Dolphin Entertainment's Q3 2025 Earnings Call: Clashing Visions on Organic Growth, Seasonality, Government Impacts, and 42West Performance

Date of Call: November 12, 2025

Financials Results

• Revenue: $14.8M, up 16.7% YOY from $12.7M in Q3 2024
• EPS: Diluted loss of $0.03 per share in Q3 2025 (based on 11,770,195 shares) vs. net loss of $0.80 per share in Q3 2024 (based on 10,930,286 shares)
• Operating Margin: GAAP operating income $308,296 (~2.1% margin) vs. operating loss of $8.2M in Q3 2024; adjusted operating income ~$1.0M (6.9% of revenue), up from 4.5% in Q2

Guidance:

• Expectation of continued momentum and a strong Q4 based on subsidiary performance and festival season for 42West.
• Plan to announce a distribution partner and release date for the film Youngblood before year-end (management conservative on timing).
• Anticipated cash/cost improvements over next 1–3 years from lease expirations and payoff of bank loan, freeing significant cash and supporting margin expansion.
• Continued focus on investing selectively while sustaining adjusted operating income growth.

Business Commentary:

• **Revenue Growth and Cross-Selling:
• Dolphin Entertainment reported record revenue of $14.8 million for Q3 2025, up 16.7% year-over-year.

• This growth was driven by the cross-selling model of the Super Group, with healthy organic growth across all subsidiaries.

  

• **Operating Income and Amortization:

• The company's operating income turned positive with $300,000 in Q3 despite almost $600,000 of noncash amortization expenses related to historical acquisitions.

• The positive operating income reflects the expansion of margins, with adjusted operating income of more than $1 million or 6.9% of revenue.

• **Financial Simplification and Strong Balance Sheet:

• Dolphin Entertainment simplified its financial statements by eliminating warrants, puts, contingent consideration, and nearly all fair-valued convertible notes.

• The simplified P&L and reduced below-the-line expenses show a stronger balance sheet, with only interest expense remaining.

• **Ventures and Productions Expansion:

• The company continues to advance its ventures and productions portfolio, with a notable focus on its anticipated feature film, Youngblood.

• Youngblood premiered at the Toronto International Film Festival and is anticipated to announce its distribution partner soon.

• **Investment and Growth Strategy:

• The company is investing in growth while achieving adjusted operating income, with strategic investments like TDD's affiliate program.
• The balance between investing and managing growth is supported by upcoming cash catalysts, such as leases expiring and debt payoff.

Sentiment Analysis:

Overall Tone: Positive

• Management called Q3 a "record-setting quarter" with revenue rising 16.7% YOY to $14.8M and operating income turning positive; adjusted operating income rose to ~$1.0M (6.9% of revenue, up from 4.5% in Q2). CEO cited continued momentum, buyback activity and strong subsidiary performance.

Q&A:

• Question from Allen Klee (Maxim Group LLC, Research Division): This is the best quarter I've seen since covering your stock, considering everything. So congratulations. Starting with the organic growth of 16.7%, could -- how do you think about organic growth kind of what were the key drivers of that? And how you think about that maybe going forward?
  Response: Growth is organic and broad-based across the seven agencies, driven primarily by cross-selling among subsidiaries; momentum should continue into Q4 with adjusted operating income exceeding $1M as evidence of scalability.

• Question from Allen Klee (Maxim Group LLC, Research Division): That's great. For 42West, well, overall, I think 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 like your clients win, you could get paid more. So how does it look for the events that you're involved in?
  Response: 42West had very strong September and October performance and is expected to carry that momentum into a seasonally strong Q4.

• Question from Allen Klee (Maxim Group LLC, Research Division): And with The Door, you highlighted Jesse Gerstein rejoining and disrupt agency. Could you comment a little on kind of what those -- both those things represent?
  Response: The Door is growing via strategic 'acqui-hires' (e.g., Jesse Gerstein returning with a book of restaurant clients); the practice is diversified and revenue is significantly up year-over-year.

• Question from Allen Klee (Maxim Group LLC, Research Division): With Shore Fire Media, I don't know if I've 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 -- how does that help you? And then how do you just think about how they're performing?
  Response: Shore Fire's broad, high-profile client base drives cross-agency collaborations (example: Springsteen film with 42West), has delivered numerous industry recognitions and materially contributes to group growth.

• Question from Allen Klee (Maxim Group LLC, Research Division): 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.
  Response: Yes — Youngblood premiered well at TIFF, the LA Kings partnership is unique, additional footage completed, and management expects to announce a distributor and release timing before year-end (likely sooner).

• Question from Allen Klee (Maxim Group LLC, Research Division): That's great. And then just kind of thinking about how you're thinking strategically, you're doing great, but it's a balance between dropping results to the bottom line and investing also at the same time for growth. So I was wondering kind of how you're thinking about that of investing while you're also growing. And also, in the fourth quarter, just the government shutdown and some impacts on travel, should we think that that might impact any of your businesses?
  Response: They've been largely unaffected by the shutdown; management says they've struck the right balance—continuing targeted investments while delivering adjusted operating income—and expect future cash upside from lease expirations and loan payoff to further improve margins.

