IMAX Corporation Stock

All right. Great. We'll get started with our next session of the day. Thank you, everyone, for taking the time to join us. My name is Stephen Laszczyk, and I cover entertainment here at Goldman. We are excited to welcome to the Communacopia and Technology Conference this year, Natasha Fernandes, the CFO of IMAX; and Anne Globe, the CMO of IMAX. Thank you both for being with us today.

Thanks for having us, Stephen.

It's a pleasure.

Great. Well, I wanted to start high level. Natasha IMAX, we've seen just incredible demand play out so far this summer between Odyssey and Spider-Man far outpacing supply. Would just love to get your thoughts on your strategic priorities stepping out of a record summer as you look out over the next 3 to 5 years, perhaps across network expansion, content, partnerships, pricing and then the investments that you can make in technology.

I think our differentiated model is stronger than ever. It's all about the power of our platform. And so our opportunity is increasingly about converting your demand into capacity and your capacity into earnings. And when you look at our priorities, of course, expanding the network. I mean we're highly underpenetrated. We're in 1,800 locations, 91 countries, but our TAM is 4,500. And so a lot of -- we're less than 50% penetrated, a lot of opportunity to keep growing and in really high-performing markets. So I think we're really excited about how do we expand into new markets and whether that is using our capital or just signing new deals out of all the momentum that's coming out of The Odyssey and the conversations there.

I think there's a lot of opportunity, deepening our content partnerships. I think filmmakers and studios as they're designing their releases, they -- I'm sure they've taken a note as to how The Odyssey was released and how Nolan graciously sort of leaned into the IMAX of it all and how it has been proven to be such a success out of that.

And I think that that's a great kind of model for filmmakers and studios to take note of and to involve IMAX earlier in the process for releasing a film. Investing in technology is one of our other priorities. I mean it's technology and that technological moat and the differentiated IMAX experience that really creates the brand awareness and the consumer demand for IMAX.

Without a differentiated experience, there would not be a reason that filmmakers, studios and consumers all want IMAX. And so keeping that strong and building on it and improving is really important. And importantly, I think the growth comes overall from just all of that together being leveraged in our model and our earnings model, as you know, our operating leverage in the model, it's all creating higher level of earnings, which has a high flow-through down to our bottom line. And so I think all of that really is what is leading us into the next 3 to 5 years. We feel so excited about where we're going in the future, where we had our best year ever last year, and we're going to have a new best this year as we look at achieving our guidance that we put out for the year and looking at growth for years beyond. And I think it's an exciting time to be in the IMAX business for sure.

It's a great overview, and I want to touch on a lot of those points individually. But maybe first, we start with the summer slate, Odyssey materially outperformed expectations. I would just be curious, Natasha, for maybe your updated views on how The Odyssey changes your shorter-term outlook for the 2026 box, but also to how it influences how you think about the long-term growth algorithm for IMAX?

I think it's definitely strengthened our confidence in 2026. But more importantly, I think it's definitely shown us what our long-term growth model is as well. Like The Odyssey is not just about one big title. It's about -- it's a proof point about our business and about the future of our business. And near term, yes, it's a box office hit and 100% we're capitalizing on that. It's going to run through our financials, and it's going to be -- help us achieve our goals for 2026.

When you look at the earnings opportunity for future years, I mean, in the long term, you're strengthening several parts of the algorithm along the way, like you're looking at more demand from consumers for IMAX screens. And that demand from consumers for IMAX screens then makes exhibitors want more demand for growing their network because they want to deliver for the consumer what the consumer wants. And then once you start growing the network even more, like our global platform is what is highly desired from filmmakers and studios.

So the more you grow the platform globally, then more studios and filmmakers will want that, too, because that's more reach, right? And so all of that put together, you'll get more pricing power because you're going to lead to more higher utilization rates, more revenue per screen. And so it all works in a nice virtuous cycle, but mostly working towards long term. Of course, The Odyssey is helping us achieve our 2026 goals, but definitely setting us up for strength in the future.

And I'm curious if you think consumers are increasingly choosing a movie because it's IMAX and choosing the brand first and perhaps the movie second. And if so, could you maybe talk a little bit more about how the brand has evolved over the course of time to get to this point?

Well, I think with The Odyssey, it was clearly both, right? So we had an amazing film by an amazing filmmaker that really envisioned how to maximize that experience in the IMAX screens. And our dedicated fan base obviously showed up and was very excited about that opportunity. But we also saw new fans coming to IMAX. So it's -- we discovered last year in our own research that our biggest growth area, which is now widely reported for all theatrical is Gen Z ages 13 to 17 that wanted to come to IMAX and want that great experience in the theater.

Our fan base broadly, to your question, has been growing. We're up over 12 million fans following us on various platforms globally. Tremendous amount of additional growth there, particularly in international territories where we can talk to people in local language, and we have all kinds of offerings for fans. We have a newsletter following, which people have to subscribe to purposefully, which is closing in on 1 million followers.

That is a great way for us to talk to fans and for us to have fans engage specifically with the theater that they want to go to, with tickets that they want to get. We're seeing that already create a lot of excitement for upcoming Filmed For IMAX releases that are on sale, such as Resident Evil and the upcoming Dune. So again, with our subscriber base, we're able to be just directly engaged with our fans on an ongoing basis. We're seeing our brand awareness also continue to grow.

So our own study of brand awareness with moviegoers last year was our brand was recognized by 75% of moviegoers in an unaided question. And then now this year already, that's up over 80%. So we are seeing that brand growth, and we're seeing our fan base expand and continue to be excited about what's being offered in IMAX.

How do you hope the brand grows from here? You mentioned a lot of the ways you're engaging with fans, driving engagement, further engagement, perhaps both internationally and domestically. Is there an evolution that you hope plays out over the next couple of years?

Yes, I think we will continue to see that. We do have amazing films created or Filmed For IMAX, both digitally and shot with film that are planned over the next several years, some that we've announced, some that we haven't, but we can look further out and see fans being very excited about that. We have tremendous growth in local language opportunity. And then we're also just seeing generally moviegoing increase and seeing more suppliers of films coming both from traditional studios, from local language suppliers, from even Netflix now, people seeing the value of the theatrical release.

So our fan base is responding very positively to that. And we're seeing fans, of course, who had a terrific experience with The Odyssey and Spider-Man and so forth immediately want to know what is coming next in IMAX. So we're seeing that, again, pay back in ticket sales for future titles. So we think that growth is definitely going to continue to increase with new fans and our existing fan base being much more committed to going more frequently.

What's great about the brand growth is creating consumer awareness for the differentiated experience. Like our whole goal is that when you go out to a movie, you're not necessarily saying, I want to see that movie. I want to go to IMAX. I want to see what's playing in IMAX this week. And if you create the understanding that this is a whole different experience, it's not about just a large screen, but it's about a large screen, a different projector, an enhanced experience, a differentiated sound and a different version of the film, like getting consumers to understand that they are a brand -- have a brand affinity to IMAX, that's where you'll increase the utilization eventually as well as you work through the network. And so that is eventually the goal is to continue to do that. And Anne and the team have done a great job over the past couple of years kind of educating the consumer as to we're not just simply a large screen. There's a lot more going on there.

Maybe back to the summer slate, the other hallmark movie of the summer was Spider-Man, which I don't believe was originally set to play in the North American market. Could you maybe just talk a little bit about the decision to bring Spider-Man back to the slate? And then maybe more broadly your ability to be flexible with programming week in and week out?

Yes. I think one of the things that we've been able to cultivate over the past couple of years is our ability to screen share and to do a multi-programming strategy where having an 1,800-plus network in 91 countries allows you to say certain markets I could play different types of content and not necessarily lean into one movie that has to play in every single location. And so Spider-Man, I mean, we've always -- we always wanted to be part of Spider-Man, but we are committed to Odyssey 100%, of course.

And we wanted to lean into Odyssey as well. But when we realized, well, China and South Korea and Japan were not opening Odyssey on the same day and date, that gave us an opportunity to play Spider-Man. And then once a few weeks have passed for The Odyssey, that gave us an opportunity to play Spider-Man domestically as well. I think it's really great for the strategy to be able to lean in when you have an opportunity. But I mean, the other side of it is The Odyssey. I mean, we only intended to play it for a handful of weeks originally, and it's playing all the way through until the end of September at this point. So it works the other way, too, where you have the ability to lean in even more to a film that is just so well done and really shows IMAX on full display in a unique way. And so I think that, that's also great, too.

Maybe looking ahead, you have Dune coming up later this year, which has the potential to be another tentpole Filmed For IMAX. Would just be curious on the 70-millimeter front, how long do you plan to play the film in that format? And as you take some of the best learnings from Odyssey this past summer in that format, what are you applying to Dune later this year?

