Dolphin Entertainment at LD Micro: Strategic Growth and Financial Prudence

Dolphin Entertainment (NASDAQ: DLPN) presented a comprehensive strategic overview on Thursday, 10 April 2025, at the 15th Annual LD Micro Invitational 2025. CEO Bill O'Dowd outlined the company's structure, strategy, and recent developments, highlighting both growth opportunities and financial challenges. The focus was on strengthening its marketing division and improving cash flow while addressing stock undervaluation.

Key Takeaways

• Dolphin Entertainment is structured into three divisions: production, marketing, and ventures.
• The company plans to consolidate office spaces to save $1.25 to $1.5 million annually.
• A $5,000 per week stock buyback program has been initiated to address stock undervaluation.
• The company aims to reach free cash flow positive within 3.5 years.
• Strategic partnerships and acquisitions are central to its growth strategy.

Financial Results

• Dolphin Entertainment aims to improve free cash flow by consolidating office spaces in 2026 and 2027, expecting to save $1.25 to $1.5 million annually.
• The company plans to pay off its term loan with BankUnited by September 2028, saving approximately $2.5 million per year.
• CEO Bill O'Dowd personally invested $50,000 in Dolphin stock in September and December, signaling confidence in the company's prospects.
• A $5,000 per week stock buyback program has been launched, totaling $260,000 annually, to address perceived undervaluation.

Operational Updates

• Dolphin Entertainment is divided into three main divisions: production, marketing, and ventures.
• The marketing division focuses on earned media, with a diverse portfolio in film, music, and culinary PR.
• The company launched Always Alpha, a women's sports management firm, in partnership with Alison Felix.
• Dolphin's production division is known for partnerships with Nickelodeon and IMAX, producing successful shows and documentaries.

Future Outlook

• Dolphin Entertainment plans no further acquisitions, having completed its strategic group of marketing companies.
• The company sees this as a pivotal moment to showcase its strengths, particularly in earned media.
• The aim is to reach free cash flow positive within 3.5 years, leveraging its current adjusted operating income and attractive enterprise value.

Q&A Highlights

• The company develops projects internally, providing revenue visibility and forecastability.
• The PR business is heavily retainer-based, ensuring steady revenue streams.

For more details, please refer to the full transcript below.

Full transcript - 15th Annual LD Micro Invitational 2025:

Operator: Okay. We are ready to begin our next presentation. So let's please give a warm welcome to the CEO of Dolphin Entertainment, Bill O'Dowd.

Bill O'Dowd, CEO, Dolphin Entertainment: Well, thank you. I've been tethered to the podium, so I'll be good and not wander around. Pleasure to see everybody, and thank you for coming here to learn more about Dolphin. See some familiar faces that I know know Dolphin, but it's always nice to be introduced to some new ones through LD Micro. So thank you, LD.

All right. Well, here we go. So obviously, we have a cautionary note on forward looking statements that I'm sure you're riveted by and want to read every word. But then Dolphin. So just to kind of give a quick overview of Dolphin and our history.

It's a company I founded in 1996, and the first twenty years are easy. We were a private company that produced television, and then we expanded into features and digital. And it was in doing some of the features that we realized that we could make a play to go public by on an acquisition strategy to buy entertainment marketing companies. And we uplisted in 2017 after 42us came into the family and I can talk about each of these companies a little bit with the strategy that we would build this group of elite entertainment marketing companies. And we bought a company a year as you can see.

And we finished the group now and I'll be happy to talk about it. So as we think about Dolphin and how we earn money, we think of ourselves in three main divisions. We have Dolphin Entertainment which is the legacy production studio. We have Dolphin Marketing, which is the group of the marketing companies that I'll talk about next. And then of course, why did we put this group together?

And that's for the third bucket, which is Dolphin Ventures, as we start to take ownership stakes in some of the things that we market. That gives us optionality to use the business school term or upside or whatever words you like. Well, first, the legacy, Dolphin Entertainment. So we started by making television. You can see we're probably most known for our ten year partnership or so with Nickelodeon.

