Alliance Entertainment reports higher fiscal 2026 revenue and EBITDA

On Thursday, Alliance Entertainment (NASDAQ: AENT ) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

5 million. 3%, driven by stronger margins in physical movies and collectibles. Strategic initiatives include expansion into higher-margin collectibles, development of Alliance Authentic for product authentication, and enhanced fulfillment capabilities using automation and AI. Key partnerships with Paramount and Amazon MGM Studios strengthened Alliance's position in physical media distribution.

4 million. Future growth is expected in physical music, collectibles, and the development of a peer-to-peer marketplace for authenticated products. The company is leveraging AI to improve sales and marketing efficiency, with a new AI-enabled B2B platform to launch in early 2027. Full Transcript OPERATOR Greetings and welcome to Alliance Entertainment's Fiscal Year 2026 Financial Results conference call.

At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to Paul Koontz, a member of Alliance Entertainment's IR team at Redshift.

Paul Koontz, Investor Relations Paul, thank you. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates or other information that might be considered forward-looking. While those forward-looking statements represent the Company's current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's opinions only as of the date of this presentation.

Please keep in mind that the Company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, management will attempt to present some important factors relating to the business that may affect predictions. You should also review the Company's Form 10-K filed today, September 10, 2026, for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors.

During this conference call, management will discuss non-GAAP financial measures, including a discussion of adjusted EBITDA, adjusted net income and adjusted earnings per share. Management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment's core operating performance. Please refer to the investor presentation or today's earnings press release for reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. Your hosts today, Jeff Walker, Chief Executive Officer, and Emmanueko, Chief Financial Officer, will present the results of operations for the fiscal year ended June 30, 2026.

Bruce Ogilvie, Executive Chairman, is also on the line and will participate during the Q&A session. Before I turn the call over, I'd like to congratulate Jeff on being named Billboard's Executive of the Week last week, recognizing Alliance's role in helping drive the continued growth of physical music. With that, Jeff, the call is yours. Jeff Walker, Chief Executive Officer Thank you, Paul, and good afternoon, everyone.

We appreciate you joining us. Fiscal 2026 was a year of acceleration for Alliance, both financially and strategically. We grew the business, expanded margins, strengthened our position across physical entertainment and collectibles, and continued building new capabilities that can drive the next phase of growth. 15 billion.

5 million. 1 million. We saw broad-based growth across physical music, home entertainment, collectibles and fulfillment while continuing to shift the business toward premium products, exclusive content and higher-valued services. Several changes occurring across the entertainment industry are also increasing the value of the distribution and fulfillment infrastructure we have built over the past three decades.

Physical entertainment is becoming more specialized and increasingly centered around ownership, fandom and premium products. Consumers have virtually unlimited digital access to music and entertainment, yet they continue to purchase vinyl records, CDs, 4K Ultra HD titles, steelbooks and other physical products. Those purchases are increasingly about owning something connected to an artist, movie franchise or community that matters to them. The latest industry data shows how strong that demand remains.

S. 6% growth in CD revenue. In home entertainment, DEG reported that consumer spending on 4K Ultra HD increased 12% in calendar 2025 even as the broader physical video market declined. We saw those same trends in our own results for fiscal 2026: vinyl revenue increased 13% to $383 million, CD revenue increased 25% to $156 million, and physical movie revenue increased 22% to $339 million in home entertainment.

That growth also reflects the expanding role Alliance is playing with major studios. Over the last two years we have added significant relationships with Paramount and Amazon MGM Studios. S. and Canada beginning in calendar 2025, and we added Amazon MGM at the beginning of calendar 2026.

These relationships are important not only for the products they bring to our portfolio, but for what they say about Alliance's position in the market. As studios and labels increasingly consolidate and outsource physical media operations, content owners need partners that can coordinate manufacturing, inventory, retail execution, distribution and e-commerce fulfillment efficiently at scale. That is exactly what Alliance has spent more than three decades building.

We support more than 340,000 in-stock SKUs across more than 35,000 retail and e-commerce storefronts with capabilities spanning wholesale distribution, dropship, fulfillment, inventory management and direct-to-consumer execution. That infrastructure is becoming increasingly valuable as more content owners look to scaled specialists to manage these functions. Fiscal 2026 also demonstrated that our growth is becoming broader across categories. 6 million.

Collectibles in particular remain an important area of opportunity and growth. We are increasingly moving towards licensed, premium and differentiated products with higher average selling prices and better margin characteristics. And because we already have relationships with entertainment licensors, major retailers and e-commerce platforms, we can use infrastructure that already exists to expand into adjacent fan and collector categories without having to recreate the distribution platform. Handmade by Robots is one example of that strategy.

Owning the brand gives us greater participation in product development, licensing and economics. Rather than serving solely as the distributor of a third-party product, we see opportunities to apply that approach selectively as we continue developing our collectibles portfolio. Our fulfillment business is another extension of the same infrastructure. As retailers expand online assortments, they increasingly need partners that can efficiently manage large catalogs and fulfill products directly to consumers.

Our breadth of inventory and dropship capabilities allow retailers to offer substantially more selection without carrying every product in their own stores or distribution centers. We also continue investing in automation to increase the scalability of that platform. During fiscal 2026, we ordered 5,000 additional totes for our AutoStore system, bringing total capacity to 57,000 totes. These investments are helping us create higher throughput while maintaining labor efficiency, which is important as we continue growing fulfillment volumes.

We are bringing the same focus on automation to sales and marketing. We implemented HubSpot in January 2026 to give our teams better visibility, automate workflows and strengthen customer engagement. We are also rebuilding our Web Amy B2B platform with AI-enabled capabilities designed to help retail buyers discover products more efficiently, improve purchasing accuracy and make our sales organization more productive. The new Web Amy platform is scheduled to launch in the first quarter of 2027.

