Earnings Call Transcript - CNVS Q4 2025

Operator, Operator

Good day, everyone. Welcome to Cineverse's Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. My name is Emily, and I will be your operator today. Please note that this call is being recorded. I would now like to turn the call over to your host, Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser for Cineverse. Please go ahead.

Gary S. Loffredo, Chief Legal Officer

Good morning, everyone. Thank you for joining us for Cineverse's Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. The press release announcing Cineverse's results for the fiscal fourth quarter and year ended March 31, 2025 is available at the Investors section of the company's website. A replay of this broadcast will also be made available at Cineverse's website after the conclusion of this call. Before we begin, I would like to point out that certain statements made on today's call may contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions. The company's periodic reports filed with the SEC describe potential risks and uncertainties that could cause the company's business and financial results to differ materially from these forward-looking statements. All the information presented on this call is as of today, June 27, 2025, and Cineverse does not assume any obligation to update any of these forward-looking statements, except as required by law. In addition, certain financial information presented in this call represent non-GAAP financial measures and we encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. I am Gary Loffredo, Chief Legal Officer, Secretary and Senior Adviser at Cineverse. With me today are Chris McGurk, Chairman and CEO; Erick Opeka, President and Chief Strategy Officer; Tony Huidor, President of Technology and Chief Product Officer; Mark Lindsey, Chief Financial Officer; and Mark Torres, Chief People Officer, all of whom will be available for questions following the prepared remarks. On today's call, Chris will briefly discuss our fourth quarter and fiscal year 2025 financial highlights, the latest operational developments, outlook and long-term growth strategy. Mark will follow with a review of our financial results for the fourth quarter and fiscal year. Erick will provide some details on our streaming business results and operating initiatives. And Tony will provide updates on our technology initiatives before opening the floor for questions. As the market opens at 9:30 A.M. this morning, we would like to conclude our comments and Q&A by that time. I will now turn the call over to Chris McGurk to begin.