June is shaping up to be another title where the IMAX presentation is going to be integral to the release. I think we're working through all the details of how many film locations. Obviously, we have 41 film locations available, but all the details will be sort of unveiled over the next little while. But I think we are playing it for 2 weeks in December, and then we'll continue to play it into January. The release is December 18. We actually are doing previews earlier in that week, which Anne maybe you can touch on in a minute, too. But I think we -- the lesson of The Odyssey, I think it's clear that the consumers want to have the IMAX experience, and it demonstrates that we have the ability to kind of curate that for them.

And so we're being thoughtful about how to approach it and really pull out the differentiated experience of IMAX for the consumer. So they understand the only place to see Dune is in the IMAX locations. That's the best experience. You get the expanded aspect ratio. We'll have the film locations. The sound will be differentiated. I mean the visuals of Dune, just think about it on our massive screen, the cinematography is so well done that it's going to be -- you'll be immersed into it. And so I think that we're planning for it to be something that we've learned over the summer and to make it even better for Dune.

Yes. I think one of the elements of maybe The Odyssey effect is that we were able to start selling tickets early for The Odyssey a year in advance. That became something that we saw that fans really embraced, and then we were able to do that again for Dune. And then we were able to start selling tickets for Dune 4 months in advance, which is, again, pretty long lead time.

But that just is because fans are very excited and want to look forward to the opportunity to see that. Dune, again, it was shot partially with digital, partially with film cameras. But we have an amazing filmmaker coming from the beginning of the process envisioning how that story is going to unfold on -- in IMAX and then working very closely with the filmmakers, both at Legendary and Warner Bros., it's just a great partnership, and that is partly learnings from The Odyssey and the effect of what both the audience experience and what we're able to learn in the marketing side and take those forward into the Dune campaign. And we're seeing great presales. As Natasha mentioned, we do have advanced ticket sales that are already on sale starting on the 14th. So that is going to be leading into the release on the 18th and ahead of Avengers, which is also on that date.

That's helpful. Natasha, on the supply-demand front, Dune is another great example of where supply and demand there'll likely be a mismatch. Odyssey, of course, this past summer. Just be curious, as you look ahead to later this year, where do you think the biggest bottleneck in the system is today? And then lessons learned from Odyssey in terms of handling that for go-forward tentpole releases like a Dune?

I think we see it less as having a bottleneck and more about having an opportunity. I mean, the opportunity to add capacity by expanding the network, that's an obvious thing that we know we want to do and we need to do, and we have the opportunity to do it because we're less than 50% penetrated. So I think it's thinking through -- it's a good problem to have when you have more supply -- more demand than supply.

And so we're going to continue to have good conversations with exhibitors. There's been a lot of activity on the exhibitor front of signing for new systems and expanding the network. And so I think, obviously, from The Odyssey, you're getting some of those theaters from The Odyssey, their per screen averages on the 1 film, they were more than most locations make in 1 or even 2 years. So you can imagine the returns that came out for the exhibitors from that. And that -- those data points are so helpful for our sales team to immediately highlight in the sales pitch because that ROI conversation becomes so much easier when you have all these data points as well to expand the network and to work through there.

So I do think that we're in a good position to continue to increase the supply of IMAX locations to meet demand. But I like the position we're in where there's a lot more demand than our locations for sure.

That's great. I wanted to turn to the competitive environment. Over the course of the last number of years, there's been examples of competition coming in, in the premium large format space. I'd be curious if you could talk a little bit about what differentiates IMAX today versus some of the competition out there. I think in the past, we've touched on things like the filmmaker relationship. There's the proprietary technology, perception of the brand amongst consumers. Could you maybe just touch on some of those topics?

I actually wouldn't choose one moat because -- are we okay, [ Kevin ]? I actually wouldn't choose one moat because the power of the IMAX platform really comes from the combination. We have a global network, and we have proprietary technology, and we have relationships with filmmakers and studios. And so any one of those moats on its own is not necessarily in itself sufficient. I think you need all of it working together in that nice healthy combination for there really to be the success of the platform there.

And I think increasingly, what's been increasing over the past little while is brand awareness and consumer behavior as well. So I think that, that is adding to our competitive differentiation because consumers understanding the difference of IMAX is actually what is helpful towards strengthening that moat as well. Because if you're a consumer and you understand that I haven't just gone to -- I haven't just visited an IMAX location or a regular theater, and I've seen a very big presentation, but I've actually gone to an experience where that film was curated in an IMAX version of the film. It is a bespoke sound set that I'm listening to, like if you sit in an IMAX theater, that sound will shake your seat, and you feel it while you're watching it.

And you're having a whole experience, but also the fact that we maintain our systems across our worldwide network and to make sure that it's a consistent offering. The quality of systems is not something that is maintained for most other offerings, most other screens, right? Systems are not like checked for maintenance levels and sound levels and calibration and everything. Every day, our systems are going through a daily calibration.

There's like small details behind the scenes, but it makes the quality of the experience so much different. And I think all of that adding together along with our technology and the fact that we continue to invest in technology. I mean, we have 80 engineers that work for us that -- we are constantly evolving our technology. We're not just sitting back and waiting for something to happen, we are actually actively pursuing new technologies and making our experience stronger and differentiated. I think all of that coming together kind of creates that competitive differentiation.

That's great. I wanted to focus a bit on the international opportunity, the local language opportunity for IMAX ahead. Maybe a good place to start is with this past year. I'd be curious if you could just spend a little time talking about The Odyssey and Spider-Man and the performance that you saw in China and if that surprised you in any way?

Yes. I think Spider-Man and The Odyssey in China definitely didn't surprise us. I think we knew that they were going to do well in China. And what's interesting is the Chinese consumer is not unlike the consumer in North America. They just want good content. So content that is a good story, fresh, new, something relatable. They actually like a family connection or a relationship in the story is something that they enjoy as well.

So I think from that perspective, that the China market, we know exactly how to kind of create content for them. We just have to make sure that content is created in a way that meets their demands. But on the local language front, I mean, we're doing so many other countries. In the past year, I think we've done 5 or 6 new countries offerings of local language. And it's all part of our whole content strategy of diversifying the types of content that we offer. So whether that be Hollywood or local language alternative content, really making sure that you -- we sort of meet the consumer demand.

Like when we think about our network, we're less -- we're only about 35% penetrated from a network perspective in the international markets outside of China. And how do you grow the network over there? Well, that's by meeting the consumer demand and what the consumers want in those markets is local language content. So like last year, one of our German exhibitors said to us, that there was this really popular German title coming out. We had no idea about it.

But we didn't really know much about what the German content was that was popular. And so when the exhibitor highlighted to us, our film team picked it up and we played it and it did really well. But what's good about that is that then opens the door for conversations with exhibitors, because once you offer them the local language that they want for their country, then -- plus Hollywood, then that's where the conversation for sales can happen as well.

How do you think about the longer-term opportunity for local language and alternative content that you're thinking across some of your key markets in Japan, India, perhaps the some of the underpenetrated markets out there where you see a big opportunity?

Yes. I think that there's a lot of opportunity. I mean, Japan, Demon Slayer is a great example of Japan. We increased our network 20% that year simply in advance of opening Demon Slayer. And then, I mean, Demon Slayer did almost $80 million for us, right, for a local language title. That's amazing. And I think that's a great model and example of how local language can do well. And this year, we're doing Godzilla Minus Zero.

It's our first local language international title that is a Filmed For IMAX title that was crafted by the filmmaker again at the very inception, Academy Award-winning filmmaker, and then we will see additional marketing and merchandise associated with that. We also have Ramayana, which is an Indian title, our second local language Filmed For IMAX title. Those are both first for us this year. We will have more of those coming in years to come. So we see our local language business expanding.

I think we released 67 titles last year. We will release over 75 this year, and we will continue to see that growth in years to come. Just demand again from the audience and amazing filmmakers internationally that want to display their films in IMAX. So we have a robust way of getting those into those markets.

That's great. Maybe to zoom out for a moment and discuss some of the other drivers of the business. I'd be curious just in terms of the opportunity that remains on the pricing side, the take rate side, maybe the broader economic participation that IMAX can gain within the theatrical ecosystem given this position of strength that you currently have.

I think there's still a lot of opportunity. I mean we're not limited to just like improving price or take rates. I think it also comes from higher utilization as well, right? And I think the key is that you have to demonstrate value for every participant. So if consumers are willing to pay for the experience, then exhibitors will receive attractive economics and then the studios and filmmakers will want to keep showing their films in IMAX as well and -- because they'll be growing their box office, right? And so I think there's a lot of opportunity there. I mean we don't set pricing.

The exhibitors set pricing. And of course, we love to feed them data and you have conversations, but realistically, we are not in control of pricing. But I do think that there's been a lot of eyes on what's happened, especially for The Odyssey and for Spider-Man and demand. The reality is consumers are here. Consumers are back to movies. And they're always there.

