IMAX Q2 2025 Earnings Report

IMAX EPS Results

• Actual EPS: $0.26
• Consensus EPS: $0.19
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: $0.18

IMAX Revenue Results

• Actual Revenue: $91.68 million
• Expected Revenue: $93.04 million
• Beat/Miss: Missed by -$1.35 million
• YoY Revenue Growth: +3.10%

IMAX Announcement Details

• Quarter: Q2 2025
• Date: 7/24/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 24, 2025
• Conference Call Time: 8:30AM ET

IMAX (NYSE:IMAX), together with its subsidiaries, operates as a technology platform for entertainment and events worldwide. The company operates in two segments, Content Solutions and Technology Products and Services. The company offers IMAX DMR, a proprietary technology that digitally remasters films and other content into IMAX formats for distribution to the IMAX network; IMAX Enhanced that provides end-to-end technology across streaming content and entertainment devices at home; and SSIMWAVE, an AI-driven video quality solutions for media and entertainment companies. It also offers preventative and emergency maintenance services and quality monitoring to the IMAX network; film post-production services; and IMAX film and digital cameras to content creators. In addition, the company engages in the distribution of large-format documentary films to institutional theaters, as well as live performances and interactive events with artists and creators; after-market sales of IMAX System parts and 3D glasses; sale or lease of IMAX theater systems; provision of management services to three other theaters, as well as production advice and technical assistance to documentary and Hollywood filmmakers; and rental of company's proprietary 2D and 3D large-format film cameras. The company markets its theater systems through a direct sales force and marketing staff to science and natural history museums, zoos, aquaria, and other educational and cultural centers, as well as theme parks, private home theaters, tourist destination sites, fairs, and expositions. It offers its services under the IMAX, IMAX 3D, Experience It In IMAX, The IMAX Experience, DMR, Filmed For IMAXTM, IMAX Live, IMAX Enhanced, and SSIMWAVE. The company operates a network of IMAX systems comprising commercial multiplexes, commercial destinations, and institutional locations in 90 countries and territories. IMAX Corporation was founded in 1967 and is headquartered in Mississauga, Canada.

IMAX Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: IMAX delivered 50% installation growth, over 40% box office growth, and a 43% adjusted EBITDA margin in Q2, setting new quarterly records.
• Positive Sentiment: The company raised its full-year installation guidance to 150–160 new and upgraded systems, up from prior expectations, with 124 agreements already completed year to date.
• Positive Sentiment: IMAX’s Film-for-IMAX strategy drove opening weekend market shares averaging 15% on 400 screens, including three releases exceeding 20%, marking unprecedented engagement.
• Positive Sentiment: Long-term film slate visibility is at a record high with major titles like Avatar, The Odyssey, and multiple Disney and Star Wars sequels locked in through 2026 and 2027, underpinning future box office growth.
• Positive Sentiment: Financial flexibility improved with an expanded $375 million revolving credit facility and $109 million in cash, leaving total available liquidity near $490 million for strategic investments.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Q2 twenty twenty five IMAX Corporation Earnings Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

[Operator]

You will hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jennifer Horsley, Head of Investor Relations. Please go ahead.

[Jennifer Horsley, SVP & Head - IR at IMAX]

Good morning, and thank you for joining us for IMAX's second quarter twenty twenty five earnings conference call. On the call today to review the financial results are Rich Gelfond, Chief Executive Officer and Natasha Fernandez, our Chief Financial Officer. Rob Lister, Chief Legal Officer, is also joining us today. Today's conference call is being webcast in its entirety on our website. A replay of the webcast will be made available shortly after the call.

[Jennifer Horsley, SVP & Head - IR at IMAX]

In addition, the full text of our earnings press release and the slide presentation have been posted on the Investor Relations section of our site. Our historical Excel model is posted to the website as well. I would like to remind you of the following information regarding forward looking statements. Today's call as well as the accompanying slide deck may include statements that are forward looking and that pertain to future results or outcomes. These forward looking statements are subject to risks and uncertainties that could cause our actual future results to not occur or occurrences to differ.

[Jennifer Horsley, SVP & Head - IR at IMAX]

Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results and outcomes. Any forward looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update those statements as a result of new information, future events or otherwise. During today's call, references may be made to certain non GAAP financial measures. Discussion of management's use of these measures and the definition of these measures as well as a reconciliation to non GAAP financial measures are contained in this morning's press release and our earnings materials, which are available on the Investor Relations page of our website at imax.com. With that, let me now turn the call over to Mr. Richard Gelfond. Rich?

[Richard Gelfond, CEO at IMAX]

Thanks, Jennifer, and thanks, everyone, for joining us as we review another outstanding quarter for IMAX. We delivered strong financial results in Q2, highlighted by installation growth of 50, box office growth of over 40% and an adjusted EBITDA margin of 43%. We've opened a total of 57 new and upgraded IMAX locations year to date compared to 39 during the same period of 2024. Given the demand for IMAX systems, we're moving higher in our range for full year installations to between one hundred fifty and one hundred sixty systems worldwide. And we've now completed agreements for 124 new and upgraded IMAX systems worldwide year to date compared to 130 in all of 2024.

[Richard Gelfond, CEO at IMAX]

Q2 was our highest grossing quarter ever at the domestic box office as we remain on track to achieve our guidance of $1,200,000,000 for the full year. This is a direct result of our strategy to increase our global market share, which had 3.6% of total box office on less than 1% of screens, is up 19% year over year in the second quarter. And to ensure that IMAX is the platform of choice for filmmakers and studios who wanna deliver the best experience for the greatest films from around the world. Coming into the second quarter, we were focused on an unprecedented run of eight consecutive film for IMAX releases this summer. Films shot with our cameras featuring exclusive IMAX expanded aspect ratio designed every step of the way to be experienced on our screens.

