Greetings. Welcome to the Dolphin Entertainment Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, James Carbonara with Hayden IR. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us once again for Dolphin Entertainment's third quarter 2024 earnings call. 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 the cautionary text regarding forward-looking statements contained in the earnings release published earlier 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.

Thanks, James, and welcome, everyone. I'll start by reviewing some of the key financial and operating highlights from our third quarter of 2024, and then Mirta will provide a more detailed financial overview before we open it up for Q&A. So starting with the financials. We are pleased to report strong financial results for the quarter with significant quarter-over-quarter and year-over-year growth in both revenue and adjusted operating income. Q3 revenue grew 24.5% year-over-year to $12.7 million, driven by strong performance across all operating segments. Adjusted operating income improved greatly reaching $492,000 compared to an $850,000 adjusted operating loss in Q3 2023. Year-to-date revenues through nine months has increased 26.6% to $39.4 million, leading to $1.4 million of adjusted operating income, a significant improvement from the $2.7 million adjusted operating loss in the same period of last year. The company remains on track to exceed $50 million in revenue and achieve positive adjusted operating income for the full-year 2024, marking a key milestone. I'll now turn to updates from our subsidiaries. Starting with 42West, we've maintained our dominant position in entertainment PR. Our team delivered exceptional results in major industry events, including a substantial presence at the Toronto International Film Festival and managing the Venice Film Festival premiere of Tim Burton's highly anticipated Beetlejuice. At San Diego Comic-Con, we represented an unprecedented 13 major entertainment clients, cementing our position as the go-to agency for tentpole properties. Our clients received 60 Primetime Emmy nominations, and we've expanded our footprint to the anime and gaming space, representing industry leaders like Crunchyroll and TOHO at Anime Expo. As discussed on our Q2 call, completed in Q3 Dolphin acquired Elle Communications, a leading PR agency focused on social and environmental impact with offices in Los Angeles and New York, now operating in conjunction with 42West. Elle brings 16 years of expertise in impact PR and deepens our capabilities in the $1.1 trillion impact investing industry. The team has already integrated seamlessly with our existing PR firms and agencies, strengthening our ability to serve clients wanting to leverage their influence for positive change. Turning to Shore Fire Media, the team had a landmark quarter in music. We're particularly proud of our work with Dave Matthews Band, Kool & The Gang, and MC 5, all of whom were inducted into the Rock and Roll Hall of Fame. This achievement underscores our ability to support artists across their entire career journey. And even though it’s a Q4 event that we'll talk more about on our 10-K earnings call in March, I'd be remiss if I didn't highlight the press release we put out on Tuesday of this week, sharing that Shore Fire clients are in 26 nominations for the 2025 GRAMMYs, including one for Jacob Collier for Album of the Year. In breaking news, I was just told that we signed a new client who has two GRAMMY nominations himself, bringing Shore Fire's total to 28 GRAMMY nomination campaigns to handle this year. Simply phenomenal, as always. Go Matt Hanks. The Door continues to demonstrate excellence in hospitality and lifestyle PR. A highlight was securing a prestigious three-star review from the New York Times for Bungalow; I've been there, and it is fantastic. Our innovative work with Newman's Own on their Pay What You Want Pizza Program shows our ability to drive meaningful consumer engagement. The Digital Department, our influencer marketing agency, has shown remarkable growth, securing 137 new talent signings this year. We successfully expanded our BRANDEdit Influencer Showroom to New York Fashion Week in September, marking an important milestone in our fashion and lifestyle vertical. Our team has one coming up during Art Basel, which is very exciting as that one will also mark the first time the Showroom comes to Miami. At Special Projects, our celebrity booking agency, we maintained our long-standing partnership with Wall Street Journal Magazine's Innovator Awards at the Museum of Modern Art last month, and our work with the Academy Museum's Annual Gala helped honor industry luminaries while raising over $11 million for the Motion Picture Academy. That team is especially busy with three major events this week alone, for example, including the store opening for LBMA happening tonight in Manhattan. These results reflect our team's expertise, creativity, and ability to deliver impact across multiple sectors. Turning to Dolphin Ventures, our division that secures ownership stakes in promising businesses or products, primarily in content creation, consumer products, and live experiences, we're open to various opportunities while focusing on these three sectors. Starting with content creation, our IMAX partnership maintains strong momentum with a $2.6 million Q3 payment from licensing the streaming rights to the Blue Angels. The film's success has exceeded our expectations, leading to planned expansion into prestigious institutional theaters across the country starting in January. We expect the film to play those theaters for years to come, providing an annuity for both Dolphin and IMAX. With this powerful foundation and fall development season underway, we anticipate announcing our next major project in partnership with IMAX soon. Additionally, we expect to be able to announce shortly more distribution partnerships for Staple Gin, our first celebrity-partnered spirits venture developed with culinary icon Rachael Ray. Crafted in New York's Catskills region, the Gin has earned double gold and scored 96 points at the New York International Spirits Competition. Staple Gin is now available at restaurants and retail outlets throughout New York State through Southern Glazers Wine and Spirits, a fellow Miami-based company and the nation's largest distributor with $26 billion in revenue last year and operations in 44 states. With those updates on the ventures front, I'll turn to two headlines from the month of October. First, we announced the launch of Always Alpha, a groundbreaking initiative marking our strategic entry into the women's sports management space. We believe that Always Alpha is the first ever comprehensive management firm dedicated exclusively to women's sports. This venture is led by an extraordinary team, starting with Allyson Felix, the most accomplished US track and field athlete in history. That's a pretty good start. Alongside her brother and business partner Wes Felix and distinguished sports executive Cosette Chaput. The timing of this launch aligns perfectly with the explosive growth we're witnessing in women's sports. Our research and market analysis indicate this is a significantly undervalued sector with immense growth potential. Always Alpha represents more than just a new revenue stream; it's a strategic advancement that we believe will be a major growth driver for our company in the years ahead. What sets Always Alpha apart is its holistic approach to talent management. We're not just representing athletes. We're building a platform that supports women who are simultaneously competing at the highest levels, serving as brand ambassadors, building businesses, and driving social change. This aligns perfectly with Dolphin's existing expertise in celebrity management, brand development, influencer marketing, and impact PR. The synergies with our current operations are substantial. Our entertainment marketing infrastructure, which has delivered remarkable success this