Angel Studios, Inc. (ANGX) Earnings Call Transcript

Hello, everyone. Welcome to Angel's Second Quarter 2026 Earnings Call. Joining me are Angel's Co-Founder and CEO, Neal Harmon; and Angel's CFO, Scott Klossner. Before we begin, I would like to remind everyone that certain statements made on today's call, including statements regarding future financial performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Information regarding these risks and uncertainties is included in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. These forward-looking statements represent our outlook only as of the date of this call, and we undertake no obligation to update any forward-looking statements, except as required by applicable law. During this call, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are available in our earnings press release. These cautionary statements apply to all forward-looking statements wherever they appear in this call, including in the question-and-answer session. Our earnings press release is available on our Investor Relations website at angx.com, where we also encourage you to sign up for our e-mail alerts. Neal and Scott will take approximately 20 minutes for their opening remarks before we turn the call over to questions. Thank you all for joining us. And now I'll pass the call over to Neal.

Thank you, Luk. Good morning, everyone, and thank you for joining us. When we started in 2026, we set out to accomplish 2 things. First, we wanted to continue growing the Guild, our community of paying members. And second, we wanted to show that as Angel grows, our business becomes more efficient and more valuable. This quarter, we've made meaningful progress on both. Guild growth continues to exceed analyst expectations. Our operating leverage improved, and we're reaffirming our commitment to limit our full year adjusted EBITDA loss to no more than $25 million. When investors look at Angel, they usually ask 4 questions. What are you building? Why is it different? Is it working? And how big can it become? I'd like to answer those today. First, what are we building? Investors should think about Angel differently. We're not trying to build another streaming service. There are so many of those or another studio. We're building a first-of-its-kind audience-driven entertainment platform. Everything begins with the Angel Guild. The Guild helps us discover stories. It helps us to understand what audiences want. It helps us build awareness for every single title we release. It helps filmmakers improve their work before release. And increasingly, it helps us decide where to invest. Every major decision at Angel starts with one simple question. Does it strengthen the Angel Guild community? Because we've proved something, that's become fundamental to how we think about Angel. Every new Guild member makes Angel better, better for audiences, better for filmmakers and ultimately, better for investors. That's the company we're building together. Now, why is it different from the rest of the industry? Traditional entertainment companies start with a lot of capital, a lot more than we've got, and they invest billions making content and they spend billions more trying to find an audience for what they made. We start with the audience. Our community tells us which stories matter. It helps us improve the stories we choose to distribute. It builds awareness before release. It validates demand before we commit capital. Traditional studios don't have a revenue problem. They have a cost problem. We use audiences to decide where to invest capital and do it far more efficiently. That's a different way to build an entertainment company, one that's aligned with filmmakers, it's more capital efficient and increasingly difficult to replicate as our community grows. The next question that investors ask is, is this working? We very much believe the answer is yes. And this quarter gave us more evidence than ever before. In 3 years, we've grown to more than 2.85 million paying Guild members. In Q2, Guild sales and marketing was reduced by over 26% over Q2 2025, from 71.6% of Guild revenue to 52.8% of Guild revenue, even as we added almost 400,000 Guild members. That's exactly the type of operating leverage we hoped this model would create. But what's encouraging is that we're seeing momentum across nearly every part of the business. Take theatrical. People often ask how theatrical fits into Angel. We actually think they're asking the wrong question. We don't think of theatrical as a separate business. We think of it as part of the engine that strengthens the entire platform. Young Washington serves as a great example. It delivered one of the strongest theatrical openings in Angel's history. But what was even more important and more exciting for us is what happened around the film. It brought new audiences into the Guild with new talent. It will strengthen our existing streaming library. It has expanded awareness of Angel. It attracted new filmmakers to the Angel platform, and it demonstrated how our community can help build momentum long before opening weekend. And Guild members, I being one of them, we're proud to be part of the release of this great film on the 250th anniversary of the United States of America. That's exactly how we designed the model to work. Every successful release grows the Guild. A larger Guild attracts better filmmakers and better talent. Better filmmakers tell better stories, especially with early feedback from the Angel Guild and better stories attract more Guild members. That's what we call the Angel flywheel. And we're excited about what's ahead. 