Alliance Entertainment Reports Third Quarter Fiscal Year 2025 Results

Rhea-AI Summary

Alliance Entertainment (AENT) reported strong Q3 FY2025 results with net income of $1.9M, a $5.3M year-over-year improvement. Revenue reached $213M, with notable growth in key segments: physical movie sales surged 39% to $58M, and vinyl record sales increased 11% to $86M. The company's Direct-to-Consumer sales now represent 35% of gross revenue, up from 33% last year. Operational highlights include a new exclusive license agreement with Paramount Pictures for physical media distribution, expanded retail distribution of Handmade by Robots, and reduced operating expenses by 11.4%. The company improved its financial position by reducing revolver debt by 25% year-over-year and decreasing inventory levels by 13% to $93.2M.

Positive

• Net income improved significantly to $1.9M from a $3.4M loss year-over-year
• Physical movie sales surged 39% YoY from $42M to $58M
• Vinyl record sales increased 11% YoY from $78M to $86M
• Reduced total operating expenses by 11.4% YoY
• Secured exclusive license agreement with Paramount Pictures for physical media distribution
• Higher-margin Consumer Direct Fulfillment increased to 35% of gross sales
• Interest expense declined 20.2% YoY
• Adjusted EBITDA increased 66% YoY to $4.9M

Negative

• Working capital decreased to $46.3M from $57.3M YoY
• Nine-month revenue declined to $835.7M from $863.5M YoY
• Nine-month gross profit margin slightly decreased to 11.6% from 11.8% YoY

Insights

Financial Analyst

Alliance Entertainment delivered strong profitability turn-around with $1.9M net income, debt reduction, and promising growth in high-margin segments.

Alliance Entertainment's Q3 results demonstrate a compelling financial turnaround, with the company swinging from a $3.4M loss to $1.9M in net income year-over-year. The 66% jump in Adjusted EBITDA to $4.9M highlights management's successful focus on higher-margin business segments and operational efficiency.

Revenue grew modestly at 1% to $213M, but the underlying composition shows promising shifts toward more profitable channels. The expansion of Consumer Direct Fulfillment to 35% of gross revenue (up from 33%) is particularly significant, as this drop-ship model typically generates higher margins while requiring less working capital.

Two product categories showed exceptional performance: physical movie sales surged 39% to $58M, while vinyl record sales increased 11% to $86M. These growth areas align perfectly with Alliance's strategic focus on premium physical media, where collectors are willing to pay for tangible, high-quality products despite broader digital trends.

Balance sheet improvements are equally impressive, with inventory levels down 13% to $93.2M and revolving debt reduced by 25%. These improvements, combined with a 10.2% reduction in distribution costs and 20.2% lower interest expenses, signal a more efficient operation. The exclusive Paramount Pictures distribution deal represents a strategic coup that will likely continue driving physical media sales growth.

The 0.4% gross margin expansion to 13.6% may seem modest but indicates the company is successfully implementing its premium product strategy while maintaining price competitiveness in a challenging retail environment.

Delivered $1.9M in net income, a $5.3M year-over-year improvement, showcasing strong execution and margin gains

Reduced revolver debt by 25% year-over-year, strengthening balance sheet and liquidity position

Direct to Consumer sales reach 35% of gross revenue

PLANTATION, Fla., May 15, 2025 (GLOBE NEWSWIRE) -- Alliance Entertainment Holding Corporation (Nasdaq: AENT), a premier distributor and fulfillment partner of entertainment and pop culture collectibles, reported its financial and operational results for the third quarter and nine months ended March 31, 2025.

