• Revenue was $140.5 million in Q2 2023, compared to $153.2 million in Q2 2022. YTD 2023 revenue of $267.1 million was consistent with YTD 2022 revenue of $265.8 million.
• Net loss was $13.0 million in Q2 2023, compared to net income of $4.6 million in Q2 2022. YTD 2023 net loss was $20.5 million, compared to YTD 2022 net loss of $16.8 million.
• Adjusted EBITDA1 in Q2 2023 was $26.0 million, compared with $27.3 million in Q2 2022. YTD 2023 Adjusted EBITDA was $45.9 million, compared to YTD 2022 Adjusted EBITDA of $47.2 million.
• Cash provided by operating activities in Q2 2023 was $63.1 million, compared to $11.3 million provided by operating activities in Q2 2022. Cash provided by operating activities YTD 2023 was $39.8 million, compared to $0.1 million used YTD 2022.
• Free Cash Flow1 for Q2 2023 was positive $26.4 million, compared with negative Free Cash Flow of $0.8 million in Q2 2022. YTD 2023 Free Cash Flow was positive $17.5 million, compared to negative $20.7 million YTD 2022.

Toronto, Canada — WildBrain Ltd. reported its second-quarter (“Q2 2023”) results for the period ended December 31, 2022.

Eric Ellenbogen, WildBrain CEO, said: “We continue to execute on our 360-degree strategy to engage and entertain audiences across the globe with our leading kids’ and family brands, multi-platform content and consumer products. Our newest series, Sonic Prime, co-produced with SEGA, is off to a terrific start, having premiered on Netflix in December as the top show in kids’ content worldwide, spending three weeks in the global top 10 on the platform across all demographics. Audiences are loving Sonic Prime, and we look forward to delighting fans further with many upcoming consumer products launches tied to the brand this year.

“In post-quarter activity, the enduring power of the Peanuts brand was highlighted in a new partnership that sees Snoopy team up with MetLife Pet Insurance. MetLife and Peanuts previously had a 30-year partnership, and we’re delighted now to reignite our relationship with this valued partner. Additionally post-quarter, our global licensing agency, WildBrain CPLG, was appointed master licensee worldwide for PLAYMOBIL, a brand synonymous with high-quality toys, to expand this globally popular kids’ toy brand into new consumer products categories. We’re off to a solid start in calendar 2023, with many more exciting partnerships, content launches and brand activations in the pipeline.”

Aaron Ames, WildBrain CFO, added: “We remain on track to deliver continued growth in line with our guidance in fiscal 2023. The Content Production and Distribution revenue in the quarter was impacted by timing as certain production revenue shifted from Q2 and we now expect to recognize that revenue in the second half of our fiscal year. We’ve made investments across content, creative and consumer products, which are beginning to show results and will provide the foundation for future growth, as we continue to drive our own brands and also work with quality partners seeking access to our unique strengths across the entire IP lifecycle. Gross Margin was up over 200 basis points as we realized the synergies from the consolidation of Peanuts representation rights under our global licensing agency, WildBrain CPLG. Free Cash Flow and operating cash flow were particularly strong in the quarter with increased collections, and we expect to end the fiscal year with positive Free Cash Flow. We implemented the cost initiatives discussed last quarter, and we will continue to moderate our expenses while supporting growth initiatives.”

Q2 2023 Performance – Executing on Priorities

View News Release Full Screen

Q2 2023 Financial Highlights

In Q2 2023, revenue declined 8% to $140.5 million, compared to $153.2 million in Q2 2022. YTD 2022 revenue of $267.1 million was consistent with YTD 2022 revenue of $265.8.

Content Production and Distribution revenue declined 8% to $56.1 million in Q2 2023, compared to $61.3 million in Q2 2022. Content Production and Distribution revenue in the quarter was impacted by timing, particularly in the live action slate, and by certain productions that shifted to 2H23. YTD 2022 revenue increased 10% or $10.0 million to $108.8 million, compared to YTD 2022 revenue of $98.8 million.

Consumer Products revenue declined 8% to $57.4 in Q2 2023, compared to $62.5 million in Q2 2022. YTD 2023 revenue was $109.5 million compared to YTD 2022 revenue of $110.9 million. The decrease in revenue was driven by foreign exchange headwinds in Yen, Euro and GBP currencies which impacts the licensing royalties from the Peanuts franchise, and lower royalty performance by top global apparel and domestic partners as retailers focused on reducing overstock inventory that had built up during Covid, both in the current quarter and YTD.

