Dolphin Leisure, Inc. (NASDAQ:DLPN) This autumn 2021 Outcomes Convention Name April 13, 2022 4:30 PM ET
Firm Individuals
James Carbonara – Hayden IR
Invoice O’Dowd – CEO
Mirta Negrini – CFO
Convention Name Individuals
Allen Klee – Maxim Group
Operator
Good afternoon, girls and gents, and welcome to Dolphin Leisure Fourth Quarter 2021 Earnings Name. Right now, all individuals have been positioned on a listen-only mode and we’ll open the ground in your questions and feedback after the presentation.
It’s now my pleasure to show the ground over to your host, James Carbonara. Sir, the ground is yours.
James Carbonara
Thanks. And as soon as once more, welcome to Dolphin Leisure’s fourth quarter and full yr 2021 earnings name. With me on the decision are Invoice O’Dowd, Chief Govt Officer; and Mirta Negrini, Chief Monetary Officer.
I’d like to start the decision by studying the protected harbor assertion. This assertion is made pursuant to the protected harbor assertion for forward-looking statements described within the Non-public Securities Litigation Reform Act of 1995.
All statements made on this name except for historic details could also be thought-about forward-looking statements inside Part 27A of the Securities Act of 1933 and Part 21E of the Securities Change Act of 1934. Though the Firm believes that expectations and assumptions mirrored in these forward-looking statements are affordable, it makes no assurances that such expectations will show to have been right. Precise outcomes could differ materially from these expressed or implied within the forward-looking statements as a result of numerous dangers and uncertainties. For a dialogue of such threat components and uncertainties, which may trigger precise outcomes to vary from these expressed or implied within the forward-looking statements, please see threat components detailed within the Firm’s annual report on Kind 10-Ok contained in subsequent filed reviews on Kind 10-Q in addition to in different reviews that the Firm information once in a while with the Securities and Change Fee.
Any forward-looking statements included on this earnings name are made solely as of the date of this name. We don’t undertake any obligation to replace or complement any forward-looking statements to replicate subsequent information, occasions or circumstances.
Now, I want to flip the decision over to Invoice O’Dowd, Chief Govt Officer of Dolphin Leisure. Invoice, please proceed.
Invoice O’Dowd
Thanks, James, and hello, everybody. Good afternoon, and thanks for becoming a member of us right now.
As all the time, we’ll begin with a evaluate of some monetary and working highlights, adopted by a full monetary evaluate, after which we’ll open it up for Q&A.
Total, 2021 will likely be remembered as a transformative yr for Dolphin, each with respect to our steadiness sheet and working revenue in addition to in our evolution to creating investments and property for which we imagine our advertising and marketing experience will significantly affect the chance of success.
Let’s begin with our monetary statements. The momentum from the primary 9 months of the yr carried via to the fourth quarter. Trying on the P&L, we’ve got set one other new quarterly income document with $10.5 million in income, up 57% year-over-year. Every quarter of 2021 set a then document for income. Q1 reached $7.2 million in revenues, a document damaged in Q2, which reached $8.6 million in revenues; adopted by Q3, which set a then document with $9.4 million in revenues. Now we’ve got achieved $10.5 million in revenues in This autumn, all of those will increase have been solely natural and a results of the Tremendous Group’s progress and cross-selling of companies. And with every successive quarter setting a brand new document in income, clearly, the complete yr set a brand new income document as properly reaching $35.8 million, which is an approximate 49% improve from the prior yr.
Subsequent, we take a look at our working revenue, which is the metric by which we gauge ourselves. 2021 was a milestone yr on this regard in addition to we turned working revenue constructive after deducting noncash gadgets of depreciation and amortization and a change within the truthful worth of contingent consideration. We’re very pleased with this achievement, particularly since our bills included investments in our 2.0 initiatives.
Lastly, I’ll make a touch upon our steadiness sheet. Whereas I do know that we are going to be releasing the steadiness sheet upon the completion of the audit, which we count on to happen within the subsequent few days, I might be remiss if I didn’t level out, and imagine me that this feels nice to say, in 2021, we reached a working capital surplus with extra cash available than all remaining debt, together with long-term debt, which has allowed us to take away our going concern, an amazing milestone for any microcap public firm.
Now, let’s transfer to some operational updates on our Tremendous Group, the businesses which might be making these nice numbers occur. We’ll begin with Shore Fireplace Media. Dolphin’s industry-leading music PR agency, which had an awesome 2021, punctuated by a fourth quarter engaged on shoppers and initiatives who collectively earned 27 GRAMMY nominations, reflecting the breadth of the Firm’s roster throughout R&B, Digital, World, Roots, Folks, Jazz, Blues, Gospel, Modern Christian, Comedy and different genres.