Third Quarter FY 2025 Highlights

• Exclusive home entertainment license agreement with Paramount Pictures became effective January 1, 2025, establishing Alliance as the exclusive licensee of Paramount’s physical media—including DVD, Blu-ray, 4K, and UHD—across the U.S. and Canada, enhancing its leadership in premium home entertainment content.
• Expanded retail distribution of Handmade by Robots following the December 2024 acquisition, leveraging Alliance’s retail network to launch exclusive licensed collectibles. Significant new releases coming in the second half of 2025, leveraging iconic franchises such as DC Comics, Harry Potter, Jurassic World, Peanuts, Disney, Sonic the Hedgehog, Hello Kitty, SpongeBob SquarePants, and Star Trek.
• Physical movie sales surged 39% year-over-year, increasing from $42 million to $58 million, driven by new exclusive content partnerships and strong demand for premium 4K and collectible SteelBook editions—an upward trend expected to continue as retailers prioritize curated, high-value offerings across their in-store and online channels to enhance customer engagement and loyalty.
• Vinyl record sales increased by 11% year-over-year, rising from $78 million to $86 million, supported by strong pre-Record Store Day demand and fueled by sustained consumer enthusiasm for the collectible, tangible, and artistic appeal of vinyl—an upward trend we expect to continue as fans seek exclusive and limited-edition releases.
• Higher-margin Consumer Direct Fulfillment (CDF) sales accounted for 35% of gross sales revenue, up from 33% in Q3 of FY24.
• Inventory levels improved to $93.2 million, down 13% from $108.0 million at March 31, 2024, supporting improved inventory turnover and working capital efficiency.
• Working capital totaled $46.3 million, down from $57.3 million at March 31, 2024, reflecting more efficient management of inventory and supplier payables, while maintaining financial flexibility to fund operations and growth initiatives.
• Reduced total operating expenses by 11.4% year-over-year, with distribution and fulfillment costs declining by 10.2% due to automation initiatives and the consolidation of warehouse operations.
• Interest expense declined 20.2% year-over-year, reflecting a lower revolving credit balance and improved financial efficiency.

“This quarter’s results reflect the strength of our operating model and our commitment to creating long-term value for our shareholders,” commented Bruce Ogilvie, Chairman of Alliance Entertainment. “By leveraging our leadership position in entertainment media and collectibles, we continue to deliver exclusive content and unique products that resonate with fans and collectors worldwide.

“The launch of our Paramount distribution partnership and the expanded retail rollout of Handmade by Robots represent two important milestones that build on our strategy to scale high-margin, high-demand categories through our trusted retail relationships. At the same time, our focus on operational discipline, inventory optimization, and supplier partnerships has strengthened our balance sheet and enhanced our financial flexibility.

“As the entertainment and collectibles markets continue to evolve, Alliance is uniquely positioned to lead, grow, and capture new opportunities that extend our leadership and deliver sustainable profitability over the long term,” concluded Ogilvie.

Jeff Walker, Chief Executive Officer of Alliance Entertainment, added, “We are pleased to report another strong quarter, highlighted by both top-line growth and improved profitability. Revenue reached $213 million, supported by double-digit increases in vinyl and physical movie sales—two of our highest-performing product categories.

“Operationally, we remain laser-focused on driving margin expansion and cost efficiency. Our automation investments and warehouse consolidation efforts have meaningfully reduced distribution and fulfillment costs, while our disciplined inventory management has improved working capital efficiency.

“We are also seeing strong momentum in our higher-margin Consumer Direct Fulfillment (CDF) channel, which accounted for 35% of gross revenue this quarter, up from 33% in the prior year period. This model allows our retail partners to offer a dramatically broader online assortment without holding physical inventory, while enabling Alliance to ship directly to consumers with faster delivery and high fulfillment accuracy—enhancing both customer satisfaction and our profitability.

“We delivered $4.9 million in Adjusted EBITDA for the quarter, up 66% year-over-year, and achieved $1.9 million in net income, reflecting our commitment to profitable growth. As we look ahead to the remainder of fiscal 2025 and beyond, we are confident in our ability to capitalize on emerging trends in physical media, direct-to-consumer fulfillment, and collectibles—positioning Alliance to deliver sustained growth and enhanced value for our shareholders,” concluded Walker.

