WildBrain Ltd.

Revenue from continuing operations was $72 million, up 11% year over year. Global licensing revenue was $27 million, up 24%, while content creation and audience engagement revenue was $45 million, up 4%. Gross margin in continuing operations was 50% versus 48% a year ago, and SG&A was $21 million, up 8%. Adjusted EBITDA from continuing operations was $15 million, up 30%, and net loss narrowed to $20 million from $86 million. Discontinued operations revenue was $132 million, up 83%, with discontinued adjusted EBITDA of $23 million, up 54%. Free cash flow was positive $15 million on a consolidated basis, and leverage ended the quarter at 4.88x. For outlook, management said the Peanuts sale proceeds will repay debt in full, but fiscal 2026 guidance remains paused and fiscal 2027 guidance is expected to resume later.

Josh Scherba framed the quarter as evidence that WildBrain’s flywheel strategy is working, especially in owned IP, licensing, digital distribution and premium content. He emphasized that the Peanuts sale is a transformational step that makes the company debt-free and gives it flexibility to invest in wholly owned franchises, digital monetization, infrastructure and systems. His tone was optimistic but transitional: fiscal 2026 is being treated as a reset year while the company prepares for a more focused, higher-growth structure.

Nick Gawne highlighted that continuing operations revenue grew 11% to $72 million and adjusted EBITDA rose to $15 million, with gross margin improving to 50% from 48% thanks to a mix shift toward higher-margin licensing. He said SG&A was $21 million, up 8% due to higher variable compensation and foreign exchange, but underlying SG&A was broadly flat. He also noted consolidated free cash flow of $15 million, leverage of 4.88x, and said the company still expects roughly $40 million of proceeds from the Peanuts deal after debt repayment and fees. On capital allocation, he described the planned infrastructure and technology spending as more of a one-time modernization effort, and said guidance remains paused until the company can better size the transformation.

Analysts focused first on the timing of the Peanuts close, and management said it is still aiming for calendar Q1, without giving a more specific update. Questions also centered on whether the Q2 continuing-business profile is representative; Nick said licensing growth should continue through the year and that the mix should remain tilted toward higher-margin licensing. Josh gave more color on Strawberry Shortcake and Teletubbies, saying Strawberry is still mostly a U.S. business with significant international upside, while Teletubbies has room to grow in China, Southeast Asia and Korea; he also said the company is comfortable with 2x leverage if the right opportunity arises. Analysts pressed on acquisition capacity and SG&A reduction, and management said it is not ready to quantify either yet, but will use cash for selective M&A, internal investment and possible buybacks.