National CineMedia(NCMI) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - National CineMedia's total revenue for Q2 2025 was $51.8 million, which was below the guidance range of $56 million to $61 million and down 5% compared to the prior year [18][19] - Adjusted OIBDA for the second quarter was $700,000, a significant decrease from $7.6 million in the prior year [22] - Operating income was negative $12 million, compared to negative $9.3 million in the same period last year [21] Business Line Data and Key Metrics Changes - National advertising revenue for Q2 2025 was $41.2 million, slightly down from $41.7 million in Q2 2024, with national ad revenue per attendee dropping to $0.36 from $0.45 year-over-year [19] - Local and regional advertising revenue totaled $6.4 million, down from $9.8 million in the previous year, reflecting cautious advertiser sentiment [19][20] - Programmatic advertiser volume grew by over 50% quarter-over-quarter, with approximately 70% of programmatic advertisers being new to NCM [10] Market Data and Key Metrics Changes - The scatter market represented 40% of NCM's national on-screen revenue in Q2 2025, with inventory utilization up 12% [19] - Attendance increased by 24% year-over-year, reaching over 115 million individuals across the network in Q2 2025 [13] Company Strategy and Development Direction - The company is focusing on scaling programmatic and self-serve offerings to capture growing premium video advertising budgets [8] - NCM is enhancing its sales capabilities by onboarding new talent and engaging high-value advertisers at local and regional levels [10] - The company aims to deepen existing advertiser relationships and strategically expand its client base, leveraging the unique value of cinema as a high-impact advertising channel [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment in Q2 due to advertiser caution in key categories, but expressed optimism for the second half of the year [6][14] - Early indicators for Q3 are encouraging, with booked sales pacing ahead of the same period last year and demand normalizing across key categories [14] - The company expects third-quarter revenue to be between $62 million and $67 million, supported by improved advertiser commitment and sustained theatrical strength [26] Other Important Information - NCM had $40.3 million in cash and equivalents at the end of Q2 2025, with zero outstanding debt [23][24] - The company reinstated a quarterly dividend of $0.03 per share, amounting to $2.8 million, to be paid on August 29, 2025 [25] - Year-to-date total revenue was $86.6 million, down from $92.1 million in the same period last year [22] Q&A Session Summary Question: Insights on Q3 revenue guidance and potential year-end ad budget flushes - Management noted a more relaxed budgeting environment in Q3 compared to Q2, with significant confidence returning among advertisers [30][32] Question: Expectations for strategic investing in sales and marketing - Management indicated that investments in sales and marketing would be more back-half weighted, with ongoing monitoring of operating expenses [34][35] Question: Clarification on Q3 guidance and demand spillover from Q2 - Management confirmed that the Q3 guidance reflects mostly new business rather than a spillover from paused deals in Q2 [39][40] Question: Feedback on programmatic advertising traction - Management reported significant traction in programmatic advertising, with a high percentage of new advertisers engaging with the platform [42][43] Question: Strategies for increasing visibility with media buyers - Management highlighted the establishment of a new business group focused on acquiring new clients and enhancing awareness of their advertising platform [45][46] Question: Impact of CTV on utilization and CPMs - Management acknowledged CTV as a competitive bucket and indicated plans to build a programmatic platform to compete in that space [68]