It's just you have to price it, like the aftermarket sales on some of these tickets have been ridiculous. And so I think there is an opportunity when you think about film locations or you think about prime time shows or you think about different pieces of content, definitely some opportunities there. So hopefully, the exhibitors are doing their analysis with all the data they received because we've definitely received a lot of data as well. And so I think that, that's helpful. The reality -- the other part is you can't -- I wouldn't say you're going to raise it to like $100 or something a ticket, but could you raise it a little bit? Yes, definitely for different occasions.

Yes. And I feel like I've seen more IMAX merchandise over the last year or 2. I'm curious how sizable of an opportunity you feel like this can become for the brand over time.

Well, terrific. I'm glad you're buying that IMAX merchandise. Yes, it's definitely a revenue driver for us. Last year, we announced a bigger growth strategy in merchandise, and we've done that in a couple of key ways. We do have monthly IMAX brand drops, which are IMAX-driven, can be great design, sweatshirts, T-shirts, 70-millimeter hats. We don't have a lot of inventory risk there because when it sells out, then we can just replenish and recreate those items.

We are also doing a lot of IP-driven merchandise. So we had great success with Project Hail Mary T-shirt. We've done some really cool items on The Odyssey that hopefully you've seen around. We have much more stuff coming in the fall for Godzilla in June, and we'll have a lot more of that coming in years to come. So those are licensed items. And then we've done some great brand collaborations that are well associated with our brand. So we did a collaboration with Kodak this year, this summer. We also did a collaboration with Travis Scott, who was in The Odyssey and also wanted to do a T-shirt with us.

And so that was a very cool drop and great for our fans. And then, of course, for the first time ever in IMAX history, we got into the popcorn bucket business with a very authentic camera style popcorn bucket that in the Viewfinder had an actual film still in there. We did 3 drops of that sold out very quickly in a matter of hours. It became a very hot item. And so the scarcity of that really excited demand among fans. And so again, when we have a great authentic idea like that, we'll see more of those things to come. And we are anticipating continued growth in the merchandise area.

I think it's a great organic way to monetize the brand naturally, right? Like it's not something that we have to -- going out of our way in a distinct and new business. It's actually coming off of a brand that we built over 60 years, and it's well known at this point.

Helpful. I want to touch on some of the other ways IMAX can monetize the brand, the technology, the platform. Box office is one driver, but there are certainly others as well. As you think ahead and look to leverage the dynamics around network growth, we talked a little bit about pricing. There's certainly technology components, thinking more broadly within the IMAX organization that are potentially monetizable content strategy then, of course, the operating leverage on the business model. What would you point investors to thinking ahead over the course of the next couple of years as ways to extend the reach of the business and the monetizable opportunities?

I think box office gets the most attention because it's visible every weekend, right? And there's a lot of information on box office posted. But there's several other drivers of value as well in the business. I mean value creation is all driven by the power of our platform. It's not just simply one area of our business. I mean, our network growth for sure. Our revenue per screen, I mean, utilization. So we have an existing network plus we're growing the network, the content differentiation, the fact that we could play different types of content all around the world. And like we're not limited to being one exhibitor, for instance, right?

We run a global platform across over 250 exhibition customers and partners. So we have the ability to have -- create value through that avenue as well. Our technology and the technological differentiation in our business as well. And then, of course, it's all flowing through to the operating leverage in the business. I mean the network plus the box office flowing right through to the bottom line. I mean our model isn't simply about just more box office. It's about more box office leading to network growth, leading to more box office needing to -- like leading to more earnings in the end, right?

And so it's more about revenue growth overall from all of those areas as opposed to one area driving all the growth and now merchandise as well. We do have our SCT business as well. While be it small, it is growing. I mean we just signed that deal with Goer, who's in automotive parts in China as well for their audio and visual system for self-driving cars. So I think there's a lot of little other areas where we can continue to drive opportunities and as well alternative content and local language.

That type of content is not only necessarily box office. Sometimes they're flat fee deals, sometimes they're different arrangements. And so you can see lots of value and creation coming from them. And I think what's great about some of those events is you're bringing new fans in. And so the consu0mer and building the consumer base for us is very important because you're introducing IMAX to a whole new consumer. I mean the F1 event we just did one this past weekend. The F1 events introducing like the F1 fans to IMAX, there's many of them who have never been to IMAX before.

We experienced that with the League of Legends in China as well when we did that event, many of them had not been to an IMAX before. And then we did a K-pop concert a couple of years ago in Korea, where it was women aged 50 where most of them we -- when we did the surveys out, they had never been to IMAX before, but they all understood now the IMAX experience. And so creating value through the chain all the way down to the consumer.

Yes. You've mentioned network expansion a few times. Just wanted to dig a little bit deeper into that as you think about the success that you've had on the back of Odyssey. I'm curious to the extent any of those conversations around network expansion with your partners has changed and if there's any maybe update the way we should be thinking about the opportunity for network expansion both this year and next year?

There's a lot of opportunity. I mean the conversations have only gotten stronger, more activity. I mean, I think I mentioned it earlier about us having a lot of data out of The Odyssey to be able to -- our sales team to be able to go to the exhibitors and show them that, too.

I mean if you don't have an IMAX screen, it was unfortunate for you coming out of The Odyssey because you really would have made a lot of money from having an IMAX screen. But there's lots of opportunity. I mean, Dune is coming up next and next year has a lot of titles as well where filmmakers are leaning into using our cameras. And so I think the more that these opportunities for box office come up, it also drives the conversations, too. And The Odyssey is a very big effect on those conversations. There's many deals kind of in play right now.

It sounds like opportunity for second screens as well in particular markets or higher capacity.

Yes. Yes.

Maybe moving down the P&L to margins. Natasha, just as we talk about the operating leverage in the business, just would be curious to get your latest thoughts on how we should be thinking about operating leverage this year and in particular, the third quarter, outsized quarter across a number of different dynamics. Any framework or help you can give us on thinking about margins, maybe both for the third quarter, but also too for this year?

Well, earnings is coming up soon. So you'll see the results very soon. But I'm sure you know as soon as we hit those higher levels of box office above $250 million in a quarter, and we're already at $600 million for this quarter. I mean, you can easily see the incrementality fall through. Every additional dollar over the $250 million, essentially 85% of it runs through straight down to the bottom line. So you can easily see how the margins will be very high as you look at this quarter.

But you look at the full year, right, Q4 is going to be a very strong quarter with all of the content we have coming through Q4 as well, but also the network expansion and the opportunities of growing the network, too, that's also additive. So I think we guided, obviously, EBITDA margin to mid-40s with a floor of 45%. Year-to-date June, we were at 42.6% or something around there for EBITDA margin. So obviously, we're well on track to achieve our guidance for this year.

As you think about the margin profile of the business over the medium term, what are some of the investments that you think are necessary to sustain, just continue improvement in margin? Like of course, you have the operating leverage in the business. Are there perhaps either investments that you can make in efficiencies or efficiencies that can still be taken out in the business?

What's great is we've actually taken the time over the past couple of years to already start to address where we could make changes and become more efficient. Obviously, we've employed -- deployed AI on a corporate infrastructure side. We're using it a lot in data analytics. Our film team using it to analyze all of the film data that we have so they can better program our locations.

Obviously, the back office teams using it a lot for their jobs as well to create efficiencies. We've done a lot of restructurings in the past couple of years, which you've seen through our financials. So we've been very thoughtful about what staff do we need, what level of talent in what positions, especially as we look towards growing the business in the future and what do we need for the future? That's sort of the way that we're looking at it from that perspective.

Our cost basis really doesn't need to increase for any reason. So any top line growth really will fall to the bottom line because there's nothing we need to invest in significantly that is required to enable our business to continue to grow.

Yes. I do want to touch on M&A quickly. But before we get there, just a question on free cash flow conversion and investing in the business. You guided to 50% free cash flow conversion this year. Just would love any updated thoughts on that front, how you're thinking about conversion over the next couple of years? And then as you think about capital allocation, investing in the business versus buybacks or dividend.

Yes. On the free cash flow, I mean, yes, we've guided to the 50% plus. I mean we're well on track towards that. I think you can see easily that as the box office levels are at the higher level, we will have that cash flow convert through because we're not increasing our expenses by any manner.

Growing our network does not require us to increase costs at either the film remastering side or even on the SG&A side. And when we think about capital allocation, our first priority is to grow the network. Like the more that we can continue to invest in growing the network faster, that's really important because that will then grow box office, which will grow the network, and it's a virtuous cycle that's beneficial to us.

But then historically, all of our cash has been -- also been used for buybacks. And so we've done a little bit earlier this year. But obviously, as we start to build up cash, that we don't generally -- we're not a highly acquisitive company, so we generally don't use it for that purpose.