[Richard Gelfond, CEO at IMAX]

With all seven of these films to date, we've averaged about 15% of the North American box office on opening weekend on just 400 IMAX screens. Soaring as high as 20% on Impossible, The Final Reckoning, Sinners, and F1. That's a feat we've only achieved eight times in our entire history. And three of those milestones came in this second quarter. And with Superman, our 16% opening weekend indexing marked our highest market share ever on a domestic debut over a $100,000,000.

[Richard Gelfond, CEO at IMAX]

It's becoming increasingly clear that we're raising the floor for our market share. 10 used to be the high end of what we delivered on major tentpole releases. Now thanks to our film for IMAX strategy, the higher level is business as usual. In May, a New York Times feature posed the question, quote, why is IMAX suddenly everywhere, unquote. And the preponderance of film for IMAX releases this summer, along with our outsized share of the global box office, demonstrates the importance of IMAX across the global center of business.

[Richard Gelfond, CEO at IMAX]

More filmmakers are wielding our technology to create films designed to be experienced on our screens. Studios are competing more fiercely than ever to secure IMAX release windows and make IMAX a centerpiece of their marketing campaigns to eventicize their films. Audiences are responding, demonstrating a strong preference for seeing films in IMAX. And exhibitors are clamoring to get more IMAX systems into their networks and fully capitalize on the very IMAX friendly slate rolling out over the next several years. We're seeing that our strong system signings and installations this year, which is a powerful catalyst for our business.

[Richard Gelfond, CEO at IMAX]

The more we grow our network, the more we grow sales and box office revenue. And we maintain a strong capital position. Our recent renewal and expansion of our revolving credit facility demonstrates the continued confidence in our financial growth model. Simply put, this is a fantastic time to be in the IMAX business, and we have good reason to believe it will only get better. Looking at our global network, installs came in at the high end of our projection with 36 systems in the quarter.

[Richard Gelfond, CEO at IMAX]

The full year is set to yield several milestones, including our largest single year expansion ever in France with seven expected installations, five of which have already been completed. Our largest single year expansion in The Netherlands with four expected installations close to doubling our network in that country. And our largest single year expansion ever in Japan with eight already installed and at least four to go, representing network growth of over 20% in that country from last year. Our recent agreement with Regal will see us expand into our first new location in Manhattan in fifteen years, as well as a new location in the iconic LA Live Entertainment Complex with an 80 foot screen and an IMAX 70 millimeter film projector. With eight new domestic exhibition partners in 2024 and our record domestic box office in the second quarter, we remain keenly focused on growth in North America, one of our highest per screen markets in the world.

[Richard Gelfond, CEO at IMAX]

We also recently completed another agreement with Wanda that will see IMAX systems replace existing premium format auditoriums in up to 27 locations, a sign of our dominant competitive position in China. And we continue to do brisk system sales in Australia, where recent agreements with EBT, Hoits and Village will help satisfy strong consumer demand and high PSAs for the IMAX Experience. The second quarter offered strong evidence of our ability to elevate box office hits and drive results through our diversified global slate. One of Hollywood's biggest hits in years, it's easy to forget the questions that surrounded sinners in advance of its release. As longtime partners of director Ryan Kugler, we encouraged him to make IMAX a centerpiece of the marketing.

[Richard Gelfond, CEO at IMAX]

IMAX drove 21% of the film's global box office during its two weeks IMAX run, even bringing it back weeks later for an encore run-in IMAX film locations. The Final Reckoning made similar use of IMAX from the production through the marketing and the launch of the film. Final Reckoning includes more IMAX exclusive expanded aspect ratio than any Mission film. And premieres from Tokyo to London to New York were hosted on IMAX screens. We far outpaced our projections in delivering over $75,000,000 in global box office, our best result ever of the Mission Impossible franchise and a double digit percentage of the film's overall gross across its entire run.

[Richard Gelfond, CEO at IMAX]

The third quarter is already off to a great start. F1: Movie was designed from top to bottom for the IMAX Experience, shot entirely in IMAX expanded aspect ratio by our long term partner, Joe Kaczynski. And we exceeded our internal projections in delivering more than $80,000,000 and counting a whopping 22% of the domestic box office and 18.5% of the global box office for the film. Superman will conclude its IMAX run this week with well over $50,000,000 in global box office. And in local language, the Demon Slayer sequel delivered our biggest opening weekend ever in Japan this past weekend with $3,000,000 and an incredible $48,000 per screen average.

[Richard Gelfond, CEO at IMAX]

And in China, the much anticipated film Primax release, Ganje Rescue, opens next month. Our year to date local language box office stands at nearly $230,000,000 just shy of the $244,000,000 full year record we set in 2023. At the current pace, we expect to set a new record within q three. The second half slate looks promising. This weekend, Marvel's long awaited Fantastic Four opens worldwide.

[Richard Gelfond, CEO at IMAX]

The Rotten Tomatoes scores and presales are pretty strong. Our film for IMAX slate continues into the fall with Tron, Ares, and Mortal Kombat two. There are several IMAX friendly genre releases, Predator Badlands and The Running Man. Zootopia two is shaping up to be another big sequel for Disney animation and holds significant global appeal, particularly across our Asian markets. And the year concludes with the second installment of Wicked and finally with Avatar Fire and Ash, which will be proceeded with an IMAX rerelease of The Way of Water in October.

[Richard Gelfond, CEO at IMAX]

2026 kicks off the year with the Avatar carryover and features Christopher Nolan's The Odyssey as well as Avengers, Star Wars, The Mandalorian and Grogu, Super Mario Brothers movie sequel, Toy Story five, Greta Gerwig's Narnia and Dune Part three. And a very compelling twenty seventh slate continues to take shape, including Star Wars Starfighter from Deadpool and Wolverine director Sean Levy, Avengers Secret Wars, The Batman two and Beyond the Spider Verse. We continue to deepen our relationships with tech companies in the theatrical space as well. Our partnership with Apple has yielded excellent results to date on F1, and we're re releasing F1 on August 8. Amazon will release its first ever film for IMAX title next year with Ryan Gosling's Project Hail Mary.

