Cineverse swings to $3.17M quarterly profit
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Cineverse Corp. (CNVS) reported revenue of $25.955 million for the three months ended September 30, 2026, versus $12.357 million a year earlier. Net income attributable to common stockholders was $3.168 million, compared with a $5.678 million loss. For the six months, revenue was $56.550 million versus $23.476 million, while the common-stockholder net loss narrowed to $2.603 million from $9.327 million.
Net cash used in operating activities was $3.857 million for the six months, versus $21.695 million a year earlier. At September 30, cash was $3.552 million and working capital was negative $9.7 million. Management believes cash, line-of-credit availability and ATM access will support operations for at least 12 months from the report’s filing.
Cineverse sold 1.5 million shares through its ATM program for net proceeds of $3.7 million during the six months; the authorized offering price cap was increased to $30 million. A subsidiary’s Pan’s Labyrinth loan had a $3.0 million balance and 18.01% annual effective interest. After principal and interest are paid, the lender is entitled to 11.25% of net film receipts, up to $6.370 million including principal and interest.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointQuarterly revenue reached $25.955 million, versus $12.357 million a year earlier.
- Moderate pointQuarterly common-stockholder income was $3.168 million, versus a $5.678 million loss.
- Moderate pointFirst-half operating cash use was $3.857 million, down from $21.695 million.
Negative
- Moderate pointNegative working capital was $9.7 million at September 30, 2026.
Filing Explained
Outstanding Class A shares rose from 20,532,531 on March 31 to 26,629,716 on September 30, reducing existing holders’ percentage ownership absent offsets.
This unaudited quarterly report records completed share issuances from the IndiCue settlement, a note conversion, and the CONtv buyout, increasing total shares outstanding and reducing existing holders’ ownership percentages absent offsetting changes.
During the six months, Cineverse issued 1.9 million shares on September 15 to partially settle deferred consideration, approximately 661,000 shares upon an investor’s conversion of
The Pan’s Labyrinth loan is secured by the subsidiary’s rights in the film and distribution agreements; Cineverse guarantees up to
Key Figures
Key Terms
at-the-market financial
negative working capital financial
Level 3 inputs financial
earnout consideration financial
FAST technical
convertible notes financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What revenue and earnings did Cineverse (CNVS) report for the quarter ended September 30, 2026?
What are the terms of Cineverse’s Pan’s Labyrinth loan?
What is Cineverse’s ATM offering capacity?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the fiscal period ended:
Commission File Number:
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol |
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Name of each exchange on |
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The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
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Accelerated filer ☐ |
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Smaller reporting company |
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Emerging Growth Company |
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of November 6, 2026,
Cineverse Corp.
TABLE OF CONTENTS
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Page |
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PART I - FINANCIAL INFORMATION |
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Item 1. |
Condensed Consolidated Financial Statements (Unaudited) |
1 |
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Condensed Consolidated Balance Sheets as of September 30, 2026 (Unaudited) and March 31, 2026 |
1 |
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Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2026 and 2025. |
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Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended September 30, 2026 and 2025. |
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Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2026 and 2025. |
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Unaudited Condensed Consolidated Statements of Equity for the Three and Six Months Ended September 30, 2026 and 2025. |
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Notes to the Condensed Consolidated Financial Statements (Unaudited) |
8 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
25 |
Item 4. |
Controls and Procedures |
31 |
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PART II - OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
32 |
Item 1A. |
Risk Factors |
32 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
32 |
Item 3. |
Defaults Upon Senior Securities |
32 |
Item 4. |
Mine Safety Disclosures |
32 |
Item 5. |
Other Information |
32 |
Item 6. |
Exhibits |
33 |
Exhibit Index |
33 |
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Signatures |
34 |
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Cineverse Corp.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
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As of |
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September 30, |
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March 31, |
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(Unaudited) |
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ASSETS |
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Current Assets |
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Cash |
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Accounts receivable, net of allowance for credit losses of $ |
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Content advances, net of allowance of $ |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Goodwill |
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Content advances, net of current portion |
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Other long-term assets, net |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable and accrued expenses |
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$ |
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Line of credit |
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Deferred consideration |
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Current portion of earnout consideration |
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Current portion of operating lease liabilities |
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Deferred revenue |
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Total current liabilities |
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Operating lease liabilities, net of current portion |
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Term loan, including unamortized debt issuance costs and discount of $ |
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Convertible notes payable, including unamortized debt issuance costs of $ |
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Earnout consideration, net of current portion |
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Total Liabilities |
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$ |
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$ |
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(Note 7) |
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Stockholders’ Equity |
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Preferred stock, |
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Common stock, $ |
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Additional paid-in capital |
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Treasury stock, at cost; with |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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Total stockholders’ equity of Cineverse Corp. |
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Deficit attributable to noncontrolling interest |
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( |
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Total stockholders' equity |
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Total Liabilities and Stockholders' Equity |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements
1
Cineverse Corp.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
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Three Months Ended September 30, |
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Six Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues |
$ |
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$ |
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$ |
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$ |
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Costs and expenses |
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Direct operating |
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Selling, general and administrative |
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Depreciation and amortization |
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Change in fair value of acquisition-related deferred consideration |
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( |
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Change in fair value of acquisition-related earnout consideration |
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( |
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Total operating expenses |
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Operating profit (loss) |
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( |
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Interest (expense) income |
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( |
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( |
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( |
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Other income (expense), net |
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Net income (loss) before income taxes |
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( |
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( |
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( |
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Income tax expense |
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( |
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( |
) |
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( |
) |
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( |
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Net income (loss) |
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( |
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( |
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( |
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Net loss attributable to noncontrolling interest |
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( |
) |
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( |
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Net income (loss) attributable to controlling interests |
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( |
) |
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( |
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( |
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Preferred stock dividends |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income (loss) attributable to common stockholders |
$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Net income (loss) per share attributable to common stockholders: |
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Basic |
$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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Diluted |
$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Weighted average shares of Common Stock outstanding: |
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Basic |
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Diluted |
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See accompanying Notes to Condensed Consolidated Financial Statements
2
Cineverse Corp.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
|
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Three Months Ended September 30, |
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Six Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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Net income (loss) |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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Other comprehensive (loss) income: |
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Foreign exchange translation |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net loss attributable to noncontrolling interest |
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( |
) |
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( |
) |
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Comprehensive income (loss) |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
|
See accompanying Notes to Condensed Consolidated Financial Statements
3
Cineverse Corp.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
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Six Months Ended |
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|||||
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2026 |
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2025 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
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Fair value change in acquisition-related deferred consideration |
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( |
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Fair value change in earnout consideration |
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( |
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Stock-based compensation |
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Capitalized content |
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( |
) |
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( |
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Amortization of debt issuance costs |
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Allowance for content advances |
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( |
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Barter transactions |
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( |
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Interest discount received from lender |
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( |
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Other |
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( |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Other current and long-term assets |
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( |
) |
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( |
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Accounts payable, accrued expenses, and other liabilities |
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( |
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Content advances and expenditures |
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( |
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( |
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Deferred revenue |
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( |
) |
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Net cash used in operating activities |
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$ |
( |
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$ |
( |
) |
Cash flows from investing activities: |
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Expenditures for long-lived assets |
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( |
) |
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( |
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Internally developed software capitalization |
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( |
) |
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( |
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Purchase of business |
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( |
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Net cash used in investing activities |
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$ |
( |
) |
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$ |
( |
) |
Cash flows from financing activities: |
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Proceeds from line of credit |
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Payments on line of credit |
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( |
) |
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( |
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Proceeds from the issuance of a term loan, net of debt issuance costs |
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Proceeds from issuance of common stock from ATM, net of fees |
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Payment of deferred consideration |
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( |
) |
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( |
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Cash paid to acquire noncontrolling interest |
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( |
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Withholding taxes paid on restricted stock units |
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( |
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Proceeds from common stock warrant exercises |
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Net cash provided by financing activities |
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$ |
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$ |
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Net change in cash |
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( |
) |
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Effect of exchange rate changes on cash |
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( |
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( |
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Cash at beginning of period |
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Cash at end of period |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements
4
Cineverse Corp.
SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY
(Unaudited)
(In thousands)
|
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Six Months Ended |
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2026 |
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2025 |
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Cash interest paid |
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$ |
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$ |
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Income taxes paid |
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$ |
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$ |
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Noncash investing and financing activities: |
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Issuance of Common Stock for settlement of deferred consideration |
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$ |
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$ |
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Shares issued to acquire noncontrolling interest |
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$ |
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$ |
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Payroll tax withholding accrual on equity vesting |
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$ |
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$ |
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Receivable for Issuance of Common Stock for ATM, net of fees |
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$ |
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$ |
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Accrued dividends on preferred stock |
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$ |
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$ |
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Issuance of Common Stock for payment of accrued preferred stock dividends |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements
5
Cineverse Corp.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
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Preferred Stock |
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Common Stock |
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Treasury |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Non |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Equity |
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Interest |
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Total |
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Balances as of March 31, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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Foreign exchange translation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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— |
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( |
) |
Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Preferred stock dividends paid in Common Stock |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Preferred stock dividends accrued |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of Common Stock for ATM |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Non-controlling interest buyout |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Preferred stock conversion to Common Stock |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Employee vesting shares |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balances as of June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
- |
|
|
$ |
|
||||||||
Foreign exchange translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Conversion of convertible notes |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Employee vesting shares |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Issuance of Common Stock for ATM |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Preferred stock conversion to Common Stock |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Preferred stock dividends paid in Common Stock |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Preferred stock dividends accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of common shares as deferred consideration |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Balances as of September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||||
See accompanying Notes to Condensed Consolidated Financial Statements
6
Cineverse Corp.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
|
Preferred Stock |
|
|
Common Stock |
|
|
Treasury |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Non |
|
|
|
|
|||||||||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
|
Interest |
|
|
Total |
|
||||||||||||
Balances as of March 31, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||||
Foreign exchange translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Issuance of Common Stock for deferred consideration |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Issuance of Common Stock in connection with employee equity awards |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Treasury shares withheld for employee taxes |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Preferred stock dividends paid in Common Stock |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Preferred stock dividends accrued |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balances as of June 30, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||||
Foreign exchange translation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Proceeds from common stock warrant exercises |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Preferred stock dividends paid in Common Stock |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Preferred stock dividends accrued |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of Common Stock for ATM, net of fees |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balances as of September 30, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
7
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. NATURE OF OPERATIONS AND LIQUIDITY
Cineverse Corp. (“Cineverse”, “us”, “our”, "we", and “Company” refers to Cineverse Corp. and its subsidiaries unless the
context otherwise requires) is a premier technology and entertainment company which was incorporated in Delaware on March 31, 2000.
Cineverse's core entertainment business operates (i) a portfolio of owned and operated streaming channels with enthusiast fan bases; (ii) a large-scale global aggregator and full-service distributor of feature films and television programs; and (iii) a proprietary technology software-as-a-service platform for over-the-top (“OTT”) app development and content distribution through subscription video on demand ("SVOD"), dedicated ad-supported ("AVOD"), ad-supported streaming linear ("FAST") channels, social video streaming services, and audio podcasts.
Our streaming channels reach audiences in several distinct ways: direct-to-consumer, through major application platforms, and through third-party distributors of content on platforms. We distribute products for major brands such as Hallmark, ITV, Nelvana, ZDF, Konami, NFL and Highlander, as well as international and domestic content creators, movie producers, television producers and other short-form digital content producers. We collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, and Tubi, as well as (ii) physical goods, including DVD and Blu-ray Discs.
Cineverse's technology business provides advertising technology and media services. Bolstered by the acquisition of IndiCue Inc. in the fourth fiscal quarter of 2026, the Company’s Connected TV (“CTV”) monetization platform provides proprietary location-based digital advertising technology solutions that offer advertisers a targetable, measurable, and accountable way to utilize CTV media and data solutions at scale. The Company also provides solutions for media owners, including an advertising platform for Digital Out-of-Home ("DOOH") networks that enables users to manage advertising inventory, optimize sales, and monetize unsold inventory.
The Company’s streaming technology platform, known as Matchpoint™, is a software-based streaming operating platform which provides clients with AVOD, SVOD, transactional video on demand ("TVOD") and linear capabilities, automates the distribution of content, and features a robust data analytics platform. Through the integration of Giant Worldwide, Matchpoint™ has expanded its automated media services ecosystem supported by longstanding studio relationships and performance marketing expertise. Our media distribution services offerings include media mastering, quality control services, localization, content delivery and fulfillment.
Our Class A common stock, par value $
Financial Condition and Liquidity
We have a history of net losses. For the three months ended September 30, 2026, we had net income attributable to Common Stock holders of $
The Company is party to a Loan, Guaranty, and Security Agreement, as amended on
As of September 30, 2026, $
On February 17, 2026, the Company sold in a public offering an aggregate of
8
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
underwriting commissions and expenses payable by the Company. The Offered Shares were sold pursuant to an Underwriting Agreement with The Benchmark Company, LLC and pursuant to a prospectus and prospectus supplement which are part of the Company’s shelf registration statement on Form S-3 (File No. 333-273098) filed with the U.S. Securities and Exchange Commission (the “SEC”).
On February 12, 2026, the Company issued and sold convertible notes in the aggregate principal amount of $
On May 3, 2024, the Company entered into an at-the-market, or ATM, sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners and The Benchmark Company, LLC (collectively, the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of its Common Stock. Shares of Common Stock may be offered and sold for an aggregate offering price of up to $
On August 31, 2026, Cineverse Pans LLC (“Pans Borrower”), a wholly-owned subsidiary of the Company, entered into a Loan and Security Agreement, dated as of August 28, 2026, with BondIt LLC (“Pans Lender”) (the “Pans Loan Agreement”). The Pans Loan Agreement provides for a term loan with a principal amount not to exceed $
The Company will continue to invest in content development and acquisitions from which it believes it will obtain an appropriate return on its investment. As of September 30, 2026 and March 31, 2026, short-term content advances were $
Our capital requirements will depend on many factors, and we may need to use existing capital resources and/or undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs. Management's plans with respect
9
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
to the Company's recurring net losses and net operating cash outflows also include but are not limited to our effort in increasing revenue from existing services as well as offering new services, which may result in additional income from operations. Should management be unsuccessful in executing these plans, additional capital resources will be necessary. There can be no assurance that resources under our Line of Credit Facility or from additional debt or equity resources will be available on acceptable terms, if at all.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying interim Condensed Consolidated Financial Statements of Cineverse Corp. have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026, filed with the SEC on June 26, 2026. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading. Certain columns and rows may not foot due to the use of rounded numbers.
The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026. Interim results are not necessarily indicative of the results for a full year.
As of March 31, 2026, we owned an
Use of Estimates
Reclassifications
Certain amounts have been reclassified to conform to the current presentation.
Accounting Policies
There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026.
Non-monetary Transactions
From time to time, the Company entered into non-monetary transactions for the purchase and sale of content licenses with
10
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
unrelated third parties. The fair value of the content licenses purchased are recognized within Intangible Assets, Net on our Condensed Consolidated Balance Sheets and amortized over the estimated useful lives of the respective assets. As functional intellectual property, the Company recognizes the corresponding revenue at the time of delivery to the recipient.
Credit Losses
We maintain reserves for expected credit losses on accounts receivable primarily on a specific identification basis. We review the composition of accounts receivable and analyze historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.
We recognize accounts receivable, net of an estimated allowance for product returns and customer chargebacks, at the time that we recognize revenue from a sale. Reserves for product returns and other allowances are variable consideration as part of the transaction price. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required.
