All right, y'all. Happy Wednesday. Welcome back. We got the IMAX earnings call Q4 and full year 2025. The results just got posted publicly. The call will start in about five minutes. So, we'll look at the press release really quickly. But market does like what IMAX reported today. You can see that big green candle on the right hand side up 4%. This stock is up 100% almost last 12 months, which is why we look at other pickers in this industry because some of y'all would probably like to have some of them that are in the green. And this has been a great stock to trade or hold over the past couple years. Relative safety and gains after gains. Let's look at the press release.
Here we go. February 25th, IMAX delivers above expectations for the full year 2025 across key metrics. Best ever revenue of $410 million, up 16% year-over-year. Strong operating profitability with net income margin of 11% and record adjusted EBITDA margin of 45%. Holy cow. 45% adjusted EBITDA. Record cash from operating activities of $127 million up 79% year-over-year. So operating activities providing $127 million in the last 12 months up 79%. Highest grossing year ever for IMAX at the global box office. Remember they have a big presence in Asia. If you want Asia exposure in the movie exhibitor entertainment arena, IMAX is a good one. AMC covers Europe. Cinemark covers South America. IMAX pretty much covers everywhere and heavy in Asia. 2025 system installations of 160 at very high end of the full year guidance. They had guided 145 to 160. So there you go. They hit the high end of their guidance with 160 signings, signings of 166 installs of 160. Guidance for next year points to another strong year, including 1.4 billion in IMAX box office. They're increasing the installs for next year from 145 to 160 this year. They're going to 160 to 175 next year. Just the growth, the demand for IMAX keeps growing and they have a backlog on installs on top of that. Adjusted EBITDA margin is going to remain it looks like around 45% for next year.
So, what we have a couple minutes before we get to hear from Rich Gelfond and whatever analyst questions there are. If you guys have questions in the audience, now is a good time to drop them. Actually, I'm going to be quiet in about one minute and just listen in with you guys. I did get out the Cinemark recap video earlier this week. The AMC one I'm ready to publish it but I have spent my day tweaking improving making much more useful for you. I think the dashboard, the red yellow green dashboard that we use here on the channel, just something I created to give you guys a visual of how I'm looking at risk versus catalysts. And my past two days have been spent mainly making sure that is ready to fully launch to you guys. And we'll go over Cinemark, IMAX, AMC, Marcus Corp. They'll be the first ones. And I'm really curious to put GameStop through the new dashboard, too. It's not telling you when to buy. It's more just like looking at a company and what is the overall health of this company visually. Everyone sees numbers. What do they mean? A lot of people don't even look at numbers. They just care about naked shorts. But I look at numbers and I want to convey to you in terms of red, yellow, green, as any professional analyst would think about it. What do these numbers mean? When you see them all laid out and then compare them side by side, some things maybe it'll spur you to have an aha moment. Oh, I need to understand what this is that if they're worried about it, maybe I should be. If analyst is focusing on this metric, maybe I should at least if nothing else to understand your opponent. If you view analysts or institutions as opponents instead of peers in the game, I get it. It depends if their viewpoint differs from yours or not, but I find it valuable to try and understand people's viewpoint.
Still got music here. Still got music. Rich Gelfond goes on to say the slate for 2026 is arguably the strongest they have ever seen with a record of at least 12 filmed for IMAX releases worldwide. A highly anticipated offering of family films in a time where they are growing market share of family audience and more international blockbusters than ever. The year is highlighted by huge IMAX centric tentpoles, including The Odyssey later this summer, the first theatrical feature shot entirely with IMAX film cameras and Dune Part Three, The Mandalorian and Grou, and Greta Gerwig's Narnia. Well, there'll be a slide in slide deck going over all of the movies. I don't know if it's in press or and if you're really a numbers nerd, IMAX you know the spreadsheet that I created for AMC where I do forecasting, IMAX provides a spreadsheet for you on their investor relations page. So you guys that really want to get really nerdy on the numbers, go check that out on relations page.
Presentation. There'll be a question during the session. Need to press star one one on your telephone. You will then hear an automated message device and your hand is raised. To withdraw your question, please press star one again. Please be advised today's conference is being recorded. I would like to hand the conference over to speak today. Jennifer Horsey, please go ahead.
