Dolphin Entertainment, Inc.DLPNNASDAQ
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James Carbonara: Good day, everyone. Welcome to the Dolphin Entertainment, Inc. third quarter 2025 earnings call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara, Investor Relations. The floor is yours.
James Carbonara: Thank you, operator. Good afternoon. Before we begin, I would 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 involve risks and uncertainties that could differ materially from actual results. Please refer to cautionary text, forward-looking statements contained in the earnings release published today as well as the most recent SEC filings and reports. During the call today, management will also discuss non-GAAP financial measures including adjusted operating income or loss. The company believes that these will provide helpful 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 Entertainment, Inc. Bill, please go ahead.
Bill O'Dowd: Thanks, James, and welcome, everyone. As usual, I will start by reviewing key financial and operating highlights from our third quarter and then Mirta will provide a more detailed financial overview before we open it up for Q&A. Well, this is the first quarter where we can have a true year-over-year comparison after the super group was finished being assembled with the acquisition of L on July 1. We have long talked about the benefits of cross-selling within the group. How did we do? Dolphin delivered another record-setting quarter in Q3, with revenue rising 16.7% year-over-year to $14.8 million and operating income turning positive with $300,000 despite almost $600,000 of non-cash amortization expenses related to our historical acquisitions. Furthermore, the first nine months of 2025 have now surpassed the first nine months of 2024 in revenue despite the Blue Angels generating over $3.4 million in revenues in 2024. In fact, Q3 2025, this most recent quarter, is the second-highest revenue quarter in Dolphin's history, behind only the Blue Angels fueled $15.2 million in 2024. Equally important, as I just mentioned, the quarter's results were entirely organic. The same agencies delivered this outstanding year-over-year revenue and operating income growth. That same agencies that we had at this time last year. This healthy organic growth is the primary driver behind our continued margin expansion, with adjusted operating income of a little more than a million dollars or 6.9% of revenue, which is up from 4.5% in just Q2. This performance reflects both the consistency and strength of our core subsidiaries and the growing scalability of our cross-selling operating model. Another point worth highlighting is how clean our financial statements have become. In Q3, the last of our warrants expired earlier this year, we recorded the last of our contingent consideration from our acquisitions, and thus below the line, we are down to just one fair valued convertible note and our interest expense. I remember investors telling me that our P&L was too complicated. In addition to simplifying our P&L with only two line items below the line, the elimination of warrants puts, contingent consideration, and virtually all fair valued convertible notes removes the constant fluctuation up or down in our net income or loss from what would be expected based on our operating results. We knew this day would come, and here we are. In short, with our below-the-line expenses being reduced to effectively just our interest expense, we now show clearly the operational performance of the business. And it was obviously a fantastic quarter. That operational performance continues to be driven by the collective power of our agencies. Every Dolphin subsidiary brings something unique to the table, but together, they create something far greater than the sum of their parts. This unified strength across entertainment, lifestyle, influencers, sports, and digital, our ability to cross-sell these services and our reach across pop culture continues to be the engine of our growth. We also continue to advance our ventures and productions portfolio with a particular focus on not expanding our cost base. In Q3, our anticipated feature film Youngblood premiered at the Toronto International Film Festival to overflowing screening rooms followed by a historic collaboration with the Los Angeles Kings in what we believe is the first major promotional partnership between the NHL and the feature film in over two decades. We are actively negotiating sales opportunities for Youngblood now and hope to be able to announce our selected distribution partner before the end of the calendar year, if not in just a few short weeks. Stepping back, our third quarter results represent another key milestone in Dolphin's long-term trajectory. Revenue is at record levels, margins are expanding, and our balance sheet is stronger than ever. As a longtime believer in Dolphin's vision, I have continued to invest personally, having purchased a little over 2% of our outstanding shares since just April. Furthermore, I have entered into a new 10b5-1 plan that extends my buying program through December 2026. I continue to believe our stock price undervalues the company's proven performance, strategic positioning, and the significant growth still ahead. Thank you for your time and attention today, and with that, I will turn it over to Mirta for her deeper dive into the financials.
