Thunderbird Entertainment Reports Steady Growth Amid Challenges

Thunderbird Entertainment Group ((TSE:TBRD)) has held its Q2 earnings call. Read on for the main highlights of the call.

Thunderbird Entertainment Group’s recent earnings call painted a picture of steady growth and robust industry partnerships, though not without its challenges. The company celebrated consistent revenue increases and positive earnings, attributing much of its success to strong production services. However, a significant drop in licensing and distribution revenue, coupled with a decline in gross margin, presented hurdles for the company.

Revenue Growth

Thunderbird Entertainment Group reported a commendable 6% increase in its Q2 revenue, reaching $47.2 million compared to $44.5 million in the previous year. The year-to-date figures were even more impressive, showing a 19% boost to $92.8 million, underscoring the company’s strong financial performance.

Production Services Growth

The company’s production services saw substantial growth, with revenues climbing to $44.3 million, marking a 42% increase. This surge was fueled by a 16% rise in the Animation division and notable contributions from both Scripted and Unscripted production services.

Positive Earnings

Thunderbird continued its streak of positive earnings, recording a net income of $0.8 million for the fifth consecutive quarter, up from $0.6 million in the same period last year. This consistent profitability reflects the company’s effective management and strategic planning.

Adjusted EBITDA Increase

There was a notable increase in Q2 adjusted EBITDA, which rose to $4.2 million from $3.9 million the previous year. Year-to-date, adjusted EBITDA saw a significant 30% rise to $8.3 million, highlighting the company’s operational efficiency and profitability.

Strong Partnerships

Thunderbird boasts over 250 partnerships with major streaming platforms and broadcasters, including Netflix, Apple, Disney, and NBCUniversal. These alliances are pivotal in maintaining the company’s competitive edge and driving its content distribution.

Content Success

The company’s content success was exemplified by “Sidelined: The QB and Me,” which became the number one movie in Canada and the USA on Tubi, and achieved a notable position on Variety’s Streaming Originals Chart.

Milestone Achievement

“Highway Thru Hell” is poised to celebrate its 200th episode, marking a significant milestone and cementing its status as a long-running series, which speaks to the company’s ability to produce enduring and popular content.

Licensing and Distribution Revenue Decrease

A 79% decrease in licensing and distribution revenue, amounting to a $10.5 million shortfall, was a notable setback, primarily due to the timing of airing several unscripted shows. This decline highlights a challenge in managing revenue streams.

Gross Margin Decline

The gross margin for Q2 fell to 21.3% from 23.2% the previous year. This decline was attributed to increased costs in scripted and unscripted production services, indicating an area that may need strategic adjustments.

Forward-Looking Guidance

Thunderbird Entertainment Group’s outlook remains optimistic, with a reaffirmed target of 20% revenue growth and over 10% growth in adjusted EBITDA for the fiscal year. Despite the challenges in licensing and distribution revenue, the company is confident in its growth strategy, supported by ongoing production service contracts and future series commitments. With a strong balance sheet and no corporate debt, Thunderbird is well-positioned to explore new growth opportunities.

In summary, Thunderbird Entertainment Group’s earnings call reflected a positive trajectory in revenue and earnings, bolstered by strong industry partnerships and successful content offerings. While the company faces challenges in licensing revenue and gross margin, it remains optimistic about future growth, supported by a solid financial position and strategic foresight.