Cineverse - Earnings Call - Q3 2025

Executive Summary

• Q3 FY2025 delivered record results driven by Terrifier 3: revenue $40.7M (+207% YoY), direct operating margin 48%, net income to common $7.0M, adjusted EBITDA $10.8M.
• Management stated results beat Street consensus: revenue $40.7M vs $36.4M, diluted EPS $0.34 vs $0.31, net income $7.2M vs $5.1M, and adjusted EBITDA $10.8M vs $8.2M.
• Balance sheet strengthened: as of 12/31/24 cash $6.1M and line of credit outstanding $3.8M, with post-quarter cash >$13M and zero debt; working capital surplus $6.8M.
• Catalysts: continued Terrifier 3 ancillary monetization (EST/VOD, physical media, Screambox), slate expansion (Toxic Avenger 8/29/2025, Silent Night Deadly Night, Wolf Creek: Legacy), and accelerating ad-tech/AI monetization (Matchpoint, cineSearch).

What Went Well and What Went Wrong

What Went Well

• Record financial performance: “strongest quarter in the company's history” with $40.7M revenue, $7.2M net income, $10.8M adjusted EBITDA; direct operating margin within 45–50% target.
• Terrifier 3 economics and marketing model: highest-grossing unrated film ever ($54M domestic box office) achieved on ~$500k P&A via owned ecosystem and Bloody Disgusting virality; driving Q3 and expected Q4 upside.
• Platform engagement and diversification: monthly viewership up 47% YoY; podcast and related revenues up 39% YoY; ad platform Cineverse 360 hit record direct-sold revenue month in October.

Management quotes:

• CEO: “We had the strongest results… $40.7 million in revenues… $7.2 million in net income… adjusted EBITDA $10.8 million… completely debt free… approximately $13 million in cash-on-hand”.
• President/CSO: “Our streaming audience surged 47% year-over-year… biggest direct sold ad revenue period to date… rapidly building a slate… technology-powered entertainment company with a decade-long head start”.

What Went Wrong

• SG&A increased $3.0M (+47% YoY) in Q3, largely Terrifier 3 related, with management expecting normalization going forward.
• Programmatic advertising still scaling: podcast monetization relied heavily on programmatic with 50–55% fill rate; bundling to improve CPMs and fill rates but ramp remains in progress.
• Prior quarter softness underscores volatility: Q2 revenue $12.7M with operating loss and adjusted EBITDA $0.5M; Terrifier 3 upside only began in Q3.

Transcript

Operator (participant)

Good day, everyone. Welcome to Cineverse's third quarter fiscal 2025 financial results conference call. My name is Matt, and I'll be your operator today. Currently, all participants are in a listen-only mode. We will have a question-and-answer session following management's prepared remarks, at which time participants can press star followed by the number one to ask a question. If anyone needs operator help, press star zero. Please note that this call is being recorded. I will now turn the call over to you, Mr. Gary Loffredo.

Gary Loffredo (Chief Legal Officer, Secretary, and Senior Advisor)

Thank you, everyone. Welcome to Cineverse's third quarter fiscal 2025 financial results conference call.

Good afternoon, everyone. Thank you for joining us for the Cineverse fiscal year 2025 third quarter financial results conference call. The press release announcing Cineverse's results for the third quarter ended December 31, 2024, is available at the investors' section of the company's website at www.cineverse.com. A replay of this broadcast will also be made available at the Cineverse website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on this 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 the information discussed on this call are, as of today, February 13, 2025.

Cineverse 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 represent 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'm Gary Loffredo, Chief Legal Officer, Secretary, and Senior Advisor at Cineverse. With me today are Chris McGurk, Chairman and CEO; Erick Opeka, President and Chief Strategy Officer; Tony Huidor, Chief Operating Officer and Chief Technology Officer; Mark Lindsey, Chief Financial Officer; Mark Torres, Chief People Officer; and Yolanda Macias, Chief Content Officer, all of whom will be available for questions following the prepared remarks. On today's call, Chris will discuss our fiscal year 2025 third quarter highlights, the latest operational developments, outlook, and long-term growth strategy.

