IDW Media Holdings, Inc. (IDWM) Earnings Call Transcript & Summary

Greetings. Welcome to the IDW Media Holdings Fourth Quarter and Full Fiscal Year 2024 Conference Call. [Operator Instructions] Davidi Jonas, CEO; and Andrew DeBaker, CFO, will be available to answer questions and provide company insight. Please note this conference is being recorded. Before we begin, I'd like to review the company's abbreviated safe harbor statement. I'd like to remind you that statements made during this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships and any other statements that may be construed as a prediction of future performance or events are forward-looking statements, which may involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only.

[Operator Instructions] Your first question is coming from [ Chris Loving ].

I guess, overall, I just want to congrats on a -- after a turbulent year, it seems as though you've kept revenue flat and it looks like you ended on a positive note on cash flows. I guess I just wanted to give you an opportunity first to hear if you had any overall reflections on the year. And if anything happened during the fourth quarter that you thought was significant noting?

Thank you, Chris. No, I think it was a pretty good year for IDW coming in, in the middle of 2023, being able to really turn things around in '24 to go from a meaningful cash loss in fiscal '23 to cash profit in '24 is obviously a tremendous result, a lot of hard work from the team. So we're pleased. In terms of fourth quarter results, I don't have any meaningful event in mind. But Andrew, is there anything you want to add?

Not necessarily meaningful. Just kind of a reminder that fourth quarter, which obviously for us is August, September, October, tends to be our best quarter in terms of revenue, and that's obviously leading up to Christmas and whatnot. So no different than any other year that was the case for this year. Otherwise, yes, I mean, we obviously had successes throughout the year that we'll probably touch on throughout this call. But yes, overall, fourth quarter continued with the success that we saw this year, obviously, compared to last year.

I guess I just had 2 questions. One, regarding the Diamond bankruptcy, how concerned are you about that? And I'm curious, I think you have about $5 million of receivables from Penguin. How much of that do you see as threatened by this or is impacted by this?

I mean it's early days in the bankruptcy proceeding and having visibility into the potential impact. Diamond as a percentage of the company's revenue is significant, but not like essentially so. And in terms of the impact of Diamond's presence, we think that there will likely be an impact. Like I said, too early to tell how substantial it will be. But we don't think that everyone that Diamond service is going to disappear if Diamond is no longer servicing them as a sub-distributor. So if that does come to pass, we do think that other stores, retailers will find other distributors to be able to buy product from. But to the degree that there are stores that will not be able to establish relationships with other distributors, whether it's because they have different credit terms or different hoops that are harder for them to jump through. We do expect that there might be an impact, but just too early to tell.

And then my last question was IDW Entertainment. I was just curious on the -- on how -- you've mentioned you have 4 projects going on right now. I'm curious, what does it take to get a project on that list? And several are not on that list that were on there last year. I'm just curious what -- is this mostly internal where you decide just what you want to focus on? Obviously, there's also an external partner that you work with. But I'm just interested in that process of how you end up with these 4 projects. And then I'm asking just curious if any of them stand out to you in terms of promise right now?

Yes, fair question. And in terms of how those 4 projects came to being a state of development, it is sort of luck of the draw. The entertainment sales cycle, production cycle, development cycle can be substantial. And so things -- we have many titles that have been optioned for meaningful periods of time that, I guess, are in some level of development, but they're not -- they haven't moved meaningfully. And then there are others that sort of have felt very hot for a moment and then cooled off. In terms of these 4, I wouldn't say it was based on our particular feeling that like these are the best 4 titles we have in our catalog. I think we have a robust catalog and things -- at any given day, I could get a call about a piece of IP that's 6 weeks old or 16 years old. And they could be of interest for entertainment development. So I think these are just what we're of the moment for particular production partners that are interested in moving those projects forward.

