WildBrain Q4 2026 Earnings Results & Report

WildBrain EPS Results

• Actual EPS: -C$0.05
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

WildBrain Revenue Results

• Actual Revenue: $54.97 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

At WildBrain (TSE:WILD) we inspire imaginations through the wonder of storytelling. A leader in 360° franchise management-spanning Content Creation, Audience Engagement and Global Licensing-our mission is to cultivate and grow love for our own and partner brands through exceptional entertainment experiences. Home to such franchises as Peanuts, Teletubbies, Strawberry Shortcake, Yo Gabba Gabba!, Inspector Gadget and Degrassi, we produce such acclaimed series as The Snoopy Show,¿Snoopy in Space,¿Camp Snoopy, Teletubbies Let's Go!, Yo Gabba GabbaLand!, Sonic Prime and Strawberry Shortcake: Berry in the Big City. With a library of approximately 14,000 half-hours, our shows reach kids and families everywhere, including on our YouTube network, which has generated more than 1.7 trillion minutes of watch time. Our consumer products licensing arm, WildBrain CPLG, represents our own and partner brands in every major territory worldwide.

WildBrain Q4 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: WildBrain completed the sale of its Peanuts interest, exited Canadian broadcasting, and repaid all corporate debt, ending fiscal 2026 with CAD 89 million in cash and greater financial flexibility.
• Positive Sentiment: Management expects fiscal 2027 revenue of CAD 270–295 million and adjusted EBITDA of CAD 28–32 million, representing approximately 15% and 44% growth at the midpoint, respectively.
• Negative Sentiment: Fiscal 2027 is expected to be an investment year, with approximately CAD 30 million of planned spending on franchises, technology, infrastructure, and facilities; management therefore expects negative free cash flow despite positive cash generation before these investments.
• Negative Sentiment: Fourth-quarter continuing-operations revenue fell 29% to CAD 55 million and adjusted EBITDA declined to negative CAD 4 million, pressured by lower content activity, reduced WildBrain CPLG agency revenue, receivable provisions, and higher franchise marketing costs.
• Positive Sentiment: Management cited momentum in Strawberry Shortcake and Teletubbies, a planned rebound in animation and live-action production, and 20%-plus growth in fourth-quarter direct advertising; it also expects adjusted EBITDA to approximately double from the fiscal 2027 midpoint by fiscal 2029.

Presentation

[Operator]

Thank you for standing by. This is the conference operator. Welcome to WildBrain's fiscal 2026 full year and fourth quarter earnings conference call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Ms. Kathleen Persaud, Vice President of Investor Relations. Please go ahead, ma'am.

[Kathleen Persaud, VP of Investor Relations at WildBrain]

Thank you, operator, and thank you everyone for joining us today for WildBrain's fourth quarter and fiscal year 2026 earnings call. Joining me today are Josh Scherba, our President and CEO, and Nick Gawne, our CFO. Before we begin, please note that matters discussed on this call include forward-looking statements under applicable securities laws, which reflects WildBrain's current expectations of future events. Such statements are based on a number of factors and assumptions that management believes are reasonable at the time they were made and information currently available. However, many of these factors and assumptions are subject to risks and uncertainty beyond WildBrain's control, which could cause actual results to vary materially from those that are disclosed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, changes in general economic, business, and political conditions.

[Kathleen Persaud, VP of Investor Relations at WildBrain]

WildBrain undertakes no obligation to update such forward-looking information, whether as a result of new information, future events, or otherwise, except as expressly required by applicable law. Please note that all currency numbers are in Canadian dollars unless otherwise stated. After our marks, we will open the call for questions. I will now turn the call over to our President and CEO, Josh Scherba.

[Josh Scherba, President and CEO at WildBrain]

Thanks for joining us today. Fiscal 2026 was a transformational year for WildBrain. We completed the sale of our interest in Peanuts, exited the Canadian television broadcasting business, and fully repaid our corporate debt. These actions simplified our business, strengthened our balance sheet, and repositioned WildBrain around three core growth platforms: Franchise & Global Licensing, Content, and the WildBrain Network, which became our new reporting segments effective in Q4. We enter fiscal 2027 with a clearer operating model, substantial financial flexibility, and the ability to deploy capital more deliberately. Our focus has shifted from balance sheet repair and debt servicing to investing in the capabilities that we believe can create a larger, higher quality, and more scalable business. As part of that repositioning, we have aligned our external reporting with the way we now manage the business and create value.