And maybe lastly, just to touch on M&A. In the past, you've spoken to IMAX as a strategic asset. I would just be curious, any updated thoughts on that front? And as you look ahead, any potential partners or strategic attributes that you'd be looking for?

We occupy a unique position in the entertainment industry. I think we're connected with filmmakers and studios, and we have a global reach. So I think we are definitely a highly valued asset, but we are operating at such strength, and we are doing very well. We are growing every year, a new record year each year, like last year and projected for this year. And we see growth for the future as well. And there's so much buzz and activity around our conversations with filmmakers and studios and our relationships. So I think we're in a really great position, and we're excited about the future for IMAX.

That's great. Well, let's leave it there, Natasha. And thank you very much.

Yes, yes, thank you. Thanks for having us.

Okay. We're a bit to go. So Rich, welcome back. We're here with Rich Gelfond, CEO of IMAX Corporation, and we're thrilled to have you.

Yes. I mean, obviously, Jessica, there's not a better time for us to go to a conference like that. Our company is in the midst of a dramatic awakening globally. So happy to be here.

So what a year it's been since you were here last year, your stock has basically doubled after spending years in a tight trading range. I mean, for years, it was like $18. Lucky number, but still nice to be in the 50s. So you've reached a different level of relevance for moviegoing.

Just mentioned like bazillion kids outside the theater, the IMAX theater the other day, very young. So clearly, you're more relevant than ever, but you're packing them in. But having Chris Nolan in your corner health, what do you think has really changed in the IMAX opportunity in the last year or so?

Yes. This is going to sound like hyperbole, but I think it's really the beginning rather than the later stages of what's going on. And when we looked at our slate for the year, I was the most bullish person in the company on Odyssey. And our record up until that point had $225 million for Avatar. Keep in mind, that's on 1% of the screens in the world. And today, we're knocking on the door of $0.5 billion.

So how many films do $0.5 billion, let alone in IMAX only. And it's -- the comment I made when I was telling people at IMAX, they didn't understand the impact of this movie was that I don't know where this is going to take us, but it's going to take us to places they couldn't imagine. So it's really -- there's a lot going on beneath the surface, but even publicly on the surface.

So yesterday, we put out a release with the Walt Disney Company saying that they're rereleasing Star Wars next February, the 50th anniversary. And it was filmed in 35-millimeter film and they're releasing it in IMAX. And more importantly, they're releasing it in IMAX Film. They're printing it out and doing that, and they're also announced they're doing Starfighter next year, the Ryan Gosling one, which I've been on set for, and I'm very optimistic about that film with IMAX prints. And we're now in week 8.

And like you said, there are lines around the block. We've extended the film run until the end of September. And what I described to you, I mean, this is just one small anecdote, but I think it's funny, is Chuck Schumer called Adam Aron, the Head of AMC Theaters and said, I've got to see The Odyssey, can you get us in? So Adam called me and he said, I can't get anybody in.

Can you get anybody in? So it's just -- it's a phenomenon, but thinking about it more in business terms, I think it's a product breakout. And just one final thought is our next big film release is on June 3, which is around Christmas.

And we put the tickets on sale like 2 weeks ago. And if you stop today, which is 3 months in advance of the film's release, it would be one of the most highest presales in our 60-year history. So I don't think this is a one-off. I think it's symptomatic of a real change.

Absolutely. So as you think about IMAX, as you assess the business, how do you define like where IMAX is today and where you see the opportunity from here?

Yes. So where we are today, let's put it in some quantitative terms is for this quarter, we're over $600 million in box office so far, and it's just started to be September, and our best quarter ever was in the mid-300s. So -- and then when you look at what's coming forward, now we have Resident Evil. I know you had Sony on before us and tracking is quite good on that.

We have Diggers, which is Tom Cruise movie coming out. I mentioned Dune 3 coming out. We also have a very interesting project, which is called the Mis-Adventures of Cliff Booth, and it's a sequel to Netflix -- that Netflix is doing to Once Upon a Time in Hollywood. And David Fincher is directing, it stars Brad Pitt. And why that's interesting. It's the -- it's only being released in IMAX exclusively for 2 weeks.

So anyone in the world that wants to see that movie in a theater has to go to IMAX to see it. And that's on top of Odyssey still playing. We're having trouble getting it off the screens because the demand is so high. So it's a very exciting time. And as you look in some of 2017 is known and the film slate there looks really good. The Dune play over because it opens in Christmas, be very good.

And then you've got at the end of the year, the next Avengers that we're playing there and you have Frozen and you have Thomas Crown Affair with Michael B. Jordan, and we're doing again with Netflix, Greta Gerwig's Narnia. But to me, as exciting as all that is, it's the stuff that hasn't come to fruition yet that I was mentioning. But I think when you see alternative content, which we do like sports content and concerts, there's going to be a lot of that, that's in the works that's going on behind the scenes.

Merchandising at IMAX rounded to 0 before this year. But we did something called an IMAX Popcorn Bucket. And because it was a test for us, we put 2,500 on sale. And within 90 minutes, they were gone, and we kept putting more on sale and couldn't keep up with the demand. And I think we saw like 25,000 of those.

And then we have a film strip from Odyssey that we put on sale for $40 a film strip, and we sold 30,000 of those in like an hour. So when you look at our plans for 2027, we're going to lean into merchandising, obviously. I didn't know this, but popcorn buckets, AMC does $100 million a year in popcorn buckets. We did 0 before this year.

And then you just look at more films being filmed with IMAX cameras and release. There's just a lot of things going, and it doesn't end in '27. It just starts. We're doing The Beatles with Sony, which is 4 separate movies, and they're being filmed with IMAX cameras. We're doing Miami Vice with Joe Kosinski next year. So it's just really an incredibly exciting time.

When do The Beatles movies come out?

April of 2028.

Well -- actually, Robbie didn't mention that, but I know that's something we've been working on. It's very exciting. But anyway.

Sam Mendes is directing it, which is a side point that New York Magazine just ran an issue of the top 50 or 100 directors today most powerful. And I think of the top 20, we work with 19. So it's not a matter of people don't know us.

We've built this business over 60 years, and we have the relationships. But it's -- as I said before, it's like a new awakening Studios are recognizing that IMAX is really important to a global blockbuster release.

Absolutely. But given this amazing recent performance, how much do you think can be attributed to the huge content cycle that's sort of coming out of like finally post strikes, both strikes and obviously, COVID versus IMAX just simply gaining share globally?

It's really both. So we were on a very strong growth curve -- 2019 was our best year ever. '17 and '18 were great. Then COVID came. And obviously, we were affected in a significant way. And a lot of companies were talking their book and saying nobody is ever going to go back to theaters. It's the end of theatrical.

But actually, even though the theater industry is having a good year this year, we had our best year ever in 2025. And 2023 and '24, we're doing well, and that was because of market share gains. But the premium sector of which we're the primary player has been really doing well. And this year will certainly be a record box office year for us.

We're already approaching that. So it has a lot to do with what IMAX does and what we've done. But there's no doubt it's a good year for content. And where we really do well is if it's not a franchise, but it's someone trying to build a franchise. So for Sinners, Ryan Coogler filmed that with IMAX cameras. And as I think he won Best Director. And as you know, it was a breakout hit.

The biggest movie Apple ever did was last year, Formula 1, which IMAX did close to $100 million. So I think the move towards proprietary content and first-run content and kind of broadening of diversity of movies is good for us. So I think we're getting there on our own, but I think the Hollywood megatrends are also helping.

Right. I mean others have tried to replicate the success in the premium experience, and we're still seeing others trying like fast and at present. But without much success, who do you view, if anyone, as your more tangible competitors?

Obviously, theatrical is a competitor in general, right? People could see a movie in a regular theater and they could see it in IMAX and you were more polite than to call them the copycats. But the copycats about the only thing they have in common with IMAX is they have an X at the end of their name. So we spend $100 million a year in SG&A, they spend 0.

So they take a regular projector and they put it on a big screen and what a shock, it doesn't look better. And also, we monitor every theater in the world in real time. So we make sure that the standards are kept, the quality is there, people go and maybe most important directors really lean in to IMAX. So with The Odyssey, it's not only the technical aspects, but Chris Nolan filmed it all with IMAX cameras. The first time. He was very generous in going around and saying, that's the way you have to see it.

So I think the way we're positioned and kind of an end-to-end solution is something that keeps the competition at bay. Of course, you're cognizant, especially from a pricing point of view. But I think that's even a room for growth for us. I think the exhibitors have -- and again, the model is a licensing model.

So the exhibitors set the prices we don't. And I think they've been a little conservative in that department. And the greatest example is Odyssey, where a ticket is similar to a regular ticket around $20, $25, but they're being resold online for up to $1,000. So I'm not advocating that at all, but I think there's some room there.

