D-BOX Technologies Q2 2025 Earnings Report

D-BOX Technologies EPS Results

• Actual EPS: C$0.01
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

D-BOX Technologies Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

D-BOX Technologies Announcement Details

• Quarter: Q2 2025
• Date: 11/12/2024
• Time: After Market Closes
• Conference Call Date: Friday, November 15, 2024
• Conference Call Time: 9:00AM ET

D-BOX redefines and creates realistic, immersive and haptic entertainment experiences by providing whole-body feedback and stimulating the imagination through movement. Haptics essentially allows for sensations that would be perceived if the body were to interact directly with physical objects. This expertise explains why D-BOX has collaborated with some of the world's best companies to tell captivating stories. Whether it be movies, video games, virtual reality applications, themed entertainment or professional simulators, D-BOX's mission is to make the world live and vibrate like never before. D-BOX Technologies (TSE:DBO) (TSX: DBO) is headquartered in Montreal, Canada with offices in Los Angeles, USA and Beijing, China. D-BOX.com.

D-BOX Technologies Q2 2025 Earnings Call Transcript

Key Takeaways

• DBox reported a record quarterly performance with EBITDA more than tripling year‐over‐year and net income rising over five‐fold on robust revenue growth.
• Year‐to‐date EBITDA margin reached 15%, up 400 basis points from last year, reflecting enhanced cost discipline and mix improvements beyond top‐line gains.
• Despite a soft market and a C$1 million impact from exiting direct‐to‐consumer hardware, system sales delivered 21% growth in theatrical & sim racing and 3% growth in simulation & training, while royalty revenue climbed 12%.
• The company has achieved positive net income on a rolling 12-month basis for five consecutive quarters and generated C$3 million of operating cash flow year-to-date, underscoring sustainable profitability.
• Following its recent debt restructuring, DBox is exploring various capital allocation strategies—reinvestment, debt paydown, shareholder returns or acquisitions—to leverage its newly available liquidity.

Presentation

[Elizabeth Hamaoui, Investor Relation at D-BOX]

Good morning, everyone. Welcome to the D-BOX Quarterly Earnings presentation for the quarter ended September 30th, 2024. I am Elizabeth Hamaoui, Investor Relations, and joining me today is Sébastien Mailhot, President and CEO of D-BOX. He will be taking you through the results for the quarter in a moment and address some of the questions we received. Before we begin, I'd like to remind everyone that certain statements made during today's call may be forward-looking and are based on our current expectations and assumptions. These statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied. For further details on these risks and reconciliation to non-IFRS measures, please refer to our public filings available on the corporate website and on SEDAR+.

[Elizabeth Hamaoui, Investor Relation at D-BOX]

With that, I will now turn the call over to Sébastien Mailhot to begin with a review of the company's performance for the quarter. Go ahead, Sébastien.

[Sébastien Mailhot, CEO at D-BOX]

Thank you, Elizabeth Hamaoui. Hi everyone. Really pleased to be there. As a CEO, sometimes we have ups and downs, but definitely, I'm really proud to be with you and present the result of this quarter. This was an exceptional quarter for D-BOX, marking the best performance in a company's history on several metrics. We believe this is a confirmation that our strategy is effective and our decisions are paying off and delivering results. As you can see, there is growth on the revenue side on the system. You definitely, and we had discussed that in the past, that at a certain level of the business, profitability would jump higher. You see that multiplication on the EBITDA is more than triple.

[Sébastien Mailhot, CEO at D-BOX]

More often, after last year doing the first year ever in net income, really pleased as well that the net income level has multiplied that more than five times. It shows as well that all the significant impact of all the businesses on the profitability with growth in every segment. Furthermore, we want to emphasize that it's not just top-line growth that's driving the margin. And again, interesting always to repeat, looking at last year's result, while sales have been relatively flat, we are still able to drive efficiency with now a year-to-date EBITDA of 15%, up 4% year over year. Let's move more on the detailed revenue. So, first, let's remember our commercial focus, as we know. So, we are playing in the entertainment market when we have the segment of theatrical and as well as some racing.

[Sébastien Mailhot, CEO at D-BOX]

In the more industrial, we are having the simulation and training. On the detail, we achieved record sales despite what remains a soft environment. Really important to remember. Despite the one million impact of exiting the direct-to-consumer hardware market, as previously communicated. If we take a look at system sales, and if we strip again out the direct-to-consumer figures, we had growth in all three key commercial markets. Theatrical and sim racing together are up 21%, and simulation and training are up 3%. If we give a bit of color, definitely theatrical has been mostly to continue the rollout with our current partners and remembering that our focus again in theatrical is definitely the domestic market, so U.S. and Canada, but as well Europe.