[Josh Scherba, President and CEO at WildBrain]

Franchise & Global Licensing, Content, and the WildBrain Network each have a distinct mandate, but they are designed to work together to form our flywheel. Franchise & Global Licensing builds and monetizes owned and partner brands. Content develops, produces, and distributes programming that drives fandom and supports franchise growth. The WildBrain Network reaches audiences at scale while generating advertising revenue and data insights. This flywheel creates the differentiated platform we have developed to grow and accelerate brands and those of our partners. Organizing around these three connected pillars gives us clearer accountability, brings related capabilities closer together, and provides investors with greater visibility into the underlying economics and growth drivers of the business.

[Josh Scherba, President and CEO at WildBrain]

Our fourth quarter results were affected by impacts arising from lower licensing agency revenues at WildBrain CPLG, reflecting timing differences and the impact of changes in certain partner relationships, as well as provisions for uncollectible trade receivables related to certain licensing customers. We also increased investment behind our own franchises to continue driving growth. At the same time, we continue to see positive momentum in Strawberry Shortcake and Teletubbies, higher direct advertising revenue in the WildBrain Network, and an expanding pipeline of content activity heading into fiscal 2027. We are also adding new capabilities to our licensing ecosystem. Subsequent to the quarter, we announced the acquisition of Personality AI, a kid-safe, scalable, interactive character platform. This adds proprietary generative AI capabilities that can be deployed across toys, apps, games, and digital platforms, both for our own brands and for partner IP through our licensing agency.

[Josh Scherba, President and CEO at WildBrain]

Starting with Franchise & Global Licensing, fiscal 2026 demonstrated the strength of our owned brand licensing model. Full-year segment revenue grew 27% to approximately CAD 88 million, supported by growth in owned brand royalties and WildBrain CPLG agency commissions. Strawberry Shortcake remained a key driver. During the year, the brand continued to expand across content, retail, licensing, and live experiences. In the fourth quarter, owned brand royalties continued to grow, led by Strawberry Shortcake. We have continued to build a broad content and marketing pipeline around the brand. The rollout of new Strawberry Shortcake programming on the WildBrain Network is designed to keep the franchise in front of audiences, deepen fan engagement, and support future consumer products opportunities across categories and territories. Teletubbies also continued to build momentum, particularly across Asia. In June, the first ever themed Teletubbies and In the Night Garden retail store opened in China.

[Josh Scherba, President and CEO at WildBrain]

Called WildBrain Garden, the store is part of Magic World, one of the region's largest family entertainment centers, featuring WildBrain's brands alongside others such as Peanuts, Peppa Pig, and Crayola. This is another example of how we can extend our brands beyond the screen and into physical experiences that support awareness, retail activity, and long-term franchise value. As Teletubbies approaches its 30th anniversary, we are building a coordinated global program across content, consumer products, retail, and live experiences. Our objective is to combine global brand recognition with locally relevant execution to create durable growth across markets. At WildBrain CPLG, the fourth quarter reflected lower agency revenue impacted by factors I previously mentioned. We have been actively managing through the transition of client relationships over the past year by expanding our portfolio of third-party partners and building a strong pipeline of new opportunities.

[Josh Scherba, President and CEO at WildBrain]

While new relationships take time to onboard and scale, we remain confident in our ability to replace this business over time. In addition, over the last several quarters, we have proactively repositioned WildBrain CPLG to better capitalize on local market opportunities and unlock growth across both international and domestic markets. Building on our success in Asia Pacific and other key regions, we have expanded local capabilities and strengthened our market presence to accelerate opportunities for both owned and partner brands. Most recently with the opening of a new WildBrain CPLG office in Japan this summer. This repositioning is an offensive growth initiative designed to increase our addressable market, deepen client relationships, and accelerate long-term growth. We remain confident in WildBrain CPLG's long-term value as a global licensing platform and as an important route to market for WildBrain's own franchises. We also continue to expand WildBrain CPLG's existing partner brand mandate.