Good afternoon and thank you for joining us for IMAX's fourth quarter 2025 earnings conference call. On the call today to review the financial results are Rich Gelfond, chief executive officer, and Natasha Fernandez, our chief financial officer. Rob Lister, chief legal officer, is also joining us today. Today's conference call is being webcast in its entirety on our website. A replay of the webcast will be made available shortly after the call. In addition, the full text of our earnings press release and the slide presentation have been posted on the investor relations section of our site. Our historical Excel model is posted to the website as well. I would like to remind you of the following information that historical Excel model doesn't help you predict like statements that are forward and that pertain to future results or outcomes. These forward-looking statements are subject to risks and uncertainties that could cause our actual future results to not occur or occurrences to differ. Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results and outcomes. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information, future events, or otherwise. During today's call, references may be made to certain non-GAAP financial measures. Discussion of management's use of these measures and the definition of these measures, as well as a reconciliation to non-GAAP financial measures, are contained in this afternoon's press release and our earnings materials, which are available on the investor relations page of our website at imax.com. With that, let me now turn the call over to Mr. Richard Gelfond. Bridge.
Thanks, Jennifer. And thanks everyone for joining us today as we review our results for a record-breaking year and look ahead to a very promising 2026. 2025 was a truly transformational year for the company in which we firmly established IMAX as a premier global platform for entertainment and events with a powerful position among out-of-home experiences and a content pipeline that continues to grow richer and more diverse. We finished with a record $1.28 billion in global box office, up 40% year-over-year. We captured our biggest share of the global box office ever, up 700 basis points year-over-year. We achieved our highest grossing year ever for local language films with $45 million worldwide with 67 international releases from 14 countries, including two of our top five in Neha 2 and Demon Slayer Infinity Castle. And we drove significant network growth with agreements for 166 new and upgraded IMAX systems and 160 systems installed worldwide including 8% network growth in the rest of the world. We are an unqualified winner in a complex entertainment landscape. Signs of our impact are everywhere. Studios put IMAX front and center in their marketing campaigns, driving record indexing and enormous media value for our brand. The New York Times, Wall Street Journal, and Los Angeles Times have all published features highlighting our unique success. Our stock is among the best performers in global media and entertainment, up over 44% in 2025. And IMAX releases earned 58 Academy Award nominations, including five of the 10 best picture nominees. Every one of Warner Brothers' 30 nominations was for a film that played in IMAX, including Sinners, which was shot with IMAX film cameras, and One Battle After Another, which received an IMAX 70 millimeter film run. We delivered at least 20% of the domestic opening for Sinners, One Battle After Another, and F1.
Our financial results reflect our progress and the strength and incrementality in our model. We beat projections across almost every key financial metric, setting several company records. We delivered a record $410 million in total revenue in 2025. We achieved double-digit percentage beats on original consensus estimates for adjusted EBITDA and EPS with $185 million and $1.45 respectively for the full year. We delivered a 45% EBITDA margin, a record, and our first time breaking 40% since 2019. Record operating cash flow of $127 million for the full year. And in the fourth quarter, we delivered record box office and over 50% growth in adjusted EBITDA and adjusted EPS. We expect another outstanding year in 2026 with a projected $1.4 billion in global box office, 160 to 175 system installations worldwide, and total adjusted EBITDA margin in the mid-40s range with a floor of 45%. And through 2028, we aim to drive revenue growth at high single to low double-digit compound annual growth rate, adjusted EBITDA margin of over 50% by 2028, adjusted EPS growth at twice the rate of revenue, and free cash flow conversion of approximately 50% in 2026 and growing.
We believe we are far from our peak, but rather in a period of evolution and growth. With superior immersive technology and unmatched scale, IMAX is the premier global platform for blockbuster content. And blockbuster content continues to grow in importance across the global ecosystem. The world's greatest filmmakers, studios, and even streamers are leaning into blockbuster theatrical releases as drivers of IP and value throughout the chain. As this trend accelerates, IMAX becomes an increasingly valuable player. We're the only game in town with a global platform, content portfolio, and well-recognized brand. We're able to leverage the shift to premium and consumer demand for great out-of-home experiences. And with a very strong slate booking all the way into 2029 and an expanding total addressable market for IMAX systems, we are capitalizing on our strong position and delivering for our shareholders. The slate for '26 is arguably the strongest we've ever seen, highlighted by massive filmed for IMAX tentpoles, headlining a record of at least 12 filmed for IMAX releases worldwide, including Christopher Nolan's The Odyssey, the first theatrical feature shot entirely with IMAX film cameras. Tickets for select IMAX 70 millimeter showings sold out a full year in advance and we will have 40 film locations for Odyssey's debut in July.