Shore Fireplace’s management in music PR reveals no signal of slowing down. Simply final month, helming the purple carpet on the Bud Mild Tremendous Bowl Music Fest, three nights of All-Star Expertise, together with Inexperienced Day and Miley Cyrus, Blake Shelton and Gwen Stefani with Mickey Guyton; Halsey & Machine Gun Kelly; and different particular visitors.
Turning to 42West, Dolphin’s leisure PR powerhouse. They have been busy within the fourth quarter as properly from the promotion of the newest James Bond film to Steven Spielberg’s adaptation of Westside Story to — and similar to that, the guts stopping a revival of Intercourse within the Metropolis. Should you’re watching it, chances are high 42West selling it. However you don’t must take my phrase for it. The Observer simply launched its rating of the perfect PR businesses in America 2022, a extensively revered listing of the 50 strongest public relations companies within the nation. 42West was ranked quantity 2 within the nation. As soon as once more, the best rating of any leisure PR agency. The Observer notes 42West, led by CEO of Amanda Lundberg, but once more is acknowledged for its elite PR companies for movie, tv and company PR administration with shoppers together with almost each studio and streaming service, a number of A-list expertise and impactful manufacturers like Fandom, Bond, Turner and Riot Video games. Congratulations to everybody at 42West for such an unimaginable recognition.
Shifting alongside to Be Social, Dolphin’s influencer advertising and marketing group. It was a busy quarter that included partnerships with Japanese media franchise juggernaut, The Pokémon Firm. These social group expertise influencer campaigns additionally included McDonald’s, Capital One and SKIMS clothes line cofounded by Kim Kardashian. As well as, Be Social and its influencer community labored on initiatives for trendy footwear room wears [ph] which made Oprah’s Favourite Issues listing in addition to Sports activities Illustrated Swimsuit journal and vogue collections for Nordstrom.
Shifting to the Viewpoint Inventive, Dolphin’s revered inventive relations company and video manufacturing boutique. Viewpoint introduced house 4 Gold MUSE awards on this yr’s worldwide competitors, Viewpoint’s work with shoppers HBO Max, AAA Northeast, the Leary Firefighters Basis and First Look Media gained the classes of video TV program, video insurance coverage, video documentary and video public service and activism, respectively.
Lastly, we’ll speak about The Door, our main culinary hospitality and life-style PR agency. Throughout the fourth quarter, The Door was busy selling the New York Metropolis Wine & Meals Competition launching the Rachael Ray’s e-book, This Should Be the Place, and Dan Richer and Katie Parla’s e-book The Pleasure of Pizza. It sounds fairly good, each of which turned New York Instances class bestsellers and discovering room to advertise Nationwide Peppermint Bark Day for shopper Häagen-Dazs.
Should you’re consuming, consuming or making a reservation for it, chances are high The Door’s selling it. And as soon as once more, you don’t must take my phrase for it. The Door additionally made the Observer’s extensively revered rating of fifty strongest public relations companies of the nation. The Observer notes, The Door led by Co-Founder, President, Lois Najarian O’Neill; and Co-Founder, CEO, Charlie Dougiello, was credited for overseeing the launch of Dolphin Leisure’s NFT studio final yr, together with offering a singular built-in advertising and marketing strategy for a lot of high-profile shoppers, together with Williams-Sonoma, Citarella, Häagen-Dazs Sir Kensington’s, quick informal chain PLNT Burger, the Francis Ford Coppola Vineyard and the Expo to Dubai.
That’s large recognition from the esteemed Observer, and I’d additionally like to acknowledge Charlie, Lois and your complete Door staff for taking part in a vital half within the Dolphin 2.0 initiatives we’re going to speak about in a couple of minutes.
All proper. As a reminder, for anybody new on the decision or to the Dolphin story, we outline the work of our Tremendous Group underneath Dolphin 1.0 is the easiest at advertising and marketing popular culture. And we outline what we known as Dolphin 2.0 as utilizing popular culture to market property that we personal. The entire level of assembling the Tremendous Group of leisure advertising and marketing corporations and placing them inside a public firm is in order that we are able to take possession positions in property we create whereby our type of advertising and marketing experience will affect the chance of success. Merely put, we need to personal among the kinds of issues that we all know we are able to market higher than anyone else.
When it comes to a enterprise mannequin, broadly talking, there are two kinds of Dolphin 2.0 initiatives. Ones the place we develop property within the classes of content material, client merchandise or stay occasions, and ones the place we obtain possession stakes in different folks’s corporations which have property in these three classes.
