[Management View]
Dolphin Entertainment reported a record total revenue of $14.1 million for the fiscal second quarter ended June 30, 2025, reflecting a 23% year-over-year growth. Adjusted operating income was approximately $628,000, reversing an adjusted operating loss of $137,000 from the same period in 2024. The company emphasized the strength of its subsidiary portfolio and strategic investments in new business lines, such as the Tastemakers division, which integrates talent management and lifestyle PR.

[Outlook]
Management provided performance guidance indicating that investments in Always Alpha and affiliate marketing are expected to deliver returns starting in 2026. Lease expirations in New York and Los Angeles by 2026 and 2027, respectively, and the repayment of commercial bank loans by September 2028, are anticipated to free up over $3.25 million in annual cash flow. The upcoming Youngblood film premiere at the Toronto Film Festival is expected to be a catalyst for revenue and strategic visibility.

[Financial Performance]
Total revenue for the quarter was $14.1 million, a 23% increase from $11.4 million in the same period of the prior year. Adjusted operating income was $628,000, compared to an adjusted operating loss of $137,000 in Q2 2024. Net loss improved to $1.4 million from $1.6 million in Q2 2024. Operating expenses increased to $14.1 million from $12.6 million in Q2 2024.

[Q&A Highlights]
Question 1: Hi. Congrats on the strong results. For revenue, where would you say the upside came in for your revenue in the quarter?
Answer: Thanks, Allen. The revenue growth was broad across all our operating subsidiaries. Each of our seven marketing companies showed steady growth, with June being stronger than April. Special projects and our event company had a particularly good quarter. The Tastemakers division also contributed to the broad revenue growth.

Question 2: And I know that one of your big investment focuses is Always Alpha and your affiliated marketing. Can you talk a little about how you're making out in the investments and to grow those businesses?
Answer: Happy to. Adjusted operating income was over $600,000, despite investments in women's sports and affiliate marketing. We expect these investments to pay off in 2026 and beyond. We brought in senior talent managers for women's basketball and Olympic athletes, which will start generating revenue in Q4. Affiliate marketing within the digital department is also expected to build a nice return.

Question 3: Switching to Youngblood, remind us can you give us a sense of how much you think it's gonna cost to produce? And does that just remind me the accounting, does that show up as, like, capitalized cost that you on the cash flow statement, not on the income statement? And then for how that works, and then when you recognize that or when it's sold or just if you could go through that. Thank you.
Answer: Sure. The film budget is between $5 million and $15 million. We produced the movie without putting up any capital, financed through Canadian content credits and a bank loan secured by the film's copyright. If we sell it for $2 to $3 million, Dolphin could see financial results in the range of half a million to a million dollars.

Question 4: Interesting. Thank you. So then you talked about earlier that different legacy things that could go away, and you could benefit from that. Could you just go through some of the numbers for them again? You mentioned some of it, but is the only way you could...
Answer: Sure. Lease expirations in New York and Los Angeles will save real money, potentially half a million a year in New York and more in Los Angeles. Commercial bank loans will be repaid by September 2028, freeing up $2.2 million annually. Combined, these savings could free up over $3.25 million in cash flow.

Question 5: Yeah. No. This is great. So can you just remind us if there's any typical seasonality in your business?
Answer: Typically, Q1 is our hardest quarter, and Q4 is our strongest, driven by awards season and holiday-related influencer marketing. The second half of the year is generally stronger than the first. Q3 and Q2 tend to mirror each other somewhat.

Question 6: And my last question would be just related to your IMAX partnership. You think it's possible that there might be something in 2026 that could be announced. For, you know, related to that?
Answer: We're actively negotiating a follow-up to Blue Angels with IMAX and multiple parties. We hope to announce a new project soon. Youngblood's success at the Toronto Film Festival could lead to further opportunities.

[Sentiment Analysis]
The tone of the analysts was positive and congratulatory, reflecting satisfaction with the company's strong financial performance and strategic initiatives. Management's tone was optimistic and confident, emphasizing future growth and value creation.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|---------------------------|---------------|---------------|--------------|
| Total Revenue | $14.1 million | $11.4 million | +23% |
| Adjusted Operating Income | $628,000 | -$137,000 | N/A |
| Net Loss | $1.4 million | $1.6 million | Improvement |
| Operating Expenses | $14.1 million | $12.6 million | Increase |

[Risks and Concerns]
- Continued investment in new business lines and sports marketing initiatives may impact near-term margins.
- Lease expirations and debt repayments are contingent on future cash flow improvements.
- Success of film ventures like Youngblood is uncertain and dependent on market reception and sales.

[Final Takeaway]
Dolphin Entertainment's Q2 2025 earnings call highlighted record revenue growth and positive adjusted operating income, driven by the strength of its subsidiary portfolio and strategic investments. The company is poised for future cash flow improvements through lease expirations and debt repayments, while the upcoming Youngblood film premiere at the Toronto Film Festival represents a potential catalyst for revenue and visibility. Management's confidence in continuous value creation is underscored by the CEO's incremental insider purchasing. Investors should monitor the company's progress in executing its strategic initiatives and achieving sustainable growth.