If you're the right age, we made some shows that you'll remember, like Zoe 101 or Ned's Declassified. But we expanded into digital. Kids were online first watching video, and then we start doing feature films. That's an image from a Mattel co production we did, one of the ones that led us into thinking about buying PR firms and influencer marketing firms. And then we're back in this space with documentaries as well.

We entered into a fifty-fifty partnership with IMAX to do documentaries for theaters. We put our first one in last year called Blue Angels on the Flying Squadron from the U. S. Navy, and it did extremely well for us, both from a profit perspective and then also just an awareness in the market perspective. We premiered it on Amazon after it was in theaters over Memorial Day weekend.

It was the number one movie on Amazon for weeks, which was great. We just finished shooting. We went back and scripted. Again, this is our legacy. We just finished shooting the remake of Youngblood up in Toronto.

Youngblood, if you remember it, was a well, in the movie, he's a hockey prodigy, teen prodigy played by Rob Lowe. His best friend was Patrick Swayze in the original. Keanu Reeves was the goalie. And we thought it was due for a remake. The basic storyline in the original was that Youngblood had to learn how to fight to be a man that may not have aged as well.

So we flipped it. And he's a hot head on the ice and he's always in the penalty box. And we thought if he could learn to control his temper, could be the best player and man he can be. So we're excited about that. We hope to premiere it at the Toronto Film Festival and we'll be rolling that out in the second half of the year.

And we have more projects, both features, documentaries and television shows in development. Dolphin Marketing, this is where the bulk of the company is today. The core thesis of when we set out to build this group was that earned media would become more and more important in the new world by the time that we hit where we are today. Those who don't do marketing every day, let me break marketing in two buckets for you. There's paid marketing and earned marketing.

Paid is your TV commercials, your billboards, your radio ads, things you spend money to get somebody to play your advertisement. Earned media, you hire a PR firm. And increasingly, you hire an influencer marketing firm to create word-of-mouth. So one of our shows, for example, would be White Lotus. I don't know if any of you saw that recently.

But if you wanted the creator of White Lotus to have a profile in the New York Times, you're hiring a PR firm. If you want your lead actors to be on Jimmy Fallon, you're hiring a PR firm. Influencer marketing, we'll get to in a second. So we, the group started with 42. Tom Crune, obviously, he's pretty big.

But we promote movies and TV shows as well, a few dozen a year, and from major franchises to leading independents. I think the firm has been behind eight Best Picture winners at the Oscars since its inception. So it's a pretty powerful firm. Once we had that on the film and TV side, we've complemented it with a few others. Shorefire is an industry leading music PR firm.

Bruce Springsteen is a client, of course, as you see up there. But so would be Dave Matthews or Chance the Rapper or Steve Aoki, whatever type of music you like. The Door is a leading culinary PR firm, again with celebrity chefs like Richel Ray that you see pictured there, but also John George or consumer products companies led by chefs like Carbone. I'm in New York, so think about restaurants you might have heard of, right? Or the Tau Group.

We're going to come back to L because you'll see them in a couple of slides. We complemented the PR firms with second from the right is the digital department. This was an influencer marketing. It is an influencer marketing agency. We acquired B Social in L.

A. And we acquired Socialite in New York and we've merged them. We believe we're building in the influencer marketing space, which is still very new, the market leader like we believe we have in those three PR firms I just mentioned with the signature clients. And PR and influencer marketing kind of go hand in hand, a little peanut butter and jelly. It would be extremely difficult today to open a restaurant, open a hotel, launch a movie, drop an album if you don't have influencer marketing.

And while PR will do a lot of the heavy lifting for you, you need the influencers to spread the word. That's why it was strategic for us. And then special projects that company does celebrity booking and events. And you'll see why that's important to us in a second. They'll do everything from organizing the room at the Motion Picture Academy Gala to handling celebrities at Fashion Week in New York to coming up with the idea and executing the Wall Street Journal Innovator Awards.

