Good day everyone and thank you for joining us. And welcome to the Cineverse Corp. Second Quarter Fiscal Year 2026 Financial Results Conference Call. My name is Luca and I will be your moderator today. After today's prepared remarks, we will host a question and answer session. And star six to unmute. I would now like to turn the call over to Gary S. Loffredo, Chief Legal Officer, Secretary, and Senior Advisor for Cineverse Corp. Please go ahead. Good afternoon, everyone.

Thank you for joining us for the Cineverse Corp. Fiscal Year 2026 Second Quarter Financial Results Conference Call. The press release announcing Cineverse Corp.'s results for the fiscal second quarter ended September 30, 2025, is available at the Investors section of the company's website at cineverse.com. A replay of this broadcast will also be made available at the Cineverse Corp. website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions. The company's periodic reports that are filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements. All of the information discussed on this call is as of today, November 14, 2025. And Cineverse Corp. does not assume any obligation to update any of these forward-looking statements except as required by law. In addition, certain financial information presented in this call represents non-GAAP financial measures. And we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. I am Gary S. Loffredo, Chief Legal Officer, Secretary, and Senior Advisor at Cineverse Corp. With me today are Christopher J. McGurk, Chairman and CEO; Erick Opeka, President and Chief Strategy Officer; Mark Wayne Lindsey, Chief Financial Officer; Yolanda Macias, Chief Motion Pictures Officer; and Mark Antonio Huidor, Chief People Officer. All of whom will be available for questions following the prepared remarks. On today's call, Christopher J. McGurk will briefly discuss our fiscal year 2026 second quarter business highlights. Then Mark Wayne Lindsey will follow with a review of our financial results. And Erick Opeka will provide further details on our business and operating results and new initiatives. I will now turn the call over to Christopher J. McGurk to begin.

Thank you, Gary, and thanks, everyone, for joining us here today. I'd now like to cover some important business highlights. And then Mark Wayne Lindsey will review our financial performance, then Erick Opeka will cover our operating progress, and new business initiatives in much more detail. We had a slightly down revenue quarter with strong margin improvement. Total revenues were $12.7 million, down 3% from the prior year quarter. During the quarter, we closed a $1.1 million licensing deal for the Toxic Avenger that will be recognized in future periods. With this license fee revenue, the revenues for the quarter would have been $13.4 million, up 5% from the prior year quarter. Operating margins grew by 7% from the prior year quarter to 58%. Net income and adjusted EBITDA in the quarter were impacted by the investments we have been making to build our technology sales force, grow our Matchpoint deal pipeline, and fill and market our theatrical release portfolio. We expect those investments to generate returns over the balance of the year and beyond. At the same time, we continue our intense focus to control costs and leverage the savings and efficiencies of Cineverse Services India to manage SG&A spending. The Toxic Avenger unrated released on August 29 did not perform as well as we hoped at the box office. However, our marketing campaign is helping the film perform very well in the ancillary distribution markets, particularly VOD, physical, and licensing with Amazon and Hulu. And the film will be profitable, with an expected IRR of 40%. We own the domestic distribution rights to this film in all media in perpetuity. And so we believe it will be a strong and valuable addition to our over 66,000 title film library. Now, the performance of The Toxic Avenger unrated is…

