National CineMedia, Inc. Q3 FY2024 earnings call

• Box office performance: Third quarter box office was almost $2.7 billion, up slightly from last year, with films like Deadpool & Wolverine, Despicable Me 4 leading. July, August, September showed positive month-over-month growth.
• Ad offerings: NCM's Platinum ad unit is growing, with sales up 2.4x. New platforms Boomerang and Boost provide incremental value. Experiential marketing efforts are increasing, with examples like in-lobby holographic activations and long-form content campaigns.
• Data and technology: Collaboration with Snowflake for data sharing, NCMx's advanced measurement capabilities driving client growth, and self-serve offering seeing strong growth with new AI feature.

In the third quarter of 2024, NCM's revenue was $62.4 million, exceeding the guidance range of $56 million to $58 million. Adjusted OIBDA was $8.8 million, surpassing the guidance range of $6 million to $8 million. Approximately 59% of national revenue was from longer term upfront commitments, and 41% from scatter market. National advertising revenue was $46.8 million, down 10% year-over-year due to lower attendance and CPMs. Local and regional advertising revenue was $11.4 million, down from the previous year, but with increases in contract activity in certain categories. Categories like tech, retail/apparel, and pharma showed significant growth. Platinum ad unit sales were up 2.4x year-over-year. New platforms Boomerang and Boost showed strong value, with Boomerang increasing post-theater engagement and Boost expanding audience reach.

• For the fourth quarter of 2024, revenue is expected to be between $82 million and $86 million, and adjusted OIBDA between $28 million and $30 million. This reflects a challenging year-over-year comp due to Taylor Swift's The Eras Tour in 2023 and higher theater access fees.
• 2025 is expected to be a strong year with a favorable film slate including Superman Legacy, Avatar 3, etc., and NCM is well-positioned to benefit from this.

• Market volatility: Category diversification helps reduce sensitivity, but market conditions can still impact revenue.
• Upfront market challenges: Evolving upfront marketplace with less reliance on upfront than in the past, affecting some competitors more than NCM.

Q: Update on upfront visibility as we head into next year and long-term commitment goals.

A: Tom noted the upfront marketplace is evolving with less reliance on upfront, NCM's pricing in upfront was stable year-on-year and performed solidly.

Q: Premium format ad package demand and exclusivity.

A: Ronnie said there's momentum in the premium format ad package, but it's not ready to give specific visibility yet; likely to go to multiple advertisers rather than exclusive.

Q: 4Q guide and dependence on attendance and ad sales.

A: Ronnie explained 4Q guide is affected by a challenging comp from Taylor Swift 2023 and audience mix shift, Tom emphasized optimism for 2025's strong film slate and potential attendance and revenue per attendee growth.

Q: Capital allocation and M&A potential.

A: Tom said focus is on share buyback program but also looking at small additive investments that fit strategically.

Q: Performance guarantees in scatter market and impact on gross margins.

A: Tom said performance guarantees can be offered in scatter market, Ronnie noted scatter market typically has higher CPMs which could positively impact gross margins as market shifts.

Q: Participation in live events with exhibitors.

A: Tom said NCM can participate in live events, has discussions with content and exhibitors to grow this business, and sees potential in monetizing live events.