NCM's Q3 2025 Earnings Call: Contradictions in Revenue Growth, Programmatic Adoption, and Advertiser Sentiment

Date of Call: October 30, 2025

Financials Results

• Revenue: $63.4M, up 2% YOY

Guidance:

• Q4 revenue expected to be $91M–$98M
• Q4 adjusted OIBDA expected to be $30M–$35M
• Fiscal Q4 includes an extra week vs prior year; total attendance expected to outpace industry but drive a lower revenue per attendee
• Management expects a strong holiday slate (Wicked, Avatar Fire & Ash, Zootopia 2) to drive advertiser demand and momentum into year-end and 2026

Business Commentary:

* Advertising Demand Recovery: - NCM's total revenue for the third quarter was $63.4 million, up 2% year-over-year, driven by higher national advertising demand and improved inventory utilization. - The stabilization of advertiser demand, particularly across retail, automotive, wireless, and government categories, contributed to this growth.

• Programmatic and Self-Serve Growth:
• Programmatic revenue grew by 82% sequentially, achieving the strongest Programmatic performance since its launch, while self-serve platform revenue increased by 23% quarter-over-quarter.

• This growth was attributed to expanded business development outreach, CRM-based activation, and the attraction of new clients through Programmatic's ability to reach untapped audiences.

• Box Office and Attendance Trends:

• NCM's quarterly audience was 109 million, down 11% compared to Q3 2024, aligning with the third quarter box office trends.

• The decline in attendance was due to a softer late summer box office and industry-wide decline in attendance, despite strong July releases like Jurassic World Rebirth and Superman.

• Local Sales and Advertiser Base Expansion:

• Local and regional advertising revenue was $9.6 million, down from $11.4 million in the prior year, partly due to lingering softness in healthcare and professional services.

• The company is focused on strengthening local sales talent, new coverage models, and data-driven insights to better connect local advertisers with NCM's engaged audiences.

• Inventory Utilization and Pricing Strategy:

• National revenue per attendee was $0.46, up 20% year-over-year, reflecting the success of optimizing pricing and yield through Programmatic and self-serve capabilities.
• This improvement was due to strong growth in inventory utilization and a slight increase in CPMs, supported by the amended AMC deal.

Sentiment Analysis:

Overall Tone: Positive

• Management reported Q3 revenue of $63.4M (up 2% YOY) and adjusted OIBDA of $10.2M, called it the highest third-quarter monetization in five years, highlighted ~4x YoY Programmatic growth and strong upfront commitments for holiday tentpoles; provided upbeat Q4 revenue and OIBDA guidance ($91M–$98M; $30M–$35M).

Q&A:

• Question from Patrick Sholl (Barrington Research Associates, Inc., Research Division): I just wonder if you could talk a little bit more about the Programmatic and the ad categories that are adopting that. Are you seeing expanded budgets from existing partners or which ad categories are adopting the format?
  Response: Programmatic was ~4x higher YoY, largely bringing new clients across many categories and expanding reach to advertisers who hadn't used cinema before.

• Question from Patrick Sholl (Barrington Research Associates, Inc., Research Division): On the guidance for EBITDA with the revenue growth, is the AMC renewal the main driver of lower conversion to profit growth? What revenue increase is needed to improve EBITDA conversion?
  Response: The key driver cited is an extra fiscal week that increases attendance and dealer/theater access fees, which reduces margin conversion versus prior-year comparisons.

• Question from Eric Wold (Texas Capital Securities, Research Division): Regarding the incremental attendance in the extra week between Christmas and New Year, is the mix of attendance less valuable to advertisers such that high attendance may not translate to as much ad value?
  Response: Post-Christmas attendance rises (families), but advertiser demand and value soften compared with the strong pre-Christmas weeks, so that week is less valuable despite higher attendance.

• Question from Eric Wold (Texas Capital Securities, Research Division): With recent press about franchises versus new IP, are advertisers waiting closer to release dates and using Programmatic to time buys, or are you seeing patterns of caution around new IP?
  Response: No broad avoidance of new IP—advertisers generally buy flights across movies; when an unknown overperforms, incremental buys occur (via Programmatic or scatter).

• Question from Michael Hickey (The Benchmark Company, LLC, Research Division): Looking into 2026, how does NCM fit from a growth perspective across national, local, Programmatic and what are the key catalysts to drive growth and leverage?
  Response: Management expects momentum from Q3/Q4 to carry into 2026 driven by box office growth, expanded Programmatic and self-serve adoption, and an anticipated rebound in local advertising.