year, thousands of influencer campaigns through The Digital Department alone, is immediately complementary. The market-leading position of our entertainment PR firms, driving 24 Oscar nominations, 60 Emmy nominations, and 28 Grammy nominations for our clients, creates a broad platform to increase awareness through pop culture events, providing an immediate competitive advantage for Always Alpha's roster. We're seeing strong early interest from both potential clients and brand partners. The unique positioning of Always Alpha in the market has already attracted attention from major advertisers who are increasingly focused on authentic engagement in the women's sports space. From a financial perspective, Always Alpha represents a compelling opportunity. The women's sports market has demonstrated remarkable momentum, as anyone listening to this call would be aware, with viewership, sponsorship revenue, and media rights valuations all showing strong upward trajectories. Looking ahead, we expect Always Alpha to contribute to our revenue mix through several channels. First, we'll earn talent management fees similar to our influencer division from a growing roster of elite athletes, broadcasters, and coaches, starting with Allyson herself. Secondly, we'll have brand partnership revenues, including strategic consulting for brands entering the women's sports space. Third, we anticipate developing content and having other production opportunities. Fourth, and finally, we know that there will be potential opportunities to create exciting ventures together. With Always Alpha, we believe we're positioning Dolphin at the forefront of what we expect to be one of the most dynamic sectors in sports and entertainment for years to come. Now, turning to our newest alliance, formed at the end of October with Loti AI, a breakthrough move that reshapes how we safeguard our clients’ digital presence. In today's age, where digital manipulation has become increasingly sophisticated, we've taken decisive action. Our new collaboration with Loti AI equips our full network, spanning our entertainment marketing powerhouses like Shore Fire, 42West, The Door, The Digital Department, and our newest company, Always Alpha, with state-of-the-art digital protection tools. Why did we partner with Loti? The numbers tell a compelling story. Loti's technology sweeps through nearly half a billion digital assets daily, monitoring major social networks, web platforms, and inappropriate content sites. When unauthorized content appears, their system achieves removal in under a day with a success rate exceeding 95%. Simply put, we were not aware of anything else in the market with that level of reach and success. With our celebrity clients, they frequently become targets. So this move accomplishes several key objectives for the Dolphin companies. It strengthens our core service offering by adding robust digital protection, opens fresh revenue channels through enhanced security services, and, most importantly, it launches Dolphin into the AI technology sphere, setting the stage for future innovations and opportunities in entertainment and marketing. What excites us most is the collaborative nature of this partnership. We're not just implementing existing solutions; we're actively developing next-generation tools tailored to our clients' evolving needs. We think of it as building tomorrow's digital safety net while addressing today's challenges. Like Always Alpha, the timing couldn't be better. As deep fakes, digital impersonation, and unauthorized content become more sophisticated, our clients need more than traditional PR and marketing support to manage their public persona. They need comprehensive digital protection, and we're now uniquely positioned to provide it. This partnership isn't just about defense; it's about innovation. AI technology is still evolving, but it has the potential to revolutionize a variety of aspects in entertainment and marketing. Through this alliance, we're positioning Dolphin as a responsible leader in entertainment for the ethical use of AI at the intersection of creativity and technology, ready to shape the future of digital content and protection. Now, usually after our ventures updates, I would conclude and pass it over to Mirta, but first I want to reiterate what we stated in our recent shareholder letter and also in my presentation at the LD Micro Conference a couple of weeks ago, that we believe our current market cap starkly undervalues the true strength and prospects of our unique portfolio. Let's look again at what has been accomplished so far in just the past 12 months. We achieved record revenues in Q4 of last year and then broke that record again in Q1. Our IMAX co-production, Blue Angels, was a standout hit with a full recoupment of our production investment and well over $1 million in ROI already achieved, with a long revenue tail ahead. In May, we successfully launched Rachael Ray's award-winning Staple Gin. In July, we acquired the profitable Elle Communications to add impact PR to our capabilities. Most recently, in October, we announced the launch of Always Alpha, our management firm exclusively focused on the rapidly growing multibillion-dollar women's sports market, all in the last 12 months. These milestones, along with the consistently stellar work by our industry-leading entertainment marketing companies, position Dolphin for continued success. As noted at the top of the call, through nine months, our revenue is up over 26% year-over-year. We anticipate our revenue this year to exceed $50 million, and with over $39 million in revenue through the first nine months, and with Q4 typically being our strongest quarter, we believe it will be very difficult for us to not hit this goal. Thus, we are trading at approximately one quarter of one times the expected revenue of the current year. We also anticipate achieving positive adjusted operating income for the full year 2024, again after reporting positive adjusted operating income of $1.4 million through the first nine months, and with Q4 historically being our best quarter, we believe it would be very difficult for us to not hit this goal. That's an understatement. More than 20% of year-over-year growth while achieving positive adjusted operating income, we believe these results set us apart from many of our micro-cap peers. Looking ahead, we see immense potential in influencer marketing, women's sports, and innovative ventures like Staple Gin and the new Loti AI partnership we just discussed. In my view, our current market cap starkly undervalues the true strength and prospects of our unique portfolio. Furthermore, we believe there's a significant discrepancy between our present market capitalization and the fundamental worth of our assets. I believe we are significantly undervalued, and as CEO, I am putting my money where my mouth is by actively increasing my personal stake in DLPN with $100,000 of open market purchases in the past year alone. I plan to buy more here before the end of the year. I'm confident the market will soon better appreciate Dolphin's robust financial health and exciting growth catalysts on the horizon as we continue to create long-term value for shareholders. With that in mind, one last tease before I turn it over to Mirta. I want to share the announcement of our upcoming launch of our new shareholder rewards program in partnership with Ticker, the same company that works with Starbucks and Whirlpool and others. We're set to debut in January of 2025, and this new shareholder rewards program will offer our shareholders exclusive access to DLPN client products, invitations to unique events, and other perks that celebrate our community's support and connection to Dolphin's dynamic ventures. Stay tuned for more details as we get closer to January. It's our way of saying thank you to those who are part of our Dolphin journey. Thank you for your continued support of Dolphin Entertainment. I'll now turn it over to Mirta to walk through the financials and then we'll open it up for Q&A.

