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IDW MEDIA HOLDINGS, INC. (IDWM)·Q2 2022 Earnings Summary

Executive Summary

  • Revenue was $6.05M, down 40% year over year (vs. $10.14M) and down sequentially from $11.85M, driven by zero entertainment revenue in Q2 while publishing grew modestly; consolidated net loss was $2.25M ($0.17 per share) vs. net income of $2.54M ($0.25) in Q2’21 .
  • Management reiterated H2 timing: revenue expected in Q3 from Surfside Girls and in Q4 from Locke & Key Season 3 under the derisked entertainment financing model; no debt and cash of $13.68M provide flexibility to invest in originals .
  • Publishing loss from operations improved to $(0.3)M vs. $(0.5)M YoY, aided by direct-to-consumer and retailer exclusives; IDWE swung to a $(1.7)M operating loss on zero revenue vs. $1.2M profit in Q2’21 .
  • Catalysts: delivery/recognition of Surfside Girls and Locke & Key S3 in H2, expanded original IP slate (100+ originals, 40+ in development) and 12 Eisner Award nominations supporting pipeline visibility .

What Went Well and What Went Wrong

  • What Went Well
    • Publishing revenue increased 1.1% YoY to $6.1M; loss from operations improved to $(0.3)M vs. $(0.5)M YoY, with SG&A ratio improving to 50.9% from 52.0% .
    • Balance sheet strength: $13.68M cash, $19.0M working capital, and no debt, enabling investment in original IP and derisked entertainment projects .
    • Strategic pipeline advances: “we expect to generate improved results… realize revenue… deliveries of both Season 3 of Locke & Key and Season 1 of Surfside Girls,” and 12 Eisner nominations highlighting content quality .
  • What Went Wrong
    • Consolidated results deteriorated: loss from operations of $(2.24)M vs. +$0.43M YoY; net loss $(2.25)M vs. +$2.54M YoY as entertainment revenue was absent in Q2 .
    • IDW Entertainment posted zero revenue (vs. $4.2M YoY) and an operating loss of $(1.7)M (vs. $1.2M profit YoY), underscoring quarter-to-quarter revenue lumpiness tied to deliveries .
    • Segment mix pressure: consolidated SG&A of $4.6M on $6.05M revenue compressed profitability in a quarter with no entertainment contribution .

Financial Results

MetricQ2 2021Q1 2022Q2 2022
Revenue ($USD Millions)$10.14 $11.85 $6.05
Direct Cost of Revenue ($USD Millions)$4.73 $4.79 $3.60
SG&A ($USD Millions)$4.92 $4.99 $4.60
Loss/Income from Operations ($USD Millions)$0.43 $1.98 $(2.24)
Net (Loss)/Income ($USD Millions)$2.54 $1.99 $(2.25)
Net EPS ($USD)$0.25 $0.15 $(0.17)
SegmentQ2 2021Q1 2022Q2 2022
IDW Publishing Revenue ($USD Millions)$6.0 $7.5 $6.1
IDW Entertainment Revenue ($USD Millions)$4.2 $4.3 $0.0
IDW Publishing Op Income (Loss) ($USD Millions)$(0.5) $0.5 $(0.3)
IDW Entertainment Op Income (Loss) ($USD Millions)$1.2 $2.0 $(1.7)
Corporate Op Income (Loss) ($USD Millions)$(0.3) $(0.5) $(0.3)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Entertainment revenue recognition from deliveries (Surfside Girls S1)Q3 2022Expect deliveries/revenue in H2 2022 (calendar) Expect revenue recognition from delivery of episodes in Q3 2022 Maintained/Clarified timing
Entertainment revenue recognition from deliveries (Locke & Key S3)Q4 2022Expect deliveries/revenue in H2 2022 (calendar) Expect revenue recognition from delivery in Q4 2022 Maintained/Clarified timing
Publishing originals contributionFY 2022 and beyondIncreased investment in originals; expect increased revenue from new originals throughout 2022 and beyond Expect increased revenue from new originals through balance of 2022 and beyond Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2021 and Q1 2022)Current Period (Q2 2022)Trend
Entertainment revenue cadence & derisked financingRevenue tied to deliveries; move to asset-light, derisked model; $4.2M Locke & Key S2 recognized in Q1; H2 deliveries for Surfside Girls and Locke & Key S3 “No revenue on the entertainment side” expected in Q2; focus on TTM view; expect Q3/Q4 recognition from Surfside Girls and Locke & Key S3 Consistent narrative; timing clarity improved
Original IP expansionScaling to ~40 originals annually; 100+ originals in library Over 100 originals with 40+ in development; adding 40 quality titles per year; expanding genres beyond legacy focus Accelerating pipeline breadth
Distribution and publishing profitabilityPenguin Random House full distribution; publishing SG&A ratio improvements; Batman game boosted margins Publishing loss narrowed; SG&A % improved; gross margin aided by prior-year games obsolescence write-off Operational discipline continues
Macro demand for contentStrong buyer appetite; consolidation raises IP value “Buyers don’t have enough supply… need something for everyone”; multi-buyer demand intact despite Netflix budget headlines Demand supportive
Governance changesUplisting to NYSE American; capital raise By-laws amended to add Chairman officer role; Howard Jonas appointed Chairman Governance formalization

