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Alliance Entertainment Reports 29% Decline in Q3 Revenues
Alliance Entertainment, a distributor and wholesaler of physical media based in Florida, has released its Q3 fiscal results for the three months ending March 31. The net revenues for the quarter were $227.7 million, representing a decline of 29% compared to the $320.4 million in the same period of 2022. The company attributed this drop to conservative inventory positions by its business-to-business (B2B) customer base and direct to consumer (DTC) sales channels, which were caused by macroeconomic uncertainty.
Despite the revenue decline, Alliance has had some successes. The company signed a multi-year home entertainment licensing agreement with Disney for hundreds of live-action movie and TV titles from Disney’s content libraries. The company extended its partnership with the Criterion Collection to continue distributing its titles in physical media across the US and providing inventory, order management, and financial services. Alliance also completed its SPAC merger with Adara Acquisition Corp., with Adara shareholders taking a 22% stake in the new company and Alliance shareholders retaining a 78% stake.
Alliance Remains Confident in Its Future Performance
The company reports that it has implemented various cost-saving initiatives, including headcount reduction and management salary cuts, to address macroeconomic headwinds caused by increased inflation, interest rates, and retailers’ conservative inventory positions. Alliance is focused on growing through acquisitions, enhancing DTC relationships, and expanding product offerings as a public company with strong cash flow and access to capital markets.
Alliance Chairman Bruce Ogilvie is optimistic about the future, saying, “As a public company, we are now well positioned to pursue future strategic combinations that further diversify our product offerings, and to invest in our operations and proprietary technology.” CEO Jeff Walker added, “We believe that in combination with cost-cutting initiatives, we have put in place a long-term strategy with competitive advantages that will position us for ongoing success.” The company plans to continue expanding and diversifying by adding brands, product categories, and retail partnerships.
Financials
Alliance Entertainment’s net revenues for the nine months ended March 31, 2023, were $911.6 million, compared to $1.152 billion for the same period in 2022. The Adjusted EBITDA loss for the nine months ended March 31, 2023, was $21.0 million, compared to Adjusted EBITDA of $60.6 million for the same period in 2022. The Adjusted EBITDA loss for calendar Q1 (Q3 fiscal) ended March 31, 2023, was ($2.4) million, compared to Adjusted EBITDA of $9.6 million for the same period in 2022. The net loss for the Q3 fiscal period ended March 31, 2023, was $7.8 million, compared to net income of $3.7 million for the same period in 2022.
