Earnings call transcript: WildBrain Ltd Q1 2025 sees revenue beat, EPS miss

WildBrain Ltd reported its fiscal Q1 2025 earnings, revealing a mixed financial picture. The company posted a revenue of $140.1 million, surpassing forecasts by $14.87 million. However, it reported an earnings per share (EPS) of -$0.07, missing the expected EPS of $0.0019. The stock saw a modest increase of 0.49% in after-hours trading, reflecting a cautiously optimistic market sentiment. According to InvestingPro data, the company has shown remarkable momentum with a 17% return over the past week and a 102% gain over the last six months.

Key Takeaways

• Revenue exceeded expectations by 11.87%, driven by strong global licensing performance.
• EPS fell short of forecasts, raising concerns about profitability.
• Stock price increased by 0.49% post-earnings, indicating a mixed market reaction.
• The company reported positive free cash flow and reduced leverage.
• WildBrain emphasized strategic growth in high-margin and cash-generating businesses.

Company Performance

WildBrain Ltd demonstrated robust revenue growth in Q1 2025, with a 42% year-over-year increase in revenue from continuing operations. The company’s global licensing revenue surged by 44%, highlighting its successful brand activations and partnerships. Despite the strong sales performance, the EPS miss suggests challenges in managing operational costs or other profitability factors. InvestingPro analysis indicates the company maintains a healthy current ratio of 1.7, with liquid assets exceeding short-term obligations. However, InvestingPro’s Fair Value analysis suggests the stock is currently trading slightly above its Fair Value.

Financial Highlights

• Revenue: $140.1 million, up 42% year-over-year.
• Earnings per share: -$0.07, missing the forecast of $0.0019.
• Adjusted EBITDA from continuing operations: $16 million, up 18%.
• Free cash flow: Positive $13 million, compared to negative $3 million in the prior period.
• Leverage reduced from 5.3x to 4.4x.

Earnings vs. Forecast

WildBrain’s revenue of $140.1 million surpassed the forecast of $125.23 million, marking an 11.87% surprise. However, the EPS of -$0.07 fell short of the expected $0.0019, indicating a significant divergence between sales performance and profitability.

Market Reaction

Following the earnings announcement, WildBrain’s stock edged up by 0.49%, closing near its 52-week high of $2.11. The modest stock price increase suggests that the market is weighing the strong revenue performance against the EPS miss and potential future challenges. InvestingPro reveals the company has achieved an impressive 100% return over the past year, with a notable free cash flow yield. Subscribers to InvestingPro have access to 10 additional key insights about WildBrain’s financial health and market position, along with comprehensive Pro Research Reports available for over 1,400 stocks.

Outlook & Guidance

WildBrain projects fiscal 2025 revenue growth of 10-15% and adjusted EBITDA growth of 5-10%. The company remains focused on high-growth opportunities, debt reduction, and expanding global licensing programs. Strategic initiatives include launching new content and streamlining operations through planned divestitures. InvestingPro data shows the company maintains an Altman Z-Score of 3.42, indicating financial stability, while its overall Financial Health Score is rated as "GOOD" with particularly strong momentum metrics.

Executive Commentary

CEO Josh Schirkel stated, "We have evolved to a vertically integrated IP company with world-class capabilities." He emphasized the company’s unique position to "deliver sustainable growth and drive shareholder value," highlighting the compounding value of successful licensing.

Risks and Challenges

• Potential tariff impacts could affect cost structures and margins.
• Economic uncertainties may influence consumer spending on licensed products.
• Managing profitability amidst strong revenue growth remains a challenge.
• Competitive pressures in the digital content and licensing markets.
• Execution risks associated with strategic initiatives and content production.

Q&A

During the earnings call, analysts inquired about potential tariff impacts and the recovery of the content production pipeline. The company addressed these concerns, emphasizing its focus on high-margin businesses and the growth potential of brands like Strawberry Shortcake and Teletubbies.

Full transcript - WildBrain Ltd (WILD) Q3 2025:

Conference Call Operator: Hello, and welcome to WildBrain’s Third Quarter Fiscal twenty twenty five Earnings Call. Today’s conference is being recorded. Note that all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. And I would like to turn the call over to Kathleen Pichon, Vice President, Investor Relations at WildBrain.