And the celebrities that are there then serve on the cover of Wall Street Journal Magazine. Big month for us last month. We finished the group, and the group was named the Agency of the Year in the one power ranking of PR firms in the industry. I realize that this is something that Wall Street wouldn't know about typically, but I played college basketball. I'm aware of top 25 rankings.

And they exist and put forty two West with Shorefire, with the door, with Elle. You've got something special and that somebody doesn't have that breadth of the ability to market using pop culture. And that's our core strength. And we're very proud of that and the people you see in those pictures right there. Also, as you can see, we were invited to we were invited to ring the bell at NASDAQ on International Women's Day and Women's Sport Day.

And we're heavily female. We're proud of the fact that we're 78% of our company's female and every one of our eight operating subsidiaries has at least one female CEO. So that's pretty cool. Since we were here last year at LD Micro New York, some things that have happened. Well, we made our the final acquisition into our group is this PR firm that you see in front of you.

It's a nonprofit PR that overlaps with entertainment. Danielle Fink on the left, Sylvie Snow on the right. Back to the female leadership of the company. They are just incredible at what they do like our other firms. They understand the nonprofit space as well as anybody I know.

And it's a personal passion point for mine because as many of you know that know me, I'm proud to serve on the board of United Way Worldwide. And just the connections to elevate worthy causes and worthy nonprofit groups is just I think it's very impactful. So very proud to have them in the group, and we will grow them. And the cross selling of services into entertainment and the use of entertainment to bring awareness to nonprofit causes is as old as entertainment and nonprofits, I think. So highly strategic for us.

October, we launched the first ever women's sports management firm called Always Alpha dedicated to female athletes in partnership with Alison Felix, the woman on the left, who is the woman, male or female, the American who's won the most Olympic medals in track and field history. She's won 11. She's also, I think, won 20 world championships. She's pretty darn impressive. She's as humble as they come.

She was with us at the ringing of the bell because International Women's Day was also Women's Sport Day. Cosette, on the right, Cosette Shaput, she is our CEO for Always Alpha and been twelve years now in this business. And we're building a roster of many Olympians, female athletes. And then we're going to expand it this year to include the major sports in The U. S, which would be obviously soccer and basketball.

And we're very proud of the growth of this company. And it's very much similar to our influencer marketing business where we get paid a commission on all the brand deals we bring the athletes just like we would with influencers. And there's a Venn diagram here where there's a tremendous amount of overlap, especially on the college athlete front. You know many of you are aware that college athletes can be paid after the Supreme Court ruling three years ago. But how are college athletes paid?

They're paid as influencers. And female athletes often make, I would say, almost always make more money off the court than they do on the court. Famously with Caitlin Clark last year or others, you know that the rookie contract was I think $74,000 to play in the WNBA and then how much she can make off the court. But almost all athletes could. That's true of our roster as well.

And so to be able to bring these dedicated female athletes and sportscasters meaningful money, hundreds of thousands of dollars a year is our mission. And we're doing it with the initial athletes we've signed. We've probably got a couple of dozen under management already. So we launched that in October. It's fast growing for us.

And this probably is the most exciting thing we've done that is the most misunderstood or not understood, I should say, by Walt. We an affiliate division of the digital department in influencer marketing. What does affiliate mean? Well, we are seeing any quarter's revenue of last year. We think that's a sign of potentially an opportunity.

And even if you look at our estimated operating income for this year, the current year, not 2026, you can see our enterprise to value divided by that. We think we're at attractive multiple too. And it's nice to be a microcap that can talk about a multiple of adjusted operating income. And so that led us to first of all, we have a lot of our CEO's own equity in our company. Most of our acquisitions were made with fifty-fifty cash and stock.

And then led to well, I'll start buying our stock back. So I bought $50,000 in September, I bought $50,000 in December. I entered into a 10b5 and we just finished, we passed the ninety day hold period. So two weeks ago, announced I would be buying $5,000 a week indefinitely. And so now we just finished the second week and that will be obviously $260,000 a year in fifty two weeks until we feel that we can be fairly valued.

