AENT - NASDAQ

Greetings, and welcome to Alliance Entertainment's Fourth Quarter and Fiscal Year 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now pass the call over to Paul Kuntz, a member of Alliance Entertainment's IR team at RedChip. 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 these 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 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. Management believes non-GAAP disclosures enable investors to better understand Alliance Entertainment's core operating performance. Please refer to the investor presentation for a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. A press release detailing these results crossed the wire this afternoon at 4:01 p.m. Eastern Time and is available in the Investor Relations section of Alliance Entertainment's website at aent.com. Your host today, Jeff Walker, Chief Executive Officer; and Amanda Gnecco, Chief Financial Officer, will present the results of operations for the fourth quarter and fiscal year 2025 ended June 30, 2025. At this time, I will turn the call over to Alliance Entertainment's CEO, Jeff Walker.

Thank you, Paul, and good afternoon, everyone. I'm pleased to welcome you to today's call. Alliance Entertainment is the premier distributor and fulfillment partner at the center of the growing collectibles ecosystem. With over 340,000 SKUs in stock and fulfillment relationships across 35,000 retail storefronts and 200 online platforms, we connect fans to the entertainment properties and pop culture products they collect from vinyl, CDs, DVDs, Blu-ray and collectible SteelBooks, the video games, licensed toys, tabletop games, and stylized vinyl figurines. Our business is built to serve collectors, enthusiasts and retailers alike. We simplify how physical media and collectibles are sold, stocked and shipped, delivering speed, scale and accuracy across B2B and DTC channels. We've built category leadership in film, music and collectibles over the past 2 decades through a series of 15 acquisitions that form the foundation for our capital-light omnichannel fulfillment network. We believe Alliance is uniquely positioned at the intersection of retail, content and fandom. We've aligned our strategy around where the market is and where it's heading, and that clarity is driving stronger margins, improved earnings and long-term value creation. This slide offers a quick snapshot of our performance. Amanda will walk through the full Q4 and fiscal year financials later in the call, but I wanted to briefly highlight a few key metrics that reflect the strength of our business model and the progress we're making. In fiscal 2025, we delivered $15.1 million in net income, a 229% increase from the prior year. Adjusted EBITDA grew 51% to $36.5 million with gross margin improving from 11.7% to 12.5% year-over-year. Our earnings per share rose to $0.30 more than tripling the $0.09 we delivered in fiscal 2024. These results reflect a more profitable product mix, continued automation benefits and disciplined expense management across the business. We also made significant progress on the balance sheet. We reduced revolver debt by 22%, improved inventory alignment and ended the year with $26.8 million in cash flow from operating activities. Our capital-light model, combined with improving working capital efficiency, has enabled us to unlock stronger profitability without sacrificing growth or flexibility. In Q4 alone, we delivered $5.8 million in net income and earnings per share of $0.11, up from just $0.05 in the prior year. Gross margin expanded to 15.8% and adjusted EBITDA margin exceeded 5%, up from 0.9% in the prior year both demonstrating the strength of our product mix, cost structure and operating discipline. We believe these margins are sustainable going forward, and we expect them to hold as we scale into fiscal 2026 and beyond. This momentum is already carrying into the new fiscal year. Consumer demand remains strong, as we head into the holiday season, we have a highly anticipated release from Taylor Swift on October 3, that will be a great start to what should be a very strong second quarter fiscal year 2026. Taken together, our infrastructure, exclusive content partnerships and financial discipline provide a strong foundation for continued scale and profitability. As retailers and licensors seek efficient omnichannel solutions, Alliance is increasingly the partner they trust to meet that demand. We've built a differentiated platform, not just to participate in the collectibles and physical media market, but to lead it. And with the momentum we're carrying into fiscal 2026 we are just getting started. With that, I'll now turn it over to Amanda to walk through our fourth quarter and fiscal year financial results in more detail.

