ALLIANCE ENTERTAINMENT HOLDING CORP Q1 FY26 Results

Our first quarter results reflect a strong start to fiscal 2026 and demonstrate the continued resilience of Alliance’s business model. We delivered solid top-line growth and a significant improvement in profitability, driven by high-margin content, disciplined cost management, and growing demand across our omnichannel distribution and fulfillment platform. Physical media remains a powerful driver, led by our exclusive Paramount Pictures agreement and sustained interest in premium 4K and SteelBook formats. Our owned and licensed collectibles brands also continue to expand, with Handmade by Robots™ and Master Replicas performing ahead of expectations. At the same time, our Consumer Direct Fulfillment channel remains a cornerstone of our model—capital-light, scalable, and increasingly critical for retailers as they navigate hybrid physical and digital demand. We’re also beginning to see tangible results from our AI initiative. By embedding tools such as HubSpot and Microsoft Co-Pilot into our workflows, we’re improving sales enablement, speed to market, and customer responsiveness. These innovations are making our teams more productive and our operations more agile heading into the holiday season, which historically represents our strongest quarter of the year. With disciplined execution, exclusive content, and a more technologically enabled platform, Alliance is better positioned than ever to support our partners, capture share in growth categories, and deliver sustainable long-term value for our shareholders.

Our performance this quarter reflects more than numbers; it reflects momentum. We’re building a stronger, smarter, and more scalable business, positioned for long-term value creation. The quarter continued the profitability trend we established last year, with significant margin expansion, higher earnings, and improved cash generation. Gross margin rose 340 basis points, Adjusted EBITDA grew nearly threefold, and net income reached $4.9 million compared to just $0.4 million in the prior-year period. These results reflect a more profitable mix of exclusive content, operating discipline, and efficiencies from automation and AI integration. We also strengthened the balance sheet. Our working capital management remains disciplined, interest expense declined 17% year-over-year, and subsequent to quarter-end we refinanced our credit facility with a new $120 million senior secured revolver from Bank of America. This enhances liquidity and flexibility as we enter the peak holiday quarter, supporting both inventory readiness and future growth investments. Looking ahead, we remain focused on sustaining profitability and cash generation while scaling AI adoption to unlock further productivity gains across sales, operations, and fulfillment. Our platform is built for efficiency and scalability, and with strong liquidity and a growing base of exclusive content, we believe we are well positioned to drive continued earnings growth and long-term shareholder value.