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IDW MEDIA HOLDINGS, INC. (IDWM)·Q1 2023 Earnings Summary

Executive Summary

  • Revenue fell 44% year over year to $6.6M as IDW Entertainment recognized no meaningful revenue in the quarter; Publishing drove all revenue, supported by print strength in TMNT: The Last Ronin and retailer exclusives like Sonic the Hedgehog .
  • EPS swung to a loss of $0.15 from profit of $0.15 in Q1’22 and from $0.03 profit in Q4’22 as the prior-year quarter benefited from $4.3M of Locke & Key Season 2 delivery and ~$1.9M of DTC games revenue (Batman Adventures) that did not recur .
  • Management emphasized a “building year” with a focus on steady Publishing revenues, digital/direct-to-consumer expansion (Shopify migration in two phases during FY23), and advancing ~9–12 optioned Entertainment projects; expenditures on TV shows have “declined a bit,” heightening timing uncertainty .
  • No quantitative guidance was provided; liquidity is adequate with $9.3M cash and working capital of $16.8M, and management expects cash inflows plus working capital to sustain operations for at least the next 12 months .

What Went Well and What Went Wrong

What Went Well

  • Publishing print titles continued to show resilience with strong sales in TMNT: The Last Ronin and retailer exclusives for Sonic; book market revenue rose $734K YoY and retailer-exclusive revenue rose $551K YoY .
  • Management advanced a digital strategy to drive more consistent revenues, including a two-stage Shopify migration in FY23 to deepen direct customer connections .
  • Entertainment pipeline breadth improved with ~9–12 optioned projects and progress on Earthdivers (Hulu/20th Television) to a pilot script—often the step before a pilot decision .

What Went Wrong

  • Entertainment had no meaningful revenue in Q1’23 versus $4.3M in Q1’22 from Locke & Key S2, creating a difficult comparison and driving the consolidated revenue decline and operating loss .
  • Segment profitability deteriorated: IDWP shifted to a $0.3M operating loss (vs $0.5M op income in Q1’22), and IDWE posted a $0.5M loss (vs $2.0M op income in Q1’22) .
  • Overall operating margin dropped sharply as consolidated operating income swung from +$2.0M in Q1’22 to −$2.0M in Q1’23; management highlighted the unpredictability of Entertainment revenue timing amid softer TV content spending .

Financial Results

Consolidated P&L Trend (oldest → newest)

MetricQ3 2022Q4 2022Q1 2023
Revenue ($M)$7.7 $10.5 $6.6
Operating Income ($M)$(0.8) $0.3 $(2.0)
Operating Margin %−10.4% (calc from $−0.8/$7.7) 2.9% (calc from $0.3/$10.5) −30.2% (calc from $−2.0/$6.6)
Net Income ($M)$(0.8) $0.4 $(2.0)
EPS ($)$(0.06) $0.03 $(0.15)

Year-over-Year Comparison

MetricQ1 2022Q1 2023YoY Change
Revenue ($M)$11.8 $6.6 −44%
Operating Income ($M)$2.0 $(2.0) −$4.0M
Net Income ($M)$2.0 $(2.0) −$4.0M
EPS ($)$0.15 $(0.15) −$0.30

Segment Revenue and Operating Income (oldest → newest)

SegmentQ3 2022 Rev ($M)Q4 2022 Rev ($M)Q1 2023 Rev ($M)Q3 2022 Op Inc ($M)Q4 2022 Op Inc ($M)Q1 2023 Op Inc ($M)
IDW Publishing$6.6 $5.7 $6.6 $(0.6) $(1.6) $(0.3)
IDW Entertainment$1.2 $4.8 $0.0 $0.05 $2.8 $(0.5)
Corporate———$(0.2) $(0.9) $(1.2)

KPIs

KPIQ3 2022Q4 2022Q1 2023
Cash ($M)$10.25 $10.01 $9.33
Working Capital ($M)$18.1 $18.5 $16.8
IDWP SG&A as % of Revenue52.3% (3Q22) 65.2% (4Q22) 48.7% (1Q23)

Estimates vs Actuals

MetricPeriodS&P Global ConsensusActualBeat/Miss
RevenueQ1 2023Unavailable (no CIQ mapping/coverage)$6.6M N/A
EPSQ1 2023Unavailable (no CIQ mapping/coverage)$(0.15) N/A

Note: We attempted to retrieve S&P Global consensus estimates but they were unavailable for IDWM this quarter; as a result, no beat/miss determination versus consensus can be made.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quantitative financial guidance (revenue, margins, EPS)FY2023None provided None provided Maintained (none)
Liquidity runwayNext 12 monthsNot explicitly stated priorManagement expects cash inflows plus working capital sufficient for at least next 12 months New qualitative disclosure