[Sébastien Mailhot, CEO at D-BOX]

On the simulation and training, definitely our partners continue to grow, but one of the segments that we're always remembering that has definitely some good traction is all sim racing centers, so commercial area where people are putting simulators to be able to feel the real-life racing. On the simulation and training, again, remembering we're mostly in the driving and as well into heavy equipment, the growth has been coming by continuing order for current customers. On theatrical, again, we benefited from both the increase of D-BOX footprint, as we know we're adding more than 100 screens a year, and the strong success of Deadpool & Wolverine that killed it at the box office. All these factors combined together help us to generate 12% revenue growth. Moving to the next slide.

[Sébastien Mailhot, CEO at D-BOX]

So, doing one good quarter is really good, but as we know, what we're trying to get is to have a sustainable, profitable growth. So, while we are proud of this quarter, we want to underscore it's important to look at our business from a year-to-date on the long-term perspective. In fact, looking through this lens, the company has been consistently delivering positive net income on a rolling 12-month basis for the last five quarters. So, I know shareholders have been more than patient after 20 years, but now we're getting at that level to bring sustainable profitability. While we have been driving positive EBITDA for much longer, we have achieved and surpassed revenue required to drive a positive and solid bottom line. As you know, any company, it's important we have some salary to pay. We are operating in Canada.

[Sébastien Mailhot, CEO at D-BOX]

But when after that you are able to drive revenue above your cost structure, that's where profitability improves, and that's why we like all those results. Next slide, please. Another thing that happened, as you know, is at our last AGM, so shareholders' meeting, it resulted that there's been a new independent director that has been put on the board. So, now we have a refreshed board and as well with additional expertise around the table. This is really important. As you know, D-BOX is a complex business operating in multiple countries, so that range of expertise from governance, strategy, finance, marketing, and operation is really key for the success of the business.

[Sébastien Mailhot, CEO at D-BOX]

We still have. We had one of the members, Zrinka Dekic, that was nominated, but unfortunately had to step down as a recent appointment to another role unfortunately prevented her from serving on the board of a publicly traded company. We have started a search for the replacement. So, right now, as you're saying, and I see that positively, all new boards bring fresh eyes to the business, and we have started the onboarding of all new members. And again, I'm really happy so far. So, with our positioning into the haptic market, our commercial positioning, again, the focus of what we're saying, theatrical, sim racing, and professional simulation, we are paying more time with the board, but I'm really happy with the discussion and the alignment we have found together.

[Sébastien Mailhot, CEO at D-BOX]

But of course, we'll have more discussion, and I look to the board to bring, of course, those tweaking and wisdom that can continue to improve the business moving forward. Last thing as well, it is important. It's important. We're all looking together with the board to continue to enhance governance and driving value for all stakeholders. Next slide, please. So, turning to key priority, as you know, with all that strategic pivot that we do, we have announced previously the arrival of Jean-François Gagnon, our new Senior Vice President, and he started the onboarding in Q2, and he's going to be leading the company into commercial effort. One of the things that we did as well is to combine the sales and marketing position under one leader, again, to improve the efficiency and the impact of our action.

[Sébastien Mailhot, CEO at D-BOX]

Another thing as well that is important is the cost discipline and other efficiency that we drove, so we increased our cash flow from operations. Note that we generated CAD three million year-to-date, and our recent debt restructuring. We are gaining greater flexibility. We are currently assessing our capital allocation strategy, looking to support growth across key markets, maintain a strong balance sheet, and exploring other opportunities. Yes, shareholders, we are now happy to be in that situation about being able to drive revenue, additional cash, and to be able to consider a new option. That's a nice position to be in, so to comment a bit on our H2, our fiscal year 2025, so definitely, as you know, we're not providing guidance, but I'll bring you some kind of colors, so the good news is, as you see, the industry is getting momentum.

[Sébastien Mailhot, CEO at D-BOX]

So, if we think about theatrical, COVID is behind, the strike is behind. So, that's why we see that with the movie slate, everything is improving. So, that's really important. Second thing as well, there's more visibility for some of those segments. So, yes, we have challenges, still some lingering effect, but it's positive about what we see the business going. Again, movie slate. So, we all feel, and if you look at various articles in the newspaper, people feel really confident and happy with the movie slate moving into calendar 2025 and beyond. We are back at normal time in the theatrical industry. And as well for all other segments as well, the visibility that we're having right now is continuing to push consumer buying more. This concludes our presentation. I'll be happy to respond to questions we have received following our earnings release.