Thank you, Bill. I'll now review our Q3 2024 financial results in more detail. Total revenue for the third quarter was $12.7 million, representing an increase of 24.5% over the third quarter of 2023. Operating expenses were $20.8 million, including approximately $600,000 of depreciation and amortization, $6.5 million of goodwill impairment, $150,000 of acquisition transaction costs related to our acquisition of Elle Communications, and a $1.3 million write-off of the Midnight Theatre notes receivable. This compares to operating expenses of $12.3 million in Q3 2023 that included an impairment of intangible assets of approximately $300,000 and $500,000 of depreciation and amortization. Net loss for the three months ended September 30, 2024, was $8.7 million, which includes depreciation, amortization, impairment charges, acquisition transaction costs, and the notes receivable write-off discussed in the operating loss remark plus interest expense of approximately $500,000. This compares to a net loss of $3.9 million in Q3 of 2023 that included the depreciation, amortization, and impairment costs detailed in the operating loss remark plus interest expense of approximately $600,000. Adjusted operating income, a non-GAAP measure, improved to $500,000 in Q3 2024 from an adjusted operating loss of $800,000 in Q3 2023. Loss per share was $0.80 per share based on 10.9 million weighted average shares outstanding for both basic loss per share and fully diluted loss per share for the three months ended September 30, 2024. For the three months ended September 30, 2023, loss per share was $0.55 based on 7.1 million weighted average shares outstanding for both basic and fully diluted loss per share. Cash and cash equivalents were $6.6 million as of September 30, 2024, compared to $7.6 million as of December 31, 2023. I will now ask the operator to open the phone lines for questions. Operator, would you please poll for questions?

