CNVS Cineverse Corporation

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 14, 2024

 

 

Cineverse Corp.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-31810	22-3720962
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
224 W. 35th St. Suite 500, #947
New York, New York				10001
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 212 206-8600

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE		CNVS		The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On November 14, 2024, Cineverse Corp. (the “Company”) issued a press release announcing its financial results for the three and six months ended September 30, 2024.

A copy of such press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

The information in this Item 2.02 of Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

99.1		Press Release dated November 14, 2024 announcing Cineverse's financial results for the three and six months ended September 30, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	November 14, 2024	By:	/s/ Gary S. Loffredo
		Name: Title:	Gary S. Loffredo Chief Legal Officer, Secretary and Senior Advisor

 

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Exhibit 99.1

Cineverse Reports Second Quarter Fiscal Year 2025 Results

(No Financial Impact from Terrifier 3 in Quarter)

Total Revenue of $12.7 Million, 20% Increase Excluding Digital Cinema Business

Total Direct Operating Margin of 51%

 

LOS ANGELES, November 14, 2024 – Cineverse Corp. (“Cineverse” or the “Company”) (NASDAQ: CNVS), a global streaming technology and entertainment company, today announced its financial results for its fiscal first quarter ended September 30, 2024 (“Q2 FY 2025”).

 

The Company's financial results for Q2 FY 2025 reflected significant improvement in recurring revenue, direct operating margin, SG&A expenses and net loss when compared to the prior quarter and the prior year quarter when excluding non-recurring, non-cash revenue related to our legacy digital cinema equipment business ("Digital Cinema"). These improved financial results did not include any impact from Terrifier 3, which was released in our fiscal 3rd quarter and therefore will begin to be reflected in our next quarterly report.

 

After debuting in North American theaters on October 11 and displacing Joker: Folie a Deux at the top of the box office charts, Cineverse’s low budget horror phenomenon Terrifier 3 has rolled on to become the highest-grossing non-rated film ever (topping previous record-holder Renaissance: A Film by Beyoncé), having amassed more than $54 million domestically to date. In addition to a continued theatrical run, which may include a special Christmas re-issue, Terrifier 3 will also soon enter the Digital Sales, BluRay/DVD and the Streaming/Pay distribution channels, including our Screambox channel, and is expected to have a major positive financial impact on our fiscal 3rd quarter and beyond. Revenues from the theatrical release alone are expected to exceed $20 million in the 3rd quarter. We plan on detailing all of the positive impacts on both our income statement and balance sheet from the Terrifier franchise on our next quarterly earnings report.

 

Q2 FY 2025 Highlights (all comparisons are to the prior year fiscal quarter ended September 30, 2023, or Q2 FY 2024):

 

 

Total revenue was $12.7 million versus $13.0 million in the prior year quarter, which included $2.4 million of non-recurring, non-cash revenue related to Digital Cinema. Excluding the prior year quarter Digital Cinema revenues, our total revenue for the quarter increased $2.2 million, or 20%. In addition, compared to the last quarter ended June 30, 2024, our revenues increased by $3.6 million, or 40%.

 

Driven by the increase in recurring revenue from the prior year quarter, the Company's direct operating expenses increased by $1.6 million, for a direct operating margin of 51%, which exceeds our previously

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stated margin target of 45% to 50%. Excluding the impact of Digital Cinema revenue in the prior year quarter, our direct operating margin improved from 44% to 51%.

 

SG&A expenses decreased $0.5 million, or 7%, primarily due to the Company's continued focus on cost savings initiatives in addition to savings realized from its offshoring program to Cineverse Services India.

 

Net loss attributable to common stockholders was $1.4 million, or $(0.09) per share, compared to a net loss of $0.4 million, or $(0.04) per share, in the prior year quarter primarily due to last year’s recognition of significant legacy Digital Cinema business revenues.

 

Adjusted EBITDA decreased by $1.8 million to $0.5 million primarily driven by $2.4 million of non-recurring, non-cash revenue in the prior year quarter related to Digital Cinema.