Let’s discuss in regards to the second kind of Dolphin 2.0 funding first. I’ll begin with Crafthouse Cocktails. In December 2021, we introduced a strategic partnership with Crafthouse Cocktails, a pioneering model of ready-to-drink all-natural traditional cocktails created by world-renowned mixologist, Charles Joly and esteemed restauranteur, Matt Lindner. Actual high quality elements, balanced cocktails and authenticity at each stage have been hallmarks of the model since day 1.
Now Crafthouse Cocktails is an organization that’s nearly 10 years outdated. They’ve an award-winning product line. And so they wished the Tremendous Group led by The Door to assist market their product. They pay us a money payment each month to just do that, and we additionally obtain an possession stake within the firm in return for the added worth of the companies and relationships prolonged by your complete Tremendous Group.
We structured our relationship with FanJolt, one other Dolphin 2.0 initiative that we introduced within the first quarter of this yr in the identical manner. FanJolt is a brand new on-line experiential platform, creating memorable interactions between followers and a curated listing of premier expertise to help their favourite causes. The platform options Rafael Nadal, Aaron Choose, Jewel, Ashanti, Kevin O’Leary, Josh Richards, Jen Selter, Daymond John and Patrick Mahomes’ 15 and the Mahomies Basis and Tua Tagovailoa’s Tua Basis.
And much like Crafthouse Cocktails, with FanJolt, we obtain a month-to-month money payment for our companies, and we additionally obtain an fairness stake of their firm in return for the added worth of the companies and relationships prolonged by your complete Tremendous Group.
With respect to most of these Dolphin 2.0 initiatives, we usually look to obtain someplace between 5% and 10% of the fairness within the respective firm along with the month-to-month money payment.
With respect to the opposite kinds of Dolphin 2.0 initiatives, whereby we develop property that we’re excited to market, we don’t obtain a month-to-month money payment since we’d typically be merely paying it to ourselves. However correspondingly, we take a bigger possession place within the product or enterprise. Examples of most of these Dolphin 2.0 investments could be Midnight Theater and the NFT market we’ve got been constructing.
Let’s begin with Midnight Theatre. On October 12, 2021, we introduced the acquisition of an possession stake in Midnight Theater. Modern selection theater and eating places that can anchor the $4.5 billion growth from Brookfield, often called Manhattan West. As we’ve beforehand shared for Dolphin, the Midnight Theater is probably the most thrilling stay venue idea we’ve got seen in a really, very very long time. It is going to be a really trendy selection theater paired with a incredible restaurant, which is a mix that’s lacking within the cultural panorama right now.
We count on to open the restaurant in June of this yr and be in previews this summer time with the theater with a grand opening and a full 7-day per week theatrical calendar within the fall. Dolphin will handle all elements of publicity and advertising and marketing for the venue, each the restaurant and the theater in addition to facilitate expertise and industrial relationships inside each the leisure and culinary industries. We’re hopeful that Midnight Theater creates a comparatively easy or predictable vary of modeling as a result of though it has two elements, a restaurant — by the way in which, the eating places known as Hidden Leaf and the theater — Midnight Theatre, I ought to add, it has a 3rd element, a bar named James Carbonara’s touchdown spot. It has most of the variables already outlined for the mannequin.
Why? As a result of there’s a sure variety of seats in every, so you’ll be able to mannequin out a median ticket value and the variety of turns within the restaurant, you are able to do the identical within the theater with an assumption of various reveals per week, and it will rapidly get you to a income mannequin. And naturally, we’ll look to function the venue at an inexpensive revenue margin normal within the {industry}. In success, in fact, we’ll look so as to add areas across the nation and all over the world. You’ll be able to rapidly see how this chance can develop into very thrilling for an organization at this stage of Dolphin in 2022.
We invested $1 million into the enterprise for a stake of roughly 13%. We additionally invested within the choices for as much as one other roughly 25%. As you’ll be able to inform, we’re very excited for Midnight Theater.
Now, I’ll flip to NFTs. As a reminder, final August, we introduced our partnership with FTX U.S., the main cryptocurrency alternate and pockets supplier with over 1 million lively customers and over $10 billion of common buying and selling quantity per day. That was as of final August, I’m positive they’re a lot increased now.
Our aim is to create a program world NFT collections focusing on all of Dolphin’s verticals, together with the sports activities, movie, tv, music, gaming, e-sports, culinary, life-style and charity industries. We then introduced in award-winning visible designer Anthony Francisco from Marvel Studios, the place he was the senior visible growth artist answerable for designing iconic characters throughout the Marvel Cinematic Universe.