As Chris noted, we closed on a $1.1 million licensing deal for the Toxic Avenger unrated that will be recognized in future periods in accordance with current accounting rules. In the prior year quarter, the company recorded $1.6 million from a similar Dog Whisperer license agreement. Excluding these timing effects, performance across the company's core business line continued to show solid underlying growth. For the quarter, we had a slight decrease in revenue, but strong gross margin growth with $12.7 million in revenue, $8.4 million or 3% decline over the prior year quarter, and a gross margin of 58% compared to 51% last year quarter. Materially above our guidance of 45% to 50%. For the quarter, we reported a net loss of $5.5 million and adjusted EBITDA of negative $3.7 million compared to a net loss of $1.2 million adjusted EBITDA of $500,000 in the prior year quarter. The decline in both numbers is primarily the result of SG&A expenses impacted by increased investments in sales, marketing, and technology to support our expanding theatrical and technology initiatives as well as startup costs associated with our newly formed MicroCo venture. We fully expect to see strong top and bottom line results in the remainder of our fiscal year as a result of these upfront investments and in fiscal year 2027 with the launch of MicroCo. We had $2.3 million in cash and cash equivalents on our balance sheet as of September 30, with $5.9 million available on our $12.5 million working capital facility. The decline in cash from year end is directly attributable to the payment of royalties during the quarter, majority of which was related to the Terrifier three two related to Terrifier three and advanced payments associated with our increased theatrical slate. We would also like to highlight the positioning of our current balance sheet with no long-term debt, no acquisition-related liabilities, outstanding warrants have been reduced to 700,000 shares, and $5.9 million available on our capital facility as of quarter end. In addition, our content library evaluation has been finalized reflecting an increase in the value of our library to $45 million compared to the current book value of $3.2 million as of quarter end reflecting material asset value not included on our balance sheet. Finally, coming off of fiscal year with record revenues and strong revenue and gross margin growth, this quarter, we believe the SG&A investment that we have made during the first two quarters of the year will lead to strong top and bottom line results for the remainder of the year. With that, I will turn the floor over to Erick Opeka to discuss our operating and strategic growth initiatives. Erick? Thanks, Mark.

This was a strong quarter across streaming, distribution, technology, and our emerging businesses. Starting with streaming, total streaming viewers in the quarter reached 143.8 million, up 47% from last year. Total minutes streamed were 3.4 billion, up 45%. Fast minute stream were 3.2 billion of that, up 47%. And SVOD subscribers grew to 1.39 million, a 6% increase year over year. Several of our key channels delivered their best ever quarters in viewer growth. Our Barney channel more than doubled year over year. Dog Whisperer grew nearly 1000%. Screenbox TV increased 32% ScreenBox SVOD is up 27% since the launch of TerrorFire three. With Toxic Avenger unrated, we expect to see the majority of the impact in Q3, the current quarter. Secured a co-exclusive licensing deal with both Amazon and Hulu for the film. And as Chris noted, combined with the surge of direct-to-consumer subscribers on Screenbox, that we anticipate expect a healthy IRR that exceeds our baseline expectations of around 40%. We achieved this while minimizing downside risk through our theatrical model, and we plan to follow the same approach for our upcoming slate of horror, thriller, and independent films. Our Cineverse branded channel has now grown more than 6400% since its relaunch in January, in viewership. This reflects the strength of our fandom strategy and our ability to convert efficiently into long-term users. On distribution, our hybrid model continues to deliver. We are capturing strong licensing revenue while still preserving key windows on our own streaming platforms. That balance allows us to monetize content today while growing long-term recurring engagement and it continues to be a competitive advantage for our company. Turning to advertising. Environment this quarter was mixed. Bill rates in CPM were pressured as the market continues to adjust to large amounts of new inventory that…

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, the first question comes from the line of Daniel Louis Kurnos with Benchmark. Your line is open. Please go ahead.

Yes. Thanks. Afternoon. One for one for Erick. Just Chris, you know, Toxy, not as good in the box, but great in the ancillaries. Obviously, the licensing deal, it is nice to see some of the pay window stuff. Does this influence either your expectations for your upcoming slate based on what happens? Just kind of more of an adjacent category to the traditional, horror And, also, just does it change how you view which films you go after? Obviously, you have your blueprint, but you kind of are it is going to take a little while to sort of settle in to see you know, what fits and and what kind of produces what kind of results. And then for Erick, just on Matchpoint, appreciate the incremental color. Just, you know, want to get a sense on timing of monetization. I know that while you said longer sales cycles, we got a new studio there. Sounds like you guys are looking to also accelerate the growth but it it seems like it is moving along nicely. So just any color you can give us on you know, contribution and sort of where you expect to be, say, like, you know, twelve to twenty-four months from now with Matchpoint would be super helpful. Thank you. So, Dan, this is Chris. Thank you. I will take that first question.