The Mandalorian and Grou, the big screen debut of the massively popular Disney Plus former TV series from director Jon Favreau, who crafted the film with cutting-edge technology specifically for IMAX screens. Dune Part Three, the next installment in Denis Villeneuve's franchise and the first of the series shot with IMAX film cameras. And next month's Project Hail Mary, a filmed for IMAX space adventure that is earning excellent buzz and will screen in IMAX 70 mm across 16 locations, an indicator of strong indexing for recent releases. Highly anticipated family releases in a time when family films are leading the box office and IMAX is capturing a greater box office share of family films than ever before, including Super Mario Galaxy Movie, which we're hearing is testing extremely well, Minions 3, and Toy Story 5. The previous installments of these films all gross near or above a billion dollars. A diverse collection of distinctive and filmmaker-driven releases that we believe hold real upside from Michael to Zack Snyder's Resident Evil. Another strong offering of local language films from around the world, including the eagerly awaited sequel Godzilla Minus Zero from Japan and the Indian epic Ramayana. And finally, Barbie director Greta Gerwig's Narnia, a pioneering partnership with Netflix that we believe will deliver greater value to our exhibition partners.
Furthermore, we are already booked for 2027 with blockbusters including Top Gun Maverick and F1 director Joe Kosinski's Miami Vice, which will be filmed for IMAX. Star Wars Starfighter from Deadpool and Wolverine director Shawn Levy. The film looks to be a throwback to the galaxy-spanning adventure of the original trilogy. The Thomas Crown Affair from Academy Award nominee Michael B. Jordan. Avengers Secret Wars, and The Batman 2. And for '28, we look forward to being involved in Sam Mendes' groundbreaking Beatles four-film event. With two months down in '26, we feel good about our projected box office for the year as we enter one of the most promising periods. Our global box office in January was up 16% year-over-year. Avatar Fire and Ash extended our success with that franchise, earning more than $188 million in IMAX, our sixth highest grossing release of all time and our highest indexing of the series with 13% worldwide. The Chinese New Year holiday delivered $28 million on the strength of Pegasus 3, our biggest Chinese title since Neha 2. And we continue to diversify our content suite, securing an agreement with Apple to stream live broadcasts of Formula 1 World Championship races to IMAX locations this season and delivering a very successful exclusive opening of Baz Luhrmann's Elvis doc epic.
We also continue to drive strong system sales and network growth worldwide, particularly in underpenetrated high-value rest of the world markets, where we installed a record 118 systems in 2025. We now work with more exhibition partners globally than ever before, 257 in total last year, up 28% over 2019. Surging demand for IMAX supported an expansion of our total addressable market to nearly 4,500 total zones worldwide, double our current systems in operation and backlog. To capture that opportunity, we're executing against a four-prong strategy. One, focusing on high growth, underserved markets. We've had tremendous success here, driving our biggest year ever for sales and installations in Japan in 2025, tripling our network in Australia since 2023, and making strong progress in France and Germany. Second, continuing to unlock new opportunities in North America. Domestic is an engine of growth for us with new and existing partners alike, dispelling the notion that this is a fully mature market. In 2025 alone, we struck agreements with each of the biggest exhibitors in the US, AMC, Cinemark, and Regal, that advanced key strategic priorities, including new locations in Los Angeles and New York with Regal and three new IMAX 70 mm film locations with Cinemark. Third, identifying opportunities to add a second IMAX location in high-performing zones. For all our success with marquee locations in major metropolitan areas, we are still deeply underpenetrated in many, presenting an opportunity to grow within our best market centers. For instance, we have only five IMAX locations serving a population of 1.6 million people in Manhattan, including our first new location in 15 years, set to open in Battery Park. And we see a lot of opportunities in metropolitan areas, including Chicago, Boston, San Antonio, and San Jose, among others. And lastly, finally, we continue to explore innovative deal structures that leverage our liquidity. Given our strong balance sheet and momentum, we can help our partners get more IMAX into their circuits quickly through upfront capital expenditures that paid for themselves given our strong market share gains and the impressive film slate lying ahead.