6 of our 10 planned theatrical releases are still scheduled for the remaining half of this year. These are in-person, In Real-Life experiences that build our Guild community and that build the Angel brand. We're also seeing momentum in technology. Each team member across Angel now uses AI tools in their daily work. Over the last several quarters, we've shared examples of how AI has helped us move faster, release more titles and improve productivity across the company. But I actually think the bigger story here is what AI will do for the entire entertainment industry, and it's really exciting. Every week, we meet with filmmakers using AI to dramatically reduce both the cost and time required to produce great films. As an example, Wonder Project, the company behind Young Washington, used AI to increase the production quality for theaters and to reduce the cost of production. The Angel Guild cares about quality, and they care about the values in the story, not whether it was produced with practical or AI effects. However, we do believe AI will significantly increase the amount of film and television being created over the next decade. And if this is true, something very interesting happens. As the supply of films grows exponentially, curation becomes even more valuable. What do I watch with all the titles available. That's exactly what our Guild does. They curate. And it's curation audiences trust because it represents them. Our release cadence is accelerating as well. July was the biggest release month in Angel's history. And so far this year, we've added 115 films, 31 comedy specials and 340 television episodes, including 18 new series, more than halfway toward our goal of 750 total releases in 2026. And that's on top of doubling our library last year. We're also becoming more than a destination for Angel Originals. We're becoming a destination for a beautiful values-driven library of great stories. Industry data shows that nearly 90% of viewing happens on old catalog titles. People love discovering something new, but they also love returning to the stories they already know. That's why we partnered with studios large and small to bring curated catalog titles on to Angel. Those partnerships make the platform more valuable for Guild members while also improving the economics of the business. Supporting these partners actually required us to build enterprise-grade digital rights management that is high-grade antipiracy security for the movies. We were told by a major studio that to upgrade to that level would take over a year. With our AI tools, our engineering team delivered it in under 6 weeks. That's another example of how Angel is operating at scale. We're also making Angel available where audiences want to watch. During the quarter, we launched on Comcast X1, Xfinity Flex, Xumo and LG, significantly expanding our reach on improved economic terms. Finally, our filmmaker ecosystem continues to strengthen. Filmmakers have now earned nearly $300 million through Angel. As our community grows, the value of building with Angel grows, too. And I actually remember when many years into their story, YouTube announced a few creators getting paid over $100,000 in a single year, and that was a huge deal, big news in the industry. Look where Angel has come in so little time. Filmmakers have earned $290 million. When we step back and look across the business, we don't see just individual wins. We see multiple parts of the Angel platform reinforcing one another. The royalties, the talent, the filmmakers, the Guild. Finally, how big can this all become? Well, in the common baseball parlance, we believe we're still in the early innings. Today, as we stated in our earnings release, more than 90% of households subscribe to at least one streaming service. The average household in America pays for 4 streaming services. That's 117 million households, which is a huge domestic market. And streaming isn't a winner-take-all business. Consumers already choose multiple streamers because each serves a different purpose. And at Angel, we're not trying to replace or replicate major streaming platforms, Netflix, Disney or Prime Video. Streamers primarily focus on persuading audiences to consume what a few gatekeepers decided to make. At Angel, millions of Guild members help filmmakers know what they would like to see made with their values, boats and their wallets. Guild members are part of a community with purpose, belonging and impact. Again, 117 million households. And when we grow into the international market, the opportunity grows exponentially at such a huge opportunity. As we look into the second half of the year, our priorities are clear. First, we'll continue to grow the Guild because it's the foundation of everything we do, our Guild community. Second, we'll continue demonstrating operating leverage as we scale, showing that growth and improved economics can go hand in hand. Third, we'll continue to build Angel in a disciplined cash and capital-efficient way as we execute our long-term strategy. These priorities position us well not only for the second half of this year, but for many years ahead. Thank you. And now I'll turn it over to Scott.

