Angel Studios (ANGX) Q2 FY26 earnings call: guidance and Q&A

How does Angel Studios manage its marketing spend, especially in relation to theatrical releases, and what drives the ebbs and flows?

Scott Klossner explained that marketing spend is driven by three factors: effective growth, specific cost (multiple of ARPM), and conversion efficiency. If campaigns show great conversion, they increase spend, leading to growth at a good GAAP cost and cash-efficient manner. Neal Harmon added that internal AI-powered tools like 'Ad Factory' and 'Creative Studio' enable scalable and granular marketing, and aided awareness of Angel has doubled from 8% to 14.9% in a year.

“If we're buying into those specific numbers, you may see that number adjust. So we -- if we're seeing great conversion on a campaign, we're going to spend more heavily into that, which will increase our growth, but do so at both a good cost from a GAAP perspective and in a cash-efficient manner.”

asked by Eric Handler · answered by Scott Klossner

What triggers content licensing deals, and what types of deals fall into this category (TVOD, licensing to other streamers)?

Neal Harmon clarified that content licensing includes premium video on demand (PVOD) through partners like Amazon, Apple, and Fandango, where titles can be rented or bought after theatrical release. It also includes licensing content to other streamers, such as the 'David' IP to Netflix (which hit #1) and 'Solo Mio' to Disney/Hulu, expanding audience exposure and falling under the content licensing category.

“There was a recent announcement we're trying to grow the notoriety of the David IP, and we licensed the title to Netflix, which hit #1 on Netflix and which is very, very exciting because it's -- there's tens of millions that are now being exposed to the David intellectual property. That also falls into content licensing.”

asked by Eric Handler · answered by Neal Harmon

Given the year-to-date adjusted EBITDA gains, what are the swing factors in the second half to achieve the annual guidance of no more than $25 million loss?

Scott Klossner explained that the company plans to continue investing in growth as long as marketing efficiency remains high, which will keep adjusted EBITDA slightly negative. He noted that stopping growth would significantly improve adjusted EBITDA, but the focus is on expanding market share. Potential swing factors include unexpected theatrical hits or downstream deals, but the business is largely scientific. Neal Harmon added that the balance sheet supports exceeding consensus expectations.

“But because we are in this growth mode and we continue to spend into that number, we anticipate for the rest of the year to be at a slightly negative adjusted EBITDA number based on the growth expectations we're having. If we don't -- if we were to stop at 2.88 million where we're at today and at the end of the year, we would be in -- from a profitability standpoint, we look far, far better.”

asked by Andrew Crum · answered by Scott Klossner

Investors misunderstand Angel's theatrical strategy, expecting profitability from releases, and question the future of cinema. How does Angel address these points?

Neal Harmon stated that Angel aims for profitability in theatrical releases but doesn't build its business model solely on it, viewing it as a means to grow the Guild. He highlighted Angel's success as the highest average per-title box office for independent films (2023-2025). He argued that cinema is not dying, citing Gen Z and Gen Alpha as the fastest-growing demographics for IMAX and Cinema United, indicating a desire for in-person experiences. Scott Klossner added that theaters are evolving, and people will continue to seek great storytelling in various modes.

“The box office has a couple of other unique things about it. That is, is that we've got a younger generation who's growing up, and they're kind of sick of living on their phones. I mean, there are some people are addicted to their phones, but they are hungry for in-person experiences.”

asked by Thomas Forte · answered by Neal Harmon

What is the significance of transferring 10 million super voting shares to the Angel Mission Trust, and how does it impact public investors?

Neal Harmon explained that the trust aims to maintain Angel's mission beyond the founders' tenure, drawing inspiration from companies like Patagonia, Hershey, and Rolex. He acknowledged trade-offs for public markets but noted that mission-driven companies like Hershey have historically outperformed. The goal is to ensure the company stays true to its original mission, which management believes will lead to great future returns.

“And our goal for this was we loved the Disney Brothers growing up. Our mom read his stories about them. And then we went through a big lawsuit with the Disney Company and just felt like that the company lost its way after the founders were gone.”

asked by Jason Helfstein · answered by Neal Harmon

How has churn improved with the growth of the content library, and what insights can be shared about retention?

Neal Harmon stated that the back catalog strategy provides retention benefits and acquisition opportunities, as Angel can market 'little gems' that previously lacked proper promotion. He confirmed improvements in retention from cohort-to-cohort year-over-year and noted learning the seasonality of retention. Scott Klossner added that while specific numbers aren't disclosed, metrics enhancing retention are improving, including greater watch time and engagement. The biggest predictors of high retention are getting viewers the right first and second titles, an area where Angel has invested in machine learning expertise.

“We are seeing improvements in retention from cohort-to-cohort year-over-year, and we're learning the seasonality of retention, and we're learning -- and we're increasingly learning about the strength of our people who have been with us over a year, and it's very exciting.”

asked by Eric Wold · answered by Neal Harmon

Why did Guild membership grow 18% QoQ while Guild revenue grew only 9% QoQ?

Neal Harmon explained that a significant portion of Q2 Guild membership growth occurred in the latter part of the quarter. Revenue recognition is based on the number of days members are active within the quarter, so growth weighted towards the end of the quarter results in a lag in revenue recognition. Scott Klossner added that annual memberships, which spiked due to the America250 campaign, also contribute to lower ARPM but benefit cash flow and retention.

“So the revenue growth for those -- for all that growth will lag a little bit just based on the timing at which they join during the quarter.”

asked by Ryan Meyers · answered by Neal Harmon