In some, 2025 was a transformational, record-breaking year for IMAX. We exceeded our targets for financial performance and finished with a strong fourth quarter. We drove great results for our exhibition partners, breaking box office records as fans, filmmakers, and studios clamor for more of the IMAX experience. We continued network expansion with significant runway to grow further even as we capture a record share of the global box office. In every way, we've leveled up our performance with an incredibly promising slate locked in for the next several years. We continue to believe the best is yet to come. We're focused on strengthening our position, executing with financial discipline, providing the most immersive entertainment experience on the planet, and delivering for our shareholders. Thank you all, and now I'll turn it over to Natasha.
Thanks, Rich. And good afternoon, everyone. In a time of limitless entertainment options and more discerning global audiences, IMAX delivered record fourth quarter and full year results, exceeding our guidance and street expectations across key measures. Fourth quarter box office was $336 million, up 16% versus the prior Q4 record, driving full year box office to $1.28 billion. We captured a record 3.8% of global box office, up 700 basis points year-over-year, underscoring the increasing value the IMAX platform delivers to exhibitors and to the broader industry. Strong demand for the IMAX experience also drove us to the high end of our installation guidance with 160 systems installed in 2025, up 10% year-over-year. As we keep our focus on delivering value for shareholders from a profitability perspective, our operating leverage resulted in an adjusted EBITDA margin of 45% for full year 2025 above our guidance of low 40s%. And adjusted EPS reached a new full year record of $1.45, an increase of 50 cents year-over-year. Importantly, these results translated into our highest ever cash from operations of $127 million with cash conversion directly benefiting from the margin expansion. Our standout 2025 financial results once again illustrate the uniqueness of IMAX's operating model and position as a leading entertainment platform. And we believe the momentum is carrying into 2026 as we look toward the exceptional slate. With all the major tentpole Hollywood releases still in front of us, many with breakout potential, we believe we are well positioned to achieve another year of strong performance. We expect IMAX box office will build through the year with Q1 representing the lowest box office quarter. Specifically in China, we expect a more balanced year as opposed to 2025 where 46% of China's box office was in Q1 as two of the larger local language titles, Once Upon a Time in the Middle East and Pengu, did not make it into Chinese New Year and will likely release mid to late this year along with there being a more balanced and compelling Hollywood release setup for Greater China.
Taking a closer look at our Q4 and full year 2025 results, we had a strong close to 2025 with fourth quarter revenues up 35% year-over-year, which drove us to a full year revenue record of $410 million, an increase of 16% over 2024's full year revenue of $352 million. Gross margin continues to grow faster than revenues, clearly demonstrating the value proposition of our business model, which enables a high level of incremental profit flow through as we scale our platform and box office growth. Q4 gross margin was at a 58% margin, a 540 basis point improvement over the prior year period, while full year gross margin was $246 million at a 60% margin, up 600 basis points year-over-year. Looking at our results at the segment level, content solutions revenues grew significantly, driven by higher box office with fourth quarter revenues of $38 million or 50% growth over the prior year comparative period and full year content revenue growth of 21%. We have continuously focused on diversifying our content offerings and sought to outperform expectations and 2025 displayed the success of our strategies. Every quarter of 2025 had a different content storyline enabled by our diverse programming strategy. Q1 box office was local language driven. Q2 into Q3, our filmed for IMAX program delivered some of our highest indexing levels in our history. Q3 benefited from a diverse mix of local language, horror titles, and alternative content. And Q4 anchored the year with large Hollywood tentpoles. Fourth quarter content solutions gross profit was $22 million, while full year content solutions gross profit of $100 million grew 50% year-over-year, more than twice the rate of revenue, actualizing the proof point of the significant operating leverage in our model. As a result, we delivered a 66% gross margin for 2025, a substantial increase of 1,260 basis points from the 53% in 2024.