Christopher J. McGurk, Chairman and CEO

Thanks, Gary, and thanks, everyone, for joining us today. As you recall, in February, we reported our third quarter results. That quarter was the best in the company's history with over $41 million in total revenues, an increase of $27.5 million from the prior year quarter. And we also recorded net income of $7.2 million, a $9.9 million increase from the prior year. And we've continued that very strong financial and business momentum in our fourth fiscal quarter, generating impressive growth in all our financial performance measures and beating consensus analyst guidance on all key metrics. In the quarter, we generated total revenue of $15.6 million, a $5.7 million, or 58%, increase over the prior year. Net income was $858,000, a $15.5 million increase over the prior year. Adjusted EBITDA was $4 million, a $2.4 million, or 158%, increase over the prior year quarter. Total direct operating margin was 55%, well above our stated margin target of 45% to 50%. Our full year fiscal 2025 results were equally impressive. Total full year revenues increased by 59% to $78.2 million. Total full year net income was $3.8 million, and total full year adjusted EBITDA was $13.9 million, a $9.5 million, or 216%, increase over last year. These strong results were driven by growth across all the company's key lines of business particularly streaming, digital and podcast revenue. But most importantly, by the unprecedented success of Terrifier 3, the most successful unrated film release of all time. Our goal now is to build a high-growth, high-profit, low-risk year-round wide theatrical releasing business by following the same acquisition releasing and marketing blueprint that works so well on the Terrifier movies and astonish the entertainment industry. I will speak more about that in just a minute, and Erick will go into much more detail about all the operating successes and new initiatives we've been pursuing across our other lines of business. But first, let me speak about an important reorganization we just implemented. First, to rapidly capture the growth and financial upside of our most important underlying assets, our proprietary streaming content management and AI technology, we have set up our technology business as a separate business group and put Tony Huidor in charge as President and Chief Product Officer. This move was designed to focus all of Tony's considerable talent and experience in technology and business development on immediately turbocharging this business, with a focus on Matchpoint licensing and the development of new AI-based products such as cineSearch, our industry-leading AI search tool that we developed with Google. Tony is not only tasked with keeping the company at the forefront of industry AI innovation, but also ensuring that Cineverse becomes the first truly AI-forward entertainment company in every operating process across every function of the company. In a few minutes, Tony will speak about all these key technology initiatives and the strong progress we're making in the marketplace with our Matchpoint and AI products. Second, we also reorganized our entertainment content business to create a dedicated Theatrical Motion Pictures division. Yolanda Macias is now the company's Chief Motion Pictures Officer. In this role, Yolanda will focus 100% of her considerable experience and expertise to leverage the success of Terrifier 2 and 3 by building and releasing a wide release slate of theatrical movies that are well poised to successfully follow the Terrifier blueprint. We believe this business, given our unique new media assets and releasing formula, can be a major potential source of ongoing value creation for the company. We've already made great progress in this area based on the high potential slate of franchise IP properties we have secured for our release lineup over the remainder of this fiscal year, which I will describe in more detail now. Our next franchise release is The Toxic Avenger, a contemporary rendering of the classic trauma horror comedy. The film was produced by major studio Legendary Films, which counts the tremendously successful Dune movies and Godzilla versus Kong among its recent megahits. The film was directed by Macon Blair and stars Peter Dinklage, Kevin Bacon and Elijah Wood. We have domestic rights for the film in perpetuity, and we'll be releasing it on August 29. Like Terrifier 3, our all-in cash investment in this film for acquisition and release marketing will be less than $5 million. However, it's important to note that this film will generate approximately the same level of financial return to Cineverse as Terrifier 3 if it performs at only half of Terrifier's box office level, given the parameters of the economic field we made on the film. Additionally, our lifetime box office breakeven for the film is well below $10 million, underscoring again the favorable risk/reward profile of this property. And the