A summary of the movements of our allowances for credit losses as of September 30, 2026 (in thousands):
Allowance for credit losses at March 31, 2026 |
|
$ |
|
|
Increase in estimated provision |
|
|
|
|
Allowance for credit losses as of June 30, 2026 |
|
$ |
|
|
Decrease in estimated provision |
|
|
( |
) |
Allowance for credit losses as of September 30, 2026 |
|
$ |
|
Property and Equipment, Net
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation expense is recorded using the straight-line method over the estimated useful lives of the respective assets, with useful life ranges by major asset class as follows:
Computer equipment and software |
|
|
Internal use software |
|
|
Machinery and equipment |
|
|
Furniture and fixtures |
|
We capitalize costs associated with software developed or obtained for internal use when the preliminary project stage is completed, and it is determined that the software will provide significantly enhanced capabilities and modifications. These capitalized costs are included in property and equipment and include external direct cost of services procured in developing or obtaining internal-use software and personnel and related expenses for employees who are directly associated with, and who devote time to internal-use software projects. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended use. Once the software is ready for its intended use, the costs are amortized over the useful life of the software on a straight-line basis. Post-configuration training and maintenance costs are expensed as incurred.
Intangible Assets, Net
Intangible assets are stated at cost less accumulated amortization. For intangible assets that have finite lives, the assets are amortized using the straight-line method over the estimated useful lives of the related assets.
Amortization expense is recorded using the straight-line method over the estimated useful lives of the respective assets as follows:
Content Library |
|
|
Tradenames, Trademarks and Patents |
|
|
Customer Relationships |
` |
|
Advertiser Relationships and Channel |
|
|
Preferred Partner Medallions |
|
|
Software |
|
|
Capitalized Content |
|
11
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company’s intangible assets included the following (in thousands):
|
|
As of September 30, 2026 |
|
|||||||||
|
|
Cost Basis |
|
|
Accumulated |
|
|
Net |
|
|||
Content Library |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Advertiser Relationships and Channel |
|
|
|
|
|
( |
) |
|
|
|
||
Customer Relationships |
|
|
|
|
|
( |
) |
|
|
|
||
Software |
|
|
|
|
|
( |
) |
|
|
|
||
Capitalized Content |
|
|
|
|
|
( |
) |
|
|
|
||
Preferred Partner Medallions |
|
|
|
|
|
( |
) |
|
|
|
||
Tradenames, Trademarks and Patents |
|
|
|
|
|
( |
) |
|
|
|
||
Total Intangible Assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
As of March 31, 2026 |
|
|||||||||
|
|
Cost Basis |
|
|
Accumulated |
|
|
Net |
|
|||
Content Library |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Advertiser Relationships and Channel |
|
|
|
|
|
( |
) |
|
|
|
||
Customer Relationships |
|
|
|
|
|
( |
) |
|
|
|
||
Software |
|
|
|
|
|
( |
) |
|
|
|
||
Capitalized Content |
|
|
|
|
|
( |
) |
|
|
|
||
Preferred Partner Medallions |
|
|
|
|
|
( |
) |
|
|
|
||
Tradenames, Trademarks and Patents |
|
|
|
|
|
( |
) |
|
|
|
||
Total Intangible Assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The Company had amortization expense of $
As of September 30, 2026, amortization expense is expected to be (in thousands):
|
|
Total |
|
|
In-process intangible assets |
|
$ |
|
|
Remainder of fiscal year 2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
Capitalized Content
The Company capitalizes direct costs incurred in the production of content from which it expects to generate a return over the anticipated useful life and the Company’s predominant monetization strategy informs the method of amortizing these deferred costs. The determination of the predominant monetization strategy is made at commencement of the production or license period and the classification of the monetization strategy as individual or group only changes if there is a significant change to the title’s monetization strategy relative to its initial assessment. The costs are capitalized to the Capitalized Content costs within Intangible Assets and are amortized as a group within Depreciation and Amortization within the Consolidated Statements of Operations.
12
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Business Combinations
The Company accounts for business combinations in accordance with ASC 805, Business Combinations, using the acquisition method of accounting. Under this method, the Company recognizes and measures the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at their estimated fair values as of the acquisition date.
The total consideration transferred is allocated to the identifiable assets acquired and liabilities assumed based on their respective fair values. The excess of the purchase price over the fair value of net identifiable assets acquired is recorded as goodwill. Please see the Goodwill policy separately outlined below within this footnote.
In certain circumstances, such as a forced sale or bankruptcy of the acquiree, the fair value of the identifiable net assets acquired exceeds the total consideration transferred in a business combination, resulting in a bargain purchase gain. The Company recognizes bargain purchase gains in earnings as of the acquisition date.
Goodwill
Goodwill is the excess of the purchase price paid over the fair value of the net assets of an acquired business. Goodwill is tested for impairment on an annual basis or more often if warranted by events or changes in circumstances indicating that the carrying value may exceed fair value, also known as impairment indicators.
Inherent in the fair value determination for each reporting unit are certain judgments and estimates relating to future cash flows, including management’s interpretation of current economic indicators and market conditions, and assumptions about our strategic plans with regard to our operations. To the extent additional information arises, market conditions change, or our strategies change, it is possible that the conclusion regarding whether our remaining goodwill is impaired could change and result in future goodwill impairment charges that could have a material effect on our consolidated financial position or results of operations.
The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount or to perform the quantitative impairment test.
For the six months ended September 30, 2026, the Company's adjustments to goodwill related to the finalization of post-closing working capital estimates.
Deferred Consideration
The Company initially recognizes liabilities related to Deferred Consideration from business combinations at fair value at the time of acquisition in advance of the ultimate settlement of these liabilities. Amounts due within 12 months under the terms of the agreements are classified as current within the Consolidated Balance Sheets.
The deferred consideration associated with the IndiCue, Inc. ("IndiCue") acquisition, included in the fair value measurement table below, is due within one year of the acquisition date. In addition to contractual inputs, the Company estimated the fair value of this deferred consideration using Level 3 inputs, including the expected forward stock price at settlement and an embedded downside protection mechanism. On September 15, 2026, the Company partially settled this liability through the issuance of
The deferred consideration related to the Giant Worldwide acquisition is payable in quarterly cash installments of $
Earnout Consideration
The Company estimated the fair value of its earnout liabilities using both contractual and Level 3 inputs from the related business combination. The specific financial targets required for payment are defined in the IndiCue purchase agreement. The
13
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Company also utilizes Level 3 inputs, including the most up to date forecast at each reporting date to estimate the outcome against these targets to determine the ultimate estimated payout, discounted by a rate reflecting the Company’s estimate of a market borrowing rate and incremental spread for similar subordinated obligations.
During the fiscal year ended March 31, 2026, the Company acquired IndiCue and as a part of the purchase consideration, may be required to pay up to $
Fair Value Measurements
The fair value measurement disclosures are grouped into three levels based on valuation factors:
The table below summarizes the levels of fair value measurements of the Company’s financial assets and liabilities as of September 30, 2026 (in thousands):
|
|
As of September 30, 2026 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred consideration, current portion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnout consideration, both current and non-current portion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of March 31, 2026 (in thousands):
|
|
As of March 31, 2026 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred consideration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnout consideration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Content Advances
Content advances represent amounts prepaid to studios or content producers for which we provide content distribution services. We evaluate advances regularly for recoverability and record a provision for amounts that we expect may not be recoverable. Amounts which are expected to be recovered within 12 months are classified as current, which were $
14
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
advances. For the three and six months ended September 30, 2025, the Company recorded reductions of $
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following (in thousands):
|
|
As of |
|
|||||
|
|
September 30, |
|
|
March 31, |
|
||
Accrued acquisition related liabilities |
|
$ |
|
|
$ |
|
||
Accounts payable |
|
|
|
|
|
|
||
Amounts due to producers |
|
|
|
|
|
|
||
Accrued compensation and benefits |
|
|
|
|
|
|
||
Accrued other expenses |
|
|
|
|
|
|
||
Total Accounts Payable and Accrued Expenses |
|
$ |
|
|
$ |
|
||
Revenue Recognition
The Company follows the five-step model established by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from contracts with customers ("ASC 606") when preparing its assessment of revenue recognition.