Mirta A. Negrini: Thank you, Bill, and good afternoon. Total revenue for the quarter ended September 30, 2025, was $14.8 million, an increase of 16.7% from $12.7 million in the same period last year. Operating income was $308,296 for the quarter ended September 30, 2025, compared to an operating loss of $8.2 million for the quarter ended September 30, 2024. Adjusted operating income was approximately $1 million for the quarter ended September 30, 2025, as compared to an adjusted operating income of $492,620 for the same period in 2024. Operating expenses for 2025 were $14.5 million including depreciation and amortization of $589,388 and non-cash expenses of $127,365. This compares to operating expenses of $20.8 million in 2024 including depreciation and amortization of $606,136,782 and non-recurring or non-cash expenses of $8 million. Net loss for Q3 2025 was $365,494 including depreciation and amortization of $589,388 and non-cash expenses of $177,365. This compares to a net loss of $8.7 million for 2024 including depreciation and amortization of $636,782 and non-recurring or non-cash expenses of $8 million. Diluted loss per share for both basic and fully diluted shares in 2025 was $0.03 per share based on 11,770,195 weighted average shares compared to net loss per basic and fully diluted shares in 2024 of $0.80 per share based on 10,930,286 weighted average shares. With that, I will now turn it back to the operator to open the floor for questions.
Operator: Certainly. The floor is now open for questions. If you have any questions or comments, press 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just a moment while we hold for questions. Your first question is coming from Allen Klee with Maxim Group. Please pose your question. Your line is live.
Allen Klee: Yes. Hi. This is the best quarter I have seen since covering your stock considering everything. So congratulations. Starting with the organic growth of 16.7%, could you explain how you think about organic growth, what were the key drivers of that, and how you think about that maybe going forward?
Bill O'Dowd: Sure. Thank you for the kind words at the start, Allen. I would agree with you. I know Q1 last year was phenomenal because of Blue Angels. But this quarter would be the strongest in history except for that one-time event by a large margin, and it feels good as we just built on top of Q2. You know? Q2 was the biggest revenue quarter, I think, in history, if excluded Blue Angels. So we feel the momentum and it is organic. As I was mentioning in my prepared remarks, it is the first time since we have had the super group finished that you could just compare apples to apples. It is the same companies we had a year ago and the companies we have now. Without any one-time events. No movie released in the quarter or no jolt of revenue or expense one way or the other, you are just comparing side by side and 16.7% revenue growth. Obviously, you can see what happened in the operating income. Our adjusted operating income, what we measure ourselves by going over $1 million for the quarter, that is simply our operating profit and adding back the amortization costs. Gets you to over $900,000 of that. So we feel very strong, and it is all growth at these companies. And a big driver of that is the cross-selling that they are doing. They are working with each other. So we just feel we have great momentum. And, you know, across seven companies, some are going to be doing better than others in any given quarter. But most of them are firing well and are going to continue that into Q4. And so it is just a really good feeling. The Better Mousetrap, we hope to build when we uplifted to Nasdaq of building the super group of entertainment marketing companies and using their growth as a base and that they should be able to cross-sell with each other. We should get more clients. We should get different types of clients. We should add, you know, share of wallet from the clients we already do have. It is happening. And then from that base, able to go into ventures like Youngblood and have that optionality of a Blue Angels or a Youngblood. It is only fuel this. Imagine if the Blue Angels came out in this quarter, right? We would have had revenue over $18 million. So yeah, it feels great, and the growth is for all the right reasons that you want to see growth. Right? It was brick by brick across all the companies, not a one-off.