Yes. And just to add to that real quickly. Obviously, we want to do our best to maintain updated information to all of you, to all our investors and prospective investors. So we are especially in these description areas, looking to make sure that we are providing the latest information that we can. And so that our document isn't just something stale that seems to repeat itself over and over. So generally, the ones we do list are going to be, as Davidi said, the ones that we're actively working on and are more recent.

And are there any of those that you're particularly excited about? Or are they all in sort of similar stages of development?

There -- no, I'd say they're in somewhat different stages of development, but I'd say they're all months -- at least months away from a potential green light, maybe even year -- over a year. So they're fairly early stage. I mean in terms of content, I think, I guess, everybody has their own subjective attendance. There are some of those that I really love, some that would probably resonate with a different audience. But I particularly -- I think the delicacy is a great title. But each of the titles on there are fantastic.

Okay. Yes, I just want to reiterate, it seemed like it was a very -- a lot of things went on last year, and so I think the way that you ended the year was definitely successful. So I want to express that.

[Operator Instructions] Your next question is coming from Jeff Silver from Corrado Financial Group.

I guess the first question I have is where would I find the release on the fourth quarter and the year? I don't see it on the website. I look on Newswire, I don't see it...

If you go to the OTC website, which is where the OTCQB companies file their reports, if you go to IDWM, you'll be able to find it in the disclosure section.

All right. Terrific. So we've been shareholders since prior to '23, and prior to the delisting. And certainly, I understand why you delisted. I think it made a lot of sense in terms of saving costs and trying to chart a path going forward. With respect to the charting a path going forward, I mean, obviously, there have been a lot of changes in the, I'll call it, broadly speaking, in the content space over the last couple of years. And I don't know if there's anything that you can elaborate on with regard to what that means or what opportunities you might see with respect -- strategic opportunities with respect to your existing business?

I'm not sure that I fully understand the question. It sounds like you're asking us to pontificate a bit about the media landscape and what opportunities that presents for IDW?

Yes. Exactly. Exactly. And that would include potential acquisitions of either properties, companies or anything like that. Yes, I'd love to hear you pontificate, yes.

Oh my gosh. I'm terrified that if I start rhapsodizing, we might be here all day. I'll try to get it brief. I do think that the media landscape is -- has evolved substantially in the last -- I mean, almost day by day, but certainly in the last 5 years. And I do think that presents opportunities for IDW. At the same time, as there are tailwinds, there are also potential headwinds. It is a -- there was a [ writer ] strike. And so coming out of the writer strike, there are potential opportunities where studios are looking to bring new content in, looking for content that's sort of cutting edge, the comic industry has been a great place to tell new stories. It's a bit of on guard, if you will. The comic space is almost an analog for some of the largest franchises that have come out in the last 2, 3 decades, whether that's Iron Man, Spiderman, Superman, all the cinematic universes and so many other great titles that have started at comics, the Walking Dead. So I do think that the comic industry is a space that studios will continue to look at for content. At the same time, there's other media platforms that present a lower cost way to create media, whether that's short-form video, handheld video, so we see that type of content coming from other countries. And at the end of the day, at this point, about half of media that's being consumed is being -- is short-form video, which means that, that's a really cost-effective way to produce content and be able to reach audience. The question, of course, is going to be around monetization. I haven't seen any companies that have a pay-for-play short form -- successful pay-for-play short form subscription model. But those are things that could open up. Obviously, podcasting is having quite a moment. Audio books I'd say that we are in a time where consumers are looking for deeper engagement with content and not just sort of a single, I don't know, cinematic experience, but deeper engagement, deeper relationship with the content that they consume. So I guess, Rush Limbaugh Limbo has been replaced by Joe Rogan. And that conversation has been more deep generally in the podcast space than it would be in sort of the talk radio space. And I'd say movies have given way to deeper character unfolding in TV. And so I think we'll continue to see that. And when you're looking for something that has a real universe and character building and the ability to delve deep into characters, I think that the mix of art and writing that comic presents that graphic storytelling presents is a very deep and rich universe. So I think it presents an opportunity for us. At the same time, I think that, that's one iteration of how the content we produce can be consumed, and we're looking at other ways to create experiences for fans and for prospective fans to be able to engage with the media that we produce, whether it's novelization, or audio books or merchandising or podcasting or other ways that we can continue to create opportunities for fans to have that kind of deeper engagement. I think there's enough pontification. That's...