• Question from Allen Klee (Maxim Group LLC, Research Division): No, I would agree. In my entire career, the only company I've ever known that the CEO has entered one of these plans or buying the stock. I've had plenty for selling. But no, it's quite -- and is it -- is the term of it like a certain amount like each time? Or is it -- I don't know if we need to know.
  Response: The CEO's 10b5-1 buy plan is set at $5,000 per week, extended through December 2026 (≈$260k/year; >$400k over the plan term) as a signal of confidence.

Contradiction Point 1

Organic Growth and Investment Strategy

It involves expectations regarding organic growth and the company's investment strategy, which are crucial for understanding Dolphin Entertainment's financial performance and future prospects.

How are you balancing investment with growth? Could the government shutdown and travel disruptions impact your businesses in Q4? - Allen Klee(Maxim Group LLC)

2025Q3: Dolphin has been unaffected by government shutdowns and tariffs, prioritizing growth while investing in strategic initiatives. The company is expected to achieve adjusted operating income for the first time without any ventures or films involved in 2025. Future cash savings from lease and loan expirations are expected to significantly impact the bottom line. - William O'Dowd(CEO)

How are you doing with your investments in business growth? - Allen Klee(Maxim Group LLC)

2025Q2: Adjusted operating income shows our performance, which is over $600,000, despite investments in Always Alpha and Affiliate Marketing. Investments will slow down after the next 6 months. These investments are highly strategic, opening up new opportunities in consumer products and events. - William O'Dowd(CEO)

Contradiction Point 2

Seasonality and Revenue Trends

It involves expectations regarding seasonality and revenue trends, which are critical for understanding Dolphin Entertainment's financial performance and investor expectations.

What were the key drivers of the 16.7% organic growth, and how do you expect it to trend going forward? - Allen Klee(Maxim Group LLC)

2025Q3: This is the best quarter I've seen since covering your stock, considering everything. So congratulations. Starting with the organic growth of 16.7%, could -- how do you think about organic growth kind of what were the key drivers of that? And how you think about that maybe going forward? - Allen Klee(Maxim Group LLC)

Is there typical seasonality in your business? - Allen Klee(Maxim Group LLC)

2025Q2: Q1 is our hardest quarter, Q4 is our strongest. 42West and The Digital Department have seasonality. Q1 is slowest for The Digital Department. Q3 and Q2 tend to mirror each other, with the core business having a slightly better second half. - William O'Dowd(CEO)

Contradiction Point 3

Organic Growth and Strategic Investments

It involves the company's strategy for achieving organic growth and its approach to investing for future growth, which are critical for investor expectations and financial planning.

What were the key drivers of the 16.7% organic growth, and how do you expect this trend to evolve going forward? - Allen Klee (Maxim Group LLC, Research Division)

2025Q3: The growth is organic and driven by cross-selling within the Super Group, highlighting the collective strength of the agencies. Each agency is performing well, contributing to this growth. Dolphin's focus remains on building a better mousetrap, uplisting to NASDAQ, and further utilizing the cross-selling synergy among the subsidiaries. - William O'Dowd(CEO)

What are your top priorities for 2025? - Allen Klee (Maxim Group)

2025Q1: The top priorities are growing Always Alpha and the affiliate marketing division of TDD. Also significant is having Youngblood ready and increasing the frequency of film productions. - Bill O’Dowd(CEO)

Contradiction Point 4

Impact of Government Shutdowns and Tariffs

It involves the company's exposure to and potential impacts of government shutdowns and tariffs, which can affect operational and financial performance.

How are you balancing investment for growth with maintaining profitability? Will the government shutdown and travel impacts affect your Q4 results? - Allen Klee (Maxim Group LLC, Research Division)

2025Q3: Dolphin has been unaffected by government shutdowns and tariffs, prioritizing growth while investing in strategic initiatives. - William O'Dowd(CEO)

Can you comment on the financial outlook for the year? - Allen Klee (Maxim Group)

2025Q1: The company expects a strong year despite the initial impact. - Bill O’Dowd(CEO)

Contradiction Point 5

Performance of 42West

It highlights a difference in the expected performance of 42West, with one response suggesting a strong end of summer and fall while the other indicates a stronger fourth quarter.

Could you comment on how the fall festivals you participate in impact your Q4 revenue? - Allen Klee (Maxim Group LLC, Research Division)

2025Q3: 42West is performing well, with a strong lineup of films for the fall season. The company has experienced a very strong end of summer and fall, which is expected to carry into Q4, a typically strong quarter for them. - William O'Dowd(CEO)

Can you discuss Q4 growth investments and their return expectations? - Allen Klee (Maxim Group)

2024Q4: The 4th quarter will be a seasonally strong quarter, and 42West is set to have a very strong 4th quarter. - Bill O’Dowd(CEO)