film is very well made, directed and acted, and currently has a 92% positive score on review aggregator Rotten Tomatoes. Like Terrifier 2 and 3, it will be an unrated release. After that, on December 12, we will be releasing Silent Night, Deadly Night, the reinterpretation of the classic controversial Christmas horror film that was banned from theaters years ago. We are releasing the film domestically and have partnered with international entertainment powerhouse STUDIOCANAL, which is releasing it overseas. The film has finished principal photography and is currently in post production. Total acquisition and releasing investment with this film will also be below $5 million. Next up will be Return to Silent Hill, the latest film installment of the enormously successful and popular video game horror franchise, which will be released on January 23, 2026. This film will also carry a total investment of less than $5 million. So we will have at least three wide release films in this current fiscal year, all with investments of less than $5 million, all based on very well-known franchise IP, all with very specific and reachable fan bases, and all perfectly poised to leverage the unique set of assets we have built at Cineverse. Our streaming channel, our podcast network, our social media platforms, our AI-based research tools, our targeted ad sales technology and to use them all to follow the blueprint that was so successful in powering the performance of the Terrifier movies. Expect more wide release film announcements in the next few months as we build our slate for fiscal year 2026. In addition, we continue to generate significant new advertising businesses by other studios using our ecosystem to market their theatrical releases as well. Yolanda will give a detailed update on all this on our next earnings call in August. And with that, I'll turn things over to Mark for a financial update. Mark?

Gary S. Loffredo, Chief Legal Officer

Operator, I don't think we can hear Mark.

Operator, Operator

Mark, we are unable to hear you. If I could please ask you to check that you are not on mute.

Mark Wayne Lindsey, Chief Financial Officer

Can you hear me?

Gary S. Loffredo, Chief Legal Officer

Yes.

Mark Wayne Lindsey, Chief Financial Officer

Thank you, Chris. As Chris noted, last quarter was a record quarter for us, and we have been able to follow that up with a very strong quarter, which is seasonally our toughest quarter in our fiscal year. We are able to beat analyst consensus estimates for revenue, net income, diluted EPS and adjusted EBITDA for both the fourth quarter and the full year. For the quarter, we reported revenues of $15.6 million compared to $9.9 million for the same quarter last year, or a 58% increase. Net income and adjusted EBITDA were $0.9 million and $4 million, respectively, for the quarter, reflecting significant improvements over the prior year quarter. Again, very strong results for a seasonally low quarter, especially considering the depressed direct and programmatic advertising environment in the first quarter, which is a direct result of companies pulling back on their discretionary advertising spend due to the ever-changing tariff environment. Our direct operating margin for the quarter was 55%, which is above our previously issued guidance of 45% to 50%. Our improved operating margin is a direct result of our cost optimization initiatives implemented over the last 12 to 18 months, as well as our ability to grow revenues while controlling variable costs. We expect our direct operating margin in future quarters to remain in the 45% to 50% range. SG&A expenses for the quarter were $5.4 million, a decrease of $1.4 million compared to the prior year quarter and 35% of revenues, a material improvement from 69% in the prior year. As I stated last quarter, we expect to continue to see our SG&A expenses decline as a percentage of revenues as we continue to focus on top line revenue growth while maintaining an efficient cost structure, bolstered by our ability to offshore operations to our Cineverse India location. We had $13.9 million in cash and cash equivalents on our balance sheet as of March 31, 2025, with $0 outstanding on our $12.5 million working capital facility. In addition, as of March 31, 2025, we have a working capital surplus of $3.6 million, continuing to reflect our improving financial position over the last 12 to 18 months. For the year, our net cash provided by operations was $18.5 million, a $29.1 million improvement over the prior year. Finally, with a strong fourth quarter and record revenue for the full year, and a $40 million valuation for our content library portfolio, which is almost entirely off balance sheet, we continue to believe that our stock price is undervalued with significant upside, based on yesterday's closing stock price of $4.18 per share. With that, I'll turn the floor over to Erick to discuss our operating and strategic growth initiatives.