Certainly. At this time, we will be conducting a question-and-answer session. Your first question for today is from Allen Klee with Maxim.

Hello, can you hear me?

Yes. I hear you, Allen. Thank you.

Hi, sorry, I'm having phone problems. Congrats. Strong quarter. Good job.

Thank you.

The jump in revenue this quarter year-over-year, could you rank some of the bigger factors that you would point to?

Sure. Let's see. Yes, 24.5% year-over-year revenue growth comes from multiple factors, as you might anticipate. Certainly, special projects and Elle would play a factor in that. Elle had a particularly strong quarter going into an election year, which is good for the impact PR business as many people are looking to create additional awareness of the good work that they're doing. Many of the clients received funding from city, local, state, or federal government agencies. Also, the legacy PR firms of Shore Fire, The Door, and 42West had good quarters. 42West has had a strong stretch of having strong results and Shore Fire and The Door have also seen momentum through Q1 to Q2 to Q3 of this year. I would say the surge from special projects and organic growth from the legacy PR businesses were probably the primary drivers. We're getting stronger each quarter at cross-selling, and I think it will continue to show in the quarters ahead.

Thank you. In the Digital Department, what items can you highlight? I understand this is the fourth quarter, which is typically a strong quarter seasonally. However, with all the activity you've been engaged in, is there anything else you want to emphasize about the new business and cross-selling efforts?

Yes, I'm very proud of the work done by the team at The Digital Department. We've done a lot of work there this year and have seen growth. The Digital Department has three main operating divisions: talent management, brand campaigns, and the events division. The talent management division has gone through strong growth as we've hired quite a few new talent managers in the past six months. The skincare group has been a real highlight. We're investing in additional talent managers in that group, and we see a lot of growth with professional advice, if you will, or content from professionals online. So that would definitely be something to look for in 2025. The brand division had a strong start to the year, and we have done work for some recognizable brands, and we anticipate doing it again in 2025. That's a real strength of our overall company. The events division has expanded the showrooms; we just came off a showroom the last two days in Los Angeles for the holiday season, and we're about to do another one at Art Basel in a couple of weeks. Digital Department has a strong upcoming Q4; we have no reason to believe it won't be another explosive quarter.