The following tables present the Company’s disaggregated revenue by source (in thousands):
|
|
Three Months Ended September 30, |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Advertising technology and services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Streaming and digital |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Media services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Podcast and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Base distribution |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other non-recurring |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company earns fees for the distribution of content in the home entertainment markets via several distribution channels, including digital, video on demand (“VOD” or "Streaming and Digital”), and physical goods (e.g., DVDs and Blu-ray Discs) (“Base Distribution”). Fees earned are typically a percentage of the net amounts received from our customers.
Depending upon the nature of the agreements with the platform and content providers, the fee rate that we earn varies. Fees from Ad-Network revenue are based on an agreed-to cost per mille (“CPM”) rate, and fees for Media Services are typically specified in purchase orders based on the services requested to be rendered.
The Company’s performance obligations include the shipment of physical goods and delivery of content for transactional, subscription and ad supported/free ad-supported streaming TV (“FAST”) on the digital platforms, delivery of advertising-related impressions, and at the time of completion of media services.
Revenue is generally recognized at the point in time across the Company’s revenue streams. Specifically, revenue is recognized when the content is available for subscription on the digital platform (the Company’s digital content is considered functional IP), at the time of shipment for physical goods, or point-of-sale for transactional and VOD services as the control over the content or the physical title is transferred to the customer. The Company considers the delivery of content through various distribution channels to be a single performance obligation. Ad Network transactions are recognized at the point in time when the billable impression is delivered. Media services revenue is recognized at the point of delivery.
Base Distribution Revenue from the sale of physical goods is recognized after deducting the reserves for sales returns and other allowances, which are accounted for as variable consideration. Reserves for potential sales returns and other allowances are recorded based upon historical experience. If actual future returns and allowances differ from past experience, adjustments to our allowances may be required. We have the right to receive or bill a portion of the theatrical distribution fee in advance of the exhibition date, and therefore such amount is recorded as a receivable at the time of execution, and all related distribution revenue is deferred until the third-party feature movies’ or alternative content’s theatrical release date.
Payment terms and conditions vary by customer and typically provide net 30-to-90 day terms. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to our customer and payment for that product or service will be one year or less. As the Company satisfies its performance obligations, whether relating to the delivery of digital content, physical goods, or licensing, revenue is generally measured at a point in time.
Principal Agent Considerations
Shipping and Handling
Shipping and handling costs are incurred to move physical goods to customers. We recognize all shipping and handling costs as an expense in direct operating expenses because we are responsible for delivery of the product to our customers prior to transfer of control to the customer.
Contract Liabilities
We generally record a receivable related to revenue when we have an unconditional right to invoice and receive payment, and we record deferred revenue (contract liability) when cash payments are received or due in advance of our performance. Deferred revenue includes amounts related to advances, the sale of DVDs or theatrical releases with future release dates. The ending deferred revenue balance, all of which was current as of September 30, 2026 and March 31, 2026, totaled to approximately $
Participations and Royalties Payable
When we use third-parties to distribute Company-owned content, we record participations payable, which represent amounts owed to the distributor under revenue-sharing arrangements. When we provide content distribution services, we record accounts payable and accrued expenses to studios or content producers for royalties owed under licensing
16
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
arrangements. We identify and record as a reduction to the liability any expenses that are to be reimbursed to us by such studios or content producers.
Concentrations
For the three and six months ended September 30, 2026, the largest customer represented
consolidated revenue, respectively. For the three and six months ended September 30, 2025, largest customer
represented
Direct Operating Expenses
Direct operating costs consist of operating costs such as cost of revenue, including fulfillment expenses, shipping costs, property taxes and insurance on systems, royalty and participation expenses, allowance against advances, ad-network revenue share, and marketing and direct personnel costs.
Stock-based Compensation
The Company issues stock-based awards to employees and non-employees, generally in the form of restricted stock, restricted stock units, stock appreciation rights and performance stock units. The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, "Compensation—Stock Compensation" (“ASC 718”). ASC 718 requires all stock-based payments, including grants of stock options and restricted stock units and modifications to existing stock options, to be recognized in the Consolidated Statements of Operations based on their fair values. The Company measures the compensation expense of employee and non-employee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date. That cost is recognized on a straight-line basis over the period during which the employee and non-employee is required to provide service in exchange for the award. The fair values of options and stock appreciation rights are calculated as of the date of grant using the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility, risk-free rate and expected term. The Company’s estimates of these assumptions are primarily based on the trading price of the Company’s stock, historical data, peer company data and judgment regarding future trends and factors.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carryforwards and for differences between the carrying amounts of existing assets and liabilities and their respective tax basis.
Valuation allowances are established when management is unable to conclude that it is more likely than not that some portion, or all, of the deferred tax asset will ultimately be realized. The Company is primarily subject to income taxes in the United States and India.
The Company accounts for uncertain tax positions in accordance with an amendment to FASB ASC Topic 740-10, Income Taxes (Accounting for Uncertainty in Income Taxes), which clarified the accounting for uncertainty in tax positions. This amendment provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is “more-likely-than-not” to be sustained were it to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. If an uncertain tax position meets the “more-likely-than-not” threshold, the largest amount of tax benefit that is more than 50% likely to be recognized upon ultimate settlement with the taxing authority is recorded. The Company recorded unrecognized tax benefits of approximately $
Recently Issued Accounting Pronouncements
The Company evaluates all Accounting Standard Updates ("ASUs") issued but not yet effective by FASB for consideration of their applicability. ASUs not included in the Company's disclosures were assessed and determined to be not applicable or not material to the Company's consolidated financial statements or disclosures.
17
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Effective
In November 2024, the FASB issued ASU 2024-03, "Income Statement-Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220)", requiring all public business entities to provide additional disclosure of the nature of expenses included in the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact on our financial statement disclosures.
In July 2025, the FASB issued ASU 2025-05, “Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326)" aiming to simplify the estimation of credit losses on accounts receivable and contract assets arising from transactions accounted for under ASC 606, “Revenue from Contracts with Customers,” by providing companies an option to assume that the conditions as of the balance sheet date will remain unchanged for the remaining life of these assets while estimating expected credit losses. The Company adopted ASU 2025-05 effective January 1, 2026 on a prospective basis. The adoption of this guidance did not have a material impact on the Company's condensed consolidated financial statements or related disclosures.
In September 2025, the FASB issued ASU 2025-06 "Intangibles: Goodwill and Other Internal-Use Software - Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40)" to modernize the accounting for software costs under, Intangible: Goodwill and Other Internal-Use Software (referred to as “internal-use software”). Upon adoption, we will be required to account for internal-use software under the updated capitalization criteria. The standard is effective for annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing adoption timing and the method of adoption.
3
The Company operates as a reportable segment. The Company’s Chief Operating Decision Maker ("CODM"), its , reviews financial information on a consolidated basis to make operating decisions, assess financial performance, and allocate resources.