Mark will follow with a review of our results for the fiscal third quarter ended December 31, 2024. Erick will provide some detail on our streaming business results and operating initiatives before opening the floor for questions. I will now turn the call over to Chris McGurk to begin.

Chris McGurk (Chairman and CEO)

Thank you, Gary, and thanks, everyone, for joining us today. This was the strongest quarter in the company's history. We recorded $40.7 million in total revenues, up $27.5 million from the prior year quarter. We generated $7.2 million in net income, a $9.9 million increase from the prior year quarter. We recorded $10.8 million in adjusted EBITDA, a $9 million increase from the prior year quarter. Our operating margin was 48%, within our targeted range of 45%-50%. As of yesterday, we had more than $13 million in cash on hand and zero debt, with a full $7.5 million available on our line of credit with EastWest Bank. These results were driven in large part by the unprecedented success of Terrifier 3, but they also reflect strong growth across all of the company's key lines of business.

Mark and Erick will speak to our financial results and operating highlights across the full span of our business in just a few minutes. I will focus now on what we believe the future holds for our feature film releasing and marketing business, which we believe is uniquely poised to be a major source of new revenue and profits for the company on an ongoing basis. After stunning the industry in October when Art the Clown displaced Joaquin Phoenix as the Joker at the top of the box office charts, Terrifier 3 charged on to become the highest-grossing non-rated film ever, with more than $54 million at the domestic box office, topping previous record holder Renaissance, a film by Beyoncé. Subsequently, Terrifier 3 has done very strong business in digital sales and Blu-ray and DVD, topping the sales charts there as well.

The film debuts tomorrow on our Spring Box Horror streaming channel, and we are currently reviewing multiple other pay and streaming distribution channel options. Like all studios, we do not disclose profitability on any individual film basis for both competitive and for participant non-disclosure reasons. However, Terrifier 3 obviously had a huge impact on our results this quarter and should provide significant financial upside in our fiscal fourth quarter and into the next fiscal year. Perhaps the biggest long-term upside to the company from the success of Terrifier 3 is that it has opened up a potential new profit line for us, releasing and marketing theatrical films by fully utilizing the unique collection of new media assets that we built over the last few years.

We demonstrated this to the film industry in stunning fashion by generating $54 million at the box office with just a $500,000 out-of-pocket marketing spend to open the movie at number one, a previously unheard-of feat. The shock and awe within the film industry at this performance, particularly at how we were able to hyper-effectively utilize our new media assets, including our portfolio of streaming channels, podcast network, Matchpoint advertising technology, and social media strength, while spending $0 on national media, has led to a deluge of new film releasing and marketing opportunities. As a result, we are now rapidly filling out our go-forward theatrical release slate with films targeted at very specific fan bases and with known and successful intellectual property that we can distribute using the same blueprint that drove the success of Terrifier 2 and 3.

These films include Silent Night: Deadly Night, where we are partnering with European media powerhouse Studio Canal to release a reinterpretation reboot of this classic controversial horror film for this coming Christmas. Also, Toxic Avenger, an unrated update of the classic Troma title, produced by Legendary Pictures, the major studio behind global hits like Dune, Godzilla vs. Kong, Jurassic World, and many other massive successes, and starring Peter Dinklage, Kevin Bacon, and Elijah Wood. The Toxic Avenger debuted at Fantastic Fest, earning a 92% positive score on Rotten Tomatoes and is slated for release on August 29 of this year. Just yesterday, we announced another horror film for our lineup, Wolf Creek: Legacy, the third installment of the classic gritty Australian outback horror film, which we will be releasing in the next calendar year.

It's very important to note that all three of these films have very strong risk-reward profiles and upside economics for Cineverse. Total investment in each movie for both acquisition and marketing costs are expected to be less than that of Terrifier 3, driven again by our unique hyper-targeted and cost-efficient approach to theatrical marketing. For example, we anticipate that if Toxic Avenger does only half the box office as Terrifier 3, it will generate about the same bottom-line financial results for Cineverse as Terrifier 3 did. Expect more film announcements soon as we continue to fill our release slate with similar properties, as well as films in other genres besides horror, where we believe we can use our ecosystem to hyper-market against very specific fan bases as well.

