IDW Media Reports their Fourth Quarter and Fiscal Year 2017 Results. Blames Comic Downturn for Losses.
IDW Media Holdings announced its results for the fourth quarter and fiscal year ending October 31, 2017.
The company in the announcement focused on the company’s success in non-comics and said that that will help accelerate the growth in 2018. It also highlighted its transition to Random House for distribution as well as their new Star Wars and Sonic the Hedgehog comics as hopefully helping turn things around in 2018.
However, despite strength in television, IDW felt the sting of the comic industry as a whole and saw a decline in 2017. The company had $4.9 million less in revenue in 2017 compared to 2016.
Here’s the highlights of the announcement:
Fiscal Fourth Quarter and Fiscal Year End 2017 Financial Highlights:
- Revenue of $20.0 million for Q4-17 compared to $23.6 million for the year ago period (-15.4%) and $16.7 million in Q3-17 (+19.6%). Revenue of $60.4 million for FY-17 compared to $65.3 million for the previous year. The year over year decline in revenue and the sequential quarterly increase in revenue are discussed below for each segment of the Company.
- Gross profit margin for the Company of 40.8% for Q4-17 compared to 42.1% for Q4-16 and 46.2% for Q3-17. Gross profit margin for the Company of 44.9% for FY-17 compared to 47.2% for the previous year. The year over year decline was principally due to increasing printing costs at IDW Publishing, reduced revenue at CTM Media Group (where almost all direct costs are fixed costs), and a change in revenue mix in which a higher percentage of the total revenue were from relatively lower margin offerings, partially offset by an increase in gross margin at IDW Entertainment.
- Net income for the Company of $0.7 million for Q4-17 compared to $2.0 million for Q4-16 and $0.1 million for Q3-17. Net loss for the Company of $0.8 million for FY-17 compared to Net income of $3.7 million for the previous year. The decline in net income from the prior year was principally due to declines in revenue and gross profit margin, as well as an increase in SG&A expenses at IDW Entertainment associated with the launch of new programs. Additionally, we saw increases of $0.7 million in Q4-17 and $2.6 million for FY-17 compared to the prior year periods of non-cash compensation expense associated with the grant of stock to employees beginning in Q1-17. The sequential improvement in quarterly net income was principally due to the increased revenue discussed above.
- Cash Balance for the Company of $9.2 million at year end was $3.0 million higher than at the previous year end primarily due to the cash raised in the capital stock offering in Q3-17, and $8.0 million lower than $17.2 million at the end of Q3-17. The decline during Q4-17 was primarily due to investments in television productions to support the anticipated future growth of the IDW Entertainment business. The investment in production assets is reflected in the increased balances of Accounts Receivable and Inventory of IDW Entertainment, which the Company expects to convert to revenue beginning in FY-18.
- IDW Entertainment Revenue of $7.6 million for Q4-17 compared to $8.3 million for Q4-16 and $5.2 million for Q3-17. IDW Entertainment Revenue of $16.2 million for FY-17 compared to $16.0 million for the previous year. The decrease in revenue from the prior year quarter and increase from the prior year was principally due to timing of delivery of episodes of television properties that are being produced. As further described in this release, IDW Entertainment is positioned for significant future growth with programs at various stages of development and production.
- IDW Publishing Revenue of $6.8 million for Q4-17 compared to $9.4 million for Q4-16 and $5.4 million for Q3-17. IDW Publishing Revenue of $24.5 million for FY-17 compared to $27.9 million for the previous year. IDW Publishing’s revenue in FY-17 was impacted by a cyclically slow period in the comic book speciality market, compounded by temporary disruption related to the transition in distributors to Random House. With the move to Random House complete and with the planned release of major titles, including Star Wars Adventures, Sonic the Hedgehog, and Star Trek: Discovery, as well as new games, including Atari: Centipede, Sonic the Hedgehog, and Nickelodeon Splat Attack!, we anticipate continued sequential growth in IDW Publishing, which includes IDW Games.
