IDW Media Holdings (IDWM), in its Third Quarter Fiscal Yr 2024 earnings name, outlined a promising future backed by strategic restructuring and a concentrate on mental property (IP). CEO Davidi Jonas and CFO Andrew DeBaker mentioned the corporate’s monetary efficiency, highlighting a major income contribution from non-Penguin Random Home (PRH) sources, comparable to Scholastic (NASDAQ:) orders for common titles. Regardless of a powerful quarter, the corporate’s market valuation didn’t mirror the optimistic monetary indicators, with administration pointing to undervalued IP belongings as the important thing to future development.

Key Takeaways

• IDW Media Holdings predicts money recoupment from “Wynonna Earp” between $100,000 to $150,000 in This fall 2024 and $400,000 to $500,000 for the complete yr 2025.
• Non-PRH income accounted for 15-20% of whole income, pushed by orders for titles like “Sonic” and “Teenage Mutant Ninja Turtles.”
• PRH income share decreased to 70% in Q3 from 80% in earlier durations.
• The corporate has undergone important restructuring, now specializing in development and long-term shareholder worth.
• CEO Davidi Jonas is dedicating substantial time to money circulation administration and increasing worth alternatives.
• The corporate raised $3 million for strategic investments and to boost monetary safety.

Firm Outlook

• IDW Media Holdings is implementing a “shrink, repair, and develop” technique, aiming to leverage high-value licenses and new IP ventures.
• Administration sees actual long-term worth within the firm’s IP, which is at the moment undervalued by the market.
• There’s optimism for future engagement with traders and the corporate’s development trajectory.

Bearish Highlights

• The market has not positively responded to the corporate’s elevated money reserves and robust monetary yr.
• Future licensing alternatives, notably for key franchises like Ninja Turtles and Sonic, are usually not assured for renewal.

Bullish Highlights

• Administration expressed confidence within the firm’s monetary place and the potential of its IP belongings.
• The current capital elevate of $3 million is predicted to help strategic initiatives and risk-taking for development.

Misses

• The corporate acknowledged that formidable targets set by the Board could not totally align with present market circumstances.

Q&A Highlights

• CEO Jonas reiterated the corporate’s concentrate on profitability and IP worth, which he believes the market undervalues.
• The dialogue emphasised ongoing efforts to interact with traders and set the stage for future discussions on the corporate’s route.

In abstract, IDW Media Holdings, with a present employees of about 50 staff, is poised for growth, specializing in its IP for long-term worth regardless of market undervaluation. The administration’s technique and optimism, coupled with a powerful quarter and strategic capital elevate, recommend a forward-looking strategy for the corporate’s operations and shareholder pursuits.

Lusso’s Information Insights

As IDW Media Holdings (IDWM) continues to navigate via its restructuring part with a watch on leveraging its mental property, Lusso’s Information knowledge and ideas present extra context to the corporate’s monetary well being and market efficiency.

Lusso’s Information Information:

• The inventory has skilled excessive worth volatility, which can replicate investor uncertainty concerning the firm’s future profitability and IP valuation.

• IDW Media Holdings’ gross revenue margins are thought of weak, indicating that the corporate could also be going through challenges in changing gross sales into earnings effectively.

• The corporate’s valuation suggests a poor free money circulation yield, which may elevate issues about its potential to generate adequate money to help operations and strategic initiatives.

Lusso’s Information Ideas:

• Analysts are usually not anticipating IDW Media Holdings to be worthwhile this yr, aligning with the corporate’s personal admission of formidable targets that will not totally match present market circumstances.

• The corporate’s share worth has seen a major decline over the previous 5 years, but there was a powerful return during the last month, hinting at a possible shift in investor sentiment.

For readers considering a deeper dive into the corporate’s prospects, there are extra Lusso’s Information Ideas out there at https://www.investing.com/professional/IDWM, which may provide additional steerage on funding choices associated to IDW Media Holdings.