Allen Klee: That is great. For 42 West, overall, I think the fourth quarter is a seasonally strong quarter, and you have a bunch of festivals that you participate in in the fall. Could you comment on, and I know it is like your clients win you could get paid more. So how does it look for the events that you are involved in?
Bill O'Dowd: Yeah. You know, we have a good lineup of films this year. You know, it is still a little too early to know how long or how well they could perform through festival season or through award season. What I will say though is that 42 West is one of the companies doing very well for us. They had a fantastic end of summer into the fall season. September was a very strong month. October was equally strong, if not stronger, for them. And it is just carrying into Q4, which is, as you said, a very strong quarter typically for 42 West in particular. And we feel bullish about Q4 this year. Based upon 42 West being our biggest subsidiary and them having a very strong start to the quarter. So the momentum we had in Q3 will carry into Q4 for sure.
Allen Klee: That is great. And with the door, you highlighted Jesse Bernstein rejoining and just disrupt agency. Could you comment a little on kind of what those both those things represent?
Bill O'Dowd: Yeah. The door, you know, our PR firms are doing well and the door is one of them. Thank you for that. Yeah. The door is growing anyway as well, but one of the strategies they are employing are aqua hires, you know, making strategic hires of more senior publicists that already have a handful of clients that are with them. Jesse is one of them. He came back to the door where he had been working up till a few years ago. And so he is a known commodity, somebody that the team loves. And he brings a book of business with restaurants. And, you know, as we rebuild that practice, the door is really diversified. Since COVID. You may remember that was the one of our agencies that took the hardest hit in COVID by far. Think anyone that represented restaurants in New York and LA Chicago and COVID is going to be pretty affected. And they just built back a beautiful business Lois and Charlie, and the whole team at door. So Adrian Jefferson joining in January with Disrupt is a key milestone for that agency as well, and Jesse joining this summer. You know, the door's revenue is significantly up year over year and just getting stronger. And what a great diversity of clients inside that company. I mean, that is the company that can represent everything from John George and his restaurant empire to, you know, Adidas and to Haagen Dazs and PayPal. I mean, they have just had some signature clients throughout the year. And so it is a special agency within our group for sure.
Allen Klee: Great. With Shore Fire Media, I do not know if I have ever asked this, but does it also kind of you have some powerful clients that are doing well. How does or how do you think about or does that how does that help you, and then how do you just think about how they are performing?
Bill O'Dowd: Well, you know, it is a good example. You made me think we say powerful clients. It is hard not to, you know, on one hand, Shore Fire has got hundreds of clients. And they are very proud of their breadth and depth. And then it is hard not to think of Mr. Springsteen when you say powerful clients. Right? So, you know, there is a good example of cross-selling and working together. Right? You know, the film Springsteen Road to Nowhere was obviously worked on by both Shore Fire and 42 West. And just those types of collaborations are occurring on far less high-profile projects with great frequency between our companies. Shore Fire's breadth though, as you said, is just very strong. I mean, we put out the Grammys press release today 35 nominations across our companies, 30 from the Shore Fire alone. And how many different categories my goodness. They are just such a leader in that. And you know, you read the press release and you are like, man, they have got clients that do everything. I learned a fun fact from the Shore Fire team that Tobias Jesso, who is up for songwriter of the year, works with, you know, big name artists like Justin Bieber. He is six foot seven, I said, oh, he could play small forward on our company team. But the growth of Shore Fire, you know, we have talked about it a lot over the years, and there is a company that, you know, has really grown in size since they joined Dolphin in December 2019. And just has such a beautiful management team layers deep, by the way. I think Marilyn Labrady would be the first to tell you that as the founder and CEO. And again, 42 West, Shore Fire, the door have just had such a strong year, each of them. And it really drives us when our PR firms are doing well it is great to see them recognized. I mean, March was awesome with the number one agency in the country by the Observer, and that is not in entertainment, that is in any field. That really validated what this group of PR firms can do, but we it seems like every other week we are being recognized. It is quite a humbling and rewarding fall for us, and those awards mean something within the industry, that have a couple more, three, four more this fall, is really a tribute to what I think the professionals in the industry recognize, which is that these firms individually are best in class in the industries they serve, whether it be movies and TV for 42 West or music and Shore Fire and hospitality and lifestyle in the door and, you know, impact with Elle, but collectively, you know, they are unique in the industry. There just is not another group like this across all of pop culture, and it is nice to get the awards, and I am sure for Wall Street, nice to see these numbers.