Right. It was crazy black market, obviously. But your relationship is strong across the board. So you mentioned Chris Nolan and other directors, but your relationship with Netflix seems to be strengthening as well. So they selected IMAX for an exclusive theatrical window for Narnia.

And as you mentioned, The Further Mis-Adventures of Cliff Booth exclusively [ by ] IMAX over Thanksgiving '26 ahead of Narnia, which is '27. But Netflix has also signaled an interest on focusing on the more big event type of content. Do you think IMAX -- like IMAX releases fit into that? How do you see your relationship with Netflix evolving from here?

Well, first, I'll give you a general answer, Jessica, which is we've done some research and the fact that a movie is being released in IMAX helps its streaming run later. So we looked at companies not being released -- movies not being released in IMAX, and IMAX had a profound effect on the streaming end of the run. So I think this test with Netflix is kind of exciting.

And I'm not just looking at what the box office is to whether it's successful or not, but I'm looking at the streaming aftermarket and what happens to that and how it affects the vision of the film. And I think there's no question that IMAX creates an event around a film and an event aura. And one of the best examples is Sinners. It was a movie about Vampires in the Jim Crow South.

Now if you had gotten an elevator pitch to that and you ran a studio, I don't think you'd run out and say, there is a market that's evolving. But Warner's did an amazing job and Ryan Coogler did an amazing job in promoting the IMAX of it all, and it broke out in an [ alter ] filmmaker sort of way. And I think Netflix knows that, that's what IMAX does. So I think both Greta's movie, [ The Adventures ] and Narnia and the Cliff Booth's movie will have that same kind of impact. So yes, I think both will do well at the box office.

But more significantly for Netflix, I think it creates an aura around the project and says this is something important. As you know, Netflix, after we did the deal, broaden their audience and they're releasing Narnia in regular theaters as well.

So I think they're -- certainly, they could speak for themselves. But from the outside, it looks like they're testing the waters and see how that works for them, both theatrically, but more importantly, in the streaming world and fingers crossed, but I think it's a promising experiment.

Right. IMAX generates a substantial portion of its revenue from markets outside North America. How much runway is left for growth in international markets? And where are you still underpenetrated?

So in terms of penetration, every couple of years, we release our addressable market. And right now, we have 1,800 theaters open and our addressable market is about 4,500. So we have a very long runway to go. We also have about 500 theaters in backlog, which means they're signed and over the next couple of years, they'll be installed on a global basis.

I think particularly Asia-Pacific, we can double our presence there and like Japan has been on fire. I think other territories that are promising are Australia, where we have 2 theaters 2 years ago, and I think we're up to 10, and I think we have another 10 set to install this year.

The Middle East, I mean, at the moment, obviously, the war is causing a lot of disruptions there, but we have a big backlog there and our theaters have done very well. Western Europe, surprisingly is a good opportunity.

So in Germany, we think -- I think we have like 10 theaters. And in Ecuador, we have 10. And in the U.K., we have 60. So obviously -- I think France is an area that can grow. And surprisingly, North America, even though we have 400 theaters there, we've had recent good success there.

Right. How significant is local language as an evolving percentage of your mix?

I think it's very significant. We set a record in the last couple of years with the percentage of our box office in local language, it was roughly 20%, 25%. And just to let her explain what that means, that means that we'll take a film, let's say, it's an Indian film and it's made in India for Indian audiences, and we'll release it not only in India, but we'll release it in other countries where there's a lot of Indian expats.

And a couple of examples, anime has really taken the world by storm. And I have to admit, we didn't see it coming, how strong it was. So some of the anime we do in Japan, when we show it in other countries like China, it does a bigger box office in China than it does in Japan. And I missed your Sony presentation.

But I certainly talked about it a lot. But I think we played a role in seeding other markets for anime. Studio Ghibli, which is kind of the original creator of anime, we did a re-release and they were really opposed to doing it any way other than traditionally because it was the inventor of that format, and it really felt it didn't want to take a risk, but it did phenomenally well in rerelease, and we're doing other things with Studio Ghibli as well.

So that's an example where we took a local language, well-known product and globalized it. And I'll come back to your question, but it's an important one. Most people don't realize that we're global. So when you think of exhibitors, they're asset-heavy models. A lot of their revenue depends on concessions. Our model is a licensing model.

So we don't own the theaters or hard assets, and we don't make money on concessions. God blessed, our partner, they can make as much as they want, but our revenue comes from theater performance and film performance, and it's tied to that. And again, back to the word global. So people look at IMAX and they go, oh, well, February is not a good month.

So we're not excited. But February is typically Chinese New Year. So in 2025, we played a film called Ne Zha 2 and the film did $1.2 billion globally, and I think we did around $160 million. But again, I think one reason our company has had an awakening, but so is our stock. And I think people have come to the incredible conclusion that $1 earned offshore is equivalent to $1 earned in the U.S. and about 2/3 of our revenues are outside the United States.

And I think that diversification is a powerful thing. And again, in terms of global, some of our biggest hits in any year are global. And I think that's one reason the analysts have struggled a little bit because they've heard of Star Wars, they've heard of Marvel, but they've never heard of Ne Zha.

But we have. Last year, we released 120 pieces of content, and that includes local language films, event films, concert films, sports films. And I think you're going to see a lot more of that.

Right. So given what you just said, how do you think about capital allocation across regions to kind of continue to drive this opportunity?

So we've, over the years, bought back stock on an opportunistic basis. As a matter of fact, we bought some stock back in the second quarter this year at about $35 a share. It's now between $50 and $55. And obviously, our third quarter is going to be extremely good. I gave you the outlines of the revenue side.

So we're going to generate a lot of cash, and our cash generation has gone very well. So I think that's a buffer if the stock market encounters any turbulence. We've also been using our cash to help expand our network. So the exhibition sector where -- which are our partners, they're not as flush as we are or maybe the studios are. So we've been using our cash in the form of joint ventures.

So our old model used to be they would put up all the money and we would license our technology. Then we went more to a joint venture model where we take a bigger percentage of the box office, but we put up more of the capital and they put up less of the capital. And this year, we've been transitioning to putting up more of the capital.

And also since they've been doing very well, the paybacks have even been better than we modeled in doing that. So I think given where we're going from a cash flow point of view, those are primarily the 2 areas, which would be stock backs if it warrants and expanding the network faster.

So for many years, franchises and superhero films dominated the box office. But this year, we've seen a wide range of genres have success. How do you view the dynamics and the impact for your business? Like how diversified are we?

Yes. So I think diversification is great for us because what we offer is the IMAX experience. And IMAX, I've been running for over 30 years. And 30 years ago, we commissioned a study as to what we want to be when we grow up. And what came out of us was rather than people focusing on the movie, we want people to say when they wake up in the morning, what's playing at the IMAX theater, and I want to see it in IMAX.

And I'm not saying we're there yet, but I think the last several years have shown that, that momentum is clearly happening. And that's why I think Sinners did so well. And yes, Odyssey is an amazing movie, but Universal and Chris Nolan marketed as Universal in IMAX. And I think as you try and stand out with a variety of different content, the IMAX of it all becomes more important.

Again, I think Formula 1 is a great example because people said, wow, seeing -- and as much as I still believe in superhero movies, and I think they'll work, I don't think there's anything so unique about superhero movies that say, wow, I've got to see it in an IMAX. And to some extent, we've seen the last few years, some of that has run its course. So I think IMAX becomes even more of the attraction. So it's a good thing.

Right. You mentioned merchandise before, which I don't think most of us thought about with IMAX. So it seems like a new potential revenue stream. Can you talk a little bit about like where you can take this? And maybe what is the response to the popcorn buckets tell you about the fandom of it all for IMAX?

Yes. It tells you that we badly misunderestimated it earlier on, and we should have done it sooner. But since we don't own IP in the movies, that's owned by the studios, I think we need more bespoke merchandise. So the one I would focus on even more than the buckets is we sold these film strips.

And I think the selling price was around $40 and the cost of goods is -- provides a really healthy margin for that. So I think where we're going to take it is lean into what about IMAX makes this movie special and then try and find the crossroads between what makes it special and what we can produce.

And obviously, the popcorn bucket, I wish we had a slide of it because besides being a bucket that looks like the camera, you can look in the viewfinder and you can see a film strip of the Odyssey and you press a button and it lights up. And our fan base is crazy in a good way.

So I think we could turn that into collectibles and you think of movies, although we haven't thought about it at all, and I'm sure Sony will kill me. But with The Beatles movie where there are 4 separate movies, you could think how to do 4 kinds of merchandising and you can think of how to tie them together. So I'm really excited about that opportunity.

It's incredible, the brand extensions, the merchandise, it's actually very exciting. So anyway, moving on, given the strength of your brands and premium offering with leading technology, how do you view the opportunities and the risks of -- related to AI? You knew there was going to be the AI question.

