Q1 2024 Highlights

• Revenue was $105.5 million, compared to $126.7 million in Q1 2023.
• Net loss was $15.5 million, compared with net loss of $7.6 million in Q1 2023.
• Adjusted EBITDA1 was $18.9 million, compared to $19.9 million in the prior year period.
• Cash used in operating activities was $3.0 million, compared to cash used in operating activities of $23.3 million in Q1 2023.
• Free Cash Flow1 was negative $25.4 million, compared to negative $8.9 million in Q1 2023.

Toronto, CA – WildBrain Ltd.  reported its first-quarter (“Q1 2024”) results for the period ended September 30, 2023.

The Company also announced today that Nick Gawne has been appointed Chief Financial Officer, effective November 8, bringing over 20 years’ experience in finance, operations and business development in the media space with a focus on kids’ and family IP, including almost 15 years with eOne. He succeeds Aaron Ames, who will continue in an advisory capacity to ensure a seamless transition.

Josh Scherba, WildBrain President and CEO, said: “Our three strategic pillars of Content Creation, Audience Engagement and Global Licensing are the core of our 360-degree strategy, cultivating and creating exceptional entertainment experiences for our own and partner brands. To support collaboration and innovation across the organization, we’ve realigned our internal teams under these strategic pillars. With our strong leadership team, I’m confident this new, simplified structure will optimize our plans to focus on the growth of key owned IP, such as Peanuts, Teletubbies and Strawberry Shortcake, alongside key partnership brands.

“As we focus on our key brands, we are excited that Apple TV+ has announced the greenlight of a new CG-animated Peanuts feature film. With production slated to start in 2024, this feature is a continuation of our commitment to investing in premium content.

“I’m delighted to welcome Nick to WildBrain. As we continue our strategic shift to focus our business on key franchises that can generate the greatest returns from our integrated 360-degree capabilities, Nick’s deep expertise in finance and operations in kids’ IP, particularly in global licensing, is an ideal fit for WildBrain. I’d like to also thank Aaron for his leadership, dedication and years of service to WildBrain. Aaron has been a great business partner and a passionate champion of our Company. His contributions have been invaluable in shaping our strategic path forward and repositioning the Company for continued growth. We look forward to continuing to benefit from his expertise and knowledge as an advisor as we move through Fiscal 2024.”

Aaron Ames, commented: “I’ve greatly enjoyed working with the people across WildBrain’s global organization to help build the Company into the global leader it is today. I have every confidence in the future of WildBrain, and I look forward to continuing in an advisory capacity to ensure a smooth transition and the continued success of the Company.”

Nick Gawne stated: “I’m excited to join the WildBrain team, as I’ve long admired the company’s capabilities and IP portfolio. I look forward to working with Josh as well as the senior management and finance teams across the global organization to help accelerate the growth of our brands and business and to drive value for shareholders.”

Q1 2024 Performance – Executing on Priorities

Q1 2024 Financial Highlights

In Q1 2024, WildBrain made changes to streamline its business structure under a focused strategy designed to optimize its existing 360° IP management expertise and drive the growth of key WildBrain and partner franchises across its core capabilities of Content Creation, Audience Engagement and Global Licensing.

Financial results will be reported as “Content Creation and Audience Engagement” and “Global Licensing”. Legacy “Content Production and Distribution” and legacy “WildBrain Spark” revenue is combined into the renamed “Content Creation and Audience Engagement”. As AVOD becomes an even more important form of distribution and an integral part of our overall engagement, the interconnectedness of the network’s scale and reach is best reflected on a combined basis.

For the transition period of Fiscal Year 2024, the Company will provide legacy “WildBrain Spark” results for comparable results. Legacy “Consumer Products” has been renamed to “Global Licensing”. The Company’s Canadian Television Broadcasting business will continue to be reported separately.

In Q1 2024, revenue decreased 17% to $105.5 million, compared to $126.7 million in Q1 2023.

Content Creation and Audience Engagement revenue decreased 27% to $47.2 million in Q1 2024, compared to $64.4 million in Q1 2023. Revenue in the quarter was in line with expectations as the impact of the timing delays in project greenlights slowed activity in the broader content industry. There were fewer live action productions versus the prior year, which preserved gross margin.

Global Licensing revenue declined 5% to $49.5 million in Q1 2024, compared to $52.1 million in Q1 2023. Revenue in the quarter was primarily driven by resilience in the US, for Peanuts as well as strength in our global licensing agency, WildBrain CPLG and our owned brands, offset by timing of deals within the Peanuts brand as well as FX headwinds related to the Japanese Yen.

Legacy WildBrain Spark revenue in Q1 2024 was $11.1 million compared to $11.6 million in Q1 2023, a sequential improvement of 5% from Q4 2023. Kids continue to be highly engaged on our YouTube network, with over 46 billion minutes of videos watched and the average duration of viewing continuing to improve.

Gross Margin1 for Q1 2024 was 49%, compared with gross margin of 44% in Q1 2023. Gross margins were higher with fewer live action production in the current period, compared to the prior period.

Cash used in operating activities in Q1 2024 was $3.0 million, compared to $23.3 million used in operating activities in Q1 2023. Free Cash Flow1 was negative $25.4 million in Q1 2024, compared with negative Free Cash Flow of $8.9 million in Q1 2023.

Adjusted EBITDA1 declined 5% to $18.9 million in Q1 2024, compared with $19.9 million in Q1 2023. The decrease in the quarter was driven by lower revenue, primarily within Content Creation and Audience Engagement. We continue to moderate our expenses while supporting growth initiatives.

Q1 2024 net loss was $15.5 million compared to net loss of $7.6 million in Q1 2023. The decrease was primarily driven by lower gross margin dollars1 and higher finance costs.