Cinedigm Corp. (CIDM) on Q3 2022 Results - Earnings Call Transcript
Operator: Good day, ladies and gentlemen. Today, we are hosting a Conference Call to discuss Cinedigm's Third Quarter Fiscal 2022 Results. My name is Adam, and I will be your conference operator. At this time, all participants are in a listen-only mode. We will have a question-and-answer session at the end of the call. Please limit yourself to one or two questions so that others may have a chance to ask questions too. You may reenter the queue. Please note that this call is being recorded. Your host for today is Ms. Laura Kiernan, Head of Investor Relations for Cinedigm. Please go ahead when you are ready.
Laura Kiernan: Thank you, Adam. Good afternoon, everyone, and welcome to Cinedigm's fiscal 2022 third quarter results conference call. Before we begin, I would like to point out that certain statements made on today's call contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. Potential risks and uncertainties that could cause the Company's business and financial results to differ materially from these forward-looking statements are described in the Company's periodic reports filed with the SEC from time to time. All the information discussed on this call is as of today, February 15, and Cinedigm undertakes no duty to update it. In addition, certain information presented on this call represents non-GAAP financial measures. With us today, we have Chris McGurk, the Chairman and CEO; John Canning, CFO; Yolanda Macias, Chief Content Officer; Gary Loffredo, Chief Operating Officer, General Counsel and President; Erick Opeka, Chief Strategy Officer and President of Cinedigm Networks; and Tony Huidor, Chief Technology and Product Officer, all of whom will be available for questions following the prepared remarks. I will now turn the call over to Chris McGurk to begin.
Chris McGurk: Thank you, Laura. Welcome everyone, and thanks for joining us on the call today. Clearly, we had great results this quarter on all fronts and that's because unlike many of the growth microcap and technology, new media stocks, we often get compared to, we are successfully executing on a strategic roadmap for sustained growth. We just posted record streaming revenues with our fourth quarter in a row of triple-digit streaming revenue growth. And we saw huge acceleration in all our key performance metrics, including monthly viewers, subscribers and total minutes viewed. We also have solid fundamentals, including a strong balance sheet with $20 million in cash and zero debt, and we have posted a net profit of $4.3 million year-to-date, and we are already seeing the strong streaming growth momentum carry-forward into this January and February as well. We are achieving these outstanding results because we have a unique strategy to capture all the upsides of the rapidly growing streaming and media technology business. Unlike almost all the other players in this space, we are not dependent on a single revenue stream or a single streaming channel. Instead, we have a portfolio of multiple revenue streams from advertising, subscriptions, technology and digital content. And we also have a robust portfolio of enthusiast streaming channels, more than two dozen with extremely broad distribution across every major streaming platform. And our portfolio of streaming channels does not compete with the big general entertainment subscription services like Disney+ and Netflix, but instead it's perfectly complimentary to them on every distribution platform. This unique revenue and channel portfolio strategy in the streaming space is what is driving our rapid growth and why we are such a different and high potential business and investment proposition than everyone else in the streaming and technology arena. Let me further underscore that point by going through some of the quarters highlights. Our total consolidated revenues are $14.1 million this quarter were up 42% over the prior year and up almost 40% over the prior sequential quarter. Streaming revenues were a new record and up a 104% with ad-supported streaming revenues up a 100% and subscription streaming revenues up 109%. And I know it's important to many of you that this quarter's revenues more than handly beat all the revenue estimates of all the analysts who follow our company. Our year-to-date consolidated revenues were $39.2 million, which was up 69% from last year led by our streaming revenues, which increased by 133%. This was driven by a serving ad-supported streaming revenue business, which was up 171% and also subscription streaming revenue, which was up 90% year-to-date versus the prior year. And it's very important to note that we achieved this huge overall streaming revenue growth against increasingly tougher comparisons as we grew strongly each quarter last year as well. Notwithstanding that we have now grown streaming revenues and triple-digits for four quarters in a row with record numbers in each quarter. Erick will expand further on the details and