue retention, increase in customer annual spends, and particularly on the media network side, looking at TAC in that business. For our services and media services business, similar SaaS metrics will apply, along with software-like margins out of those services businesses. IndiCue's net revenue retention sits at nearly 98% today, which bodes very well for the continued growth of our recurring SaaS revenue. On micro dramas specifically, since you and I last spoke, there have been about 400 microdrama service launches globally, many of them losing hundreds of millions of dollars a year.

We've been down that road in 2014 and 2015 in the early days of streaming. I'd rather be selling content to 400 microdrama services and providing technology than competing with 400 services.

Operator: This concludes the Q&A session. We will now turn the call back to Chris McGurk for closing remarks.

Chris McGurk: Thank you all for joining us today. Please feel free to reach out to Julie Milstead with any additional questions. We look forward to speaking to you all again on our next quarterly call, where we'll see the full impact of the two acquisitions that we just made. Thank you all very much.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.