 

Financial condition overview:

Operational Developments During the Quarter

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Operational Developments Subsequent to Quarter-End

Management Commentary

 

Chris McGurk, Cineverse Chairman and CEO, stated: “We had a very solid quarter of growth and financial improvement, even without recording any of the financial results from our box office hit, the horror phenomenon Terrifier 3. We grew total revenues by 20% excluding the legacy Digital Cinema business, we generated a total operating margin of 51%, again exceeding our stated margin goals, we continued to significantly reduce SG&A costs and we generated positive Adjusted EBITDA of $0.5 million. Our content licensing, advertising, technology and streaming businesses all contributed to these positive results, which bodes very well for continued future success”

“Released into theaters on October 11, Terrifier 3 took the entire film world by surprise, supplanting Joker: Folie a Deaux at the top of the domestic box office charts with an almost $19 million first weekend opening despite micro spending levels from a production and marketing standpoint versus industry norms. The film continues to shock and awe the film world, rolling on to more than $54 million at the domestic box office to date, with Digital, DVD/BluRay and Streaming/Pay releases upcoming shortly. Terrifier 3 will have a major impact on both our income statement and balance sheet beginning in our next reported fiscal quarter and beyond. For instance, we expect to record at least $20 million in just theatrical rental revenues alone in the next reported quarter and record significant additional revenue and high margin profit streams from the domestic ancillary markets as well. We expect the profits and cash flow generated from Terrifier 3 will be a major factor in realizing our goal of a sustainable, self-funding balance sheet for our ongoing operations and as such, we currently see no need to raise any outside equity capital to fund our operations for the foreseeable future.”

"Beyond the significant financial upside, the tremendous success of Terrifier 3 has established a potential new blueprint in the industry for the theatrical release of independent films with a much more risk-advantaged economic profile than ever before. We believe this can become a major upside for the independent film business and independent filmmakers going forward. Essentially, Cineverse used the entertainment and technology assets we built over the years, our MatchpointTM technology, our targeted fan-centric streaming channel portfolio with more than 80 million monthly viewers, our social media footprint including online leader Bloody Disgusting and our top 10 podcast network to open a movie to #1 at the domestic box office amidst an array of wide-release, mega-spending major studio movies, for well below $1 million in out-of-pocket marketing costs. At the same time, we estimate that we generated well over $5

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million in media value through the Cineverse ecosystem. That is a previously unheard-of feat in the entertainment business, and we intend to both release more of our own films using this model as well as other studio’s releases that can potentially take advantage of our unique array of assets to market and distribute their films, creating a new profit line for the Company. Our recent announcement that we are going to distribute on a worldwide basis the remake of the controversial horror classic Silent Night Deadly Night is the first step in that regard.”

 

Erick Opeka, President and CSO of Cineverse, stated, “This quarter marks a transformative period for Cineverse as we expand our capabilities across podcasting, technology, and streaming. With our podcast network now ranking among the Top 10 by audience, driving 98% revenue growth, we’re positioned to deliver substantial value to our audiences and advertisers. Recent technological advances, including our cineSearch AI product and initial MatchpointTM deals closed this quarter, demonstrate our commitment to innovation, with a robust pipeline expected to drive further growth in the coming quarters. Partnerships with leaders like Google further strengthen our position in the tech-driven future of entertainment.

“Our proprietary C360 platform, which now processes over 20 billion ad requests per month and achieved record results in October, enables us to reach and engage passionate fan communities at a fraction of Hollywood’s typical marketing spend. This highly efficient approach delivers significantly greater returns for both talent and Cineverse, as seen with the success of Terrifier 3. We are eager to expand on this approach as we build out our film releasing slate for the next fiscal year and beyond.

“We are also advancing exciting opportunities in AI, leveraging our extensive content library and MatchpointTM technology. Currently, we’re in discussions with multiple parties to license parts of our library for AI training purposes and are finalizing partnerships to represent and process AI training rights and data for a wide array of global rights holders. This initiative could dramatically expand our existing library of over 66,000 titles, positioning us at the forefront of training data licensing.

“In our streaming business, our channel portfolio has driven exceptional engagement and financial performance, contributing to a 73% year-over-year increase in viewership. Notably, The Dog Whisperer with Cesar Millan channel generated more than $1.6 million in licensing revenue alone, quickly becoming one of our top revenue-generating channels in the portfolio, and we anticipate continued growth in this channel as we further expand its distribution.