Following that, in December, we introduced art work had begun on Creature Chronicles: Exiled Aliens, Dolphin’s first generative NFT assortment which can function 10,000 distinctive customized crafted avatars of an historical race of aliens designed by Anthony himself.
In March of this yr, we introduced our partnership with Flower Ladies. Flower Ladies is a nice artwork female-led NFT assortment of 10,000 distinctive Flower Ladies by revered artist, Varvara Alay. Launched in December of 2021, the Flower Ladies has surpassed over $15 million in gross sales to this point and is donating 20% of earnings from each major and secondary NFT gross sales to quite a lot of youngsters’s charities voted on by the group.
In February, greater than $400,000 was donated throughout youngsters’s charities, together with $200,000 to St. Jude Youngsters’s Analysis Hospital, a shopper that can also be on Dolphin Leisure’s in depth roster. The Flower Ladies additionally give an extra 5% of earnings in direction of gathering youngsters’s NFT artwork, supporting and empowering the subsequent technology of artists.
Dolphin is activating its total community of main advertising and marketing and promotional businesses to amplify the Flower Ladies charitable initiatives in addition to increase group advantages and improve worth for Flower Ladies holders. Dolphin may even leverage its distinctive place to discover significant and thrilling new alternatives for model progress throughout all life-style and leisure verticals, together with, however not restricted to, scripted and unscripted tv sequence, digital and conventional publishing, client merchandise, music, gaming and occasions. And naturally, we’ll promote the leaving sugar out of future Flower Ladies NFT collections as a partnering enterprise.
So you’ll be able to see that we’ve got labored onerous over the previous a number of months to permit us to benefit from our efforts within the NFT house. This coming summer time, we count on to produce other Flower Ladies bulletins in Q2 and to launch Creature Chronicles: Exiled Aliens on the market in Q3. Every of those collections can have a retail worth within the seven figures, which permits the NFT — every NFT assortment to characterize vital potential upside for Dolphin, as soon as we go on sale.
So, I’ll pause there. In abstract, we’re extraordinarily happy with these first 4 Dolphin 2.0 initiatives, and hopefully, right now’s dialog offered some further element. Only one yr in the past, on December 31, 2020, we had not but began exploring Dolphin 2.0 initiatives. We all the time talked about January 1, 2021, is the beginning line for Dolphin as a result of by then, we’d have scale with our Tremendous Group, we had 6 corporations which were acquired and that we’d start to discover what we wished to make investments in. By December 31, 2021, we had launched the primary three of those Dolphin 2.0 initiatives, the NFT market was being constructed, Midnight Theater had been — we had acquired an possession stake, and we clearly entered into the strategic partnership with Crafthouse Cocktails. We added a fourth initiative subsequent to year-end, which is the FanJolt social media app.
In closing, I want to additionally reiterate that these 2.0 investments are on high of a rising 1.0 enterprise that has led to document revenues for 4 quarters in a row, together with greater than 57% year-over-year income progress within the fourth quarter. We’re worthwhile and rising with a pristine steadiness sheet and now we’re at a degree the place we are able to see Dolphin 2.0 flourish. This was our thesis after we uplisted to NASDAQ 4 years in the past and started assembling the Tremendous Group.
Thanks for becoming a member of us on this experience. And to that finish, I’ll now flip it over to Mirta Negrini, our Chief Monetary Officer.
Mirta Negrini
Thanks, Invoice, and good afternoon, everybody.
I’ll now focus on outcomes for the yr ended December 31, 2021. Revenues for the yr have been roughly $35.7 million as in comparison with $24 million for the yr ended December 31, 2020. Total working bills for the yr have been roughly $41.2 million in comparison with roughly $26.7 million within the prior yr.
Working bills are composed of direct prices, payroll and advantages, promoting, basic and administrative prices, adjustments within the truthful worth of contingent consideration, depreciation and amortization and authorized {and professional} charges. Direct prices for the yr ended December 31, 2021, have been roughly $3.9 million in comparison with $2.6 million within the prior yr.
Payroll and profit prices for the yr ended December 31, 2021, have been roughly $23.8 million in comparison with $15.9 million within the prior yr.
Promoting, basic and administrative bills for the yr ended December 31, 2021, have been roughly $5.8 million in comparison with $4.8 million within the prior yr. Authorized {and professional} charges have been roughly $2 million in comparison with $1.2 million final yr. Working loss was $5.4 million, which included noncash gadgets from depreciation and amortization of roughly $1.9 million and adjustments within the truthful worth of contingent consideration of roughly $3.7 million. This in comparison with an working lack of roughly $2.6 million within the prior yr, which included noncash gadgets from depreciation and amortization of $2 million.
