WildBrain Q3 Earnings Call Highlights

Key Points

• WildBrain’s fiscal Q3 revenue fell 16% to CAD 61 million as content production timing weighed on the business, but global licensing jumped 35% and helped lift gross margin to 46% from 33% a year ago. Adjusted EBITDA rose 38% to CAD 6 million, and the net loss narrowed year over year.
• The company said the sale of its Peanuts interest strengthened the balance sheet, generating preliminary net proceeds of about CAD 48 million and allowing WildBrain to eliminate corporate term debt. It has also started an NCIB share buyback program and repurchased more than 600,000 shares.
• Management is sharpening its focus on franchise and global licensing, with momentum in brands like Strawberry Shortcake and Teletubbies, while expanding the WildBrain Network and new content pipelines. WildBrain also paused fiscal 2026 guidance and expects to resume guidance for fiscal 2027.

WildBrain TSE: WILD reported lower fiscal third-quarter revenue from continuing operations as production timing weighed on its content business, while licensing growth and a richer revenue mix helped lift margins and adjusted EBITDA.

On the company’s fiscal 2026 third-quarter earnings call, President and CEO Josh Scherba said WildBrain has spent the past year strengthening its financial position and narrowing its focus around three core areas: franchise and global licensing, content, and the WildBrain Network. He pointed to the completed sale of WildBrain’s interest in Peanuts and the repayment of corporate term debt as key steps in repositioning the company.

“As a result of these many actions taken over the past year, we're now operating from a position of strength with a more focused business and the resources to invest confidently in our future,” Scherba said.

Licensing Growth Offsets Softer Content Revenue

CFO Nick Gawne said revenue from continuing operations was CAD 61 million in the third quarter, down 16% from the prior-year period. Global Licensing revenue rose 35% to CAD 25 million, driven by growth in both WildBrain’s own franchises and its global licensing agency.

Content Creation and Audience Engagement revenue fell 33% to CAD 36 million. Gawne attributed the decline to lower production activity across animation and live-action businesses due to the timing of greenlights, as well as lower digital platform revenue tied to changes in partner mix.

“The prior year quarter benefited from significant production activity on earlier greenlights, while some of our current projects are still in early stages ahead of a production ramp-up, creating a temporary timing mismatch in revenue recognition,” Gawne said.

Gross margin from continuing operations improved to 46% from 33% a year earlier, reflecting stronger growth in franchise and licensing and a mix shift toward higher-margin licensing revenue. Selling, general and administrative expenses rose 9% to CAD 22 million, which Gawne said was driven by higher variable compensation and the timing of trade show costs. Excluding those items, SG&A was “broadly flat,” he said.

Adjusted EBITDA from continuing operations attributable to shareholders, which the company refers to as WildBrain EBITDA, rose 38% to CAD 6 million. Net loss from continuing operations attributable to shareholders narrowed to CAD 14 million from CAD 19 million a year earlier.

Peanuts Sale Strengthens Balance Sheet

WildBrain’s discontinued operations include its former Canadian television broadcasting business and its sold interest in Peanuts. Gawne said discontinued operations revenue was CAD 42 million, down 34% year over year, reflecting the timing of the Peanuts transaction closing and the cessation of the Canadian television business.

The Peanuts transaction closed on March 2. After repayment of the senior secured credit facility, transaction-related costs and other closing adjustments, WildBrain generated preliminary net proceeds of approximately CAD 48 million. Gawne said that was above the more than CAD 40 million anticipated when the transaction was announced. The proceeds remain subject to final working capital adjustments.

Following the debt repayment, Gawne said WildBrain now has no corporate term debt. The company began its normal course issuer bid, or NCIB, in April and has repurchased more than 600,000 common shares to date.

“We view the NCIB as an important component of our capital allocation strategy and a reflection of our confidence in the long-term value future cash generation potential of the business,” Gawne said.

Consolidated free cash flow was negative CAD 60 million in the quarter. However, Gawne said that after adjusting for Peanuts transaction costs, interest costs and discontinued operations cash flow — items he said will not continue into the fourth quarter — underlying free cash flow from the continuing business was positive CAD 10 million.

Franchise Focus Centers on Strawberry Shortcake and Teletubbies

Scherba said WildBrain’s franchise and global licensing business remains a key growth driver, with Strawberry Shortcake and Teletubbies showing momentum across retail, licensing and consumer engagement.

For Strawberry Shortcake, he highlighted recent brand activations at FAO Schwarz in New York, the King’s Picnic and the Flowers and Garden Festival in Mexico City. Scherba said the brand also generated encouraging retailer engagement at New York Toy Fair, including early response to Strawberry Shortcake Monopoly and Candy Land launches with Hasbro.

In retail, Scherba cited a new Jazwares launch that ranked among the top-performing SKUs in its category at Walmart and a Goodie Two Sleeves collaboration in which an Old Navy exclusive was a bestseller online.

For Teletubbies, WildBrain is preparing for the brand’s 30th anniversary with licensing collaborations, live experiences and retail activations. Scherba said the company sees a long-term opportunity in China, where Teletubbies previously aired on national broadcaster CCTV. WildBrain has launched “Teletubbies Come to Play,” a new series produced with iQIYI for the Chinese market.

Scherba said Teletubbies’ YouTube organic search views increased more than 30% year over year, while total social followers grew 20%.

WildBrain CPLG also delivered growth across all regions, Scherba said. During the quarter, WildBrain expanded its relationship with Dr. Seuss Enterprises and was appointed by Sega and Rovio Entertainment as licensing agent for Angry Birds across Europe, the Middle East and Korea.

Reporting Structure to Change in Fourth Quarter

Gawne said WildBrain will begin reporting under a new segment structure with its fourth-quarter results. The updated segments will be:

• Franchise and Global Licensing: WildBrain’s owned franchises and WildBrain CPLG.
• Content: The company’s content studios and content distribution business.
• WildBrain Network: Its global ad-supported kids and family network across YouTube and FAST channels.

Scherba said the WildBrain Network now spans more than 1,000 channels, doubling from last year, and generates more than 17 billion viewing minutes each month across YouTube, FAST and AVOD platforms. He described the network as an effort to aggregate fragmented kids and family audiences into a scaled offering.

WildBrain also continues to expand digital-first content, including “The Berry Best Baking Show,” a Strawberry Shortcake live-action animated hybrid series. Scherba said it begins a rollout of 38 new Strawberry Shortcake episodes planned for calendar 2026, dubbed into nine languages.

Guidance Remains Paused

Gawne said WildBrain is maintaining its pause on fiscal 2026 guidance, which was first announced in December after the Peanuts transaction and transformation agenda. The company expects to resume financial guidance for fiscal 2027.

During the Q&A portion of the call, RBC analyst Drew McReynolds asked about balancing share repurchases with investment in the business. Gawne said WildBrain has the balance sheet flexibility to continue the NCIB while investing in technology and content initiatives, and to evaluate M&A opportunities.

McReynolds also asked whether restructuring and automation efforts would reduce SG&A over time. Gawne said the technology projects are intended to drive down SG&A, though benefits would not be immediate. He said WildBrain expects to see “real benefits” in calendar 2027, with a larger impact in fiscal 2028.

On content timing, Gawne said the fourth quarter will not repeat the significant production activity seen in the prior-year period. Scherba added that the fiscal 2027 pipeline is developing positively, including a second season of the Netflix live-action figure skating series “Finding Her Edge,” which he said is expected to be in production in fiscal 2027.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.