Thank you, operator, and thank you, everyone, for joining us today for WildBrain’s third quarter twenty twenty five earnings call. Joining me today are Josh Sherva, our President and CEO and Nick Gaughan, our CFO. Before we begin, please note the matters discussed on this call include forward looking statements under applicable securities laws, which reflect current expectations of future events. Such statements are based on a number of factors and assumptions that management believes are reasonable at the time they are made and information currently available. However, many of these factors and assumptions are subject to risks and uncertainties beyond Voltaren’s control, which could cause actual results and events to differ materially from those that are disclosed or implied by such forward looking statements.

Such risks and uncertainties include, but are not limited to, general economic, business, and political conditions. Walgreens undertakes no obligation to update such forward looking information, whether as a result of new information, future events, or otherwise, except as expressly required by applicable law. Please note all currency numbers are Canadian dollars unless otherwise stated. After our remarks, we’ll open the call for questions. I will now turn the call over to our President

Josh Schirkel, President and CEO, WildBrain: and CEO, Josh Schirkel. Thank you, Kathleen. Thanks for joining us. We drove sustained strength in the third quarter, fueled largely by our global licensing business and our own franchises. Peanuts, strawberry shortcakes and Teletubbies continue to fuel our three sixty degree strategy, contributing meaningfully to not only the 44% year over year growth we’ve reported this quarter within licensing, but across the full platform of our business.

In the last year, our key owned brands as a percentage of continuing operations revenue have increased from just over 50% to over 70%, signaling meaningful progress in our strategy to focus on our core brands, which strengthens our profitability. This cannot be overlooked. We have evolved to a vertically integrated IP company with world class capabilities. These results reflect the deliberate steps we’ve taken to focus our strategy on accelerating the growth of these high potential opportunities, and we are now beginning to see the results of those efforts. We also saw a return to growth in content creation audience engagement this quarter with production commencing on a new teen live action series for Netflix called Finding Her Edge and continued production on the Peanuts feature film for Apple TV plus Our industry leading capabilities in Fast and AVOD remain important accelerators for our own brands and partners, and we’ve seen a consistent rise in viewership this quarter.

As I reiterated before, in a fragmented content environment, well known IP is critical to success. Turning back to licensing for a deeper dive. Peanuts continued to demonstrate its evergreen brand appeal worldwide. Rolling out in late March, we saw the first ever global IP activation between Peanuts and Starbucks. Peanuts themed merchandise and consumables rolled out in Starbucks stores in every major market around the globe.

The response was immediate and overwhelmingly positive. Merchandise sold out in the first week in the majority of markets, and in some places, diehard fans queued up as early as 3AM to get limited time production products. We also drove continued growth for Strawberry Shortcake and Teletubbies this quarter. The growth of Strawberry Shortcake continues to be impressive. Similar to last quarter, revenue for the brand was up over 200%.

To further illustrate this momentum, if we measure Strawberry Shortcake by retail sales, it has now surpassed over 150,000,000 US dollars over the last twelve months, and we believe we have a long runway to continue growing this brand. Strawberry Shortcake historically has done over 800,000,000 US dollars in retail sales, and we are enacting plans across content, digital first initiatives and brand collaborations now to drive growth for the long term and position us to realize strawberry’s full potential. For Strawberry Shortcake, this fall, we will see the launch of new Berry Besties licensing program celebrating Strawberry’s squad of cute friends. The program is ramping up at the Las Vegas Global Licensing Show next week, and we will feature collaborations with some notable brands. We’ll have more to report here soon.

In other strawberry shortcake news, we announced the collaboration with Sanrio’s popular Hello Kitty brand this week for co branded toys, fashion, and stationery launching this September in The US and Canada. This exciting brand mashup of two timeless icons will see capsule collections launched across specialty retailers, engaging fans with fun and unique product ranges. Licensing partners already onboard include Jazzwares, BioWorld, and Loungefly. The Hello Kitty partnership follows our ongoing licensing partnership with Cloud Code’s iconic Care Bears, which has been such a hit with fans that an expanded line of new crossover products will be coming to markets in The U. S.

And Canada. We’ve seen tremendous sustained engagement from brands of Strawberry in The U. S. And Canada, And we are now strategically working to expand the brand’s licensing program across Latin America, The U. K, Europe and APAC in the coming year.