So yes. So first of all, I'll start with the opportunities. And for us, they are in 2 primary areas. One is in cost reduction, which applies to any company. And we have had a concerted effort over the last several years. And certainly, the majority of our company is involved in using AI for things like finance and typical corporate functions.

And we've done things that would seem simple. But for example, our box office, remember, we're in 92 countries with 120 piece of content. So it seems like, gee, this should be a fairly easy business you release a movie. But when you start doing the math, I mean, again, it's around 2,000 theaters times 120 pieces of content, there's a lot of things to track and a lot of information to analyze and AI really helps us do that and more importantly, draw lessons from it.

So we're doing that. And the other thing is at a more basic level, what we do is we really enhance images. So if you take a [ delay ] terms, we blow up things and not blow up like dynamite, but blow them up and make sure they still look good and AI can really facilitate that. So we're experimenting with ways.

And again, that's not costing anyone jobs. That's something only we do, and it will help us do it better. I think it's inevitable that the studios and the filmmakers use AI in certain situations. We're not going to lead the pack in figuring that out. But clearly, if the studios and filmmakers decide it's in their interest, then we'll use it to our benefit as well.

As you look at the film slate for the next year, you mentioned a few things earlier on. Is there anything else you would like to add to what gets you excited? Is there anything that you think is underappreciated?

I think what's underappreciated is that we're a platform and the platform earns money in many different places. So we spent most of the time here, and it's probably my fault, I spent too much of the time talking about box office and films. But with every theater in the world comes a maintenance contract, and it's almost like maintenance and computer services.

So if you are in the IMAX network and you sign on, you pay us a very nice margin amount every year to maintain your system, and we do that because we're not going to release theaters around the world unless they're up to our quality standards, and they're only up to our quality standards.

If we do 4 visits a year, as I said, we monitor them in real time. So on January 1, when we turn the key on, we have a lot of recurring cash flow, even if we don't open one new theater or even if we don't have one new movie. Another area where we generate significant revenue is when we open new theaters.

So we have different models. One of the models I talked to you a little bit about is the joint venture model. On that model, we make the bulk of our revenues as a percentage of box office. But a very significant percentage of our business comes from selling new theaters. And when we sell new theaters, we do get a smaller royalty but we also get an upfront payment and an ongoing cash flow payment, and that's a significant number.

So in our second quarter this year, our box office was a little bit less than we guided to, but these ancillary revenues from other important parts of our platform far exceeded what anyone thought they were going to be. So we beat on the EBITDA and the EPS line. And I think people sometimes don't see the various place.

And then I guess coming back to box office is gross margin. So when we do over $250 million a quarter, our gross margin is higher. Our overall margin is higher because we've covered our fixed costs. So our margin goes up dramatically as the numbers go up. So that's another place. So I think kind of summarizing the answer is not to be myopic and look just at box office, but to look at the different revenue streams.

On the broadening out of like revenue streams, whether it's merchandising, brand extensions, selling theaters, opening new theaters, maintenance, as you said, all of those things, you also talked a little bit about different kinds of content. Does that come with any kind of different margin? Like is the cost profile different? Like -- and what excites you? You mentioned sports, concerts, other things.

Yes, those are probably the top 2 I would mention. So sports, 1 year, we did the NBA finals in Taiwan, but there's no reason we can't do the NBA finals in China, which is obviously a bigger market for that. We've done hockey, NHL hockey. We've done college football. We did the Olympics, the opening ceremony in Paris, and it looked amazing.

I mean the numbers were fine. But visually, when we show that to other professional leagues, if you remember it was in the rain and it was very artistic and IMAX, it just looked incredible, and we did it with NBCUniversal, and they were very happy about it.

So I think that -- in concerts actually in -- coming in the next week or 2, we have Oasis where the presales are pretty good, and we have Blackpink coming, and we have a number of other things. The margins are similar. If you want to dream ahead, and this is more speculative than other things I've talked about, but you could probably package those events with merchandise because of the fan base. And we've been charging consistent with an IMAX ticket price.

But if you package it, rock and roll fans and T-shirts and all that. So we're just really experimenting with those kinds of contents, and they've been pretty good -- the things -- we bring back old movies.

So we brought back Interstellar, and I don't remember exactly, but I think we did $5 million in a weekend when things were slow. So I do think there's a lot of potential, but we're just starting to understand it now.

Amazing. So this is an industry question, but the -- obviously, we're seeing a lot of consolidation. I mean, eventually, Warner Bros. will be consolidated, whether it's Paramount Skydance or not. I mean hopefully, it will happen at some point. NBCU is separating out from Comcast.

So Universal will be separated. Netflix when they were trying to get Warner and [ ends up ] not said they were developing their M&A muscle. How do you -- like -- so when you see all of these things -- all of these moving pieces, how do you see the industry evolving over the next 3 to 5 years? And is this good or bad for IMAX?

Well, first, I'll answer the end of your question, and then I'll back up to the beginning of it. I hope I've conveyed in a clear way that our primary relationships are with filmmakers. So wherever the filmmakers end up, they're going to end up somewhere. They're the ones that we're really talking to about the content.

And one mini example, which I kind of forgot, so thank you for having me remember it, is the movie Hail Mary this year, which was Lord and Miller and ended up at Amazon MGM. And they came to us and they released it in IMAX and film prints -- and again, we did $100 million. Again, this is not a franchise that anyone had heard of.

And I know that Amazon and MGM were extremely happy about it. And when you go through the one -- so F1 was the biggest streaming property Apple ever had, and that was a streamer, not a studio. Hail Mary was a streamer. The ones we've talked about with Netflix are streamers.

Warners is a fantastic partner, and we have a number of movies coming with them, including Dune with them in Legendary. But those relationships with the filmmakers are not going anywhere. As a matter of fact, we've talked many times to David Ellison and Paramount, where if that does happen, they're going to certainly ramp up their IMAX production. And we have a terrific relationship with them. We've done the Mission movies, Maverick and Top Gun.

And I think if there aren't enough studios and streamers, there'll be organically different ways that content is released. So whether it's the smaller studios like Lionsgate and Josh Grode, those guys are going to capture market share. So I think we'll be perfectly fine. In terms of the industry itself, I think it will survive it in a different form.

Kind of what I was just saying, I think the key content providers are going to want places to release their content. And let's take a major filmmaker, just don't want to be sort of agnostic. So let's use some of the -- Steven Spielberg.

Steven wants to make a movie and there's not enough studios, he's going to be able to attract capital. So I think when you look at this, if you focus on the entities, you're really missing the point, the focus should really be on the capital and the capital will be there for good projects.

So to wrap up, you've talked a lot about your vision for IMAX and some of the big drivers, a lot of the diversification, a lot of the growth drivers, margin improvement. I mean, is there anything that you would add to what we've discussed about like the next several years, like what else can drive your growth or what else would you emphasize?

I think we don't know yet. And I'm not being coy, we just don't. So we just signed a deal with an audiovisual manufacturer, an important one in China, and they and we are designing an entertainment system to go in vehicles in China.

And when you think of the vehicle market, I think our partner thinks because there'll be driverless cars that cars are going to increasingly be sold based on entertainment systems. So we have our hand in the water right now on that. I don't know where it's going to be, but we're there in case it does happen.

On the Vision Pro with Apple, there's an IMAX function on that. When Star Wars was shot by Disney and Lucas Film, they took the Vision Pro and they invented a way using that to film with the IMAX aspect ratio. Now if you would ask me, was any of these on my list of where we're going to go, I would say no.

But I think when you have such strong brand recognition, I mean, this merch stuff is crazy. We were -- I was interviewed by the New York Times for a story on Popcorn Buckets and I had fun with it with the reporter because I kind of said when I was growing up, did I think I would talk about the Popcorn Bucket business? No. But I think what we built is a brand and a platform, and I think they could take us in a lot of places.

Right. Amazing. You've just gone from strength to strength. So we really appreciate you taking the time to be with us.

Thank you, Jessica. Appreciate it.

Thank you.

Good day, and thank you for standing by. Welcome to the IMAX Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Jennifer Horsley, Head of Investor Relations for IMAX. Please go ahead.

Good morning, and thank you for joining us for IMAX's Second Quarter 2026 Earnings Conference Call. On the call today to review the financial results are Rich Gelfond, Chief Executive Officer; and Natasha Fernandes, 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 regarding forward-looking statements. Today's call, as well as the accompanying slide deck may include statements that are forward-looking 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 the reconciliation to non-GAAP financial measures are contained in this morning'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. Rich?