Turning to our technology products and services segment, fourth quarter revenues were up 32% year-over-year with a gross profit margin of 58% up approximately 500 basis points year-over-year. While full year revenues for this segment grew 16% with a gross profit margin of 57% up approximately 400 basis points year-over-year driven by higher systems installed under sales arrangements, growth in box office driving a higher level of rental revenues and increasing maintenance revenue associated with a growing network. In the fourth quarter, we installed 65 systems, up from 58 last year. For the full year, installations reached 160 systems at the high end of our guidance, driving 3.5% growth in our commercial footprint, led by 4% growth in our domestic network and just over 8% in the rest of world. A very strong result reflecting our growth prioritization. We are expanding in the strongest box office markets including in the US, Japan, France, and Australia. Japan grew almost 20% while Australia more than doubled its footprint. We believe growing in our strongest markets will both scale our platform and meaningfully increase our network productivity. And the engine for future growth remains strong as we completed 166 system signings in 2025, an increase of 28% year-over-year. More than 25% of the signings were signed and installed in the same year, reflecting the demand by our exhibitor partners to get IMAX locations quickly up and running to capitalize on the strengthening IMAX slate. We expect the same dynamic in 2026 given the outstanding film slate in front of us. Turning to operating expenditures defined as research and development and selling general and administrative expenses excluding stock-based compensation was $29 million in the fourth quarter and $118 million for full year 2025. Full year operating expenses increased only 1% year-over-year, a much lower rate than the 16% growth rate in revenues, reflecting continued expense and cost discipline that helped to offset the impact of inflation and continued investment in the business. We will continue in 2026 to focus on optimizing our uses of technology and evaluating work processes to enhance productivity across our business as we aim to crystallize a high level of flow through to gross profit and to the bottom line.
Included in Q4 results is $22 million of one-time charges, $15 million for the strategic repurchase of over 99% of the convertible notes due 2026, and $7 million resulting from a non-cash goodwill impairment of the legacy SSIMWAVE business associated with the monitoring of content quality. We continue to lean in on our core business where we see tremendous opportunity to gain share and expand the network. We have been repositioning our streaming and consumer technology business to enhance our differentiation particularly in support of live streaming content across the IMAX platform as well as the evolution of our core DMR and system technologies. With this shift in strategy, we have also been reviewing and optimizing the cost structure of the SSIMWAVE business. Overall, our strong operational performance led to record full year total consolidated adjusted EBITDA of $185 million. Adjusted EBITDA grew 33% for the full year, more than twice the rate of revenue growth, reflecting the operating leverage stemming from higher revenues coming from both box office and system sales. This resulted in an above expectation full year adjusted EBITDA margin of 45% up approximately 570 basis points year-over-year and placing us above our full year guidance of low 40s%. Full year adjusted EPS was $1.45 up 50 cents driven by the strong profit growth. 2025's results reflect a 28% tax rate compared to 13% in 2024 or a year-over-year headwind of 16 cents per share. No tax benefits were recognized for the one-time charges in 2025, while 2024's tax rate was unusually low, having benefited from an internal asset sale to more closely align intellectual property rights with its global operations. Turning to cash flow and balance sheet, cash flow from operations of $127 million set a new full year record, exceeding the previous high of $110 million in 2018. And full year free cash flow, which includes $28 million of investment in the IMAX network through joint revenue sharing systems, was $85 million, which equates to a record adjusted EBITDA conversion of 46% or a conversion of 61% excluding this investment in network growth capex. We believe these results reflect the positive incrementality in our model as well as improvements in working capital which we expect to continue as box office and our network expands.