[Richard Gelfond, CEO at IMAX]

And we were very pleased by the announcement that Dune director Denis Villeneuve, a long term partner of the company who has called IMAX, quote, the future of cinema, has been tapped to direct the next James Bond movie for Amazon MGM. And we're working closely with Netflix on the rollout of next year's IMAX exclusive theatrical run of Narnia from Greta Gerwin. Furthermore, we continue to offer diversified content, including films for music fans, including concert documentaries for the Grateful Dead, Prince and the Rolling Stones. To close, the fundamentals of our business are strong. The strength and impact of our brand across the entertainment landscape has reached new highs, and we have tremendous runway with a strong slate and network growth prospects ahead.

[Richard Gelfond, CEO at IMAX]

And we're focused on building on our momentum to strengthen our strategic position, executing with financial discipline, continuing to provide the most immersive entertainment experience in the world and delivering for our shareholders. Thank you. With that, I'll turn it over to Natasha.

[Natasha Fernandes, CFO at IMAX]

Thanks, Rich, and good morning, everyone. IMAX's second quarter demonstrated the strength of our model and the discipline of our execution. IMAX delivered another quarter of record breaking results, driven by a 41% year over year increase in global box office, strong installation growth of 50% and an adjusted EBITDA margin exceeding 42% for the second straight quarter. These results are not just numbers. We believe they reflect the scalability of our platform, the momentum in our business, and the growing demand for premium cinematic experiences.

[Natasha Fernandes, CFO at IMAX]

We believe we're not just outperforming the market, we're expanding it. We're attracting more audiences to choose a theatrical experience, capturing more value per screen, expanding our global footprint, and delivering consistent returns, all while maintaining a sharp focus on capital efficiency and long term shareholder value. Our results through the first half place us on track to meet or beat guidance for the full year, including on box office, system installations now expected to be between one hundred and fifty and one hundred and sixty for the year and adjusted EBITDA margin now expected to be in the low 40s. Taking a closer look at our Q2 results. Overall, we delivered revenues of 92,000,000 compared to $89,000,000 in the prior year second quarter and achieved gross margin in Q2 of $54,000,000 which grew 22% year over year.

[Natasha Fernandes, CFO at IMAX]

This reflects a 58% margin or over 900 basis point improvement year over year, reflecting high incremental profit flow through from the stronger box office performance along with a more profitable mix of revenue. Looking at our results at the segment level, Content Solutions revenues of $34,000,000 reflected the significant growth in IMAX box office of over 40%, while the prior year benefited from the downstream sale of the Blue Angels documentary to Amazon. Content solutions gross margin of $22,000,000 increased $6,000,000 at a 66% margin, up 2,000 basis points year over year, driven by strong incremental margins coming from the higher box office. Overall, box office outperformed the industry resulting in Q2 global market share of 3.6% on less than 1% of screens, driven by a remarkable 5.3 share of domestic box office and 6% share of China's box office. Technology products and services revenues of 56,000,000 was up 9% year over year with a gross margin of 30,000,000, up 17% year over year and at a 54% margin, up three sixty basis points year over year, driven by growth in box office and system sales.

[Natasha Fernandes, CFO at IMAX]

The quarter saw strong growth in installations, 36 systems versus 24 in the prior year, which included a higher mix of sales type arrangements. Moreover, installations included eight systems that were signed earlier this year and already installed in the second quarter of twenty twenty five. This is a good indicator of the robust demand by exhibitors to install IMAX systems in advance of the exceptional IMAX slate in 2025 and beyond. For instance, in Japan year to date, we have installed eight new systems, increasing our network there by 15% since the beginning of the year. And domestically, our backlog of 131 systems is up 46% year over year.

[Natasha Fernandes, CFO at IMAX]

And the momentum for signings continues with 28 signings in q two and 01/2024 year to date. We are only halfway through the year and are close to equaling the 130 systems signed in 2024. We are seeing good geographic diversity in signings, including higher per screen average countries such as Australia, France, The US, and Japan. These signings are not only replenishing, but growing our committed backlog, feeding the pipeline for future network expansion. Turning to operating expenditures, defined as research and development and selling, general and administrative expenses, excluding stock based compensation was $30,000,000 in the second quarter, which decreased $3,000,000 year over year, reflecting our continued focus on gaining operational efficiencies and looking for better ways to use technology and scrutinizing work processes to find productivity opportunities.

[Natasha Fernandes, CFO at IMAX]

We continue to take proactive steps, which led to year to date restructuring costs of over 840,000 to enhance operational efficiency and reduce annual costs while optimizing IMAX's organizational structure, including eliminating redundant roles, leveraging technology for efficiency and centralizing select functions, which positively impacts both margin and OpEx. Overall, our strong operational performance led to a second quarter total consolidated adjusted EBITDA of $39,000,000 which increased $8,000,000 or 26% year over year, driven by the higher revenues and gross margin. This resulted in a strong adjusted EBITDA margin percentage of 42.6%, up seven eighty basis points year over year and giving us a first half adjusted EBITDA margin of also 42.6%. Second quarter adjusted EPS was $0.26 up $08 year over year, driven fully by strong profit growth as tax expense year over year was a headwind of $09 given the tax benefit recognized as a result of the internal asset reorganization in the second quarter of twenty twenty four. Turning to cash flow and the balance sheet.

