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ALLIANCE ENTERTAINMENT HOLDING CORP

AENTW
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Business Summary

Alliance Entertainment Holding Corporation operates as a global distributor and retailer of physical entertainment and collectible products, including vinyl records, CDs, DVDs, Blu-rays, video games, electronics, and licensed fan merchandise. The company serves over 35,000 retail locations and more than 200 online storefronts across over 70 countries through a multi-channel distribution model . Management believes that a growing market remains for collectible physical media, specialty SteelBook® DVDs, CD box sets, and pop culture collectibles, despite a general shift towards digital formats . The company's competitive advantages are rooted in its service, selection, and technology, which enable it to act as a trusted partner in the entertainment and collectibles landscape .

Alliance generates revenue by connecting content creators such as Universal Pictures, Warner Bros. Home Video, Walt Disney Studios, Sony Pictures, Universal Music Group, and Microsoft with leading retailers like Walmart, Amazon, Best Buy, and Target . The business model is primarily transactional, involving the distribution of physical media and collectibles. The company also operates a portfolio of direct-to-consumer (DTC) brands, including DeepDiscount, PopMarket, and ImportCDs, which contributed approximately 37% of gross revenue for the fiscal year ended June 30, 2025 . Additionally, Alliance provides third-party logistics (3PL) and drop-ship fulfillment capabilities for major brands and retailers .

The company's product categories include Gaming Products, which represented approximately 24% of consolidated revenues for the fiscal year ended June 30, 2025 , down from approximately 31% in the prior year . Vinyl Records accounted for approximately 32% of all Company revenues in fiscal year 2025 , an increase from approximately 30% in fiscal year 2024 . Digital Video Discs (DVD)/Blu-Ray/UltraHD sales represented approximately 26% of consolidated revenue for fiscal year 2025 , a significant increase from approximately 19% in fiscal year 2024 . Compact Discs (CDs) comprised approximately 12% of consolidated revenue for both fiscal years ended June 30, 2025, and June 30, 2024 . Collectibles and Electronics sales represented approximately 4% of consolidated revenue for both fiscal years ended June 30, 2025, and June 30, 2024 .

For the fiscal year ended June 30, 2025, Alliance Entertainment Holding Corporation reported total net revenues of $1,063,457 thousand , a decrease from $1,100,483 thousand in the prior year . Gross profit increased, with gross margins rising from 11.7% in fiscal year 2024 to 12.5% in fiscal year 2025 . Operating income significantly improved to $30,136 thousand from $14,141 thousand in the prior year . Net income for fiscal year 2025 was $15,078 thousand , up from $4,581 thousand in fiscal year 2024 . Diluted EPS was $0.30 for fiscal year 2025, compared to $0.09 for fiscal year 2024. Cash and equivalents stood at $1,236 thousand as of June 30, 2025, compared to $1,129 thousand in the prior year. The company had an outstanding revolver balance of $57 million on its $120 million credit facility as of June 30, 2025, with total liabilities of $258,006 thousand . Net cash provided by operating activities was $26,809 thousand for fiscal year 2025.

Year-over-year, total net revenues decreased by $37 million, or 3% . Vinyl record sales increased by $11 million, or 3% , driven by a 3.8% increase in sales volume and a 0.5% reduction in average selling price . Music Compact Discs (CDs) sales decreased by $5 million, or 4% , primarily due to a 4.5% reduction in average selling price offsetting a 0.4% increase in unit volume . Physical movie sales increased by $75 million, or 37% , with unit volume rising by 14.8% and average selling price increasing by 18.8% . Gaming sales decreased by $83 million, or 25% , due to a 61.5% decline in unit volume , partially offset by a 93.4% increase in average selling price . Consumer products revenue decreased by $6 million, or 14% . Gross margin improved by 0.8 percentage points, from 11.7% to 12.5% . Total operating expenses declined by 10.3% and decreased as a percentage of revenue from 10.4% to 9.7% . Distribution and Fulfillment expenses decreased from 4.4% to 3.8% of net revenue , and Selling, General, and Administrative (SG&A) expenses decreased by $1.7 million, or 2.9% . Interest expense decreased by $1.6 million, or 13.1% .