- CTM Media Group Revenue of $5.6 million for Q4-17 compared to $5.9 million for Q4-16 and $6.1 million for Q3-17. CTM Media Group Revenue of $19.7 million for FY-17 compared to $21.4 million for the previous year. The year over year decline is attributable to the loss of certain locations and customers including due to cyclical factors impacting the Broadway industry. The sequential decrease is primarily attributable to seasonal factors. We expect CTM to increase revenue in FY-18 via introduction of new products, creating new partnerships and a rebranding initiative.
Significant Highlights and Milestones:
- IDW Entertainment is now poised for significant growth. With the success of IDW Entertainment’s initial programs, the media industry has recognized both the value of IDW Publishing’s extensive library of proprietary content and IDW Entertainment’s capabilities to produce world-class programming.
- Season two of the critically-acclaimed series Wynonna Earp premiered on SYFY channel in the U.S.; Viacom in the U.K. and Australia; and Netflix worldwide, and the fan favorite series was renewed by SYFY for season three, which went into production on January 15, 2018.
- IDW Entertainment entered into a partnership with Hulu to produce IDW Publishing’s critically-acclaimed, multiple award-winning and internationally recognized franchise Locke & Key. Production has been completed on the pilot episode by an all-star creative team, including writer Joe Hill, director Andy Muschietti (Stephen King’s IT, Mama) with Carlton Cuse (Lost, Bates Motel, The Strain, Jack Ryan) serving as showrunner. IDW Entertainment is creating a world-class production for Locke & Keythat will entertain fans globally.
- Season two of Dirk Gently premiered on BBC America in the U.S. and season one premiered globally, outside of the U.S., on Netflix. While BBC America recently announced that the series will not be renewed for a third season, the production of Dirk Gently, which was based on third party content, helped to establish IDW Entertainment’s reputation as a producer of high-quality television programming.
- IDW Entertainment began development on Jonathan Kellerman’s bestselling book property, Alex Delaware, as a scripted series for multiple platforms with Barry O’Brien (CSI: Miami, Castle) on board as writer and showrunner. The Alex Delaware franchise consists of 32 titles, selling over 40 million copies, making it the longest running contemporary crime series with millions of fans worldwide.
- IDW Entertainment anticipates an increase in production and has six new series in active development based on titles from IDW Publishing, including V-Wars, October Faction, Lore, Winter World, Life Undead and Chicacabra, with additional properties in the pipeline for FY-18 and beyond.
- IDW Entertainment also expects to expand into digital platforms via the Company’s recently established IDW Digital Studio.
- IDW Publishing had a relatively soft year in FY-17 due to industry-wide slowness in the comic book market, and the short-term disruption from the Company’s transition to Random House as its new book-market distributor. IDW Publishing will seek to maximize the benefits of that major change in FY-18. Importantly, IDW Publishing’s growing library continues to supply proprietary, high-quality content for IDW Entertainment and is well positioned to fuel the accelerated growth of IDW Entertainment.
- IDW Publishing added Star Wars to its powerful line-up of kids’ properties, with the first titles hitting at the end of the year. A full line-up for FY-18 includes graphic novel film adaptations, a monthly on-going series, and special one-shots and tie-in events.
- IDW Publishing added the classic popular title, Sonic the Hedgehog, to its publishing portfolio, with a major launch announced for April 2018. Sonic, a beloved videogame title for more than 25 years, is one of the most successful kid’s properties in the comic book market.
- IDW Publishing’s October launch of Black Crown, an adult-oriented, creator-driven imprint, has already built buzz and will provide an eclectic slate of titles, which will further build an already impressive line-up of proprieties available for entertainment development.
- IDW Publishing’s games division, IDW Games, is focused on long-term development and is adding a breadth of titles for 2018, including Sonic The Hedgehog, Nickelodeon classic characters, Dragon Ball Z, and additional mass-market titles with wide appeal.
- IDW Publishing’s Top Shelf imprint found continued success with new titles such as Surfside Girls, aimed squarely at the growing YA girls’ market. And in 2018, IDW Publishing will release one of the most anticipated titles among comic book fans–Alan Moore’s final series of The League of Extraordinary Gentlemen.
- IDW Publishing’s push into international markets continues with licensing into more territories and with a greater variety of publishers than ever before.