[Natasha Fernandes, CFO at IMAX]

Cash flow from operations continues to build and is just over $30,000,000 through the first half, which is up 25 from the prior year period. A very good first six months considering the cash flow has yet to capture collections on the larger box office titles this year and cash expenses around compensation and events tends to be first half weighted. We expect cash flows to continue to grow and similar to total adjusted EBITDA, the dynamics of cash flow are quite positive as box office expands leading to incrementality, particularly considering the cash flow characteristics of our joint revenue sharing arrangements where the capital expenditure is at the beginning of an average ten year contract term. Turning to investing cash flows, we continue to prioritize use of our available capital to invest in the business, including $15,000,000 spent on growth CapEx in the first half related to partnering with exhibitor customers to grow and upgrade the IMAX network through joint revenue sharing arrangements. This represents an attractive return on investment opportunity as numerous large partners, including AMC, Wanda and Regal are ramping up investment in IMAX as they upgrade their complexes, including bringing IMAX in to replace other premium formats as they look to capture more of the market share gains IMAX is delivering through our film for IMAX program.

[Natasha Fernandes, CFO at IMAX]

We are also making progress strengthening further our capital structure with a significant announcement last week of our amended and enlarged credit facility, which we expanded from 300,000,000 to 375,000,000 with a term that extends into 2030 and at an improved borrowing rate. This is a very positive development that not only increases our liquidity and strengthens our capital structure, but also reflects the recognition of the momentum in our business, long term trajectory, and support from our banking partners. Included in our capital structure is $230,000,000 of debt from our convertible senior notes due in April 2026 that bear an interest rate of 0.5% per annum with a cap call leading to a $37 per share conversion price. With our strong liquidity position and available facilities, we have the ability to be opportunistic as we assess the timing of when to address these notes and the nature of the instrument, whether that be our revolver or through new notes. Our capital position remains very strong with cash at 109,000,000 Debt excluding deferred financing costs was $280,000,000 and our current available liquidity is approximately $490,000,000 In conclusion, our team is executing well and our first half of the year exceeded our expectations on all of our guidance measures, IMAX box office, installations and adjusted EBITDA margin.

[Natasha Fernandes, CFO at IMAX]

We are focused on execution, and the second half has started off strong with July box office pacing to one of our highest July's on record driven by the mix of Hollywood and local language blockbusters, including the standout performance of F1 and Superman runs, as well as the record Japan opening of Demon Slayer this past weekend and several larger budget local language titles in China and other countries, along with our first German and Brazil titles later in this year. And looking beyond 2025, there is good visibility into IMAX's future installations as we have a significant and replenishing backlog with a clear path to years of network growth as IMAX location zones are less than 50% penetrated globally with potential for even more zones to be added to our addressable market. Similarly, the demand to secure an IMAX release window continues to grow resulting in filmmakers and studios building deeper and earlier partnerships. This is affording us a clear view into IMAX's film slate for 2026 and beyond. In short, the model is working.

[Natasha Fernandes, CFO at IMAX]

Filmmakers and studios are partnering with IMAX to deliver the best movie experience. Consumers are noticing and choosing IMAX. Exhibitors are looking to meet that demand by adding more IMAX systems to their circuits, and is translating to growth and expanding margins, profits and cash flows for IMAX that in turn will generate greater shareholder returns now and into the future. With that, I will turn the call over to the operator for Q and A.

[Operator]

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask your question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster.

[Operator]

Our first question comes from Omar Mahias with Wells Fargo. Your line is now open.

[Omar Mejias, VP - Equity Research at Wells Fargo]

Good morning and thanks for the question. Maybe first Rich, given the strong demand for MiMX slots from studios, and filmmakers, do you see a future where all or almost all films you play across your circuit are film for IMAX films? Just curious on how you see the evolution of the number of film for IMAX movies across your network.

[Richard Gelfond, CEO at IMAX]

I don't think it'll evolve to that point, Omar. We want to make film for IMAX something really special, including the right kind of content, the right visual, the right sound. So there are certain movies, while they might be really good movies, they just don't demand that kind of treatment. And as you know, when it's a film primax, it gets a two week minimum run. And I just don't think that all the movies will be suitable for a two week run.

[Richard Gelfond, CEO at IMAX]

As you know, the slots are what's really valuable, like the IMAX playtime. And it's a little bit of a trade off. When you do film for IMAX, you get higher indexing, you get the right property, but you're agreeing to two weeks before you've seen the movie. However, obviously, this quarter shows, the results were so strong, the indexing was so strong. So just to give you a sense, in 2026, we already have nine film Primax titles.

[Richard Gelfond, CEO at IMAX]

And for 2027, we already have at least eight. So it is something we're going to lean into for the right content, but we won't make it ubiquitous.

[Omar Mejias, VP - Equity Research at Wells Fargo]

No, that's very helpful. And maybe switching to some recent media reports that have been stating that US theater chains are under talks about jointly marketing their PLF screens to better compete with the growing influence of IMAX. Do you view this as a competitive threat to your business or more of an opportunity to partner with US exhibitors and potentially work together and grow the pie? Just curious on your thoughts on that.

[Richard Gelfond, CEO at IMAX]

Yes, so Omar, we've indexed an average of 15% on our FFI films this year on opening weekend and more than 20% on three of them. That's a real moment for exhibitors who haven't been in the IMAX business before. And they're kind of scurrying to come up with a strategy. A lot of people have tried to create competitors to IMAX over the years, but the fact is that our brand and relationships with filmmakers are unmatched and our technology is superior and audiences know it. Two of the three exhibitors mentioned in the story you're referring to have told us that they're not part of any discussions.

[Richard Gelfond, CEO at IMAX]

We just signed a renewal for 40 locations with Regal and are opening new locations with them in LA and New York City. And if you miss the boat, it's getting a little late. And I think these are kind of pathetic attempts to try and take a stand that is highly unlikely to work. That's very helpful. Appreciate it, guys.

[Operator]

Please stand by for our next question. Our next question comes from Chad Banyan with Macquarie. Your line is now open.

