DLPN Q3 2026 earnings call transcript, November 10, 2026

Good afternoon, and welcome to the Dolphin Entertainment third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode, and we will open the floor for your questions after the presentation. If you wish to join the queue to ask a question at any time, you can press star 1. Should you wish to remove yourself from the queue, press star 2. It is now my pleasure to turn over the floor to your host, James Carbonaro. The floor is yours.

Thank you, operator.

And once again, good afternoon and welcome, everyone. Before we begin, I'd like to remind everyone that during the course of this conference call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and involves risks and uncertainties that could cause actual results to differ materially. Please refer to the forward-looking statements contained in the earnings release published today, as well as the most recent SEC filings and reports. During the call, management will also discuss non-GAAP financial measures, including adjusted EBITDA and adjusted EPS. Provide information for investors. Reconciliation to the most comparable GAAP measures are provided in the earnings release. Now, I would like to turn the call over to Bill O'Dowd, Chief Executive Officer of Dolphin. Bill, please proceed.

Thanks, James, and welcome, everyone. As always, I'll walk through the highlights, then Mirta will take you through the highlights. Financials before we open it up for questions. Starting off, I'll highlight that we had a very, very strong quarter. Third quarter revenue was $16 million, the highest quarterly revenue in Dolphin's history. This is even higher than last year's Q4 or Q1 in 2024 when we reported $3.4 million of revenue from our Blue Angels documentary with IMAX. Excitingly, this is all organic growth and actually would have been 9.7% growth year over year. Excluding Always Alpha, which we spun out in November of 2025. And when we spoke in August, we said to expect a real step up in profitability in the third quarter. That's exactly what happened. Net income was $200,000 or $0.02 per share compared to a net loss of $400,000 a year ago. Adjusted EBITDA was up almost 43% year over year to $1.6 million or $0.12 per basic share versus $1.1 million. a year ago. We believe that our large non-cash amortization expenses often obscure our cash flow results, which is why we prefer to measure ourselves using adjusted EBITDA versus net income. We built Dolphin to grow steadily and to grow profits faster than revenue, and this quarter shows it. Revenue grew more than 8%, well ahead of growth in our core operating costs. We expect continued improved operating results in the quarters ahead.

Thank you, Bill, and good afternoon, everyone. I will now review our 2026 third quarter financial results. Total revenue for the three months ended September 30, 2026 was a record $16 million, an increase of 8.3% from $14.8 million in the same quarter of the prior year. If we exclude always alpha from the 2025 numbers, revenue increased by 9.7% year over year. For the nine months ended September 30, 2026, total revenue was $43.3 million, an increase of 5.4% from $41.1 million for the same period of prior year, or 6.5% increase if we exclude always alpha from the 2025 numbers. Income from operations was approximately $800,000 for the third quarter of 2026, an increase of 167% from $300,000 for this. Same period in 2025. Operating expenses for Q3 2026 were $15.2 million compared to $14.5 million in Q3 2025. Legal and professional fees were $1 million and included approximately $400,000 of litigation-related legal fees. Depreciation and amortization was $500,000. Net income for Q3 2026 was $200,000 compared to a net loss. of $400,000 in Q3 2025. Basic and diluted earnings per share for Q3 2026 was $0.02 based on approximately $13 million and $13.1 million weighted average shares outstanding, respectively, compared to basic and diluted loss per share of $0.03 in Q3 2025 based on approximately $11.8 million weighted average shares outstanding. Turning to a. adjusted EBITDA after adding back non-cash and other one-time items, our adjusted EBITDA for the third quarter of 2026 was approximately $1.6 million, an increase of 42.9% from approximately $1.1 million in the third quarter of 2025.

$1 million as of December 31, 2025. With that, I'll turn it back to the operator to open the floor for questions. Operator, would you please pull for questions?

Thank you. The floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star 1. We do ask if listening on speakerphone today that you please pick up your handset while asking your question to provide optimal sound quality. Once again, please press star 1 on your phone at this time to join the queue to ask a question. Please hold the moment while we poll for questions.

Hey, guys.

Congrats on the quarter. I wanted to start off just with asking about the Gravitour Studios, the film you have coming out. You talked a little bit about your prepared remarks. I was wondering maybe if you could just provide a little more color on that upcoming release. If you expect that to be potentially released in 27 and just how you think about potential budgeting and your expectations. Sure. And thanks, Derek. It's always fun to do earnings calls when you have these results, right? So with respect to Crush Party, we... In terms of a release date for it, we're probably aiming more for Q1 of 2028 for it to come out because it's set around Valentine's Day, as the name may or may not imply for a thriller, right? And so we'd like to film it in the first half of next year and have it readied for a Q1 release in 2028. Budget on it should be in the one and a half million range. It's a low-budget film, as Obsession was or other comparable films in terms of scope were in the past year. And, yeah, we're excited for it. We think we got the right director for sure with Kristen.