[Josh Scherba, President and CEO at WildBrain]

In North America, Penguin Ventures and WildBrain CPLG announced new licensing collaborations for the world of Peter Rabbit across apparel, accessories, homeware, gifting, and digital products. Separately, Miraculous Corp expanded WildBrain CPLG's remit to lead location-based entertainment opportunities for its global hit brand, Miraculous: Tales of Ladybug & Cat Noir across EMEA and Asia Pacific. This new LBE relationship with Miraculous builds on WildBrain CPLG's existing consumer products licensing relationship outside the Americas. These wins demonstrate the breadth of WildBrain CPLG's capabilities across consumer products and location-based entertainment. The acquisition of Personality AI expands our franchise flywheel into interactive character experiences, creating new ways for audiences to engage with beloved brands.

[Josh Scherba, President and CEO at WildBrain]

Its proprietary kids' safe technology can be deployed across COPPA-compliant toys, apps, games, digital platforms, and physical experiences, giving us a scalable capability to deepen fandom and unlock new commercial opportunities for both WildBrain's brands and partner brands represented through WildBrain CPLG. Personality AI will be reported as part of our Franchise & Global Licensing segment. Turning to Content, fourth quarter revenue of CAD 29 million was lower than the previous year, primarily because of lower live action production activity and lower distribution revenue. The prior year quarter included a significant content delivery that did not repeat, and current projects were at different points of their production cycles, impacting timing in the quarter. The underlying opportunity remains meaningful. We have a number of greenlit projects across animation and live action that are expected to support a rebound in production activity during fiscal 2027.

[Josh Scherba, President and CEO at WildBrain]

Our integrated capabilities across development, pre-production, production, and distribution remain central both to serving third-party partners and to building our own franchises. Our content capabilities were also on display at the Annecy International Animation Film Festival, where our team participated in an official work in progress panel presenting first look at Snoopy Unleashed for Apple Original Films. While our content sales team brought new Strawberry Shortcake programming to the MIFA market. In June, Apple also announced that WildBrain had been appointed the production studio on the new animated feature film, Little Santa, based on the best-selling children's book of the same name. Just this morning, Apple TV+ announced the newest Peanuts special produced by our studio. Twelve Days of Snoopy is a brand new Peanuts holiday special featuring an original song from John Legend premiering this November.

[Josh Scherba, President and CEO at WildBrain]

This is the latest production delivery in our long-term agreement with Apple TV+. In live action, production is now underway on the second season of Finding Her Edge for Netflix. These activities highlight the breadth of our pipeline across premium animation, digital-first franchise content, and live action. We are also continuing to evolve our production model to improve scalability and better match resources with project demand. The goal is to preserve WildBrain's creative leadership and partner relationships while creating a more flexible delivery platform over time. We have additional initiatives underway that we expect to discuss in the coming periods. Turning to the WildBrain Network, fourth quarter revenue increased 6% year-over-year to approximately CAD 12 million, driven by higher direct advertising revenue from our Media Solutions business. The network now spans more than 1,000 channels across YouTube, FAST, and AVOD platforms.

[Josh Scherba, President and CEO at WildBrain]

It gives us global audience reach, a direct source of audience insight, and a scaled platform for advertisers seeking brand-safe access to kids and families. During the year, monetization was affected by changes in our partner mix and lower revenue on certain third-party platforms. However, the fourth quarter showed encouraging progress in direct advertising with growth of over 20%. We are investing in sales, marketing, and operating capabilities to expand Media Solutions and improve monetization across the network. A recent example of that progress is our exclusive direct advertising sales partnership with Miraculous Corp. Under the agreement, WildBrain Media Solutions will hold exclusive direct advertising sales rights for Miraculous Corp's intellectual property, including Miraculous: Tales of Ladybug & Cat Noir. The partnership adds a globally distributed franchise to our advertiser offering and expands the publisher direct inventory available through the WildBrain Network.