[Chad Beynon, Managing Director, Analyst at Macquarie Group]

Hi, good morning. Thanks for taking my question and nice results. I wanted to piggyback on the back of that last question, maybe from a slightly different angle. Rich, I recall from Investor Day several years ago, you laid out the IMAX difference in terms of the economics and the benefits of your partners that would earn your PSAs versus the PSAs they would earn on a non IMAX screen. And think the math was pretty compelling then.

[Chad Beynon, Managing Director, Analyst at Macquarie Group]

It seems like the results are diverging even further given the indexing and some of the results that you're talking about. So my question is, in the future, could there be opportunities to improve pricing similar to what we see in the hotel industry as they've increased royalty rates, showing their partners that it helps to be with the brand that has bigger scale and marketing benefits? Thank you.

[Richard Gelfond, CEO at IMAX]

Thanks, Chad. I would say it definitely gives IMAX a stronger hand in our negotiations with the content providers, whether it's studio or live content. But I think we're going to use that carefully. So you could see in the quarter that the three of the biggest movies, Sinners, F1, and Mission Impossible, the studio has really leaned in to the IMAX of it all. And we have Fantastic Four opening this weekend, and Disney has really leaned in to that.

[Richard Gelfond, CEO at IMAX]

And I think it's more beneficial for our overall results to get them to lean in more. And when people ask to do a film for IMAX release, or they want extra time at IMAX, we really use our negotiating style to look for things like IMAX premieres, IMAX tagging, the filmmakers getting more involved in the shout outs, which has really been happening. And I think it's a dangerous game to get into kind of different pricing for different movies. I think you send signals that audiences will get that studios want to give, don't want to give. And I think overall, we think it's a fair result for both the studios and us.

[Richard Gelfond, CEO at IMAX]

And you probably know that the entertainment business is one very driven by precedent. And I think we're happy with where the rate is now, and we'll use whatever extra negotiating power we might have to try and make the experience better marketed and more accessible for people.

[Chad Beynon, Managing Director, Analyst at Macquarie Group]

Okay. Thanks, Rich. And then a quick housekeeping for Natasha. You mentioned the tax impact from this quarter that was related to something last year. Is there anything else in the back half of the year?

[Chad Beynon, Managing Director, Analyst at Macquarie Group]

Or should we assume kind of a normal tax rate as that flows into free cash flow for the back half of the year?

[Natasha Fernandes, CFO at IMAX]

Yes, Chad, I mean, internal asset reorganization that we did last year, that's essentially what you're seeing come through this year. Q1 had a higher tax rate. Q2 has come down significantly, and we're aiming towards just simply having an effective tax rate for the entire year, as we've said before. And so that's our goal as opposed to where we've been historically.

[Chad Beynon, Managing Director, Analyst at Macquarie Group]

Great. Thank you, both.

[Operator]

Thank you. And our next question comes from Eric Handler with Roth Capital.

[Eric Handler, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Good morning. Thank you for the question. Rich, a big picture question for you. As you think about your ultimate product mix between Hollywood movies, local language, alternative content, like where are you with alternative content in like the number of events that you're doing a year? How are you seeing like the average revenue per event scale higher?

[Eric Handler, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Just the opportunities there with those, and where would you like to see the local language percentage be for overall box office as well?

[Richard Gelfond, CEO at IMAX]

Yeah, so far, Eric, this year, our percentage of local language content is around 40%, which is much higher than historically. It's been closer to around 20 in the prior couple of years. But obviously, Nezha too distorted that to the upside a little bit. But if you think about that, look at the North American exhibitors, for example, it's close to zero, their percentage for local language content. And I think one of the superpowers of IMAX is our ability to get these films from all over the world.

[Richard Gelfond, CEO at IMAX]

Your timing is good for the question because Demon Slayer just opened in Japan, and we set an all time record for Japan. And we're actually releasing Demon Slayer in 40 other countries. And the last Demon Slayer did $30,000,000 and this one is a broader release pattern than the last one. So local language is a really important part of our diversity of content. And in a way, you see how Netflix has used it really intelligently to grow their network.

[Richard Gelfond, CEO at IMAX]

And I think we're gonna continue to lean in in a big way. Alternative content, while important, is less of a game changer, and there are a few reasons for that. One is it generally has a shorter play time, and it also could conflict with studio offerings. So for example, again, back to this coming weekend with Fantastic Four opening, if we had a live event or a different kind of alternative content, the studios are obviously going to want to play what they've contracted to get. So it's more of a filler than it is kind of something that's going to carry the programming.

[Richard Gelfond, CEO at IMAX]

With that said, I think we have something like seven music events coming up in the next few months. So we have the Dead and Company coming up in the next few weeks. We have a Prince concert we just announced. I believe we haven't announced it, but we'll likely re release the Rolling Stones movie later in the year. There's just a lot of high quality content.

[Richard Gelfond, CEO at IMAX]

And there's a lot of interest in the music community to have more of it. So I think it's good. Last year, we did League of Legends in China. I think you'll see us do some other gaming things around the world now. And I think we're still in somewhat of a test phase.

[Richard Gelfond, CEO at IMAX]

So we look at what the ROI is on each event. We are leaning into it for the right events. But I just don't think it'll have the same financial impact that either the Hollywood slate does do or the local language slate.

[Eric Handler, MD & Senior Research Analyst at Roth Capital Partners, LLC]

That's helpful. And also, I mean, since you mentioned Dina Serum, you've had good success with several anime movies in the past, but it seems a bit sporadic. I have no idea how big the global market is for anime annually, But given the success you have, have you started talking with some of the anime companies about collaborations in the future and maybe increasing the amount of anime that you're seeing on the screens?

[Richard Gelfond, CEO at IMAX]

Well, Eric, in going through the past, you didn't mention the Zhao two, which did $160,000,000 in IMAX and was an animated film as well. So you're right, we have had a lot of success, particularly with anime on a global basis. So it originates in Japan, or most of it does. And then we've been successful not only in Japan, but in The US and China and a number of other markets with it. So we do have a pretty good track record.