Full transcript – IDW Media Holdings Inc B (IDW) Q3 2024:

Operator: Greetings. Welcome to the IDW Media Holdings Third Quarter Fiscal Yr 2024 Convention Name. [Operator Instructions] Davidi Jonas, CEO; and Andrew DeBaker, CFO, might be out there to reply questions and supply an organization perception. Please observe, this convention is being recorded. Earlier than we start, I might wish to evaluation the corporate’s abbreviated protected harbor assertion. I might wish to remind you that statements made throughout this convention name regarding future revenues, outcomes from operations, monetary place, markets, financial circumstances, product releases, partnerships and some other assertion that could be construed as a prediction of future efficiency or occasions are forward-looking statements, which can contain identified and unknown dangers, uncertainties and different elements, which can trigger precise outcomes to vary materially from these expressed or implied by such statements. Non-GAAP outcomes may even be mentioned on the decision. The corporate believes the presentation of non-GAAP data supplies helpful supplementary knowledge regarding the firm’s ongoing operations and is supplied for informational functions solely. We’ll now start the question-and-answer session. [Operator Instructions]

Q – Daniel Seyde: Hello. Thanks for taking my query. How a lot money do you anticipate to recoup from Wynonna Earp within the fourth quarter and likewise full yr 2025?

Davidi Jonas: Have been you speaking about to fourth quarter of ’24 and financial ’25?

Daniel Seyde: Right.

Andrew DeBaker: And that is Andrew to reply. And simply to be clear, you are referring to love the recruitment that we’re getting on a quarterly foundation, right?

Daniel Seyde: Right, the recruitment of the money outlays?

Davidi Jonas: Sure. So we all know – we work clearly with Cineplex, I imply they do give us reporting. And we do know the quantity roughly over the lifetime of the contracts, lots of which they only renewed this previous April, typically three yr contracts. We receives a commission once they receives a commission. So it may be just a little little bit of hit and miss, proper? So final quarter, we solely acquired about 7,000 – and this quarter, we simply reported, what, like $250, I consider, $250 and alter. So subsequent quarter – we principally assume each quarter we’ll get someplace within the $100,000 vary. It is only for inside functions, proper, as a result of it may be just a little bit hit and miss timing-wise. So for what it is price, I might say, probably within the fourth quarter, someplace between possibly 100 and 150 understanding that I could possibly be off on that clearly. After which subsequent yr by way of your complete yr, I might principally repeat these numbers and say someplace between 400,000 or possibly 500,000 once more, relying on the timing.

Daniel Seyde: Okay. Thanks.

Operator: The subsequent query comes from Andrew Reef, Personal Investor. Andrew, please proceed.

Unidentified Analyst: Congratulations on making a revenue this yr, this quarter, I imply. Query I’ve is the final comics market has been declining within the direct market. Query can be is how a lot of the enterprise is coming from outdoors of the e book market, which is Random Home and the direct market, which is mixture. How a lot of it’s coming from – as a one conglomerate worldwide ordering instantly from your personal net retailer – or is there one other market on the market?

Andrew DeBaker: So I imply it feels like simply to be clear, you are conflating the e book market and the comedian market with PRH as being only one distribution channel and also you’re asking about all different distribution channels?

Unidentified Analyst: Proper, precisely. Since you went up roughly $1 million, Jimmy, in whole elevated gross sales. And after I’m studying the ICv2, it signifies that the markets are usually not doing that properly. So clearly, you are doing higher than the final market. And I used to be simply curious how a lot of your corporation comes outdoors of that since you have had such an enormous enhance in a single quarter?

Andrew DeBaker: Sure. Andrew, I will allow you to bounce in a extra specificity, my tough quantity, I might say, might be round 15%, possibly 20% – as much as 20% outdoors of the PRH market? And by way of diversifying our gross sales and distribution channels, specializing in direct-to-consumer, specializing in our functions, specializing in the digital market, vertical studying, different alternatives, whether or not it’s Kickstarter or different distribution channels, these are all issues that we’re .

Unidentified Analyst: The explanation for my query was to trace it. I simply figured I simply have to trace the gross sales of the highest titles – prime 200 that they publish in ICv2 and have a look at the e book market outcomes, I needed to know, does that specify many of the story. So it explains about 85% of it. Is that the purpose?

Andrew DeBaker: Not essentially…

Unidentified Analyst: What am I shedding up in different phrases.