18
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents financial information with respect to the Company’s single operating segment:
|
|
Three Months Ended September 30, |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
License, participation and technology costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and related |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other direct operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Royalty expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Advertising and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in fair value of acquisition-related deferred consideration |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Change in fair value of acquisition-related earnout consideration |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating profit (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Interest (expense) income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net income (loss) before income taxes |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Provision for income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
4
Common Stock
As of September 30, 2026 and March 31, 2026, the number of shares of Common Stock authorized for issuance was
ATM Sales Agreement
On May 3, 2024, the Company entered into a sales agreement (the “ATM Sales Agreement”) with A.G.P./Alliance Global Partners and The Benchmark Company, LLC (collectively, the “Sales Agents”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agents, shares of Common Stock. Shares of Common Stock may be offered and sold for an aggregate offering price of up to $
During the three and six months ended September 30, 2026, the Company sold
19
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Non-Controlling Interest Buyout
During the six months ended September 30, 2026, the Company entered into Stock Exchange Agreements with holders of CONtv pursuant to which the Company acquired the remaining outstanding
Preferred Stock
Cumulative dividends in arrears on Series A Preferred Stock were $
On April 27, 2026, the Company entered into an exchange agreement with one holder of Series A Preferred Stock, pursuant to which the Company agreed to issue shares of Common Stock in exchange for all
During the three and six months ended September 30, 2026, the Company issued
Treasury Stock
We have treasury stock of
Common Stock Warrants
As of September 30, 2026 and March 31, 2026, the number of warrants exercisable for shares of Common Stock was
Stock Based Compensation Awards
The Company has issued awards under the 2017 Equity Incentive Plan (the “2017 Plan").
In August 2017, the Company adopted the 2017 Plan. The 2017 Plan applies to employees and directors of, and consultants to, the Company. The 2017 Plan provides for the issuance of up to
During the six months ended September 30, 2026, the Company granted
During the six months ended September 30, 2025, the Company granted
20
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
taxes and retained as treasury stock.
For the three and six months ended September 30, 2026, the Company incurred stock-based compensation expense of $
For the three and six months ended September 30, 2025, the Company incurred stock-based compensation expense of $
Share-based compensation expense is reported within Selling, General and Administrative expenses in our Condensed Consolidated Statements of Operations.
5
Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to Common Stock holders, adjusted for by the deemed earnings attributable to participating common warrant holders, by the weighted average number of shares of Common Stock outstanding during the period.
Diluted earnings (loss) per share is computed by dividing the net income (loss) available to Common Stock holders by the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include restricted stock units, convertible notes, stock options and warrants outstanding during the period, and are calculated using the treasury stock method. Potentially dilutive common shares are excluded from the computations of diluted earnings (loss) per share if their effect would be anti-dilutive. A net loss available to Common Stock holders causes all potentially dilutive securities to be anti-dilutive and are not included.
The following table sets forth the computation of basic and diluted earnings per share and a reconciliation of the
weighted average number of common and common equivalent shares outstanding:
|
Three Months Ended September 30, |
|
|
Six Months Ended |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
(in thousands, except shares and per share data) |
|
|||||||||||||
Numerator (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to common stockholders and participating common warrant holders - basic |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Add: interest from convertible notes |
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income (loss) attributable to common stockholders - diluted |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares of common stock - basic |
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive common stock equivalents |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares of common stock - diluted |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings (loss) per share |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Effect of dilutive common stock equivalents |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Diluted earnings (loss) per share |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
21
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following common equivalent shares outstanding at period-end have been excluded from the computation of earnings per share, as their inclusion would have been anti-dilutive:
|
Three Months Ended September 30, |
|
|
Six Months Ended |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Stock appreciation rights |
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted stock units and awards |
|
|
|
|
|
|
|
|
|
|
|
||||
Warrants to purchase common stock |
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible notes |
|
|
|
|
|
|
|
|
|
|
|
||||
6
Line of Credit Facility
The Company is party to a Loan, Guaranty, and Security Agreement, as amended on
As of September 30, 2026 and March 31, 2026, $
During the three months ended September 30, 2026 and 2025, the Company had interest expense, including cash interest and amortization, of $
Convertible Notes
On February 12, 2026, the Company issued and sold convertible notes in the aggregate principal amount of $
As of September 30, 2026 and March 31, 2026, the Notes are presented net of unamortized debt issuance costs of $
22
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Term Loan
On August 31, 2026, Cineverse Pans LLC (“Pans Borrower”), a wholly-owned subsidiary of the Company, entered into a Loan and Security Agreement, dated as of August 28, 2026, with BondIt LLC (“Pans Lender”) (the “Pans Loan Agreement”). The Pans Loan Agreement is presented as non-current liability within the Company’s Condensed Consolidated Balance Sheets and has a balance of $
After the principal of and interest on the Pans Loan is paid in full, subject to a cap of 1.75 times the principal and interest paid on the loan, Pans Lender will be entitled to receive from Pans Borrower a royalty of
The Company did not elect the fair value option permitted under ASC 825 to account for the Pan's Loan Agreement and will account for the related Debt in accordance with ASC 470 using the amortized cost method. The royalty expense will be recognized in the period in which the underlying contractual obligations are incurred and become payable based on the performance of the specified content assets. As of September 30, 2026, the Company has not recognized a liability or expense associated with future royalty payments as no amounts have been earned, nor are currently probable and reasonably estimable.
The proceeds under the Pans Loan Agreement were used for reimbursements to the Company for advances paid to the licensor under the Company’s distribution arrangements for the re-release of the Film, the 3D conversion of the Film, the 4K enhancement of the Film, and payment of a portion of the Line of Credit Facility. The Pans Loan Agreement contains customary covenants, representations and warranties and events of default.
The Pans Loan is secured by a first priority interest in all of Pans Borrower’s rights and interest in the Film and the distribution agreements, including the proceeds to Pans Borrower from the distribution of the Film. The Company entered into a Guaranty Agreement pursuant to which it provided a guarantee of the Pans Loan (the “Pans Guarantee”) which is capped at obligations not exceeding $
7
Leases
The Company has
During the three and six months ended September 30, 2026, expenses related to these leases were $
were $
In September 2026, the Company entered into a lease agreement for office space in Warsaw, Poland, which is expected to commence on December 1, 2026. The lease term ends on
As of September 30, 2026, the lease had not commenced; therefore, no lease liability or right-of-use asset had been recognized.
23
Cineverse Corp.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The table below presents the lease-related assets and liabilities recorded on our Condensed Consolidated Balance Sheets (in thousands):
|
|
Classification on the Balance Sheet |
|
September 30, |
|
|
March 31, |
|
||
Assets |
|
|
|
|
|
|
|
|
||
Noncurrent |
|
Other long-term assets |
|
$ |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
|
|
||
Current |
|
Operating leases liabilities |
|
|
|
|
|
|
||
Noncurrent |
|
Operating leases liabilities, net of current |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||||
The table below presents the annual gross undiscounted cash flows related to the Company's operating lease commitments (in thousands):
Fiscal year ending March 31, |
Operating Lease Commitments |
|
|
2027 (remainder of the fiscal year) |
$ |
|
|
2028 |
|
|
|
2029 |
|
|
|
2030 |
|
|
|
Total lease payments |
$ |
|
|
Less imputed interest |
|
( |
) |
Total |
$ |
|
|
8
We calculate income tax expense based upon an annual effective tax rate forecast, which includes estimates and assumptions.
We recognized income tax expense of $
We have not recorded tax benefits on our U.S. deferred tax assets because we continue to provide a valuation allowance for all our U.S. net deferred tax assets as of September 30, 2026 as it is more likely than not that the assets will not be recovered based on an insufficient history of earnings.
Our effective tax rate for the three and six months ended September 30, 2026 was
On July 4, 2025, the President signed the One Big Beautiful Bill Act (“OBBBA”; Pub. L. 119-21) into law. The Act introduced significant changes to the Internal Revenue Code. The Company evaluated the Act and concluded it will not have a material impact on its condensed consolidated financial statements.
OBBBA retains the
24
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our historical Condensed Consolidated Financial Statements and the related notes included elsewhere in this report.
This report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “will,” “estimates,” and similar words. Forward-looking statements represent, as of the date of this report, our judgment relating to, among other things, future results of operations, growth plans, sales, capital requirements and general industry and business conditions applicable to us. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
Business Overview
Cineverse Corp. (“Cineverse”, “us”, “our”, "we", and “Company” refers to Cineverse Corp. and its subsidiaries unless the
context otherwise requires) is a premier technology and entertainment company which was incorporated in Delaware on March 31, 2000.