Look, I really appreciate it because obviously, anything that you can say about where you may be considering strategically is helpful. Are you able to -- do you have access to capital if you were to find something that you would be able to buy? I mean you're talking primarily organic? Or would you be able to entertain an acquisition or even some kind of a merger or something like that? I mean how are you thinking about this -- taking advantage of some of these other platforms?

Yes. I mean we were thinking about buying TikTok, but apparently is a bit out of our price range. We do have some capital, and we do have access to capital. So we believe if there was the right strategic opportunity that we'd be able to pursue it. At the same time, we are a small company and our resources are limited. So we did have free cash flow and we do have cash on hand for opportunistic investment. It has to be the right fit and the right price.

So then TikTok would be an organic development. I'm kidding, sorry. I mean, look -- yes, I was going to say, I mean, if you can come up with something like that, that's -- I would say that'd be -- that would create some value.

We have looked at short-form video as a space that we feel that there are gaps in that market. And that we, as storytellers and the company that engages storytellers and facilitates a space where storytellers can transmit their message, transmit to an audience that there's an opportunity for us there. Short form is often disparate videos unconnected without sort of a through line not really creating a narrative. And we think that there might be opportunities there. But at the same time, our core focus is to continue to achieve excellence as a comic publisher, as a graphic novel publisher but at the same time to be open-minded and opportunistic as we see the playing field developing. So hopefully -- I'd love to tell you one day that we're -- that we have a really successful app and great customer acquisition and so on. And maybe that will happen sometime in the future. And it would be great to one day look back at this conference call and say, wow, that was sort of a -- that was a great moment of prediction. But I wouldn't bet heavily on it.

Your next question is coming from [ Damian Pilmer ].

Davidi, I've known you back and forth for a while about different ideas, different suggestions. The person that left has mentioned about acquisitions. I still want to ask about if acquiring AfterShock comic is a possibility because I don't like right now, they have their own solution going on. But I feel like everything I saw with what they have, I feel like it will be a good complement for IDW and its expansion.

If I understand the question, you're asking if there's a potential for IDW to acquire AfterShock comic, is that correct?

Yes.

We've -- we consider the possibility of acquisition. AfterShock is a company that we've looked at. At the current time, I don't think that there is -- I don't think that, that's a likely outcome. Not to say it's not possible, but we have pursued it and didn't seem like the opportunity was going to [ come alive ].

All right. Another question, after reading the annual report and the part about Diamond, I was just wondering as another source of revenue for IDW. Could IDW be -- IDW join like GlobalComix as a digital platform to put the comics on there as another source of revenue?

Sorry. Just so I understand the question. I'm not sure how -- if there's any connection to Diamond for the question. But it sounds like the question is if we can -- if IDW is able to put its comics on GlobalComix as another digital distribution platform?

Yes.

Yes, I think that that's a possibility. I'd say it's a likelihood that IDW comics will be on GlobalComix digital platform.

Okay. That was my -- that was it.

Maybe I will just touch on the Diamond point just because there has been some chatter and confusion. In terms of Diamond, I know it's not the question you asked, I just want to make sure to address it. There was language in our report regarding going concerns. IDW management does not feel that IDW is a substantial risk of going concern regarding good going concern, and we expect in the coming days that we will be restating our financials, removing that language, and we have worked with our auditors and provided additional information to an additional clarity so that they share our opinion that IDW is not a substantial risk regarding continuing as a going concern.

[Operator Instructions] Thank you. We have reached the end of the question-and-answer session. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.