Great. That's super exciting. And then just on that budget, could you remind us how much maybe just with the structure you have to do the joint? I'm sure how much you'd be contributing versus partners. Yeah, we will look into some of the meetings I'm taking this week, whether we there are scenarios where we would put up none of the budget and partner with certain studio distributors or put up half the budget similar to our IMAX deal that we did with Blue Angels. And we'll weigh which ownership structure, you know, their trade off. of how much back-end profit you get to participate in depending on which deal you take. And we'll just make a decision based on that. Okay, that's really helpful. And then on DealMaker, it sounds like there's good progress there. Just in terms of thinking about that target of for next year, you mentioned you already have two identified. The other two, is that something like further along in the pipeline? Or just additional opportunities, maybe that could roll into 27. And then in terms of marketing those ventures, is there kind of a rough framework of the deal sizing you're looking to raise at launch? Or any other way we could think about the potential deals to be announced? Yeah, well, let's see. First on the number of ventures. I think one of them that we were hoping we'd be able to be in market by the end of this year is rolling into Q1, we think. So that's how we're giving visibility to when we think or how we believe we've identified one that should be in marketing Q1.

But we know the first two, which is exciting for us as we sit here today. And the confidence in having two more before the end of next year is because, of course, we're constantly evaluating ventures. There are two more already that we like quite a bit that if our diligence comes back positive over the next several weeks, then, you know, we feel we may already know by the time we get back on the 10K call in March what our year's already shaped up to be. We also are seeing our pipeline development accelerate as we, you know, just launched this partnership in February. 90 days plus just actually sharing information back and forth on deals that we each like. DealMaker from the fundraising capability side, Dolphin from the ability to have our marketing make a difference to the success of the company after it's funded. And the partnership's only strengthening. We're getting more clarity on what each of us are good at and the deal flow is just increasing. So we're very excited for that. And DealMaker just makes a great partner.

Okay, great. And then for the businesses you have currently, could you just talk more about the cross-selling you have between divisions and how that's been?

Sorry. Absolutely. I was just laughing because it's done so well for us this year. And I'd be happy to brag a little bit about the team that's... really across all the agencies. We call this community. It's led by Marilyn Laverty and the team that she's assembled. Andre Evanson out of our Nashville office does a great job coordinating these calls. And I believe that we're talking about seven figures of cross-selling, which it's a meaningful impact to both our top and bottom line. And in previous years, we've talked about how PR and influencer marketing... ...are really the peanut butter and jelly of earned media these days. It's very hard to imagine doing an earned media campaign without one or the other. And our companies are working very well together. But it's more than just combining one of our PR firms with the digital department on the influencer side. Our PR firms are working together. We're sharing clients. We're co-representing clients. We're sharing clients. Not to get ahead of a couple of press releases we'll have in the weeks ahead, some very exciting clients from Japan that may actually utilize the services of a 42 West in the door or Shorefire in the door. We're also co-repping clients in the U.S. I'm thinking of some between Shorefire and the door again, including a location in Los Angeles where we're going to hold our L.A. office holiday party this year. So. So I really am grateful to the work that our senior leadership has been doing to really cross sell services and want to work together.

That's that spirit of collaboration, that culture that I think the leaders at each company have really fostered, both within their own agency, but across agency. We just had one of my three favorite weeks of the year when we get all of our senior leaders together in one city. I happen to be in Los Angeles in October. To see 25 of our leaders in the same room across all the companies and the buzz and excitement that comes from that, it's just invigorating. That cross-selling is what drives you to apples to apples, 9.7% year-over-year organic growth on the marketing agency side. And, you know, we expect it to. Continue. And you can see, you know, just talking numbers for a second on our core business, we put a line in there that said our, you know, we built Dolphin to have our profits grow faster than our revenue, of course. Well, you know, you can see it through nine months, right? I mean, we're tracking, you know, well ahead in revenue, but our adjusted EBITDA is tracking over 24% year-over-year. And, you know, last year was a big jump from the year before. So, we're not going to be able to do that. We're excited about what we're doing, and it's really a function of the cross-selling, the whole idea of putting this group together. No, that's great to hear. I really appreciate the color on that. And then, so, it sounds like you're expecting the same kind of seasonality we saw last year in terms of 4Q versus 3Q and just how results typically strengthen.