Thanks, Jeff. Let's begin with our fourth quarter results. For the quarter ended June 30, 2025, we generated net revenue of $227.8 million compared to $236.9 million in the fourth quarter of fiscal year 2024. Gross profit increased 34% year-over-year to $36 million with gross margin improving to 15.8%, up from 11.4% in the prior year period. This margin expansion reflects our improved product mix and continued benefits from our operational efficiency initiatives. Profitability improved significantly in the quarter. Net income was $5.8 million or $0.11 per diluted share compared to net income of $2.5 million or $0.05 per share in Q4 last year. That is a 130% increase in net income. Adjusted EBITDA grew nearly fivefold to $12.2 million up from $2.1 million in the prior year period. This improvement was driven by margin gains, automation benefits and disciplined cost management. At the operational level, our automation investments and warehouse consolidation continue to deliver measurable cost savings, helping drive approximately 1% year-over-year reduction in distribution and fulfillment expenses as a percentage of revenue. Overall, our fourth quarter reflects strong execution, meaningful profitability gains and improved efficiency even against a backdrop of modestly lower top line revenue. Now turning to the full fiscal year ended June 30, 2025. We generated $1.06 billion in net revenue compared to $1.1 billion in fiscal year 2024. The modest year-over-year decline primarily reflects product mix shift, partially offset by strong performance in high-margin categories like physical movies and vinyl. Gross profit increased to $132.9 million, up from $128.9 million last year, with gross margin improving to 12.5% compared to 11.7% in fiscal year 2024. Earnings growth was especially strong. Net income rose to $15.1 million or $0.30 per diluted share, more than tripling the $4.6 million or $0.09 per share reported last year, that is a 229% increase. Adjusted EBITDA grew 51% year-over-year to $36.5 million compared to $24.3 million in fiscal year 2024. This underscores the progress we've made in expanding margins and improving operating leverage. We also strengthened our balance sheet and liquidity. Revolver debt was reduced by 22%. Operating expenses declined by more than 10% and interest expense fell nearly 14% year-over-year. These actions, combined with improved working capital discipline enabled us to generate $26.8 million in cash flow from operating activities, further supporting growth investments and financial flexibility. Our ability to deliver stronger earnings, expand margins and improve cash flow even in a flat revenue environment highlights the resilience of our model and discipline of our execution. With that, I'll turn it back to Jeff for closing remarks.