Management Commentary

  • “Strategically, we made tremendous progress… expanding our IP… utilizing derisked entertainment financing models and our asset-light balance sheet to drive results.” – CEO Ezra Rosensaft .
  • “We expect to recognize revenue from… Season 3 of Locke & Key and Season 1 of Surfside Girls appearing on Netflix and Apple, respectively.” – CEO Ezra Rosensaft .
  • “Our balance sheet remains strong with a solid cash position and no debt… [positioning us] to generate consistent high-margin revenues going forward.” – CFO Brooke Feinstein .
  • “IDW original titles have received 12 nominations from the Will Eisner Comic Industry Awards.” – Earnings release .

Q&A Highlights

  • Pipeline and H2 deliveries: Management confirmed revenue recognition from Locke & Key S3 and Surfside Girls in H2; no other shows announced yet .
  • Delivery vs. air date accounting: Locke & Key intended to deliver with airing; Surfside Girls will recognize episodic fees upon episode deliveries with remainder on full delivery; potential back-end later .
  • Publishing gross margin: Higher gross margin aided by prior-year games obsolescence write-off (~$300k) .
  • Content demand environment: Despite headlines, major buyers (8–10) maintain robust demand; “they don’t have enough supply” .
  • Cash burn expectations: Approximate max ~$2M for remainder of year discussed qualitatively; cash invested in originals with inflows spread over time .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2022 was unavailable for IDWM due to missing CIQ mapping; as a result, estimate comparisons could not be performed. Values retrieved from S&P Global were not available for this ticker at the time of analysis.*

Key Takeaways for Investors

  • Quarter’s weakness was driven by timing: entertainment revenue was expected to be zero; publishing execution and SG&A discipline partly offset the gap .
  • Balance sheet optionality (no debt, $13.68M cash) supports continued investment in original IP while maintaining a derisked production model with high-margin fees upon delivery .
  • H2 catalysts are significant: Surfside Girls (Apple TV) and Locke & Key S3 (Netflix) deliveries should restore entertainment revenue cadence and improve consolidated profitability .
  • Pipeline quality indicators (12 Eisner nominations; 100+ originals, 40+ in development) provide medium-term visibility into monetizable content across publishing and entertainment .
  • Publishing profitability improving (lower operating loss YoY; SG&A ratio improvement); watch for continued benefits from retailer exclusives and new original titles .
  • Expect continued quarterly lumpiness; evaluate trailing-12-month performance and delivery schedules when assessing near-term trading opportunities around H2 events .
  • Governance formalization (Chairman role; Howard Jonas appointment) may aid strategic execution and investor relations posture .