Thanks, Neal, and welcome, everyone. Angel operates a unique and straightforward business model. Q2 saw that model continue to expose itself in building and sustaining for future profitability. Every facet of our business is directed toward growing the Angel Guild, our paying members. With each passing month, our results continue to demonstrate that the Guild's total addressable market is enormous. My job is in part to balance cash, adjusted EBITDA and growth as we invest in sales and marketing to bring ever more paying members into our community. But first, let me start with our second quarter results for 2026. Total revenue was $111 million in the second quarter of 2026 compared to $88 million in the second quarter of 2025, an increase of 28%. This increase is attributable to the growth in our core business the Angel Guild, which achieved revenues of $90.7 million, an increase of 94% over last year's Q2 Guild revenue of $46.8 million. Our Guild membership grew from 2.22 million members in Q1 to 2.61 million members in Q2. They're representing 17.6% sequential growth and 99% year-over-year growth. As you may be aware, we began disclosing this key performance indicator publicly on angel.com/impact. As of July 31, 2026, 2.85 million members now choose and enjoy entertainment on our platform. The trailing 12 months average revenue per member now stands at $13.63. This is down $0.06 from the last quarter. Annual revenue per member was impacted by the size of our successful America250 campaign, which brought in a significantly higher volume of premium and annual members, which contributed to our Guild growth in Q2. As you're aware, customers get a discount by purchasing the annual membership, which puts some downward pressure on ARPM, but annual sign-ups benefit our cash position. This is reflected in the growth of our deferred revenue on the balance sheet. And this campaign was successful at acquiring members to the Guild in a very cash-efficient manner. Now that small reduction in ARPM is an investment in the growth of our membership. The growth now reflects a membership that represents approximately $466 million in annual recurring revenue. That's calculated by multiplying our 2.85 million Guild members paying an average of $13.63 a month x 12 months. And this is reflective of a membership growing at an annualized rate of 60% through the first half of this year. Our gross margin came in at 54% in Q2, and this compares to 69% in the prior year period. The predominant cause of the difference is a shift in revenue mix. Q2 2025 included a heavy concentration of theatrical and distribution revenue at 45% of total revenue, mostly from the box office success of the film, the King of Kings. Distribution revenue has structurally higher gross margins as a percent of revenue than Guild revenue does. This year, in Q2, the bulk of our revenue, 84% came from our core growing Guild business and theatrical distribution accounted for only 16%. Now operating expenses, excluding the cost of sales, were $78.5 million in the second quarter of 2026 compared to $81.7 million in the second quarter of 2025. Sales and marketing expense in Q2 of 2026 was essentially flat at $61.1 million versus $61.5 million last year, but against a significantly higher revenue base. In Q2, we added 390,000 Guild members versus only 230,000 that we added in Q2 of 2025. We actually accelerated growth and did so more efficiently. Now on an annual basis, in 2025, we spent 78% of Guild revenues on Guild sales and marketing. And we got the return on that spend. We nearly quadrupled our paying Guild members that year. But we always knew that as we scale, that spending intensity as a percent of revenue would ease. Through 2026, we brought that Guild sales and marketing expense down to 48% of Guild revenue, a significant year-over-year improvement, while still growing paying Guild members this year by over 600,000 through June or 60% on an annualized basis. Net income loss was approximately $23.8 million in the second quarter of 2026 compared to a net loss of $15.7 million in the second quarter of 2025. That net loss per share was $0.129 compared to $0.106 per share in the second quarter of 2025. Neal made clear in his opening remarks that we are reaffirming our commitment to limit our full year adjusted EBITDA loss to no more than $25 million. While for the first 6 months of 2026, we show a net adjusted EBITDA loss for the year-to-date at $7.7 million, and that compares to a loss of $46.2 million in the first half of last year and a loss of $94.6 million in the second half of last year. And we stated in our Q1 call that due to seasonality in the streaming business by quarter and the timing of theatrical releases and GAAP revenue and expense recognition in both businesses, there will be quarter-over-quarter movements in our adjusted EBITDA, but we are still on track to remain below our adjusted EBITDA loss guidance of $25 million. Moving on to the balance sheet. We ended the quarter with cash and cash equivalents of $48 million compared to $39 million at the end of Q1. Now we are delivering record-breaking Guild membership and improving efficiency while we also deliver on growth. Now, let me mention a couple of things about how we're managing that. We have real-time coordination and feedback processes between the Guild acquisition marketing team and the finance team, measuring and directing spend for the best possible outcome. This playbook assures that these teams are in alignment with financial investment, profitability, cash flow, et cetera. They are hyper-focused on multiple metric goals like Guild acquisition, CAC, same-day return on advertising. This manages acquisition cash flow and all the other metrics while growing Guild membership. It's hard science, and it's executed by really brilliant people. And these metrics are targeted and aligned in coordination with our financial goals on a daily basis. It's not by accident we've seen these results. The takeaway here is that this real-time feedback loop enables the finance team and the Guild acquisition and marketing team to focus our growth while staying in alignment with our adjusted EBITDA goal. We drive the greatest financial returns possible while maximizing our key KPI, namely paying Guild membership growth. Some of this is exhibited on our balance sheet with the cash and deferred revenues. Total deferred revenue at the end of June of 2026 was $83 million. 6 months prior to that, it was $67 million, and a year ago, it was $40 million. So let me end where I started. Angel operates a unique and straightforward business model, and Q2 saw that model continue to expose itself in building and sustaining for future profitability. Every facet of our business is directed toward growing and retaining the Angel Guild, our paying members. And our In Real-Life experiences, theatrical releases, premieres and a growing library of values-driven films and shows drives more paying members to the Guild. The enhanced quality and quantity of our library reflects how filmmakers are attracted to our unique revenue sharing model, which in turn drives more paying members to the Guild, which then increases the royalty pool and enhancing filmmakers returns and so on. The Angel flywheel for future growth is spinning and producing results, strengthening our balance sheet and growing our community, the Angel Guild. Thank you, and I'll turn it over to the operator now for questions.

