Alliance Entertainment (AENT) - 2025 Q3 - Quarterly Results

Financial Performance - Revenue increased by 11% year-over-year to $254 million, driven by strong performance in physical media and collectibles[2] - Adjusted EBITDA surged 259% to $12.2 million, with an adjusted EBITDA margin improvement of 330 basis points to 4.8%[2] - Net income rose to $4.9 million, or $0.10 per diluted share, compared to $0.4 million, or $0.01 per diluted share in the prior-year quarter[14] - Gross margin expanded by 340 basis points to 14.6%, reflecting a gross profit increase of 46% to $37.2 million[14] - Net income for the three months ended September 30, 2025, was $4,880 thousand, a significant increase from $397 thousand in the same period last year, reflecting a year-over-year growth of over 1,100%[25] - Adjusted EBITDA for the three months ended September 30, 2025, was approximately $12,208 thousand, compared to $3,413 thousand in the prior year, indicating an improvement of $8,795 thousand or 257%[26] Sales and Revenue Growth - Physical movie sales grew 59% year-over-year to $84 million, supported by an exclusive distribution agreement with Paramount Pictures[2] - Collectibles revenue advanced 32% to $6.4 million, driven by strong sell-through of exclusive licensed merchandise[2] Cash and Working Capital - The company ended the quarter with $53.2 million in working capital and $3.2 million in cash, reflecting efficient inventory and payable management[8] - Cash and cash equivalents at the end of the period were $3,223 thousand, an increase from $1,236 thousand at the beginning of the period, marking a net increase of $1,987 thousand[25] Liabilities and Inventory - Total current liabilities rose to $189,026 thousand as of September 30, 2025, compared to $172,729 thousand as of June 30, 2025, reflecting an increase of approximately 9.4%[23] - Inventory increased to $121,728 thousand as of September 30, 2025, up from $102,848 thousand as of June 30, 2025, representing a growth of approximately 18.4%[23] - Accounts payable increased to $173,845 thousand as of September 30, 2025, compared to $155,300 thousand as of June 30, 2025, indicating an increase of approximately 12%[23] Interest and Expenses - Interest expense decreased by 17% year-over-year, attributed to a lower average revolver balance and improved rates[8] - Cash paid for interest decreased to $2,313 thousand for the three months ended September 30, 2025, down from $2,975 thousand in the same period last year, a reduction of approximately 22.2%[25] Strategic Focus and Future Outlook - The company is leveraging AI tools to enhance sales enablement and operational efficiency, aiming for further productivity gains[5] - Looking ahead, the company is focused on sustaining profitability and cash generation while scaling AI adoption for long-term growth[11] Assets and Retained Earnings - Total assets increased to $382,991 thousand as of September 30, 2025, up from $361,228 thousand as of June 30, 2025, representing a growth of approximately 6.1%[23] - Retained earnings increased to $59,603 thousand as of September 30, 2025, up from $54,723 thousand as of June 30, 2025, reflecting a growth of approximately 8.5%[23] Fair Value Changes - The company reported a change in fair value of warrants amounting to $1,462 thousand for the three months ended September 30, 2025, compared to $41 thousand in the prior year[27]