[Josh Scherba, President and CEO at WildBrain]

We see the network as more than a distribution business. It is a strategic part of our franchise flywheel. Content builds audiences. The network creates reach and insight, and that engagement supports licensing, advertising, and distribution opportunities across the company. More broadly across the company, we are investing in our technology and operating infrastructure. Our priorities include better enterprise data, modernized systems, increased automation, and more scalable operating workflows. These investments are intended to reduce complexity, improve visibility, and create a stronger foundation for growth. This is not simply a systems upgrade. We are bringing technology, data, automation, and production technology into a more unified operating model with clear strategy and accountability. The objective is to create faster, simpler workflows, scalable production capabilities, and a more disciplined foundation for technology and AI investment. Stepping back, fiscal 2026 reset the foundation of WildBrain.

[Josh Scherba, President and CEO at WildBrain]

We simplified the portfolio, eliminated corporate debt, established a clearer three-segment operating model, and created the financial flexibility to invest behind our strongest opportunities. Fiscal 2027 will be an investment year. We are deliberately putting capital behind franchises, content, advertising capabilities, technology, and operating infrastructure. These investments will affect near-term profitability and free cash flow, but we believe they position WildBrain for stronger revenue growth, adjusted EBITDA expansion, and improved cash generation beyond fiscal 2027. With that, I will turn it over to Nick Gawne to review the financial results and outlook in more detail.

[Nick Gawne, CFO at WildBrain]

Thanks, Josh. Before I begin, I want to clarify the presentation of our financial results. Following the closure of our Canadian television broadcasting business and the sale of our 41% interest in Peanuts Holdings, the historical results of those businesses are presented as discontinued operations. Peanuts related revenue and expenses provided under post-closing arrangements from our licensing agency, content production, and content distribution services remain in continuing operations. We have also updated our reportable segments to Franchise & Global Licensing, Content, and WildBrain Network. Alongside segment revenue, we are now also providing adjusted EBITDA for each reportable segment. This is new incremental disclosure for investors and reflects the way management evaluates segment performance and allocates resources. Segment adjusted EBITDA is a non-GAAP financial measure, as defined and discussed in our MD&A. I will highlight both the fourth quarter and full-year results for each segment.

[Nick Gawne, CFO at WildBrain]

Comparative information has been recast to conform to the new structure. Unless I state otherwise, the figures I will discuss relate to continuing operations. Revenue from continuing operations in the fourth quarter was CAD 55 million, down 29% from CAD 77 million in the prior year quarter. For the full year, revenue from continuing operations was CAD 246 million, down 10% from CAD 274 million in fiscal 2025. Franchise & Global Licensing revenue was CAD 16 million in the fourth quarter, down 16%. The decrease reflected lower licensing agency revenue at WildBrain CPLG, partly offset by continued growth in own brand royalties led by Strawberry Shortcake. For the full year, Franchise & Global Licensing revenue was CAD 88 million, up 27%, driven by growth in own brand royalties and higher agency commissions at CPLG.

[Nick Gawne, CFO at WildBrain]

Content revenue was CAD 29 million in the fourth quarter, down 40%, reflecting lower production and distribution revenue, including the absence of a significant content delivery recognized in the prior year quarter. For the full year, Content revenue was CAD 115 million, down 27% from CAD 157 million in fiscal 2025, reflecting lower production activity and lower point in time distribution, music, and other revenue. WildBrain Network revenue was CAD 12 million in the fourth quarter, up 6% driven by higher direct advertising revenue. For the full year, WildBrain Network revenue was CAD 47 million, down 10%, reflecting lower platform advertising revenue with direct advertising revenue broadly flat. We continue to see encouraging audience momentum across our owned IP, with watch time on WildBrain owned channels up 10% year-over-year, and Teletubbies recording its strongest quarter ever for watch time.