Thanks, Jennifer, and thanks, everyone, for joining us today. Just days ago, audiences around the world began to experience something we've been building toward for decades. Christopher Nolan's The Odyssey is the purest and most complete expression yet of the power of IMAX. The first feature-length release ever shot entirely with IMAX film cameras, a game-changing technical achievement, a massive launch campaign that from the very first tweet made IMAX the centerpiece of the discussion and a global fan frenzy for the IMAX experience as well as a strong demand for IMAX systems among theater owners. Not since the original Avatar, have we seen a global cinematic event like this, where filmmaking technology took center stage. Avatar established IMAX as a force in entertainment, accelerated our network growth around the world and permanently raised the bar for our box office. We believe the Odyssey is also a transformational event in many ways we can see and many ways we can't yet predict. The box office results are already exceeding our expectations. IMAX is the center of the cultural conversation like never before. And more than ever, IMAX is the premier global platform for blockbuster content. At our Investor Day last year, we talked about how we've entered a new era of growth. Right now, that thesis on full display. All this comes on top of a quarter in which we delivered strong results, beating consensus across virtually every metric, including revenue of $103 million, up 12% year-over-year. Adjusted earnings per share of $0.43, up 65% year-over-year and adjusted EBITDA of $48 million at an almost 47% margin. Natasha will detail our results in a moment. But first, I'd like to share what Odyssey tells us about the future of IMAX. The results for the Odyssey have been nothing short of tremendous. IMAX delivered $52 million in its global opening, the biggest global opening weekend in our history on a like-for-like basis, given the film is yet to open in China, Japan and South Korea. That amounted to a staggering 20% share of the film's worldwide debut on less than 1% of total screens. Our occupancy was 75% across our domestic network, an unheard of number. Our holds so far have been even more eye-popping. We delivered the highest grossing Monday in our history, thanks to an $11 million performance for the Odyssey, an unprecedented 21% hold from the weekend. On Tuesday, we delivered another $10.6 million, notching our biggest Tuesday of all time. And our presales for the second weekend would qualify on its own as one of our biggest opening weekends ever. These numbers help prove that we're just getting warmed up. IMAX 70-millimeter film has become among the hottest tickets in the world. Our 41 IMAX film locations worldwide delivered $6.3 million in weekend box office, a massive average of $153,000 per screen. The Odyssey will play in IMAX 70-millimeter locations for months, and we're already recording sellouts at these locations deep into the films run, in some cases, the seventh or eighth week. And it's important to remember that the film locations drive more revenues for IMAX than the digital locations. Overall, we remain on track to deliver a record $1.4 billion in global box office for the full year. Odyssey and Dune Part Three give our 26 slate a highly advantageous structure with 2 mega tent poles filmed with IMAX cameras in the second half that fully deploy the power of IMAX. Both shot with IMAX film cameras by 2 of the biggest filmmakers in the world, both presented in IMAX 70-millimeter with tickets to IMAX locations selling out months, if not a full year in advance, both stacked with incredible casts and both very highly anticipated. The level of fan frenzy around the Odyssey in IMAX speaks volumes. We built one of the most passionate fan communities anywhere in entertainment and a global brand that represents unforgettable out-of-home experiences. Universal put select IMAX 70-millimeter screenings on sale a full year in advance of the release, and those sold out in under an hour. The launch of presales for the Odyssey and IMAX crashed every major ticketing platform in the United States, and the Odyssey clocked our biggest presales of all time by a multiple of 3. Fans are flying across countries, if not continents, to experience the Odyssey and IMAX 70millimeter. Selling out screenings around the clock, 10:00 p.m., 2:00 a.m., 7:00 a.m., that level of consumer loyalty is difficult to build. It's even more difficult to replicate. And we're capitalizing on that loyalty in new and expanding ways, most notably merchandising. We continue to see IMAX merch as a largely untapped opportunity for our business. Our first ever popcorn bucket, a replica of the IMAX 70-millimeter camera used to film the Odyssey powerfully underscores that opportunity. The first drop of buckets sold out in under 2 hours on imax.com. The second drop just 5 days later sold out in 7 minutes, and our Chinese bucket release sold out in 63 seconds. We've sold over 10,000 units so far through our channels alone and more buckets are available at theaters around our network and along with a full line of Odyssey merchandise at imax.com. We're very excited for the continued run of the Odyssey and the slate ahead. Christopher Nolan's previous film, Best Picture winner Oppenheimer, delivered more than $190 million in IMAX box office. IMAX opening weekend for the Odyssey was 47% higher than Oppenheimer. The Odyssey is presented in almost 40% more IMAX 70-millimeter film locations than we had with Oppenheimer, and the Odyssey is arguably more commercially and internationally accessible. We also have a great lineup of filmmaker-driven IMAX-centric releases that follow, much stronger than what followed Oppenheimer, which will allow us to reengage the diehard and new fans alike that are turning out for IMAX, including Spider-Man: Brand New Day, which we've announced will play in China, Japan and South Korea. The box office has picked up dramatically in China in recent weeks, and Spider-Man is tracking very well, and there is strong presales in China. Resident Evil, the first film for IMAX release from Red Hot Horror auteur, Weapons Director, Zach Cregger; Cregger from our long-term partner, Tom Cruise an Oscar-winning Director Alejandro González Iñárritu. Godzilla Minus Zero, the first film for IMAX title from Japan and a sequel to the highest grossing Japanese Godzilla film ever, Godzilla Minus One. This will be a global release for IMAX. Ramayana Part 1 one of the first-ever film for IMAX titles from India, our groundbreaking exclusive theatrical release with Netflix, David Fincher Directed and Brad Pitt starring the unofficial sequel to Quentin Tarantino's 2019 hit Once Upon a Time in Hollywood. And we believe there are several sleeper hits lying in wait, including Paramount's fresh take on Street Fighter video game franchise and Don't Look Back in Anger, the concert documentary Chronicling Oasis Massive 2025 Reunion Tour. And the year concludes with Denis Villeneuve's Dune Part Three, which was shot with IMAX film cameras and will be presented in IMAX 70-millimeter film, which will carry us into what already looks like a very strong first quarter of '27 with Greta Gerwig's Narnia, which opens exclusively in IMAX before its wide global release, 3 film for IMAX titles, including Michael B. Jordan, The Thomas Crown Affair, which [ wowed exhibitors ] at the recent CineEurope conference and a Chinese New Year slate that looks to be shaping up very nicely in the early going and some very promising titles beyond that for the year, including Star Wars: Starfighter with Ryan Gosling and the sequels to Superman and Minecraft. We also expect to have at least 4 films, including both new and rereleases on our slate in '27 that will be presented in IMAX 70-millimeter film. Our momentum continues to translate into demand from our exhibition partners. We're at 62 signings for new and upgraded IMAX systems worldwide year-to-date. We installed a very robust 38 systems in the second quarter, edging out the 36 we installed in the same period last year. The Odyssey provided another reminder to exhibitors that for the biggest, most anticipated productions from the best filmmakers, knockoffs and marketing gimmicks won't cut it and people are seeking out IMAX. You need IMAX, and we expect that our momentum from the Odyssey, the strong second half slate and anticipation for Dune Part Three will continue to drive demand throughout the year. We have a very healthy sales pipeline for the second half comprised of talks with many of the smaller regional and often new partners that have helped drive our growth in recent years. And as a reminder, we have a very healthy backlog, alongside larger potential deals with some of our biggest exhibition partners worldwide. None of this happens without continued innovation and the competitive edge of our unique end-to-end technology. On the heels of the massive success with Oppenheimer, Christopher Nolan wanted to use this cloud to realize a lifelong dream, shooting an entire movie with IMAX film cameras, and he challenged us to help make that dream a reality. In response, we designed our legacy film camera from scratch, retaining only the original mechanical movement. In addition, we developed the most advanced camera sound blimp ever created to allow Nolan to shoot sync sound in IMAX for the first time ever and get stronger performances out of its cast. Nolan shot 2.1 million feet of IMAX in its production, the distance from New York to Toronto. IMAX innovation made the Odyssey possible and gave Chris Nolan the tools to make one of the greatest movies ever seen. But this technology is also an investment in the next generation of filmmakers and the thriving art of filmmaking itself. Since its launch in 2022, the film for IMAX program has emerged as a transformational differentiating opportunity for IMAX across production, distribution and marketing. That has fueled our dramatic market share gains. Thanks to Chris Nolan's advocacy and ambition, IMAX film has emerged as an ultimate premium level that sits above even film for IMAX and is being embraced by the most exciting blockbuster filmmakers today, including Chris, Denis and Ryan Coogler. It's what the world's greatest filmmakers choose to create with. And today, more filmmakers than ever are selecting IMAX. To close, we posted strong results in the second quarter. We talked about building a company with enduring competitive advantages and an expanding moat and fiercely loyal fan base and a strong global brand, unrivaled creative partnerships, a diverse global network and growing demand among exhibitors worldwide. technology that sets the standard for immersive entertainment and a business model capable of translating those advantages into a strong long-term shareholder value, including a model that leverages very strongly when financial results come in. Right now, we're seeing all those advantages working together. And while the Odyssey is an extraordinary achievement, it doesn't sit in isolation. It both accelerates and illuminates the historically strong momentum we've been building at IMAX and offers a preview of where this company is headed. We've never had a better visibility into our content pipeline. We continue to see tremendous runway for our global expansion, and we continue to innovate in ways that make IMAX even more valuable to creators, studios, exhibitors and audiences alike. This is an incredibly exciting time for our business. We're focused on building that momentum, executing with financial discipline, delivering the world's most immersive entertainment experience and creating long-term value for our shareholders. Thank you. And with that, I'll turn it over to Natasha.