Turning to investing cash flows, we continue to prioritize use of our available capital to invest in the business, including partnering with exhibitor customers to grow and upgrade the IMAX network through joint revenue sharing arrangements, allowing us to benefit from the rising demand for IMAX and the stellar IMAX slate in 2026, '27, '28 and beyond. Our capital light model and execution have resulted in a strong capital structure. As of year end 2025, we held $151 million in cash, an increase of 50% from year end 2024 and $289 million in debt with a net leverage of 0.7 times. During 2025, we strengthened our liquidity and reduced dilution risk through strategic transactions. We renewed and expanded our 5-year revolving credit facility to $375 million, adding $75 million of liquidity. And in November, we refinanced our 2021 convertible notes with $250 million of new convertible notes at a very attractive 0.75% interest rate. And through this transaction, we simultaneously retired the vast majority of the 2021 notes with cash of $46 million to minimize dilution. Importantly, we also entered into a capped call on the new notes, raising the effective conversion price from the company dilution standpoint to $57 per share. Together, the cash payment for the outperformance in the 2021 notes and the new capped call equates to approximately $70 million strategically spent to maximize the opportunity for shareholders to benefit from the growth we expect in the coming years and in our view is akin in some respects to that of a share repurchase. To sum up, we aim to build on the momentum in 2025. And as Rich shared, the table is set for '26 and '27 with mega titles like Odyssey, two Star Wars movies, Narnia, Dune, and Avengers. Beloved, proven family content, including Toy Story, Moana, Minions, Shrek, and Frozen. Large fan-based video game IP such as Super Mario, Mortal Kombat, Zelda, and Minecraft. Tier one superhero franchise films around Spider-Man, Batman, and Superman, as well as potential for new breakout IP like the upcoming Project Hail Mary film, music-centered content like the 21 Pilots concert and Michael, and new sports ventures such as recently announced with Apple TV for live F1 races. As we highlighted at our recent investor day, we believe we have a clear strategy to continue to expand our entertainment platform in 2026 and beyond to bring the IMAX experience to more audiences. We are focused on deepening our relationships with leading filmmakers and building new connections with a diverse array of content creators and studios. At the same time, we are aiming to grow our footprint, box office and productivity of our network along with the value we can bring to our exhibitor partners. As we have shown, the growth in box office and our increasing network scale will positively impact our bottom line and cash flows given the incrementality in our financial model and our laser focus on keeping operating expenses as flat as possible. Given these dynamics, we expect to drive total adjusted EBITDA margin to over 50% in the coming years. That's why we believe IMAX's position has never been as strong. We are focused on executing on the significant opportunity in front of us to deliver on our guidance and expectations for 2026 and beyond and to drive ever-increasing shareholder returns. With that, I will turn the call over to the operator for Q&A.
Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1 1 on your telephone.
Telephone. If your question has been answered, you should resume yourself from the queue. Please press star one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Mari House with Wells Fargo. Your line is open.
Good evening and thanks for the question. Rich or Natasha, can you give us an update on the state of the Chinese box office and the early start to the Chinese New Year? We saw Pegasus 3 start very strong and outperform initial expectations, but just curious on how is the overall health of the market and the slate ahead. Thanks.
So, Omar, you know, I don't think you could take 10 days and talk about the state of the Chinese box office. I think, you know, when you look at China, Chinese New Year was kind of a, I'd call it a B slate this year and very similar to the slate in 24. And what happened was there were a number of titles that were supposed to open for Chinese New Year and they slipped. They weren't done in production and they moved them to this summer. So I think that's what accounted for kind of modest results during that period of time, but I think in the summer will be better than we thought it would be because we thought those movies would have played earlier. So I think the result is more a matter of timing than it's the result of any trends in the Chinese box office.
That's very helpful. And maybe my second question on local language and alternative content. You guys had a record year in 2025 with over 400 million in box office. Recently announced the new deal with Apple to air F1 races. And based on your investor presentation, looks like you have a big slate ahead. So how much runway does IMAX have to drive local language and alternative content box office alongside Hollywood content? Is there a certain limit to the growth of non-Hollywood content box office?
Well, I don't think we think about it in that way, Omar. I think we try and program the best content for a particular market throughout the year. So, you know, I think one thing you're asking is, are you too stocked with Hollywood films where you can't do a lot of foreign language films? But again, it depends when things are scheduled, how they're performing. We might slide something in if something's underperforming or move something if it's overperforming. But there are a couple of very big international films this year. One is called Ramadano, which is an India film that the director and producer are preparing for global release later this year. And again, I don't think anybody said, 'Well, we have Neha this year last year.' So you just don't know how they're going to break out. But I believe there's enough runway and enough space to accommodate more international films, local language films than we had last year. And we're pretty comfortable with how they look at the moment going out. But I think that's going to continue to be an important part of our business.
Great. Thank you very much.
One moment for our next question. Our next question comes from Eric Wall with Texas Capital Securities. Your line is open.
Thank you. Good afternoon. Um, couple questions on kind of just pricing. I know it's kind of come up in the past. Rich or Natasha, I know you can't directly control ticket pricing with your exhibitor partners, but can you talk about what you've seen maybe over the past year, maybe an average ticket price increase for IMAX showings as exhibitors look to take advantage of this shift in moviegoer demand? Does any expectation for additional increases play into your box office outlook for 26, or could that be an incremental upside driver if they do play into that demand with additional price hikes?