Third Quarter FY 2025 Financial Results

• Net revenues for the fiscal third quarter ended March 31, 2025, were $213.0 million, up 1% compared to $211.2 million in the same period of 2024.
• Gross profit for the fiscal third quarter ended March 31, 2025, was $29.1 million, up 3.7% compared to $28.0 million in the same period of 2024.
• Gross profit margin for the fiscal third quarter ended March 31, 2025, was 13.6%, up from 13.2% in the same period of 2024.
• Net income for the fiscal third quarter ended March 31, 2025, was $1.9 million, or $0.04 per diluted share, compared to a net loss of $3.4 million, or ($0.07) per diluted share for the same period of 2024.
• Adjusted EBITDA for the fiscal third quarter ended March 31, 2025, was $4.9 million, up 66% compared to Adjusted EBITDA of $2.9 million for the same period of 2024.

Nine-Months FY 2025 Financial Results

• Net revenues for the nine months ended March 31, 2025, were $835.7 million, compared to $863.5 million in the same period of 2024.
• Gross profit for the nine months ended March 31, 2025, was $96.9 million, compared to $102.0 million in the same period of 2024.
• Gross profit margin for the nine months ended March 31, 2025, was 11.6%, compared to 11.8% in the same period of 2024.
• Net income for the nine months ended March 31, 2025, was $9.3 million, or $0.18 per diluted share, up 349% compared to net income of $2.1 million, or $0.04 per diluted share, for the same period of 2024.
• Adjusted EBITDA for the nine months ended March 31, 2025, was $24.4 million, up 9.9% compared to Adjusted EBITDA of $22.2 million for the same period of 2024.

Conference Call

Alliance Entertainment Chief Executive Officer and Chief Financial Officer Jeff Walker and Chief Accounting Officer Amanda Gnecco will host the conference call, which will be followed by a question-and-answer session. A presentation will accompany the call and can be viewed during the webcast or accessed via the investor relations section of the Company’s website here.

To access the call, please use the following information:

Date:	Thursday, May 15, 2025
Time:	4:30 p.m. Eastern Time, 1:30 p.m. Pacific Time
Toll-free dial-in number:	1-877-407-0784
International dial-in number:	1-201-689-8560
Conference ID:	13753860

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact RedChip Companies at 1-407-644-4256.

The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1719544&tp_key=061cf336f8 and via the investor relations section of the Company's website here.

A telephone replay of the call will be available approximately three hours after the call concludes and can be accessed through July 15, 2025, using the following information:

Toll-free replay number:	1-844-512-2921
International replay number:	1-412-317-6671
Replay ID:	13753860

About Alliance Entertainment

Alliance Entertainment (NASDAQ: AENT) is a premier distributor and fulfillment partner for the entertainment and pop culture collectibles industry. With more than 325,000 unique in-stock SKUs — including over 57,300 exclusive titles across compact discs, vinyl LPs, DVDs, Blu-rays, and video games — Alliance offers the largest selection of physical media in the market. Our vast catalog also includes licensed merchandise, toys, retro gaming products, and collectibles, serving over 35,000 retail locations and powering e-commerce fulfillment for leading retailers. Leveraging decades of operational expertise, exclusive licensing partnerships, and a capital-light, scalable infrastructure, Alliance is a trusted partner to the world’s top entertainment brands and retailers. Our omnichannel platform connects collectors and fans to the products, franchises, and experiences they love — across formats and generations. For more information, visit www.aent.com.