In addition, both major studios and other independent studios have clearly recognized the success and strength of our new media ecosystem and are already using it to market their own films as well. Focus Features and Neon both advertised films recently across our network, and we expect more studios to follow suit. This should provide another high-potential new and ongoing source of revenues for the company. We also want to thank Damian Leone and Phil Falcone, who built the Terrifier franchise, for creating such an amazing property that helped catalyze all this for Cineverse. Damian is currently working on the script for Terrifier 4, which we fully expect will be another must-see event for the franchise. Finally, our strong balance sheet will help us invest behind growth in our content, technology, streaming, podcast, and advertising businesses.

That said, we are also exploring new financing options to expand our credit availability, particularly for new film releases. We are not considering any potential equity offering to support our current business, particularly since we believe we have achieved sustainable profitability and positive cash flow. With that, I'll turn the floor over to Mark to further discuss our financial results.

Mark Lindsey (CFO)

Thank you, Chris. As Chris noted, this quarter was our strongest quarter in history. Even with massive expectations this quarter, we were still able to beat analyst consensus guidance for revenue, 40.7 million versus 36.4 million, net income 7.2 million versus 5.1 million, diluted EPS $0.34 per share versus $0.31, and adjusted EBITDA $10.8 million versus $8.2 million. For the quarter, Cineverse reported record revenues of 40.7 million compared to 13.3 million for the same quarter last year, or a 207% increase. In addition, compared to our second quarter ended September 30, 2024, revenues increased by 28 million, or 220%. While the box office results for Terrifier 3 were the major catalyst for our record revenue this quarter, the remainder of our business also performed exceptionally well. Year over year, our streaming and digital revenues grew by 48%, and podcast and other revenue grew by 138%.

In a few minutes, Erick will discuss in further detail the non-Terrifier initiatives that drove these improved results. Considering the ancillary revenues associated with Terrifier 3, the continued double-digit growth of our podcast business, improved content licensing opportunities, and expected growth in our direct advertising revenues, we are expecting a material increase in revenue for our fiscal fourth quarter ended March 31, 2025, compared to the prior year quarter. As Chris mentioned, our direct operating margin for the quarter was 48%, which is in line with our previously issued guidance of 45%-50%. Our improved operating margin is a direct result of our cost optimization initiatives implemented over the last 18 months. We expect our direct operating margin in future quarters to remain in the 45%-50% range.

SG&A expenses for the quarter were 9.4 million, an increase of 3 million for the third quarter compared to the prior year quarter, primarily driven by an increase in expenses associated with the performance of Terrifier 3. As this increase was Terrifier 3 specific, we expect our SG&A expenses to return to a more normalized run rate going forward. Last quarter, we also provided guidance that we expected our SG&A expenses to remain flat and to decrease as a percentage of revenue. SG&A expenses as a percentage of revenue for the third quarter were 23% compared to 50% last quarter and 48% for the prior year quarter. Again, this improvement is a result of our continued focus on cost optimization initiatives that we've been discussing over the last 18 months.

Net income for the quarter was 7.2 million, a 9.9 million improvement over the prior year quarter, and adjusted EBITDA was 10.8 million compared to 1.8 million for the same quarter last year. We have 6.1 million in cash and cash equivalents on our balance sheet as of December 31, 2024, with 3.8 million outstanding on our 7.5 million working capital facility. As of yesterday, having received most of our Terrifier 3 box office rentals after year-end, we had more than 13 million of cash on hand, no debt outstanding, and 7.5 million of available capacity on our working capital facility. In addition, as of December 31, 2024, we have a working capital surplus of 6.8 million, the largest in company history. When reviewing our quarter-end cash balances, again, please remember that the majority of the Terrifier 3 cash receipts were received after December 31, 2024.

For the nine months ended December 31, 2024, our net cash provided by operations was 5.0 million, a 7.4 million improvement during the quarter. We expect to be operating cash flow positive for the full fiscal year 2025. In addition, during the quarter, we were able to pay in full the outstanding term loan principal and interest totaling $3.7 million. Subsequent to year-end, we reduced our outstanding working capital facility balance to zero. While we are currently debt-free with more than 13 million of cash on hand, we are exploring additional opportunities to raise debt capital to improve our financial condition and provide capital to fund our upcoming initiatives, which Erick will discuss in further detail.