And then lastly, free cash flow. This is the Keith Goodman special of a major thought to leave you with. So as we sit here and think about, okay, we're turning adjusted operating income positive. We think we can get to a very clear point of free cash flow because for two reasons. One, when we acquired all the companies, they came with office space.

We have three offices today in New York, two in LA. We will consolidate in the next leases run out, thankfully, in 2026 and then 2027. That will save us probably in the neighborhood of 1.25 one point five million dollars a year. And then lastly, we have the term loan with BankUnited. We pay 7.5% interest on it.

Pay principal and interest every month's payment is September of twenty twenty eight. That will save us about $2,500,000 a year. So between the leases and the bank loan being paid off, that's $3,500,000 If we don't grow the company at all, if that chart that you saw is going up stops today, 3,500,000.0 of free cash flow in less than three point five years on a company that's doing has a market cap of $11,000,000 So if I'm buying back the stock during that process, you can imagine it'd certainly be a topic of conversation with myself and the Board. Do we start a corporate buyback if the price doesn't move back to some type of fair value. And so it's discouraging of course to see a stock price after you've built this group and you've done the revenue growth and you've done the adjusted operating income improvement to see a price that actually went down last year.

But it's comforting to know that we are liquid and we can consider buying back our stock. So that's the story of Dolphin. Bam, baby. Ended it with four minutes and I'll take any questions you have. If there are any.

Anybody in here want to be an influencer? Just kidding.

Unidentified speaker: Yes?

Bill O'Dowd, CEO, Dolphin Entertainment: Nope. We stopped with the acquisitions. We bought the group that we set out. I was at LD Micro in LA in 2016 when James Carbonara from Hayden IR was there and we had already hired him that we set out to buy specific sets of skills. Not to quote Liam Neeson in Taken.

But we wanted film PR, music PR, culinary PR, influencer marketing. We needed celebrity booking. And now the group's done. So I think that will also help us because people will see that there's not the next acquisition on the horizon and what will we pay for it. And we hope we're sending a clear message by filing a Form four every week.

Shouldn't be additional dilution. Yes? No, we develop internally. We have a woman named Emerson Davis who's been with us eighteen years. She's here in New York, and we have team members also in Los Angeles, led by Elsa Sokol.

And we develop our own shows and TV movies. We option books. We pay for scripts. And that's always been a secret superpower of Dolphin, if you will, that we're a production company that can actually we don't need to go get someone else to fund our ability to bring in projects. Well, pay for the development, but then we typically sometimes we put in some of the capital like in Blue Angels, which obviously worked very well for us.

You're always trying to make the best educated decision of trading off. If you put in your own money then you own more of it. But sometimes it's nice to still own 20% of something and put up no capital. Yes. And I remember when we did Max Steel, we pre sold over two thirds of that budget I think or about two thirds of that budget.

So there's a great example of how you can really deleverage yourself. And back in the days when we were quote just unquote a production company for those first twenty years, that's what we built up the practice to do. We could pre sell, which gave us power in the market. And you can make a $10,000,000 movie with $2,000,000 of equity.

Operator: Act as your own sales agent or

Bill O'Dowd, CEO, Dolphin Entertainment: do you? We did. And nowadays we tend to partner with we sold Blue Angels with CAA which is a if you know it, it's a big talent agency in LA. We do a lot with CAA actually across all of our divisions. Many of our top talent are often represented there.

But we work with all the agencies and it's been good for us. Of course. Yes, Jennifer. Yes. The nice part about the PR business is it's heavily retainer.

So you have a lot of visibility. You tend to have tremendous amount of repeat clients or continuing clients, quite frankly. So I think what Wall Street may not appreciate sometimes is just both how diversified our revenue is and how forecastable it is. You do have the occasional individual projects that will come in and jolt you, but we have a good visibility months ahead of what our revenue is.

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