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Dolphin Entertainment, Inc. (DLPN)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 delivered record revenue of $11.45M (+3.8% YoY) but posted a GAAP net loss of $1.62M and an adjusted operating loss of $0.14M as ventures timing and lower sequential service activity compressed profitability .
  • Management reiterated confidence in exceeding $50M FY revenue (≥20% YoY) and delivering full‑year positive adjusted operating income; H1 revenue reached $26.68M and H1 adjusted operating income was $0.89M, positioning for a stronger second half .
  • Strategic catalysts: (1) formal launch into sports before the Q3 call, starting with athlete/influencer management economics (~20% take rate), (2) live events buildout targeting recurring revenue annuities, (3) consumer product ventures (Staple Gin launched; another liquor product targeted in 2H24; skincare in 2025), and (4) continued IMAX documentary pipeline after Blue Angels’ successful debut .
  • The narrative for H2: margin expansion and cash flow improvement as acquisition focus subsides, Ventures scale, and cross-sell synergies deepen across agencies; near-term stock reaction hinges on visibility into sports entry, venture monetization cadence, and trajectory vs FY targets .

What Went Well and What Went Wrong

What Went Well

  • Record Q2 revenue and improved cost structure: $11.45M revenue (+4% YoY); operating expenses fell to $12.6M from $18.5M (benefit from sharply lower goodwill impairment) .
  • Ventures traction: Blue Angels grossed $2.08M in the one‑week IMAX run and debuted #1 on Prime Video over Memorial Day; institutional IMAX run expected to provide multi‑year “annuity” revenue starting 6 months post-streaming .
  • Portfolio expansion: Acquisition of Elle Communications adds Impact PR scale; Oak View Group selected to operate Mastercard Midnight Theater; Staple Gin launched nationally via e‑commerce and with Southern Glazer’s distribution in NY, winning industry awards .

What Went Wrong

  • Sequential revenue decline from Q1 2024 ($15.2M) to Q2 2024 ($11.45M) pressured profitability; Q2 posted an adjusted operating loss of $0.14M vs Q1 adjusted operating income of $1.0M .
  • GAAP losses persisted despite YoY improvements: Q2 net loss was $1.62M (vs $7.96M prior year); interest expense remained ~$0.52M in the quarter, and adjusted operating margins turned negative in Q2 .
  • FY visibility still depends on execution of new verticals (sports) and timing of ventures monetization; investors flagged the need to see recurring revenue scale from live events and consumer products to stabilize margins .

Financial Results

Consolidated Results vs Prior Year and Prior Quarters

MetricQ2 2023Q4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$11.02 $12.00 $15.20 $11.45
EPS (Loss per share, $USD)$(0.60) $(0.54) $(0.02) $(0.08)
Net Loss ($USD Millions)$(7.96) $(9.60) $(0.30) $(1.62)
Operating Loss ($USD Millions)$(7.45) $(8.00) N/A$(1.12)
Adjusted Operating Income ($USD Millions)$(0.05) $0.30 $1.00 $(0.14)
Cash and Cash Equivalents ($USD Millions)N/A$6.40 $7.50 $9.80

Notes:

  • Adjusted Operating Income (non-GAAP) reconciliations provided by the company .
  • Q1 operating loss was not disclosed in the call materials; adjusted operating income was provided .

Margins (Adjusted Operating Margin %)

MetricQ2 2023Q4 2023Q1 2024Q2 2024
Adjusted Operating Margin %(0.5%) (calc from $(0.05)/$11.02) 2.5% (calc from $0.30/$12.00) 6.6% (calc from $1.00/$15.20) (1.2%) (calc from $(0.14)/$11.45)

Operating Expense and Non‑GAAP Items

MetricQ2 2023Q2 2024
Operating Expenses ($USD Millions)$18.48 $12.57
Depreciation & Amortization ($USD Millions)$0.54 $0.56
Goodwill Impairment ($USD Millions)$6.52 $0.19
Interest Expense ($USD Millions)$0.45 $0.52

Segment/Division Breakdown

SegmentQ2 2024 RevenueNotes
Not disclosedN/ACompany reports consolidated figures; narrative highlights by subsidiaries without segment revenue detail .

KPIs and Ventures Highlights

KPI / VentureQ2 2024Notes
Blue Angels IMAX Box Office (one-week run)$2.08M Debuted #1 on Prime Video on Memorial Day; institutional IMAX run expected to provide annuity-like revenue
Staple Gin LaunchActiveDouble Gold, 96 points; Southern Glazer’s NY distribution; national e‑commerce availability
Cash and Cash Equivalents$9.80M Up from $6.40M at 12/31/23