performance metrics of what's driving this massive growth and streaming and why our unique strategy is working so well. Year-to-date, we've also generated positive adjusted EBITDA of $7.5 million and net income of $4.3 million or $0.03 per share. Again, our EPS this quarter of nil per share also very handly beat the estimates of all the analysts who follow our company. However, as I've said before on these calls, we are now in a rapid growth mode and continue to invest in accretive acquisitions, more premium content and technology enhancements to drive our streaming growth. So while we have been, and we'll continue to invest behind smart accretive growth opportunities, I also want to emphasize that our positive year-to-date net income combined with our zero balance sheet is another key attribute of Cinedigm that clearly separates us from most of the other players in our space. Let me expand a little bit more on our investment activities for the roll-up acquisition, film and TV content and technology initiatives that are fueling our triple-digit streaming growth. The streaming and technology acquisition asset roll-up strategy, we have successfully executed over the last 14 months has resulted in significant accretive additions to our streaming channel and digital content portfolios. Last month, we announced an agreement to acquire Digital Media Rights or DMR, a New York-based streaming company with 10 streaming channels and 7,500 films and TV titles. DMR has a particular focus on Asian and Anime titles and channels, two of the hottest content categories in the world right now. Of the DMR deal, which is dependent on the final stages of diligence in a little over a year, we will have accretively added 15 streaming channels, more than 20,000 film and TV titles and full ownership of our industry-leading Matchpoint streaming technology to our asset portfolio. Clearly, DMR is just the latest example of how key players in the media and technology space continue to be attracted by Cinedigm's technology, distribution muscle, content, scale and public currency and seek to be part of our rapid growth narrative. As far as film and TV content acquisitions are concerned, we continue to rapidly build our library of premium distribution rights through our acquisition roll-up strategy, the distribution deals we have in place with key suppliers like Hallmark and the NFL and new content licensing deals. We now have a film and TV library of approximately 40,000 titles with about 35,000 or 90% of those titles streaming assets. Those titles have a concentration in genres like family, indie film, action and horror that clearly support our streaming channel portfolio and growth plans. This is one of the largest modern streaming content libraries in the world. And it's very important to note that we are not following the path of many of our competitors who are developing films and TV properties from scratch and taking on significant production risk. Instead, the vast majority of the content we acquire is finished product with very predictable market potential and in the vast majority of cases with acquisition deals that either require small advances or revenue-sharing deals with no upfront investment. Finally, at our core, we have always been an innovative industry-leading technology company, and we continue to invest in our technology future. Our recent augmented reality or AR announcement with Nreal, our full acquisition of and enhancements to our state-of-the-art proprietary Matchpoint streaming technology and the ramp up of our engineering team at Cinedigm India, all underscore our commitment to be at the forefront of where media business innovation is heading, be it the Metaverse, AR, NFTs, or streaming technology enhancements. Another extremely important factor and one that I feel I do not emphasize enough that sets us apart from other players in our space is our experienced executive team who all have deep industry knowledge and relationships with the capability to manage a much larger company. Finally, we believe with all the recent market volatility and impact on our sector that Cinedigm presents a much more appealing investment opportunity than ever before. Let me quote Bill Ackman of Pershing Square, who recently plowed a massive investment into Netflix to take advantage of an incredibly compelling bargain investment opportunity. Ackman stated, many of our best investments have emerged when other investors whose time horizons are short-term discard great companies at prices that look extraordinarily attractive when one has a long-term horizon. And he further pointed out, we are all in on streaming. We believe this thinking clearly could apply to Cinedigm only with even more upside is evidenced by our record results this quarter and year-to-date. And with that, I'll hand it over to John Canning, then Erick Opeka will speak more about our streaming strategy and results. Following that, we'll take your questions. And finally, I'll provide some closing remarks. John?