So, I'm not sure what the numbers were for 25, Eric, but I do know that for 26, we've been again, you know, we can't tell the exhibitors what price to charge. That's their decision. But I think given the strength of the slate and especially the number of event films coming out this year, like Mandalorian, like Dune 3, like Odyssey, that there is potential for price increases in there. I think especially if you also look at the film releases coming out. I mean historically the exhibitors charge the same for film as they charge for digital, and even coming out soon is Hail Mary in about 16 film locations. So I think there are definitely instances where I think you could push the price higher, and if we ran theaters, we would certainly do that. I'm hoping that at least where there are films in great demand, of which there are a lot this year, that the exhibitors would choose to test that.
And then just follow up on that. As you build out some of these emerging markets that are maybe a little bit newer to IMAX screens and build them out, can you talk about what you typically see with the exhibitor partners there on their pricing? Do they tend to be a little more conservative given the consumer may not be fully aware of the IMAX product as much as in more developed markets, and they kind of ramp pricing from there? Or do they tend to be, I don't want to say aggressive, but maybe as aggressive as other developed markets at the get-go?
Well, we provide them as part of the sales process with what the IMAX premium is in different countries around the world. So they're aware, and that's one reason they buy in because they understand the price premium. They understand it more as a percentage than an absolute number, because obviously in India the premium ticket price could be different than it's going to be in Japan. So they have the tools to do that, and I think the trend we've noticed is depending on the country, they charge a similar premium than they would somewhere else. So that's not really an issue. I think they understand how to maximize their profit.
One moment for our next question. Our next question comes from Michael Hickey with Stone X. Your line is open.
Hey Rich, Natasha, Jennifer. Congrats, guys. Amazing 2000. First question, Rich. Just on your film cameras, really remarkable run here you've had with 'Sinners' in 25 and getting 16 Oscar nominations is really remarkable, and one battle for another as well, which I think was under digital cameras.
Sorry Mike, we got like over 50 Oscar nominations overall.
Totally, just focused on 'Sinners' but you're right, it's truly incredible. And '22 was 'Oppenheimer'. This year you've got 'Odyssey', 'Dune'. You got your next-G cameras with 'Odyssey' which are quieter and lighter. One I guess, how do you know the right films to pick? Because some are obvious but you look at something like 'Sinners', that was not obvious. And obviously that's been an incredible success. How are you approaching and finding the right films to pick when you have this consistent level of success? Obviously durable. What opportunities? Obviously we see a lot of them, but I imagine your phone is ringing more than ever. Is it installations, maybe a better opportunity to scale more of these 70 millimeter film opportunities, or just relationships with filmmakers, talent, and your competitive advantage overall? Just sort of curious how this builds over time.
So Mike, it's a perfect time to ask me that question because I've been out in LA for over a month right now, and I've been meeting with filmmakers, studios, and producers. You're quite right, the demand is very elevated from what it was before. So I'll give you a couple of categories of answer. Something that never would have happened yet years ago, but well-known filmmakers will approach us and say, 'I want to do an IMAX film,' and they'll actually do a pitch, come in, tell us why what it's about and why they want to do an IMAX and why it's important to them. That's a category, and obviously I can't say who, but last week we got pitched by some very well-known filmmakers and it's a little bit off the beaten track. So if someone had sent in a script, we might not have been interested, but we are interested because it was very unusual. It doesn't fit in a box. Another way which I think is really important is the relationships we have with existing filmmakers. For example, we've done a lot of films with Joe Kosinski over the years, and then he did 'Top Gun: Maverick' and obviously it was a huge success in IMAX, and then we did 'F1' with him, which is not his well-known IP obviously, and it became one of our top films of the year. So Joe was working on his next project, which is 'Miami Vice', and he came to us, and we started talking to him about the different opportunities to shoot on IMAX and different tools. We're still working our way through that. Then it'll be studios who will say, for example, Warner knows it got 30 Oscar nominations, so they're looking at their slate and they're going to a filmmaker and saying, 'Hey, have you thought of shooting this with either IMAX film or IMAX digital cameras?' So there are a lot of opportunities that come in, and I think maybe the most promising one is the filmmakers who have worked with us before and filmed for IMAX, and their desire to use IMAX technology. So there are a lot of ways. Having spent the last month with a level of meetings that I'd never seen before and the types of talent coming in and executives, there's lots of projects coming in. Without spending much more time on this, if you don't know the filmmaker that well, you look at their reputation, look at other things they've shot and what it looks like. A big thing for us is the filmmakers also leaning in to the IMAX of it all. A great recent example of that was Ryan Coogler and 'Sinners'. He made a pamphlet about aspect ratios, he talked a lot about IMAX everywhere he went, and that really helped a lot. So it's all of the above.