[Operator Instructions] And your first question comes from Eric Handler with ROTH Capital.

I'm wondering if you could talk a little bit about your sort of marketing patterns. I mean, there's nothing linear about it. But trying to understand the ebbs and flows of when you push with marketing and when you sort of pull back. It seems like there's a focus around the theatrical releases. But sort of can you give some color about how you think about those patterns?

Well, since Scott's been here, he's really worked with the acquisitions and marketing team on this. I'll let him speak to that.

So as we spoke in prior calls, Eric, and thanks for the question because it's really pertinent to this Q2 results. As we -- when we market, we are specifically looking towards 3 things. One is that, we're able to grow effectively, meaning we want that number to grow, and we had amazing results in terms of growth in Q2, and we're really excited about that. Number 2 is we want to do it at a specific cost. Now that cost is a multiple of our ARPM, so if we added 175,000 members or so more in Q2 than we anticipated or at least that the consensus anticipated, I should say. And with that, comes a cost, which we recognized in Q2 as well. So it has a short-term push down on our profitability, but with a long-term benefit. But what we do is we actually buy into those numbers, meaning that, if a particular campaign or a particular seasonality that may be occurring, there's different seasonalities, both in cost of advertising and in terms of response, meaning that -- and as our awareness grows and then we start to acquire different sort of genres and our -- the different things within the company grows and the changing demographics out there. If we're buying into those specific numbers, you may see that number adjust. So we -- if we're seeing great conversion on a campaign, we're going to spend more heavily into that, which will increase our growth, but do so at both a good cost from a GAAP perspective and in a cash-efficient manner. Both of those things have to be true for us to continue to spend hard. And if they are, you'll see the ebbs and flows as they go. We may see August Q3 is a little bit of a slower quarter for us. So if we're not converting, we may pull back on our spend some, which will slow our growth. But as we efficiently can convert, we will continue to do so. Did you want to add something?

Well, I think you've done a great job with the team as far as having discipline in the costs, but also prioritizing growing into our huge total addressable market. I wanted to just talk about 2 things, Eric, from a big picture standpoint that were breakthroughs for us this quarter. So one is that, we developed internally our own system. We call it the Ad Factory and another one called the Creative Studio that allows -- has enabled a new level of scale for our marketing efforts and more granularity by using AI tools to help us launch and iterate on ads for this growing number of titles. You saw how much we're ahead of schedule on the number of titles for this year that we've released. And that's been made possible and we're able to take advantage of those opportunities because of this new technology that we've developed here internally. So that's been a big breakthrough for us. The second thing is that, we've tracked through a third-party, a question about basically aided awareness, which of these streaming services do you recognize and Angel's name is included in that question. And we've gone from some -- around 8% a year ago to 14.9% in our last survey. So the overall awareness of Angel is growing. So our marketing becomes more effective as people become aware of Angel and Angel actually has a streaming service as part of the platform. The community, the streaming service, the theatrical campaigns are all part of the Angel platform that are helping grow our mission. But those kind of breakthroughs where we have those kind of basic awareness here in the U.S. double in a year, it's a pretty big deal for us. And I just want to talk about those things from a big picture standpoint.