During the fiscal year, Alliance launched Alliance Home Entertainment, becoming the exclusive distributor of Paramount Pictures’ physical media content as of January 1, 2025 . The company also launched Alliance Authentic, a new division focused on licensed collectibles and branded merchandise, including partnerships with Handmade by Robots, Master Replicas, and Wētā Workshop . On December 17, 2024, Alliance acquired Handmade by Robots from Bensussen Deutsch & Associates, LLC for $7.6 million , adding an exclusive collectible line. In May 2024, the company closed its Shakopee, MN warehouse and consolidated fulfillment operations in Shepherdsville, KY . In April 2024, Alliance implemented the OPEX Sure Sort X® system to automate the sortation of non-standard size products .

Business Outlook

Alliance plans to pursue future growth both organically and through acquisitions, leveraging its public listing to access additional capital . The company intends to execute its acquisition strategy more effectively with this additional capital, building on its proven track record of successfully acquiring and integrating competitors and complementary businesses . Alliance expects to continue pursuing strategic opportunities that strengthen its platforms, expand content breadth and depth, and enhance its distribution infrastructure .

A key growth area is increasing market share by expanding existing product and service offerings and executing its acquisition strategy . The company also aims to enhance its Direct to Consumer (DTC) relationships and capabilities, as consumer preferences shift towards e-commerce, which will grow existing revenue lines and improve the overall service offering . Furthermore, Alliance plans to expand into new consumer product segments by leveraging existing relationships, thereby growing its product offering and attracting new customers .

Operationally, Alliance will continue to invest in automating facilities and upgrading proprietary software . The company has already implemented the OPEX Sure Sort X® system in April 2024 to automate non-standard size product sortation, reducing labor costs and accelerating processing times . In December 2022, an AutoStore Automated Storage & Retrieval System was implemented to improve warehouse speed, reliability, capacity, and accuracy . These automation initiatives are expected to contribute to ongoing operational efficiencies and cost savings .

Planned capital allocation includes continued investment in R&D and capital expenditures to support technological advancements and facility upgrades. The company's primary sources of liquidity are existing cash provided by operating activities and borrowings under its credit facility . As of June 30, 2025, Alliance had $1.2 million in cash and a $57 million revolver balance on its $120 million credit facility . The company does not currently expect warrants to be exercised unless the market price of its Class A common stock exceeds the exercise price of $11.50 per share , given the market price was $3.77 as of June 30, 2025 . Although no definitive plans exist, Alliance may seek to raise additional capital through equity issuance in the future .

Management has explicitly flagged several structural headwinds and execution risks. The company operates in industries experiencing rapid technological development and evolving consumer demand, with a continued shift to digital formats and streaming services . Disruptions in the supply chain, including fluctuating freight rates, labor shortages, and longer lead times for internationally sourced products, could adversely affect the ability to fulfill customer demand and increase costs . Inflation may cause product costs and operating expenses to grow more rapidly than net sales, potentially leading to lower gross margins and net earnings . The concentration of the retail customer base, with the top three customers generating approximately 40% of net sales in fiscal year 2025 , means that economic difficulties or changes in purchasing policies of major customers could significantly impact the company .

Risk Factors

Alliance faces material risks including rapid technological development in the entertainment industry, which could harm its business if it fails to adapt to changes in delivery formats, such as the shift to streaming and digital content offerings . Supply chain disruptions, including geopolitical events, natural disasters, and labor shortages, have increased product expenditures and could adversely impact results of operations, potentially leading to lost sales or increased costs . Inflation may cause product costs and operating expenses to grow more rapidly than net sales, resulting in lower gross margins and net earnings if these increases cannot be passed on to customers . The company's significant indebtedness, including a $57 million outstanding balance on its $120 million revolving credit facility , could adversely affect its ability to operate, requiring a portion of cash resources for interest and principal payments, and increasing vulnerability to adverse economic conditions . Furthermore, the concentration of its retail customer base, with the top three customers representing approximately 40% of consolidated revenue for the year ended June 30, 2025 , exposes Alliance to significant impact from economic difficulties or changes in purchasing patterns of these major customers . Litigation risks include a class action complaint seeking damages in excess of $35 million related to alleged trademark infringement, and other class action lawsuits under the Video Privacy Protection Act, with a settlement amount of $1.577 million for one such case, which COKeM's insurance carrier CNA has approved to cover their part of the settlement amount, estimated at $1.377 million .

