Behind the Big Screen Business: IMAX & the Future of Cinema

When you see the word IMAX attached to a movie title, you know exactly what that means. Big screen, big stars, big special effects. And as a business, IMAX has big ambitions.

IMAX is a small cap company that punches far above its weight in Hollywood. It's helped sustain an industry that struggled at the box office since co-delivering almost 4% of global ticket sales on only about 1% of all screens. Success has brought IMAX a lot of buzz. That's not enough for CEO Rich Gelfond.

This philosophy led him to promote Natasha Fernandez to CFO in 2022. A veteran of nearly two decades at the company, she's made a smooth transition to the more intense demands of the seauite. It's a very unique skill set which includes presentation to investors, management of people.

First of all, I want to thank you all. You guys put a lot of time and effort. You have to balance being aggressive and being contemplative and, you know, being friendly but being tough.

From the quarter, and what do you think went well on the quarter?

Fernandez clearly embraces this role. And as IMAX sets its sights on the future, the team at the top has both confidence and chemistry.

Rich brings a bold vision and we really collaborate well together. He has an entrepreneurial energy around him. I then bring financial structure and discipline, a view of return on investment and really thinking through how do we implement his vision?

How do you monetize his vision while of course holding to that financial discipline and structure you mentioned without blunting the creativity that's driving it?

Oh man, Scarlet, that's a big balancing act going on there. You're in a place where you can see all of this growth ready to happen and you have the ability and the responsibility to make that happen.

2025 has been a banner year for IMAX. It's captured an eyepopping share of opening weekend ticket sales for some of the year's top grossing and most acclaimed releases.

This trend has made IMAX a bonafide power player.

More screens equal more shots at these incremental dollars. IMAX is steadily expanding its global network. With three models for adding systems, the company can take a strategic approach to growth, mixing traditional sales and joint ventures to achieve maximum returns.

Which new IMAX markets have the most growth potential right now?

As his footprint broadens, so does the type of content IMAX is putting on screens. Hollywood blockbusters are still its bread and butter, but more and more local language films are adding a hefty boost to the bottom line.

I'm involved in the alt content and the documentary discussions and the green light review and modeling and looking at the legal agreements. How much room do you have to add shows and how much revenue can that add? Utilization has been something I've been highly focused on for the past year. It's near and dear to my heart because I know that by increasing utilization, that's immediate incrementality to our model and we have lots of room. But the piece that I think people miss is that you're bringing in a new consumer and then they experience IMAX and then you have a fan and now you have a new consumer and therefore you continue to grow your market share.

IMAX's strategy is part science, part art and all about creating bonds with audiences. It's also strengthened bonds with filmmakers through the filmed for IMAX program. Directors like Ryan Coogler and Christopher Nolan have hitched their cinematic vision to IMAX technology. Nolan's upcoming 'Odyssey' is the first film to be shot entirely with IMAX cameras. NextG equipment developed at his request.

Coming up, Natasha Fernandez takes me behind the scenes at IMAX headquarters and explains how strategic financial input makes all the cool output possible.

The lens that I look at it through is essentially how many do we build and in what way because the one thing is we are going to invest to build it right and to build it for longevity.

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CFO Natasha Fernandez has steadily climbed the ladder of responsibility in IMAX's finance department since joining the company in 2007. She was corporate treasurer in 2020 when COVID lockdowns suddenly upended the film industry.

It was a time of crisis and essentially you have every IMAX location across the world closed down. Really no visibility into whether or when you're going to reopen and what that could look like. So managing cash flows became really important. And we had never actually been in that position before. We've always been cash flush. Within essentially about 2 to 3 months, we brought the net cash flows down from being an outflow of $10 million a month down to net neutral. And that was a really big achievement that I was proud of because I really wanted to make sure the company was set up for success in the future.

So the New York office has the same thing outside of Rich's office. Okay.

CEO Rich Gelfond took note of her performance under pressure. Not long afterward, he tapped her for the company's top finance job.

When I visited Fernandez at IMAX's headquarters outside Toronto, we went to the facility where IMAX designs and maintains its cameras. The latest nextG equipment was out with directors on filmed for IMAX sets. But there was still plenty of cool gear on view.

As the head of the finance department, do you look at all the things in this room and think this cost that amount of money, this cost that amount of money?

Thankfully, no. I don't. When I think about cameras in general and what we, you know, when we first... I'll give you a really prime example. The film cameras. When you thought about it, okay, are we building two? Are we building four? Are you building eight? Right? And that's where I start to think about, well, what makes the most sense from a return perspective? Because yes, Nolan wants the cameras, but how many other filmmakers out there use the film cameras? The lens that I look at it through is essentially how many do we build and in what way? Because the one thing is we are going to invest to build it right and to build it for longevity. But do you need 10 of them? No. Building four, that was the right number. And do we potentially want to build a couple more? Maybe a couple more. But I don't think we need 10 because they won't always be in use all the time.

We do sit with the R&D and technology teams and look at what would be the amount of capital they need in a year. So say I airmark them and say you get, if you had $15 million, what would you spend the $15 million on? And then they would allocate and then you start to pressure test the projects that they say and then you bring the $15 million down or up depending on if there's a special project.

I heard the term pressure test from you and I imagine that at different points you need to tell people no. What's that process like for you?

Oh yeah, it's a key role in the CFO position. It is a word that most people are used to and yet they still think you're not going to say it.

Down the hall from the camera facility is the network operations center. In this room, IMAX stays on top of real-time system performance data from around the world. Our Knock Center essentially monitors our worldwide global network to make sure everything is working, that the reliability rate is maintaining a high percentage and that our quality standards are being met. To me, it's all a very good investment and actually it's a very healthy part of our business when you think about our maintenance margins. January 1 every year, I know we have $60 million of revenue and how do I know that? Because we charge a fixed fee to our exhibitors. And so as our network grows, that dollar value immediately goes up, but it's a recurring revenue stream to us as well. So it's not, it funds itself. It is a high operating margin business and it also protects our brand.

