Alliance Entertainment Holding Corporation Class A Common Stock 2026 Q4 Earnings Call

Paul. Thank you. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward-looking.

While those forward-looking statements represent the company's current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the company's opinions only as of the date of this presentation. Please keep in mind that the company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, management will attempt to present some important factors relating to the business that may affect predictions.

You should also review the company's Form 10-K, filed today, September 10th, 2026, for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. During this conference call, management will discuss non-GAAP financial measures, including a discussion of adjusted EBITDA, adjusted net income, and adjusted earnings per share. Management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment's core operating performance. Please refer to the investor presentation or today's earnings press release for reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. Your hosts today, Jeff Walker, Chief Executive Officer, and Amanda Gnecco, Chief Financial Officer, will present the results of operations for the fiscal year ended June 30th, 2026. Bruce Ogilvie, Executive Chairman, is also on the line and will participate during the Q&A session.

Before I turn the call over, I'd like to congratulate Jeff on being named Billboard's Executive of the Week last week, recognizing Alliance's role in helping drive the continued growth of physical music. With that, Jeff, the call is yours.

Thank you, Paul, and good afternoon, everyone. We appreciate you joining us. Fiscal 2026 was a year of acceleration for Alliance, both financially and strategically. We grew the business, expanded margins, strengthened our position across physical entertainment and collectibles, and continued building new capabilities that can drive the next phase of growth. Revenue increased 8% to $1.15 billion, gross margin expanded 80 basis points to 13.3%, and adjusted EBITDA increased 14% to $41.5 million. We also finished the year with strong momentum as fourth quarter revenue increased 18% year-over-year to $268.1 million. We saw broad-based growth across physical music, home entertainment, collectibles, and fulfillment, while continuing to shift the business toward premium products, exclusive content, and higher-valued services. Several changes occurring across the entertainment industry are also increasing the value of the distribution and fulfillment infrastructure we have built over the past three decades.

Physical entertainment is becoming more specialized and increasingly centered around ownership, fandom, and premium products. Consumers have virtually unlimited digital access to music and entertainment, yet they continue to purchase vinyl records, CDs, 4K Ultra HD titles, SteelBooks, and other physical products. Those purchases are increasingly about owning something connected to an artist, movie, franchise, or community that matters to them. The latest industry data shows how strong that demand remains. The RIAA's 2026 mid-year report showed U.S. physical music revenue increasing nearly 26% in the first half of calendar 2026, including 17.7% growth in vinyl revenue and 58.6% growth in CD revenue. In home entertainment, DEG reported that consumer spending on 4K Ultra HD increased 12% in calendar 2025, even as the broader physical video market declined. We saw those same trends in our own results.

For fiscal 2026, vinyl revenue increased 13% to $383 million, CD revenue increased 25% to $156 million, and physical movie revenue increased 22% to $339 million. In home entertainment, that growth also reflects the expanding role Alliance is playing with major studios. Over the last two years, we have added significant relationships with Paramount and Amazon MGM Studios. Paramount became an exclusive physical media distribution partner for us in the U.S. and Canada beginning in calendar 2025, and we added Amazon MGM at the beginning of calendar 2026. These relationships are important not only for the products they bring to our portfolio, but for what they say about Alliance's position in the market. As studios and labels increasingly consolidate and outsource physical media operations, content owners need partners that can coordinate manufacturing, inventory, retail execution, distribution, and e-commerce fulfillment efficiently at scale.

That is exactly what Alliance has spent more than three decades building. We support more than 340,000 in-stock SKUs across more than 35,000 retail and e-commerce storefronts, with capabilities spanning wholesale distribution, drop ship fulfillment, inventory management, and direct-to-consumer execution. That infrastructure is becoming increasingly valuable as more content owners look to scaled specialists to manage these functions. Fiscal 2026 also demonstrated that our growth is becoming broader across categories. In addition to the strength in music and movies, collectibles revenue increased 45% to $32 million, and distribution and fulfillment fee revenue increased 26% to $18.6 million. Collectibles, in particular, remain an important area of opportunity and growth. We are increasingly moving towards licensed, premium, and differentiated products with higher average selling prices and better margin characteristics.

Because we already have relationships with entertainment licensors, major retailers, and e-commerce platforms, we can use infrastructure that already exists to expand into adjacent fan and collector categories without having to recreate the distribution platform. Handmade by Robots is one example of that strategy. Owning the brand gives us greater participation in product development, licensing, and economics, rather than serving solely as the distributor of a third-party product. We see opportunities to apply that approach selectively as we continue developing our collectibles portfolio. Our fulfillment business is another extension of the same infrastructure. As retailers expand online assortments, they increasingly need partners that can efficiently manage large catalogs and fulfill products directly to consumers. Our breadth of inventory and drop ship capabilities allow retailers to offer substantially more selection without carrying every product in their own stores or distribution centers.

We also continue investing in automation to increase the scalability of that platform. During fiscal 2026, we ordered 5,000 additional totes for our AutoStore system, bringing total capacity to 57,000 totes. These investments are helping us create higher throughput while maintaining labor efficiency, which is important as we continue growing fulfillment volumes. We are bringing the same focus on automation to sales and marketing. We implemented HubSpot in January 2026 to give our teams better visibility, automate workflows, and strengthen customer engagement. We are also rebuilding our Webb-AMP B2B platform with AI-enabled capabilities designed to help retail buyers discover products more efficiently, improve purchasing accuracy, and make our sales organization more productive. The new Webb-AMP platform is scheduled to launch in first quarter 2027. Across the organization, we are using AI-assisted tools to reduce manual work and costs, improve decision-making, and increase productivity.

We are also extending our participation beyond the initial sale of physical product. Following our acquisition of Endstate Authentic at the beginning of the calendar year, we continued developing NFC-enabled authentication and digital product identity capabilities through Endstate Authentic and Alliance Authentic. We are already expanding Alliance Authentic beyond music. We have launched preserved and encapsulated Handmade by Robots and select Funko collectibles on the platform, and we are preparing to bring the same treatment to premium video SteelBooks. By combining preservation, authentication, and premium presentation, we believe we can transform products fans already value into what Alliance Authentic is designed to deliver, the ultimate collectible. Because these are products we already source, distribute, and fulfill, we have an opportunity to extend that model across categories at scale. As we enter fiscal 2027, several growth sectors are coming together.

We intend to build on the exceptional momentum in physical music, capture a full year of Amazon MGM, accelerate our higher margin collectibles business and own brands, and expand Alliance Authentic and Endstate Authentic into additional product categories. We also expect continued growth in fulfillment while using automation and AI from warehouse operations to sales and marketing, to the Webb-AMP redevelopment to make the business more productive. Our objective is to pair growth in these higher value areas with better operating leverage and stronger cash conversion. We believe the changes taking place across physical entertainment are creating attractive opportunities for scaled, specialized operators. Alliance has spent decades building the infrastructure, relationships, and capabilities required to operate in that environment. Fiscal 2026 provided meaningful evidence that those assets are becoming increasingly valuable.

With that, I will turn the call over to Amanda to discuss our fiscal 2026 financial performance in more detail.