Revenue continued to decline, but the company easily beat expectations.
Shares of Imax (IMAX 8.02%), the entertainment company best known for its massive movie theater screens, were gaining today after the company turned in better-than-expected results in its second-quarter earnings report.
As a result, the stock was up 6.6% as of 11:46 a.m. ET.
Image source: Getty Images.
Imax dazzles its audience
Imax is facing similar challenges to the rest of the movie theater industry as audiences are declining and flocking to streaming services, but its performance relative to expectations is what counts.
Revenue in the quarter fell 9% to $89 million, but that easily beat the consensus at $76 million. Gross margin also plunged from 59.1% to 49.4% due to lower revenue from the box office and fewer hybrid installations under joint revenue sharing agreements.
On the bottom line, adjusted earnings per share fell from $0.26 to $0.18, which topped expectations at $0.07.
Despite declining profits and revenue, CEO Rich Gelfond expressed optimism about the future, saying, “With the strikes and the lingering effects of the pandemic firmly behind us, we are in an excellent position to fully realize the benefits of our strong, asset-light business model.” He also noted that system installations are up and its backlog is growing.
Imax sees better times ahead
The company also lifted its guidance, seeing installations of 130 to 150 this year, up from 128 a year ago and its earlier guidance of 120-150, showing demand for its brand of entertainment is growing. It also said the third quarter was off to a strong start thanks in part to the release of Twisters.
Investors should still hope to see a return to revenue growth, however, before long-term bullishness in Imax is warranted.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.