John Canning: Thank you, Chris, and good afternoon, everyone. As Chris mentioned, our fundamentals are very strong, including no debt, a $20 million cash balance and both positive net income and positive adjusted EBITDA year-to-date. We are poised to continue considering accretive acquisition opportunities, while we reinvest in the organic growth of our business, improving and expanding upon our proprietary Matchpoint technology and supplementing our already strong management team. Our balance sheet remains strong as we continue to take a measured approach to fundraising activities to support our acquisition and overall growth strategies. From this position of strength, while we remain debt-free, we continuously evaluate our optimal capital structure and would consider less dilutive financing alternatives when appropriate. We handily beat both the revenue and EPS estimates of all the analysts that follow us this quarter and we are hopeful that we will be picking up additional coverage in the near future. I'd also like to reiterate, as Chris said, that we operate a portfolio business model in media technology, content and streaming that provides multiple revenue streams to fuel this rapid growth. This maximizes growth opportunities and minimizes risk. While our streaming and digital content business continues to rapidly grow and become an ever larger percentage of our total business, we are also considering breaking out cinema equipment and our non-digital based distribution business into a legacy business line next fiscal year to highlight more clearly our key growth drivers. It's worth mentioning that since having joined Cinedigm five months ago, we have significantly enhanced the accounting and finance organizations, systems, processes and the depth of experience necessary to support our goal of becoming a much larger enterprise. On the accounting side, we've improved the functionality of our existing tools and streamlined integrations with our Matchpoint technology, bolstering controls and improving efficiency. On the finance side, we've expanded the team to include topnotch talent managing our planning and analysis, budgeting, forecasting and business intelligence, driving more timely and accurate reporting to inform decision-making across the enterprise. Finally, I want to reiterate that our successful portfolio revenue and streaming channel strategy remains firmly on track, and we are prepared for and committed to achieving our long-term goals over the next two to four years. These include targeting at least 50% annual revenue growth in streaming and digital, growing revenue to $150 million through organic and acquired revenue, increasing monthly viewers to over 40 million, growing engagement to 1 billion connected TV minutes from 0.5 billion per month and growing the content library to 75,000 titles. You can find our latest investor presentation hot off the presses at investor.cinedigm.com/events-and-presentations. Now I'd like to hand it over to Erick. Erick?
Erick Opeka: Thank you, John, and thanks, everyone, for joining the call today. Before I review our results in streaming, I wanted to expand on our strategic imperative and where we fit into this rapidly changing media ecosystem. The promise of streaming has always been about two things; the freedom of choice and a better value for consumers. Over the last few years, consumers have grown increasingly wary of the cable bundle, which has lost more than 20 million households over the last 24 months. This is being driven by one key factor. Consumers have always wanted the ability to pick and choose the channels and content they want and just not pay for those that they don't watch. Initially, the promise of streaming was exactly that. You got to choose the channels you wanted and were free from the expensive long-term contracts and commitments and poor customer service of the legacy bundle. However, the trends in recent weeks and months point to a future where major media companies are going to claw back all of that choice and value in an attempt to recreate the past. What have we seen? Rapid price increases across the board at major streaming services and virtual cable providers, some upwards of 35% to 40%. Force bundling of services consumers didn't ask for, mega mergers of course even more bundling and even a return to contractual pricing. Our philosophy and value proposition at Cinedigm couldn't be more different than that. Our values are about providing consumers the diversity of choice that they desire at price points they can afford even if that means free with that, allowing consumers the ability to stream their passions and build their own bundles of content is a winning strategy because frankly, that's what consumers have been clamoring for decades. Based on our results, it's clear our strategy is fully resonating with consumers. Streaming channel revenues increased 104% over the prior year quarter and set a new company record. Ad-supported streaming channels revenues increased to 100% over the prior year quarter and subscription streaming channel revenues increased 109% over the prior year quarter to 954,000 subs. We are closing in quickly on that one million subscriber milestone. And we've seen new milestones across almost every facet of our business that reinforce consumers are enjoying Cinedigm's product. Total streaming minutes in the quarter rose to 1.33 billion, up 47% from the prior year quarter and the cumulative