Q2 2023 WildBrain Spark revenue decreased 11% to $16.0 million, compared to $18.0 million in Q2 2022, a sequential improvement from Q1 2023, supported by strong direct ad sales. Segment revenue remains impacted by softer advertising revenue due to macroeconomic headwinds. YTD 2023 revenue was $27.7 million compared to YTD 2022 revenue of $33.4 million. Kids continued to be highly engaged on WildBrain Spark, particularly in our owned brands, attracting over 46 billion views across seven billion minutes of videos watched on our network in Q2 2023.

Gross Margin1 for Q2 2023 was 44% vs 42% in Q2 2022, reflecting the synergies from our strategy of consolidating representation rights under our global licensing agency, WildBrain CPLG. YTD 2023 consolidated gross margin was $116.5 million, an increase of $1.4 million, compared to YTD 2022 gross margin of $115.2 million.

Cash provided by operating activities in Q2 2023 was $63.1 million, compared to $11.3 million provided by operating activities in Q2 2022. YTD 2023 cash provided by operating activities was $39.8 million, compared to $0.1 million used YTD 2022. Free Cash Flow1 was positive $26.4 million in Q2 2023, compared with negative Free Cash Flow1 of $0.8 million in Q2 2022. YTD 2023 Free Cash Flow was positive $17.5 million, compared to negative $20.7 million in the prior year period. Free Cash Flow1 for Q2 2023 and YTD 2023 reflected the increase in collections for trade receivables associated with larger deals and timing of working capital settlements.

Adjusted EBITDA1 was $26.0 million in Q2 2023, compared with $27.3 million in Q2 2022. YTD 2023 Adjusted EBITDA was $45.9 million, compared to $47.2 million in the prior year period. This decrease in the quarter was primarily due to lower gross margin1 dollars, and higher SG&A to support growth initiatives. The decrease in the YTD period was driven by higher SG&A which was offset by higher gross margin1 dollars. Starting in the second quarter, we implemented the cost saving initiatives and we will continue to moderate our expenses while supporting growth initiatives.

Q2 2023 net loss was $13.0 million compared to net income of $4.6 million in Q2 2022. The decrease was primarily driven by higher change in fair value of embedded derivatives, higher SG&A, lower gross margin1 dollars, offset by higher foreign exchange gain. YTD 2023 net loss was $20.5 million, compared to net loss of $16.8 million, a decrease in net income of $3.7 million. The decrease in the YTD period was driven primarily by higher SG&A, higher net income attributable to non-controlling interests, offset by higher gross margin1 dollars.

About WildBrain

At WildBrain we inspire imaginations to run wild, engaging kids and families everywhere with great content and beloved brands. With approximately 13,000 half-hours of filmed entertainment in our library—one of the world’s most extensive—we are home to such treasured franchises as Peanuts, Teletubbies, Strawberry Shortcake, Yo Gabba Gabba!, Caillou, Inspector Gadget and Degrassi. Our integrated, in-house capabilities spanning production, distribution and licensing set us apart as a unique independent player in the industry, managing IP across its entire lifecycle, from concept to content to consumer products.

At our state-of-the-art animation studio in Vancouver, we produce award-winning, fan-favourite series, such as The Snoopy Show; Snoopy in Space; Sonic Prime; Chip and Potato; Strawberry Shortcake: Berry in the Big City; Carmen Sandiego; Go, Dog. Go! and many more. Enjoyed in more than 150 countries and on over 500 streaming platforms and telecasters, our content is everywhere kids and families view entertainment. WildBrain Spark, our AVOD network, has garnered over 1 trillion minutes of watch time on YouTube, offering one of the largest selections of kids’ content on that platform. Our leading consumer-products and location-based entertainment agency, WildBrain CPLG, represents our owned and partner properties in every major territory worldwide. Our television group owns and operates some of Canada’s most-viewed family entertainment channels.

WildBrain is headquartered in Canada with offices worldwide and trades on the Toronto Stock Exchange (TSX: WILD). Visit us at wildbrain.com.