Dolphin Entertainment, Inc. 2026 Q2 Earnings Call

Once again, good afternoon, 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 involve risks and uncertainties that could differ materially from actual results. 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 or loss. The company believes that these will provide helpful information for investors. Reconciliations 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 start by walking through the key highlights, then Mirta will take you through the detailed financials before we open it up for your questions. Revenue for the quarter came in at $14.4 million, up 2.5% year-over-year, and $27.2 million for the first half, up 3.8% compared to last year. Driving that top line was another busy quarter for our agencies. We were front and center at several large events since we last spoke in May, including the Cannes Film Festival the week after our last earnings call, and the Cannes Lions Festival of Creativity in June, which is the preeminent conference of the year for the marketing industries.

Also, 42West had a big presence at the 25th Tribeca Film Festival in June and picked up multiple Emmy nominations last month. The Digital Dept. ran the creator gifting lounge at VidCon Anaheim. Elle Communications' clients were on stage at the NEXUS Global Summit in New York City, and just a few weeks ago, we were all over, really all over San Diego Comic-Con, where I'm pretty sure we saw James Carbonara dressed up as Darth Vader. The thing I really want to spend a minute on is something new, Graviteur Studios. We announced this after we last spoke in May and then announced it, excuse me, in June, timed to the start of the Cannes Lions Festival I just mentioned. We built Graviteur with our partners at Kynetic Media Ventures, which is run by David Freeman, someone Dolphin and myself have been doing business with for over 15 years.

David ran the digital division of CAA since its inception. When he left at the start of the year to start Kinetic, we developed together the idea of a production studio for leading creators and influencers, many of whom he signed at CAA. Both Kinetic and Dolphin believe that audiences will follow creators across platforms, and we certainly witnessed that with the box office success of 2 movies directed by creators this spring. In fact, the name of our studio is a portmanteau of gravity and auteur, signaling that these creators are auteurs in their own right and that they wield gravitational pull on their audiences who follow them. We believe we can help produce, distribute, and market creator-led content across streaming platforms, television networks, and theatrical releases. It's a natural extension of everything we've learned running a marketing consortium sitting inside pop culture for years.

We know these audiences, we know these creators, and now we have a vehicle to actually build and own something with them. We're early days here, but we think this could become a meaningful part of the story over the next few years, and we'll keep you posted as it develops. Now let's talk about the bottom line because the numbers this quarter need just a couple of notes of context. 2 things to note, in fact. One, we had about $360,000 of one-time retention bonuses land in the second quarter across a few of our subsidiaries. Two, legal and professional fees related to our litigation ran about another $360,000 in the quarter. We believe this number will come down to normal levels in Q3 and going forward, and the underlying business held up just fine anyway.

We expect a real step up in profitability in the third quarter as these 2 items roll off. Here's how we think about the bigger picture. The core engine of this business is already pointed toward meaningfully better free cash flow, independent of anything new we do. Our bank debt matures in just over 2 years, actually 2 years from next month, freeing up almost $2.2 million a year in principal and interest payments. Our large New York and Los Angeles leases roll off in the back half of next year, which we believe will lead to savings of another roughly $1 million a year. With approximately $127 million of NOLs on the balance sheet, almost all of those savings will flow straight to the bottom line. That's the base case, and it doesn't require anything new to go right, just running the businesses we already have.

Finally, with insiders holding a substantial stake in the company, management remains deeply aligned with shareholders in the pursuit of long-term value. In fact, under the 10b5-1 buying plan currently in place for myself, I expect to own over 5% of the DLPN common stock in the next week or 2. What DealMaker and Graviteur Studios represent is optionality on top of that. With respect to DealMaker, our strategic partnership began in February, and we used the rest of Q1 and Q2 to put together our respective teams and processes and to evaluate a pipeline of potential deals. We believe we're getting closer to having our first deal and to creating a steady flow of deals coming to market after that. We both like a couple of the names we're evaluating, and we still expect to have our first deal in the market before the end of the year.

Between that, Graviteur, and our other ventures, we feel we have got real upside sitting on top of a business that is already heading towards strong free cash flow on its own. I will turn the call over to Mirta Sanchez Negrini, our Chief Financial Officer, to walk through the numbers in more detail.

Mirta? Thank you, Bill, and good afternoon, everyone.

I will now review our 2026 second quarter financial results. Total revenue for the three months ended June 30, 2026 was $14.4 million, an increase of 2.5% from $14.1 million in the same quarter of prior year. For the six months ended June 30, 2026, total revenue was $27.2 million, an increase of 3.8% from $26.3 million in the same period in prior year. Our operating loss was $1 million for the second quarter of 2026, compared to an operating loss of approximately $100,000 for the same period in 2025. Operating expenses for Q2 2026 were $15.5 million. As Bill noted, this included approximately $400,000 of non-recurring retention bonuses for certain employees, which will not be included in Q3 of 2026 or Q2 of next year.

In addition, we had approximately $400,000 of legal and professional fees related to our litigation that we are working to reduce going forward. This compares to operating expenses of $14.1 million in Q2 of 2025. Net loss for Q2 of 2026 was $1.6 million, compared to a net loss of $1.4 million in Q2 2025. Basic and diluted loss per share for Q2 2026 was $0.13, based on approximately 12.8 million weighted average shares outstanding, compared to basic and diluted loss per share of $0.13 in Q2 2025, based on approximately 11.2 million weighted average shares outstanding. Turning to adjusted EBITDA. After adding back non-cash and other one-time items, our adjusted EBITDA for the second quarter of 2026 was approximately $243,000, compared to approximately $628,000 in the second quarter of 2025.

As Bill discussed, the year-over-year change is driven almost entirely by the retention bonus times and the elevated litigation costs. For the six months ended June 30, 2026, adjusted EBITDA loss was approximately $224,000, compared to a loss of approximately $82,000 in the prior year period, reflecting the same factors. This quarter, we have introduced adjusted earnings per share. Adjusted EBITDA basic and diluted earnings per share for Q2 2026 was $0.02, based on approximately 12.8 million weighted average shares outstanding, compared to $0.06 basic earnings per share for Q2 2025, based on approximately 11.2 million weighted average shares outstanding, and $0.04 fully diluted earnings per share for Q2 2025, based on 17.4 million weighted average shares outstanding. We think this gives you another way to track our progress on a per share basis, and we plan to continue reporting it alongside adjusted EBITDA for future quarters.

Our cash and cash equivalents as of June 30, 2026, were $7.7 million, compared to $8.8 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 poll for questions?