minutes streamed in the first nine months of the year were 3.92 billion, up more than 112% over the 1.84 billion streamed in the prior year first nine months. Total monthly ad-supported streaming channel viewers in the quarter were approximately 33 million, up 44% versus 22.6 million in the prior year quarter. And as we noted, total subscribers to our subscription offerings increased to approximately 954,000, up 466% from the prior year quarter. Additionally, our current streaming content library – sorry, our content library overall of approximately 40,000 titles, of which 90% are available for streaming, makes Cinedigm one of the largest streaming libraries in the world compared to other key streaming service providers like Amazon Prime, Netflix and Tubi. This is according to data from Ampere Analytics from this last December 2021. You want to take a look at that. It also is in the presentation that John just mentioned. Our ability to scale and achieve these viewership and subscriber milestones at this rate is a reflection of our successful multipronged portfolio strategy that Chris described earlier. First, we continue to launch new channels into the market with the goal of at least one new channel in the market per quarter. For example, in the last quarter, we launched cable and broadcast network, the country network into the fast linear space. We've done it with other players such as El Rey and others. Second, we continue to focus on content and programming. We added more than 5,000 films and series to our portfolio in the last quarter and have built a top-notch team of programmers with considerable experience growing audience in the cable and streaming environments at companies like Sinclair, Tony Networks and WGN. Third, we continue to focus on expanding the distribution of our services adding 90 new distribution outlets for our portfolio in the last quarter alone, including new distribution of channels with Comcast, Dish Network, DirecTV, ViacomCBS's PlutoTV, IMDBtv, Samsung TV Plus, LG channels and more. Our blue-chip distribution partners reflect the high quality of our brands and content, and we expect that trend to continue. Finally, our focus on technology enables us to accomplish with no other company in the space can do. Due to our tech, we can operate more channels at lower operating costs than anyone in the business. The same technology is also enabling us to optimize advertising yields, use AI and machine learning to price and value content and create new experience to prepare us for the next generation of distribution, whether it's NFTs, the Metaverse, VR, AR or whatever new developments are in front of us, we will be ready. Technology is at the heart of our competitive moat. We are planning to add more than 100 employees over time, concentrated in our Cinedigm India technology hub as we develop new game-changing products and software experiences to further our already broad market advantages. Beauty of our strategy is that with scale, we can generate more distribution, better content, better partners and ultimately more revenue. While we are growing at an incredible clip today, our acquisition roll-up strategy, most recently exemplified by DMR enables us to do this faster in a way that no other company could match. To sum it up, given our relentless focus on providing consumers the choice and value they want and combine with our portfolio strategy and technological moat, we have ample layers to continue the rapid organic growth trajectory we are on and with our accretive M&A strategy will afford us the ability to grow far faster and at better operating metrics than our competitors in the market. With that, let me turn things over to the operator to take your questions.
Operator: Our first question today is from Dan Kurnos from The Benchmark Company. Dan, please go ahead. Your line is open.
Daniel Kurnos: Yes. Hi. Good afternoon, good morning . Obviously, stock reacting well here off a really strong print. I guess first question, Chris or Erick, we've talked a lot about kind of support the growth of the portfolio here, you guys have added a ton of channels, you've added a boatload of content. Now you've got DMR, which builds a nice little niche with – it gives you a really strong presence, which I think is kind of a cornerstone for an umbrella channel. So maybe if you want to just update us on your thoughts how close you're getting to that and then any color you can kind of provide us on valuation or contribution from DMR, just how we should think about the incremental benefit from the acquisition or synergies would be helpful? Thanks.
Chris McGurk: Yes. This is Chris. Dan, thank you. Just in terms of the DMR question, we're getting close to closing that deal. I don't want to get into details until it's closed. But we think DMR is going to be incredibly additive to what we're doing. 7,500 titles, concentration on Anime and Asian titles, 10 channels, all that content is going to be incredibly useful across our portfolio for channels like CONtv or horror channels, that kind of thing. So they're going to help us in a number of ways, content channels and obviously, getting that scale is going to help set us up for the umbrella channel ideas that we've been considering and we've talked about before on these calls. So that's the DMR piece. I'll let Erick answer the question about our portfolio and growth and maybe a little more specifics on timetable and thinking of the umbrella.