Thanks, Amanda. One of the most important drivers of our performance and our differentiation in the market is our exclusive distribution and licensing strategy. These agreements give us access to unique in-demand products that can't be sourced elsewhere, whether it's a limited edition box set, exclusive label content or collectible formats for major entertainment brands. This will continue to create increased margins and profits in the future. In fiscal 2025, our exclusive partnerships accounted for more than $350 million in revenue or more than 1/3 of our total sales. These deals not only strengthen our supplier relationships, they also create a competitive advantage around our catalog and reinforce our role as a preferred partner for retailers. A great example is our home entertainment license agreement with Paramount Pictures, which went into effect on January 1, 2025. Under this partnership, Alliance is now the exclusive U.S. and Canadian distributor of Paramount's full physical media catalog including DVD, Blu-ray, Ultra HD and SteelBook titles. We are already seeing a meaningful contribution from this relationship, and we believe there's still significant room for growth as we expand placement and assortment across our refill network. With our complete B2B and DTC sales solutions, we can maximize the ability of movie and TV fans to build their video collection. We also continue to serve as the exclusive distributor for a broad range of partners in music and film, including over 150 movie studios and music labels. These include marquee brands as well as rising independence, giving us a diverse and defensible portfolio of content across formats. On the film and television side, the latest season from Paramount's Yellowstone franchise, top the DVD chart on Amazon for multiple weeks after launch, underscoring both the enduring appeal of premium physical media and Alliance's ability to deliver blockbuster content to the market. We also saw early preorders for Mission Impossible Dead Reckoning: The Final Chapter, outpacing prior installments, further highlighting the strength of our pipeline. An exciting recent addition to our exclusive portfolio is our vinyl figure brand Handmade by Robots, which we acquired in December of 2024. In its first 2 full quarters under Alliance, the brand has already launched its first anime collectibles with My Hero Academy, a limited edition Hello Kitty at San Diego Comic-Con and an exclusive Costco campaign featuring mega-size horror icons. Looking ahead, we're preparing for significant new releases in the first half of fiscal 2026, spanning beloved franchises such as DC Comics, Disney, Godzilla, Harry Potter, more Hello Kitty, Jurassic Park, Marvel, Peanuts, Sonic the Hedgehog, SpongeBob SquarePants, Star Trek, Star Wars and Toy Story. These initiatives reinforce our view that Handmade by Robots is well positioned to become a breakout brand in the licensed collectible space. In addition, we strengthened our collectibles portfolio through a new exclusive distribution agreement with Master Replicas, adding premium products from some of the most iconic Sci-Fi properties, including Blade Runner, Dune, Doctor Who, Stargate, Star Trek and Mass Effect. By continuing to add new exclusive partnerships, we are extending our reach across categories and expanding our leadership in high-value fan-driven collectibles. Across film, music and collectibles exclusivity is what sets Alliance apart. And it's a win for all parties. Retailers gain access to unique inventory, content owners tap into our scale and fulfillment expertise and Alliance deepens its leadership across the physical media and collectibles market. In addition to exclusive content, our consumer direct fulfillment model is another key growth and margin driver for Alliance. This model allows our retail partners to offer a vastly expanded online assortment without holding physical inventory, while Alliance fulfills the orders directly to the end consumer. We ship on behalf of major retailers under their brand using our infrastructure, which means we're delivering value to both our partners and their consumers. It's a win for everybody. Retailers reduce inventory risk and expand their digital shelf, consumers get fast, reliable delivery, and Alliance benefits from higher margin revenue with greater fulfillment control and operational efficiency. During fiscal 2025, CDF accounted for 37% of gross revenue, up from 36% in fiscal 2024. That growth reflects broader retailer adoption and rising consumer demand for collectibles and specialty products that aren't often stocked in store. Most importantly, this is a scalable capital-light channel. It allows us to expand SKU count, serve the long tail of consumer demand and drive continued margin expansion, all without significant working capital investments. As retailers accelerate omnichannel and digital-first strategies, we believe our role as a trusted fulfillment partner will only grow stronger and we are continuing to invest in the systems, automation and relationships that make this model even more efficient. Another critical driver of our margin expansion is the efficiency gains we've achieved through automation and warehouse optimization. Over the past 2 years, we've modernized our Kentucky fulfillment hub with advanced systems that increase the throughput, reduce labor intensity and optimize storage. These investments have already delivered millions in annual savings while enabling us to process higher volumes with greater speed and accuracy. In fiscal 2025, automation was a key factor behind the approximate 1% reduction in distribution and fulfillment expense as a percentage of revenue that Amanda highlighted earlier. Just as important, it has given us the flexibility to scale high-growth categories like collectibles and direct-to-consumer fulfillment without adding significant overhead. In the fourth quarter, we also launched a company-wide AI initiative designed to drive both sales expansion and operational efficiency. This program builds on our existing investments in automation with the goal of improving merchandising, demand forecasting and fulfillment speed while lowering costs. Looking forward, technology is not just a cost lever for Alliance, it's a growth enabler. From automation to AI, these initiatives support the scalability of our consumer direct fulfillment channel, enhanced service level for our retail partners and strengthen our ability to capture new opportunities across physical media and collectibles. As demand continues to shift towards specialty products and online channels, our infrastructure is built to handle it with efficiency and margin discipline. To wrap things up, I want to highlight one of the most important drivers, long-term value for Alliance, our disciplined merger and acquisition strategy. We have a proven track record of building scale through acquisitions with 15 completed to date. Each has been aligned with our goal of expanding content, capabilities and margins while reinforcing our leadership in physical media and collectibles. The acquisition of Handmade by Robots is a recent example. In just over 2 quarters, we've expanded its retail footprint and licensing pipeline, laying the groundwork for what we believe will be significant growth ahead. While the early results are encouraging, we're only at the beginning of realizing this brand's potential. Handmade by Robots exemplifies our M&A approach, identifying differentiated assets with passionate fan followings and scaling them efficiently through our platform. Looking ahead, we continue to evaluate a robust pipeline of opportunities, including proprietary brands, licensing partnerships and tuck-in distribution deals. We look at each opportunity with the same disciplined lens, accretion, operational synergy and long-term strategic fit. By focusing on capital-light growth we can leverage our infrastructure and retail relationships to maximize returns. As we move into fiscal 2026, our strategy remains clear. Scale high-margin categories, deep and exclusive content partnerships and strengthen our fulfillment model. With the margin profile we delivered in Q4, including a gross margin of 15.8% and adjusted EBITDA margin above 5%, we're entering the new fiscal year with a performance baseline, we believe, is sustainable. This level of profitability reflects structural advantages in our model and we expect it to carry forward into fiscal 2026 and beyond. This margin enhancement will significantly grow our earnings per share in fiscal 2026 and create lasting value for our shareholders. Before turning it back to the operator, I'd like to thank our employees, customers and partners for their support and execution throughout fiscal 2025. We're proud of the progress we've made and excited about the opportunities ahead. Operator, let's open the line for questions.