[Elizabeth Hamaoui, Investor Relation at D-BOX]

Thank you, Sébastien, for the highlights on the quarter. Let's go through a few questions. So, the first is asking if you can speak a little to the level of profitability seen in the quarter and the impact specifically coming from royalties on the theatrical systems.

[Sébastien Mailhot, CEO at D-BOX]

Excellent. Thanks, Elizabeth. So, first, it's true that the right-of-use asset impact can have an additional impact, right, on the profitability. So, as you know, you see that the level is higher, and of course, the cost structure won't be changing. So, when we have that, definitely a higher right-of-use, it has an impact. But it's not just it. So, on top of that, definitely, as we know, the profitability is for the increased timeline, so our growth of sales. As well, the mix of product has an impact. So, we had a positive mix that drives as well the gross margin. And as well, we discussed that we got out of some business in the past, so the direct-to-consumer hardware business that has lower margin.

[Sébastien Mailhot, CEO at D-BOX]

And, of course, last thing, but not the least, is definitely with the construction, higher level, definitely our expenses will proportionately is higher. So, yes, right-of-use is there, but there's other business elements as well that are contributing to this. We do believe as well that as the revenue will continue to grow, the profitability should continue as well.

[Elizabeth Hamaoui, Investor Relation at D-BOX]

Okay, for our next question, with a refreshed board, can you provide any insight on potential impact to the current strategy, either in the short or in the longer term?

[Sébastien Mailhot, CEO at D-BOX]

Thanks. So, thanks, Elizabeth. So, really important. So, as you know, a company like D-BOX has to transform all the time, and I think same thing as well for a board. So, we had a good board for up to four years, and definitely with a new strategy, a new direction. And again, sometimes as we may change, new eyes are welcome. So, I think the first, the change of board members is something that is beneficial to a company, and this is the first thing. Secondly as well, so we know, so haptic, commercial market, our segment, I think this is pretty rock solid. I said earlier we have started the onboarding, so I like this discussion we're having.

[Sébastien Mailhot, CEO at D-BOX]

The purpose of the board is definitely to drive governance, but the additional skills that we bring to the plate as well will contribute to, of course, challenging the executive, looking at things that can create short-term and long-term value, and I see that positively. Again, a couple of weeks down the road, I like the discussion, like the alignment, I like the change that has been made, and definitely looking forward to see how that new mixture is going to bring some sparkle to benefit and improve D-BOX strategy plan.

[Elizabeth Hamaoui, Investor Relation at D-BOX]

Okay, our final question with the improved economics of the business, in particular cash generation, what are you planning to do with the available liquidity?

[Sébastien Mailhot, CEO at D-BOX]

So, thanks again, Elizabeth. So, good news. So, we have cash and we can take options. So, to be honest, right now, I have nothing to announce, but definitely right now that we're saying again that the D-BOX is in a situation that is not just having positive EBITDA and profitability, but generating discretionary cash flow. So, that's where that becomes interesting and how we can benefit shareholders, the strategy plan, but as well as shareholder value. So, of course, things that, like a couple of things that might be on the plate that I'm not announcing anything, but that's going to be part of the discussion in the upcoming weeks with the board. Is definitely okay with your additional cash. Do you increase the speed of growth? Do you want to reimburse debt? Are you considering to return that to shareholders?

[Sébastien Mailhot, CEO at D-BOX]

Is there some partnership we can do with that cash? Can we consider inorganic growth? So, I think all those things are things that are on the radar. But again, I think it's fair to say that to take a good short-term and long-term decision, we'll finalize the onboarding with the boards, we'll finalize the alignment, etc. And yes, when we're going to have some decisions taken, we'll share that with the shareholders and with the Street.

[Elizabeth Hamaoui, Investor Relation at D-BOX]

Super. Well, this concludes our presentation for today. I invite you to contact us with any follow-up questions at the address shown on screen. Je vous encourage tous à nous écrire afin d'adresser toute question additionnelle. Au plaisir, merci et à bientôt. Sébastien, je te laisse le dernier mot, the last word.

[Sébastien Mailhot, CEO at D-BOX]

Thanks, Elizabeth. Thanks all the shareholders for everything. So, bright days are ahead. Thanks.

Participants

Analysts

• Elizabeth Hamaoui, Investor Relation at D-BOX
• Sébastien Mailhot, CEO at D-BOX