Davidi Jonas: I imply, a part of it’s that we had a very good quarter, and loads of that’s within the Penguin Random Home market. So despite the fact that the comics market typically may be down, we’re up year-over-year within the publishing enterprise and the standard…

Unidentified Analyst: That is why I congratulated you.

Davidi Jonas: It is not simply that our direct-to-consumer enterprise grew, which it did, it is also at a powerful quarter. However Andrew, would you agree by way of just like the 15% to twenty% vary for non-PRH income?

Andrew DeBaker: Sure. So typically, PRH is roughly 80% or so. For Q3 – and clearly, it fluctuates. For Q3, it was really 70%. So we did have just a little bit extra income from non-PRH. It is largely due for this quarter, largely resulting from Scholastic orders, Scholastic e book festivals. They typically place two orders a yr, no less than traditionally, one in kind of the June, July interval and one other one kind of within the October, November interval. So in a big order from them comes via, clearly, that blend will change. However sure, typically in that kind of 80%, possibly 75% to 80% vary is PRH.

Unidentified Analyst: Received it. And that is resulting from Sonic and Teenage Ninja Turtles. Is that the first supply for Scholastic?

Andrew DeBaker: Sure.

Davidi Jonas: I do not know if Scholastic ordered something past Sonic and Turtles. However sure, these can be.

Unidentified Analyst: I simply needed to know as a result of I may extrapolate that sooner or later, what that might be if you happen to’re going up in your Random Home and the opposite ones, then it ought to in all probability go up the identical approach…

Andrew DeBaker: Simply sorry, I used to be simply going so as to add that with Scholastic, clearly, we clearly are consistently going to them, attempting to get them considering different titles as properly. So we’d hope that sooner or later, they may transfer past Turtles in Sonic, however for the time being, that’s the driver of that income, sure.

Unidentified Analyst: One fast query. Is the quantity of income coming from Scholastic in comparison with the previous years of Scholastic, is it dramatically up? As a result of I do know that you simply guys used to have again in possibly 2019 one thing like $1 million of Scholastic income. Is that this a brand new excessive for Scholastic as a buyer?

Andrew DeBaker: Sure. Good query.

Davidi Jonas: I imply I do not suppose it is excellent. I imply it may be – it may be increased, but it surely’s not the motive force for the enterprise.

Andrew DeBaker: Sure. I might say possibly year-over-year, fiscal year-to-date this yr versus final yr, we may be up about possibly 10% possibly 15%. However once more, with Scholastic, the timing distinction, proper? So like one yr, possibly they’re going to place an order and we’ll get that into October. So we’ll get into the fiscal yr. Different years, possibly will probably be November relying on timing. So – it is not at all times a strict year-over-year comparability.

Davidi Jonas: What’s very thrilling is that within the listings that they present on comics hub, it exhibits that your product is promoting via and it is rating within the prime 3 or 2, Jimmy by way of {dollars}. So – it is not simply that persons are shopping for it, however that there’s a permanent buyer that buys the product, which could be very thrilling.

Q – Unidentified Analyst: Thanks.

Davidi Jonas: Thanks very a lot.

Unidentified Analyst: My pleasure. Thanks.

Operator: [Operator Instructions] The subsequent query comes from Paul Sunken, Personal Investor. Please proceed.

Unidentified Analyst: Hello Davidi. So I assume one remark after which a few questions. One is I simply wish to specific as I’ve within the e-mails which have despatched you the appreciation for being shareholder-friendly and having these convention calls and persevering with to reveal financials on a quarterly foundation, I assume, there are firms that might go darkish and by no means publish financials. And so I simply needed to specific how appreciative we’re.

Davidi Jonas: Thanks.

Unidentified Analyst: The opposite factor is it such as you’ve labored via loads of price reducing. You have made loads of modifications over the previous couple of years because you type of took over from Alan – and do you’re feeling as if the corporate is at type of an inflection level like once more, with out giving steerage, do you anticipate losses? Or do you suppose the corporate goes to be worthwhile going ahead, even when it is breakeven?