Finally, with a 40.7 million revenue quarter, a 40 million valuation for our content library, which is almost entirely off balance sheet, we continue to believe that our stock price is undervalued with significant upside, even at yesterday's closing price of 4.60 per share. With that, I'll turn the floor over to Erick to discuss our strategic growth initiatives.

Erick Opeka (President and Chief Strategy Officer)

Thank you, Mark. Today, I'm going to cover three key areas of our business: an overview of our next-generation theatrical strategy, an overview of our digital distribution initiatives, and our technology and advertising business. First, let's talk about our theatrical strategy. Our approach to theatrical is fundamentally different from the traditional studio model. Instead of chasing nine-figure tentpoles, we're following a money ball strategy for theatrical releasing, focusing on proven IP and franchises that studios often overlook. These films have already established fan bases, strong ancillary track records, and proven box office performance, vastly reducing our risk and increasing profitability across multiple windows. What sets us apart is not just our film selection strategy, but the structural advantages we bring to the table. Our deal structures are fair, ensuring talent creators benefit equally alongside the studio and are aligned to ensure success.

At the same time, we're going to leverage our significant media assets, proprietary ad tech, and in-house capabilities to dramatically reduce costs and increase efficiencies in the releasing process. This approach drives higher margins for both Cineverse and our creator partners, making us a highly attractive home for filmmakers and IP holders who are coming in droves to the doors, as Chris described earlier. Our ability to do this comes from more than a decade of investment in our technology and infrastructure, including machine learning and AI-driven marketing and distribution models. This is a massive moat that our competitors our size simply cannot replicate. Unlike traditional distributors who rely on expensive broad-reach campaigns, we use data and automation to precision-target audiences, ensuring our marketing spend delivers outsized returns.

Under this model, we're rapidly building a slate towards 8-10 wide and specialty theatrical releases per year, putting us on par with the volume of past and present mini majors. For the coming fiscal year, we'll release at least three to four films, reaching the 8-10 range within two additional years. Titles like The Toxic Avenger, Silent Night: Deadly Night, and Wolf Creek: Legacy are perfect examples of how we apply this playbook, targeting proven theatrical IP with strong cult fan bases and deploying cost-efficient marketing and distribution strategies, leveraging our tech and media assets, ensuring they reach their full potential across theatrical, home entertainment, merch, and streaming. Next, let's discuss our ancillary sales and distribution. For most of 2024, we focused heavily on scaling our FAST and ad businesses, which has delivered strong results, as Mark had noted earlier.

Looking ahead, we're making a major investment in accelerating our subscription business with a focus on doubling its growth rate to the 15%-20% range by investing in high-quality studio titles, cost-efficient exclusives, and originals, while also leveraging the same marketing machine that we're working with on theatrical. We're also committing meaningful capital to customer acquisition for Screambox and Dove, as well as Fandor, positioning them as premier destinations for genre-specific streaming in their verticals. As of this quarter, our total SVOD subscribers has reached 1.38 million, up 6% year over year. Screambox has seen a 7% increase in subscribers over the past 60 days, and Terrifier 2 viewership was behind that, surging 45% in Q3, reinforcing the power of this franchise-driven engagement. Meanwhile, our FAST channels collectively delivered over 2.1 billion minutes in Q3, with standout performances from Dove, up 30% year over year.

Our anime property, Yu-Gi-Oh, which was up 1,000% in the quarter over its Q1 launch. Additionally, our Barney Channel continues to excel, which has reached more than 455 million minutes streamed last month alone. To further expand our distribution reach, we launched Bob Ross, Comedy Dynamics, Dog Whisperer, and the Dove FAST Channels on Google TV's FreePlay. Additionally, we expanded our content partnership with Fubo, adding two more of our ad-supported streaming channels, Dog Whisperer Cesar Millan, and GoPro, allowing us to capitalize on the continued growth of FAST platforms. On the transactional side, Terrifier 3 dominated the EST and VOD and physical media sales charts, ranking as the number one sales title for several weeks, beating major studio releases like Joker and Wild Robot.