Web loss was roughly $6.4 million, which included noncash adjustments and truthful worth of legal responsibility of roughly $3.1 million and roughly $0.3 million of a acquire on extinguishment of debt. This in comparison with a web lack of roughly $1.9 million, which was positively impacted by non-cash adjustments within the truthful worth of liabilities of roughly $0.9 million, a acquire in extinguishment of debt of roughly $3.3 million, and a lack of roughly $1.5 million on the deconsolidation of the Max Metal variable curiosity entity for the yr ended December 31, 2020.
Fundamental and totally diluted loss per share was $0.85 per share based mostly on 7,614,774 weighted common shares excellent. This compares to $0.35 primary loss per share based mostly on 5,619,969 weighted common shares and $0.58 totally diluted loss per share based mostly on 6,382,937 weighted common shares excellent final yr.
Money and money equivalents as of December 31, 2021, have been $7.7 million in comparison with $7.9 million final yr.
That concludes my monetary remarks. I’ll now ask the operator to open the telephone traces for Q&A. Operator, would you please ballot for questions?
Query-and-Reply Session
Operator
Completely. Thanks. [Operator Instructions] First query is coming from Allen Klee with Maxim Group. Your line is stay.
Allen Klee
Sure. Hello. Congrats, good beat on my numbers for the quarter. Good momentum. So, the questions that I’ve beginning off, if I take a look at what your income was for the quarter, how — was all this income from the Tremendous Group’s, or was any of it from the two.0 to date?
Invoice O’Dowd
All of it was from the Tremendous Group. We haven’t acknowledged any 2.0 income till this summer time.
Allen Klee
Bought it. Okay. After which, you stated — simply within the timing of simply to ensure I obtained it right. Did you say that Midnight Theater, the restaurant will begin in June after which the theater within the fall, Flower Ladies will likely be in 2Q and Exiled Aliens will likely be in 3Q?
Invoice O’Dowd
Sure. Allen, that’s proper, besides the yet another caveat that the restaurant — and initially, thanks for the type phrases at first of your feedback. We’re very proud of our quarter as properly. So, thanks. The Midnight Theater, the restaurant we anticipate opening in June, we’ll begin the theater in previews. We now have quite a lot of completely different acts we’re reserving now for the summer time. It’s a totally immersive theater expertise. It is going to be a very great place for music, for Broadway cabarets, for comedy acts, for a large — magic acts, all kinds of leisure. We’ll be doing previews of various kinds of acts over the summer time. We now have some fairly thrilling bulletins coming over the subsequent a number of weeks.
After which, the entire theater can have a grand opening within the fall with a full seven-day per week schedule of leisure to go together with the theater — excuse me, with the restaurant. So, that’s the timing for Midnight Theater, sure.
After which, when it comes to the NFT collections, we’ve been constructing our means to and have now completed our means to promote NFT collections, taking a bank card, we’re excited for that. We now have the Flower Ladies partnership that we’re extraordinarily excited by. We count on the Flower Ladies announcement. We’re excited to share right here in Q2, perhaps be looking out for that. After which, we count on to have Exiled Aliens, the Creature Chronicles assortment from Anthony Francisco completed and on sale in Q3.
Allen Klee
And once you stated you anticipated seven-figure revenues from the NFTs, was that referring to the Exiled Aliens drop and the Flower Woman drop, every one among them?
Invoice O’Dowd
Sure. Every assortment can have a complete retail worth within the seven figures. So, that’s the expectation out of your mouth, you bought right here, Allen, as we embark on this journey. However Flower Ladies, the primary assortment did promote out, they achieved a $2 million preliminary sale of the — excuse me, $2 million of the revenues from the preliminary assortment after which they’ve generated over $13 million of secondary gross sales, stands for whole assortment income of over $15 million.
Allen Klee
Nice. Okay. After which, any commentary on the outlook for 2022? I imply, once I take a look at you, I might — simplistically, I might suppose that your Tremendous Group’s enterprise needs to be higher because the economic system opens up, The Door recovers, there needs to be some and cross-selling that ought to in all probability be up year-over-year? After which for two.0, it’s sort of simply the timing of when it’s all going to kick in. But when there’s something you might add of the — and if there’s any seasonality to consider within the enterprise?
Invoice O’Dowd
Certain. Sure. No, thanks. We expect so too. First quarter is all the time the slowest for a lot of of our subsidiaries. So, it wasn’t actually shocking that final yr, identical was true. The primary quarter was the bottom, however the progress has been regular. And as I discussed on the high, it’s all natural, and there aren’t any acquisitions that affected these numbers.
