HALIFAX – Despite gains in revenue, DHX Media posted a net loss of $2.4 million for its first quarter ended September 30, 2018.
The children's content and brands company said that revenues for Q1 2019 grew 5.5% to $104 million, driven by continued strong performance in WildBrain, higher consumer products royalties derived from its owned IP, and higher production service revenue. This was partially offset by declines in other business segments. The company added that the implementation of the IFRS 15 accounting standard reduced revenue by $2.4 million in the period, but this revenue is expected to be recognized during the remainder of the fiscal year.
Q1 2019 recorded a net loss of $2.4 million compared to net income of $8.1 million in the prior year quarter, due in part due to a larger non-controlling interest in Peanuts due to the Sony transaction and a non-cash write-down in deferred financing charges related to the debt repayment, said the company.
Adjusted EBITDA was $17.3 million, down from $22.8 million year-over-year.
Gross margin was 41% compared with 44% in Q1 2018, with the decline largely attributed to a higher proportion of service revenue in its studios, and increasing share of revenue derived from WildBrain. The company added that these factors were partially offset by higher margins in its television business, as it benefited from improved ratings and using its large library to control content programming costs.
Executive chair and CEO Michael Donovan said that Peanuts continued to perform ahead of plan, contributing to 12% growth in the company’s consumer products-owned business from a year ago, while WildBrain saw double-digit growth in revenues and minutes watched.
“We are pleased with the progress we are making to solidify our operations, upgrade our management team and reduce our leverage," Donovan said in the news release. "We are making the necessary investments for sustainable organic growth. While it is still early days, our pipeline of business on the content and consumer products side is starting to build, laying the foundation for improving results in the quarters and years ahead.”