Allen Klee: Thank you. And just to make sure I heard right, you were hoping for Youngblood to be able to announce something before the end of this year.
Bill O'Dowd: Yeah. And I am being conservative with that. We had a young Youngblood, you know, I was with Emerson Davis earlier today. She runs our studio development and production for Dolphin and been with me for almost twenty years, if you can believe it, Allen. And a new mother, how about a shout out to her four-month-old daughter, Carter? Who Emerson brought to Toronto for the film festival where we premiered Youngblood. I give Carter all the credit. I do not think she was more than two months old, and she did not cry once. I do not know how that is possible. But if you met Emerson, you would think it might be possible because Emerson is so cool, calm, and collected. But we had great screenings at Toronto. You can get caught up in fever, you know, where people go crazy for films that it is an overreaction, but and so we tried to mute our response because we did not want to get ahead of our skis, as they say. But, you know, we had overflowing screening rooms. I had not personally seen that at a buyer screening. And you know, we had good reception coming out of Toronto. We announced our partnership with the LA Kings and the NHL. After that, we shot additional footage which was so cool. At an LA Kings game. Not to give anything away, but people will read between the lines. And if Youngblood made the NHL and perhaps which team he might be playing for, at the end of the movie. But you know, that was really cool. And the reception to that is, you know, that is just not something that happens with independent films. You know, studios may be able to typically strike a partnership with the league, but, you know, it just does not happen. And as we put in our for independent films and as we put in our press release, I mean, we are unaware of any other example for over two decades. So we are very proud of that. And, you know, the film is now completed. As of last Friday with the additional footage in. And the reception has been very rewarding. So I do believe, you know, we will say by the end of the year, I think it will happen much sooner. And be able to announce a distributor for Youngblood, you know, relatively shortly. And with a release date. So exciting for us, and, you know, we will knock on wood for success with Youngblood for sure.
Allen Klee: That is great. And then just kind of thinking about how you are thinking strategically. You are doing great. But it is a balance between dropping results to the bottom line and investing also at the same time for growth.
Bill O'Dowd: Is affected. We have not been. So I we will not hide behind the and we do not need to hide behind. Our results are so strong. Behind anything that just is not the case with us. We have been unaffected and we are relatively unaffected by tariffs. So, you know, a little bit of impact in the first half of the year with our board game clients. And others that get a lot of their things from China. But we have been blessed that way and knock on wood, it stays that way. In terms of the first one, yeah, it is always the classic balance act, right, of investing in an affiliate program, for example, at TDD. And setting yourself up for hopeful success in 2026. While managing, you know, to the growth we have already experienced. Last year was a milestone for us because we achieved adjusted operating income for the first time in the calendar year last year. And we are proud of that. Now, Blue Angels is certainly a part of our business, so we are not apologizing for having Blue Angels at all. But if we did not have Blue Angels in 2024, we would have just almost made adjusted operating income. We would have been just short. And when I got on the call about it, which was already tremendous growth from the year before, you know, I said, you know, I really did believe that 2025 would be our first full year of adjusted operating income without any ventures or films involved. And, well, you can see the results. I am highly confident that, you know, through Q3, it would take an absolute collapse and or something in the month of December for that not to be true. So, you know, we judge ourselves by that metric. You know, it is a proxy for cash from operations, you know, like how are we doing. And, you know, we feel very good about it. And so we think we have struck the right balance this year. We are going to be rewarded in, you know, maybe even some here in Q4, but certainly by Q1. With some of those investments that we have made. And yet, we still grew along the way. And so once those investments come in, then, you know, all bets are off. And then, of course, you may remember and for those who are