That's very helpful. And then secondly, the last 2 quarters, you've seen some nice upside from the content licensing line. Now admittedly, it's a bit small. But can you talk about what sort of triggers the content licensing deals? Is it TVOD? Is it licensing out content to other streamers? What goes into that?

That's a great question. So if you look through the life cycle of an Angel original, like Young Washington, which had a great release, it goes to theaters. As soon as it -- the first place it becomes available after theaters is for Angel Guild members, and it becomes available for premium video on demand, which we have direct relationships with Amazon, Apple, Fandango and other providers, where people can essentially rent or buy the title to watch at home while it's in theaters for $24 or $25 or something like that. And that goes into the content licensing category. There was a recent announcement we're trying to grow the notoriety of the David IP, and we licensed the title to Netflix, which hit #1 on Netflix and which is very, very exciting because it's -- there's tens of millions that are now being exposed to the David intellectual property. That also falls into content licensing. The -- we've done deals with Prime and Peacock and Solo Mio was just released on Hulu. We licensed that to Disney. And so all of these fall into the content licensing category.

Your next question comes from Andrew Crum with B. Riley.

Scott, the business has demonstrated some nice year-to-date gains on adjusted EBITDA. And I guess in order to achieve your annual guidance, you'll need to increase the year-on-year improvement more substantially relative to the first half. So can you address what the swing factors are in the second half to delivering against your annual target?

Can I just interject real quick before Scott jumps into that answer? And Scott is the right one to answer. But I just want to reiterate something just from the big picture. So when it comes to adjusted EBITDA and this Scott talked about how we have a customer lifetime value. And then we have a customer acquisition cost and then we have a monthly average Guild member revenue. Angel is in growth mode today. We have a large total addressable market, and we are growing as fast as possible in a cash-efficient manner where we can control our own destiny. So the size of the market is so large that we are very focused at the company on just reaching a larger and larger and larger section of that market. And then I'll let Scott speak to the specifics of the financials.

Keep in mind, we added approximately 600,000 members to our ranks in the first half of the year. And we did so at a negative $7 million-plus adjusted EBITDA number. Now that -- and if you look at the current number that we post, it's approximately 2.85 million or 2.86 million or 2.88 million rather right now. As we continue to buy into that growth, we're not anticipating -- for example, we could stop growing right now, and we would massively change our adjusted EBITDA guidance. But because we are in this growth mode and we continue to spend into that number, we anticipate for the rest of the year to be at a slightly negative adjusted EBITDA number based on the growth expectations we're having. If we don't -- if we were to stop at 2.88 million where we're at today and at the end of the year, we would be in -- from a profitability standpoint, we look far, far better. And then you'd be asking us why we didn't take advantage of growth in the second half. And so the reality is that we are going to continue to grow as long as we can do so at the numbers that we're experiencing at this time which according to our calculations, would put us still south of a negative $25 million, meaning less than negative $25 million adjusted EBITDA. And if it's better than that, 1 of 2 things happen. One is that, we slowed growth because we weren't seeing the numbers coming back to us in terms of targeting efficiency, both on a cash basis, on a CAC basis. And/or secondly, we're starting to see things like a massive theatrical hit may make a difference to some degree or we get a great downstream deal we weren't anticipating. But the business is fairly scientific. As long as we're growing and we can do so at the numbers we're looking at right now, and we keep literally on a daily basis, we're adjusting one way or another. We've got this massive TAM we're going after, and we're going to grow as quickly as we can with our current balance sheet. We're not expecting to raise cash to do this. We believe we can grow. Now down the road, we may say, hey, we can bring even a greater result if we had some more cash. And we might say, let's go ahead and raise some funds next year or the year after sometime down the road. But right now, based on our current balance sheet and our current growth expectations, we're continuing to spend into that. The only real swings what I would say that would occur, like I said, would be that we -- for some reason, growth were to slow, which we don't anticipate. And or secondly, that there was sort of like another revenue stream that came on that we weren't expecting. That was higher than what we were expecting like a box office hit of some sort. Otherwise, I would say, we added 600,000 members with a negative $7 million adjusted EBITDA. If that were to happen again in the second half, I think everybody would be really pleased.

