Alliance Entertainment (NASDAQ:AENT) highlighted record-breaking results for the quarter ended September 30, 2025, and outlined new licensing wins, operational initiatives, and acquisition-driven plans during an investor webinar led by Executive Chairman Bruce.
Quarterly results and operational updates
Bruce said the recently completed quarter was a “record-breaking” period for the company, with growth “in all our categories.” He noted that Alliance expects to release its fourth quarter results on February 12.
Bruce also reviewed the company’s distribution footprint in Shepherdsville, Kentucky, where he said Alliance stocks more than 325,000 SKUs across approximately 871,000 square feet and ships over $1 billion in revenue through that location.
Business mix, distribution model, and automation
Bruce described Alliance as a distributor of entertainment products, including movies, music, video games, toys, and collectibles, selling to a range of retailers and supporting both store delivery and direct-to-consumer fulfillment on retailers’ behalf. He said roughly 37% to 40% of revenue comes from drop-shipping.
He provided a rough revenue mix, noting vinyl at about 31% and CDs at about 11%, putting music at over 40% of revenue. Bruce said video sales were up year over year, which he tied to Paramount-related developments earlier in the year. He acknowledged headwinds in the gaming category and said the company is working to grow collectibles.
On operations, Bruce highlighted the company’s AutoStore automated storage and retrieval system used for picking vinyl. He said the system was a roughly $10 million investment and has delivered annual labor and payroll savings of about $3.0 million to $3.5 million, while also adding storage capacity.
Licensing wins and Walmart category advisor role
Bruce emphasized the company’s strategy of building an “exclusive distribution and licensing” moat, with the goal of deepening its position in entertainment products and collectibles.
He discussed Alliance Home Entertainment and said the company took over Paramount’s home entertainment function through a licensing arrangement in which Alliance licenses content, manufactures, distributes, and sells to retailers. He then announced an additional major studio deal: an exclusive agreement with MGM Amazon, which started January 1. Bruce said Amazon owns MGM Studios and wants to be active in home entertainment, including releasing “between 14–18 movies” in the current calendar year. He also pointed to MGM’s catalog content as an opportunity for physical releases, citing ongoing collector demand for physical editions and special packaging even for widely streamed titles.
In Q&A, Bruce said likely competitors for the MGM Amazon agreement included Warner Home Video and SDS (Studio Distribution Services, a Universal Pictures and Warner Home Video joint venture), adding that he did not know the full list with certainty.
Bruce also said Alliance recently became the category advisor for Walmart’s video department. He described a “Chinese wall” structure, using a third party, to avoid conflicts of interest. He said the work includes advising Walmart on title selection, shelf space, and studio participation, and he framed the role as important to keeping Walmart’s video category productive as other retailers reduce physical video space.
Margin drivers, financing changes, and balance sheet remarks
Bruce reviewed profitability trends and said earnings per share increased from about $0.09 in fiscal 2024 to $0.30 in fiscal 2025 (ended June 30), and he cited an additional roughly $0.10 for the quarter ended September 30, with trailing 12-month EPS of about $0.38. He also pointed to adjusted EBITDA margin expansion, referencing a trailing 12-month level around 4.2%.
Asked about the first quarter fiscal 2026 EBITDA increase and margin expansion, Bruce said “every quarter is not going to be like that quarter.” He attributed the improvement to a rise in gross profit (from 11.2% to 14.6%), which he linked to Handmade by Robots and Paramount, and to a reduction in low-margin “hardware” sales tied to Microsoft. He said the company is focusing on moving away from low-margin sales toward higher-margin business during calendar 2026.
On shipping channels, Bruce said he views direct-to-consumer and B2B drop-ship economics as “about the same,” noting that retailers often bear freight costs in drop-ship arrangements, while store shipments can involve more freight expense for Alliance.
Bruce said the company changed its line of credit from White Oak to Bank of America on October 1, describing the pricing as SOFR plus 1.625, which he characterized as a meaningful reduction in borrowing cost. He also said interest expense has been declining due to lower borrowing. On liquidity, he said the company’s “cash” is reflected in its revolver availability, described as north of $40 million to $50 million, with cash swept nightly to pay down the credit line. He cited debt around the $65 million range and said he expects it could fall toward $30 million over the next few quarters due to free cash flow generation.
Collectibles expansion: Handmade by Robots, Nstate, and Alliance Authentic
Bruce highlighted Handmade by Robots as a growth driver and said the company acquired the IP last year. He said the goal was to reach about $10 million in the most recent calendar year but the business came in “a little bit shy.” Looking ahead, he said the company sees “good things” in calendar 2026, including a planned Record Store Day exclusive that he did not name.
He also laid out a longer-term target: a three-year plan to reach $100 million in Handmade by Robots revenue. Bruce said the company has signed with Disney and will have Star Wars titles and Peanuts characters, among other properties in the pipeline. He added that reaching $100 million could contribute about $40 million of EBITDA, while noting the company is still moving through the first 12 months of the plan.
In addition, Bruce announced an acquisition completed at the end of December: Nstate, a technology company focused on anti-counterfeiting and authentication using NFC chips. He said the technology can be embedded in products so consumers can scan with a phone and be directed to a portal to authenticate items. Bruce said the Nstate technology is expected to complement Alliance Authentic, a planned 2026 initiative to encapsulate and authenticate collectible items—such as vinyl—using sealed cases, limited numbering to create scarcity, and NFC-based registration intended to support peer-to-peer resale and verification.
Bruce also said insider ownership is roughly 78%, and he referenced additional trust ownership that he said pushes insider ownership above 90%.
About Alliance Entertainment (NASDAQ:AENT)
Alliance Entertainment (NASDAQ: AENT) is a distributor of physical media and related entertainment products, serving retailers, public libraries and online merchants. The company’s core business revolves around the wholesale distribution of music and video titles on CD, DVD and Blu-ray formats, as well as vinyl records, audiobooks, video games and select gift and novelty items. By maintaining a broad catalog of new and catalog titles, Alliance Entertainment enables brick-and-mortar and e-commerce channels to access an extensive range of products from major and independent labels.
In addition to its product offerings, Alliance Entertainment provides supply-chain and logistics services designed to streamline inventory management and order fulfillment.