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024Goal to reach ≥$50M (prior goal referenced) Expect to exceed $50M Raised/affirmed trajectory
Adjusted Operating IncomeFY 2024Expect positive AOI (multi‑period emphasis since Q4 2023) Expect full‑year positive AOI Maintained
YoY Revenue GrowthFY 2024Not explicitly quantifiedAim for >20% YoY growth New quantified target
Sports Vertical LaunchH2 2024 (pre‑Q3 call)Not previously guidedFormal announcement and launch before next call New initiative timeline
Live EventsLate 2024 / 2025Ideation ongoing First owned/co‑owned event announcement expected later in 2024 or 2025 Timeline clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
IMAX documentary pipelineBlue Angels trailer, Amazon sale (~$3.75M expectation), institutional IMAX annuity detailed Blue Angels successful debut; next IMAX project timing discussed (potential theaters 1H26) Positive momentum; pipeline forming
Consumer products (Staple Gin, skincare)Staple Gin partnership, awards pre‑market; skincare strategy via GlowLab/Susan Yara Staple Gin launched with Southern; plan another liquor brand in 2H24; skincare product targeted for 2025 Expanding slate
Sports verticalNot mentioned as a near‑term launchLaunch pre‑Q3: athlete influencer mgmt, ~20% rev share; Olympics/NIL changes supportive New growth vector
Live eventsSpecial Projects acquisition; ideation for owned events First event announcement expected late 2024/2025; focus on recurring/annual formats Building for recurrence
Agency cross‑sell/organic growthQ4/Q1 emphasized cross‑sell, recovery post strikes; influencer vertical expansion (GlowLab, Osbrink) Continued subsidiary wins across 42West, Shore Fire, The Door, TDD, Special Projects Strengthening breadth

Management Commentary

  • “We expect the second half of the year to be even stronger… positioning Dolphin well for fiscal year 2024 revenue to exceed our goal of $50 million, as we aim for more than 20% year-over-year growth.” — William O’Dowd, CEO .
  • “Adjusted operating loss was $100,000 in Q2… we remain on target to report positive adjusted operating income for full year 2024 and beyond.” — William O’Dowd .
  • “Staple Gin… won Double Gold and a 96 point rating… now available nationally via e-commerce… via Southern Glazer’s Wine & Spirits in New York State.” — Company press release .
  • “We selected Oak View Group… to manage operations at Mastercard Midnight Theater… fully open… right after Labor Day.” — William O’Dowd .
  • “Operating expenses… were $12.6 million… vs $18.5 million in 2023… net loss… approximately $1.6 million… loss per share $0.08.” — Mirta Negrini, CFO/COO .

Q&A Highlights

  • Sports entry strategy: Build organically via athlete/broadcaster influencer management (~20% take), scaling into PR/events cross‑sell; formal launch announcement before next call .
  • IMAX pipeline timing: Next spectacle documentary could be finished in 2H25–1H26 depending on production scope; theaters potentially 1H26, with faster timelines possible for archival‑heavy projects .
  • Live events economics: Aim for recurring annual events with attractive per‑event profit profiles, building a multi‑event annuity over time .
  • Consumer products cadence: Expect another liquor venture announcement in 2H24; skincare product targeted for 2025 leveraging GlowLab/Susan Yara capabilities .
  • Operating leverage: With acquisitions complete, focus shifts to margin expansion and cash flow; H1 adjusted operating profit of ~$0.9M vs H1 2023 adjusted operating loss of ~$1.9M (nearly $3M swing) .

Estimates Context

  • S&P Global consensus estimates for Q2 2024 (EPS, Revenue, EBITDA) were unavailable via our data pull at this time; therefore, a beat/miss assessment vs Wall Street consensus cannot be made. Values retrieved from S&P Global were not accessible due to API limit constraints.
  • Implication: Absent consensus benchmarks, investors should focus on YoY/sequential trends, H2 visibility, and execution against FY guidance targets .

Key Takeaways for Investors

  • H2 setup is constructive: H1 revenue ($26.68M) and adjusted operating income ($0.89M) bolster confidence in exceeding $50M FY revenue and delivering positive full‑year AOI; watch near‑term proof points from sports launch and live events announcements .
  • Ventures are real and scaling: Blue Angels validated the IMAX event‑doc model and streaming monetization; institutional IMAX “annuity” provides longer‑tail contribution—monitor pipeline announcements and timing .
  • Consumer product flywheel: Staple Gin has early quality signals and distribution muscle (Southern Glazer’s); additional liquor venture in 2H24 and skincare in 2025 could create exit‑optionalities without Dolphin cash outlay .
  • Margin trajectory: Q2 adjusted operating loss reflects sequential normalization after a strong Q1; management targets margin expansion as cross‑sell deepens and ventures scale. Track AOI margin quarterly and interest expense headwinds .
  • New vertical optionality: Sports entry extends addressable market and monetization vectors (influencer management + PR/events), aided by permissive athlete monetization dynamics (NIL, Olympic social media) .
  • Event‑driven catalysts: Expect announcements on sports roster/partners and first owned/co‑owned event; OVG operating Mastercard Midnight Theater may improve venue economics post‑Labor Day .
  • Trading lens: Near‑term stock moves likely tied to visibility on H2 revenue cadence vs $50M+, sports launch specifics, and incremental venture announcements; medium‑term thesis hinges on replicable venture exits and recurring live event economics .