Earnings call transcript: Blue Ant Media shows growth amid challenges in Q3 2025

Blue Ant Media’s Q3 2025 earnings call highlighted the company’s resilience in a challenging market, with revenues increasing by 7% year-over-year. Despite a net loss of $11 million, the company demonstrated strong operational cash flow and strategic growth initiatives. According to InvestingPro data, the stock currently trades at $5.20, down 19.1% year-to-date, and appears overvalued based on InvestingPro’s Fair Value analysis. With a market capitalization of $38.19 million, the company trades at an attractive price-to-book ratio of 0.61.

Key Takeaways

• Revenues grew by 7% year-over-year.
• Adjusted EBITDA rose by 31%, indicating operational efficiency.
• Net loss due to one-time charges, including goodwill impairment and transaction costs.
• Successful reverse takeover (RTO) completed on August 1, 2025.
• Expansion of global channels and production capabilities.

Company Performance

Blue Ant Media reported a 7% increase in Q3 revenues compared to the same period last year, showcasing its ability to navigate a challenging advertising market. The company’s diversified business model, including global streaming and production segments, provided a buffer against industry headwinds like cord-cutting and declining traditional TV ad spends. The strategic acquisition of three production companies further bolstered its market position.

Financial Highlights

• Revenue: Increased by 7% year-over-year.
• Adjusted EBITDA: Up 31% from the previous year.
• Net Loss: $11 million, compared to a $3 million income in the prior year.
• Operating Cash Flow: Positive inflow of $5 million.
• Net Debt: Approximately $26 million.

Outlook & Guidance

Blue Ant Media is focusing on mergers and acquisitions to expand its global channels and production capacity. The company anticipates a correction in the advertising market over the coming years and plans to consolidate its business results post-RTO. Future strategies include exploring synergy opportunities in 2026, with a focus on media-adjacent sectors. InvestingPro identifies several challenges, including weak gross profit margins and declining stock performance, with the share price currently sitting between its 52-week range of $5.09 to $6.49. Get the complete analysis and 12-month price targets with an InvestingPro subscription, which includes a comprehensive Pro Research Report on Blue Ant Media.

Executive Commentary

"Our diversified operations are enabling us to succeed even during challenging industry conditions," said Michael, CEO. He emphasized the growth of Connected TV (CTV) as a key driver, noting, "Connected TVs have been the fastest growing internet-connected platform for video consumption in the U.S."

Risks and Challenges

• Softness in the advertising market could impact revenue growth.
• The production environment remains challenging with fewer new commissions.
• Cord-cutting and subscriber attrition pose risks to traditional broadcast channels.
• Integration of new acquisitions may present operational challenges.
• Macroeconomic uncertainties could affect advertising budgets.

Q&A

During the earnings call, analysts inquired about the growth drivers for CTV advertising and the challenging production environment. The company also discussed potential M&A opportunities and the securitization of a vendor take-back promissory note, reflecting a strategic focus on financial flexibility and growth.

Full transcript - Blue Ant Media Corp (BAMI) Q3 2025:

Sylvie, Conference Operator: Good morning. My name is Sylvie, and I will be your conference operator today. At this time, we’d like to welcome everyone to the Blue Ant Media Q3 Fiscal 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. Instructions on how to queue up to ask questions will be given at that time. A reminder that the purpose of the recording today is Tuesday, August 12, 2025. I would now like to turn the conference over to Madeline Cohen from Blue Ant Media Investor Relations. Please go ahead.

Madeline Cohen, Investor Relations, Blue Ant Media: Thank you, Sylvie, and good morning, everyone. Welcome to Blue Ant Media’s Q3 Fiscal 2025 conference call for the period ended May 31, 2025. Before we begin, I would like to remind listeners that today’s remarks include non-IFRS measures, specifically adjusted EBITDA. These should be considered as a supplement to, and not a substitute for, IFRS financial measures. Reconciliations between the two and our relevant disclaimers can be found in our earnings press release, which is available on our investors’ website. The company will make forward-looking statements on our call today that are based on assumptions and therefore subject to risks and uncertainties that could cause the actual results to differ materially from those projected. The company undertakes no obligation to update these statements except as required by law.