Thank you. I just wanted to understand a little more about the second installment of $2.6 million from the content licensing agreement. Could you explain the total amount of money you received? Did that $2.6 million count as revenue or was it recorded differently? Additionally, is there any other source of revenue expected going forward?

Sure. Yes. Blue Angels did very well for us. That $2.6 million was the revenue we received in July, in Q3, from revenue we had recognized when we delivered the film earlier in the year. We've received over $3.4 million from Blue Angels alone, and that is against a total cash investment of $2.25 million. So we've recouped the full cash investment and have made a nice profit before it goes into institutional theaters, which it will start doing in January. The beauty of the institutional theaters is, as I mentioned in the prepared remarks, we treat it like an annuity. We get a percentage of the box office revenue from ticket sales. Those are all IMAX institutional theaters, and we expect they'll probably run in most, if not all of those theaters around the country.

Okay. Thank you. You've mentioned some other ventures or new areas for young people, and I was wondering how that might be progressing.

In terms of the influencer marketing agency and having different divisions that we could expand, we've had this experience before. With our skincare group, that group can be a significant source of growth, but our focus is across different verticals in influencer marketing. We're strong in beauty, fashion, and lifestyle. These are the bread and butter of both Be Social and Socialyte before we merged to create The Digital Apartment a year ago. We are continuing to expand the types of creators that we represent, building rosters of creators in areas such as young adults, culinary, or other areas that crossover into our PR expertise.

Thank you.

What I don't know is if we're going to start a vertical for accounting, I'm going to talk to Mirta about that. If we get some online influencers interested in that space, we may expand it.

Your partnership with Loti AI sounds very interesting. Can you explain how you earn revenue from this? Also, you mentioned a potential opportunity for venture investment in this area. What are your thoughts on that?

AI is still new to everyone. We made this partnership with Loti initially to bolster our core services. Many of our PR firms manage public personas and public relations, and you can't manage a public persona today without protecting it online. Our partnership with Loti is our first entry into AI. They are a cash-paying client, which is fantastic. If we have success with Loti, we could work to greatly expand them within entertainment and other verticals and brands across industries. We hope to have some interesting announcements and products created from AI capabilities in 2025.

Thank you. As we get closer to 2025, what would you say your priorities are for the next year?

It will be a good organic growth year. We feel very good about cross-selling. We'll grow Always Alpha, and there's complementary services to help that company. We'll continue to grow our impact PR division. Dolphin's story in 2025 will likely mark pivotal growth. 2024 is establishing a foothold, and as we cross $50 million in revenue and full-year positive adjusted operating income, we aim to grow revenue, build some lottery tickets that could be worth more than our market cap.

I forgot to ask about Always Alpha. You have so many things, it's hard to remember everything. But how do you develop? I mean, you have a strong management team, but the ability to bring on new clients. How do you think about going to market on that?

We have several advantages. Allyson Felix is a legend, and her brother Wes is very accomplished. When you get a chance to educate potential clients about all the other companies Dolphin has under its umbrella, it’s compelling. We feel we have a unique story, and the first mover advantage puts us ahead in an industry where management firms for female athletes are uncommon.

Thank you very much. That's it for my questions. Thank you.

Sure. I hope 2025 does not bring me a challenge to a foot race from Allyson Felix. That would be embarrassing.

There appear to be no further questions in queue. I would like to turn the call over to Bill for closing remarks.

Thank you, everybody for listening. Obviously, we're very proud of the year we've had so far. We've accomplished many great things due to the hard work of our team, the 270 dolphins now across the country. Our financial results are speaking for themselves, as are the ventures we're doing and the companies we're bringing in. We hope to have a very successful Q4 and into 2025, with more announcements before we speak again in March. Thank you all for being on this ride with us, and we look forward to what’s ahead. Happy holidays to everyone. Bye now.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.