Executive Summary

Q2 revenue fell to $79.9M from $110.0M in Q1 and rose 112% year over year (vs. $37.6M) as Redbox integration lapped, but profitability deteriorated: GAAP net loss was $43.7M and Adjusted EBITDA was $0.7M (vs. $20.1M in Q1 and $5.6M in Q2’22) .
Management formed a Board-level Strategic Review Committee to explore options to “unlock maximum shareholder value,” a potential stock reaction catalyst .
Kiosk/TVOD performance benefitted from The Super Mario Bros. Movie, delivering record rentals and TVOD records, but high interest expense ($17.9M) and heavy opex kept losses elevated .
Prior full-year 2023 outlook (revenue ~$500M; Adjusted EBITDA $100–$150M) was issued in March; Q2 materials did not update or reiterate guidance .
Wall Street consensus from S&P Global was unavailable via our connector for Q2’23; third-party sites characterized the quarter as a miss on expectations, but we do not rely on those figures .

What Went Well and What Went Wrong

What Went Well

Record content performance: The Super Mario Bros. Movie drove the top movie rental of 2023, the most first-week rentals since Top Gun: Maverick, and record week-one TVOD revenue; PVOD/EST debut surpassed Avatar: The Way of Water .
Distribution and monetization expansion: Crackle Connex signed deals to put TikTok content on 3,000+ kiosk screens and expanded its DOOH reach to 10,000+ screens; new FAST channel agreements with AMC Networks, Fremantle, and others increased channel breadth .
Retail footprint growth: Began rolling out 1,500 additional kiosks with Dollar General, supporting physical channel traffic as the theatrical slate normalizes .

Management quote: “Despite these seismic changes, we have been able to streamline our business to drive cash flow… we will be forming a strategic review committee… to consider the various ways to unlock maximum shareholder value.” — CEO William J. Rouhana, Jr. .

What Went Wrong

Profitability pressure: Adjusted EBITDA collapsed to $0.7M from $20.1M in Q1 and $5.6M in Q2’22 as operating losses expanded; GAAP net loss widened y/y to $43.7M .
High leverage and financing burden: Interest expense surged to $17.9M in Q2 amid ~$511.9M of debt and stockholders’ equity fell to $18.7M, constraining flexibility .
Sequential revenue decline: Net revenue fell from $110.0M in Q1 to $79.9M in Q2 despite stronger content catalysts, highlighting variability and integration challenges .

Financial Results

Metric	Q4 2022	Q1 2023	Q2 2023
Revenue ($USD Millions)	$113.6	$110.0	$79.9
GAAP Net Loss ($USD Millions)	$(56.3)	$(58.6)	$(43.7)
GAAP EPS (Basic & Diluted)	$(2.70)	$(2.76)	$(1.50)
Adjusted EBITDA ($USD Millions)	$14.7	$20.1	$0.7

Additional Q2 year-over-year context:

Revenue up 112% y/y ($79.9M vs. $37.6M) .
Net loss widened y/y to $43.7M from $20.8M; Adjusted EBITDA dropped to $0.7M from $5.6M .

Segment breakdown: Not disclosed in the Q2 8-K/press release .

Selected KPIs and balance sheet items:

Kiosk network: “approximately 29,000” in Q2 company overview; earlier June release cited “approximately 31,000” kiosks, implying footprint rationalization/rounding variance .
Debt and equity: Total debt (net) $511.9M; total stockholders’ equity $18.7M at June 30, 2023 .

Guidance Changes

Metric	Period	Previous Guidance	Current (Q2’23 materials)	Change
Revenue	FY 2023	≈ $500M (issued Mar 30, 2023)	No update/Not reiterated in sop Q2 materials	—
Adjusted EBITDA	FY 2023	≈ $100–$150M (issued Mar 30, 2023)	No update/Not reiterated in Q2 materials	—
Revenue	Q1 2023	$110–$113M (issued Mar 30, 2023)	Delivered $110.0M	Met prior guidance
Adjusted EBITDA	Q1 2023	$18–$20M (issued Mar 30, 2023)	Delivered $20.1M	Met prior guidance
Preferred Dividend	July/Aug 2023 (CSSEP)	$0.2031 monthly dividend timing notices	July and August 2023 payments announced (cash)	Maintained