Forward Looking Statements

Certain statements included in this Press Release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of other financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether identified in this Press Release, and on the current expectations of Alliance’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by an investor as, a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Alliance. These forward-looking statements are subject to a number of risks and uncertainties, including risks relating to the anticipated growth rates and market opportunities; changes in applicable laws or regulations; the ability of Alliance to execute its business model, including market acceptance of its systems and related services; Alliance’s reliance on a concentration of suppliers for its products and services; increases in Alliance’s costs, disruption of supply, or shortage of products and materials; Alliance’s dependence on a concentration of customers, and failure to add new customers or expand sales to Alliance’s existing customers; increased Alliance inventory and risk of obsolescence; Alliance’s significant amount of indebtedness; our ability to refinance our existing indebtedness; our ability to continue as a going concern absent access to sources of liquidity; risks and failure by Alliance to meet the covenant requirements of its revolving credit facility, including a fixed charge coverage ratio; risks that a breach of the revolving credit facility, including Alliance’s recent breach of the covenant requirements, could result in the lender declaring a default and that the full outstanding amount under the revolving credit facility could be immediately due in full, which would have severe adverse consequences for the Company; known or future litigation and regulatory enforcement risks, including the diversion of time and attention and the additional costs and demands on Alliance’s resources; Alliance’s business being adversely affected by increased inflation, higher interest rates and other adverse economic, business, and/or competitive factors; geopolitical risk and changes in applicable laws or regulations; risk that the COVID-19 pandemic, and local, state, and federal responses to addressing the pandemic may have an adverse effect on our business operations, as well as our financial condition and results of operations; substantial regulations, which are evolving, and unfavorable changes or failure by Alliance to comply with these regulations; product liability claims, which could harm Alliance’s financial condition and liquidity if Alliance is not able to successfully defend or insure against such claims; availability of additional capital to support business growth; and the inability of Alliance to develop and maintain effective internal controls.

For investor inquiries, please contact:

Dave Gentry
RedChip Companies, Inc.
1-407-644-4256
AENT@redchip.com

ALLIANCE ENTERTAINMENT HOLDING CORP. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
		Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended
($ in thousands except share and per share amounts)		March 31, 2025				March 31, 2024				March 31, 2025				March 31, 2024
Net Revenues		$	213,045			$	211,209			$	835,707			$	863,549
Cost of Revenues (excluding depreciation and amortization)			183,984				183,196				738,821				761,580
Operating Expenses
Distribution and Fulfillment Expense			9,989				11,125				31,425				37,983
Selling, General and Administrative Expense			14,187				13,948				41,092				43,667
Depreciation and Amortization			1,352				1,402				3,865				4,455
Transaction Costs			-				2,086				-				2,086
Restructuring Cost			4				179				73				226
Gain on Disposal of Fixed Assets			-				(51	)			(15	)			(51	)
Total Operating Expenses			25,532				28,689				76,440				88,366
Operating Income (Loss)			3,529				(676	)			20,446				13,603
Other Expenses
Interest Expense, Net			2,435				3,052				8,101				9,520
Change in Fair Value of Warrants			(1,676	)			124				910				(41	)
Total Other Expenses			759				3,176				9,011				9,479
Income (Loss) Before Income Tax Expense (Benefit)			2,770				(3,852	)			11,435				4,124
Income Tax Expense (Benefit)			919				(475	)			2,116				2,049
Net Income (Loss)			1,851				(3,377	)			9,319				2,075
Net Income (Loss) per Share – Basic and Diluted			0.04				(0.07	)		$	0.18			$	0.04
Weighted Average Common Shares Outstanding - Basic			50,957,370				50,933,020				50,957,370				50,788,811
Weighted Average Common Shares Outstanding - Diluted			50,965,970				50,933,020				50,965,970				50,788,811