Nice. Thanks Rich. The second question, big film for you. 'Narnia' very important film, very important partner. And I think with anyone you sort of crack here seems likely. Just curious, as you continue to, with Ted or whoever on team you're talking with, do you get the sense that they're more motivated, Rich, to make this movie best? Do you also feel like there's a bigger opportunity maybe in the future with this model that you've created here, which obviously was smart, or maybe your normal model you use your cameras? I think just your excitement for 'Narnia', the input from Netflix, and the future opportunity you would see with that for yourself and the broader industry.
So the first point, Mike, is that we make movies with filmmakers, and studios or streamers are part of the system. So Greta, as you know, came to us because she was excited about releasing in IMAX, and together we plan to talk this through with Netflix and brought Netflix into the fold. The most important thing is that Greta is incredibly excited. When she thinks about how to make the movie, the sets, the magnitude and scale, she really leans in. It's too early to see a rough cut, but from conversations with her, I believe she's making a movie that's going to look fantastic in IMAX. That's the thing that probably makes me the most confident in terms of the business model. Netflix has approached us about a number of projects since we did that deal with Greta, and some of them we did under different sorts of models, like 'Frankenstein' with Guillermo del Toro and a number of other things over time. We're always talking to them about different ideas. My hope when I did this deal was that this model is going to work so well. I'm not talking about only the box office, but remember the point of it is to create a buzz and a cultural event. When Greta releases this in IMAX, it will be a cultural event. They're going to get the benefit from that of increased streaming hits after that. Remember, it's a series of books, not a one-off, and it's going to help build an event. That's what we really do. So I'm very optimistic that when the IMAX audience sees that movie, there's going to be the kind of reaction that will lead to a number of good things.
In the interest of time, to allow everyone to participate in the Q&A portion of today's presentation, we ask that you limit yourself to one question. One moment for our next question. Our next question comes from Chad Bon with McQuarie Capital. Your line is open.
Hi, good afternoon. Thanks for taking my question. You guys at the investor day and reiterated today talked about the high single digit, low double digit growth through 28 and hopefully beyond. I think a big component of that is the underpenetrated rest of world opportunity that you've spoken about. So Rich, what do you think the main catalyst is at this point? The business model makes more sense every year for these exhibitors. You're clearly putting up the results. Local language is working. So what's the next inflection point to grow the pipeline for that rest of the world? Thanks.
So when you look at the slate going ahead this year, and I believe the financial returns that follow for the exhibitors, for us we've talked a lot about that, but for the exhibitors, I think it just makes so much sense. Obviously exhibition has had its challenges in its traditional industry, and I think it's certainly looking for growth opportunities for its network and its strategy. I think they look at their box or someone else's box next door that's selling out and getting very attractive paybacks. I think that's going to have a big influence. Using some examples, in Japan in 2025, the per screen average was up an enormous amount from 2024. So the returns to the exhibitors are much more attractive. So it probably doesn't surprise you that there's a lot of activity coming out of Japan in 26, and our team was over there and there's a fairly large number of deals under discussion. Also, Avatar really did extremely well in certain areas like France and Germany, where it was among the leading markets in the world in numbers that were a step change over the previous year. So there's a lot of activity this year, inquiries coming out of France and Germany. So in general, it's looking at performance and trying to replicate it and bring it forward. But then you add some obvious things like the slate this year, whether it's Mandalorian, Odyssey, or Doom Part Two. I think people want to get open in advance of that. The people who opened before Avatar, we looked at the number, I don't recall, but I think we opened like 27 theaters right before Avatar opened. And the performance of those theaters by being open for Avatar, their ROI and payback period were far superior to what would have been if they waited. Our team around the world is using that data and sharing it. I think that's helping create a catalyst. We're also being a little bit more flexible, as we talked about in our prepared remarks, in using some of our capital in different places in the world where we know the results are really terrific. So I'll use Japan again as an example, but the numbers were so strong and compelling, the payback periods are fairly short and the economics very good. So we're seeding some of those markets by using a small amount of our capital to help jumpstart them. So I'd say all of that.
Thanks, Rich. Appreciate it, guys. Good quarter.