By tapping into our engaged audiences, smart streaming tech, and targeted advertising, Cineverse has built a real competitive edge as a next-generation studio. This approach lets us connect releases directly with fan communities, reach audiences efficiently, and keep costs down—all while growing and driving profits. We’re setting a new standard for how a modern studio can thrive.

 

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Conference Call

Cineverse will host a conference call at 4:30 p.m. ET (Thursday, November 14, 2024), during which management will discuss the results of the fiscal second quarter ended September 30, 2024. To participate in the conference call, please use the following dial-in numbers:

United States (Local): +1 404 975 4839

United States (Toll-Free): +1 833 470 1428

Canada (Toll-Free): +1 833 950 0062

Access Code: 364307

 

The conference call can also be accessed by webcast at the Investors section of the Company's website at https://investor.cineverse.com/events-and-presentations. Those who are unable to attend the live conference call may access the recording at the above webcast link, which will be made available shortly after the conclusion of the call.

 

About Cineverse

On a mission to uplift storytellers and entertain fans with the power of technology, Cineverse (NASDAQ: CNVS) distributes over 71,000 premium films, series, and podcasts. Engaging over 150 million unique monthly users, Cineverse delivers more than one billion minutes of curated content each month – connecting fans with stories that resonate.

With properties like the box office sensation, Terrifier 3, iconic horror destination, Bloody Disgusting, the Bob Ross Channel, women’s entertainment channel Dove, and a leading podcast network, Cineverse is the first stop for audiences seeking authentic and experiential content. From a vibrant lineup of titles and fandom channels, to next-gen advertising offerings and streaming solutions, Cineverse is setting the stage for a new era of entertainment.

 

Safe Harbor Statement

Investors and readers are cautioned that certain statements contained in this document, as well as some statements in periodic press releases and some oral statements of Cineverse officials during presentations about Cineverse, along with Cineverse's filings with the Securities and Exchange Commission, including Cineverse's registration statements, quarterly reports on Form 10-Q and annual report on Form 10-K, are "forward-looking'' statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act''). Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "expects," "anticipates,'' "intends,'' "plans,'' "could," "might," "believes,'' "seeks," "estimates'' or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings, or growth rates), ongoing business strategies or prospects, and possible future actions, which may be provided by Cineverse's management, are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to various risks, uncertainties, and assumptions about Cineverse, its technology, economic and market factors, and the industries in which Cineverse does business, among other things. These statements are not guarantees of future performance, and Cineverse undertakes no specific obligation or intention to update these statements after the date of this release.

 

For additional information, please contact:

 

Julie Milstead

424-281-5411

investorrelations@cineverse.com

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CINEVERSE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
		As of
		September 30, 2024				March 31, 2024
		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	2,429			$	5,167
Accounts receivable, net			14,814				15,106
Employee retention tax credit			79				1,671
Content advances			10,788				9,345
Other current assets			2,069				1,432
Total Current Assets			30,179				32,721
Property and equipment, net			2,932				2,276
Intangible assets, net			17,937				18,328
Goodwill			6,799				6,799
Content advances, net of current portion			1,472				2,551
Other long-term assets			1,281				1,703
Total Assets		$	60,600			$	64,378
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses		$	19,928			$	20,817
Line of credit, including unamortized debt issuance costs of $180 and $81, respectively			4,637				6,301
Current portion of earnout and deferred consideration on purchase of business			3,040				3,294
Term loan, including unamortized debt issuance costs of $87 and $0, respectively			3,147				—
Operating lease liabilities			273				401
Current portion of deferred revenue			352				436
Total Current Liabilities			31,377				31,249
Deferred consideration on purchase, net of current portion			—				457
Operating lease liabilities, net of current portion			371				462
Other long-term liabilities			61				59
Total Liabilities		$	31,809			$	32,228
Stockholders’ Equity
Preferred stock		$	3,559			$	3,559
Common Stock			194				194
Additional paid-in capital			547,234				545,996
Treasury stock, at cost			(12,193	)			(11,978	)
Accumulated deficit			(508,691	)			(504,153	)
Accumulated other comprehensive loss			(297	)			(345	)
Total stockholders’ equity of Cineverse Corp.			29,806				33,273
Deficit attributable to noncontrolling interest			(1,015	)			(1,122	)
Total equity			28,791				32,151
Total Liabilities and Equity		$	60,600			$	64,378