Cineverse's core entertainment business operates (i) a portfolio of owned and operated streaming channels with enthusiast fan bases; (ii) a large-scale global aggregator and full-service distributor of feature films and television programs; and (iii) a proprietary technology software-as-a-service platform for over-the-top (“OTT”) app development and content distribution through subscription video on demand ("SVOD"), dedicated ad-supported ("AVOD"), ad-supported streaming linear ("FAST") channels, social video streaming services, and audio podcasts.
Our streaming channels reach audiences in several distinct ways: direct-to-consumer, through major application platforms, and through third-party distributors of content on platforms. We distribute products for major brands such as Hallmark, ITV, Nelvana, ZDF, Konami, NFL and Highlander, as well as international and domestic content creators, movie producers, television producers and other short-form digital content producers. We collaborate with producers, major brands and other content owners to market, source, curate and distribute quality content to targeted audiences through (i) existing and emerging digital home entertainment platforms, including but not limited to Apple iTunes, Amazon Prime, Netflix, Hulu, Xbox, Pluto, and Tubi, as well as (ii) physical goods, including DVD and Blu-ray Discs.
Cineverse's technology business provides advertising technology and media services. Bolstered by the acquisition of IndiCue Inc. in the fourth fiscal quarter of 2026, the Company’s Connected TV (“CTV”) monetization platform provides proprietary location-based digital advertising technology solutions that offer advertisers a targetable, measurable, and accountable way to utilize CTV media and data solutions at scale. The Company also provides solutions for media owners, including an advertising platform for Digital Out-of-Home ("DOOH") networks that enables users to manage advertising inventory, optimize sales, and monetize unsold inventory.
The Company’s streaming technology platform, known as Matchpoint™, is a software-based streaming operating platform which provides clients with AVOD, SVOD, transactional video on demand ("TVOD") and linear capabilities, automates the distribution of content, and features a robust data analytics platform. Through the integration of Giant Worldwide, Matchpoint™ has expanded its automated media services ecosystem supported by longstanding studio relationships and performance marketing expertise. Our media distribution services offerings include media mastering, quality control services, localization, content delivery and fulfillment.
Our Class A common stock, par value $0.001 per share (the "Common Stock"), is listed on The Nasdaq Stock Market (“Nasdaq”) under the symbol “CNVS.”
Financial Condition and Liquidity
As of September 30, 2026, the Company has an accumulated deficit of $512.7 million and negative working capital of $9.7 million. For the three months ended September 30, 2026, we had net income attributable to Common Stock holders of $3.2 million, and for the six months ended September 30, 2026, we had a net loss attributable to Common Stock holders of $2.6 million.
25
Net cash used in operating activities for the six months ended September 30, 2026 was $3.9 million, which included $5.8 million of incremental investment in our content portfolio via advances or minimum guarantee payouts. We may continue to generate net losses for the foreseeable future.
The Company is party to a Loan, Guaranty, and Security Agreement, as amended on April 8, 2025, with East West Bank (the "Line of Credit Facility") that currently provides for borrowings of up to $12.5 million guaranteed by substantially all of our material subsidiaries and secured by substantially all of our and our subsidiaries’ assets. The facility includes provisions that allow for an increase in total borrowing capacity up to $15.0 million, subject to lender approval. As of September 30, 2026, $11.5 million was outstanding on the Line of Credit Facility.
The Company will continue to invest in content development and acquisitions from which it believes it will obtain an appropriate return on its investment. As of September 30, 2026 and March 31, 2026, short-term content advances were $9.0 million and $7.5 million, respectively, and long-term content advances, net of current portion, were $10.9 million and $8.2 million, respectively.
Our capital requirements will depend on many factors, and we may need to use existing capital resources and/or undertake equity or debt offerings, if necessary and opportunistically available, for further capital needs. We believe our cash, availability under our Line of Credit Facility and ability to use our ATM as of September 30, 2026, will be sufficient to support our operations for at least twelve months from the filing of this report.
Critical Accounting Estimates
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our Condensed Consolidated Financial Statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Our significant accounting policies are discussed in Note 2 – Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to the Condensed Consolidated Financial Statements, included in Item 1, Condensed Consolidated Financial Statements (Unaudited), of this Quarterly Report on Form 10-Q. Management believes that these policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.
Results of Operations for the three months ended September 30, 2026 and 2025 (unaudited) (in thousands):
Revenue
|
|
Three Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Advertising technology and services |
|
$ |
11,169 |
|
|
$ |
— |
|
|
$ |
11,169 |
|
|
|
— |
% |
|
|
43 |
% |
|
|
— |
% |
Streaming and digital |
|
|
9,692 |
|
|
|
9,558 |
|
|
|
134 |
|
|
|
1 |
% |
|
|
37 |
% |
|
|
77 |
% |
Media services |
|
|
3,110 |
|
|
|
— |
|
|
|
3,110 |
|
|
|
— |
% |
|
|
12 |
% |
|
|
— |
% |
Podcast and other |
|
|
1,067 |
|
|
|
946 |
|
|
|
121 |
|
|
|
13 |
% |
|
|
4 |
% |
|
|
8 |
% |
Base distribution |
|
|
917 |
|
|
|
1,837 |
|
|
|
(920 |
) |
|
|
(50 |
)% |
|
|
4 |
% |
|
|
15 |
% |
Other non-recurring |
|
|
— |
|
|
|
16 |
|
|
|
(16 |
) |
|
|
(100 |
)% |
|
|
— |
% |
|
|
0 |
% |
Total Revenue |
|
$ |
25,955 |
|
|
$ |
12,357 |
|
|
$ |
13,598 |
|
|
|
110 |
% |
|
|
100 |
% |
|
|
100 |
% |
For the three months ended September 30, 2026, revenue increased by $13.6 million to $26.0 million compared to the prior year quarter, primarily due to $14.3 million of revenue from the IndiCue and Giant businesses acquired in the fourth quarter of fiscal 2026, partially offset by a $0.9 million decrease in base distribution revenue.
26
Base distribution revenue decreased primarily due to $1.2 million of lower theatrical revenue, as the prior year quarter included the theatrical release of Toxic Avenger, partially offset by $0.3 million of sponsorship revenue related to Air Bud Returns.
Podcast and other revenue increased by $0.1 million, primarily due to revenue from new podcasts.
Direct Operating Expenses
|
|
Three Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Direct operating expenses |
|
$ |
16,053 |
|
|
$ |
5,214 |
|
|
$ |
10,839 |
|
|
|
208 |
% |
|
|
62 |
% |
|
|
42 |
% |
Direct operating expenses increased by $10.8 million for the three months ended September 30, 2026 compared to the prior year quarter, primarily due to the IndiCue and Giant acquisitions, mainly increased revenue share costs within our Advertising Technology revenue stream and increased personnel costs from Media Services, neither of which was present in the prior year quarter, which preceded the acquisitions in the fourth quarter of fiscal year 2026. The Company also incurred higher royalty expenses on certain higher performing titles such as Demon Slayer and a higher estimated provision for content advances, partially offset by lower theatrical distribution costs, as the prior year quarter included Toxic Avenger.