Erick Opeka: Yes, sure. Hi, Dan. So I think one of the big things about a portfolio strategy, like any strategy is, you're constantly adding new properties to the portfolio and you're calling things that don't work. So I think that's really – we're still in growth mode of adding new things to the portfolio. The market is still very nascent. If you kind of look at – if you look at sort of the long-term horizon, there's only around $3 billion to $4 billion of fast advertising happening today depending on you talk – who you talk to, which analysts of that market you talk to. But on the broader scope, there's $70 billion from the rapidly eroding legacy system that needs to flow somewhere. So we think you're just going to see the sustained long-term growth. So what does that mean? That means there's the demand for inventory is being outstripped by availability. So we think this is a really good time for us to continue to add new channels to the portfolio, but with a real focus on learning what our – I've listed a lot of great partners, really learning what is going to drive their business because ultimately, in addition to serving consumers, we're also trying to build great channel for those partners. So I think that's a little bit more on where we're going on the portfolio. In terms of how DMR enhances this portfolio, you did hit the nail on the head when you talked about Anime. As you look at every – every major streaming service has a big Anime component, also has a big batch of foreign dramas, which are white hot right now, driving a lot of attention in the market. But beyond that, we also are bringing in components in terms of their ad network, which adds more scale. This is the year we're going to be adding direct sales to our repertoire and really expanding CPM. So we're not only just getting channels and content, we're also getting capabilities as well.
Daniel Kurnos: That's really good color. And on that last point, Erick, that was going to be one of the questions I was going to talk about. Just looking at your results, it seems pretty clear to me, and I know you mentioned this somewhat in your prepared remarks that you guys had a very healthy uptick in both fill rates and CPMs in the quarter. And I'm just curious, well, a) just talk about how much low-hanging fruit there is to still pick there? And then, b) as we look into Q1, there's obviously been some noise in the marketplace around potential worries about the consumer inflation, et cetera. And I know you guys weren't impacted by any supply chain stuff, obvious in your Q3 results, but just curious what kind of trends you're seeing as we head into the March quarter?
Erick Opeka: Sure. Well, look – and I think as we've gone through many quarters over the last year talking about this, one of the things that I'm always impressed by is just when I think the team's ability to bring even more revenue growth out of the inventory, they go and they do even more. I just got feedback from my team that we are already for February pacing to where we were in November. And I'm sure you know, February is not exactly very robust advertising month as the Super Bowl winds off and the holidays are in the rearview mirror. So the fact that we're pacing in February to where we were in November puts – to me, that's just a sliver example of just how good our team has been at optimizing our ad yields. CPMs are up, our render rates are among the highest they've ever been, and our fill rates are incredible just given the seasonality we're seeing. So the caveat obviously is we're still halfway through the quarter here. But I think that example sort of – it exemplifies just how focused we are on being the best in the business at maximizing yield out of the inventory. They clamor for me every day to deliver them more inventory through M&A and better content because they know they can fill it. So I think that's one of the great strategic advantages we as a company have is we're just very, very good at extracting revenue out of inventory even when the rest of the market made the experience of things. We're not seeing that so far.
Daniel Kurnos: Got it. Super helpful. I have asked a couple of multiparter, so I guess I'll get back in the queue for now. So thanks for all the color guys. I appreciate it, and excellent finish to the calendar year.
Chris McGurk: Thanks, Dan.
Erick Opeka: Thank you.
Operator: The next question is from Brian Kinstlinger from Alliance Global Partners. Brain, your line is open. Please go ahead.
Brian Kinstlinger: Hey, guys. Great quarter. First, can you update us on the expected timing for the launch of the Elvis channel? I think it was supposed to launch on his birthday. And I didn't know if I saw it. Maybe you can tell us also what distribution partners will be streaming this channel?