Davidi Jonas: I really feel like life is filled with inflection factors. So relying on the place you wish to pause the tape, I undoubtedly suppose we’re at an inflection level. For me, the inflection level is the – as you identified, we have executed loads of the arduous work of attempting to right-size the enterprise and the overhead and prices, et cetera. And on the identical time, we actually have executed a fairly good job of locking down a few of our key partnerships and licenses. I might say the overwhelming majority of our key partnerships and licenses. So I might say the inflection level is like now we have to push the fuel. So does that imply that we’ll be worthwhile, I assume time will inform. We now have as a lot of – as a lot of a prediction about what the climate might be in three months from now as anyone else. However our expectation is that if we proceed on the trail that we’re happening, that might be considerably worthwhile and hopefully, extra so than we have been in 2024.

Unidentified Analyst: So the opposite query, which type of leads off that’s prefer it’s not a type of a typical turnarounds mannequin can be shrink, repair and develop. And it appears as if you have been via the shrink and repair phases. After which I assume the query is, like I might ask you this earlier than, I assume, a few years in the past, like so that is nonetheless consuming 100% of your time like by way of your corporation actions?

Davidi Jonas: Sure. I might say, if something, it is consuming extra of my time personally now than it ever has. I feel I am in all probability as mentally unstable as they’ve been in a very long time. In order that’s actually a correlation there. I am simply kidding.

Unidentified Analyst: I perceive.

Davidi Jonas: Positively taking on nearly 100% of my time. When it comes to the shrink, repair and develop, sure, I feel we have kind of shrunk. I feel we have executed loads of fixing. And by way of rising, the way in which I give it some thought is like now we have a bus and now we have area for extra passengers on the bus. Like now we have the instrument prepared. We now have your complete enterprise arrange, and we have to layer in extra alternatives for income development for backside line, high-value licenses in addition to on the identical time, we’re not simply within the money circulation of the enterprise. We’re additionally within the long-term shareholder worth and creating worth within the underlying IP. So taking some dangers round co-creator, round new entrants, round wholly owned IP, so it could be some leisure alternatives. So it is a mixture of placing extra passengers on the bus and on the identical time saying like, okay, now now we have – now now we have extra stability within the enterprise, that is a possibility for us to additionally put money into the long-term worth of the IP.

Unidentified Analyst: So the place are you spending loads of your time or most of your time? And I assume I perceive that like profitability brief time period could also be compromised to put money into development alternatives?

Davidi Jonas: That is a very good query. I attempted to – I imply, I do not know if you happen to’re asking me personally or if you happen to’re asking concerning the enterprise.

Unidentified Analyst: Nicely, you, because it pertains to the enterprise. I imply, how many individuals work on the firm now?

Davidi Jonas: About 50.

Unidentified Analyst: Okay. So I imply you are operating the present, so it is actually like – have – properly, I assume, how you might be positioning the corporate and what you have been emphasizing for your self and in flip the corporate?

Davidi Jonas: Sure. I imply it is kind of a – like the way in which I take into consideration the enterprise is type of having like two main heads. One is the money circulation aspect of the enterprise. And I might say that is primarily the license aspect of the enterprise. And the opposite is the worth alternative, and that is type of the co-creator and authentic IP and that franchise extension and leisure and all of the issues that type of prolong additional out. I might say like I attempt to discover the most important drawback that – I should not name them issues, the most important areas that should be addressed and spend ample time on them to get them arrange for future stability after which go on to the subsequent difficulty. So like – and on the identical time, I am additionally doing in a given day, I may be coping with three or 4 points on both aspect of the fence. So by way of me personally, I am fascinated by how one can do – how one can prolong our franchises, whether or not that is promoting bourbon whiskey or fascinated by different ways in which we are able to prolong franchises, whether or not that be tabletop video games, board video games, podcast, conferences, sneakers, no matter it’s, to get followers thrilling alternatives to interact with the franchises that they love, that may be taking on a lot of my time. After which on the opposite aspect, I am fascinated by what are the subsequent licenses that we must be targeted on, how can we put extra passengers on the bus after which going out and attempting to land these offers and land these subsequent alternatives. So I might say it is type of proper mind, left mind, however attempting to be sure that every website is getting the enough period of time and focus to have the ability to ship.

Unidentified Analyst: Received you. After which my final query, which is type of a extra technical query, I apologize as a result of I haven’t got – I am out of the workplace, so I haven’t got my – the submitting in entrance of me. However I used to be curious concerning the vesting schedule for the choices. Like I wasn’t positive in the event that they invested over time as a result of I knew that there have been some market cap thresholds. So I did not know if each of these needed to be met or – and I learn via it a few occasions, and I used to be just a bit confused.