[Richard Gelfond, CEO at IMAX]

But again, we've done pretty well even with some Hollywood movies, the Illumination ones. We've done very well with Despicable Me and movies like that. And we've done really well with some Pixar, Disney movies, and others. So I think we're leaning in to the right kind of animation. When we look at a movie, we don't say, oh, that's an animated one.

[Richard Gelfond, CEO at IMAX]

Let's go for that. I think it depends on the kind of content. And we have pretty good relationships with the anime studios and the animated studios globally. And we've always valued it. And for the right movies, we'll continue to lean into it.

[Eric Handler, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Great, thank you.

[Operator]

Thank you. And to allow for everybody in the queue to participate, if you could please limit yourself to one question. Our next question comes from Eric Wold with Texas Capital Securities.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

Thanks. Good morning. Hey, Rich, a quick question for you. I know there's been, at least there was at CinemaCon and some a little bit since then of some call for lower pricing by some of the studios on tickets. And we've had to move by AMC recently to kind of feel kind of add to the discount Tuesdays and move to the 50% off on Wednesdays. Just want to get your thoughts on what you think that could do kind of for IMAX going forward. I think it's early. I know that their 50% just went into effect at the start of this month or on the July 9.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

But do you think moving to lower pricing, if that becomes kind of more the norm midweek across the board, not just with AMC but with more of your exhibitor partners, does that give more of an incentive to maybe that cohort of moviegoers that may have been more, not willing to pay up for IMAX previously and now made more incentive to try out IMAX given that the baseline price is cheaper and maybe the adding on IMAX maybe more agreeable to them and maybe you can kind of tap into a movie door base that you may not have been able to before and that could be maybe a little bit of tailwind towards your market share potential moviegoer awareness longer term?

[Richard Gelfond, CEO at IMAX]

So Eric, I think the IMAX consumer over the years has shown that it's willing to pay a premium price for a premium experience. And look at this year right now, I know we reported the quarter, but our business has been extremely strong since then. And we're around $700,000,000 now, and it's not even the July yet. So I think our pricing formula is working pretty well for us. And especially another example I would give you is that, as you know, the Odyssey tickets went on sale for certain of the film theaters.

[Richard Gelfond, CEO at IMAX]

And this is for a movie that's opening a year from now. And especially film is something that the exhibitors don't really like to discount, and it virtually sold out within twenty four hours, in some cases, much shorter time than that, minutes. So I just don't think that the premise that lower prices or that I'll rephrase it. I don't think the price we charge is keeping people away. I think people recognize it's a premium experience, and they're willing to pay for it.

[Richard Gelfond, CEO at IMAX]

And you look at analogies such as sports ticketing or concert ticketing or other kinds of entertainment. And I think the trends go the other way. I understand why the exhibitors do it. They have huge capacity. And in fact, in certain cities, overbuilt.

[Richard Gelfond, CEO at IMAX]

And I think they're competing with other exhibitors for traffic in those markets. And that's what's driving rethinking the discount days. But IMAX has exclusivity zones. We buy IMAX film. We have filmmakers leaning in.

[Richard Gelfond, CEO at IMAX]

Extra costs in making an IMAX film. And I just don't think discounting is likely to change the dynamic.

[Operator]

Thank you. Our next question comes from Steven Frankel with Rosenblatt Securities.

[Steve Frankel, Director of Research & Senior Research Analyst at Rosenblatt Securities]

Good morning, Rich. I want to go back quickly to the alternative content discussion. You had wired a group of theaters for live events. Maybe give us an update on how many are able to do that today? And do you have plans to grow that network any further?

[Richard Gelfond, CEO at IMAX]

So we wired, I don't remember exactly the number, it's around 200 theaters, think a little bit more. Because that was the way to distribute alternative content. Since we acquired SimWave using their technology, came up with an alternative way to deliver alternative content. And that way is by streaming. And it's a much more cost effective way than wiring it.

[Richard Gelfond, CEO at IMAX]

You don't have the upfront cost of having to put the special cabling in. And in fact, for the event we did in China around the League of Legends, that was a completely streamed event. And we did over 150 theaters. And we were able to put that together really quickly. And that one virtually sold out at a higher price.

[Richard Gelfond, CEO at IMAX]

So it's a long way of saying, I think we are going to do it for more theaters. But I don't think we'll have to put up the capital like we did at the beginning because we were able to find a more cost effective way of doing it. And I think you'll see the base expanding, but not with a large cost associated with it.

[Steve Frankel, Director of Research & Senior Research Analyst at Rosenblatt Securities]

Great, thank you.

[Operator]

Thank you. And our next question comes from Mike Hickey with The Benchmark Company.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Hey, Rich, Natasha, Jennifer. Thanks for taking our questions, and congrats on a strong Q2, Rich. Just two from us. Film visibility, Rich, is, I think, probably the best it's ever been for you. Just curious as we sort of get into the second half of '25, your confidence level that you can grow your GBO in 2026. And I have a quick follow-up.

[Richard Gelfond, CEO at IMAX]

Yeah, Mike, I have an incredible amount of confidence in that because our '26 slate is almost all filled up. And just some of the high points, we have the Avatar carryover in early 'twenty six and got a number of other good films there, including Project Hail Mary from Amazon MGM. In the second quarter, we've got Super Mario Brothers two. We've got the new Star Wars Mandalorian, we've got Toy Story five, Supergirl in the third quarter. Obviously, the most anticipated one is the Odyssey from Chris Nolan.

[Richard Gelfond, CEO at IMAX]

We've got Moana, back to Eric's question. We've got Minions three. In the fourth quarter, we have Narnia, we have Avengers, we have Dune Part three. So this far in advance, it's unusual to have virtually all locked in. And then for '27, I think I said this earlier, we not only have a number of films locked in, but we have at least that are IMAX film, film for IMAX films in that.

