Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WildBrain Ltd (WLDBF) reported a 5% increase in consolidated revenue for Q1 2025, reaching $111 million.

• Global licensing revenue grew by 27%, driven by strong performance in Peanuts, WildBrain CPLG, and brands like Strawberry Shortcake and Teletubbies.

• The company saw significant growth in its AVOD business, with YouTube experiencing double-digit revenue growth.

• WildBrain Ltd (WLDBF) successfully refinanced its debt, extending maturity to 2029, which improves its financial stability.

• The company is well-positioned to capitalize on the growing FAST channel opportunity, with a strong presence in the kids' content market.

Negative Points

• Content creation and audience engagement revenue decreased by 14% due to fewer productions and timing impacts in live-action production.

• Gross margins declined to 47% from 49% year-over-year, affected by higher content amortization and third-party participation expenses.

• SG&A expenses increased by 11% year-over-year, partly due to higher variable compensation costs.

• Adjusted EBITDA fell by 19%, indicating challenges in maintaining profitability amidst rising costs.

• The company faces headwinds in its content production and distribution business, with a slow recovery expected in the industry.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with WLDBF.

Q: Can you provide insights on the mix between content creation, audience engagement, and global licensing for the year, considering the sluggish industry and your Q1 results? A: Unidentified_4 (CFO): We expect to be more back-half weighted this year compared to last year. The licensing business performed well in Q1, and we expect this to continue, compensating for the softness in the content industry. Unidentified_3 (CEO) added that the content slate is filling out, and they anticipate growth in content this year and further into 2026, despite the longer ramp-up times typical in animation.

Q: What groundwork is needed to tap into the fast opportunity, given its rapid growth in the streaming market? A: Unidentified_3 (CEO): We focused on fast early, dedicating resources since 2019, which has positioned us well. The next phase involves improving monetization, particularly in kids' content, which has unique advertising challenges. We're enhancing our direct ad sales business and building expertise in connected TV to better monetize our inventory.

Q: How sustainable is the growth in the Peanuts brand, and what about other brands like Teletubbies and Strawberry Shortcake? A: Unidentified_3 (CEO): We feel good about Peanuts' growth prospects, especially with the 75th anniversary and a feature film for Apple TV Plus. For Teletubbies and Strawberry Shortcake, we're seeing significant revenue growth from a small base, providing a long runway for attractive returns.