Our final stop required a costume change. We put on hazmat suits to enter a clean room where IMAX assembles optical components for projectors. Fernandez oversees financials for a manufacturing operation that sends equipment to some 90 countries.

We do everything here. So even if something is getting sold by IMAX China or IMAX Ireland or one of our other entities, it is all getting built here, shipped out to those entities, then shipped over to the customers.

IMAX is a Canada based company and the manufacturing is done in Canada. How affected by the US tariffs are you?

We've always been subject to tariff risk, currency risk, geopolitical risk, supply chain volatility because we're a global company and we actually source components worldwide as well. And so working through all of that, we've spent decades already building out and assessing what our risks are and weighing those. The immediate risk obviously with the US. I have been working closely with the supply chain group and working through what strategies we could do. Actually spent some time with the transformation team.

Sometimes you think we're finance, we just have to take it as is, but you don't necessarily need to. You can actually add more value by giving scenarios and scenario planning, thinking through what are all the opportunities and alternatives. It gives me the opportunity to say, well wait a minute, that deal doesn't look great when I actually lay it out after you work through all the details, but if you move this one little word around or if you structure the sentence in a different way, it could mean something totally different from a financial perspective. And I'd say this year we've had a lot of those that have come across and it's been a great opportunity. It also is what keeps it interesting, right? Get to work on new things.

Coming up, IMAX has a big chunk of convertible debt coming due in 2026, and that means some big decisions for the CFO.

I'm constantly looking at the stock price. My key focus is not to create any dilution in the stock.

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Since the pandemic caused movie theaters around the world to shut their doors in 2020, global cinema box office revenue still has not climbed back to 2019 levels. Meanwhile, streaming services have stepped up production of original feature films, blurring the line between theatrical and at home platforms. I've always said I think that streaming and the movie theater are additive and complimentary, not adversarial because so many of the studios also own streaming services or have stream services where their big screen movies will eventually wind up. We want to feed that pipeline with big movies and movies that are shown in a movie theater, marketed for the movie theater, those have a higher prestige factor. So, people seek those films out when they finally land on streaming.

Usually out of home theaters and inhome streamers are competing with one another. Is that changing now?

IMAX has emerged from the depths of the pandemic with a healthy balance sheet. The company is carrying about $280 million in debt with $230 million of that in convertible notes coming due in April 2026. Fernandez has plenty of options as she considers her exit strategy.

What are you thinking in terms of how you're going to address this debt?

First of all, I'm super pleased about those notes because that is near and dear to my heart. I did that during the pandemic and I was very pleased with that deal and it was the first time we've ever done notes. Also, we got a great deal. 0.5% and with a capped call brings us up to a $37 price point from an investor point of view. I mean, that's a great stock price to be at before you have any dilution. And so, I was really happy with it. It's unfortunate the term is over and that we have to address it. Natasha led an effort to get a new revolving credit facility. The old one was $300 million, this one's $375 million. So we put ourselves in a strong position, whereas if we want to pay it off, we could pay it off with our credit facility. So we don't have to do anything. Obviously issuing new notes in my mind is the right way to go from an interest rate perspective and a cash outflow annual cash flow perspective; the note interest is much cheaper and lower than the revolver. However, from an investor perspective, I'm constantly looking at the stock price. What is the stock price right now? What would it issue at? If I put a capped call, what would that take me to? What would that stock price then be before any dilution kicks in? My key focus is not to create any dilution in the stock.

In June 2025, IMAX expanded its share buyback program by $100 million. Gelfond and Fernandez say there's no specific timeline to exercise those buybacks.

Natasha Fernandez may not have the name recognition of directors like Christopher Nolan, but when it comes to the financial future of IMAX, the shots she calls will dramatically shape the big picture. I asked her what she sees when she looks ahead.

What is the opportunity for IMAX in the next 5 to 10 years that most excites you, the single biggest opportunity?

I think the opportunity to penetrate rest of world markets. I'm really excited about that because we've seen such success domestically and knowing that that success is within our ability and we just have to execute on it. That excites me because that's within our control and we just have to go make it happen and we know it's there and it would lead to a significant impact on our financials. And so that really does excite me from that perspective and it gives me the confidence in our long-term plan as well.

What's the challenge for IMAX in the next 5 to 10 years that keeps you up at night or gives you a lot to chew over and think about?

So, not much keeps me up at night, which is great, but I do think, you know, as I look at the biggest challenge, it's just will the content hit or miss? And that's a big one. We experienced that in a big way last year with Joker coming out and we placed a lot on Joker expecting to hit our box office guidance for the year and essentially that title pushed us out of the realm of achieving it and we've taken some learnings from it and taken the challenge and tried to address it as an opportunity. So instead of placing your bet into one and holding it there, how do we be more agile on the content side and now have the opportunity to split our world apart and say, 'Okay, we could play 10 different titles in other places so that we're not having the impact of that.'

Complete the sentence. The hardest part of being a CFO is blank.

Wow. Managing my vision and what I want to execute on versus my peers and what they want to execute on. And how do we all get there together?

Bridging those two.

Yes. Yep. So, a friend calls you up, Natasha, and says, 'I've got great news. I've just been promoted to CFO.' And you say, 'Of course, congratulations.' And then you offer what? One piece of advice.

Be a partner. You have to be a partner. Being a CFO is one thing and it is a big position and it holds a lot of power, but you can't get things done on your own. You have to be a partner across the organization within all the different levels. You have to have an ear to listen.

I'm Scarlett Fu. This is Bloomberg.