ALLIANCE ENTERTAINMENT HOLDING CORP. UNAUDITED CONSOLIDATED BALANCE SHEETS
($ in thousands)		March 31, 2025				June 30, 2024
		(Unaudited)
Assets
Current Assets
Cash		$	2,030			$	1,129
Trade Receivables, Net of Allowance for Credit Losses of $760 and $648, respectively			94,860				92,357
Inventory, Net			93,188				97,429
Other Current Assets			11,369				5,298
Total Current Assets			201,447				196,213
Property and Equipment, Net			11,838				12,942
Operating Lease Right-of-Use Assets, Net			19,967				22,124
Goodwill			89,116				89,116
Intangibles, Net			19,353				13,381
Other Long-Term Assets			175				503
Deferred Tax Asset, Net			7,500				6,533
Total Assets		$	349,396			$	340,812
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts Payable		$	139,589			$	133,221
Accrued Expenses			8,901				9,371
Current Portion of Operating Lease Obligations			3,144				1,979
Current Portion of Finance Lease Obligations			3,003				2,838
Contingent Liability			511				511
Total Current Liabilities			155,148				147,920
Revolving Credit Facility, Net			65,164				69,587
Finance Lease Obligation, Non- Current			2,735				5,016
Operating Lease Obligations, Non-Current			18,244				20,413
Shareholder Loan (subordinated), Non-Current			10,000				10,000
Warrant Liability			703				247
Total Liabilities			251,994				253,183
Commitments and Contingencies (Note 12)
Stockholders’ Equity
Preferred Stock: Par Value $0.0001 per share, Authorized 1,000,000 shares, Issued and Outstanding 0 shares as of March 31, 2025, and June 30, 2024			-				—
Common Stock: Par Value $0.0001 per share, Authorized 550,000,000 shares at March 31, 2025, and at June 30, 2024; Issued and Outstanding 50,957,370 Shares as of March 31, 2025, and June 30, 2024			5				5
Paid In Capital			48,512				48,058
Accumulated Other Comprehensive Loss			(79	)			(79	)
Retained Earnings			48,964				39,645
Total Stockholders’ Equity			97,402				87,629
Total Liabilities and Stockholders’ Equity		$	349,396			$	340,812

ALLIANCE ENTERTAINMENT HOLDING CORP. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
		Nine Months Ended				Nine Months Ended
($ in thousands)		March 31, 2025				March 31, 2024
Cash Flows from Operating Activities:
Net Income		$	9,319			$	2,075
Adjustments to Reconcile Net Income to
Net Cash Provided by (Used in) Operating Activities:
Depreciation of Property and Equipment			1,280				1,455
Amortization of Intangible Assets			2,585				3,000
Amortization of Deferred Financing Costs (Included in Interest)			1,053				511
Allowance for Credit Losses			780				457
Change in Fair Value of Warrants			910				(41	)
Deferred Income Taxes			(967	)			-
Operating Lease Right-of-Use Assets			2,157				2,651
Gain on Disposal of Fixed Assets			(15	)			(51	)
Changes in Assets and Liabilities, Net of Acquisitions
Trade Receivables			(3,283	)			16,966
Inventory			4,994				38,871
Income Taxes Payable\Receivable			1,558				1,764
Other Assets			(6,027	)			3,021
Operating Lease Obligations			(1,004	)			(2,959	)
Accounts Payable			6,368				(19,101	)
Accrued Expenses			(3,627	)			(2,504	)
Net Cash Provided by Operating Activities			16,081				46,115
Cash Flows from Investing Activities:
Capital Expenditures			(52	)			(186	)
Cash inflow from Asset Disposal			15				43
Cash Paid for Business Asset Purchase			(7,551	)			—
Net Cash Used in Investing Activities			(7,588	)			(143	)
Cash Flows from Financing Activities:
Payments on Revolving Credit Facility			(778,620	)			(872,760	)
Borrowings on Revolving Credit Facility			773,144				820,517
Proceeds from Shareholder Note (Subordinated), Current			-				46,000
Payments on Shareholder Note (Subordinated), Current			-				(36,000	)
Issuance of common stock, net of transaction costs			-				3,516
Deferred Financing Costs			-				(4,211	)
Payments on Financing Leases			(2,116	)			(2,257	)
Net Cash Used in Financing Activities			(7,592	)			(45,195	)
Net Increase in Cash			901				777
Cash, Beginning of the Period			1,129				865
Cash, End of the Period		$	2,030			$	1,642
Supplemental disclosure for Cash Flow Information
Cash Paid for Interest		$	8,089			$	9,520
Cash Paid for Income Taxes		$	1,675			$	366
Supplemental Disclosure for Non-Cash Investing and Financing Activities
Stock-based compensation conversion to stock			-				1,386
Conversion of Warrants from liability to Equity			454				—