Erick Opeka, President and Chief Strategy Officer

Thanks, Mark. I'd like to spend a few minutes reviewing our platform businesses and growth initiatives across distribution, streaming, advertising, and podcasting. So let's start with our distribution and content licensing businesses. This past quarter continued to be a solid one for Terrifier 3 on the ancillary side. Transactional and home entertainment revenues continued to exceed expectations. And during the quarter, we closed several windows of licensing deals with both Amazon and Peacock for the film. Compellingly, we were able to preserve a window on our own services while maintaining market value licenses on third parties. This concurrent windowing approach not only maximizes revenue, but enables us to continue to grow our streaming services as well. Since the Home Premiere of T3, Screambox subscribers have grown 31%, while preserving valuable third-party license revenues in the mid-7 figure range over the next 18 months. We also expanded our footprint with major fast channel launches on Google TV Freeplay, international rollout of our flagship brands, including Dog Whisperer, and broader domestic distribution as well. As noted in the earnings release, we closed several traditional content licensing deals across genres and saw a meaningful uptick in our catalog revenues as well. Our team also announced new podcast licensing agreements and content expansions with the Cineverse Podcast Network continuing to grow rapidly, thanks to a more diverse content slate and increased advertiser demand. We now have 62 current shows and 4 new original series in development slated for release in the current fiscal year. Podcast revenues were up 57% over the prior year due to the rapid expansion of our slate and the impact of our ad sales strategy. We think we can maintain this robust rate of growth as we scale up the current series and ad efforts. On the comedy front, we're making major progress with our partner WITZ as recently announced, the team behind the Stand Comedy Club in New York City and other major ventures in comedy. We're seeing strong early interest from brands and agencies, and we'll be announcing our inaugural content lineup this mid-summer. We currently have a dozen new shows in the works and we'll be announcing the slate later this summer. Comedy remains the largest and most monetizable podcast category in the U.S., and it represents over 23% of all podcasts listening, according to Edison. We're also exploring other emerging segments like health, wellness, and family, where brand demand is accelerating, but there's a real lack of scale in the market. Let's discuss our streaming channels business. Our platforms delivered strong engagement in Q4 with over 3.2 billion minutes streamed across our owned and operated services, up 45% over the prior year. Subscription revenues grew meaningfully, and we saw a 4% year-over-year increase in subscribers, bringing our total across the portfolio to approximately 1.42 million. This was fueled by continued momentum from Screambox, which now ranks among the top 4 services in North America, and from our new Cineverse channel on Amazon, which has shown significant subscriber growth and has been growing at 30% per month since launch. We plan on expanding this platform beyond Amazon in the coming quarters and believe it will become one of our top streaming services over time, especially with access to the high caliber of wide and specialty theatrical programming that we're now releasing. In addition to Cineverse, we now have 4 flagship services that have scale potential: Screambox, Dove, Fandor, and Midnight Pulp. These platforms make up the bulk of our subscriber base, and we're going to focus our investments in growth on these 4 properties in the short to midterm. Our genre-specific and movie-centric model not only supports subscription growth, but it acts as a flywheel that supports our theatrical and ancillary businesses as well. On the FAST front, while we continue to grow viewership as noted, we've seen a glut of supply with huge growth in available competitive channels from studios outstripping the audience growth in the market. This factor has put some pressure on CPMs and fill rates for open market programmatic in the short to midterm, combined with the macro environment, as Mark had described. We think over the long term, the market will absorb this oversupply, but as we support and maintain this channel base during this period, we're focusing our efforts in the ad space more on direct sales, our platform C360, and on private marketplace deals. And that's been a good turn for us. On the direct advertising front, Cineverse continues to become a must-buy destination for entertainment marketers. We now work with 4 of the top 5 movie studios and all major indies on wide release campaigns and have added several new key brand partners in Q4, including Sony Pictures, Expedia, Hulu, Display, Warner Bros., and Rocket Money. We've expanded this list to include Progressive, ZipRecruiter, Universal Pictures, Mint Mobile, and more in the current quarter. Unlike competitors that are focused exclusively on CTV, given our brands and platforms, we offer a full 360-degree strategy that includes CTV, mobile, display, podcast, and live events. This holistic offering provides superior outcomes for advertisers and allows us to command more strategic partnerships. While programmatic remains under pressure, our performance in direct and PMP channels continues to outperform budgetary benchmarks. C360, our proprietary ad platform, remains a major focus as well. Q4 marked our strongest quarter to date for the service with year-over-year revenue growth of 290%. Importantly, C360 now directly connected to The Trade Desk will integrate with Cinecore, our proprietary film data set comprising millions of titles and billions of metadata points. We believe it's the most expansive domain-specific data set for film in existence. Originally developed to support cineSearch, it's now central to how we will revolutionize targeting and film advertising. So there'll be more on that to come in future quarters. Lastly, I want to talk about where we're headed in the near term. Podcasting continues to be one of our highest margin, fastest growing businesses. In addition to horror and comedy, we're going to continue to invest in the new verticals as we discussed. We've already hired a dedicated podcast sales team and are considering further expansion given the early momentum we're already seeing in the space. We're also seeing strong growth in YouTube and social video. Across our brands, we now manage nearly 24 million social followers. According to Nielsen, YouTube is the #1 platform by watch time in all of media commanding 13% of full TV viewing. And over the last 9 months, with minimal to no CapEx investment, we've built a low 7-figure business placing our premium content into this space and believe that with our vast content library, there's significant growth and upside leveraging this #1 streaming platform in the world. Additionally, we're exploring other high-growth, high-revenue formats like scripted micro dramas and short-form content. According to business research insights, the short-form video market is currently at $34 billion globally, and growing at 32% annually. With our scalable content pipeline tech platforms and existing reach, we believe we're well positioned to capture a meaningful share of this emerging category in the near to midterm. And finally, on content licensing, both traditional and AI-based remains a key focus. Our theatrical slate will be the main driver of this with titles like The Toxic Avenger; Silent Night, Deadly Night; and Silent Hill. We'll have a robust slate that will also drive licensing value of our vast catalog. And given our focus on IP-driven popular content that appeals to wide swaths of people and demographics, and not just coastal audiences, we're in a strong position to secure an output deal with a major streaming company against our future releases. On the AI front, we're in numerous dialogues to license our content for AI training and expect to see traction on that front later this year. At every level, we're focused on high-quality, high-margin growth and maintaining the existing margins that we've painstakingly built. We're excited about where Cineverse is headed in fiscal year '26 and beyond.

