Alliance Entertainment Touts 21% Sales Jump, Collectibles Push at Investor Event

Key Points

• Alliance Entertainment reported strong quarterly growth, with revenue rising 21% year over year to $258 million. CD sales nearly doubled, while vinyl and movie revenue also increased, helping lift earnings and EBITDA.
• The company is leaning on its distribution network and automation as a core advantage. Its Kentucky facility ships more than 57 million units a year, and AutoStore automation has sharply reduced labor needs and is expected to cut costs further when a lease expires in 2027.
• Management is pushing into higher-margin growth areas such as collectibles, authentication, and studio licensing. Initiatives like Handmade by Robots, Alliance Authentic, and Endstate Authentic are aimed at expanding revenue and improving profitability beyond traditional physical media.

Alliance Entertainment NASDAQ: AENT executives outlined growth in physical media, collectibles and licensing opportunities during a RedChip Companies investor event, while emphasizing the company’s distribution scale and push into higher-margin products.

Bruce Ogilvie, executive chairman of Alliance Entertainment, described the company as a distributor of movies, music, video games, toys and collectibles, including vinyl LPs, CDs, 4K and Blu-ray movies, video game hardware and software, and licensed collectible products. Ogilvie said the company stocks more than 325,000 SKUs and serves major retailers through store shipments, distribution-center shipments and white-label drop shipping from its facility in Shepherdsville, Kentucky.

Ogilvie said Alliance generated approximately $1.1 billion in revenue and characterized the business as “very steady state,” noting that diversification across categories helps offset headwinds in individual markets. He said vinyl is the company’s largest physical category at close to 32% of revenue, followed by video movies at about 31% and CDs at 12%.

Quarterly Sales Led by CDs, Vinyl and Movies

For the quarter discussed in the presentation, Ogilvie said revenue rose 21% to $258 million from $213 million in the prior-year period. He said CDs nearly doubled, rising 93% year over year, while vinyl increased 17% and the movie category, including licensing opportunities, rose 6%.

Ogilvie also said earnings per share increased to $0.05 from $0.04 for the quarter, while adjusted EBITDA rose 4%. For the nine-month period, he said adjusted EBITDA was up 47%.

In discussing longer-term financial metrics, Ogilvie said adjusted EBITDA had grown from $24.3 million to $47.9 million over the periods shown in the company’s presentation. He also said trailing 12-month earnings per share were running at $0.45, compared with $0.09 and $0.30 in prior fiscal periods referenced in the presentation.

Distribution Center Remains Central to Strategy

Ogilvie called Alliance’s 873,000-square-foot Kentucky distribution center “the secret to our success.” He highlighted the company’s AutoStore automation system, which he said reduced vinyl picking staff from 41 processors to seven and improved receiving efficiency by bringing storage totes to workers rather than requiring workers to travel to shelf locations.

Alliance ships more than 57 million units annually, has the ability to ship 261,000 units in a day and ships to 71 countries, Ogilvie said. He added that the AutoStore lease is scheduled to end in January 2027 with a $1 buyout, eliminating about $250,000 per month in related expense. Ogilvie said the company is considering future automation investments to further reduce pick, pack and shipping costs.

The company also supports more than 175 online retailers by supplying metadata, artwork, images and product details for e-commerce listings, Ogilvie said. He said more than 35% of the business, approaching 40%, comes from white-label drop shipping on behalf of retailers.

AMPED, Studio Licensing and Catalog Expansion

Jeff Walker, CEO of Alliance Entertainment, said the company’s AMPED music division has benefited from both existing label performance and new label additions. He cited Virgin Music Group, which he said went live with Alliance in September of last year, as a significant addition. Walker said independent labels benefit from Alliance’s reach across major retailers and independent stores, as well as its ability to feed inventory into e-commerce sites.

Walker said AMPED also picked up “a significant amount of business” from Redeye and that the company remains in discussions with other labels. He added that CD and vinyl category growth is supporting AMPED’s revenue growth.

On the video side, Ogilvie said Alliance began expanding its studio licensing business in 2018 and now works with more than 48 studios. He said the company won an RFP from Disney in 2022 for certain catalog titles, including Fox content, and became the home entertainment department for Paramount on Jan. 1, 2025. He said Amazon MGM started Jan. 1, 2026, including the James Bond franchise and Prime Video-related content.

Walker said Alliance is in active conversations with studios and believes it is a strong long-term outsourcing solution for physical media. He said the company has expanded catalog availability for Paramount and MGM, including bringing certain titles to formats such as 4K and developing strategic SteelBook products.

Collectibles and Authentication Products Target Higher Margins

Ogilvie and Walker also highlighted several higher-margin growth initiatives, including Handmade by Robots, Alliance Authentic and Endstate Authentic.

Ogilvie said Alliance acquired Handmade by Robots in December of the prior year, gaining its figurine form factor, intellectual property and brand name. He said the company’s goal is to use existing relationships with studios, video game companies, record labels and retailers to build the division, adding that reaching $100 million in revenue could contribute about $40 million in gross profit.

Alliance Authentic focuses on encapsulated collectible vinyl records, which can be numbered for scarcity and include NFC chips to verify authenticity, Ogilvie said. Walker, speaking from San Diego Comic-Con, said the company’s in-person activation was drawing interest from collectors and described encapsulated vinyl as both a collectible and displayable piece of album art. He also said Alliance Authentic includes a peer-to-peer marketplace where owners can list products by tapping the embedded chip.

Endstate Authentic, which Alliance acquired in a transaction that closed Dec. 31 of last year, provides NFC-based authentication technology. Ogilvie said the technology can be used across categories to verify authenticity and combat counterfeiting, including potential uses in apparel, luxury goods and products requiring digital product passport information in Europe.

Fulfillment and Acquisition Plans

Asked why consumer-direct fulfillment is more profitable than traditional wholesale, Walker said the profitability is “just a tad bit better,” but emphasized the efficiency for retail partners because they can list Alliance’s inventory without investing in it upfront. Ogilvie added that drop shipping can reduce returns, which he described as a cost center.

Ogilvie said he and Walker completed 16 acquisitions from 2001 to 2020, helping grow revenue from $18 million to a peak of $1.4 billion during COVID. He said Alliance continues to evaluate acquisitions and has “three or four discussions” underway, while also pursuing collectible brands and additional licensing opportunities.

About Alliance Entertainment (NASDAQ:AENT)

Alliance Entertainment NASDAQ: AENT is a distributor of physical media and related entertainment products, serving retailers, public libraries and online merchants. The company’s core business revolves around the wholesale distribution of music and video titles on CD, DVD and Blu-ray formats, as well as vinyl records, audiobooks, video games and select gift and novelty items. By maintaining a broad catalog of new and catalog titles, Alliance Entertainment enables brick-and-mortar and e-commerce channels to access an extensive range of products from major and independent labels.

In addition to its product offerings, Alliance Entertainment provides supply-chain and logistics services designed to streamline inventory management and order fulfillment.

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