On the Teletubby side, our franchise and marketing teams are already generating buzz in the market for the thirtieth anniversary of the franchise in 2027 as they head to Las Vegas Licensing Expo next week. Licensing is a long lead time business, so it’s never too soon to start laying track for licensees and retailers to come on board for big anniversary milestones. We’ve seen the success of such strategies firsthand with Peanuts in its seventy fifth anniversary this year. In the near term for Teletubbies, we recently announced a raft of new licensing deals, including a brand new digital game with The Sandbox, a new line of collectibles with Pop Mart and multiple retail partnerships for apparel, plush, accessories, and even cosmetics. This summer, Sands will find a range of apparel and accessories at US retailer Five Below.

And we continue to see great trends with top licensees like Cakeworthy, Lions Fly, and Loyal Subjects. Our other researching franchise, Yo Gabba Gabba, recently took to the stage for two live performances at the Coachella Festival. Thousands of fans enjoyed fun and nostalgic shows featuring the brand the brand’s characters, special musical guests from the brand’s Apple TV plus series, as well as crossover kids characters such as the Teletubbies, Strawberry Shortcake, and Care Bears. The event generated more than 35,000,000 impressions across media and connected music fans new and old with this beloved IP. In the words of our franchise management team, Yojabba Gabba won Coachella.

This viral pop up event followed our recent announcement that Jazzwares has signed on to launch a robust slate of toys, costumes, and accessories for the brand this year. We’re excited about the momentum of the GABA brand, and we’ll we will be announcing further licensing partnerships in the coming weeks and months. And I’d remind you of GABA’s musical legacy. With five international tours, we see a significant opportunity to develop and roll out a new live tour show as we look to further extend and monetize the brand. Across our key brands, we have laid on the building blocks of our enhanced platform to engage and monetize our IP in the digital world.

We know the importance of driving engagement across AVOD, SVOD, fast, socials, and gaming, and leveraging this awareness and interaction to drive licensing relationships, utilizing our own global licensing platform. These strong results are the very beginning of this hard work coming to life. As we discussed last call, licensing success begets success, and that compounds value over the long term. Across our key franchises, we continue to exceed our KPIs across watch time, social engagement, and new licensee growth, setting us up for meaningful growth over the years to come. Turning to the macro view.

As with the rest of the world, we are actively assessing the potential impact of US tariffs to our diverse business. While the situation is still too fluid to forecast any exact impact, I thought it would be helpful to zoom out and bring up a few key items to think about our business in general. As far as tariffs on consumer products and goods are concerned, we are not a manufacturer ourselves and do not have the same direct supply chain impacts nor the cost structure of a manufacturer. We have the benefit of diversification across our business. That is diversification across lines of business with content creation, our digital businesses like AVOD and FAST, and within our licensing business.

We saw the benefit of diversification in 2024 as the slowdown in content from the strikes hit our production pipeline, but we drove growth in other areas of our business. We even have the benefit of diversification within our licensing business. In our CPLG business, we represent over 3,000 licensees on a global basis across hundreds of brands and territories. We are a global business, not overly indexed to any one geographic region. In our largest brand, Peanuts, we have the benefit of a broad mix of licensees across categories and across territories.

Lastly, we have many evergreen brands such as Peanuts, Telusubbies and Strawberry Shortcake. Well known IPs tend to perform better in a downturn as we saw during the COVID time period. Turning to audience engagement, we continue to continue to see a significant opportunity in fast, where we were being the distributor with the largest number of kids channels. Minute viewed of WildBrain content across global flat fast platforms remains healthy with growth of over 50% year to date for this fiscal year versus the same period last year. Revenue in fast was slightly down in the quarter with a timing impact.

Adjusting for timing, underlying growth was strong, and we continue to be a destination for third party brands like the recently launched Pokemon. We saw incredible viewership on the newly launched channel, making it the largest and fastest release ever for WildBrain. Monetization is fast, and especially in kids content has lagged. But with our market leading position, we are poised to capitalize on the opportunity as advertisers recognize the attractiveness of the platform and viewership continues to scale. Kids and families continue to be engaged on our Avon network on YouTube.

