Can you bridge the 10x pro forma EBITDA multiple for Captivate, given its 2025 EBITDA of $19.3 million implies a 14.5x multiple?

The 10x multiple is inclusive of the $3.5 million of cost savings expected within the first year post-close and the outlook for Captivate's full year 2026 financial performance. “So the multiple actually also is inclusive of the $3.5 million of cost savings that we expect to achieve within the first year of closing the transaction. And then it is also what's underlying in that multiple is the outlook for the full year of '26.”

What does leverage look like pre-synergies, and how quickly do you expect to delever?

Leverage pre-synergies is 'definitely sub 5x'. Captivate is not capital-intensive ($3 million annual capex) and has favorable working capital, which is expected to generate meaningful free cash flow for debt repayment, leading to significant deleveraging over the next 2-3 years. “So I think in terms of your comments about what leverage looks like presynergies, I will tell you, it's definitely sub 5x. And that our expectation is that we are -- very similar to our business, Captivate is not very capital-intensive.”

What are your expectations for Captivate's revenue and EBITDA growth, especially relative to pre-pandemic levels, and its market penetration?

Return-to-work in Captivate's Class A buildings has normalized to pre-COVID levels. Captivate grew revenue 40% and EBITDA over 50% in the last two years. There's significant growth potential from 11,000 new Class A buildings and 10,000 residential buildings, as well as increasing B2B CPMs and improved utilization by leveraging NCM's sales force. Penetration in major DMAs like Los Angeles is only about 17%. “all of the data that we have is that the return-to-work in the Class A buildings that Captivate focuses on has normalized to pre-COVID levels. And that's verified and supported by the impressions measurements that we're using.”

NCMI

National CineMedia (NCMI) Q2 FY26 earnings call: the analyst Q&A

Earnings call· Jun 2026 (Q2 FY26)· Communication Services· Aug 11, 2026

Source: earnings call transcript

Executive summary

National CineMedia Q2 FY26 — Captivate Acquisition and Strong Local Ad Growth

National CineMedia announced a definitive agreement to acquire Captivate, a leading digital video out-of-home advertising platform, to expand its reach and capabilities. Despite some June monetization headwinds from film mix and the FIFA World Cup, NCM delivered strong Q2 results driven by robust local advertising growth and increased attendance. The acquisition is expected to accelerate revenue growth and margin expansion, with a primary focus on deleveraging post-close.

Highlights

Total revenue increased 12.7% year-over-year to $58.4 million.
Adjusted OIBDA improved 200% year-over-year to $2.1 million.
Local advertising revenue surged 48.4% year-over-year to $9.5 million.
Programmatic revenue grew 45% year-over-year.
Network attendance increased 19% year-over-year.

Concerns

June film slate (R-rated horror) and FIFA World Cup created near-term monetization headwinds and reduced advertising yield.
Mainstream studio releases like Supergirl and Star Wars: The Mandalorian and Grogu underperformed expectations.
The company is pausing its dividend and share repurchase programs post-acquisition.

Product announcements

Product	Type	Timeline	Details
AMC lobby initiative	update	recently

Deals & partnerships

Captivate Acquisition of Captivate, a leading operator of digital video elevator and lobby advertising in North America, to create a combined premium video and digital out-of-home advertising platform. $275 million

Captivate operates over 26,000 digital video screens in more than 11,000 buildings across 170+ DMAs. The combined entity will have 48,000+ digital screens in 185 DMAs. The transaction will be financed through $275 million of new committed term debt, with available cash used to refinance the existing revolver and fund transaction expenses. Unanimous Board approval, subject to customary closing conditions including regulatory approvals.

Risks & headwinds

Reduced advertising yield due to film mix and competitive advertising environment Q2 FY26 (June)

June film slate (R-rated horror) and FIFA World Cup created near-term monetization headwinds and reduced advertising yield.

Mitigation:Continued focus on execution, strategic investments in local sales and programmatic offering, and operational transformation cost savings.

Underperformance of mainstream studio releases Q2 FY26

Mainstream studio releases, including Supergirl and Star Wars: The Mandalorian and Grogu, underperformed compared to expectations.

Mitigation:Diversifying advertising offerings and leveraging a broad film slate, with strong Q3/Q4 titles expected to drive attendance.

Pausing of capital return programs Post-Captivate acquisition close

Pausing dividend and share repurchase programs.