[Nick Gawne, CFO at WildBrain]

This audience growth reflects the strength of our owned IP as we evolve network towards deeper, more strategic partnerships. We believe our continued investment in direct sales and broader monetization capabilities positions the network for stronger advertising growth and improved operating leverage over time. Gross margin in the fourth quarter was CAD 21 million, or 39% of revenue, compared with CAD 32 million, or 41%, in the prior year quarter. The decrease in gross margin dollars reflected lower distribution and licensing revenue, along with increased franchise marketing investment. For the full year, gross margin was CAD 111 million, or 45% of revenue, compared with CAD 110 million, or 40%, in fiscal 2025. The approximately 500 basis point improvement in gross margin reflected the increased contribution from higher margin owned brand licensing revenue, which offset the impact of lower production and distribution activity.

[Nick Gawne, CFO at WildBrain]

Franchise & Global Licensing segment adjusted EBITDA was -CAD 4 million in the fourth quarter, compared to +CAD 2 million in Q4 2025. The decrease reflected lower licensing agency revenue, higher franchise marketing investment, and higher SG&A. For the full year, segment adjusted EBITDA increased to CAD 22 million from CAD 11 million, reflecting revenue growth described above, partly offset by higher staff, content, and marketing costs. Franchise marketing investment was approximately CAD 1 million higher than in the prior year quarter. We are deliberately investing ahead of revenue to increase awareness in Strawberry Shortcake and Teletubbies across content, consumer products, retail, and new territories. That spending affected fourth quarter profitability and is expected to continue to affect Franchise & Global Licensing margins in fiscal 2027, with the related licensing revenue expected to develop over subsequent periods.

[Nick Gawne, CFO at WildBrain]

Content segment adjusted EBITDA was CAD 2 million in the fourth quarter, compared to CAD 10 million in Q4 2025. For the full year, segment adjusted EBITDA was CAD 8 million, compared with CAD 23 million. The decreases reflected lower production activity, lower high-margin distribution, and partner brand royalty revenue, and a greater mix of lower margin production revenue. WildBrain Network segment adjusted EBITDA improved to approximately break even in the fourth quarter from -CAD 2 million, driven by a higher advertising revenue and lower content costs, partly offset by higher SG&A. For the full year, segment adjusted EBITDA was -CAD 2 million, compared with approximately break even in fiscal 2025, as lower platform advertising revenue and investment in the direct advertising sales team more than offset lower content and distribution costs. The segment results presented before corporate and other consolidation adjustments and inter-segment eliminations.

[Nick Gawne, CFO at WildBrain]

In the fourth quarter, corporate costs were about CAD 600,000 higher. This was partly offset by approximately CAD 260,000 increase in the benefit from consolidation adjustments and eliminations. For the full year, corporate costs were approximately CAD 913,000 higher, with a benefit from eliminations and consolidation adjustments increasing approximately CAD 1 million. Eliminations and consolidation adjustments contain inter-segment eliminations that net to zero at gross margin and the removal of rent charges under IFRS 16. To explain further, we load our segment adjusted EBITDA with rent charges, which are then removed in this line. Adjusted EBITDA from continuing operations attributable to shareholders of the company, which I will refer to as adjusted EBITDA, was -CAD 4 million in the fourth quarter, compared with +CAD 8 million in the prior year quarter. For fiscal 2026, adjusted EBITDA was CAD 21 million, down 22% from CAD 27 million in fiscal 2025.

[Nick Gawne, CFO at WildBrain]

Fourth quarter profitability was affected by several discrete items. First, impact arising from the wind-down of a partner relationship. Second, provisions related to certain receivable balances. Third, year-end adjustments to estimates surrounding accrued licensing income. Lastly, increased franchise marketing expenditures supporting key brand initiatives. Absent these impacts, the business performed as management expected. We continue to make progress in own brand licensing and direct advertising, while advancing our production pipeline. Together, these trends support the fiscal 2027 outlook that I'll detail in a moment. Net income from continuing operations attributable to shareholders of the company was CAD 5 million in the fourth quarter, compared with net income of CAD 6 million in the prior year quarter. For the full year, net loss was CAD 75 million, compared with net loss of CAD 122 million in fiscal 2025.