And we yes, and we've got the balance sheet to exceed consensus expectations for Angel for sure.

Okay. And then maybe a follow-up, Neal. As you think about extending into new genres, 2Q featured 2 breakout hits and obsession in backrooms that were spawned through popular YouTubers that seem to appeal to the younger audiences. Now for your business, do you see that as a white space opportunity?

That's a great question. And those were perhaps not Angel titles, but they were good examples of community getting behind a particular launch of a film for a specific YouTuber and kickstarting the release of those films. What's powerful about Angel's model is that, rather that being based on a YouTuber or a specific film or brand, it's based on the trust of the community for the Angel brand. Because Angel, all titles are selected by the Angel Guild members and as people grow to trust the brand and our Guild grows in size, our releases will get bigger and bigger and bigger. So we think that, that's a -- those are great examples of the anatomy of a successful release. It's just that we've built an economic model that takes advantage of that. Like it's one thing to go and have a flash in the pan box office. And then when you're done, you have to start over again and release another title with another YouTuber. But with Angel, we have this defensible community that gets increasingly difficult to replicate where we're able to deliver those kinds of results over and over and over again. And occasionally, we'll have a title that once it gets kick-started by the community, it will catch fire in the greater market, and it will do something like what David or King of Kings or Young Washington or Sound of Freedom did. And that's great. That helps us reach new audiences and build the size of that community to a larger community. Now, when it comes to actually working with YouTubers, we do have some specific efforts and projects and technologies we've been developing to make it easier for people who have YouTube followings to get involved at Angel, and we think that's going to be an important part of the future.

Your next question comes from Thomas Forte with Maxim Group.

Great. So Neal, Scott, Luk and Jeanette, congratulations on the quarter. I have a statement and a long 2-part question, and I'll say it all at once. So first off, is --

Objection compound question. No, I'm just kidding. Sorry, Tom. Go ahead.

Okay. But I didn't want you to start answering before I finish, Neal. Thank you for the interjection. So first off, it was an honor and a pleasure to watch Young Washington in movie theater with my family on the 4th of July to celebrate America's 250th. So thank you for that. And then second, so Neal, you discussed this in your prepared remarks, but I wanted to ask the following. I think there's a lack of understanding by investors on how Angel Studios makes money, including a misunderstanding in the role of theatrical releases play in the strategy. So I think investors believe Angel Studios is trying to make money on its theatrical releases. Otherwise, why else would you spend the time and effort to do that? I think you're clear in communicating that the theatrical releases are a means to market your subscription video-on-demand service and increase your membership. But I think investors still expect you to at least try to make money on the theatrical releases. So I'd appreciate your thoughts on that. And then lastly, I think there's a structural challenge for the company to overcome and would appreciate your thoughts on the following. I think most investors think theaters and theatrical releases are going the way of the dinosaur. So why do you feel differently?

Okay. These are great questions, both around theatrical and give me an opportunity to speak to those points. So of course, Angel is going to execute on every single theatrical release with the utmost marketing efficiency and with the intent that they will hit the zeitgeist and become profitable ventures. And we've had that happen a number of times where films have made a profit in the box office, and we celebrate those films when they -- yes, when they give a return in the box office, that's a great, great success. But building a business model around that is like going to Vegas to try to make money. You got to be at the table over and over and over again for a long time to be able to make money. And we just don't want to operate with our livelihood dependent upon that business alone. Now that said, we do it really, really well. The Media Odyssey podcast said that for 2023 through 2025, we were the highest average per title box office in -- of all distributors in independent films. So our model is working. We're becoming more and more successful at the box office and intend to do so moving forward. The box office has a couple of other unique things about it. That is, is that we've got a younger generation who's growing up, and they're kind of sick of living on their phones. I mean, there are some people are addicted to their phones, but they are hungry for in-person experiences. They're hungry to meet new people. And so we are very intentional that at Angel about building a brand around being together in-person. So we have Guild premiers. We have Guild screenings. We have these large theatrical events. And we actually show when people are checking out with their seats where Guild members could be sitting, so they can sit next to a Guild member and get to know somebody new. And that's community. And the strongest brands in our world today are built on a mixture of digital and physical experiences. And so that's going to be really important. And the numbers bear this out. When I was on a panel, I mentioned this before, but I was on a panel with the IMAX CMO and I think the CFO of Cinemark. And the IMAX CMO said that their biggest demographic and the fastest growing is Gen Z. And then that Cinema United study came out that Gen X -- or is it -- am I getting confused? No, Gen Alpha. The IMAX said Gen Alpha and then the Cinema United said Gen Z is the fastest growing among the theatrical population. So those are the young people, and they go to movies more and increasingly more than other people do. And so this story that cinema is dying is it doesn't bear out in the numbers. Young people are going, which is the future of the cinema and people are increasingly wanting that in-person experience. And so Angel, we're leaning into this long term because it's such a growth driver for the larger Guild community. And then I'll just add that really great talent wants to be on the silver screen. And so we're able to get talent to participate in Angel's ecosystem that wouldn't otherwise do so. So thanks for those questions, Tom. Do you have any follow-up? Or is that going to --

