Release Date: May 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong box office performance with $1.6 billion in revenue, demonstrating robust consumer demand for movies.
- Significant year-over-year revenue growth, with total revenue of $37.4 million, up 7.2% from the previous year.
- Successful introduction and performance of the platinum advertising offering, achieving the best first quarter since its inception in 2019.
- Effective utilization of programmatic advertising, securing 15 advertisers in the first quarter and continuing momentum into the second quarter.
- High engagement from core demographic (Gen Z and millennials), with 76% viewership and strong performance metrics compared to other premium video offerings.
Negative Points
- Impact of industry strikes leading to limited product availability and postponed releases, affecting attendance and revenue.
- Seasonal low in advertising during the first quarter, although mitigated by strong box office recovery.
- Decrease in local and regional advertising revenue by 34% due to reduced movie slate and non-return of certain government and travel category sales.
- Decline in beverage revenue by 41% due to the termination of the Regal ESA and decreased attendance.
- Challenges in the advertising market, although growth was seen in both upfront and scatter markets.
Q & A Highlights
Q: Can you discuss the visibility you're seeing with your advertising partners in terms of booking ads and their confidence in budget allocations for future quarters?
A: Thomas Lesinski - National Cinemedia Inc - Chief Executive Officer, Director
The scatter market is showing good visibility for the upcoming quarters, and the upfront market is just beginning to pick up. We expect a strong upfront market in the next two months, reflecting a positive outlook on cinema, which hasn't been seen since early 2019 due to various disruptions.
Q: Could you elaborate on the philosophy behind your quarterly guidance and how you build up to that guidance considering the dynamic environment?
A: Ronnie Ng - National Cinemedia Inc - Chief Financial Officer
Our guidance currently focuses on quarterly projections due to uncertainties in the movie slate and advertising market. We're waiting for more stability in these areas, which we anticipate by 2025. The guidance incorporates confirmed bookings and estimates for real-time demand expected over the next two months.
Q: How is the mix between national and local advertising changing, and what impact did the beverage contract have on this?
A: Ronnie Ng - National Cinemedia Inc - Chief Financial Officer
The shift towards national advertising is driven by a better performance in the scatter market. Local advertising was affected by lower attendance and the non-return of some contracts. The beverage contract is separate and tied to attendance and contracted CPMs with ESA partners.
Q: What are your plans for expanding beyond cinema advertising?
A: Thomas Lesinski - National Cinemedia Inc - Chief Executive Officer, Director
While we have explored digital out-of-home spaces like convenience stores and college campuses, our current focus remains on optimizing our cinema business. Post-upfront, we may look into diversifying more, but cinema remains our primary focus.
Q: How do you view the potential impact of the political ad environment on your inventory and the resilience of your top advertising categories against potential consumer spending pullbacks?
A: Thomas Lesinski - National Cinemedia Inc - Chief Executive Officer, Director; Ronnie Ng - National Cinemedia Inc - Chief Financial Officer
Political ads typically lead to inventory shortages in local markets, which could benefit us as advertisers look for available media spaces. Our top advertisers are generally resilient, focusing on consumer staples that are less sensitive to economic downturns.
Q: Can you provide more details on your Q2 guidance and the factors influencing it?
A: Ronnie Ng - National Cinemedia Inc - Chief Financial Officer
The Q2 guidance primarily reflects expectations of lower attendance due to a weaker film slate compared to the previous year. If attendance exceeds our expectations, revenue could potentially surpass the guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