A description of the risks and uncertainties that may affect future results is contained in our Q3 2025 MD&A and our Management Information Circular dated May 9, 2025, available on CDAR Plus. As a reminder, the quarterly and year-to-date results we’ll be discussing are for Blue Ant only. They do not incorporate results from the businesses retained in our reverse takeover as we completed the transaction subsequent to the quarter on August 1. Unless otherwise noted, % growth rates that we refer to today are for the identified period ending May 31, 2025, compared with the same period ending May 31, 2024. Finally, please note that because the company reports in Canadian dollars, all amounts discussed today are in Canadian dollars unless otherwise indicated. With that, I will turn the call over to Michael.

Michael, CEO, Blue Ant Media: Thanks, Madeline. We’re very excited to be reporting our first quarter as a public company. We completed our reverse takeover on August 1, which further improved our balance sheet and increased our dry powder. We welcome three new production companies under the Blue Ant Media umbrella: Jannfield Entertainment, Insight Productions, and Proper Television. That’s going to enhance the scale and diversity of our studio. We report in three segments: global channels and streaming, production and distribution, and Canadian media. The unique combination of these business lines gives us stability even in challenging market conditions and numerous opportunities for growth. As Madeline mentioned, the results that we’re speaking about today are not reflecting the new scale and strength of Blue Ant Media post-RTO, which we’re going to see in quarters to come. This is just the Blue Ant Media earnings up to the end of May.

We had a solid Q3 with adjusted EBITDA up 31% from a combination of higher revenues and margin expansion. There are three key takeaways from the quarter. The first is that top-line growth and profit contribution in the quarter and year to date have been driven by significant growth in our global channels and streaming segment. Specifically, contribution from our connected TV or CTV digital ad solutions business continues to grow significantly. That reflects the convergence of content and advertising on the biggest screen in the house, which is the TV. Global channel revenues also increased during the quarter. We benefited from content programming events with some smart TV platforms that provided a one-time significant boost to FAST revenue, as well as we also had backfill sales opportunities in the quarter.

Second, our global focus on growth and interconnected streaming production and distribution operations have provided us stability in a year marked by ad market softness, cord cutting, and lower production revenues industry-wide. Our diversified operations are enabling us to succeed even during challenging industry conditions. Our improved financial position will enable us to invest in key areas to accelerate growth, both organically and through acquisitions. For us, current challenging industry conditions present a unique opportunity to pursue significant content and business acquisitions at attractive valuations. As we’ve previously discussed, our focus for acquisitions is threefold.

In the global channels business, we see opportunities to accelerate our plan to replicate the success of Love Nature by acquiring brands in certain genres that we can repurpose and take global, such as we did in rebranding Oasis to Love Nature, and also through acquiring library catalogs in these genres to support our creation and commissioning of first-run content. This combination accelerates content supply for our channels and drives a better return profile. In our studio business, we will look to increase our production capacity, which will make us more attractive to partners, as well as acquire library catalogs that are complementary to the genres we produce, distribute, and exhibit. Finally, we will continue to explore M&A in media-adjacent sectors that are emerging due to the shifts in technology, much in the same way we did in acquiring Media Pulse a couple of years ago.

Now turning to the operating environment for each of our segments. Within global channels and streaming, CTV ad sales have been a strong contributor to our results this year, as we’ve successfully leveraged the shift in ad spend from traditional broadcast and cable TV to connected TVs. As I noted in our investor call in March, connected TVs have been the fastest growing internet-connected platform for video consumption in the U.S., outpacing mobile devices. Combined with the increasing personalization capacity on CTVs, connected TV ad spend in the U.S. is anticipated to grow at a double-digit CAGR, offsetting an anticipated decline in traditional TV ad spend. It’s also been a positive year for our global streaming channels. Our fast-channel brands have performed well on YouTube and other social platforms this year, as well as on companion AVOD channels operated by the Smart TV platforms.

However, audience growth continues to outpace monetization on the linear fast channels, resulting in low seller rates and CPMs, factors that industry forecasts suggest will begin to correct in coming years when advertiser demand for connected TV advertising inventory rebounds. As I noted, revenues have been impacted by challenges in the ad market. There has been a general pullback in advertising spend over the last 12 months across all media platforms. The value of individual advertising inventory units, measured as the cost per thousand impressions, or CPM, has also gone down with the increase in the number of channels and the excess ad inventory in the marketplace as the SVODs have added ad tiers. Advertising has historically been tied quite closely to overall economic trends, with brands increasing or reducing their marketing spend accordingly. The market is expected to remain soft in the near term, particularly given increasing tariff uncertainty.