Mark Antonio Huidor, President of Technology and Chief Product Officer

Thank you, Erick. I'm pleased to provide an update on our technology business. Recently, the company announced a new organizational structure, creating a division called Cineverse Technology Group to enhance our sales efforts by allocating more resources to an area of significant value. Over the past few years, we have established various partnerships with small channel operators and video distributors, allowing us to test Matchpoint in real-world scenarios prior to fully launching it as a SaaS product. These collaborations have aided in our hardening process, helping us onboard clients and identify areas for improvement. We have gained valuable insights from these experiences and appreciate our partners' contributions to enhancing Matchpoint. With this groundwork laid, Matchpoint has now reached a mature level of capability that enables us to target major Hollywood studios and large media companies as our primary customers. Our seasoned sales team brings extensive expertise in the media supply chain and strong connections within the Hollywood community, facilitating effective outreach to decision-makers across these organizations. We intend to showcase Matchpoint to every major studio before the end of summer. In the past 45 days, we have already presented it to three major studios, two broadcast networks, and a prominent e-commerce company, and we are grateful for the positive and encouraging responses we have received. For a long time, we have misjudged the pace of innovation in the entertainment industry. We have come to realize that large media companies continue to grapple with fundamental issues related to operating extensive streaming services. Many still rely on manual processes, disjointed systems, external vendors, and large internal teams, often taking weeks to launch a single title. This reliance on third-party vendors for operational solutions rather than developing in-house technology is unsustainable and calls for a new approach. This situation positions Matchpoint uniquely, offering a comprehensive end-to-end media supply chain specifically designed for the streaming era. Media companies typically utilize various vendors, leading to makeshift solutions that only partially address their needs. In contrast, Matchpoint has been tailored to meet the full spectrum of requirements for modern streaming businesses, including addressing complex edge cases that most technology vendors overlook. Our unmatched ability to deliver tens of thousands of titles monthly without human intervention has led to Matchpoint being well-received by large media companies. Moreover, our new organizational structure, with separate entertainment and technology divisions, has alleviated concerns about competition, leading to increased opportunities for collaboration. Currently, Matchpoint is being evaluated in two active RFPs, and from the three major studios we have presented to, one has prioritized their evaluation and is advancing to a pilot program, which we expect will lead to a commercial trial. This pilot will require us to integrate Matchpoint into their internal supply chain, enabling it to fulfill their content distribution needs globally and potentially generating mid-7-figure annual revenue for the company. Discussions with other studios and media companies reflect similar trends, as they face immense pressure to scale their streaming services, reduce costs, cut jobs, and utilize AI for efficiency. Matchpoint excels in all these areas. Moving forward, our strategy will focus on selling Matchpoint Dispatch to initiate relationships and demonstrate our capabilities. These media companies are ideal customers for other Matchpoint products, such as Insights and cineSearch. Leveraging Dispatch as our flagship product gives us a strategic edge during pitches. Regarding cineSearch, we recently announced its completion, and we are proud to have achieved what no other media or technology company has: superior accuracy and breadth in content recommendations. While Google and OpenAI provide acceptable results, their understanding of cinema is broad yet shallow, lacking the depth that cineSearch offers. We plan to license cineSearch as a full product offering and also as a standalone dataset through Cinecore. This launch is timely as the streaming industry grapples with poor user experiences tied to inadequate search capabilities. We believe we have a competitive advantage, having several years' head start over our rivals. Finally, we are committed to leveraging AI for our future. We have utilized AI for years to enhance Matchpoint's efficiency and our internal operations. Following our success with AI, we initiated an internal project to transform the company into a next-generation studio, aiming for each department to adopt AI for automation and efficiency. Our goal is to establish a network of AI agents that communicate across departments to maximize operational efficiencies. We also have more products in development, and we look forward to sharing updates soon. Let's open it up for Q&A.

Operator, Operator

Our first question today comes from Dan Kurnos with Benchmark.

Daniel Louis Kurnos, Analyst

I'll try to keep it tight per your requests to finish up here. Look, just fantastic into the year. We've got wide releases in the next 3 quarters coming out. I guess, Chris, high level, just if you guys are successful or see early signs of success, how much more are you willing to lean in? And I know Erick kind of intimated that you're talking with some of the streamers, but how do we think about pay windows and licensing opportunities, especially for the licenses that you own?

Christopher J. McGurk, Chairman and CEO

Yes, as we continue to develop our lineup, we have a primary goal of establishing a pay output deal, and we've initiated discussions in that area. Over the next few months, we will be announcing more films similar to the three—actually four if you include Wolf Creek—that are currently on our release schedule. We will also be broadening our focus beyond horror to include family films, a domain where we have previously excelled. Additionally, we are considering more fantasy films, along with some Black Cinema content and comedies, as Erick mentioned. Once we incorporate these elements into our release schedule, we will be ready to take negotiations for a pay deal more seriously.

Daniel Louis Kurnos, Analyst

And just on profitability, it really matters because it was great in the quarter. I don't want to lose sight of the offshoring. I know Mark mentioned about a 45% to 50% operating margin. You exceeded that this quarter. How should we consider this in quarters where you have a successful owned license film for wide release? Is there any possibility that margin could increase over time?

Christopher J. McGurk, Chairman and CEO

Yes, I forgot what the margin was in our last quarter. Maybe Mark can mention that. But I think with Terrifier in the market, we put up a really, really solid operating margin. So we feel good about the 55% number that we put up, and we feel really good that we'll meet or exceed our operating margin target of 45% to 50% going forward.