As of tomorrow, Terrifier 3 will premiere on Screenbox for an exclusive SVOD window, with active discussions underway for a pay-one licensing deal with major cable and streaming platforms to further extend the film's reach and maximize its long-term value. In addition, we continue to capitalize on merchandising collectibles through our Bloody Disgusting brand, following successful partnerships and launches with retailers like Spencer's and Walmart. This expansion further monetizes our horror vertical beyond streaming and theatrical, and will provide additional revenue streams tied to our most engaged fan bases. On the technology front, we continue to grow our Matchpoint business past its early stages, and recent results have been promising. We've expanded our sales team and are rapidly scaling our pipeline of customer targets.

As content distributors and OEMs race to expand their libraries and future-proof operations for AI-driven revenue streams, there's a growing demand for a cost-effective, high-volume solution that can streamline delivery, deliver monetization, and enable AI-driven content enhancement. That's Matchpoint. We recently announced two new scale customers for Matchpoint, including Multicom Entertainment Group, our first distribution client, and Joy Soft, a venture-backed streaming service run by experienced entrepreneurs focused on bringing Asian-American content to the global streaming ecosystem. Both clients selected Matchpoint due to its robust and expansive set of features and end-to-end capabilities that will streamline their business. These partnerships validate Matchpoint's ability to support both established distributors and new fast-growing media ventures in navigating the evolving content landscape. Additionally, our Matchpoint Real Visuals AI initiative that we recently announced is gaining traction, and we're nearing the close of our first deals with major LLM providers.

To date, we represent AI training rights for more than 350,000 hours of video and audio content, creating a new revenue stream at the intersection of content and AI monetization. This initiative positions Cineverse at the forefront of an emerging opportunity where content owners can license their libraries for AI training, enhancement, and contextualization, and offering a scalable way to capitalize on the evolution of digital media. Cineverse 360 is evolving into a next-generation SSP, our supply-side platform, and we've recently integrated with a major ad-buying platform to improve margins and optimize costs in programmatic advertising. This is unlocking new opportunities to merge our technologies for additional revenue and premium value. A key example is CineCore, our proprietary AI-optimized movie dataset originally built for CineSearch. CineCore enables precise contextual and content-based ad targeting, even in restrictive environments where user data isn't available.

Today, advertisers can't target users based on their favorite films or attributes through an SSP, but we're changing that. By leveraging CineCore, we'll be able to reduce ad costs while enabling highly targeted campaigns with a deployment plan for upcoming wide releases and making it commercially available to customers soon after that. Meanwhile, our growing ad sales business is seeing meaningful results. October was our biggest revenue month to date, and on Cineverse 360, reflecting strong revenue growth driven by direct and programmatic ad sales. We executed our largest direct ad sales campaign to date in partnership with Focus Features and 13th Floor Entertainment with the December release of Robert Eggers' Nosferatu. This campaign not only expanded revenue, but established a playbook for future brand support and immersive experiences.

In the longer term, and for this year, we're focused on developing Endeavor-style partnerships with film studios where they commit to multiple titles upfront in exchange for favorable rates and added value. Under these Endeavor partnerships, we expect studios to commit to between six to eight wide-release films per partnership. Our direct sales team continues to grow, and we're breaking through to new brands. While entertainment remains our lead vertical, we're now securing deals with advertisers in retail, fashion, travel, and packaged goods. At the same time, we're expanding our podcast advertising base beyond horror, with new content genres launching this year, including comedy, women's lifestyle, and wellness, areas that will be our largest driver of new revenue in 2025.

To further drive this growth, we're hiring up a new head of podcast sales to focus on evangelizing the Cineverse Podcast Network to more brands and buying agencies, accelerating revenue growth beyond the triple-digit growth we already have seen this year. Additionally, we're doubling down on entertainment partnerships, actively engaging with studios, as I described, to invest in the non-horror side of our business beyond our core genre business. To date, we've had a lot of success on that already. Our advertising customer base has been expanding significantly. Recent advertisers include Hulu, Sony Pictures, Macy's, Paramount Plus, Mint Mobile, A24, Quintz, and Focus Features. In the coming quarter, we anticipate closing deals with additional studios as well as finance and travel brands. Looking ahead, our focus is clear.