[Nick Gawne, CFO at WildBrain]

Cash used in operating activities was CAD 30 million in the fourth quarter, compared with CAD 2 million in the prior year quarter. The change primarily reflected working capital timing to productions. Free cash flow presented on a consolidated basis was -CAD 20 million in the fourth quarter, compared with -CAD 17 million in the prior year quarter. The current quarter result primarily reflected production working capital outflows and the seasonality of our licensing businesses, partly offset by an increase in interim production financing. For fiscal 2026, consolidated free cash flow was -CAD 31 million, compared with +CAD 50 million in 2025. The comparison was significantly affected by the Peanuts transaction. Fiscal 2026 included cash generated by Peanuts before the transaction closed in March, as well as transaction costs and interest paid before the repayment of our debt. It also included significant production and licensing working capital movements.

[Nick Gawne, CFO at WildBrain]

As a result, consolidated free cash flow for fiscal 2026 is not directly indicative of the cash generation profile of the continuing businesses following the transaction. With corporate debt now repaid, future periods will no longer include interest on that former credit facility, although production financing and working capital timing will continue to create variability. We ended the year with CAD 89 million of cash and cash equivalents, providing liquidity to support our fiscal 2027 investment program and broader capital allocation priorities. We also continue to execute our normal course issuer bid. As of the end of August, we had returned approximately CAD 3.2 million to shareholders through share repurchases. This reflects our commitment to returning capital to shareholders when we believe doing so creates long-term value.

[Nick Gawne, CFO at WildBrain]

Our capital allocation priorities are to invest in franchise, marketing, and content, technology and operating infrastructure, pursue selective acquisitions to strengthen our franchise portfolio or capabilities, and return capital to shareholders when we believe doing so creates long-term value. For fiscal 2027, we expect revenue of CAD 270 million-CAD 295 million. At the midpoint, this represents year-over-year growth of approximately 15%. We expect adjusted EBITDA of CAD 28 million-CAD 32 million. At the midpoint, this represents year-over-year growth of approximately 44%. Our fiscal 2027 growth is supported by the underlying trends across our three operating segments and by our visibility into contracted activity and the current pipeline. Although timing can create variability between periods, that visibility gives us confidence in the guidance ranges we have provided. Fiscal 2027 represents an investment year for WildBrain.

[Nick Gawne, CFO at WildBrain]

We expect to rebuild growth across each operating segment while making concentrated investments intended to strengthen our long-term competitive position. Within Franchise & Global Licensing, we expect growth from owned brand licensing programs, including Strawberry Shortcake and Teletubbies. Continued investment in content and franchise marketing is intended to support broader consumer products programs across categories, markets, and territories. This investment is expected to reduce segment profitability in fiscal 2027, with the related licensing revenue developing over subsequent periods. The timing and amount of those returns will depend on licensee adoption, retail placement, consumer demand, and product launch timing. At WildBrain CPLG, we are focused on expanding the roster of owned and partner brands across key regions while managing the near-term impact of changes in certain partner relationships.

[Nick Gawne, CFO at WildBrain]

Within Content, we expect a rebound in production revenue with a number of greenlit live action and animation projects expected to drive revenue and adjusted EBITDA growth. Distribution and Content sales are also expected to remain important contributors to segment profitability. Within the WildBrain Network, we see an opportunity to recapture advertising demand in the kids and family category as the broader media landscape evolves. We expect growth in total advertising revenue, supported by investment in direct sales and marketing capabilities and continued monetization through third-party platforms. SG&A is expected to grow ahead of advertising revenue in fiscal 2027, creating a near-term drag on segment profitability. As advertising revenue grows, we expect improved operating leverage and increased margin dollars in subsequent periods. Our fiscal 2027 guidance includes approximately CAD 30 million of planned investments.

[Nick Gawne, CFO at WildBrain]

Most of these investments are expected to be reflected below EBITDA, primarily within reorganization development other costs and as capital expenditures, with a smaller portion recognized in operating expenses and therefore reflected in adjusted EBITDA. These investments are concentrated in three areas. First, we are increasing investment in our own brand content and franchise marketing initiatives to support broader consumer products programs across categories, markets, and territories. These costs are expected to be primarily reflected in operating expenses. Second, we are making a multi-year investment in technology and infrastructure, including data, enterprise systems and automation, and scalable operating workflows. These costs are expected to include both reorganization development other expenses and capitalized investments. Third, our investment and program include leasehold improvements and other capital expenditures to support our physical infrastructure. These investments are expected to be capitalized.