[Operator Instructions] Our first question comes from the line of Thomas Forte with D.A. Davidson.

Sure. Thomas Forte from Maxim Group. I have 3. So I'll go one at a time. It sounds like things are progressing really well with the Paramount deal, how should investors think about your ability to sign similar deals with other studios?

This is Jeff Walker, CEO. Welcome to the call there. We are diligently working on that. We see that as a long-term opportunity in the consolidation of physical DVD distribution. So we are definitely looking and working on those conversations.

Excellent. And then, Jeff, my second question is, I think the answer to this one is that you're not very much impacted, but I did want to ask about tariffs. So how are you impacted by tariffs? And what efforts are you undertaking to mitigate the impact of tariffs?

Yes. We're in a unique space in music and video, where we have really no impact on the tariffs in that aspect of our business. They're very minimal if there are some in there. On the collectibles side of our business, for Handmade by Robots, in particular, we do manufacture in China. So we are incurring the current China tariffs. We've been able to manage that within our cost structures and so forth there. So it hasn't had a major impact on that brand. And then other collectible products that we buy from the manufacturers and wholesalers and such, we are seeing some price increases there on those products. And ultimately, those price increases come to us and they go through to the refill price of the product. And there have been some increases. We don't feel they've been very significant, but they've really impacted the overall consumer demand and sales of those products. So while the pricing on them is going to move up a little bit, we don't see a huge decline in the volume in those products.

Great. So my last one and thanks for taking my questions. From a capital allocation standpoint, can you talk about your preferences regarding reinvesting in the business, paying down debt, strategic M&A where you have an excellent track record and then potentially buying back your stock?

Well, I'll start with the paying down debt. We operate with a line of credit and asset based line of credit. So every day, all of the cash we've collected for that day sweeps through our line of credit and reduces our line balance and our interest cost there. And so that's why you also see a fairly minimal amount of cash on hand in our financials, that's really the last day of the quarter's cash on hand. From an aspect of buying back stock, we have a pretty small amount of stock out in the market today. So we really have no desire to buy back stock. And I think that the paying cash to the business is generating, we're actively looking at how we deploy that cash into strategic acquisitions as well as some internal investments to help grow the business. So we're really reinvesting our cash at this point.

And there are no further questions for now over the phone. And therefore I hand it over to Paul Kuntz for any questions via the webcast.

Thank you. Great. And we actually have had several questions come in already. Our first question how sustainable is the lift you've seen from the Paramount Pictures exclusive license? Do you expect incremental growth in fiscal '26 or was fiscal '25 more of a onetime step-up?

Okay. On Paramount Pictures, our license agreement with started effective January 1, and we ramped that up in the first quarter of calendar 2025. And so we got a partial of the business in that first quarter. The second quarter that we just completed and reported, we had all of the Paramount product sales on the Alliance side there. So as we move into the current quarter that we're in right now as well as calendar Q4, we have not seen the -- we are generating those sales, and we were going to see the impact of that in this year. We will also see a small impact in Q1 of 2026, and then we'll be in Q2 of 2026 will be comping, but we just completed in the last quarter. So it's a huge win for us. And the other thing that we're really focused on, on the last part on the Paramount side is, we're really focused on growing the sales and the sales opportunities there. And all the different channels that we touch from brick-and-mortar to direct-to-consumer and e-commerce to expand those sales from what they were previously. And the one last thing I want to mention on Paramount side. We are pretty excited about the Skydance acquisition of Paramount. That is our initial indications looks like they're going to invest in additional content, theatrical movies and television there. So we do think the slate of products coming through Paramount will be growing in the future. So that's an unexpected win for Alliance on that side as well.

And our next question is, the earnings release mentions Walmart selected you as its video category adviser. What does that mean for the company?

Yes, this was a big win for us to be selected by Walmart as the video category adviser. This went live just recently in August 11th. And what it is, is Walmart has a designated category adviser that helps with overall planning in the video category with strategic planning, space planning, everything to do with how that department is going to operate on the video side. And it includes all the studios as far as working together. And we were designated the category adviser. It moved over to us, as I said. And it's an independent group of people on the alliance team that manage that because it's managed on behalf of all the studios. And it was a big honor for us to get that from Walmart that they believed in the capabilities that Alliance has and also the long-term strategy that we share with Walmart with respect to physical movies and TV series were both very long on continuing to stock and support the fans of physical media in the movie category.