Non-GAAP Financial Measures: For the three months ended March 31, 2025, we had non-GAAP Adjusted EBITDA of approximately $4.9 million compared with Adjusted EBITDA of approximately $2.9 million in the prior year period, or a year-over-year improvement of $2.0 million. For the nine months ended March 31, 2025, we had non-GAAP Adjusted EBITDA of approximately $24.4 million compared to Adjusted EBITDA of approximately $22.2 million for the prior year period, or a year-over-year improvement of $2.2 million. We define Adjusted EBITDA as net gain or loss adjusted to exclude: (i) income tax expense; (ii) other income (loss); (iii) interest expense; (iv) depreciation and amortization expense; and (v) other non- recurring expenses. Our method of calculating Adjusted EBITDA may differ from other companies and accordingly, this measure may not be comparable to measures used by other companies. We use Adjusted EBITDA to evaluate our own operating performance and as an integral part of our planning process. We present Adjusted EBITDA as a supplemental measure because we believe such a measure is useful to investors as a reasonable indicator of operating performance. We believe this measure is a financial metric used by many investors to compare companies. This measure is not a recognized measure of financial performance under GAAP in the United States and should not be considered as a substitute for operating earnings (losses), net earnings (loss) from continuing operations or cash flows from operating activities, as determined in accordance with GAAP. See the table below for a reconciliation, for the periods presented, of our GAAP net income (loss) to Adjusted EBITDA.

		Three Months Ended				Three Months Ended
($ in thousands)		March 31, 2025				March 31, 2024
Net Income(Loss)		$	1,851			$	(3,377	)
Add back:
Interest Expense			2,435				3,052
Income Tax Expense			919				(475	)
Depreciation and Amortization			1,352				1,402
EBITDA		$	6,557			$	602
Adjustments
Transaction Costs			-				2,086
Change In Fair Value of Warrants			(1,676	)			124
Gain on Disposal of PPE			-				(51	)
Restructuring Cost			4				179
Adjusted EBITDA		$	4,885			$	2,940

		Nine Months Ended				Nine Months Ended
($ in thousands)		March 31, 2025				March 31, 2024
Net Income		$	9,319			$	2,075
Add back:
Interest Expense			8,101				9,520
Income Tax Expense			2,116				2,049
Depreciation and Amortization			3,865				4,455
EBITDA		$	23,401			$	18,099
Adjustments
Stock-based Compensation Expense			-				1,386
Transaction Costs							2,086
Restructuring Cost			73				226
Change In Fair Value of Warrants			910				(41	)
Merger-related Contingent Losses			-				461
Gain on Disposal of Property and Equipment			(15	)			(51	)
Adjusted EBITDA		$	24,369			$	22,166

FAQ

What were AENT's Q3 2025 earnings results?

AENT reported Q3 FY2025 net income of $1.9M ($0.04 per share), compared to a loss of $3.4M in Q3 FY2024. Revenue was $213M, up 1% YoY, with Adjusted EBITDA of $4.9M, up 66% YoY.

How did AENT's physical media sales perform in Q3 2025?

Physical movie sales increased 39% YoY to $58M, while vinyl record sales grew 11% YoY to $86M, driven by strong demand for premium formats and collectible editions.

What is the impact of AENT's Paramount Pictures partnership?

Effective January 1, 2025, AENT became the exclusive licensee for Paramount's physical media (DVD, Blu-ray, 4K, UHD) across the U.S. and Canada, strengthening its leadership in home entertainment content.

How has AENT improved its operational efficiency in Q3 2025?

AENT reduced operating expenses by 11.4% YoY, decreased distribution costs by 10.2% through automation and warehouse consolidation, and improved inventory levels by 13% to $93.2M.

What percentage of AENT's revenue comes from Direct-to-Consumer sales?

Consumer Direct Fulfillment (CDF) sales accounted for 35% of gross sales revenue in Q3 FY2025, up from 33% in Q3 FY2024.