 

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CINEVERSE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data)
(Unaudited)
		Three Months Ended September 30,								Six Months Ended September 30,
		2024				2023				2024				2023
Revenues		$	12,739			$	13,012			$	21,866			$	25,992
Operating expenses
Direct operating			6,262				4,646				10,741				11,633
Selling, general and administrative			6,364				6,827				12,927				14,715
Depreciation and amortization			974				953				1,837				1,775
Total operating expenses			13,600				12,426				25,505				28,123
Operating (loss) income			(861	)			586				(3,639	)			(2,131	)
Interest expense			(337	)			(195	)			(768	)			(490	)
Gain (loss) from investment in Metaverse, a related party			1				(718	)			4				(718	)
Other income (expense), net			—				26				163				(478	)
Net loss before income taxes			(1,197	)			(301	)			(4,240	)			(3,817	)
Income tax expense			(6	)			(16	)			(13	)			(36	)
Net loss			(1,203	)			(317	)			(4,253	)			(3,853	)
Net income attributable to noncontrolling interest			(84	)			(40	)			(106	)			(53	)
Net loss attributable to controlling interests			(1,287	)			(357	)			(4,359	)			(3,906	)
Preferred stock dividends			(89	)			(88	)			(177	)			(176	)
Net loss attributable to common stockholders		$	(1,376	)		$	(445	)		$	(4,536	)		$	(4,082	)
Net loss per share attributable to common stockholders:
Basic		$	(0.09	)		$	(0.04	)		$	(0.29	)		$	(0.37	)
Diluted		$	(0.09	)		$	(0.04	)		$	(0.29	)		$	(0.37	)
Weighted average shares of common stock outstanding:
Basic			15,721				12,376				15,711				11,118
Diluted			15,721				12,376				15,711				11,118

 

Adjusted EBITDA

We define Adjusted EBITDA to be earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, merger and acquisition costs, restructuring, transition and acquisitions expense, net, goodwill impairment and certain other items.

 

Adjusted EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of other companies. We use Adjusted EBITDA as a financial metric to measure the financial performance of the business because management believes it provides additional information with respect to the performance of its fundamental business activities. For this reason, we believe Adjusted EBITDA will also be useful to others, including our stockholders, as a valuable financial metric.

 

We present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net income (loss) from continuing operations as an indicator of operating performance. We also believe that Adjusted EBITDA is a financial measure that is useful both to management and investors when evaluating our performance and comparing our performance with that of our competitors. We also use Adjusted EBITDA for planning purposes and to evaluate our financial performance because Adjusted EBITDA excludes certain incremental expenses or non-cash items, such as stock-based compensation charges, that we believe are not indicative of our ongoing operating performance.

 

We believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net income (loss) from operations and Adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to net income (loss) from operations as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity.

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In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

 

Following is the reconciliation of our consolidated net (loss) income to Adjusted EBITDA (in thousands):

		For the Three Months Ended September 30,								For the Six Months Ended September 30,
		2024				2023				2024				2023
Net Loss		$	(1,203	)		$	(317	)		$	(4,253	)		$	(3,853	)
Add Backs:
Income tax expense			6				16				13				36
Depreciation and amortization			974				953				1,837				1,775
Interest expense			337				195				768				490
Stock-based compensation			503				499				973				909
Loss from equity investment in Metaverse			(1	)			718				(4	)			718
Other (income) expense, net			—				(26	)			(163	)			148
Net income attributable to noncontrolling interest			(84	)			(40	)			(106	)			(53	)
Transition-related costs			—				368				27				835
Adjusted EBITDA		$	532			$	2,366			$	(908	)		$	1,005

 

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v3.24.3

Document And Entity Information	Nov. 14, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 14, 2024
Entity Registrant Name	Cineverse Corp.
Entity Central Index Key	0001173204
Entity Emerging Growth Company	false
Entity File Number	001-31810
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	22-3720962
Entity Address, Address Line One	224 W. 35th St.
Entity Address, Address Line Two	Suite 500, #947
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10001
City Area Code	212
Local Phone Number	206-8600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE
Trading Symbol	CNVS
Security Exchange Name	NASDAQ

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