Within our Canadian media segment, revenues from our Canadian specialty broadcast channels declined. This reflects viewership declines industry-wide due to subscriber attrition, as well as general ad market softness. This was partially offset by growth in consumer show revenue as we continue to see a post-COVID sector recovery. Finally, within our production and distribution segment, revenues declined due to several anticipated productions not coming to fruition this year. However, this was partially offset by an increase in distribution revenues stemming from growth in international sales, notably sales of Blue Ant-owned content. Overall, segment profit increased this year as the decline in revenues has been more than offset by a reduction in associated costs of revenues and operating expenses. This is the benefit of us having an international distribution arm and other interconnected operations rather than being a pure-play production company.

In the current market, commissioning of new productions by declining broadcast and cable platforms has decreased. What is being approved for production is generally produced with a smaller group of trusted partners and talent, and the production approval process is taking more time. This reality has put increasing pressure on pure-play production companies that are entirely dependent on new commissions each year. From a production perspective, despite current headwinds, we believe that our increasingly larger production scale, including the addition of production services capabilities, positions us well as global broadcasters and streamers that seek to do more business with fewer partners. At the same time, from a distribution perspective, in the current market, producers might find it appealing to take an advance, a distribution advance from us to get their project completed, which would enable us to acquire content at quite attractive terms. I’ll now turn it over to Rob.

Thanks, Michael. Q3 revenues increased by 7% year over year as strong growth in global advertising revenue offsets the decline in production revenues. The increase in global advertising reflects significant growth in CTV ad sales, as well as just over $1.5 million U.S. dollars from one-time programming events in April that Michael described a few moments ago. Cost of sales increased 3% as a decrease in programming amortization in our production and distribution segment was offset by higher connected TV publishing costs and producer royalties. SG&A expense decreased 4% due to reductions in our Canadian media and production and distribution segments. The combination of the revenue increase and expense reduction led to a 31% increase in adjusted EBITDA.

In terms of segment profit, global channels and streaming segment profit increased to $5.3 million in Q3 from $3.3 million, driven by the one-time boost to Love Nature and the increase in CTV ad sales. Canadian media segment profit was $8.6 million in Q3, compared to $9 million due to a decline in our broadcast business, partially offset by an increase in other units. Production and distribution segment profit for Q3 was $2.2 million, compared to $1.3 million in Q3 of the prior year, as the decline in revenues was more than offset by a decline in cost of sales and a reduction in SG&A expenses. Loss from continuing operations was approximately $11 million for Q3, compared to income of $3 million in the prior year period, as the increase in adjusted EBITDA was offset by three one-time items.

First, an $8 million non-cash goodwill impairment charge related to moving our connected TV advertising business, Media Pulse, out of our Canadian media segment and into our global channels and streaming segment. Secondly, $4 million in transaction-related costs in connection with the RTO. Finally, roughly $9 million in share-based compensation, primarily related to RSUs issued over a period of time dating back to 2017, which fully vested and settled on closing of the RTO. For the first nine months of the fiscal year, our operating cash inflow was $5 million compared to $5.6 million in the prior year period, with the decrease driven by RTO transaction costs. Including working capital changes, net cash provided by operating activities was $11.1 million compared to $10.4 million for the first nine months of fiscal 2025.

Cash generated in the period was primarily used for debt repayment, lease payments, capital expenditures, and investments in library content. We ended Q3 in a strong financial position with approximately $26 million in net debt, excluding lease liabilities. A reminder, though, that subsequent to quarter end, we received a significant inflow of cash from the RTO, with more to come, with total value in the range of $54 million to potentially up to $89 million. There are four elements to this cash inflow. First, as of the close of the transactions, the businesses we are retaining have a minimum cash balance of $25.5 million and a normalized net working capital, an amount which was guaranteed by Fairfax. Second, also on close, Fairfax acquired our minority stake in the initial group for $11.6 million U.S. dollars in cash. Third, on closing, certain Boat Rocker Media Inc.

assets were sold for $19 million, with compensation to us in the form of a vendor take-back promissory note. The note is fully guaranteed by Fairfax, which will enable us to securitize it and sell it, and we’ve ascribed a value to the note of $13.6 million in our investor call in March. Finally, we have the value assurance payment agreement with Fairfax, through which Fairfax will provide us up to $34.7 million based on the financial performance in calendar 2025 of the three retained businesses, Jannfield Entertainment, Insight Productions, and Proper Television, before corporate overhead or other costs. The three studios will continue to run independently for the remainder of calendar 2025 in connection with this agreement. In calendar 2026, we will be able to begin identifying opportunities for potential revenue and other synergies.