Selling, General and Administrative Expenses
|
|
Three Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Compensation expense |
|
$ |
5,331 |
|
|
$ |
5,253 |
|
|
$ |
78 |
|
|
|
1 |
% |
|
|
21 |
% |
|
|
43 |
% |
Corporate expenses |
|
|
1,624 |
|
|
|
1,486 |
|
|
|
138 |
|
|
|
9 |
% |
|
|
6 |
% |
|
|
12 |
% |
Share-based compensation |
|
|
793 |
|
|
|
494 |
|
|
|
299 |
|
|
|
61 |
% |
|
|
3 |
% |
|
|
4 |
% |
Marketing expenses |
|
|
1,224 |
|
|
|
2,849 |
|
|
|
(1,625 |
) |
|
|
(57 |
)% |
|
|
5 |
% |
|
|
23 |
% |
Other operating expenses |
|
|
1,167 |
|
|
|
1,325 |
|
|
|
(158 |
) |
|
|
(12 |
)% |
|
|
4 |
% |
|
|
11 |
% |
Selling, General and Administrative |
|
$ |
10,139 |
|
|
$ |
11,407 |
|
|
$ |
(1,268 |
) |
|
|
(11 |
)% |
|
|
39 |
% |
|
|
92 |
% |
For the three months ended September 30, 2026, selling, general and administrative expenses decreased by $1.3 million compared to the prior year quarter, primarily due to decreases in marketing expenses of $1.6 million and compensation expense of $0.1 million, partially offset by increases in share-based compensation of $0.3 million, other operating expenses of $0.2 million and corporate expenses of $0.1 million.
Compensation expense was relatively flat, due to the reversal of previously accrued incentive compensation ($0.6 million), partially offset by increased severance costs ($0.5 million) as part of integration and cost rationalization efforts.
Corporate expenses increased primarily due to acquisition-related professional services ($0.6 million), partially offset by lower consulting fees and audit fees ($0.5 million).
Share-based compensation increased primarily due to incremental awards granted following the second quarter of fiscal year 2026.
Marketing expenses decreased primarily due to earlier theatrical marketing for the fiscal year 2026 film slate which had an earlier average release date in the fiscal year.
Other operating expenses increased due to higher rent expense associated with new leased facilities ($0.2 million), partially offset by lower bad debt expense following collections on a previously reserved IndiCue receivable ($0.2 million).
27
Depreciation and Amortization Expense
|
|
Three Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Amortization of intangible assets |
|
$ |
2,580 |
|
|
$ |
1,040 |
|
|
$ |
1,540 |
|
|
|
148 |
% |
|
|
10 |
% |
|
|
8 |
% |
Depreciation of property and equipment |
|
|
175 |
|
|
|
106 |
|
|
|
69 |
|
|
|
65 |
% |
|
|
1 |
% |
|
|
1 |
% |
Total Depreciation and Amortization |
|
$ |
2,755 |
|
|
$ |
1,146 |
|
|
$ |
1,609 |
|
|
|
140 |
% |
|
|
11 |
% |
|
|
9 |
% |
Amortization expense increased by $1.5 million during the three months ended September 30, 2026 compared to the prior year quarter primarily due to the intangible assets acquired as part of our acquisitions made in the fourth quarter of fiscal 2026.
Changes in Fair Value of Assets and Liabilities
For the three months ended September 30, 2026, the Company recognized a decline of $7.0 million from changes in the fair value of acquisition-related consideration, consisting of $3.7 million decline for deferred consideration including a $1.5 million gain on the partial settlement and $3.3 million decline for earnout consideration. There were no such amounts in the prior year period.
Interest Expense, Net
For the three months ended September 30, 2026, interest expense increased by $0.6 million to $0.7 million compared to the prior year quarter. The increase was primarily the result of interest on the Notes issued in February 2026 and a higher average balance on the Line of Credit Facility.
Results of Operations for the six months ended September 30, 2026 and 2025 (unaudited) (in thousands):
Revenues
|
|
Six Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Advertising technology and services |
|
$ |
27,119 |
|
|
$ |
— |
|
|
$ |
27,119 |
|
|
|
— |
% |
|
|
48 |
% |
|
|
— |
% |
Streaming and digital |
|
|
19,440 |
|
|
|
18,663 |
|
|
|
777 |
|
|
|
4 |
% |
|
|
34 |
% |
|
|
79 |
% |
Media services |
|
|
6,590 |
|
|
|
— |
|
|
|
6,590 |
|
|
|
— |
% |
|
|
12 |
% |
|
|
— |
% |
Podcast and other |
|
|
2,163 |
|
|
|
1,935 |
|
|
|
228 |
|
|
|
12 |
% |
|
|
4 |
% |
|
|
8 |
% |
Base distribution |
|
|
1,238 |
|
|
|
2,860 |
|
|
|
(1,622 |
) |
|
|
(57 |
)% |
|
|
2 |
% |
|
|
12 |
% |
Other non-recurring |
|
|
— |
|
|
|
18 |
|
|
|
(18 |
) |
|
|
(100 |
)% |
|
|
— |
% |
|
|
0 |
% |
Total Revenue |
|
$ |
56,550 |
|
|
$ |
23,476 |
|
|
$ |
33,074 |
|
|
|
141 |
% |
|
|
100 |
% |
|
|
100 |
% |
For the six months ended September 30, 2026, revenue increased by $33.1 million to $56.6 million compared to the same period in 2025, primarily due to $33.7 million of revenue from the Advertising Technology and Services and Media Services revenue streams acquired in the fourth quarter of fiscal 2026, partially offset by a $1.6 million decrease in Base distribution revenue. The decrease in Base distribution revenue was primarily due to $1.2 million of theatrical revenue from Toxic Avenger in the prior year period. The increase in Streaming and digital revenue was primarily due to higher revenue from higher performing titles such as Demon Slayer. Podcast and other revenue increased by $0.2 million, primarily due to revenue from new podcasts.
Direct Operating Expenses
|
|
Six Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Direct operating expenses |
|
$ |
35,989 |
|
|
$ |
10,021 |
|
|
$ |
25,968 |
|
|
|
259 |
% |
|
|
64 |
% |
|
|
43 |
% |
Direct operating expenses increased by $26.0 million for the six months ended September 30, 2026 compared to the same period in 2025, primarily due to the revenue share costs of $19.8 million related to the Advertising Technology revenue stream and incremental personnel costs of $3.2 million to service the Media Services revenue stream.
28
Selling, General and Administrative Expenses
|
|
Six Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Compensation expense |
|
$ |
11,598 |
|
|
$ |
10,690 |
|
|
$ |
908 |
|
|
|
8 |
% |
|
|
21 |
% |
|
|
46 |
% |
Corporate expenses |
|
|
3,087 |
|
|
|
2,682 |
|
|
|
405 |
|
|
|
15 |
% |
|
|
5 |
% |
|
|
11 |
% |
Share-based compensation |
|
|
1,741 |
|
|
|
912 |
|
|
|
829 |
|
|
|
91 |
% |
|
|
3 |
% |
|
|
4 |
% |
Marketing expenses |
|
|
2,224 |
|
|
|
3,312 |
|
|
|
(1,088 |
) |
|
|
(33 |
)% |
|
|
4 |
% |
|
|
14 |
% |
Other operating expenses |
|
|
3,107 |
|
|
|
2,763 |
|
|
|
344 |
|
|
|
12 |
% |
|
|
5 |
% |
|
|
12 |
% |
Selling, General and Administrative |
|
$ |
21,757 |
|
|
$ |
20,359 |
|
|
$ |
1,398 |
|
|
|
7 |
% |
|
|
38 |
% |
|
|
87 |
% |
For the six months ended September 30, 2026, selling, general and administrative expenses increased by $1.4 million compared to the same period in 2025, primarily due to increases in share-based compensation of $0.8 million, other operating expenses of $0.3 million, compensation expense of $0.9 million and corporate expenses of $0.4 million, partially offset by a $1.1 million decrease in marketing expenses.
The increase in compensation expense was primarily due to severance costs related to integration and cost rationalization efforts ($0.8 million) and additional employees from the acquisitions made in the fourth quarter of fiscal 2026 ($0.5 million).
The increase in corporate expenses was primarily due to acquisition-related professional services ($0.7 million), partially offset by lower audit fees ($0.3 million).
The increase in share-based compensation was primarily due to incremental awards granted at a higher fair value subsequent to the second quarter in fiscal year 2026.
