Alliance Entertainment (AENT) investor relations material

Executive summary

• Q1 FY2027 revenue rose 9.8% to $278.8M; GAAP net income increased 56.2% to $7.6M and diluted EPS rose 50% to $0.15.

• Gross profit grew 13.3% to $42.1M, with gross margin expanding 50 bps to 15.1%; adjusted EBITDA was $12.311M versus $12.208M.

Financial highlights

• Operating income was $10.6M versus $10.5M; operating expenses rose 18.3% to $31.5M, including higher fulfillment and SG&A costs.

• Adjusted net income was $7.245M versus $7.3M; adjusted diluted EPS remained $0.14.

• Interest expense fell 48.8% to $1.2M; the effective borrowing rate declined to 5.3% from 8.4% following refinancing.

• Operating cash flow increased 58% to $4.3M; inventory used $25.4M of cash, partly offset by a $27.8M increase in accounts payable.

Outlook and guidance

• FY2027 priorities include profitable growth, working-capital efficiency, expense discipline, improved operating leverage and investment in warehouse automation.

• AI and automation initiatives, including WebAmi's January 2027 launch, are intended to streamline workflows and support future growth and operating savings.

• Management expects gaming to improve next quarter on easier comparisons and expected product activity; Grand Theft Auto VI alone will not fully reverse prior trends.

• A 14-store Best Buy music test began in late October; potential expansion to 100–300 stores in 2027 depends on test results.