We have another question that came in. Fantastic results. It seems like your M&A activity is highly curated. Can you share the profile of your current M&A pipeline? And would your current capital structure support such inorganic initiatives?

Well, as most of you know, M&A has -- I think it's -- we've done a lot over the years, it's more of an art, I think, than a science. There's definitely science and mass and those aspects to M&A. But the art aspect is really what fits with putting the 2 companies together. What's the strategies there? What's the willingness of the seller? Is the seller a willing seller or a maybe seller? And there's just a lot of pieces to put together and trying to get an acquisition over the line. I think we've learned over the years that we stay in acquisition conversations ongoingly not just with a lot of different people, but sometimes an acquisition conversation may have started 3 or 4 years ago. And and now is the time for it to happen. And there's different aspects with the sellers and with us trying to match all those things up. I will say that we're actively in a lot of conversations because I think it's -- that's the way that acquisitions work is you really have to be in a lot of conversations at the same time. And but -- and then you're in a position where you can execute on the right one at the right time. We don't want to be in a situation where we have very few opportunities, and we're over chasing a few opportunities. So we have a pretty robust net of conversations happening right now, and we're continuously evaluating them as to what fits for us at each different time and what fits with the seller at that time.

Thank you, Jeff. The next question, with the big jump in earnings per share and adjusted EBITDA, can you walk us through how much of that margin expansion is structural versus cyclical or onetime factors?

Yes. They're definitely not onetime factors. It's a structural improvement in the company overall. And it really comes from 2 areas you're seeing the margin enhancement, that part on the gross profit that we're generating. That's coming from different licensing and moving into more higher-margin products there. And then on the other side, we communicated some significant cost savings. And as some of you might know, we exited a big warehouse facility in Minnesota in May of 2024, for that was a big operational savings for us in fiscal 2025. We are exiting this month a smaller facility in Minnesota as well, but it's not going to be as significant of a savings as the large facility was there. So from that perspective, we're seeing an ongoing economies of scale by running through our -- primarily through our Kentucky facility.

Thank you, Jeff. And somewhat related to the last question, I guess, you mentioned launching an AI program to boost sales and efficiency. Can you explain in simple terms how AI can help the business?

Yes. As we all know, AI is here to stay, and I firmly believe the companies that focus on it and use that technology to help their business grow and advance the businesses are going to be the winners in the future. And so over the last 6 months, we've really hopped on an AI initiative here at Alliance. And it's coming from several different areas. The first and foremost is really the implementing or using Copilot as our AI internally, we're ultimately a Microsoft house here for most of our products. And we've got over 250 people in the organization on Copilot right now. We've been doing weekly trainings with Copilot and best practices, and we're all learning a lot about that really quickly right now. And I kind of look at it and go, we started this about 6 weeks ago. What they're going to look like a year from now with all of us working on a weekly basis and seeing how each one of us can individually use it in the organization. So I'm pretty bullish about what that's going to look like for us a year from now. And that aspect is really from the standpoint of helping each person do their job more efficiently. We do also have GitHub going for our programming side, that's in place right now. And then one of the big projects we're working on, we're going down the path and we're going to integrate HubSpot for our sales and marketing initiatives. It's an implementation we're in the middle of right now. And it's going to help consolidate our sales functions as well as their AI technology helping us drive sales going forward. And so a big part of our AI initiative is really the power we use in AI to drive sales. And as everybody knows on this call, we have a huge warehouse full of products that consumers want, and it's our job to sell those products through more retailers and to more consumers. And so we're really working to double down on our sales focus right now and help with technology that's going to assist our sales seem to be more efficient and expand our sales opportunities. So that's how we're focused on AI today, and we're -- we have a lot of conversations in the organization. A lot of people, senior leadership people in it. And I will also say that across the board, our entire team is really excited about what this technology can do and how it can help us make the business better. So we're really happy with how our teams really gravitated to it and focused on it. And we're going to see over the course of the next 12 months what the benefits of all that time and energy on AI is going to produce.

