Dolphin Entertainment posts record Q2 revenue of $14.1M, achieving 23% growth year over year and adjusting to positive operating income margin of 4.5%.

SAM - Moderator - (00:02:22)

SAM Greetings and welcome to the Dolphin Entertainment second quarter 2025 earnings call. @ this time, all participants are on a listen only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star 0 on your telephone keypad. And please note that this conference is being recorded. I will now turn the conference over to your host, Mr. James Carbonara of Hayden IR. Sir, the floor is yours.

James Carbonara - Host - (00:03:26)

Thank you, operator. Good afternoon. 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 events. Please refer to cautionary text Forward looking statements contained in the earnings release published today, as well as the most recent SEC filings and reports. During the call today, management will also discuss non GAAP financial measures including adjusted operating income 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 go ahead.

Bill o', Dowd - (00:04:30)

Thanks James and welcome everyone. As usual, I'll start by reviewing some of the key financial and operating highlights from our second quarter and then Myrta will provide a more detailed financial overview before we open it up for Q and A. And I am definitely going to steal Myrta's thunder because starting with the financials. Well, as we just saw in the earnings release, we put out total revenue came in at a second quarter record 14.1 million, which represents an increase of 23% year over year. On the bottom line, we reported adjusted operating income again how we measure ourselves of approximately 628,000 as opposed or as compared, excuse me, to an adjusted operating loss of 137,000 from the same period in 2024. Obviously, we are extremely pleased with those 2 results. I would like to point out also that these results were fueled solely by the strength of our subsidiary portfolio without benefiting from the contributions of ventures or productions such as the impact of 20 documentary Blue Angels. Also, we believe our growth to a 4.5% adjusted operating income margin this quarter is just the beginning. We believe that we will free up significant free cash flow steadily over the next three years for three reasons. In addition, of course, to our subsidiaries continuing to grow. First, next year in 2026, we believe the investment phase and always alpha and affiliate marketing will greatly reduce those results we just talked about come with those investments being made here in the second quarter. Second, our expensive long term leases in both New York and Los Angeles will expire New York by the end of next year 2026 and Los Angeles by the end of the following year 2027, thereby significantly reducing our overhead costs. And third, our commercial bank loans will be repaid in full in September of 2028. These term loans, used to fund our acquisition strategy and complete our marketing supergroup, currently represent approximately 2.2 million per year in principal and interest. We will no longer need to pay that after September of 2028. Thus, even without the revenue and profit growth we expect to experience in the coming quarters and years, we expect to free up significant free cash flow throughout the next three years, which we believe provides us a clear path to improving our margins beyond this core trajectory. We believe our films such as Youngblood and our venture portfolio, including Staple Gin, offer tremendous optionality, especially when comparing potential upside in success against our current market capitalization. More to come on these two topics later in my prepared remarks, but first, let's turn our attention to this morning's news. As you saw in the announcement, we've taken another significant step in expanding our integrated services model with the creation of our Tastemakers Division. I want to spend a few minutes discussing why this matters. Strategically.