Management Priorities

Management's message to shareholders emphasizes the company's unique position as a leading global distributor and retailer of physical entertainment and collectible products, supported by a diverse portfolio of direct-to-consumer brands and advanced warehouse automation. They highlight the company's ability to navigate macroeconomic headwinds, such as high interest rates and cautious consumer spending, by distinguishing itself as a value-added retail distributor with exclusive distribution rights for approximately 175 film and music studios and labels . Management believes that its robust portfolio of exclusive content and deep inventory levels position it to effectively serve both B2B and DTC markets. The strategic priorities for the period ahead include executing an acquisition strategy to build scale and add capabilities, enhancing Direct to Consumer (DTC) relationships and capabilities to capitalize on shifting consumer preferences, and expanding into new consumer product segments by leveraging existing relationships . Additionally, management is committed to continuing technological advancement through investments in automating facilities and upgrading proprietary software, as evidenced by the implementation of the OPEX Sure Sort X® system and the AutoStore Automated Storage & Retrieval System .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Alliance Entertainment is a leading global distributor and retailer of physical entertainment and collectible products, including vinyl records, CDs, DVDs, Blu-rays, video games, electronics, and licensed fan merchandise. The Company’s unique position in the entertainment ecosystem is supported by a diverse portfolio of direct-to-consumer brands, including Critics’ Choice Video, Collectors’ Choice Music, Movies Unlimited, DeepDiscount, PopMarket, Blowitoutahere, Fulfillment Express, ImportCDs, GamerCandy, and WowHD. Alliance connects top content creators, including Universal Pictures, Warner Bros. Home Video, Walt Disney Studios, Sony Pictures, Lionsgate, Paramount Pictures, Universal Music Group, Sony Music, Warner Music Group, Microsoft, Nintendo, Take-Two, Electronic Arts, Ubisoft, and Square Enix with leading retailers such as Walmart, Amazon, Best Buy, Barnes & Noble, Wayfair, Costco, Dell, Verizon, Kohl’s, Target, and Shopify. Through its multi-channel distribution model, the Company serves more than 35,000 retail locations and over 200 online storefronts across more than 70 countries.
  2. [2] Item 1, Business — Industry Background
  3. [3] Item 1, Business — Alliance’s competitive advantage is driven by its commitment to three pillars, Service, Selection, and Technology, which enable the Company to serve as a trusted partner across the entertainment and collectibles landscape.
  4. [4] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  5. [5] Item 7, MD&A — Net Revenue
  6. [6] Item 1, Business — The Company’s operations are supported by advanced warehouse automation and scalable logistics infrastructure, enabling Alliance to offer a broad product selection, high in-stock availability, and fast fulfillment across over 340,000 SKUs. These include core physical media as well as toys, figures, limited-edition collectibles, and licensed memorabilia. Alliance also provides third-party logistics (3PL) and drop-ship fulfillment capabilities for major brands and retailers.
  7. [7] Item 1, Business — Product Categories
  8. [8] Item 1, Business — Product Categories
  9. [9] Item 1, Business — Product Categories
  10. [10] Item 1, Business — Product Categories
  11. [11] Item 1, Business — Product Categories
  12. [12] Item 1, Business — Product Categories
  13. [13] Item 1, Business — Product Categories
  14. [14] Item 1, Business — Product Categories
  15. [15] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  16. [16] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  17. [17] Item 7, MD&A — Cost of Revenues
  18. [18] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  19. [19] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  20. [20] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  21. [21] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  22. [22] Item 8, Note 1 — Earnings per Share
  23. [23] Item 8, Note 1 — Earnings per Share
  24. [24] Item 8, Consolidated Balance Sheets
  25. [25] Item 8, Consolidated Balance Sheets
  26. [26] Item 7, MD&A — Liquidity
  27. [27] Item 7, MD&A — Liquidity
  28. [28] Item 8, Consolidated Balance Sheets
  29. [29] Item 8, Consolidated Statements of Cash Flows
  30. [30] Item 7, MD&A — Net Revenue
  31. [31] Item 7, MD&A — Net Revenue
  32. [32] Item 7, MD&A — Net Revenue