We will continue expanding our IP-driven theatrical slate, scaling our subscription growth through premium content investment, deepening our direct ad sales relationships, and advancing our AI-powered technology initiatives to cement Cineverse as a leader in next-generation media distribution. Cineverse is not just another distributor. We are a technology-powered media company with a first-mover advantage that's becoming increasingly difficult to replicate. As we refine our playbook, we're confident that our ability to deliver high-impact, high-margin films, scale our streaming business, and expand our advertising ecosystem will drive long-term value for shareholders. With that, let's open it up for Q&A.

Operator (participant)

If you would like to ask a question, please press Star followed by One on your telephone keypad. If for any reason you'd like to remove that question, please press Star followed by Two. Again, to ask a question, press Star One.

As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We'll pause here briefly as questions are registered. First question is from the line of Dan Kurnos with Benchmark. Your line is now open. Dan, please check to see if you're on mute.

Daniel Kurnos (Managing Director and Senior Equity Research Analyst)

Hey, sorry. Can you guys hear me now? Yes. We do. Okay, good. All right. Sorry about that. I spent about a minute talking to myself. Wonderful. Congratulations on the quarter. Fantastic. Obviously, Chris, appreciate the color on Toxic Avenger. Let me just ask you a couple of things in general here. One, and Erick, also the incremental color on the building slate. First, how do we think about number of screens on release here? Obviously, you guys have Canal, so there's potentially some global ramifications to this, which you didn't have with T3.

First question, just size of screens, number of screens, and is that going to vary by film, or are you guys going to look to kind of build a sort of consistent distribution platform by film size and screen release as you guys build out the film library?

Chris McGurk (Chairman and CEO)

Yeah, thanks, Dan. This is Chris. We're looking to follow a release pattern on these films very similar to what we did with Terrifier 3, trying to get it out on 1,500-2,500 screens, which we think is the right amount for these very targeted films. We see the big studios and their wide releases sometimes with 3,500, 4,000 screens, but they do 90% of their business on 1,500-2,500 screens. We're going to take a much more targeted approach on these films and target an average of about 2,000 screens going forward.

The good news is that we've got this huge pool of content that we're looking at right now, and we've been very selective with the choices that we've made. You saw the first three, Toxic Avenger, Silent Night: Deadly Night, and now Wolf Creek: Legacy. We're really looking, as I said, for properties that we can clearly follow the same playbook that we executed on Terrifier. Known IP, successful IP where we know there's a fan base and a very targeted fan base that we know we can get to. I think you saw, based on what I said in my remarks, the economics of these movies. We're able to pick and choose as well, and we've cut some very, very favorable deals.

Toxic Avenger, for instance, has a budget that's many times greater than the budget on Terrifier 3, but our investment level will probably end up being less than what we invested in Terrifier 3 for acquisition and for marketing costs in a really good movie. Our upside is a lot greater because basically we bought the distribution rights in perpetuity, and we don't have a big participant where we're sharing the upside economics with. We think we can do more deals like that going forward and expect more announcements in that regard soon.

Dan Kurnos (Managing Director and Senior Equity Research Analyst)

Should we think, Chris, that there's an opportunity to kind of just throw out in another genre with a big shot at something in another genre, or would you save that more for just the advertising channel?

Chris McGurk (Chairman and CEO)

I didn't hear the first part of your question. Sorry, Dan. Sorry.

Dan Kurnos (Managing Director and Senior Equity Research Analyst)

I asked if you guys would expand into another genre. If you think that this is all going to be in horror, or would you expand into another genre or keep that mostly in the advertising side if you were going to move out of the horror genre?

Chris McGurk (Chairman and CEO)

Obviously, we've kind of made our bones in the horror genre, so we're getting a lot of properties coming our way. We're looking at properties in the family space as well, comedy, urban properties, where we think we've got strength from our channel footprint and our podcast footprint to hypermarket just as we did in Terrifier 3, and where there's a known fan base and known IP.

I'm very hopeful that in the next few months, as we make announcements, you'll see that we're rounding out our portfolio in other genres, but with the same kind of really favorable economics that I've been talking about and in areas where we can very closely follow the blueprint for success in terms of marketing that we have with Terrifier.

