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) was incorporated in Delaware on March 31, 2000.
Cineverse is a premier technology and entertainment company with its core streaming business operating (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 these major application platforms, and through third-party distributors of content on platforms.
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 by adding audience development, customer acquisition, and direct-to-consumer marketing capabilities supported by longstanding studio relationships and performance marketing expertise.
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.
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.
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 June 30, 2026, the Company has an accumulated deficit of $515.9 million and negative working capital of $(18.9) million. For the three months ended June 30, 2026, the Company had a net loss attributable to the Company's common stock holders of $(5.8) million. Net cash used in operating activities for the three months ended June 30, 2026 was $1.0 million, which included $0.2 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.
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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 June 30, 2026, $11.4 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 June 30, 2026 and March 31, 2026, short-term content advances were $6.8 million and $7.5 million, respectively, and long-term content advances, net of current portion, were $8.5 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 and cash equivalents, availability under our Line of Credit Facility and ability to use our ATM as of June 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 June 30, 2026 and 2025 (unaudited) (in thousands):
Revenue
For the Three Months Ended June 30, As a % of Revenue
2026 2025 $ Change % Change 2026 2025
Advertising technology and services $ 15,949 $ — $ 15,949 — % 52 % — %
Streaming and digital 9,748 9,104 644 7 % 32 % 82 %
Media services 3,481 — 3,481 — % 11 % — %
Podcast and other 1,097 989 108 11 % 4 % 9 %
Base distribution 320 1,024 (704 ) (69 )% 1 % 9 %
Other non-recurring — 2 (2 ) (100 )% — % 0 %
Total Revenue $ 30,595 $ 11,119 $ 19,476 175 % 100 % 100 %
For the three months ended June 30, 2026, the Company's revenue increased by $19.5 million.
Advertising technology and services and Media services revenue increased by a combined $19.4 million due to the fiscal year 2026 fourth quarter acquisitions of IndiCue Inc. and Giant Worldwide.
Streaming and digital revenue increased by $0.6 million, primarily due to the strong advertising performance ($0.3 million) and Electronic Sell-Through ("EST") ($0.2 million) from titles such as Return to Silent Hill.
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Base distribution revenue decreased by $0.7 million, primarily driven by a decline in physical sales of $0.4 million following the success of Terrifier 3 in fiscal year 2026.
Direct Operating Expenses
For the Three Months Ended June 30, As a % of Revenue
2026 2025 $ Change % Change 2026 2025
Direct operating expenses $ 19,936 $ 4,807 $ 15,129 315 % 65 % 43 %
The $15.1 million increase in Direct operating expenses for the three months ended June 30, 2026 was primarily attributable to the addition of Advertising Technology revenue share and Media Services revenue in the fiscal fourth quarter.
Selling, General and Administrative Expenses
For the Three Months Ended June 30, As a % of Revenue
2026 2025 $ Change % Change 2026 2025
Compensation expense $ 6,267 $ 5,129 $ 1,138 22 % 20 % 46 %
Corporate expenses 1,463 1,196 267 22 % 5 % 11 %
Share-based compensation 948 418 530 127 % 3 % 4 %
Marketing expenses 1,000 463 537 116 % 3 % 4 %
Other operating expenses 1,940 1,746 194 11 % 6 % 16 %
Selling, General and Administrative $ 11,618 $ 8,952 $ 2,666 30 % 38 % 81 %
For the three months ended June 30, 2026 compared to three months ended June 30, 2025, compensation expense increased by $1.1 million primarily due to an increased non-cash bonus accruals ($0.6 million) and severance ($0.3 million). The increase in share-based compensation was attributable to incremental share-based compensation granted from fiscal fourth quarter acquisitions. The increase in marketing expense related to the increase in spend from upcoming theatrical releases such as Air Bud Returns and Pan's Labyrinth 20th Anniversary.