We saw solid growth in viewership on our own brands in the quarter, including Teletubbies and Strawberry Shortcake, and we continue to be a valuable partner for third party brands such as LEGO as we discussed last quarter. We also saw growth in the quarter from our media solutions team. As a reminder, WildBrain’s Media Solutions is our direct ad sales team who sell advertising space on our YouTube and fast channels. Leveraging our expansive presence across platforms and our premium broadcast quality content, our media solutions team empowers brands and media agencies to reach parents and families through COPA and KERU compliant opportunities. They are also experts at brand integrations for our own and third party brands on leading gaming platforms such as Roblox and Fortnite.

We’ve made significant progress over the last several months, enhancing our technology, team, and tools to drive higher value bespoke offerings in the AVOD and SaaS ecosystem. The team has done a tremendous job driving results for top brand advertisers, and we see opportunity to grow this business for years to come. On the content creation side, we saw a return to growth in our production business with a new live action series we’re doing with Netflix, Finding Your Edge. And our production teams are also hard at work on the new animated Peanuts feature film for Apple TV plus with another Peanuts special rolling out soon, bringing us up to seven specials launched on the platform and three more in production. As we announced back in December, we signed an agreement to sell our TV channels to IOM Media Ventures.

We’re pleased to have found the ideal partner in IOM, an independent Canadian owned children’s studio. In April, we provided an update on the transaction after we were unable to negotiate a new carriage arrangement with Bell for the channels following a decision from the CRTC. We have entered renegotiations with IOM regarding certain commercial aspects of the sale agreement and expect the transaction to proceed. Taking a step back, the sale of the channels is part of an overall strategic objective to simplify and streamline our business to focus on key franchises such as Peanuts, Strawberry Shortcake and Teletubbies. This strategy has not changed and we have a clear path ahead as we continue in our commitment to harnessing high growth opportunities and cash generation.

The deal with IOM will require approval from the broadcast industry regulator in Canada. After regulatory approval and closure of the transaction, we will be able to revisit our variable voting structure. For those unfamiliar under the Broadcast Act, we are currently subject to a number of restrictions on non Canadian ownership. Simplifying our voting structure to a single class structure will provide strategic flexibility to WildBrain. With our unique three sixty degree capabilities, our diversified brands, and a streamlined business, we are well positioned to deliver growth and value for years to come.

With that, I’ll turn it over to Nick to review our results.

Nick Gaughan, CFO, WildBrain: Thanks, Josh. Before I start on the financials, as a reminder, in accordance with the IFRS accounting rules, we have classified Canadian television broadcasting or television that held for sale in the quarter and presented the historical results of this business unit as discontinued operations. As with the last quarter, our reference results from continuing operations and results including discontinued operations as applicable in my remarks. Revenue from continuing operations in the third quarter was a hundred and $28,000,000, up 42% year over year. Revenue including discontinued operations in the third quarter was a hundred and $40,000,000, up 40% year over year.

Global licensing revenue in the quarter was $71,000,000, up 44%. It was another strong quarter for Peanuts, and the growth was broad based across multiple geographies and licensing categories. We also saw impressive growth in our higher EBITDA margin brands, Strawberry Shortcake and Caliseries. Both these brands have been important contributors to growth this fiscal year, with Strawberry Shortcake’s revenue up triple digit percentages and Teletubbies revenue up double digit percentages year to date. For Strawberry Shortcake particularly, we’re encouraged we are encouraged by the broad base of growth for the brand.

As we noted last quarter, for many of our licensees, we’re part of the sugar rush of minimum guarantees, and we’re into the sell through phase where we have the where we have quality, sustainable revenue. The children trajectory we’re on is based on our marketing and digital content strategy to drive greater engagement through continued social media focus and YouTube and Fox content, which we then leverage to drive new licensees on the consumer product side. As Josh noted, with Stronger Shortcake having delivered annual US annual retail sales of 800,000,000 US dollars, in the past, we’re focused on the upside that this brand can bring us. As we’ve been talking about on prior calls, the growth in global licensing is a result of management’s actions to focus the business on high potential, higher margin, higher cash generated businesses to set us up for sustainable earnings and free cash flow growth. Content creation and audience engagement revenue in the quarter was $57,000,000, up 40% year over year.

This revenue increase in this period was driven by growth in production and media solutions revenues as compared to prior year, offset by lower distribution, YouTube, and fast revenues. As Josh mentioned, adjusting for some timing impacts, underlying growth fast was strong. Revenue from television was $12,000,000 in the quarter. From comparability, as we as we had provided last quarter, supplemental information for continuing discontinued operations can be found in the earnings release. Gross margin percentage for continuing operations in the quarter was lower, primarily from a mix shift in revenues and higher participation costs in the quarter.