Erick Opeka: Yes. Hi. Erick here. So yes, we did – when we initially announced it, I think we were originally aiming for Elvis' birthday. But one thing I want to make clear about when we announced forthcoming channels, it's almost – I think you can kind of – they're akin to development deals around movies, right, where sometimes they take – sometimes we're able to go faster than we anticipate, which was actually the case with El Rey, I think we were live in a few weeks after launch an announcement. Others take longer, especially if there's a lot of original programming, if there's a lot of parties, if there's a lot of approvals and things. So I think Elvis, clearly, just given the high profile, given our focus on really getting the content right given the brand care and feeding that has to happen, it's taking longer. And also, there is a big movie coming out in the middle of the year. I think it's slated for July staring, Tom Hanks as Colonel Parker, story of Elvis, huge priority for WarnerMedia. So obviously, we want to – if we can get this out in the market in tandem with that, it's going to be just a much more successful launch and far more culturally relevant. So long story short, timing and windowing as we've seen with movies this last year, you have to be flexible and change and roll with the optimal timing. And so this is really the same thing here. So we're still working on it, working heavily. We'll have more details on the distribution partners and so on. We would expect it to look very similar to other offerings we brought into the market.
Chris McGurk: Yes, Brian, we think the Warner movie is a little bit more important than Elvis' birthday, I think, to sum it up.
Brian Kinstlinger: Yes. And then as it relates to the Real Madrid channel, can you talk about when you'll have the picture-in-picture technology or any other updates you need to make it so that you can better monetize the solid viewership? And then maybe you can provide an update on any KPIs for that channel?
Erick Opeka: Yes, sure. So, well, here's the great news about that channel is it's doing very well, right? We've seen in excess of about 3.2 million viewers on that channel pretty consistently. Even when there's not – even when there's matches or not matches, we're finding an actual increase in uptake in the non-match programming. As I think we've mentioned on previous calls, the biggest challenge with soccer is unlike football that's kind of had 50, 60 years to kind of shape its cadence to work in the North American TV advertising market, football does not have the same sort of pauses and breaks every – sometimes even maddeningly that happens when you're watching an NFL game. That said, we are in deep negotiations with some technology providers to allow us to do some of the things like picture-in-picture, side-by-side screen and other things. We're also – we already do have deployed the technology to do overlays and sponsorships. So we'll be able to leverage some of that as we ramp up our direct sales efforts this year on the overlay sponsorship side. The thing about the side-by-side, picture-in-picture type technology, sometimes those things require – unlike a broadcast stream, they require participation and approval of the third-party technology partners we work with simply because we have ad sharing deals and other things. And so if they can't leverage that technology for their share, then it becomes a problem. So it's a little more complicated than if we were just a broadcast network, we could just deploy it. But it's going to take a little more time and effort to get it right. But I think the upside to that is we'll have basically come to market with something that nobody else can do. So I think there's a lot of goodwill to get it right because it may lead to more business from other European teams if we're able to successfully deploy it.
Brian Kinstlinger: Great. And then on render rates and prices, you made some comments. First of all, with the new technology you have, is there any way to quantify how much stronger render rates are from a year ago but from a percentage basis? And then from a pricing standpoint, you made a couple of comments. It sounded interesting. It sounds like CPMs are up. It sounds like demand exceeds supply of inventory units. How do you see pricing over the next 12, 18 months, up 10%, 20% more?