Our final acquisition was efficient as of January 1st of final yr, the Bender/Helper. So, it actually, fairly frankly, we really feel validated. It proved the thesis for Dolphin 1.0 that our acquisitions can cross-sell with one another. And the very fact when you may have the main or the leaders of their respective fields. I imply, let’s simply brag about 42West for a sizzling second, to be ranked, the second strongest PR agency within the nation, proper, in any {industry}.
Once more, the chief in leisure, then you definately’re going to obtain your justifiable share of the expansion of the {industry}. And the arrival of those streaming companies, I believe in all probability everyone on this name subscribes to multiple streaming service. As we wish to say again in 2018 and 2019, after we’re placing the Tremendous Group collectively and was on the highway, there’s going to be all this content material coming. Any individual’s obtained to put it up for sale, proper?
So, this natural progress, the cross-selling, it’s working, we’re rising. After which, why we predict we constructed a greater mousetrap was that we may take our earnings and put money into proudly owning some property that we may take, clearly, we’ll have a lot greater upside if we personal the property that we’re selling. And I’d be remiss if I didn’t level out the Crafthouse Cocktails instance. I imply, right here’s an instance of what we are able to additionally do. There are a variety of corporations on the market which have client merchandise or stay occasions that will need this group of selling leaders to market their product.
So, we are able to higher monetize our companies by taking a money payment each month like we’d usually do than taking an fairness stake within the enterprise to have the ability to entry the 42West and the Shore Fires and the Be Socials as a result of they know that if we market their services or products that they’re extra more likely to obtain their objectives, whether or not it’s to do a fundraising spherical to promote the corporate, to only develop the corporate, have some kind of liquidation occasion sooner or later. So, that’s thrilling for us.
These kinds of offers are equally thrilling for us. After which, once you add to that, the large optionality of one thing like a Midnight Theater, or an NFTs enterprise, then that’s what we imply by we predict we’ve got a greater mousetrap. We now have the optionality of massive swings like biotech corporations or others, however we’re not the main money alongside the way in which. We’re truly making money alongside the way in which. So, that’s I believe our outlook for 2022 is the satisfaction of getting thus far.
2.0 goes to generate income simply a few months. Midnight Theater’s open, Flower Ladies can have an announcement, we’ll have Creature Chronicles on sale. That’s all very thrilling for us.
Allen Klee
That’s nice. After which, on common, the margins will likely be increased than your organization common for two.0. Is that affordable?
Invoice O’Dowd
Sure.
Allen Klee
Then Tremendous Teams, I imply, 2.0 will likely be increased than Tremendous Teams?
Invoice O’Dowd
Sure. Sure. I imply, we’ve got a really, very stable — present companies enterprise, proper, as we are able to see, and people who know our story have seen this being constructed over 4 years. However as somebody who could — who did 20 years of content material possession, proper, additionally earlier than, in success, should you personal the asset you’re advertising and marketing, you’re simply going to make a a lot, a lot increased margin by definition, proper? You’ll be able to present nice advertising and marketing companies for James Bond. However I promise you, the people who personal James Bond are making greater than we’re. I’m simply choosing absurd instance, proper?
Properly, it’s the identical throughout each layer. If it’s a meals pageant, if it’s a music pageant, if it’s a client product, should you personal the product, you’re going to make much more. And there’s sure — and I assume, that’s the underlying assumption of our thesis, too, Allen. There are particular merchandise the place the advertising and marketing makes a much bigger distinction to whether or not they’re going to succeed, proper?
Consider advertising and marketing liquor or consider advertising and marketing magnificence and cosmetics merchandise or consider advertising and marketing fragrance or consider advertising and marketing no matter you may have for example in your head the place being able to promote it and create client adoption is way extra beneficial than say, doing the identical factor for an automotive — vehicle, proper? I imply, the standard of the product issues so much on the car, proper? So, I believe that’s what we’re searching for and use our advertising and marketing to the best financial benefit for ourselves and our shareholders.
Allen Klee
For gadgets — for the NFTs which you could create a model that has — turns into an annuity that you just do persevering with tales, persevering with drops, what do you suppose is cheap for what number of like drops could be executed a yr?
Invoice O’Dowd
Properly, humorous half — that’s an awesome query, Allen. And we’ve got a variety of consultants in-house on the way it works within the analog world for advertising and marketing collectibles to the patron. The reality is nobody else. I imply, the NFT collections began actually lower than a yr in the past right now. So, you’re all the time going to get a clear reply. And the reality is we’re going to experiment.