Mitigation:Primary use of free cash flow will be debt repayment to delever the combined company.

What to watch in Q3 FY26

Captivate Acquisition Closing

Second half of 2026

Current Definitive agreement signed, subject to regulatory approvals.

Target Transaction closed.

Why it matters

The closing of this transformative acquisition will significantly alter NCM's business model and financial profile, creating a larger, more diversified advertising platform.

The acquisition received unanimous Board approval but remains subject to customary closing conditions, including applicable regulatory approvals and is expected to close during the second half of 2026.

Find out whether NCMI delivers this. Inve re-checks your case every morning.

Q&A highlights

Why acquire Captivate now, diversifying from core cinema, given the strong box office recovery?

The acquisition is a strategic next step to build a market-defining premium video and digital out-of-home platform, complementing the core business by reaching sought-after audiences in high-attention environments. It adds a second layer of growth, expands advertising relationships, and makes cinema inventory more valuable by reaching consumers throughout the week where they live, work, and play.

“this acquisition represents really the next step in our strategy to build a market-defining premium video and digital out-of-home platform. And it's actually a very highly complementary extension of our core business in that it delivers really a sought-after audience in the same premium type of high-attention environment.”

asked by Michael Hickey · answered by Thomas Lesinski

3 min read 6 chapters

Detailed narrative

Captivate Acquisition: Strategic Rationale and Scale

NCM has entered into a definitive agreement to acquire Captivate for an enterprise value of $275 million, aiming to create a leading premium video and digital out-of-home advertising platform. The acquisition will combine NCM's network with Captivate's 26,000 digital video screens in office and residential buildings, resulting in a combined platform of over 48,000 digital screens across 185 designated market areas.

This merger is designed to reach complementary premium audiences, from NCM's moviegoers to Captivate's affluent professionals, enabling advertisers to target consumers where they work, live, and play.

Financial Profile and Synergies of Captivate

Captivate is highlighted as a strong financial asset, having grown revenue by 40% and adjusted EBITDA by over 50% in the past two years, reaching $64 million in revenue and $19.3 million in adjusted EBITDA in 2025. It operates at a 30% adjusted EBITDA margin with low capital intensity ($3 million annual capex) and strong cash generation, supported by 96% building retention.

The acquisition is expected to strengthen NCM's financial profile, accelerate revenue growth and margin expansion, and generate at least $3.5 million in annual run-rate cost synergies within the first year post-close, with additional commercial upside from cross-selling.

Q2 Financial Performance and Attendance

NCM reported total revenue of $58.4 million, a 12.7% increase year-over-year, and adjusted OIBDA of $2.1 million, up 200% year-over-year, both within guidance. This performance was supported by a 19% year-over-year increase in network attendance, reflecting sustained consumer demand for films.

Despite strong moviegoing, the composition of the June film slate (R-rated horror) and a temporary budget shift towards the FIFA World Cup created monetization headwinds, leading to lower advertising yield than typically associated with this level of audience.

Robust Local and Programmatic Advertising Growth

Local advertising revenue was a standout, increasing 48.4% year-over-year to $9.5 million, driven by investments in the local sales organization, expanded premium inventory, and improved pricing. Average local advertising revenue per attendee grew 24% to $0.07. Programmatic revenue also saw significant growth, up 45% year-over-year, fueled by new buyers and a diversified advertiser base.

NCM added Magnite to its supply-side platform relationships, now covering 90% of the programmatic digital out-of-home market.

Operational Transformation and Cost Savings

The company completed the execution of its operational transformation plan announced earlier in the year. Year-to-date, NCM realized $2.7 million in cost savings and remains on track to achieve approximately $11 million in annualized run-rate cost savings, with up to $6 million expected by the end of 2026.

These efforts have strengthened the operating foundation and created flexibility to invest in high-return growth initiatives, while offsetting some of the lower utilization experienced in June.

Box Office Outlook and Capital Allocation Post-Acquisition

Management remains encouraged by the broader theatrical environment, with July showing a strong start, highlighted by 'The Odyssey's' performance. Anticipated strong fourth-quarter releases, including 'Cat in the Hat' and 'Avengers: Doomsday,' are expected to maintain positive momentum. Following the Captivate acquisition, NCM's primary focus will be on debt repayment, with the dividend and share repurchase programs being paused.

Net leverage at close is expected to be approximately 3.9x, with meaningful free cash flow generation for deleveraging over the next 2-3 years.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.