National CineMedia(NCMI) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q3 2024, revenue was $62.4 million, exceeding guidance of$ 56 million to $58 million, while adjusted OIBDA was$ 8.8 million, surpassing guidance of $6 million to$ 8 million [18][35][36] - Total revenue decreased 10% year-over-year, primarily due to a high mix of harder-to-monetize G and PG rated movies in July [37] - National advertising revenue was $46.8 million, down 10% from the previous year, attributed to lower attendance and a decrease in national advertising CPMs [38] Business Line Data and Key Metrics Changes - Local and regional advertising revenue was$ 11.4 million, down from $12.9 million the previous year, driven by lower attendance [40] - Adjusted OIBDA excluding noncash charges was$ 8.8 million, down from $11.3 million in the same period last year [42] - The scatter market revenue increased by 35% compared to the prior year, indicating strong performance despite overall revenue decline [36][19] Market Data and Key Metrics Changes - The box office generated nearly$ 2.7 billion in Q3 2024, showing slight growth compared to the same period last year [6] - Seven films surpassed $100 million at the box office in Q3, the highest number since Q4 2019 [9] - Gen Z and Millennials made up 64% of NCM's viewership in Q3, highlighting cinema's ability to reach desirable demographics [12] Company Strategy and Development Direction - NCM is focusing on expanding its programmatic and self-serve advertising offerings to unlock new demand channels [31][32] - The company is investing in innovative experiential marketing efforts to enhance brand engagement [24][26] - NCM is leveraging its advanced measurement capabilities through NCMx to drive measurable results for clients [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the cinema industry's momentum continuing through the end of 2024 and into 2025, with a strong film slate expected [10][51] - The company anticipates a challenging year-over-year comparison in Q4 due to the success of Taylor Swift's The Eras Tour in October 2023 [50][75] - Management highlighted the importance of attendance recovery and revenue per attendee growth for future performance [72][76] Other Important Information - NCM's total adjusted OIBDA year-to-date is$ 10.7 million compared to $12.9 million the previous year [45] - The company had$ 52.5 million in cash and equivalents at the end of Q3 2024, with total debt remaining unchanged at $10 million [46] - NCM has repurchased 2.5 million shares for$ 12.8 million as part of its $100 million share repurchase program [48] Q&A Session Summary Question: Can you update on your upfront visibility as we head into next year? - Management noted a shift towards advertisers buying closer to scatter, with stable pricing in the upfront market [55][56] Question: Any early success with the new premium format ad package? - Management indicated strong momentum in building the new ad package, expecting significant traction [59][60] Question: Are you able to offer performance guarantees in the scatter market? - Management confirmed that performance guarantees can be offered in both upfront and scatter markets [83] Question: How does the shift to scatter impact gross margins? - Management acknowledged that the scatter market typically has higher CPMs, which could positively impact gross margins [85] Question: Can you participate in live events advertising? - Management confirmed that advertising rights for live events are available, and they are actively pursuing opportunities in this area [88][89]