Alliance Entertainment Holding Corp.

Fiscal 26 net revenue increased 8% to $1.15 billion versus $1.06 billion in fiscal 25. Gross profit increased 15% to $152.3 million, and gross margin expanded 80 basis points to 13.3% from 12.5%. GAAP operating income was $27.2 million versus $30.1 million in fiscal 25, and net income was $13.1 million versus $15.1 million. Adjusted EBITDA increased 14% to $41.5 million, adjusted net income increased 24% to $23.4 million, and adjusted diluted EPS increased 24% to $0.46 from $0.37. Interest expense declined 28% to $7.6 million from $10.6 million, with the average effective rate improving to 6.1% from 9.2%. Net cash used in operating activities was $1.7 million versus $26.8 million of cash provided in fiscal 25, as working capital increased to $62.4 million from $45.4 million. At year end, $74.3 million was outstanding under the $120 million revolver, leaving $45.7 million of availability. Looking ahead, management did not provide formal quarterly or full-year numerical guidance, but said fiscal 27 priorities are to build on physical music momentum, capture a full year of Amazon MGM, accelerate higher-margin collectibles and owned brands, expand Alliance Authentic and Endstate Authentic, grow fulfillment, and improve cash conversion.

Jeffrey Walker framed fiscal 26 as a year of acceleration both financially and strategically, saying the company expanded margins, strengthened its position in physical entertainment and collectibles, and built capabilities for the next phase of growth. He emphasized that physical entertainment is shifting toward ownership, fandom, and premium products, and argued that Alliance’s distribution and fulfillment infrastructure is becoming more valuable as studios and labels consolidate operations. His tone was upbeat and confident, especially around collectibles, authentication, AI, and the opportunity to combine music, movies, gaming, and fan engagement into repeatable commercial capabilities.

Amanda Gnecco focused on the financial drivers behind the year’s performance: revenue of $1.15 billion, gross profit of $152.3 million, gross margin of 13.3%, and adjusted EBITDA of $41.5 million. She said gross margin improvement came from stronger physical movie and collectibles margins, more premium/exclusive content, favorable mix, returns activity, and lower wholesale freight costs as a percentage of sales. She also noted SG&A rose to $66 million from $56 million due mainly to payroll and consulting costs, interest expense fell to $7.6 million after refinancing, operating cash flow was negative $1.7 million because inventory and receivables grew faster than revenue, and year-end revolver borrowings were $74.3 million with $45.7 million of availability. Capital allocation remains focused on working capital, selective investments in automation/AI and product initiatives, cash conversion, and selective acquisitions.

Analysts pressed on tariff refunds, CD growth, gaming exposure, studio consolidation opportunities, SG&A leverage, fulfillment capacity, and the commercial path for Alliance Authentic and Endstate Authentic. Management said it had secured some tariff credits back and had received most of the credits it was waiting for. On CDs, Jeffrey Walker said the category is benefiting from improved stocking and retailer support as fans seek to collect favorite artists, while on gaming he said the company is emphasizing and deemphasizing categories based on trend data and expects GTA VI to be a major fourth-quarter opportunity. On Alliance Authentic and Endstate, management said the near-term focus is growing the collector ecosystem and then building a peer-to-peer marketplace, while WebAMI’s AI-enabled rebuild is expected to launch in January 2027 and materially improve search and cross-category discovery for retail buyers.