SG and A in continuing operations was $27,000,000 in the quarter, up 12%. Adjusting for foreign currency translation differences and nonrecurring items, underlying SG and A costs were up low single digits as we invest in higher opportunity businesses to continue to fuel long term growth. Adjusted EBITDA from continuing operations was $16,000,000, up 18%. Adjusted EBITDA, including discontinued operations, was $26,000,000, up 33 percent. Net loss from continuing operations was $11,000,000 compared to a net loss of $16,000,000 in the prior period.

Free cash flow in the quarter was positive $13,000,000 compared to negative $3,000,000 in the third quarter of twenty twenty four. Year to date free cash flow was positive $67,000,000 compared to negative $23,000,000 in the nine month period in fiscal twenty four. Free cash flow is subject to variability arising from working capital timing and our interim production financing payables. We remain confident that this business that the business will maintain strong free cash flow growth in the year, highlighting again the quality of the assets we have cup we have coupled with the higher cash generation conversion and more asset light profit streams we’ve been building in licensing. Our leverage at the end of the quarter was 4.4 times, down from 5.3 times in the December.

We are comfortably in compliance with all financial covenants, and our commitment to reducing leverage under four times remains unchanged. Turning to guidance. We reconfirm our outlook for fiscal year twenty twenty five for revenue growth, including discontinued operations of approximately 10% to 15% and adjusted EBITDA growth, including discontinued operations, of approximately 5% to 10%. Last quarter, we had given incremental color about underlying revenue growth of our continuing operations of 15% to 20% and adjusted EBITDA growth of 12.5% to 17.5%. With more visibility into the balance of the fiscal year, we continue to see revenue growth trending to the higher end of that range, but with the timing impact of distribution deals, which are higher margin, we now see adjusted EBITDA from continuing operations growth of approximately 5% to 10%.

Moving on to our expectations for free cash flow. As I said, this is subject to material funding variances, but the quality of earnings we’re driving this year leads us

Josh Schirkel, President and CEO, WildBrain: to see free cash flow as being strongly positive with a good proportion of the $67,000,000 year to date holding through the third fourth quarter despite some expected working capital outflows. Absent interest, our unlevered free cash flow was 30,000,000 32,000,000 in the quarter and 105,000,000 year to date. That compared to 10,000,000 in all of fiscal twenty four, another proof point of our turnaround and our ability to operate and grow despite higher leverage. Through fiscal twenty five, we’ve delivered quality EBITDA growth versus prior years and materially better cash creation. There’s still much work to do, but have built a strong foundation for significant growth and cash generation for years to come.

I’ll hand it over to to Josh as we wrap up. Thanks, Nick. These strong results show that our franchise focused strategy is working across the full 360 degree platform. We have evolved to a vertically integrated IP company with the unique ability to develop, distribute, and monetize entertainment franchises across multiple platforms and revenue streams. This model allows us to supercharge the reach and longevity of our owned and partner brands.

Looking ahead, we will continue to double down on high growth opportunities, including for our owned IP, AVOD, FAST and media solutions, as well as continuing to grow our content production pipeline. We also remain focused on reducing our debt and streamlining the business with the sale of television. Now more than ever, we are well positioned to deliver sustainable growth and drive shareholder value. With that, I’ll open it up to questions.

Conference Call Operator: Thank you, sir. Ladies and gentlemen, a reminder to please press 1. Should you have any questions, and if you would like to withdraw from the queue, you will need to press 2. And if using a speakerphone, please lift the handset first before pressing any key. Please go ahead and press 1 now if you have any questions.

First question will be from Drew McReynolds at RBC. Please go ahead. Please go ahead, Drew. Unmute your line.

Josh Schirkel, President and CEO, WildBrain: Yeah. My apologies. Good morning, everyone. Thanks for taking my questions. Yes.

I I just wanna clarify, and it it gets just to a broader question. So obviously, great to see the revenue momentum. Just in terms of the flow through to adjusted EBITDA, I think, Nick, you’re just trimming kind of what your fiscal twenty twenty five would be XTV in terms of margin guidance. Obviously, with the big revenue piece, not particularly a plus with that from my perspective. But just can you speak to this as we look forward the flow through of revenue into profitability?