Mark Wayne Lindsey, Chief Financial Officer

Chris, margin last quarter was 49%.

Christopher J. McGurk, Chairman and CEO

Yes.

Brian Kinstlinger, Analyst

Great to hear about all the great details on the slate of movies. So I want to focus on some other growth areas. I'm hoping you can frame for investors how to think about cineSearch and Matchpoint. With Tony's comments, how should we think about maybe the pipeline of opportunities? What do deal sizes look like? And maybe when should we expect this will have a significant impact on your overall results?

Christopher J. McGurk, Chairman and CEO

Thanks, Brian. I'll let Erick and Tony respond to that.

Erick Opeka, President and Chief Strategy Officer

So I'll frame the top line. So I think, as Tony mentioned, and I'll let Tony go into more detail here. I think as it relates to the overall sales pipeline, the opportunity set of the companies we have, we're now focused more on the enterprise side in the future. In the past, we have been focused on smaller entities as more of a proof of concept. Those kinds of entities are pretty small. It takes a lot of them to generate meaningful revenue. So they're good for testing, but they're not really efficient for scaling the business. Tony, why don't you detail sort of the opportunities that generally, in terms of the number of properties in the pipeline, what do you think the average deal size could end up being?

Mark Antonio Huidor, President of Technology and Chief Product Officer

Thank you, Erick. As noted, we have been concentrating on smaller operators because we only have one chance to enter the market, and we didn’t want to jeopardize that opportunity. By targeting smaller operators, we can learn what needs to be improved before approaching larger media companies. Each of the five major studios typically represents an opportunity of around $5 million. The amount varies based on their use of the platform for domestic worldwide distribution. Our current partner has an expectation to start with the back catalog launching worldwide, and if that goes well, it could expand to include their streaming service and international operations. This $5 million could increase significantly, but for now, we are anticipating mid-7 figures, and we have already presented to several studios with very positive feedback. Following the major studios, we have large networks and media companies as potential clients, providing us with ample opportunities. We believe that over the next few years, we will establish a strong presence in the industry. This will enable us to expand our offerings, such as Dispatch, cineSearch, and other services or analytics, which are areas where big media companies are facing challenges. Our technology uniquely positions us in the market.

Brian Kinstlinger, Analyst

Great. That's wonderful. And just I wanted to follow up just on podcast. I don't know what revenue-wise, the segments haven't been out yet. But with your push in to direct hire, and I know one of the initiatives was to better monetize podcasting. Maybe you can provide some more details on, again, direct sponsorship and sizes of those deals and how you maybe frame also monetization of broadcasting over the next 12 to 18 months versus where it is today?

Erick Opeka, President and Chief Strategy Officer

First, regarding our monetization strategy, it has two main components. In the podcast sector, our key advantage lies in offering fresh content and new releases. This creates a strong demand from advertisers compared to FAST channels that mainly feature library content. We're observing that podcast CPMs are often higher than CTV CPMs, sometimes by $10 or more on a direct basis, which shows the quality and value of our growing portfolio. We aim to assemble shows with at least 0.5 million to 1 million monthly listeners per podcast, distinguishing ourselves from other networks that take in all shows, regardless of their size. This approach resonates well with advertisers. Additionally, we're working directly with advertisers and have formed a dedicated team, including sellers from SiriusXM who are making an immediate impact. We're achieving average deal sizes with larger brands like Progressive reaching low six figures, while consistently closing mid-five figure deals. We've noted a trend towards larger, brand-focused clients rather than just performance-driven ones, which tend to buy in larger packages. Given our previous 100% programmatic approach last year, we believe that direct CPMs are now more than double those rates. With the right momentum, especially in the latter half of the year, we may be able to achieve double or more of our previous year's performance, although this depends heavily on macroeconomic conditions and the overall advertising market. So far, the outlook appears promising, and we believe that increasing our sales team could further enhance our growth.

Operator, Operator

There are no further questions remaining. So I'll pass the conference back over to the management team for closing remarks.

Christopher J. McGurk, Chairman and CEO

Yes, this is Chris. Thank you all for joining us today. And please feel free to reach out to Julie Milstead with any additional questions you might have. And we look forward to speaking to you all again on our next quarterly call. Thank you very much.

Operator, Operator

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.