Well, I think as I said in my remarks, we really believe that Toxic Avenger validated our theatrical releasing strategy as as much as Terrifier two and three did. Because it showed the downside protection, the strength of our ability to market movies in the the ancillaries, as well as theatrical and the utilization of our marketing ecosystem. I will repeat again. I do not think anybody in this business that had released a movie other than us would have got anywhere near 40% IRR. On on that picture. But it is it is outperforming in the ancillaries. I do think one piece of key learning that we we got out of this is all of the other films in our release straight slight are straight down the middle genre pictures, horror pictures, family picture, fantasy now from Guillermo del Toro. This movie, Toxic Avenger, which we know, we picked up the rights forever. For a virtual virtually nothing. Was kind of a mixed genre movie. What was it, a superhero movie, a horror movie, You know, comic book movie? You know, a comedy was a little bit of all those things. And I think if there is one piece of key learning, that we take away from the release is movies like that are difficult to make work theatrically. So we are going to kind of avoid anything that is max of being a mixed genre movie in the future. Erick?

Yeah. Thanks, Dan. So, first up on basically, we think about Matchpoint, one of the one of the first thing I will I will unpack the the the revenue cycle concept. So and I will and I will also, Tony is also on the call, and he I think he can provide some additional color. But I will first, I will give you so the the big the big picture. As I noted in the call, we are we are seeing a pretty rapid and overwhelmingly positive response to the product as we we take it out broadly to studios, broadcasters, and so on. All of them are seeing incredible margin pressure and, you know, really need to entertain cost cuts and efforts to sort of maintain their margins as, you know, some of those business are level setting, others are maturing, and others are entering a new phase of consolidation technology sort of centricity. So as we see that happen, all of them are expressing significant interest in using tech to to accomplish that. There really are not really you know, there is always been the promise of a unified solution in the market, but none none really exist that do what Matchpoint does. And so we are seeing incredible response think the biggest challenge is obviously number one, as these large companies are are highly bureaucratic and the cycle time from, you know, first conversation to you know, steady state operation you know, in its best incarnation, six months, up to nine months in its longest incarnation. You know, I and and I think I will I will I will let Tony really kind of talk about it more specifically with you know, the studio that we are working with. But other prospects on that front I would…

Yeah. Sure. Thank you, Erick. Yeah. Absolutely. As as reported, a quarter or two ago, we went into the pilot with a major studio. And as you would imagine, given the uncertainty within the Hollywood studio system, which consolidation, several studios being acquired or potentially being acquired It has created a sort of a ecosystem or this inertia within the industry where everyone is a little afraid of moving, not knowing where things are going. But in spite of that, as Erick pointed out, they are all under pressure to reduce costs, grow revenue, into new territories, and launch their services more widely. All of them rely on traditional legacy vendors who do this manually. So time to market is an important factor for them. And that is as we have discussed many times before, that is what Matchpoint excels at. So with the major studio that we just recently onboarded, it took us months just get into the financial systems. We are we are through that. We are in the process of finishing our first order. This was essentially a validation that we can actually do what we said we can do. That is going well. The feedback that we have gotten from the studio is if if this goes as well as they are seeing, they are they are completely interested in expanding the relationship taking away from some of the competing vendors that we are competing against. So what we see is the strength in the automation, the cost savings, the time to market, all the efficiencies that Matchpoint brings to us is a tremendous interest to the studios. At the same time, one of the challenges is what we do is so different that the the the sack and studio that is evaluating what we do,…

There are no further questions remaining, so I will pass the conference back over to Cineverse Corp.'s Chairman and CEO, Christopher J. McGurk. For closing remarks.

You all for joining us today and please feel free, if you wish, to reach out to Julie Milstead. With any additional questions you might have. We look forward to speaking to you all again on our next quarterly call.

That concludes today's conference call.

Thank you very much.

Thank you for your participation. You may now disconnect your line.