[Nick Gawne, CFO at WildBrain]

We expect these investments to support greater operating scalability and a more moderate rate of growth in corporate costs over time, while also strengthening the foundation for long-term growth. Operating cash flow generated by the continuing business is expected to fund a material portion of this investment with our available cash balance providing additional capacity for these initiatives, selective acquisitions, and share repurchases. As a result of this planned investment program, we expect free cash flow to be negative in fiscal 2027. Importantly, before these planned investments, we would expect the continuing business to generate positive free cash flow in fiscal 2027. We believe this disciplined investment approach positions the business to deliver stronger profitability, improved cash generation, and enhanced long-term shareholder value.

[Nick Gawne, CFO at WildBrain]

As our business mix shifts towards higher margin consumer product licensing and we scale the WildBrain Network's advertising sales capabilities, we expect improvements in adjusted EBITDA and free cash flow generation. Following fiscal 2027, we expect adjusted EBITDA to approximately double from the midpoint of our fiscal 2027 outlook by the end of fiscal 2029. The expected improvement is based principally on growth in own brand licensing revenue, increased total advertising revenue within the WildBrain Network, improved operating leverage, and a moderation of incremental transformation spending. We also expect free cash flow generation to improve as adjusted EBITDA grows and the fiscal 2027 investment program moderates. The amount and timing of free cash flow will continue to depend on working capital movements, production financing, content investment, and capital expenditures. There are, of course, risks to achieving any forward-looking outlook.

[Nick Gawne, CFO at WildBrain]

However, current business momentum, the depth of our pipeline, and the developing opportunities across our broader ecosystem provide us with the confidence in our ability to deliver against these expectations. We believe the opportunity ahead of WildBrain is meaningful, and our priority is disciplined execution. As always, our guidance and outlook are based on our current expectations and are subject to the risks and assumptions described in our public filings. I will now turn it back to Josh to close.

[Josh Scherba, President and CEO at WildBrain]

Thank you, Nick. Fiscal 2026 marked a major transition for WildBrain. We monetized our interest in Peanuts, exited television broadcasting, eliminated corporate debt, and repositioned the company around three connected growth platforms. We are entering fiscal 2027 from a position of financial and operational strength and with a disciplined investment plan. Strawberry Shortcake and Teletubbies are building momentum. The content pipeline is expected to support a rebound in production activity. The WildBrain Network is expanding its direct advertising opportunity, and Personality AI adds a new differentiated capability to our franchise ecosystem. The near-term investment is deliberate. Our objective is to build stronger franchises, a more scalable operating platform, and multiple pathways for long-term earnings and cash flow growth. We appreciate your continued support and interest in WildBrain. With that, we are happy to take your questions. Operator?

[Operator]

Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question will come from David McFadgen with Cormark Securities. Please go ahead.

[David McFadgen, Analyst at Cormark Securities]

Yeah. Hi. A couple of questions. You are talking about making an investment of CAD 30 million. I was just wondering, can you break that down between what is CapEx that would be reflected in the investing section of the cash flow statement and then what would be reflected in operating costs of the income statement?

[Nick Gawne, CFO at WildBrain]

We're not disclosing that at this time, David. As I said in my script notes, it's CAD 30 million that will be spread across. Some of it will hit within adjusted EBITDA, the franchise marketing costs and some of the amortization related to the content costs. The majority of it sits in reorg development and other costs and within CapEx. It's there really to drive that kind of accelerated growth that we're seeing through 2028 and 2029.

[David McFadgen, Analyst at Cormark Securities]

Okay. Sorry, didn't get that. Do you expect the majority would be in CapEx as reflected in the investing section of the cash flow statement, or the majority is going to be up in the income statement somewhere?

[Nick Gawne, CFO at WildBrain]

Again, we're not disclosing that level of detail. IFRS rules around what's capitalizable and what's not capitalizable are different to U.S. GAAP and so on and so forth. I think our job is to kind of try and guide people to how much we're spending and what the expected return on that and the return flows through our target to approximately double the kind of 2027 EBITDA through to 2029.