Depreciation and Amortization Expense
For the Three Months Ended June 30, As a % of Revenue
2026 2025 $ Change % Change 2026 2025
Amortization of intangible assets $ 2,649 $ 957 $ 1,692 177 % 9 % 9 %
Depreciation of property and equipment 166 105 61 58 % 1 % 1 %
Total Depreciation and Amortization $ 2,815 $ 1,062 $ 1,753 165 % 10 % 10 %
Amortization expense increased by $1.7 million during the three months ended June 30, 2026 compared to the prior year quarter primarily due to the purchase price accounting-related intangible asset additions from our IndiCue and Giant acquisitions in the fourth quarter of fiscal 2026.
Interest Expense, Net
For the three months ended June 30, 2026, compared with the same period in 2025, interest expense increased by $0.8 million to $0.6 million, primarily due to a $(0.4) million reduction in interest expense recognized in the prior-year period resulting from a discount on accrued interest provided by a financing arrangement for the film Terrifier 3 in exchange for an expedited final payment, as well as higher average outstanding borrowings under the Line of Credit Facility during the current quarter.
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.
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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 continuing 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 continuing 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 June 30,
2026 2025
Net loss $ (5,690 ) $ (3,516 )
Add Back:
Income tax (expense) benefit (19 ) 14
Depreciation and amortization (1) 2,859 1,147
Interest expense 558 (278 )
Change in fair value of acquisition-related deferred consideration 2,000 —
Change in fair value of acquisition-related earnout consideration (650 ) —
Stock-based compensation 948 418
Other (income) expense, net (11 ) 78
Net loss attributable to noncontrolling interest — (44 )
Acquisition-related costs 78 —
Employee severance costs 385 47
Adjusted EBITDA $ 458 $ (2,134 )
(1) - Includes $44 thousand and $85 thousand of amortization included in direct operating expenses on our Condensed Consolidated Statements of Operations for the three months ended June 30, 2026 and 2025, respectively.
Cash Flow
Changes in our cash flows were as follows (in thousands):
For the Three Months Ended June 30,
2026 2025
Net cash used in operating activities $ (994 ) (14,343 )
Net cash used in investing activities (1,951 ) (197 )
Net cash provided by financing activities 3,896 2,568
Net Change in Cash and Cash Equivalents $ 951 $ (11,972 )
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For the three months ended June 30, 2026, net cash used in operating activities was primarily attributable to the Company's loss from operations, excluding non-cash expenses such as depreciation and amortization, stock-based compensation, fair value adjustments related to acquisition-related deferred and earnout consideration, as well as changes in working capital. Working capital changes were primarily driven by an increase in accounts receivable resulting from the timing of customer collections, partially offset by an increase in accounts payable, accrued expenses, and other liabilities. Operating cash flows are typically seasonally lower during the first two fiscal quarters and higher during the third and fourth fiscal quarters, primarily due to revenues generated during the holiday season.
Cash used in investing activities primarily reflected expenditures for long-lived assets and internally developed software.
Cash provided by financing activities was primarily attributable to net borrowings under the Line of Credit Facility and proceeds from the issuance of common stock under the Company's ATM program, partially offset by shares withheld to satisfy employee tax withholding obligations, cash paid to acquire a noncontrolling interest, and payments of deferred consideration.
For the three months ended June 30, 2025, net cash used in operating activities was primarily attributable to the Company's loss from operations, excluding non-cash expenses such as depreciation, amortization, and stock-based compensation, as well as changes in working capital. Working capital changes were primarily driven by cash outflows related to content advances made to partners, for which initial expenditures are generally recovered within six to twelve months, operating prepayments, and decreases in accounts payable and accrued expenses. Operating cash flows are typically seasonally lower during the first two fiscal quarters and higher during the third and fourth fiscal quarters, primarily due to revenues generated during the holiday season. Cash used in investing activities primarily reflected expenditures for long-lived intangible assets and property and equipment. Cash provided by financing activities was primarily attributable to net borrowings under the Line of Credit Facility.
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 and Note 3 - Other Interests on the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.