Obviously, you’ve got a revenue mix that’s evolving with some higher margin and lower margin businesses. Just wondering if you’re if you can unpack that one a little bit, and and then I’ll ask just a couple others. Thank you.

Nick Gaughan, CFO, WildBrain: Sure. So, yeah, as you know, we did different parts of our business give off different margin. And when we spoke last quarter, we were seeing growth EBITDA growth of 12 and a half to 17 and a half percent for continuing operations. Distribution is point of time revenue, and and we can be impacted by timing of distribution. And distribution is also a higher margin.

So we’ve had some margin mix shifts in which we’re seeing for the balance of the year, which is therefore impacting the flow through in in in the way that you’re seeing.

Josh Schirkel, President and CEO, WildBrain: Okay. And with respect to content production and good to see, you know, the demand coming back overall, just can you just unpack that with respect to, you know, on the proprietary pipeline, your own production, what what that pipeline is looking like, and then the level of third party service revenue that you generate, you know, are both kinda coming back. Maybe speak to that. And then third, just on tariff. Thanks, Josh, for your comments on your exposure, which from a direct perspective doesn’t look to be overly material.

Just wondering what you’re seeing in terms of end demand out there across your licensed products. And on the assumption that tariff regime becomes more coherent as we go forward, more constructive here when we think about licensed products heading into kind of holiday season. Presumably, from that perspective, you’re still relatively well positioned, but wondering if you’re seeing any any softness in real time. Thank you. Sure.

So maybe I’ll I’ll I’ll speak to the tariff question first and then talk about the content slate after. Yeah. Look. I mean, no question. It’s it’s an evolving situation.

We’re dealing with a a different set of facts as of Monday. And as I talked about, we’re, you know, we’re we’ve got a lot of diversity built into our business. But you rightly point out that we’re kind of at a critical point for holiday orders, and those are real time conversations that are happening over the next few weeks, you know, particularly based on the the new, you know, the new set of fact of facts that were established on Monday. So, you know, we we’ve reaffirmed our guidance for this year. Obviously, we’ve only got, you know, kind of six weeks left in in the quarter in our fiscal year, so we feel good about that.

And we’ll monitor closely any impact that when that we might see at the you know, coming into this holiday season. But as you said, we’ve got a lot of diversity of of geographically from our licensing business, also a large large range of licensees who have different manufacturing bases all over the world. So there’s a lot of diversity built into our into our overall licensing business. On the content slate, yeah, we’re we’re pleased to see it coming back. You know, we had we had anticipated growth this year and further growth into next year, and that’s still the plan.

And our IP slate is is is coming along. You know, we’re we’re in production on the on the on the PNS feature for Apple TV plus. We continue to have more PNS content in the pipeline. And your question about third party, yeah, that that business is has been coming back. You know, we we continue to be in business with LEGO who we produce a number of series four, and we’re we’re just getting started on new projects for them.

So overall, is it you know, it’s it’s certainly not back to to the days of 2019 or or or early twenty twenty, But it it but it is coming back, and you’re seeing that come through in our numbers, and we expect that trend to continue. Okay. That’s great. Thank you both.

Conference Call Operator: Thank you. Again, ladies and gentlemen, if you do have any questions, please press followed by one on your touch tone phone. Next will be Dan Kurnos at Benchmark. Please go ahead.

Josh Schirkel, President and CEO, WildBrain: Great. Thanks. Good morning. And let me just start by saying, Josh, Nick, it’s another solid print from you guys. You guys have put up a few quarters now that are really showing momentum and particularly in the licensing side.

The growth rate accelerated over more than the delta in the comp in the quarter. So there’s some clear momentum there. I wanna, Josh, just double click on the macro just for one second. I appreciate that all the color you gave in the remarks as well as the answer to the last question. Just to be clear, though, on the economic side, higher prices would actually in a way I mean, you you get some offset because of the rev share, right, as opposed to, you know, lower volumes, higher prices could be sort of a net neutral depending on what happens to the to demand, obviously.

And then on the guidance piece, you know, look, obviously, those of us doing the the monkey models out here, it’s always tricky to figure out timing with you guys. But, I mean and I I appreciate Nick’s comments. It looks like you’re pacing above the high end of your guidance on revenues. I’m just trying to get a sense if there’s any uncertainty or conservatism baked into, know, given what’s going on in the landscape. So yeah.

