Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- National CineMedia Inc (NCMI, Financial) reported its fourth consecutive quarter of solid performance, indicating consistent execution and delivery of results.
- The box office generated significant growth, with seven films earning over $100 million in the third quarter, highlighting the recovery of the cinema industry.
- NCMI exceeded its revenue guidance for the third quarter, reporting $62.4 million in revenue, surpassing the expected range of $56 million to $58 million.
- The company saw a substantial increase in revenue per attendee year over year, driven by strong scatter market performance.
- NCMI's innovative advertising solutions, such as the Platinum ad unit and retargeting platforms like Boomerang and Boost, are gaining traction and contributing to revenue growth.
Negative Points
- Total revenue for the third quarter decreased by 10% year over year, primarily due to a high mix of G and PG-rated movies in July, which are harder to monetize.
- National advertising revenue was down 10% compared to the previous year, impacted by lower attendance and a slight decrease in national advertising CPMs.
- Local and regional advertising revenue decreased by 24% year-to-date, largely due to the lingering effects of the 2023 writer and actor strikes.
- The company faces a challenging year-over-year comparison in the fourth quarter due to the previous year's success with Taylor Swift's concert movie.
- NCMI's guidance reflects potential margin compression in the fourth quarter, influenced by a high mix of G and PG-rated audiences in December.
Q & A Highlights
Q: Can you update us on your upfront visibility as we head into next year, and what are your goals for long-term commitments as you grow programmatic and self-serve platforms?
A: The upfront marketplace is evolving, with more advertisers buying closer to the scatter market. Our performance in scatter has been strong, and while the upfront market is shrinking, our pricing remained stable. We performed well compared to other media companies, and our focus is on maintaining this momentum.
Q: How is the demand for the new premium format ad package, and will these packages be sold exclusively to advertisers?
A: We have significant momentum in building the new ad package for premium formats. Advertisers are gravitating towards wider screens, and we expect traction. While exclusive deals are possible, it's more likely that inventory will be shared among multiple advertisers.
Q: Are you able to integrate QR codes with cinema partners for advertising formats, and how effective are they?
A: Almost all ad units can run QR codes, which have become popular for tracking consumer behavior. Our QR code download rates are the highest in the industry, providing significant traction for advertisers.
Q: Can you discuss the financial stability of exhibitors and the competitiveness of the screen advertising market?
A: There hasn't been significant shifting between exhibitors and advertising companies. We focus on renewals and are happy with our footprint, capturing 70% of opening weekend attendance. We continue to explore opportunities with exhibitors to enhance our market presence.
Q: Are you expecting attendance growth in the fourth quarter, and how does this impact your revenue guidance?
A: We expect attendance growth in Q4, but face challenging comps due to last year's Taylor Swift release. December's G/PG-rated films also impact revenue per attendee. Despite these factors, we anticipate slight margin compression year-over-year.
Q: How optimistic are you about growth in 2025, and is there operating leverage potential?
A: We are optimistic about 2025, expecting robust attendance growth and increased revenue per attendee. The slate for 2025 and 2026 looks strong, and we anticipate significant operating leverage opportunities as attendance and revenue per attendee improve.
Q: How do performance guarantees work in the scatter market compared to upfront contracts?
A: Performance guarantees can be offered in both scatter and upfront markets, provided we have enough time to execute. Our NCMX platform has gained traction, and we can deliver performance metrics in either market.
Q: Are you participating in live events with exhibitor partners, and what opportunities do you see in this area?
A: We have advertising rights for live events and are actively developing this business. We successfully monetized events like Taylor Swift's concert movie and see opportunities in communal experiences, which are attractive to advertisers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