Davidi Jonas: No. I feel by way of divesting, if I am not mistaken, divesting is said to the possibly it’s twin, but it surely’s largely – so far as traders are involved, I feel it is largely associated to the success for tax causes, a part of it’s by way of it being handled as ISOs and which are simply typical choices. There’s solely a certain quantity that could possibly be – that might divest in a given yr. In order that’s why – that is a part of the rationale I divest over such a protracted time frame.

Unidentified Analyst: Okay. So it is primarily associated to market cap. After which I do know I requested you this earlier than, however I simply ask once more, just like the goal appear to be extremely excessive, which might apply you on. However I used to be interested by type of why that call was made – as a result of I feel it is like $25 million, $50 million.

Davidi Jonas: And $110 million. Sure. I do suppose that the targets on the time that they have been set have been primarily based on an expectation on that second in time. And I feel that the fact is that the dearth of liquidity within the inventory, the dearth of curiosity, the – we have had a fairly good yr relative to the previous 5 years for IDW. I imply it is a superb yr and there is additionally more money within the financial institution, and the market hasn’t actually mirrored that type of a turnaround. So I do suppose that there is – like on the time that the Board set these targets, I feel there was extra of an expectation of a extra engaged market and that might be extra impacted by information and that hasn’t been the case.

Unidentified Analyst: I can nearly assure that the extra backing and money circulation that you simply produce, the upper the inventory will go. So it is going to care for itself.

Davidi Jonas: Sure. No, like I mentioned, I feel there’s the 2 sides of that — of the 2 heads of the monster, the money circulation. And I feel we are able to hopefully hold layering profitability. And the actual upside for the enterprise is just not going to be an incremental $1 million or $2 million or $3 million of profitability as a result of there isn’t any actual worth in that revenue, prefer it’s simply the money as a result of we don’t personal the Ninja Turtles, we don’t personal Sonic. And if these licenses do not get renewed, which they are not assured to – so by way of the worth for the IP, that is actually the place the long-term alternative is. And I might say the market is sort of 100% discounting, I should not say nearly. I imply like I feel, negatively discounting that risk. I might say that the market is, in my estimation, is estimating a adverse worth to the longer term exploitation of licenses simply primarily based on liquidation worth and the present market cap.

Unidentified Analyst: Nicely, there are folks out, they’re like me who have been keen to supply liquidity, if anyone needs to get out.

Davidi Jonas: Thanks.

Unidentified Analyst: And once they’re prepared to purchase, we’ll present liquidity for them to get in.

Davidi Jonas: I hope that effectively solutions your questions.

Unidentified Analyst: Sure. Thanks very a lot.

Davidi Jonas: Pleasure.

Operator: Okay. We now have a follow-up coming from Daniel Seyde with SpruceLine Capital. Please proceed.

Daniel Seyde: Hello. What does IDW plan to do with the $3 million of capital that was not too long ago raised?

Davidi Jonas: So it was raised via strategic functions and likewise simply type of as a backstop. In order the backstop, it is clearly going to proceed to perform as a supply of safety for the corporate. We now have a cloth quantity of our money steadiness invested into safe and extremely liquid market belongings, simply to have the ability to present some worth whereas it is sitting, but it surely’s there for alternatives, whether or not it’s a brand new license, no alternatives for the enterprise. I can say personally, having $7 million within the financial institution versus just a bit over $3 million, there’s much more confidence to take wholesome calculated danger understanding that now we have that a lot money within the financial institution.

Daniel Seyde: Thanks.

Operator: Thanks. There are at the moment no questions in queue. I might like to show the ground again to administration for any closing remarks.

Davidi Jonas: Thanks very a lot, John. Thanks, everybody, for becoming a member of. That is – I feel our most strong dialog with traders but, and I hope that can proceed. We welcome questions and engagement and stay up for our subsequent quarterly replace. Thanks, everybody, and have a very good day.

Operator: Thanks. This concludes right now’s convention, and it’s possible you’ll disconnect your traces at the moment. Thanks in your participation.

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