[David McFadgen, Analyst at Cormark Securities]

Okay. You talked about changes in partner relationships at WildBrain CPLG. I was wondering if you could elaborate on that.

[Josh Scherba, President and CEO at WildBrain]

Sure. I'll take that one, David. Thank you for the question. We alluded to some consolidation in the business and to be specific, it's a partnership with Paramount, who have obviously been going through a lot of changes, and have decided to take their licensing representation business back in-house. That had an impact on us in the quarter. We've built that adjustment into our forecast for fiscal 2027 and beyond. We remain extremely optimistic about our prospects at WildBrain CPLG. We've been adding additional partners. We've mentioned Miraculous. We've also been expanding some of our rights on the Dr. Seuss franchise. As well, there's really significant geographical momentum. I just came back from Asia, where I spent time with our offices in Taiwan and Seoul and in Shanghai. We're seeing real growth in that region and opportunities for us to add third-party representation properties there.

[Josh Scherba, President and CEO at WildBrain]

These partners do cycle out from time to time. This had been a really long-term relationship, but consolidation in the business led to this decision by them and for them to take this work in-house. We're adjusting and are extremely confident in our prospects.

[David McFadgen, Analyst at Cormark Securities]

Okay. Can you elaborate on what brands Paramount took back in-house?

[Josh Scherba, President and CEO at WildBrain]

Well, I'm not going to list them all out, but Paramount, we were representing a portfolio of Paramount brands, and they've taken that business back in-house.

[David McFadgen, Analyst at Cormark Securities]

Okay. Then you talked about uncollectible trade receivables in MD&A. I was just wondering if you can quantify that.

[Nick Gawne, CFO at WildBrain]

Yeah, we are not quantifying that, but it was an impact in the fourth quarter. Over the year, it does not really impact the results. But we had to take some action as a result of new information we got in the Q. So we would see it as discrete. It does not speak to the quality of the trading business, and it does not speak to the quality of the license fee program we have for Strawberry and Teletubbies.

[David McFadgen, Analyst at Cormark Securities]

Okay. Then lastly, you talked about SG&A growth in fiscal 2027. So what magnitude of growth are you expecting there?

[Nick Gawne, CFO at WildBrain]

Again, I seem to be repeating myself, David. I apologize, but we are not breaking it down to that level of growth. I think I would zoom out and say, I joined just about three years ago. The business is pretty unrecognizable now versus what it was then. Back then, it was very much a content investment spend business rather than a people business. That content business has become extremely challenged over the past five years, and we kind of navigated the business out of that challenge with a clean balance sheet and with a licensing business and a network business and a more selective studio business that we are incredibly proud of. That network business and the licensing business are people-driven businesses rather than content spend-driven businesses. So if you look at a cash flow profile of the business, content investment has been dramatically falling over the past five years.

[Nick Gawne, CFO at WildBrain]

But we've replaced that with investment in people, because the more people we have, the more licensing programs we can launch for our own brands and for partner brands in various territories. So that's why we're seeing SG&A running ahead. What you're not seeing is content amortization moderating, which kind of nets the impact of that SG&A. Unfortunately for us, the SG&A growth is very obvious, whereas the moderation in content amortization is not as obvious. But that's really what's driving the trend.

[Josh Scherba, President and CEO at WildBrain]

I would also add, David, that that dovetails with our investment in infrastructure and systems so that our people can be more efficient, moving forward. As our business grows in 2028 and 2029, we're not going to have to increase our headcount to scale the business because we're going to be able to operate in a much more efficient way given the investments we're making in the next 12 months.

[David McFadgen, Analyst at Cormark Securities]

Okay. All right. Well, thank you.

[Operator]

Again, if you have a question, please press star then one. This will conclude our question and answer session, as well as our conference call for today. You may now disconnect your lines. Thank you for your participation, and have a pleasant rest of your day.

Participants

Executives

• Kathleen Persaud, VP of Investor Relations
• Josh Scherba, President and CEO
• Nick Gawne, CFO

Analysts

• David McFadgen, Analyst at Cormark Securities