Chris McGurk: Sure. Well, so I'll give you sort of the philosophy we have. So first up, on the render side, I'll have to get back to you on specific numbers, but I do think we are approaching mid-90% effectiveness there, which is a pretty substantial improvement over where we were last year. That's one big piece of it is there. We still have a few platforms and partners where we got work to do on that front, but it's more of a mop-up exercise. So we've really across the board, dramatically improved that. In terms of pricing, I think pricing is really a function of two things: one, having the content that advertisers want and the audience that advertisers want affords you the ability to increase pricing. Third is actually just time and market and getting market trust that you deliver on the ads and the impact that the advertiser wants. Well, the good news is we've been in market long enough where many of the advertisers are now familiar with us, our brands. Keep in mind, our portfolio is very heavy with emerging brands, new brands, brands have made transition from broadcast to fast and so on. So it takes time, but I think we're starting to see some real goodwill emerge there. As you note – as you saw from our earlier notes, we've dramatically expanded the content portfolio. And I think this year, our focus on bringing in top-tier recognizable series, exclusives, even some original programming that we license is really going to be a big part of being able to increase our ask. And then lastly, of course, having the team in place to do those direct sales to get that ask. I mean I'll give you a great example, right now, we're running a private marketplace deal that's nearly a $45 CPM. That's a lot higher than what we're normally doing, by more than twofold. So if we can – there's a lot more headroom on that front as we improve the value of our content and programming. Those are Hulu and greater type numbers. So we have a lot of headroom on that as we add better programming, deploy more technology and really increase our direct sales efforts.
Brian Kinstlinger: Great. I have one last question. With the acquisition of DMR, I'm wondering, are there any limits to where they were distributing? Meaning now that they're working with you, are there any video-on-demand services or other platforms that weren't necessarily working with them, but now they can leverage your reach and maybe you can get more out of that?
Erick Opeka: Absolutely. So a couple of things. So I think, first off, their business has been predominantly an ad – even though they offer some of their services and brands as a subscription, they're predominantly an advertising-based company. Because we know and you guys know, we are a hybrid model, we do advertising and subscription. So first off, being able to take 10 new brands into market and either launch them as new subscription services or combine their content into our existing services. A great example is they have one of the greatest libraries of foreign horror and we have one of the fastest-growing horror streaming service in the market. So we can immediately not only improve the content on our horror service, but we can also – they have a fantastic Anime service called RetroCrush, which is kind of like a retro animated version of Crunchyroll. It's very lightly distributed on the subscription side. We can bring that to our 25-plus subscription platforms, partners, cable, international. So we really can dramatically scale up the distribution, the subscription is where they bring – we bring a lot of benefits. On the advertising side, they've had a lot of experience building their ad network and driving social ad revenue that has not been a big piece of our business. So those two sort of – it's a very kind of symbiotic situation there where they have things that they're great at that help our overall business, and we can hand off to them. And we have great distribution and models and partners that they're not working with today to enhance their offerings. And then you add in signing the content elements from their services into our services that are starting to scale. It just makes for a really rich base of opportunities between us.
Brian Kinstlinger: Great. Thanks so much guys.
Chris McGurk: Thanks, Brian.
Operator: Our final question today is from Scott Buck of H.C. Wainwright. Scott, your line is open. Please go ahead.
Scott Buck: Hi, good morning guys. Thank you for taking my questions. First, I was hoping you could just kind of talk about what the environment is like for content acquisition in terms of competitiveness and pricing these days? And how that could impact the cadence of future acquisitions?
Chris McGurk: Yes. I will take. This is Chris. Sure. Scott, thanks for joining the call today. Scott, I think – we're in a great position, as I mentioned in my remarks, in order to acquire premium independent content right now. There were fewer distributors in the marketplace, and we're one of the biggest independent buyers of distribution rights in the market witnessed as we both mentioned, the size of our library of 40,000 film and TV titles and 35,000 of which have a streaming component. So we're one of the largest modern streaming libraries. And that gives us very, very strong leverage to build and renew distribution deals with key players, as I said, like Hallmark and the NFL, but to also acquire finished content in the market. And increasingly, I think, reasonable deal terms where many of the deals that we're doing now to acquire film and TV content, either require a very minimal advance upfront or there are revenue-sharing deal. So there's no investment upfront. And so we've got leverage in the market. We've got the large library. We've got the ability to acquire finished product where we've got a track record of distributing content for 20 years right now. We know what's working in the marketplace now and what isn't. And acquiring finished content gives you a much better opportunity to pick up films and TV episodes and other pieces of content that you know has great and immediate market potential without taking on the risk like many of our competitors are, obviously, of actually developing and producing content from scratch. That's the very, very small part of what we're doing. It’s not really in our DNA. And I think all those factors combined have put us really in the driver's seat in a buyer's market for independent content, and that's why our library is expanding. And that's why we've been fueling all of our channels with this content, and it's leading to that enormous growth that you're seeing.