  33. [33] Item 7, MD&A — Net Revenue
  34. [34] Item 7, MD&A — Net Revenue
  35. [35] Item 7, MD&A — Net Revenue
  36. [36] Item 7, MD&A — Net Revenue
  37. [37] Item 7, MD&A — Net Revenue
  38. [38] Item 7, MD&A — Net Revenue
  39. [39] Item 7, MD&A — Net Revenue
  40. [40] Item 7, MD&A — Net Revenue
  41. [41] Item 7, MD&A — Net Revenue
  42. [42] Item 7, MD&A — Net Revenue
  43. [43] Item 7, MD&A — Net Revenue
  44. [44] Item 7, MD&A — Cost of Revenues
  45. [45] Item 7, MD&A — Operating Expenses
  46. [46] Item 7, MD&A — Operating Expenses
  47. [47] Item 7, MD&A — Operating Expenses
  48. [48] Item 7, MD&A — Interest Expense
  49. [49] Item 1, Business — Alliance Home Entertainment
  50. [50] Item 1, Business — Alliance Authentic
  51. [51] Item 7, MD&A — Merger and Business Acquisition
  52. [52] Item 7, MD&A — Operating Expenses
  53. [53] Item 1, Business — Technology
  54. [54] Item 1, Business — Strategy for Future Growth
  55. [55] Item 1, Business — Strategy for Future Growth
  56. [56] Item 1, Business — Strategy for Future Growth
  57. [57] Item 1, Business — Strategy for Future Growth
  58. [58] Item 1, Business — Strategy for Future Growth
  59. [59] Item 1, Business — Strategy for Future Growth
  60. [60] Item 1, Business — Strategy for Future Growth
  61. [61] Item 1, Business — Technology
  62. [62] Item 1, Business — Technology
  63. [63] Item 1, Business — Technology
  64. [64] Item 7, MD&A — Liquidity
  65. [65] Item 8, Consolidated Balance Sheets
  66. [66] Item 7, MD&A — Liquidity
  67. [67] Item 7, MD&A — Liquidity
  68. [68] Item 7, MD&A — Liquidity
  69. [69] Item 7, MD&A — Liquidity
  70. [70] Item 1A, Risk Factors — If we fail to respond to or capitalize on the rapid technological development in the music, video, gaming, and entertainment industry, including changes in entertainment delivery formats, our business could be harmed.
  71. [71] Item 1A, Risk Factors — Disruptions or inefficiencies in our supply chain or logistics network could adversely affect our ability to fulfill customer demand and may increase our costs.
  72. [72] Item 1A, Risk Factors — Inflation may continue to cause Alliance’s product costs and operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings.
  73. [73] Item 1A, Risk Factors — The concentration of our retail customer base and continued shift to ecommerce sales means that economic difficulties or changes in the purchasing or promotional policies or patterns of our major customers could have a significant impact on us.
  74. [74] Item 1A, Risk Factors — The concentration of our retail customer base and continued shift to ecommerce sales means that economic difficulties or changes in the purchasing or promotional policies or patterns of our major customers could have a significant impact on us.
  75. [75] Item 1A, Risk Factors — If we fail to respond to or capitalize on the rapid technological development in the music, video, gaming, and entertainment industry, including changes in entertainment delivery formats, our business could be harmed.
  76. [76] Item 1A, Risk Factors — Disruptions in Alliance’s supply chain have increased product expenditures and could result in an adverse impact on results of operations.
  77. [77] Item 1A, Risk Factors — Inflation may continue to cause Alliance’s product costs and operating and administrative expenses to grow more rapidly than net sales, which could result in lower gross margins and lower net earnings.
  78. [78] Item 1A, Risk Factors — Alliance’s existing and any future indebtedness could adversely affect its ability to operate its business.
  79. [79] Item 1A, Risk Factors — Alliance’s existing and any future indebtedness could adversely affect its ability to operate its business.
  80. [80] Item 1A, Risk Factors — The concentration of our retail customer base and continued shift to ecommerce sales means that economic difficulties or changes in the purchasing or promotional policies or patterns of our major customers could have a significant impact on us.
  81. [81] Item 1A, Risk Factors — The concentration of our retail customer base and continued shift to ecommerce sales means that economic difficulties or changes in the purchasing or promotional policies or patterns of our major customers could have a significant impact on us.
  82. [82] Item 3, Legal Proceedings
  83. [83] Item 3, Legal Proceedings
  84. [84] Item 3, Legal Proceedings
  85. [85] Item 7, MD&A — Alliance Entertainment Holding Corporation Results of Income Year Ended June 30, 2025, Compared to Year Ended June 30, 2024
  86. [86] Item 1, Business — Strategy for Future Growth
  87. [87] Item 1, Business — Technology

Analysis on 5/19/2026