We expect that the market can maintain a minimum of two drops per yr per model, and we’ll see if we’re proper. And a part of that’s going to be how properly you’ll be able to have interaction the group. These persons are shopping for NFTs to take part a lot of them in on-line communities across the model. And we — the place we predict we’ve got a giant benefit is that we are able to ship a variety of group advantages. We now have experiences, we are able to share with our communities, we’ve got prizes and giveaways. We are able to provide that, fairly frankly, only a few others, if any, can present due to backstage or invites to venues and et cetera, et cetera, so.
After which what we’re additionally enthusiastic about is one thing like Flower Ladies is there’s an awesome model, proper? It’s obtained nice artwork, it’s family-friendly, it’s charitable. And what are you able to do with Flower Ladies, there are a variety of model extensions for that kind of group. And lots of of these model extensions, and I don’t need to give away something that we could also be engaged on or we’ll must announce shortly, fall into the areas of experience of our corporations. So, that’s thrilling for us, and that’s why we chosen that female-fronted NFT assortment to associate with. We’re very enthusiastic about that assortment. And so they’ve executed very properly. They bought out, like I stated.
Allen Klee
That’s incredible. So, for Midnight Theater, I’m simply making an attempt to recollect, there — Midnight Theater is — it’s 160-seat venue. After which, the restaurant is 75 seats plus 20-seat non-public eating, 40-seat bar, lounge. Are there any public corporations you might level us to only to consider like affordable, such as you stated that we may mannequin this based mostly on variety of seats and assumptions? Are you aware if there’s any {industry} rule of thumb that you might level us to for that?
Invoice O’Dowd
Sure. And with out moving into particular steerage preopening or something, it’s a tough one. I’m excited to speak much more about Midnight Theater over the next earnings calls. I’ll say, if you consider, for lack of a greater phrase, I’ll say, cool spots like that, do you take a look at sure teams which have that kind of pedigree, whether or not or not it’s TAO, clearly that was purchased by Madison Sq. Backyard, or others that might create areas across the nation and across the globe. The place we predict we’ve got a distinction, in fact, is that our venue can have that high-quality restaurant, high-quality bar, nevertheless it’s obtained a theater, proper, for stay efficiency.
And as you’ll be able to think about, we predict we’re uniquely positioned to not simply promote the are available in there, however facilitate the relationships with the {industry} or the industries. So, there actually isn’t any direct comp since you may say within the outdated days, Home of Blues, however I’m unsure they might have considered themselves in the identical vein on the restaurant and bar facet. They — they usually have been for music solely.
So what would you contemplate to be one thing related? However we additionally suppose that’s the large alternative, proper? The many individuals on this name are in New York Metropolis, very, only a few locations can supply a full night time out in a single location, and we are able to. And naturally, it’s inside a drop-dead attractive complicated. I imply, it takes two metropolis blocks what Brookfield constructed. It’s unimaginable. And proper throughout the Plaza from us is the opposite restaurant that’s Danny Meyer’s eating places that simply obtained nominated for James Beard award, proper?
However if you need leisure and a high-quality restaurant in the identical venue, then we predict we’ve got one thing distinctive, so. However I believe once you begin modeling round these kinds of comps, I believe you’d get fairly shut.
Allen Klee
Okay. Nice. And you’ve got a lot in your plate, does producing films nonetheless slot in there, or is {that a} perhaps, or how do you consider that?
Invoice O’Dowd
Allen, I believe you simply have to attend a really quick time frame for that vertical to open up for us. Going again to 2.0, we’ve been constant in saying that the 4 legs of that stool for us will likely be taking possession stakes in different folks’s corporations. In order that’s Crafthouse, that’s FanJolt. It is going to be our personal content material, which hasn’t began but, however persistence. It is going to be our personal client merchandise, which has began. And to us, that’s NFTs in a bizarre manner, Midnight Theater, as a result of I imply that information virtually encompasses all of the classes. After which, in fact, our personal stay occasions. So, I believe it’s truthful to say that we count on the content material vertical to open up shortly, and the stay occasion might be nearer to the top of the yr for apparent causes. We’re popping out of COVID, we’re feeling good. The music excursions that our shoppers have booked are holding, music festivals are opened up.
So, when the world — the world is hungry for stay leisure, so we predict we are able to get into stay occasions by the top of the yr, and content material sooner.
Allen Klee
Nice. And I do know you’re not likely — you’re not giving steerage, however any ideas on like the way you’re fascinated by the monetary self-discipline of managing income progress relative to expense progress?