Across the organization, we are using AI-assisted tools to reduce manual work and cost, improve decision-making and increase productivity. We are also extending our participation beyond the initial sale of physical product. Following our acquisition of End State Authentic at the beginning of the calendar year, we continue developing NFC-enabled authentication and digital product identity capabilities through End State Authentic and Alliance Authentic. We are already expanding Alliance Authentic beyond music.

We have launched preserved and encapsulated Handmade by Robots and select Funko collectibles on the platform, and we are preparing to bring the same treatment to premium video steelbooks. By combining preservation, authentication and premium presentation, we believe we can transform products fans already value into what Alliance Authentic is designed to deliver: the ultimate collectible. And because these are products we already source, distribute and fulfill, we have an opportunity to extend that model across categories at scale. As we enter fiscal 2027, several growth sectors are coming together.

We intend to build on the exceptional momentum in physical music, capture a full year of Amazon MGM, accelerate our higher-margin collectibles business and owned brands, and expand Alliance Authentic and End State Authentic into additional product categories. We also expect continued growth in fulfillment while using automation and AI—from warehouse operations to sales and marketing to the Web Amy redevelopment—to make the business more productive. Our objective is to pair growth in these higher-value areas with better operating leverage and stronger cash conversion.

We believe the changes taking place across physical entertainment are creating attractive opportunities for scaled, specialized operators. Alliance has spent decades building the infrastructure, relationships and capabilities required to operate in that environment, and fiscal 2026 provided meaningful evidence that those assets are becoming increasingly valuable. With that, I'll turn the call over to Amanda to discuss our fiscal 2026 financial performance in more detail. Amanda, Chief Financial Officer Thanks, Jeff.

I'll walk through our fiscal 2026 financial results beginning with revenue and gross margin, then covering operating expenses, profitability, cash flow, and our balance sheet. 06 billion in fiscal year 2025. 5%. The improvement in gross margin reflected stronger margins in physical movies and collectibles, increased contribution from premium and exclusive content, favorable product mix, returns activity, and lower wholesale freight cost as a percentage of sales.

Gross profit grew faster than revenue during the year, reflecting improvement in the economics of our business as our mix continues to evolve. Turning to operating expenses, selling, general and administrative expenses increased to $66 million from $56 million in fiscal year 2025. The increase primarily reflected higher payroll and employee-related costs to support the larger business, as well as increased consulting and professional service costs associated with strategic initiatives and public company operations. As we enter fiscal year 2027, expense discipline and converting gross profit growth into stronger operating leverage are important priorities.

8 million non-cash write-off of a historical vendor rebate receivable associated with Tastemakers following the counterparty’s cessation of operations. We do not consider this charge representative of our ongoing operating performance. 1 million in fiscal year 2025. 1 million in the prior year.

5 million last year. 37 in fiscal year 2025. Turning to interest expense, we saw substantial benefit from the refinancing of our credit facility. 2%.

This improved our borrowing economics and provides a stronger financing platform as we manage the working capital requirements of our business. 8 million of cash provided by operating activities in fiscal year 2025. The year-over-year change was primarily driven by higher working capital requirements, including increased inventory and receivables. Both balances grew faster than revenue during the year, contributing to the decline in operating cash flow.

In fiscal year 2027, our objective is to convert a greater share of earnings into operating cash flow by moderating working capital growth relative to revenue, improving inventory productivity, and strengthening receivable collections. 4 million a year earlier. As Jeff noted, improving cash conversion is a key priority in fiscal year 2027. Our focus is on disciplined inventory management, receivable collections, and working capital efficiency while continuing to support attractive growth opportunities across the business.

7 million of availability. The facility also provides, subject to certain conditions and lender consent, up to $50 million of additional borrowing capacity, providing further potential financial flexibility as the business grows. During fiscal year 2026, we also repaid $10 million of related-party borrowings, further simplifying our financing structure. Our capital allocation priorities remain straightforward.

First, we will fund working capital required to support attractive organic growth. Second, we will invest selectively in initiatives designed to increase both growth and productivity, including automation and AI, our WebAMI B2B redevelopment, Endstate and Alliance Authentic, and the continued expansion of Handmade by Robots. Third, we are focused on improving cash conversion and balance sheet efficiency, and finally, we will continue to evaluate acquisitions selectively, where the strategic fit and expected return justify the use of capital. With that, I'll turn it back to Jeff.

Jeff Walker, Chief Executive Officer Thank you, Amanda. Before we open the call for questions, I want to close with a few recent examples that bring our strategy to life and explain why I am so excited about where Alliance Entertainment is going. In July, I had the opportunity to spend time with Sir Richard Branson on Necker Island and present him with an Alliance Authentic preserved copy of the Sex Pistols’ Never Mind the Bollocks, Here’s the Sex Pistols because that album is so closely connected to the history of Virgin Records, it was a particularly meaningful moment for myself and Richard.

We were taking an iconic physical record, one with real cultural and personal significance, and showing how preservation, authentication, and digital identity can help protect its condition, provenance and story over time. For someone who has spent his entire career in physical entertainment, it was a remarkable illustration of what Alliance Authentic can become. Later that month, we brought the strategy directly to collectors at San Diego Comic-Con. Alliance Authentic joined Handmade by Robots inside the Lucasfilm Pavilion, where we presented preserved music and licensed collectibles to one of the most engaged fan communities in the world.

We also secured an additional 5,000 units of the previously sold-out Project Hail Mary Amazon Exclusive Limited Edition Collector's Steelbook. These units sold out again on the same day they were made available. Our studio and label relationships give us access to some of the most important products and franchises in entertainment.