Operator (participant)

Thank you for your question. Next question is from the line of Brian Kinstlinger with Alliance Global Partners. Can you allow us to open?

Brian Kinstlinger (Managing Director and Senior Technology Analyst)

Great. Thanks. I got a few questions. What a great quarter, and congratulations on your success. You talked about taking on some debt. I assume this is due to the pipeline of opportunities in front of you, given the success of Terrifier that we talked about.

Can you talk about the ranges of prices for relevant horror content, especially for these films you're going to remake? Can you share maybe the average price you paid so far, and is there a return on invested capital that you're looking at that you target?

Chris McGurk (Chairman and CEO)

Yeah. Thanks, Brian. This is Chris again. I think I mentioned on this call in the past that our total investment on Terrifier 3, for both acquisition and marketing, was less than $5 million or around $5 million. All three of the properties that we're talking about now are below that, and our expectations are going to be below that. I think that's the range that we're talking about. I think that creates a really unbelievable positive risk-reward profile for us.

Your other question was, I think the pool is big enough now that we're going to be able to fill up a release slate of 8-10 movies on a steady-state basis and stick to those economics. We have no desire to step up into the bigger-budget film market. We do not need to, okay? We just have one of the highest-return movies in the history of the film business, and we spent less than $5 million, and we spent less than $1 million in marketing all in and got 54 million at the box office. If we can do half that or a fraction of that on these other properties, we're going to do really, really well because of the favorable economics that we're looking at here.

I do not know if that answers your question, but we are feeling very good about our space and the kind of revenue we will be able to generate with that sort of economics.

Erick Opeka (President and Chief Strategy Officer)

Great. Listen, I will add the—yeah. I was going to say I will add the other side to this too is, as you saw with our partnership with Studio Canal, we will even bring in partners earlier. Studio Canal effectively, for example, on Silent Night: Deadly Night eliminates half of our risk in the project by that partnership, right? We are taking this, like I said earlier on the call, a money ball approach where we are focused on ROI. While we hope that some of these break out, and we will have the ability to push them and ride them if they happen to break out to Terrifier-type levels, it happens. Our competitors have these breakouts happen.

I think our goal is to have these, as Chris described, that we're going for singles and doubles. We're not swinging for the fences on every movie hoping to have a Terrifier.

Chris McGurk (Chairman and CEO)

Again, I said this on the last call. Maybe I didn't say it. Brian, because we're releasing movies with such an efficient low level of marketing spend and getting the kind of results that we got on Terrifier 2 and Terrifier 3, it creates a much better economic situation for our producer partners, filmmakers who want to come to us because they don't have the usual $5 million-$20 million of marketing in between them and their participation. That has been recognized in the business, and it's led to all these opportunities for us coming our way. Obviously, we like that.

We also like the idea that we've sort of helped develop a model that we need to prove the concept going forward, but hopefully, it's going to enable independent filmmakers to get their films released theatrically and get access to more eyeballs. The marketing spend piece has always been the big bugaboo in the independent film releasing business, and hopefully, we've cracked the code here.

Brian Kinstlinger (Managing Director and Senior Technology Analyst)

Thank you. I just wanted to touch on two other pieces of your business. I wasn't quite sure on CineSearch, how that's progressing in terms of monetization. And then on Matchpoint, you announced two deals. I guess, can you help frame for what the revenue opportunities for customers like these are? Can you give a range of opportunity?

Erick Opeka (President and Chief Strategy Officer)

Sure, sure. I can tell you—so first, I'll tackle CineSearch.

When we have revealed that product to the market, when we talk about CineSearch, the consumer-facing piece that's in demo, anybody can test it out, kick the tires. We're not selling that commercial version of the product. What we are selling is the back-end and capabilities that allow OEMs and others to effectively and vastly improve their search results and capabilities. That piece, we're in active conversations with a lot of parties today. We're in development of the second version of the technology that powers that. We expect it to be completed within the next quarter or so. We think commercial opportunities for that, as we get out of the early developmental stages, the R&D stages of this to full commercialization, will start to happen in the next fiscal year. In terms of Matchpoint, when we talk about average customer size, we're targeting a couple of different segments.

