Cineverse — Q2 FY 2027 Earnings Summary

Financial Performance:

• Total quarterly revenue reached $26.0 million, a 110% increase ($13.6 million) year-over-year compared to $12.4 million in Q2 FY 2026.
• Year-to-date revenue was $56.6 million, a 141% increase compared to $23.5 million in the prior year period.
• Net income was $3.2 million ($0.11 per diluted share), an $8.8 million improvement over a $5.7 million net loss ($0.31 per share) in the prior year quarter.
• Adjusted EBITDA was $1.7 million, a $5.4 million increase year-over-year, marking the third consecutive quarter of positive and growing EBITDA.
• Cash flow from operations increased $17.8 million year-over-year, despite a $4 million increase in content advances.
• Direct operating margin decreased to 38% from 58% in the prior year quarter due to acquisitions, but improved by 300 basis points sequentially from 35% in the prior quarter.
• SG&A expenses were $10.1 million, a $1.3 million decrease year-over-year, driven by $1.6 million lower marketing costs and $0.1 million lower compensation expenses.
• Year-to-date direct operating margins were 36%.
• Cash and cash equivalents were $3.6 million as of September 30, 2026.
• Reported net working capital was negative $9.7 million; the company has the right to settle $8.0 million of acquisition-related earnout and deferred consideration in equity.
• Content library valuation was indicated at $45 million as of March 31, 2026, significantly above the $6.0 million book value as of September 30, 2026.
• Line of credit facility remains active with $11.5 million drawn as of September 30, 2026.

Guidance and Future Outlook:

• Cineverse reaffirmed Fiscal Year 2027 guidance of $115 to $120 million in revenue and $10 to $20 million in Adjusted EBITDA.
• Technology revenue is expected to represent more than 50% of total revenue for the full year.
• Management anticipates continued margin improvement throughout the year.
• Preliminary estimates indicate approximately $15 million in revenue for October, the biggest revenue month since the release of Terrifier 3.
• The company expects to exit the fiscal year at the full run rate of its $14 million annualized cost reduction and synergy program.

Business Segments and Product Lines:

• Technology and Media Services revenue streams now account for 55% of quarterly revenue, up from less than 5% in the prior year quarter.
• Year-to-date Advertising Technology and Media Services revenue totaled $33.7 million, representing 60% of the consolidated total.
• Giant Worldwide integration is complete, generating $3.1 million in Media Services revenue in its second full quarter, with a record monthly total of $1.8 million in September.
• The Matchpoint platform now consolidates the product portfolio, integrating key standalone products as features to reduce engineering, sales, and marketing expenses.
• VAUDIO advertising platform was launched to extend audio campaigns to connected TV.
• New FAST channels launched include the German Soccer Network (partnered with DFB) and The Ed Bassmaster Channel (partnered with Witz Comedy Network).
• SVOD subscribers ended the quarter at 1.44 million, up 2% year-over-year, with the Cineverse channel and RetroCrush at all-time highs.
• Cineverse channel subscribers grew 62% year-over-year, and Roku SVOD subscribers across all channels grew 62%.
• Total minutes streamed rose 8% year-over-year to 4.05 billion; FAST minutes rose 7% to 3.84 billion. Excluding wound-down channels, total minutes grew 36% and FAST minutes grew 37%.
• Cineverse Motion Pictures Group grew EST revenue 18.8% and VOD revenue 16.7% year-over-year.
• New content partnerships include licensing Hundreds of Beavers to Dropout and securing North American distribution rights for the 13th Jason film.

Market and Competitive Landscape:

• The company benefits from a fragmented distribution environment where Matchpoint helps studios operate at scale.
• Ad-Tech revenue achieved its best month since the IndiCue acquisition due to the political season in October 2026.
• Cineverse positions itself as an independent entertainment technology company and studio with a unique low-risk, high-potential return investment approach for theatrical releases.
• The company is expanding into live sports and comedy via new FAST channels on LG Channels and VIZIO WatchFree+.

Risks and Challenges:

• Direct operating margin decreased year-over-year due to the integration of acquisitions IndiCue and Giant Worldwide.
• Net working capital is negative $9.7 million, though mitigated by the ability to settle $8.0 million of acquisition-related liabilities in equity.
• Interest expense increased by $0.6 million due to term loan utilization and increased line of credit usage.
• Year-to-date SG&A expenses exceeded the prior year by $1.4 million due to stock-based compensation and integration-related consulting fees, though these were largely offset by cost streamlining.

Management Commentary and Tone:

• CEO Chris McGurk described the quarter as "very strong both operationally and financially," highlighting the significant positive impact of the IndiCue and Giant Worldwide acquisitions.
• Management noted that results were achieved in one of the "slowest seasonal quarters," with momentum continuing into October.
• CFO Erick Opeka emphasized strong operating leverage, noting that Adjusted EBITDA more than tripled despite a $4.6 million seasonal revenue decline from the first quarter.
• Management expressed confidence in the competitive positioning in the evolving entertainment and media ecosystem.
• The company intends to fully fund the new Jason franchise release internally with no third-party capital.

Other Key Points:

• Cineverse has implemented $9 million of annualized cost reductions and synergies to date, achieving 90% of its previously announced $10 million efficiency program, with an additional $4 million in savings opportunities identified.
• The company completed the migration of the first Giant Worldwide customer workflow onto the Matchpoint platform, reducing processing time by roughly 40%.
• Dr. Samrat Ganguly, former Apple global infrastructure leader and founder of the Matchpoint platform, was nominated for election to the Board of Directors.
• Cineverse secured long-term North American distribution rights to the 13th Jason film from Horror, Inc. and announced a development partnership with creator Trevor Henderson to adapt Mayfair Watchers Society.
• The company recorded the largest pre-orders in its history for the 20th Anniversary release of Pan's Labyrinth in 4K.
• A sponsorship was announced with PEDIGREE and Air Bud Entertainment for a multi-city summer movie series featuring Air Bud Returns.
• The company's content library is independently valued at $45 million, more than seven times its current book value.