• Question from Michael Hickey (The Benchmark Company, LLC, Research Division): Is the decision to reinstate the dividend instead of more aggressive buybacks or M&A? What is your view on capital allocation into 2026?
  Response: Dividend reinstated as a consistent shareholder return; buybacks remain opportunistic (about $18.8M repurchased YTD plus ~100k shares post-quarter) but were paused seasonally due to negative unlevered free cash flow.

• Question from Michael Hickey (The Benchmark Company, LLC, Research Division): How are you thinking about cost structure and potential AI-driven savings or opportunities into 2026?
  Response: Exploring AI for both efficiency and revenue generation (lead generation/CRM); opportunities exist but more details will be provided next quarter.

Contradiction Point 1

Revenue Growth and Economic Uncertainty

It involves differing perspectives on the impact of economic uncertainty and tariffs on revenue growth, which is crucial for investors' expectations and strategic planning.

Is AMC renewal the main driver behind the lower conversion of revenue growth to profit growth in your EBITDA guidance? What level of revenue growth is needed to drive a positive EBITDA trend? - Patrick Sholl(Barrington Research Associates, Inc., Research Division)

2025Q3: Revenue for Q4 is now expected to be in the range of $285 million to $300 million, a year-over-year increase of 10% to 14%. - Ronnie Ng(CFO)

Does Q3 revenue guidance midpoint suggest a YoY increase despite expected declines in box office and attendance due to a tough YoY comparison? Is there a reason to believe this trend won’t continue through year-end with ad demand, a strong film slate, and potential year-end ad budget flushes? - Eric Wold(Texas Capital Securities)

2025Q2: We're seeing a more relaxed amount of budgeting compared to the middle of the tariff debate. The pacing we're seeing in the third quarter is very good compared to last year. We've seen the budgeting stabilize, with no major issues related to tariffs or economic uncertainties impacting the fourth quarter. - Ronnie Ng(CFO)

Contradiction Point 2

Programmatic Adoption and Revenue Impact

It highlights differing viewpoints on the adoption and impact of programmatic advertising on revenue, which is a strategic focus area for the company.

Are you seeing expanded budgets from existing partners or specific ad categories adopting the Programmatic format? - Patrick Sholl(Barrington Research Associates, Inc., Research Division)

2025Q3: Our Programmatic business was approximately 4x higher than it was a year ago. - Thomas Lesinski(CEO)

Is programmatic advertising now gaining traction after contributing just 2% of your business last quarter, given that the broader digital landscape previously indicated 25-30% buyer spend at your Analyst Day? What factors are driving its success now, and what feedback are you receiving from media buyer partners regarding its future utilization? - Michael Joseph Hickey(The Benchmark Company, LLC, Research Division)

2025Q2: Programmatic represents 50% to 60% of an advertiser's open to buy dollars. - Thomas Lesinski(CEO)

Contradiction Point 3

Impact of Tariff Uncertainty on Advertising Categories

It highlights differing perspectives on how tariff uncertainties affect advertising categories, which directly influences NCM's revenue and market strategy.

How did the additional week between Christmas and New Year impact the quarter, considering whether the mix of films and audience composition affected advertising value despite high attendance? - Eric Wold (Texas Capital Securities, Research Division)

2025Q3: There is an extra week in this fiscal quarter versus the prior year. This extra week between essentially Christmas and New Year's will have really high attendance. - Ronnie Ng(CFO)

Has the Q4 pacing strength weakened compared to Q1? - Eric Wold (Texas Capital Securities)

2025Q1: The scatter business is seeing more than double the bookings compared to the same period last year, but there's a need for more clarity about the next two months due to tariff uncertainties. - Ronnie Ng(CFO)

Contradiction Point 4

Advertiser Sentiment and Media Buys

It involves the reported advertiser sentiment and its expected translation into higher media buys, which are critical for revenue growth.

How is the company prioritizing dividends over more aggressive buybacks or M&A in its capital allocation strategy here and into 2026? - Michael Hickey (The Benchmark Company, LLC, Research Division)

2025Q3: Sentiment is really good, and we're finally in a state where there shouldn't be any surprises. We're optimistic about the industry's performance against the box office. - Thomas Lesinski(CEO)

How is current advertiser sentiment, and when will this lead to increased media buys? - Michael Hickey (The Benchmark Company)

2024Q4: We have a great opportunity to get upfront dollars, and we think the upfronts will be very, very strong. - Thomas Lesinski(CEO)