Marketing expenses decreased primarily due to earlier theatrical marketing for the fiscal year 2026 film slate which had an earlier average release date in the fiscal year.
The increase in other operating expenses was primarily due higher rent for new leased facilities ($0.3 million).
Depreciation and Amortization Expense
|
|
Six Months Ended September 30, |
|
|
As a % of Revenue |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
||||||
Amortization of intangible assets |
|
$ |
5,229 |
|
|
$ |
1,997 |
|
|
$ |
3,232 |
|
|
|
162 |
% |
|
|
9 |
% |
|
|
9 |
% |
Depreciation of property and equipment |
|
|
341 |
|
|
|
211 |
|
|
|
130 |
|
|
|
62 |
% |
|
|
1 |
% |
|
|
1 |
% |
Total Depreciation and Amortization |
|
$ |
5,570 |
|
|
$ |
2,208 |
|
|
$ |
3,362 |
|
|
|
152 |
% |
|
|
10 |
% |
|
|
10 |
% |
Amortization expense increased by $3.2 million during the six months ended September 30, 2026 compared to the same period in 2025, primarily due to the intangible assets acquired as part of our acquisitions made in the fourth quarter of fiscal 2026 ($2.4 million) and higher content capitalization costs ($0.9 million).
Changes in Fair Value of Assets and Liabilities
For the six months ended September 30, 2026, the Company recognized a decline of $5.7 million from changes in the fair value of acquisition-related consideration, consisting of $1.7 million decline for deferred consideration including a $1.5 million gain on the partial settlement and $4.0 million decline for earnout consideration. There were no such amounts in the prior year period.
Interest Expense, Net
For the six months ended September 30, 2026, interest expense, net increased by $1.4 million to $1.3 million compared to the prior year period, which included a $0.4 million discount on accrued interest provided by the lender on our Terrifier 3 term loan in return for the final payment on that loan. The increase was primarily the result of interest on the Notes issued in February 2026 and a higher average balance on the Line of Credit Facility.
29
Adjusted EBITDA
We define Adjusted EBITDA to be earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, merger and acquisition costs, restructuring, transition and acquisitions expense, net, goodwill impairment and certain other items.
Adjusted EBITDA is not a measurement of financial performance under GAAP and may not be comparable to other similarly titled measures of other companies. We use Adjusted EBITDA as a financial metric to measure the financial performance of the business because management believes it provides additional information with respect to the performance of its fundamental business activities. For this reason, we believe Adjusted EBITDA will also be useful to others, including our stockholders, as a valuable financial metric.
We present Adjusted EBITDA because we believe that Adjusted EBITDA is a useful supplement to net income (loss) from operations as an indicator of operating performance. We also believe that Adjusted EBITDA is a financial measure that is useful both to management and investors when evaluating our performance and comparing our performance with that of our competitors. We also use Adjusted EBITDA for planning purposes and to evaluate our financial performance because Adjusted EBITDA excludes certain incremental expenses or non-cash items, such as stock-based compensation charges, that we believe are not indicative of our ongoing operating performance.
We believe that Adjusted EBITDA is a performance measure and not a liquidity measure, and therefore a reconciliation between net income (loss) from operations and Adjusted EBITDA has been provided in the financial results. Adjusted EBITDA should not be considered as an alternative to net income (loss) from operations as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with GAAP, or as a measure of liquidity. In addition, Adjusted EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read only in conjunction with our Condensed Consolidated Financial Statements prepared in accordance with GAAP.
Following is the reconciliation of our consolidated net (loss) income to Adjusted EBITDA (in thousands):
|
|
Three Months Ended September 30, |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income (loss) |
|
$ |
3,249 |
|
|
$ |
(5,545 |
) |
|
$ |
(2,441 |
) |
|
$ |
(9,061 |
) |
Add Back: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
112 |
|
|
|
20 |
|
|
|
131 |
|
|
|
34 |
|
Depreciation and amortization (1) |
|
|
2,799 |
|
|
|
1,275 |
|
|
|
5,658 |
|
|
|
2,422 |
|
Interest expense (income) |
|
|
699 |
|
|
|
147 |
|
|
|
1,257 |
|
|
|
(131 |
) |
Change in fair value of acquisition-related deferred consideration |
|
|
(3,746 |
) |
|
|
— |
|
|
|
(1,746 |
) |
|
|
— |
|
Change in fair value of acquisition-related earnout consideration |
|
|
(3,300 |
) |
|
|
— |
|
|
|
(3,950 |
) |
|
|
— |
|
Stock-based compensation |
|
|
793 |
|
|
|
494 |
|
|
|
1,741 |
|
|
|
912 |
|
Other (income) expense, net |
|
|
(6 |
) |
|
|
(32 |
) |
|
|
(17 |
) |
|
|
46 |
|
Net loss attributable to noncontrolling interest |
|
|
— |
|
|
|
(44 |
) |
|
|
— |
|
|
|
(88 |
) |
Acquisition-related costs |
|
|
648 |
|
|
|
— |
|
|
|
726 |
|
|
|
— |
|
Employee severance costs |
|
|
479 |
|
|
|
— |
|
|
|
864 |
|
|
|
47 |
|
Adjusted EBITDA |
|
$ |
1,727 |
|
|
$ |
(3,685 |
) |
|
$ |
2,223 |
|
|
$ |
(5,819 |
) |
(1) Includes $44 thousand and $88 thousand of amortization included in direct operating expenses on our Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2026, respectively, and $129 thousand and $214 thousand for the three and six months ended September 30, 2025, respectively.
30
Cash Flow
Changes in our cash flows were as follows (in thousands):
|
|
Six Months Ended |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net cash used in operating activities |
|
$ |
(3,857 |
) |
|
|
(21,695 |
) |
Net cash used in investing activities |
|
|
(3,736 |
) |
|
|
(857 |
) |
Net cash provided by financing activities |
|
|
7,782 |
|
|
|
10,964 |
|
Net Change in cash |
|
$ |
189 |
|
|
$ |
(11,588 |
) |
The Company experienced improved operating cash flows during the period, primarily reflecting the impact of acquisitions completed in the fourth quarter of fiscal year 2026 and the resulting increase in scale and recurring cash-generating activities. Investing cash outflows were principally related to content investments and the continued settlement of acquisition-related obligations. Financing cash inflows were driven principally by borrowings used to fund strategic growth initiatives, including acquisition-related payments and upcoming theatrical release commitments.
Off-balance sheet arrangements
We are not a party to any off-balance sheet arrangements other than as discussed in Note 2 – Basis of Presentation and Summary of Significant Accounting Policies, Basis of Presentation and Consolidation on the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
ITEM 4. CONTROLS AND PROCEDURES
Definition and Limitations of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
Evaluation of Disclosure Controls and Procedures
The management of the Company, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in the Exchange Act), as of September 30, 2026. Based on such evaluation, our principal executive officer and principal financial and accounting officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, on a timely basis, and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures as of September 30, 2026.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
31
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes to the Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
The exhibits are listed in the Exhibit Index beginning on the following page herein.
32
EXHIBIT INDEX
Exhibit Number |
|
Description of Document |
4.1 |
|
Guaranty Agreement dated as of August 28, 2026 by Cineverse Corp. to BondIt, LLC. |
10.1 |
|
Loan and Security Agreement dated as of August 28, 2026 by and among Cineverse Pans LLC, BondIt LLC and the Guarantors named therein. ** |
31.1 |
|
Officer’s Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 |
|
Officer’s Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 |
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 |
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
|
Inline XBRL Instance Document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document. |
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
**Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
CINEVERSE CORP. |
|
|
|
|
Date: November 13, 2026 |
By: |
/s/ Christopher J. McGurk |
|
|
Christopher J. McGurk |
|
|
|
Date: November 13, 2026 |
By: |
/s/ Sean McCabe |
|
|
Sean McCabe |
34