Alliance Entertainment (US:AENT)2025-11-12 21:02Revenue Growth - For the three months ended September 30, 2025, net revenues increased to $253.974 million, up 11% from $228.990 million in the same period last year [141]. - Physical movie sales surged by 58.7% year-over-year, rising from $52.9 million to $84.0 million, driven by higher unit shipments and a 2.5% increase in average selling price [144]. - Vinyl record sales grew by 7.6%, increasing from $70.5 million to $75.8 million, supported by an 8.3% rise in sales volume despite a slight decline in average selling price [142]. - Consumer products revenue, including collectibles and electronics, rose by 14.4% from $7.3 million to $8.3 million, with collectibles revenue growing by 31.9% [145]. - Gaming product revenue declined by 20.2%, from $57.1 million to $45.6 million, despite a 42% increase in unit volume due to a significant drop in average selling price [146]. Strategic Initiatives - The acquisition of Handmade by Robots for $7.6 million in December 2024 has diversified the product offerings and contributed to revenue growth [130]. - The exclusive distribution agreement with Paramount Pictures enhances Alliance's position in home entertainment distribution, providing access to a vast library of content [128]. - Direct-to-consumer (DTC) solutions accounted for approximately 33% of gross revenue for the three months ended September 30, 2025 [141]. Financial Performance - The merger with Adara Acquisition Corp. resulted in a decrease in net equity of $787,000 compared to Legacy Alliance's consolidated balance sheet [133]. - Macroeconomic uncertainties, including inflation and geopolitical tensions, may negatively impact future business growth and financial performance [135]. - Total cost of revenues increased from $203 million to $217 million (+$13 million, +7%) year-over-year, with gross margins expanding from 11.2% to 14.6% (+3.4 percentage points) due to higher sales and improved margins [147]. - Total operating expenses rose from $23.4 million to $26.6 million (+$3.2 million, +13.7%), with selling, general, and administrative costs increasing from $13.1 million to $15.1 million (+$2.0 million, +15.1%) year-over-year [148][149]. - Interest expense decreased from $2.8 million to $2.3 million (-$0.5 million, -17.3%) due to a reduction in the average revolver balance and a lower effective interest rate [150]. - The company reported a pretax income of $6.7 million for the three months ended September 30, 2025, compared to a loss of $0.8 million for the same period in 2024 [151]. - Non-GAAP Adjusted EBITDA improved to approximately $12.2 million from $3.4 million year-over-year, reflecting an increase of $8.8 million [152]. Cash Flow and Liquidity - As of September 30, 2025, the company had a revolver balance of $58 million, down from $88 million a year earlier, representing a reduction of $30 million (-35%) [156]. - Net cash provided by operating activities was $2.7 million for the three months ended September 30, 2025, compared to cash used of $11.6 million in the prior year [158]. - Cash used in investing activities was $0.3 million for the three months ended September 30, 2025, compared to $0.1 million provided in the prior year [159]. - Net cash provided by financing activities totaled $0.4 million for the three months ended September 30, 2025, compared to $14.8 million in the prior-year period [161]. - The company has sufficient cash to fund its operations for at least twelve months from the issuance of the consolidated financial statements, supported by a new $120 million senior secured revolving credit facility [154].