Earnings Call Themes & Trends

TopicQ3 2022 (prior-2)Q4 2022 (prior-1)Q1 2023 (current)Trend
Entertainment pipeline and timingDelivered Surfside Girls S1; expect Locke & Key S3 in Q4; multiple dev deals announced ~10 projects in development; Surfside Girls not renewed in current form; timing to greenlight is unpredictable ~9–12 optioned projects; Earthdivers advanced to pilot script at Hulu/20th; TV spend “declined a bit” Pipeline maturing, but monetization timing remains uncertain
Publishing performanceSlightly down on fewer titles and PRH transition; steady base with strong book market titles 4Q publishing down on fewer titles; FY steady/slightly up Publishing delivered all revenue; print strength in TMNT and Sonic exclusives Stable, driven by print; mix shifts
Digital/DTC strategyNot a major focus in disclosuresStrategy to leverage IP across platforms; operational efficiency focus Two-phase Shopify migration in FY23; >20 initiatives prioritized (digital emphasis) Acceleration toward digital and DTC
Cost discipline/SG&ALoss reduced vs prior year SG&A elevated by $700K CEO severance Active cost controls incl. leaving roles unfilled; SG&A flat YoY Tightening costs post one-time items
Liquidity/capital needsCash $10.25M; WC $18.1M Cash $10.0M; WC $18.5M Cash $9.3M; WC $16.8M; no plan to raise equity; runway ≥12 months Adequate near-term liquidity, careful spend

Management Commentary

  • Strategic focus: “We view fiscal 2023 as an important transition year… Our Publishing division has established a strong reputation… Our Entertainment business has already demonstrated the ability to develop and deliver premier projects… We have nearly a dozen projects that have been optioned” .
  • Digital push: “We are migrating to a new digital platform to be hosted by Shopify… completed in 2 stages in fiscal year 2023… give us greater control and ability to have a direct connection with our loyal customers” .
  • Entertainment cadence: “There will be quarters where we will not recognize meaningful entertainment revenue… the magnitude of revenues moving forward may not be commensurate with those from historical deals” .
  • Publishing positioning: “Print revenue… delivered solid growth… strong sales for… Teenage Mutant Ninja Turtles, Last Ronin and Sonic the Hedgehog” .
  • Liquidity stance: “We anticipate that our expected cash inflows from operations during the next 12 months, combined with our working capital, will be sufficient to sustain operations for at least the next year” .

Notable quotes:

  • Allan Grafman, CEO: “We have some exciting properties optioned with top Hollywood partners and moving more properties to greenlit status remains a key focus” .
  • Allan Grafman: “We identified more than 20 possible initiatives to fuel our growth, including many which take IDW into digital platforms to connect directly with IDW fans” .
  • Brooke Feinstein, CFO: “In the first quarter of ’23, IDW Entertainment did not generate meaningful revenue… In the first quarter of ’22, IDW Entertainment generated revenue of $4.3 million” .

Q&A Highlights

  • Cost discipline: Management confirmed cost-control actions (e.g., holding open roles, weekly expense reviews) to move toward cash flow breakeven .
  • Digital roadmap: Shopify migration targeted in two stages (initial migration around May 1 and a Shopify “2.0” for enhanced fan experience), with exploration of user-generated content and motion comics/short videos .
  • Publishing cadence: Approximately 1,400 SKUs planned for the year (~1,200 comics including variants; ~113 collections/OGNs), with increased emphasis on owning IP .
  • Entertainment pipeline specifics: ~9–12 optioned projects with partners (20th Television, Hulu, Amazon, Lionsgate, AMC, Warner Bros., Universal, BBC); Earthdivers progressed to pilot script with Hulu/20th .
  • Liquidity and capital: Cash burn should not be straight-lined; management not planning to raise equity currently and expects cash plus working capital to fund operations for at least 12 months .

Estimates Context

  • S&P Global Wall Street consensus for Q1 2023 revenue and EPS was unavailable for IDWM this quarter (no CIQ mapping/coverage). Consequently, we cannot assess beats/misses versus consensus. Actual results were Revenue $6.6M and EPS $(0.15) .

Key Takeaways for Investors

  • Revenue variability will persist until Entertainment projects move from options to production; Publishing provides steadier baseline revenues in the interim .
  • Digital/DTC execution (Shopify migration) is a near-term catalyst to diversify revenue streams and strengthen customer relationships; watch for feature rollouts through FY23 .
  • Liquidity is adequate near term ($9.3M cash; $16.8M working capital), and management does not currently plan an equity raise; this reduces dilution risk if Entertainment monetization timing slips .
  • Entertainment pipeline is broad and advancing (e.g., Earthdivers to pilot script), but industry spending pullbacks and buyer timing remain swing factors for profitability .
  • Operating leverage is significant when Entertainment delivers (e.g., Q4’22), but absent deliveries, margins compress quickly; position sizing should reflect this binary cadence .
  • Publishing mix tailwinds (book market, retailer exclusives) and targeted return reduction programs support revenue quality despite fewer game campaign tailwinds vs prior year .
  • Near-term trading setup likely hinges on updates about Entertainment greenlights and digital launch milestones; absence of consensus estimates may increase volatility on company-specific news flow .