Scott Buck: That's great. That's really good color. I appreciate that. And second one from me. We talked a lot about revenue growth. How should we be thinking about the growth in SG&A? What do you guys need in terms of additional headcount? I think I heard the number 100 thrown out over the next few years. But where is the investment in OpEx? And how should we think about that over the next 12 to 24 months?
Chris McGurk: Yes, I'll let the others answer that. But the 100 figure, remember, we're talking about the expansion of our engineering and technology team in Cinedigm India. And obviously, the cost of doing business over there is very favorable. And that's where that expansion is going to come. I'll let John or Erick respond to the rest of your question.
John Canning: Yes. I can touch on that. Yes, we're – and then I'll hand it off to Erick. We're currently poised to support the growth we have in mind from an SG&A perspective. We certainly aren't expecting SG&A to grow any faster than our overall company growth, but certainly to be growing much, much more slowly. We're – we've done a great deal of investing in our teams, our processes, our systems to get to this point to support growing to $150 million revenue company. So we're comfortable that we're in good shape to get there. And with this management team, we're going to do it quite smartly. Erick?
Erick Opeka: Yes. And just to second John's comments, I think as you look at and compare Cinedigm to other – to our peers, other micro caps, streaming plays and so on. I think one of the things you'll see is we're already relatively disciplined on cost. We're not running huge deficits like some of our peers in the market are. But we're looking at it not only that we're looking at leveraging technology to tighten that up even more, right? We're operating with a comparable investment in people nearly a 30-channel portfolio that some people have the same amount of people that they're doing one or maybe two channels. So we already have a lot of operational efficiencies that we drive from technology. So one of the things that we're looking at is how can we deploy even more technology to allow the people that we already have in place do more. And so that's really at the heart of what we're doing, right, is how do we get more efficient there. So I think in the future, you're going to see our SG&A growth, we had to invest just to get the staff and base up to a level that we could support the growth we were at, we were undermanned. I think now going forward, it's going to be less about absolute headcount and more about how to get more productivity through the deployment of technology tools to get there. So I would say, I think more modest SG&A growth go forward than you've seen over the last 18 to 24 months.
Scott Buck: Great. That's perfect. I appreciate the time guys. Thanks again and congrats on the quarter.
Chris McGurk: Hey, thanks, Scott. Thanks for joining.
Operator: This now concludes today's Q&A session. So I'll hand back to Chris McGurk for any closing remarks.
Chris McGurk: Thanks. So thank you, everyone, for joining us today and for your interest in Cinedigm. To reiterate, we had our strongest results ever in streaming this quarter, registering record triple-digit revenue growth for the fourth quarter in a row. We have a unique strategy and portfolio business model in technology, entertainment, content and streaming that provides multiple revenue streams in a broad portfolio of enthusiast streaming channels to fuel this rapid growth. Unlike most players in our space, we are not dependent on a single channel or a single revenue stream. And our enthusiast channel business is not competitive with the big general entertainment subscription streamers like Disney+ and Netflix. Instead, it is perfectly complementary to them. We also have a strong balance sheet with zero debt and are net profitable year-to-date. Clearly, we continue to fire on all cylinders and believe we present a very compelling investment opportunity, particularly at this moment in time. Please follow-up with Laura Kiernan and the team at High Touch Investor Relations with any other questions you may have. She can be reached at cinedigm@htir.net. We look forward to speaking with you again when we report our fourth quarter and full-year results. Thank you all.
Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.