The SMB segment is a clear segment for us, as well as we are also targeting enterprise. So the average customer value is going to vary depending on the size of the customer we target. We've been talking internally about SMB customers being on the lower six figures annual sort of target range, and enterprise customers can be many, many multiples above that, depending on the implementation. The enterprise deals tend to have a more custom or specialized implementation, so I would expect those to be significantly higher than the SMB side. That's super helpful. They could range—I looked back. They could range to millions of dollars. Yeah.

Brian Kinstlinger (Managing Director and Senior Technology Analyst)

I looked back, and you have been discussing increased investments to drive subscriber growth. And I know podcasting as well. Those are two important pieces to your business.

Now, I see the trends in number of people, and I'm not sure even downloads, but where are we in terms of revenue contribution from those as we evaluate the better inventory fill rates? I haven't seen that in the last couple of quarters.

Erick Opeka (President and Chief Strategy Officer)

Are you talking about the podcast business, or are you talking about the podcast, the other side of the business?

Brian Kinstlinger (Managing Director and Senior Technology Analyst)

I mean, the subscription business, I'm curious what the revenue contribution is. And the podcasting business, I'm not sure if I've heard where downloads or viewership are, and maybe then you can discuss how inventory fill rates are improving to drive stronger monetization of your podcasting.

Erick Opeka (President and Chief Strategy Officer)

Yeah, sure. On the podcasting business, the viewership numbers bounce around month to month, but the high-watermark in the last quarter was about 15 million downloads.

Pretty significant audience size and up from where it was trending the prior quarter. I think we were averaging 12.5 or so. On the fill rates, there's two pieces to that. There's the programmatic side. I think we're still in the 50%-55% fill rate on that on programmatic, but we've been bundling our campaign, our inventory into 360 campaigns. Our fill rates have actually gone up substantially as podcasts have been a bigger part of the sales mix for our sales team. For example, when we do a movie deal for a studio movie, we're bundling. Typically, the engagement is on the bigger engagements, we're producing some kind of live event or premiere, plus bundling web, social, CTV, and podcast into one campaign.

The podcast business has been lifted by that inclusion as part of a bundle, as part of a whole media mix. Our advertisers love it. It's highly differentiated from PurePlay CTV, which, as I'm sure you know, is in wide abundance and high availability right now and not very differentiated. This is a very differentiated approach. That's driving up CPMs just simply because we're bundling it into high teens level plus CPM to low 20 CPM when we do those deals. We expect, as we bring on direct podcast sellers, which we've expanded that team pretty dramatically so far, that the podcast business will—less and less of it will be programmatic over time. My target for the next 18 to 24 months is to push that well below 50%, and I think we're already showing a path to that.

Brian Kinstlinger (Managing Director and Senior Technology Analyst)

Great.

Just quickly on subscriptions, can you give us a sense for revenue contribution? I think last year you were—I have to look at my model here—about 3.5 million-ish per quarter in revenue. Are we much higher than that today? Are we a similar path that you've highlighted the intent to increase your investments and drive that growth?

Erick Opeka (President and Chief Strategy Officer)

Yeah. I think that's where we have been. That's the rearview mirror kind of look. I think our target for the year would be to get that to double-digit plus growth. I think we were clocking in at 6-7% for the prior year. I think the goal is to get that up to 15% plus. You can kind of back into that number, but that's the focus for this year is really to make that a growth catalyst.

We'd put most of our capital towards scaling the theatrical, the emerging theatrical business and some other initiatives, but we really see the subscription business as a very good investment and a deployment of capital for this year given some of the market dynamics we're seeing.

Brian Kinstlinger (Managing Director and Senior Technology Analyst)

Great. Thank you, Got it..

Erick Opeka (President and Chief Strategy Officer)

Thank you, Brian.

Operator (participant)

Thank you for your question. There are no further questions remaining, so I'll pass the conference back to the management team for any closing remarks.

Thank you, Chris. Thank you all for joining us today. As always, please feel very free to reach out to Julie Mosted with any additional questions you might have, and we look forward to speaking to you all again on our next quarterly call in June. Thank you.

That concludes today's conference call. Thank you for your participation. You may now disconnect your line.