However, we will consolidate the overall results of the retained business under Blue Ant Media’s financial results as of August 1, 2025. With that, we are ready to move to Q&A.

Sylvie, Conference Operator: Thank you. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touch tone. You will then hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you’re using a speaker phone, please lift the handset first before pressing any keys. Please go ahead and press star one now if you have any questions. Your first question will be from David McFadden at Cormac Securities. Please go ahead, David.

David McFadden, Analyst, Cormac Securities: Oh, hi. Thank you. Hi, guys. A couple of questions. Just looking at the global channels and streaming business, this is where you’re experiencing a lot of growth. When we look at the revenue line promotion and advertising, I’m just wondering, you know, what is really driving that growth? Is it Media Pulse? Is it increased distribution of existing channels and other fast platforms? Is it just mainly just increased advertising revenue? If you could sort of flesh that out a bit, that would be helpful.

Michael, CEO, Blue Ant Media: I think it’s a multiple set of factors, David. One of the elements is simply getting more publishers and dealing with more advertisers. We already represent Discovery Plus, Gusto, and Paramount Plus through Media Pulse. Those relationships give us both credibility and a fair amount of inventory with which to work. In Q3, programmatic revenues in the U.S. led a lot of the top-line growth, though the transactional nature of that drove down average margin as a % of sales. The Canadian business continued to grow quickly with new sales representation agreements with major streamers. It is a combination of just the momentum in general of CTV ad inventory, as well as some distribution, which is benefiting us in both Canada and the U.S.

David McFadden, Analyst, Cormac Securities: Okay, when you talk about the distribution, you mean representing other channels, right? Is that what you mean?

Michael, CEO, Blue Ant Media: Representing other publishers, it’s really Media Pulse putting both together. It’s both the ad agencies, getting more of those and getting more inventory through publisher relationships and representation.

David McFadden, Analyst, Cormac Securities: Okay. On the production and distribution business, are you seeing any improvement here in the ability to have shows screened? I was just wondering what the pipeline looks like.

Michael, CEO, Blue Ant Media: There’s no significant changes, David, I would say. It’s still tough conditions out there. We’re not seeing any significant changes. It’s been tough for the past year and a half, and it still is. We think that will change. There’s nothing specific to point to currently. The flip side for us, as I was mentioning in our opening remark, is that it has provided a somewhat more buoyant landscape and more opportunities for us to participate as a distributor in helping other producers finish up their financing and to get new, brand new shows into our library for general sales to other streamers around the world. We’ve seen some advantage to these tough conditions show up through the success of our distribution business. There’s a little bit of good offset to that.

David McFadden, Analyst, Cormac Securities: Okay. Just on the M&A front, you highlighted a number of areas where you might be acquisitive. Is there one area in particular that you think you’d be more active in sooner?

Michael, CEO, Blue Ant Media: The thing with M&A, as everyone on the call knows, is it takes two to do a deal. We are in, as you would imagine, various forms of discussions with different other companies, chasing, or not chasing, but pursuing interesting M&A possibilities. It’s hard to guess which of those things are going to bear fruit and which will simply not happen for a variety of deal reasons. The areas we’re looking at, we kind of highlighted, you know, it’s ways to grow our international channels business. Either acquiring a brand that we can change, like how we changed Oasis into Love Nature back in the day, or acquiring.

Sylvie, Conference Operator: Please stand by while we reconnect the host.

Speaker 6: I think it was Madeleine Cohen, though.

Sylvie, Conference Operator: Please proceed.

Michael, CEO, Blue Ant Media: Hello. We’re back on the call. I’m not sure at what point in my last answer to David’s question we were cut off. Near the end? Okay. Sorry about that, David. Are there other questions?

David McFadden, Analyst, Cormac Securities: Yeah, I guess one remaining would be, do you expect to securitize that note in the short term?

Michael, CEO, Blue Ant Media: We haven’t decided yet, actually. We’re looking at it. I’ll let Rob answer that question. It’s going to be me. He’s the CFO. I’m not. Rob?