looking at our company and our stock, we have some real cash catalysts for the next three years that will fall into this cash flow for us. You know, we are now one year from now, we are out of our New York leases. You know, when you buy companies, you buy their leases. Right? So we have got three companies with offices in New York still. We only need one lease. So we will save some money there a year from now. Next year, this time, two years from now, we are out of our LA leases. That is the most expensive lease. Excited about that and the cost savings that will come from that. Again, we just do not need that much space in a post-COVID world. And then third, you know, we are less than three years out. You know, it will come on before we know it. You know, our only commercial bank loan will be paid off principal and interest on September 29, 2028. That will free up well north of $2 million of cash a year. Just on that. That plus the leases should free up north of $3 million for sure a year. Again, if we do not grow at all. So that is an extra $750,000 of cash a quarter, obviously, plus. So as we achieved adjusted operating income this quarter, of a million dollars, you know, that would just add to that. So, you know, it is the biggest reason why we think we are so undervalued. Today. And I just started a 10b5 plan to buy stock and send a signal to the market. I am buying every week because I believe in the company. The results that we are posting, not the ones we will post in the future. And so I bought 2% of all outstanding shares since April, and I am still buying. So, you know, I think that sends a pretty strong signal. I hope it would.
Allen Klee: No. I would agree. In my entire career, you are the only company I have ever known that has CEO is entered one of these plans for buying the stock. I have had plenty for selling, but no, it is quite and is it is the term of it, like, a certain amount? Like, each time, or is it, you know, if we need to know those. Yeah. Yeah.
Bill O'Dowd: I had to learn too, Allen. So we set it up to be $5,000 a week and, you know, I have extended it or sorry. It is technically entering a new one. All the way through December. So, you know, $5,000 a week may sound like one thing, but when you say, well, that is $260,000 a year, you know, that hopefully, that is making a statement. And from April '25 through at least December '26. So I had never thought of it this way before, but, you know, quick math tells me that is over $400,000. And just making a statement. And we are feeling very bullish about what we have done already. And then what we are going to do with this continued growth. So very exciting for us.
Allen Klee: This is great. Oh, okay. That is it for my questions. Congratulations. Nice results. Good talking to you.
Bill O'Dowd: Thank you, Allen, very much.
Operator: There are no additional questions in queue at this time. I would now like to turn the floor back over to Bill O'Dowd for his closing remarks.
Bill O'Dowd: Well, thank you. And thank you, those who are on the call and on the webcast and those who will listen in the future. You know, I think our excitement is well heard at this point about the company, and the commitment we have made, myself personally, with that 10b5-1 plan. And then we just decided to let the numbers do the talking. They speak for themselves, and I am very proud. I am very thankful I am very grateful to the leadership at each of the companies. They are the ones who are receiving these awards, and they are the ones that are collectively working together to post these numbers. And if any one company is going through a tough time or a particularly challenging quarter and no one's in a dramatic situation. But just if they are off, we have, you know, other team members that pick them up and overperform and use and you balance across seven companies. And it is diversified revenue, and it is diversified client base. It is highly or I should say, very much what you want. And we are very proud of 16.7% year over year with the same agencies. And the adjusted operating income that is doing what it is doing. So we see a very clear trajectory. We know what is going to happen in a year, and in two years, and in three years, and we are very excited to be here. So always great to have a good Q3. We live with these numbers for the next four and a half months. And be very proud to introduce them to anybody new to our company. During that time period. But we also expect a strong Q4. Hopefully, we can judge me on that statement at the March. And look forward to talking to everybody then. So thank you very much for your time today.
Operator: Thank you, everyone. 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.
James Carbonara: Thank you. Bye bye.