Can I just make one point? I think it's really important.

Yes, go ahead.

So Tom, we read your guys' analytics reports around the theater chains, the IMAX, the Cinemark, et cetera. And as I look at them, it looks like those that are doing it right are seeing growth in their returns and that they're actually getting -- it's a more -- it's a different world, and you have to address it differently. And I think what you're seeing is an evolution perhaps of the way that the theaters present their value proposition to their customers, and it's going to change. But I don't believe it's going away. Malls did the same thing back in the e-com days is that they had to adjust and there was consolidation. But at the same time, in some places, those things are -- retail is still a real thing. It's not going away. We believe that theaters are still going to continue to thrive. It may be a little bit differently. Maybe there will be consolidation. But we believe in the fact that people are searching for great storytelling, and they like it in different modes. And I think they will continue to see them in theaters. They're going to continue to stream. They're going to -- who knows what's next. All we know is that, it's all about giving value to that customer at the end of the day.

Your next question comes from Jason Helfstein with Oppenheimer.

A few questions. So first, if I'm doing the math right, I think your Guild contribution margin in the first half was something like 38%, it was obviously positive and meaningfully better than last year. So I guess as you think about the seasonality between the first half and the second half, do you generally think about like that marketing efficient? Like how does it move? Do you generally have higher or lower contribution margins in the first half versus the second half? And I've got a few more.

Generally, speaking, it's not going to change too dramatically. You do see some things happening in Q4, in particular. For example, advertising CPMs go up, which makes it more difficult to be as efficient on your marketing spend. At the same time, you do have a greater -- you have more customers out there looking for entertainment. And so you get a little bit benefit of both worlds. So there may be a slight tweak from one season from one period, the first half to the second half. But if I were to say it would probably slightly go down in the second half because of the cost of marketing, but I don't think you'll see it that dramatically. Remember, we have a base that we've already acquired, and they're the largest component of that revenue number. So that will continue to go forward. And you'll just see it in the growth in terms of how that works in terms of contribution margin. Yes, our pricing isn't really changing. You may see some discounting occasionally for a sale that might go on at Black Friday or something, which could have a temporary impact on it, but nothing dramatic, I would say, in the second half.

And then of course we've got -- of course, we've got 7 theatrical releases in the second half of the year and 3 in the first half, which those tend to change the margins.

Yes. That mix is probably the biggest component of the overall contribution.

Right. And then to help us like to that point on the theatrical revenue side, right, which component is probably very hard to predict. Like so those -- and then how do those 7 movies allocate between 3Q and 4Q?

Well, we've got one released, right? We released Young Washington. It's about $46 million, $47 million. And so that -- the majority of that is going to be -- I mean, the theatrical for that is going to be recognized in Q3. And then we should -- we'll have Brink of War and Runner this quarter. And then the next quarter, we've got Hershey and Angel and the Badman and Drummer Boy, that will come out early enough to start recognizing revenue. And then Zero A.D. is going to mostly get pushed. Well, it's December 11. So we'll -- Q4 should be pretty strong, assuming that we have some good releases. But both quarters, we're going to have a lot stronger theatrical revenues than we did in Q2.