Which quarter into the year? Is that the right way to think about it? Yeah, it is. You know, I wish we had better answers for Q1. It gets better every year, Q1 over the previous year's Q1. But, you know, it's always going to be our worst quarter and just given the seasonality of especially the influencer business. But, you know, others of our agencies, Q1 is definitely the worst quarter of the year. Q2 gets better, Q3 gets better, and then Q4 is typically our best quarter. You know, this year's Q3 was so strong. I mean, you see it, Derek, in the expectations you set with coverage at Maxim. I mean, basically, if I had a tagline for this call, our Q3 acted like a Q4. You know, we did record revenue, and we had really, really strong adjusted EBITDA. So, but we do, yes, we accept. They get better each quarter of every year, and Q4, as I sit here today, is looking, you know, strong. So, we're hopeful that it'll, that trend will continue. That's great. And then I wanted to ask about, we caught out, like, litigation expenses. It's around $400,000. I was wondering just how long do you expect maybe litigation expenses to be elevated? Or is that something you see coming off in the next couple of quarters? Or do you think that's kind of, like, ordinary course of business that we should kind of consistently factor in? Well, it's driven by, you know, one matter. And, you know, it's very difficult to predict when the matter will be over. You know, we're very confident in our position.

And we... I really like our chances to prevail well should it go to trial. And we'll just have to see how it plays out. No one likes to be in the situation we're in where we felt like we had no choice but to bring the lawsuit that we brought. But, you know, we're in it now and we've waited so long for, you know, a successful outcome that we'll just ride it out as long as we need to. And we're... prepared to do it. And we'll just see how it plays out in the quarters ahead.

Yeah, that makes sense. Last one from me, just on the newer initiatives, you'd already touched on the two big ones with the dealmaker and Gravitor. But I was wondering also the Topper Books partnership you have, just how that's progressing if you're seeing interest in the pipeline. Do you have any other comments to share on that in particular? Yeah, I'm sorry. I missed which area you were asking about there. Oh, yeah. The Topper Books, Simon & Schuster.

Yeah, that is moving along. We expect to have a nice announcement in Q1 related to books in general with Dolphin. You know, each of our companies do represent authors, as I think I mentioned on a previous earnings call, and, you know, have really strong expertise in marketing books, you know, in their area or even just generally. So it was a natural extension for us. It's also really a business development tool. Our Topper Books partnership is tremendous. We really, as I mentioned on previous calls, are a fan of the founder, Allie Trobe. Bridge. And just a lovely person and high ethical businesswoman. So that's always nice to be involved with someone like that in our business.

I'm just a little hesitant to say much more because I know we're excited about something we expect to be able to announce in Q1 and maybe be able to talk a little bit more about it in our 10K call. Got it. Sounds good. Well, thanks again for taking my questions, and congrats once more on the quarter. Thank you. Yeah, thank you.

With no remaining questions in the queue, I turn the call back over to your hosts for any closing remarks.

Thank you, and I know we have a large number on the call today. It's exciting to have a good quarter, any one of the four quarters. It's particularly great to have a great Q3. It's our longest stretch before we get to speak to everyone again at the end of March, four and a half months from now. I'm feeling very bullish about the collaboration, that theme we hit with some of Derek's questions about the cross-selling of the services and the ways that the companies are working together. We built a group of elite marketing companies. They're all very, very good in their own vertical. But when they come together and cross-sell their services and co-rep clients, they can really move the needle. And that growth is just going to continue. And it gives us a solid foundation for what we want to have happen over the next couple of years. And as I mentioned, too, since I won't be speaking for a while, by the time we speak again, it's hard to believe we're going to be closer to only a year and a half left. On our acquisition loan that we took out to keep buying up to this group, you know, that the free cash flow that that'll free up for us, along with the leases, which will be within six months of expiring by the time we speak again, will just be incredible. And that, of course, that total of what we expect at three million of free cash flow a year involves zero growth, zero cross selling, just.

The renegotiation of leases in New York and LA, as well as just paying off the bank loan. So we're excited. We're getting very, very close to the end of the journey of paying for all the acquisitions. And we're seeing what these acquisitions can do when they work together. So, shout out to those of the dolphins that are on this call. Congrats again to Shorefire for a great weekend at the box, excuse me, 42S for a great weekend at the box office and anticipating a shout out to Shorefire. for a great Grammy nominations weekend this coming weekend. And we'll talk to everybody again in March.

Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day.

Thank you for your participation.