Invoice O’Dowd
Certain. Properly, I imply, if I may give Mirta and the staff at Dolphin, a giant pat on the again, I imply, we have been on this name a yr in the past and stated, we’re going to handle ourselves to make the two.0 investments in 2021 out of the money that we have been producing. And I really feel actually good about the place we ended when — on that P&L subtracting the noncash gadgets of depreciation and amortization, and the change within the truthful worth of the contingent consideration, we landed revenue — working revenue constructive after making the investments within the NFT market and others.
So, I be ok with that. I believe we’ll begin to see our income exceed — proceed to develop, is what I’m making an attempt to say, sorry, the working revenue proceed to develop. After which, with a few of these alternatives, it’s all the time been — simply what are the alternatives that current themselves to us and will we need to take them. And if that’s the case, how we handle our personal money accordingly.
However we’re worthwhile and we’re rising, and I believe we’ll proceed to remain, so even whereas we’re making these investments. Clearly, inside a really quick time frame, the two.0 investments, we count on will generate outsized returns, proper? So, it might simply be a matter of investing a fraction of what we’re making. Proper now, we’re selecting fastidiously as a result of we’re rising our earnings on this yr and final yr or this yr and subsequent yr as we’re making the primary of the funding.
Operator
[Operator Instructions] Up subsequent, we’ve got Greg Greenberg, non-public investor. Greg, your line is stay.
Greg, are you able to hear us? Your line is stay. Greg appears to be having technical difficulties. [Operator Instructions] I’ll put you again within the queue. Up subsequent, we’ve got Brian Swift [ph] with Safety Analysis Associates.
Unidentified Analyst
Hello. Final yr, you had a variety of noncash-type fees, which I assume have been from a message, made prior. You stated you solely did one deal in January of this yr, apart from the truth that it’s possible you’ll do extra offers in ‘22. Do you — how do you envision these kinds of fees? Is that like a nonrecurring factor, or are we going to see extra of that as a result of it sort of made your year-end assertion? It seems such as you’re dropping some huge cash as a substitute of the constructive money circulate that you just talked about.
Invoice O’Dowd
Certain. No, thanks for the query, Brian. We had a few of these truthful worth devices which might be expiring or ending the places finish after final yr, and that created massive truthful worth swings in any given quarter or any given yr. The contingent — after we purchased the businesses for the Tremendous Group, we offered the majority of these acquisitions had earnouts, and that’s the contingent consideration. Proud to say how properly the businesses did in making their earnouts, which is what you need to see, I believe, however they create noncash swings as properly.
So, we’re just about via that. After final yr, there’s just one firm left with an earn-out that will likely be earned, we anticipate by the top of this yr. So a variety of these noncash gadgets are expiring nearly — and it’s fairly doable that each one of them will by the top of this calendar yr. So, we’re nearly via these noncash gadgets.
Depreciation and amortization will stick with us, as you’ll be able to think about, for some time, however the greater numbers that created the larger swings, like in final yr of the noncash gadgets, needs to be — we needs to be completed by the top of this yr.
Operator
Subsequent, we’ve got Greg Greenberg. Greg, are you able to hear us. Your line is stay. Okay. He has technical difficulties. We are able to’t hear you from our facet, Greg. [Operator Instructions] We now have no additional questions within the queue. I’d like to show the ground again to Invoice O’Dowd for any closing remarks.
Invoice O’Dowd
Properly, thanks. And Greg, should you’re on the market, be happy to succeed in out to James Carbonara and be comfortable to line up the decision with you. I’m positive it’s irritating not to have the ability to get the tech to work. And clearly, James does an awesome job for us, and it was our honor to call the bar theater after him, simply kidding. However thanks once more to everybody that has adopted our story.
Clearly, we’re very pleased with the final yr, hit some very nice milestones on a monetary perspective, however that’s solely the beginning. 2.0 is why we constructed this firm. We’re excited for the investments we’ve made. We’re excited for each kinds of 2.0 investments, those the place we take smaller possession stakes in different folks’s corporations and those the place we take a extra lively function and a bigger stake in creating property. And we predict that mixture of a worthwhile firm, a worthwhile base that’s rising with these kinds of upsides is what makes us just a little completely different, and hopefully, one thing that will get folks excited to be — to put money into and be part of the journey. So, thanks for many who are, and I stay up for chatting with everyone once more in only a few quick weeks. So, thanks everyone for the time. Bye, bye.
Operator
Thanks. Women and gents, this does conclude right now’s convention name. Chances are you’ll disconnect your telephone traces at the moment, and have an exquisite day. Thanks in your participation.