And another question, you've made progress diversifying into collectibles, but physical media still accounts for the vast majority of sales. How do you balance investing in legacy categories versus building out higher growth, higher-margin segments?

Well, we still see the legacy categories. Vinyl -- we'll start with vinyl in particular. We're still seeing growth on that, we're still seeing demand, we're still seeing unique collectible products. We're working on some unique initiatives in vinyl that will be coming out here shortly. And we see some really good growth in that long-term side, that legacy side. And then with respect to our video, we're definitely seeing growth and video opportunity for us and so forth there. So we're definitely investing in those as well as new initiatives going forward.

And what gives you confidence, Handmade by Robots can really break out and become a bigger part of Alliance?

Well, as some of you know, I'm a huge fan of the Handmade by Robots. I love the brand. I love the style of it, and I love the name. It's a very appropriate name right now with robotics and robots being a huge worldwide growth area, and it's a collectible that a robot would make. And that business model, we have a good style and design, a good design style, I guess, you would say, and a good name brand. And the industry that, that is in is in-licensed IP. And we don't create the IP, we don't create the characters, the movie studios, gaming companies, even humans and people are the characters and the IP there. So we definitely see just an unlimited opportunity of new characters and new versions of those characters. And it's a very creative, robust brand and opportunity. We are setting up and queuing up for our first Handmade by Robots booth at New York Comic-Con. So we'll be there with all of our key titles and products that we've got coming out this quarter. And we do see it as a great opportunity. We have a very aggressive growth strategy for the brand and you will continue to see a lot of initiatives coming out of that. I will also say that it is a very strong margin in that licensing brand. We're also developing retail sales from it through the website and so forth. And last thing I want to say is, it's an interesting aspect for Alliance to do this because we get to focus on the design and the characters and the sales of those characters. And we already have a huge warehouse and operational system to manage the product coming in and the product shipping to customers and all of that. So it's a very different situation for Alliance to do it versus somebody to start up and you have to deal with all the back-end aspects of the business. So this is -- when you look at that scale and scope that Alliance has and the ability to bring on a brand like this and scale that brand. We're only scaling the brand. We don't have to scale our warehousing and our operations and all that kind of stuff. That's us already in place and scale for us. So you can see what the opportunity then is when you get a new brand like Handmade and you can focus on licensing, designing characters and selling those characters. That's the part of the business that we have to focus on there. And we don't have to worry about setting up an accounting department, a warehouse and all those other functions that stand-alone business and that would have to do. And so one last piece that also goes towards where we look at in some aspects of acquisitions. Are there other brands and other things that could fit into the model that I just spoke about. So we're super excited about it. We've got a lot of people on the team working on it, and we're definitely seeing the sales come from that.

We have like one final question here. You said exclusive partnerships accounted for over 1/3 of revenue. Can you explain why exclusivity is such a big advantage for Alliance?

Yes. a little back story, came up as we started the business as a one-stop and a one-stop is a distributor wholesaler that is buying product from all the manufacturers and then you're selling to all the retailers, and you're in a dog fight with all the other wholesalers that are doing the same thing. And as we move down the road, as alliances move down the road into the different exclusive divisions, then you become the exclusive seller. So when you look at, let's say, Universal Music or Sony Music or Lionsgate video, they are the manufacturers and sellers of that product. So if you want to buy it, you buy it from them. And so fast forward that to Alliance, when we have Alliance Home Entertainment with Paramount product and we have AMPED, our indie distributor on the music side, and all those titles that those divisions sell that everybody wants to buy those titles buys it through Alliance, then you can see how important that aspect is. And I'll even go into the Handmade by Robots, why did we want that? Well, we were selling Funko and other collectibles into retailers and across the board all over the world. And we still do that. We still are a big wholesaler for collectible products. And when we got Handmade by Robots, now we're the exclusive supplier of that. So if a big retailer wants to buy it direct, now they need a vendor right, they need to open a vendor ID for us in their collectible department and so forth there. So it's a really big driver of -- on that exclusivity side. So we're going to continue to focus on that aspect where we can gain exclusivity of products because that opens up all the -- also last part of it opens up all the big accounts. So Amazon, Walmart, Target, Costco and so forth, all the big retailers, they buy direct through the companies that have the exclusive distribution of products. And so those companies and those sales through those big retailers all come through you, and that's the opportunity from the exclusive side.

Thank you. And we have reached the end of the question-and-answer session. And also, this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.