Chicken Soup for the Soul Entertainment, Inc. (CSSE)·Q3 2022 Earnings Summary

Executive Summary

• Revenue surged 149% year over year to $72.4M, with strong AVOD streaming and TVOD driving the outperformance; management said the quarter “has been the best financial quarter in our history.” Adjusted EBITDA rose to $9.6M and adjusted EPS reached $0.54. Management stated the company exceeded analyst consensus on revenue, adjusted EBITDA, and adjusted EPS, though S&P Global consensus data were unavailable to verify independently .
• Operating loss widened to $42.0M on integration and one-time transaction expenses related to the Redbox merger; GAAP net loss was $20.1M ($1.13 per share) despite improved adjusted profitability .
• Strategic milestones included closing the Redbox acquisition, OEM remote button deals with VIZIO/Hisense beginning in 2023, and expanded financing with Publicis/APX, positioning the ecosystem across AVOD, FAST, TVOD, and 34,000 kiosks .
• Balance sheet reflects acquisition scale-up: cash of $36.3M and net debt of $461.3M as of 9/30/22; integration synergies and TVOD strength were positioned as catalysts going forward amid a slowing macro backdrop .

What Went Well and What Went Wrong

What Went Well

• AVOD/TVOD momentum accelerated: revenue jumped to $72.4M (up 149% YoY; +$34.8M QoQ) driven by strong AVOD streaming and TVOD performance; adjusted EBITDA nearly doubled YoY to $9.6M .
• Strategic scale from Redbox: closed the Redbox merger, expanded distribution (Crackle/Popcornflix FAST on FuboTV), and secured 2023 remote-button placements with VIZIO and Hisense, enhancing consumer touchpoints and discovery .
• Management tone: “best financial quarter in our history” and “optimistic about the days ahead” despite macro headwinds, signaling confidence in execution and integration benefits .

What Went Wrong

• Profitability on GAAP basis deteriorated: operating loss widened to $42.0M (+$25.2M QoQ), largely due to one-time transaction expenses from the Redbox merger .
• Higher leverage post-merger: net debt reached $461.3M at 9/30/22, implying higher interest burden (Q3 interest expense $7.7M vs. $1.3M in prior year quarter) .
• Macro and ad softness risk: management flagged a “slowing economy,” underscoring potential pressure on ad-dependent AVOD trends, although Q3 execution overcame headwinds .

Financial Results

Consolidated P&L (GAAP and Non-GAAP key metrics)

Notes: Company also reported adjusted EPS of $0.54 for Q3 2022 . Management indicated Q3 exceeded analyst consensus for revenue, adjusted EBITDA, and adjusted EPS, but S&P Global consensus figures were unavailable to independently verify .

Balance Sheet and Liquidity Snapshot

KPIs and Operating Highlights

Segment breakdown: Not disclosed in the press release/8-K; results presented on a consolidated basis .

Guidance Changes

Note: No specific quantitative Q4 or FY 2022 guidance was provided in the Q3 earnings materials; management framed drivers and synergies qualitatively .

Earnings Call Themes & Trends

Management Commentary

• “This has been the best financial quarter in our history, and our position in the free and low-cost streaming ecosystem is stronger than ever after completing the acquisition of Redbox during the quarter.” — William J. Rouhana, Jr., Chairman & CEO .
• “We saw tremendous growth, with revenue increasing 149% and Adjusted EBITDA 97% year over year. Despite a slowing economy, I am optimistic about the days ahead as we continue to serve value-conscious consumers across kiosk, transactional and ad-supported video on demand services.” — William J. Rouhana, Jr. .
• CFO transition: Jason Meier appointed CFO effective Nov 15, 2022, bringing deep media finance experience; former CFO Chris Mitchell continues as CFO of the parent company and remains on CSSE’s Board .

Q&A Highlights

• Q3 materials emphasized that operating loss was driven in part by one-time transaction expenses from the Redbox merger, clarifying the gap between GAAP losses and improved adjusted profitability (Adjusted EBITDA) .
• Management underscored distribution expansion (FuboTV FAST launches) and OEM remote-button wins as levers to drive user acquisition and engagement into 2023 .
• The company highlighted significant growth in app engagement (+4,000% viewed minutes Aug→Sep) as evidence of programming resonance and platform traction .

Note: The internal document repository experienced errors retrieving the full Q3 2022 call transcript; highlights above synthesize management’s prepared commentary and disclosures from the 8-K/press release. Public transcript references are available here for further review: InsiderMonkey (Dec 29, 2022) and MarketScreener (Nov 14, 2022) .

Estimates Context

• S&P Global consensus estimates for Q3 2022 were unavailable via the estimates tool at the time of analysis. The company stated it exceeded analyst consensus on revenue, adjusted EBITDA, and adjusted EPS for Q3 2022 .
• Given the lack of accessible S&P Global consensus, near-term estimate revisions may focus on higher AVOD/TVOD run-rate assumptions post-Redbox and integration timing/expense cadence.

Key Takeaways for Investors

• Scale benefits are emerging: AVOD/FAST/TVOD flywheel plus Redbox integration drove record revenue; 2023 discovery levers (VIZIO/Hisense remote buttons) should aid top-of-funnel growth .
• Profitability quality improved on an adjusted basis (EBITDA), but GAAP losses widened on one-time deal costs; watch the transition from integration costs to synergy realization into 2023 .
• Balance sheet leverage is materially higher post-merger; monitoring interest expense, free cash flow trajectory, and working capital is critical near term .
• Distribution expansion (FuboTV FAST, broader touchpoints) and app engagement inflection (+4,000% viewed minutes) suggest momentum in user acquisition/retention .
• No formal Q4/FY guidance was provided in Q3 materials, but the Aug 11 outlook pointed to revenue more than tripling over the subsequent year and >$40M synergies; execution against these targets is the core medium-term thesis .
• Trading lens: Near-term narrative hinges on integration cost fade, ad environment resilience, and TVOD tailwinds; catalysts include remote-button rollouts and incremental distribution wins .

Appendix: Prior Quarter Reference Sources

• Q1 2022 press release and 10-Q: revenue ~$29.21M; net loss ~$14.1M .
• Q2 2022 press release/call: revenue $37.6M; net loss ~$20.0–$20.8M; merger completed Aug 11 .

Sources and Citations:

• Q3 2022 8-K / Press Release and financial tables .
• External references for prior quarters and transaction context: GlobeNewswire Q1 PR, SEC 10-Q, BusinessWire Q2 PR, Motley Fool transcript summary, BusinessWire Redbox completion PR, InsiderMonkey/MarketScreener transcript references .