Rob, CFO, Blue Ant Media: Yeah, I mean, we obviously want to get the best possible terms, and we’re kind of gauging what’s optimal for that, David. Our plan had been to do that, and we’re working through the mechanics of who to represent, you know, the monetization of the note. We haven’t totally kind of made a commitment to that, but that is certainly the direction we’re leaning.

David McFadden, Analyst, Cormac Securities: Okay. All right. Thank you.

Michael, CEO, Blue Ant Media: Thank you.

Sylvie, Conference Operator: Thank you. Once again, ladies and gentlemen, a reminder to please press star one should you have any questions. Your next question will be coming from Drew McBenals at RBC Capital Markets. Please go ahead, Drew.

Drew McBenals, Analyst, RBC Capital Markets: Yeah, thanks very much. Good morning, Michael and Rob. David actually covered off a couple of mine, but two additional ones. Maybe for you, Michael, just back to the green lights and the demand environment. You do certainly seem confident demand eventually comes back. Just wondering what you would like to see to really drive a more normalized environment. You talk about the opportunity of putting some of your own capital to work to get some of this across the line. Do you expect that to be the model going forward when that demand environment normalizes? Secondly, within Canadian media, you obviously have, I don’t know, legacy assets in there is the right characterization. I’m just wondering if there’s any kind of non-core or divestiture opportunities that could unfold within that segment. Thank you.

Michael, CEO, Blue Ant Media: Right. I guess the sort of the first one was about the green lights. One of the things about the fact that we’re, you know, complaining in recent years about the slowdown in the production business is that the production business worldwide went kind of crazy, you know, for the past five or ten years. You saw the SVODs, including Netflix and Amazon Prime and Paramount Plus, putting out amazing numbers of gigantic green light orders. It created an inflation throughout the industry. It was super for producers and showrunners and so on. Things accelerated during the pandemic. A lot of economic behaviors during the pandemic weren’t normal, whether it was the stock market or whether it was retail behavior or other things. This industry had built itself up to an annual output that didn’t make a lot of sense.

This direction is substantially coming back to sort of where it was five or ten years ago and probably in a more sensible place. The good news is that since the internet has enabled people to watch what they want, when they want, and choose how, and so on, that’s a really important factor that’s not going to go away. I would predict that as the annual output in the industry comes back to, and I’ve got sort of air quotes in my hands now, but towards normal, with this newfound capacity to watch programming as people want, I predict this will be a great opportunity for program creators. Is it going to, you know, what will that exactly look like, a number of hours ordered? I don’t know. I do know that people like to watch entertainment, video, and audio products, and they will continue to.

In terms of your other question about are there any assets within Canadian media or perhaps elsewhere in Blue Ant Media that we’re considering divesting right now? No, there aren’t. We have divested assets in the past, including Omnia Media and our Enthusiast Gaming stock. We’ve sold others to production companies in Australia, New Zealand, and Singapore over the years. We’re not afraid of divesting assets when they no longer have an important strategic or financial purpose. Today, there’s nothing within our bailiwick that we’re considering disposing. We think that, in fact, Canadian media, notwithstanding the headwinds in the industry, partly due to advertising and partly due to cord shaving and cord cutting, Canadian media still performs, I think, quite impressively. It generates cash, which is very useful to us. It also is one of the platforms through which we commission new programs along with our international channels.

It is connected in an important strategic way to our global channels and streaming business, as well as to our studios business. That’s a long-winded answer to say that there’s no divestitures currently being considered.

Drew McBenals, Analyst, RBC Capital Markets: No, Michael, that makes sense. Thank you very much.

Michael, CEO, Blue Ant Media: Thank you.

Sylvie, Conference Operator: Once again, ladies and gentlemen, if you do have any questions at this time, please press star followed by one. Thank you. We don’t have any further questions at this time. I will turn the call back over to Michael for closing remarks. Please proceed.

Michael, CEO, Blue Ant Media: Thank you. Thank you all for joining us this morning for the call. We appreciate your interest. We hope you’ll join us on our call later this year when we do our annual financial results. We’re happy to keep in touch with the investor industry in general as Blue Ant Media comes out of our private company life and is a public company. Thank you very much.

Sylvie, Conference Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for your participation. You may now disconnect your lines.

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