What WildBrain (WILD) Said on Its Q1 Earnings Call

Key Points

• WildBrain reaffirmed its fiscal 2027 outlook for CAD 270 million to CAD 295 million in revenue and CAD 28 million to CAD 32 million in adjusted EBITDA, despite Q1 adjusted EBITDA falling to CAD 2 million from CAD 4 million a year earlier.
• Results varied by business: licensing revenue rose 5% and WildBrain Network revenue climbed 7%, while content revenue and adjusted EBITDA were pressured by production timing, lower distribution revenue and royalties.
• The company expects negative free cash flow in fiscal 2027 as it proceeds with an approximately CAD 30 million investment program. Management also reiterated its goal to roughly double adjusted EBITDA from the fiscal 2027 guidance midpoint by fiscal 2029.

WildBrain TSE: WILD reaffirmed its fiscal 2027 outlook after first-quarter revenue edged higher, even as adjusted earnings fell and the company used cash in operations.

The children’s entertainment company reported revenue from continuing operations of CAD 58 million, up 1% from a year earlier. Adjusted EBITDA attributable to shareholders fell to CAD 2 million from CAD 4 million, while the net loss from continuing operations narrowed to CAD 7 million from CAD 40 million.

President and CEO Josh Scherba said the quarter was not indicative of the earnings profile expected for the full year. Licensing and advertising activity is weighted toward the second quarter, he said, while content production varies with project schedules.

WildBrain maintained its fiscal 2027 forecast for revenue of CAD 270 million to CAD 295 million and adjusted EBITDA of CAD 28 million to CAD 32 million. It continues to expect negative free cash flow for the year as it carries out an approximately CAD 30 million investment program.

Brand Growth Offset by Licensing and Production Headwinds

Revenue in franchise and global licensing rose 5% to CAD 20 million. Scherba said combined revenue from Strawberry Shortcake and Teletubbies grew by double digits year over year. Revenue at licensing agency WildBrain CPLG rose 9% excluding Paramount, whose impact the company expects to continue through fiscal 2027.

Scherba said WildBrain is working to offset that headwind by expanding its third-party partner portfolio. Asked about consumer spending pressures, he said the company had not seen those pressures translate into weaker demand from licensees or retailers, although conditions vary by market.

Content revenue declined 1% to CAD 29 million. CFO Nick Gawne said live-action production growth, including work on Finding Her Edge, was offset in part by lower animation revenue related to production timing. The prior-year period included a significant contribution from a Peanuts feature film.

Content adjusted EBITDA fell to a loss of CAD 0.8 million from a profit of CAD 3 million. Gawne attributed the decline to lower distribution revenue and royalties, as well as a greater share of lower-margin live-action production revenue.

WildBrain Network revenue increased 7% to CAD 12 million, supported by YouTube and free, ad-supported streaming television, or FAST. Segment adjusted EBITDA improved to CAD 0.3 million from a CAD 1 million loss.

Scherba said Pokémon helped drive FAST growth. The company also generated revenue from 10 new direct advertising clients and worked with 15 agencies during the quarter, compared with nine a year earlier. Lower spending by some toy advertisers tempered growth in the direct advertising business.

Investment Plan and Cash Flow

Gawne said the approximately CAD 30 million investment program remains intact. The plan includes spending on franchise content and marketing, direct advertising capabilities, technology systems, and production infrastructure and leasehold improvements. The company recognized approximately CAD 2 million under the program in the first quarter, he said.

About CAD 6 million of the planned spending is expected to be reflected in adjusted EBITDA, including approximately CAD 3 million for WildBrain Media Solutions and CAD 3 million for franchise marketing. Gawne said the goal is to build a higher revenue base rather than simply eliminate those costs later.

WildBrain used CAD 14 million in operating activities during the quarter, compared with CAD 14 million provided a year earlier. Gawne attributed quarterly cash flow variability in part to differences in the timing of production spending, customer payments and licensing royalty remittances.

Under a revised definition that deducts investment in property, equipment and intangible assets, first-quarter free cash flow was negative CAD 14 million, unchanged from the comparable prior-year figure. Gawne said the company expects first-quarter timing-related working capital outflows to reverse in subsequent periods.

WildBrain ended the quarter with CAD 69 million in cash and cash equivalents. After quarter-end, it completed a substantial issuer bid, buying approximately 13.8 million shares for CAD 20 million. It also deployed approximately CAD 16 million during the quarter to acquire Personality AI.

Fiscal 2029 Target

Management reiterated its expectation that adjusted EBITDA will approximately double from the CAD 30 million midpoint of its fiscal 2027 guidance by fiscal 2029. In response to a question from BMO analyst Tim Casey, Gawne clarified that the target refers to EBITDA generated in fiscal 2029, rather than an annualized rate at the end of that year.

Gawne said the investments are a net cost to adjusted EBITDA in fiscal 2027, with benefits expected to build from fiscal 2028. Management expects stronger free cash flow over time as earnings grow and investment spending moderates, while noting that results depend on factors including demand from retailers, licensees and advertisers.

About WildBrain (TSE:WILD)

At WildBrain 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.

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