Note: No explicit Q2 or FY updates were provided in the Aug 14 Q2 press release; management announced a Strategic Review Committee instead .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’22, Q1’23)	Current Period (Q2’23)	Trend
Theatrical slate/kiosk cadence	Q4’22: Set FY’23 expectations; Q1’23: Anticipated 2+ new release titles/week driving kiosk/TVOD uptake	Super Mario Bros. drove record kiosk/TVOD volumes; strong single-title performance but overall revenue sequentially lower	Mixed: title-driven spikes amid broader variability
Advertising/FAST expansion	Q4’22: Expanded FAST partners; ad-rep business scaling	Signed TikTok/DOOH deals; added AMC, Fremantle, others to FAST	Positive expansion
Cost structure & integration	Q4’22: Integration of Redbox, higher opex/interest; FY’23 EBITDA targets	Adjusted EBITDA pressured to $0.7M; interest expense $17.9M; Strategic Review initiated	Deteriorating profitability; strategic pivot
Liquidity/leverage	Q4’22: ~$479.7M net debt YE22; ability to seek facilities noted	Debt $511.9M; equity $18.7M at 6/30/23	Leverage higher; flexibility constrained
Retail footprint	Q4’22: Planning kiosk additions with a national value retailer	Began rolling out 1,500 kiosks at Dollar General	Positive footprint growth

Management Commentary

Strategy and review: “We… streamlined our business to drive cash flow… [and are] forming a strategic review committee… to consider the various ways to unlock maximum shareholder value.” — CEO William J. Rouhana, Jr. .
Market backdrop: “It’s worth noting the massive changes… in the media space… Despite these seismic changes, we have been able to streamline our business…” — CEO .
Content performance: Super Mario Bros. “top movie rental in 2023… most rented… first week since Top Gun: Maverick… broke week one TVOD revenue records… PVOD/EST debut surpassed Avatar: The Way of Water” .

Q&A Highlights

Strategic alternatives: Analysts focused on the newly formed Strategic Review Committee; management framed it as exploring options to maximize shareholder value amid industry shifts .
Profitability/interest burden: Questions probed the path from title-driven spikes to sustainable EBITDA and interest coverage; Q2 interest expense was $17.9M .
Distribution monetization: Discussion on DOOH/TikTok partnerships and FAST channel additions as levers to grow ad revenue and diversify beyond kiosk cyclicality .

Estimates Context

S&P Global consensus for Q2’23 revenue and EPS was unavailable via our data connector; therefore, we cannot provide definitive beat/miss analysis versus S&P Global estimates (Values retrieved from S&P Global*).
Third-party sites described Q2 as a “miss on earnings expectations,” but we do not substitute these for S&P Global consensus in this report .

Key Takeaways for Investors

Revenue volatility persists: Despite strong tentpole content (Super Mario), sequential revenue fell and Adjusted EBITDA collapsed to $0.7M, underscoring sensitivity to slate cadence and mix .
Leverage is the constraint: $511.9M of debt and $17.9M quarterly interest expense, alongside $18.7M equity, leave little margin for error; deleveraging or refinancing is pivotal to the thesis .
Strategic alternatives in play: The strategic review signals openness to asset sales, partnerships, or capital structure actions—potential catalysts but also execution risk .
Ad/FAST and DOOH momentum: TikTok/DOOH and new FAST channels could diversify revenues beyond transactional and kiosk cycles; watch for tangible ad revenue uplift and fill rates .
Retail expansion: 1,500 additional kiosks at Dollar General can harness a richer film slate; monitor same-kiosk rentals and conversion as releases normalize .
Guidance credibility: FY’23 targets set in March (revenue ~$500M; EBITDA $100–$150M) look challenging after Q2’s profitability; expect estimate and guidance recalibration absent a sharp H2 inflection .
Trading frame: Near term, strategic review headlines and slate-driven spikes may drive volatility; medium term requires evidence of sustained EBITDA and progress on balance sheet repair .

Citations

Q2 2023 8-K press release and financials:
Q1 2023 press release:
Q4/FY 2022 8-K press release and guidance:
Preferred dividend press releases (June/July):
Q2 2023 earnings call transcript references:

Notes

S&P Global consensus data for Q2’23 was unavailable via our connector at time of analysis (Values retrieved from S&P Global*).

Chicken Soup for the Soul Entertainment, Inc. (CSSE)·Q2 2023 Earnings Summary