On on the royalty or sorry. On the on the tariff question, I mean, we yeah. It it is a royalty business for us based on wholesale prices. And, look, ultimately, consumer demand will have an impact on our business. There’s no question about that.

But but it’s it’s early to predict. But what we do know is that, historically, when there’s been downturn in the economy, there’s been a flight to familiarity from a brand standpoint. And we’ve seen, you know, peanuts performed very well during during those early days of COVID. And we know historically in other in other times of economic turbulence, it’s performed well. So we we look.

I think there there’s a number of details we’ve that we’ll only know in time, but we feel we feel positive about overall about our about our position. And and yeah. So ahead, Nick.

Nick Gaughan, CFO, WildBrain: No. I think you’re gonna you’re gonna speak to the guidance point. You’re right. It’s kind of timing is tricky to predict. And, again, I I kinda I do math from that sometimes and look at the overall momentum that we’re delivering in the business.

So, you know, strong free cash flow growth, strong licensing growth. Margin is is tricky because the margin on a on a on production versus distribution versus peanut versus strawberry shortcut, they’re all very different margins. So that the the the the mix shift can impact us in any given quarter. But when you kind of neutralize it over time, then you come back to the momentum on the business. But as you as you know, we’ve got kind of three strong quarters this year, and and and things are looking positive.

Josh Schirkel, President and CEO, WildBrain: Got it. That’s helpful. And then, Josh, maybe some more fun ones just on the, you know, the Starbucks partnership. Really appreciate the color there. You know, are there other opportunities to do similar things?

I know you referenced some shots on goal with strawberry. Obviously, Peanut’s a global brand, so it’s kind of easier to leverage that. And I know that you’ve focusing on o and o IP, but, you know, with something like a Sonic, while maybe not as profitable perhaps, you know, it feels like you’ve been, you know, with the success that you’re seeing in Peanuts that you might be able to leverage some of the other global iconic brands that you have access to? Sure. So, yeah, the the the the Starbucks campaign is a huge success.

And I think it does it it does speak to the unique aspects of Peanuts as a global top 10 brand that it could work in so many different locations at that scale. So whether there’s a direct comp for doing that with any of our other other IP, I think would be a stretch. But in terms of the the showing our our ability to execute on those types of programs, and there there are certainly there there are certainly other opportunities in that space for us to for us to take advantage of. But it it also just it just gives Peanuts that much more strength in today’s market and relevance and does open up opportunities, you know, for further programs with with with Starbucks or with other with other global chains. So, yeah, it it was a huge success.

So big big thanks to the team for for pulling it off. And and last one for me just on strawberry because it’s kind of important that it’s really scaling. I mean, you gave the historical numbers. You gave the current run rate. Maybe just, you know, is there anything that you can give additional color on beyond your prepared remarks on how you’re kind of leaning in there and how fast do you think you can kind of rescale from here?

Well, I I mean, look, we’re there there’s not a lot more detail that I can offer, but but in terms of, you know, kind of broad sell through, that’s really encouraging for us. It’s not being driven by any one specific licensee or category. It’s it’s it’s it’s really across across across all retail categories. And and I would also say that, you know, socials are a leading indicator for us. We’ve we’ve increasingly seen a direct correlation between uptick in social engagement and sell through at retail.

And we continue to reach new heights on on our socials, which we think, you know, continues to be a great lead indicator for where we’re going next.

Nick Gaughan, CFO, WildBrain: Yeah. Just just to add to it. Just one more thing, guys. The Teletubbies is obviously a priority for us as well. And, like, Teletubbies is a brand that’s done very material retail sales in the past.

It’s been over a billion US retail. Strawberry, as we said, was 8 it’s kind of over 800 mil US retail annually in the past. And and Josh spoke about the value of known IP. So, you know, we’re really excited to have two brands that are on a growth trajectory already. We’re not having to spend huge amounts of marketing dollars to break them.

The marketing dollars that we’re putting in are extremely effective. So, you know, that that that’s that gives us a lot of runway for the future.

Josh Schirkel, President and CEO, WildBrain: Trust me, Nick. I did not wanna sell Teletubbies short. It felt like we were in different stages, but, you know, clearly, you guys have a lot of runway in front of you on both brands. So, anyway, I appreciate the color, guys, and congrats on another solid quarter. Thanks, guys.

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