[Richard Gelfond, CEO at IMAX]

So I would say there hasn't been a point in history where we've had this much locked in one and two years in advance. Obviously, we have our theater backlog as well. And as we talked about in our remarks, signings and installs are going very well. So I think that all of those things give us confidence about 'twenty six and beyond.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Nice. Thanks, Rich. Then that's a good sort of segue to installations. It looks like you raised your installation guidance for '25. Obviously, signings have been spectacular.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Also nice see some installation growth from The U. S, which is obviously your strongest market. Do you think this momentum here, Rich, in installations can continue into 2026? Or are you sort of maybe pulling forward some some demand here from your exhibitor, partners just given the strength of '25, certainly the the buzz of Avatar three, and as you just highlighted, an exceptional '26 on slate?

[Richard Gelfond, CEO at IMAX]

I think both in a way, Mike. So I think, yes, some people are installing earlier because they see the back end of the year, which obviously Avatar stands out. But also Zootopia is there, which especially internationally has a strong following. And Wicked, Predator, Running Man, there's a lot of things still to come. But by the same token, we've almost equaled all the signings we had for the whole year last year.

[Richard Gelfond, CEO at IMAX]

So while some are being pulled forward, the backlog is being replenished with the new theaters coming online. And the pace we're on is certainly very strong. So I think it's both. I think it's new ones coming in to the queue as well as ones moving forward.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Nice. Thanks, guys. Good luck.

[Richard Gelfond, CEO at IMAX]

Thank you.

[Operator]

Our next question comes from Drew Crum with B. Riley Securities.

[Drew Crum, Managing Director at B Riley Financial]

Okay, thanks. Good morning, everyone. So you made a subtle upgrade to your adjusted EBITDA guidance for the year.

[Drew Crum, Managing Director at B Riley Financial]

You're sitting at just under 43% year to date. Can you discuss what the puts and takes are for margins in the second half and the drivers for achieving or perhaps exceeding that low 40s threshold? Thanks.

[Natasha Fernandes, CFO at IMAX]

Sure, Drew. When we look at adjusted EBITDA, I mean, for the first two quarters, we've been very consistent at our 42.6%, but there's puts and takes that go into each quarter, and whether that be the incrementality we get from the box office as a positive, and then our decision making on how much to spend on marketing, or a nature of mix between local language content and Hollywood content and the remastering costs that occur. So, you know, Q1, for instance, was heavy on local language, which costs us less and creates and leads to a significant EBITDA margin, whereas you come to other quarters, like we'll have Avatar in Q4, and so there's an opportunity as we've done before, where we would want to spend more on marketing for Avatar as it's such a huge film, and not only is it a 2025 impact, but it has a '26 impact. And so all of that comes with the decision to simply make on ebbing and pulling your marketing and how much content you push into each quarter.

[Operator]

Thank you. And our next question comes from David Karnovsky with JPMorgan.

[David Karnovsky, Senior Research Analyst at JP Morgan]

All right, thanks. Rich, maybe I'll just go back and ask one more about kind of the press report last week on the PLF. I suppose one of the takeaways from that report was that there's this undercurrent of tension between exhibitors and IMAX specifically around studios marketing towards the IMAX performance or even kind of your decision to play the Narnia film next Thanksgiving. I just want to give you a chance to respond. Is that a fair assessment and how would you gauge your relationship with the domestic exhibitor community currently? Thanks.

[Richard Gelfond, CEO at IMAX]

I think it's excellent. Our biggest client, AMC, just signed a deal with us for additional theaters, including a bunch of new ones, and they're leaning in. And I talked to Adam Aaron after that story ran to get his perspective. And he basically felt that it was remote that any consortium was going to be put together in any way. And he certainly said he had zero interest in that.

[Richard Gelfond, CEO at IMAX]

We also spoke with a number of the other big exhibitors that were in North America. And they reassured us that they're either in the IMAX business or want to be in the IMAX business. Regal just signed a big deal for us, 30 or 40 theaters. So I think it's really good. I mean, how could it not be good?

[Richard Gelfond, CEO at IMAX]

I mean, first of all, at AMC's market share, as everybody reports this week. And their market share is going to be excellent because they're in the IMAX business. And I think, look at the box office that we brought in for our partners. So I think what the story did was it found people who aren't in the IMAX business. And obviously, if you were losing market share and losing money, you would be disgruntled.

[Richard Gelfond, CEO at IMAX]

So if I were them, I'd get into the IMAX business rather than make up stories to try and convince investors they're going to compete with IMAX. One little one, and I don't mean to pick on anybody, but there's an exhibitor in Europe called The View that's actually been in two restructurings in the last three years and missed the PLF boom. And they're launching their own PLF, which they announced in the trades is gonna be a threat to IMAX. So I mean, good luck with that. I mean, people have been trying this.

[Richard Gelfond, CEO at IMAX]

IMAX has been in business for fifty five years, and we have technology, we have relationships, we have lots of competitive advantages. It's almost like, and with no disrespect to Coke, if I came out and they said, I'm going to start a new soda brand, and I'm going to band together with others, so we're going to compete with Coke. I mean, the good news is if you have Coke, it doesn't work that way. And if you're IMAX, it doesn't work that way.

[David Karnovsky, Senior Research Analyst at JP Morgan]

Thank you, Rich.

[Operator]

Thank you. And our next question comes from Patrick Scholl with Barrington Research.

[Patrick Sholl, Vice President at Barrington Research Associates]

Hi. Thanks for taking the question. Just another question on, like, the backlogs and signings. With the, Regal agreement that you announced, in May, you mentioned the

[Patrick Sholl, Vice President at Barrington Research Associates]

70 mill 70 millimeter, film projector. I was just wondering how many of those are in the backlog and like how those types of screens have performed for the with the film for IMAX initiative. And just what other, I guess, would be puts and takes might go into that growth of that?

[Richard Gelfond, CEO at IMAX]

So the film theaters have done extremely well when there's IMAX film releases. So this year for Sinners, the numbers were incredibly strong because Ryan Kugler filmed with IMAX cameras and Warner Brothers put out film prints. And there were extremely high capacity. Remember, we did over 20% in each of the two weekends, that initial weekends that we played it. And obviously, Oppenheimer last year, we all how that movie performed very good.

[Richard Gelfond, CEO at IMAX]

And I mentioned the pre sales on pre ticket sales for Odyssey. So we're always looking for now we don't produce new film projectors because it's an older technology. And even though it brings in a lot of audiences, there are costs associated with it. However, we've been scouring the globe. And I do think for Odyssey, we'll have more film theaters than we had for the last film release, Sinners or Nolan's last movie, Oppenheimer.

[Richard Gelfond, CEO at IMAX]

So we're trying to address that issue. But there's a limited supply and the economics are terrific around it.

[Patrick Sholl, Vice President at Barrington Research Associates]

Okay, thank you.

[Operator]

Our next question comes from Steven Laschak with GS.

[Stephen Laszczyk, Vice President at Goldman Sachs]

Hey, thanks. Maybe just one for Natasha on cash flow. Could you update us just around your latest thinking for cash flow conversion this year, maybe relative to EBITDA. Appreciate there's been some timing dynamics in the first half of the year that you called out in your prepared remarks. Just to be curious how you think about that trending into second half.

[Stephen Laszczyk, Vice President at Goldman Sachs]

And then as you look ahead on cash conversion, just be curious how you're thinking about cash generation as the business hits stride in 'twenty six and beyond? Thank you.

[Natasha Fernandes, CFO at IMAX]

Hi, Stephen. Cash flow continues to strengthen. I mean, we're looking as we look at the targets, we're looking more similar right now to pre COVID cash conversion levels. Our first half operating cash flow was $30,000,000 It's up 25% year over year. Our free cash flow continues to improve as well.

[Natasha Fernandes, CFO at IMAX]

We were historically at around 50%, and we're trending towards that as well. As you start to think about just the operating leverage in our model, that's what starts to push through straight down to cash. And we've talked about this before, but exceeding box office levels over $250,000,000 in each quarter, essentially every dollar beyond that flows right through down to EBITDA and to cash at about an 85 percent conversion rate. And so that's what will continue to generate the cash flow. And even as we start to think about it, we have we already know Q3 will be a strong cash flow because China's cash flows come in a little later on their film content, because they just generally have a cycle where films have to close and then you get paid your cash.

[Natasha Fernandes, CFO at IMAX]

And so imagine the Nejaw two, that still sits out there and the cash will come in in Q3. So even with our strong first half cash flow, we already know Q3 is going be strong with the MNJA receipts coming in then.

[Stephen Laszczyk, Vice President at Goldman Sachs]

Thank you.

[Operator]

And we have time for one last question, and it comes from David Joyce with Seaport Research Partners.

[David Joyce, Senior Equity Analyst - Media Sector at Seaport Research Partners]

Thank you. It's great to see the operating leverage really showing through. But I had a question on trying to understand the puts and takes of the take rates. Film remastering and distribution was up year over year, but system rentals take rate compressed by 40 basis points. What would explain that, please?

[Natasha Fernandes, CFO at IMAX]

There's always different puts and takes, David. Sometimes you can have upgrades of theaters, so when you're upgrading a theater, you'll have to write off the old asset and put in the new theater, but you know that the incrementality will come within the very early stages of the ten year term on that location as you upgrade to new technology, so it's a very good investment. It all comes down to the mix in relation to whether we're putting in sales deals or JV deals as well, and so that kind of ebbs and flows your margin take rate. But overall, the operating leverage, as you can see from the content solutions, we've done really well in that $1,200,000,000 guide that we're working towards this year is flowing through. You can see it in Content Solutions, 66% margin with a very strong return and our overall gross margin of over 58% flowing right through to the EBITDA margin of 43%.

[Natasha Fernandes, CFO at IMAX]

It's been a great quarter and a great first half of the year, and we expect good things from the rest of the year as well.

[David Joyce, Senior Equity Analyst - Media Sector at Seaport Research Partners]

Well, great. Thank you.

[Operator]

And this concludes the question and answer session. I would now like to turn it back to Rich Gelfond for closing remarks.

[Richard Gelfond, CEO at IMAX]

Thanks, everyone, for joining us. I want to leave the call with a few final thoughts. IMAX has reached a new inflection point in our business and is poised to achieve new levels of success. Filmmakers and studios want to release their best films in IMAX. Consumers overwhelmingly prefer to see those films in IMAX.

[Richard Gelfond, CEO at IMAX]

And as a result, theater operators want to be in the IMAX business. All of this is creating a virtuous cycle that leads to growing revenue driven by higher box office, more systems signed, and more installations. This means more value generated for consumers, our partners, and for you, our shareholders. This simply has never been a better time to be in the IMAX business. Thank you all.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Jennifer Horsley, SVP & Head - IR
• Richard Gelfond, CEO
• Natasha Fernandes, CFO

Analysts

• Omar Mejias, VP - Equity Research at Wells Fargo
• Chad Beynon, Managing Director, Analyst at Macquarie Group
• Eric Handler, MD & Senior Research Analyst at Roth Capital Partners, LLC
• Eric Wold, Executive Director, Equity Research at Texas Capital Securities
• Steve Frankel, Director of Research & Senior Research Analyst at Rosenblatt Securities
• Mike Hickey, Equity Research Analyst at The Benchmark Company LLC
• Drew Crum, Managing Director at B Riley Financial
• David Karnovsky, Senior Research Analyst at JP Morgan
• Patrick Sholl, Vice President at Barrington Research Associates
• Stephen Laszczyk, Vice President at Goldman Sachs
• David Joyce, Senior Equity Analyst - Media Sector at Seaport Research Partners