Thanks, Rich, and good morning, everyone. As Rich said, we are focused on capitalizing on the transformational opportunity before us with the Odyssey, and our strong second quarter results demonstrate that we're successfully capturing near- and long-term opportunities to grow our business and maximize shareholder returns. These positive results strengthen our position entering the second half of 2026, where we expect substantial box office growth. As Rich highlighted, the back half of the slate is exceptional, beginning with the Odyssey and concluding with Dune Part Three, which also makes complete use of the IMAX platform and is very highly anticipated in its own right. IMAX's Q2 financial results once again showcased the strength and diversity of our operating model and the benefits of our growing scale with Q2 revenue growth of 12% and $48 million in total adjusted EBITDA. The double-digit growth in revenue supported strong profit incrementality, resulting in an adjusted EBITDA margin of 46.6%, up 400 basis points year-over-year and a record Q2 adjusted EPS of $0.43, up 65% year-over-year. Overall, we delivered revenues of $103 million, 12% growth over the prior year's second quarter of $92 million and achieved a Q2 gross margin of $63 million, which grew 17% year-over-year. This resulted in a 61% margin, which reflects a 270 basis point improvement driven by a higher number of IMAX system installations and renewals in the quarter. Operating expenditures, which include R&D and SG&A expenses, excluding stock-based compensation, was $29 million for the quarter compared to $30 million in the prior year period, reflecting the strength of our continued cost discipline that resulted in lower SG&A year-over-year that more than offset modest growth in R&D expenses as we continue to invest in deepening our technology moat. As a result, second quarter adjusted EBITDA growth outpaced revenue, up $8.9 million year-over-year to $48 million and adjusted EBITDA margin increased to 46.6%, up 400 basis points from 42.6% in the prior year period. This strength flowed to the bottom line with second quarter adjusted net income of $24 million, a growth of 66% year-over-year and a record adjusted EPS of $0.43, up $0.17 year-over-year. To put in context this quarter's strength, Q2 was not an exceptionally high box office quarter. However, our multiple drivers of revenue combined with operating leverage resulted in an adjusted EBITDA margin comfortably above our full year guidance of mid-40s margin and strong EPS growth of 65% year-over-year. Turning to the segments. In our Content Solutions segment, revenues grew 2% to $35 million, driven by growth in international markets, excluding China, headlined by the breakout title, Michael. Looking forward, the second half of the slate looks exceptional with a rich mix of IMAX-centric blockbuster, local language and alternative content, along with mega titles of the Odyssey, whose the IMAX box office is already north of $80 million in less than a week, Iñárritu's Digger featuring Tom Cruise, the untitled Cliff Booth Netflix film and Dune Part Three, the climactic conclusion of the globally acclaimed franchise that should only be seen in IMAX. On the profit side, Content Solutions delivered gross profit of $22 million, which was roughly flat year-over-year with a healthy gross margin of 63%. Turning to our Technology Products and Services segment. IMAX delivered revenues of $65 million, a growth of 16% from the prior year, driven by higher system installations, renewals and rental revenues. In addition, gross profit margin of 60% increased 600 basis points from 54% in the prior year, reflecting a positive mix shift to higher-margin revenue streams. Looking at installations, we saw strong demand by exhibitors to open IMAX locations and installed 38 systems in the second quarter compared to 36 in the year prior. For context, the 38 installations are the highest we've had in the second quarter since a decade ago. And of those 38 systems, 20 were joint revenue sharing, 18 were sales and from a network growth perspective, 21 were upgrades and 17 were new locations. The new locations reflect our diverse and expanding network with more than half of new locations coming in international markets, including Japan, Spain, Germany, Belgium, Malaysia and France. And not captured in these installation numbers is all the work the team did to get the 11 new 70-millimeter projector locations up and running, including the standout locations like Regal LA Live, which is our second highest grossing U.S. site thus far in the Odyssey run. We signed agreements for 36 systems in the quarter, up from 28 in the prior year, with 80% in new locations, a strong indicator of future network growth. And similar to installations, signings came from a diverse mix of geographies, with the most notable being the 10-system Hoyts deal in Australia and New Zealand and the 5-system Georgia Theatre deal in the U.S. We also had meaningful 3-system deals in underpenetrated countries of India, Turkey and Vietnam. All in all, momentum continues on the signings front with a strong pipeline of prospects. Turning to cash flows and balance sheet. Cash flows from operations for the first half of 2026 was strong with $36 million as a net inflow compared to $30 million in the prior year, reflecting the higher net income actualized along with improvements in working capital. Our first half operating cash flows also includes $10 million of incentive lease payments to exhibitors, most of which came in the first quarter. As highlighted last quarter, this investment reflects the continued prioritization of our use of available capital to invest in growth, including partnering with exhibitors to expand and upgrade the IMAX network through joint revenue sharing arrangements. This strategy will empower IMAX to take full advantage of our expanding brand and market share and the promising slate that continues to shape for the years ahead. We maintain a strong capital structure, thanks to our operating model and focused execution. And during Q2, we deployed $13.7 million towards share repurchases opportunistically using our capital to drive shareholder returns. As of June 30, we held $160 million in cash and $292 million in debt with a net leverage of 0.7x. To conclude, our strong financial results reflect our model and our momentum, which continues to build. The early results of the Odyssey shine a light on how IMAX's end-to-end technology, filmmaker partnerships and focus on quality deliver unique value to our stakeholders from filmmakers and studios to exhibitors and consumers through to our shareholders. We've seen this moment approaching. We spoke to you about it at our Investor Day as well as through this year, and we are prepared to capitalize on it by expanding our network to penetrate more open zones, partnering with more filmmakers on using our film cameras and film prints to create an elevated experience, building out our merchandising program and creating more direct connections with our fan base, and managing our cost base and choosing our investments to ensure we remain disciplined and are driving profitable growth. We firmly believe these actions together will help us not only achieve our 2026 guidance, but also set us up for even greater sustainable growth in the future. Thank you. And with that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from Michael Hickey with StoneX.

Rich, Natasha, Jennifer, congrats, guys. Great quarter and phenomenal success here on the Odyssey. Rich, I guess first question from us. Odyssey, again, a big success, a lot of records for you, and you gave us a ton of sort of positive data points. What metrics do you think we should focus on that sort of best, I guess, in your view, demonstrate both the power of the film, the IMAX partnership and sort of give you the confidence that you can continue your momentum here over the coming weeks?

Well, there are a lot of metrics to focus on, Mike, some qualitative and some quantitative. So starting with some of the qualitative. I mean, you should -- I'm sure you've done this, but go on social media. IMAX is really the center of the discussion kind of wherever you go and the comments not only about how far they went to get tickets, but what they thought of the experience, other qualitative things, it's a little bit of both is looking at the presales way in advance. And as I said, BFI is selling out shows in week 7 and week 8. I mean, I know those are statistics on an earnings call. But one of you ever heard of a movie selling out 2 months in advance. There's a lot of quantitative matrix, including the weekdays, which have been extraordinary. So a typical weekday in IMAX over the summer or theatrical is the Monday, it's about 10% of the weekend. And as you know, we did about $52 million over the weekend. So we were thinking maybe we'd do a little bit better, but the Monday number was around $11 million. By the way, we've had the same number on Tuesday and the same number on Wednesday. So I think you could keep an eye on the sub data coming in not only the overall number, but you earn from looking at that. I think you should look at a list of our top theaters. So LA Live, for example, is a new theater we just opened with Regal 6 months ago, and it did about $800,000 for the first 6 months, which is frankly, pretty good. But in the first 6 days of this movie, it's done $400,000. So when people -- kind of what it says is that a lot of people, new clients are going for the first time. But once they go and they like the experience and they know what it is, I believe they'll build on that. So the initial opening of the theater will be boosted. I think you can look at film releases, which we'll be announcing for next year, some this year. There are at least 4 of them. I think there'll be more. We're speaking to the studios and filmmakers right now about expanding it. And that's why kind of our premise that we don't know the ways it's going to benefit IMAX yet because there are so many. That's why we worded it that way because they are just every day, new little numbers are coming out at new directions.

Nice, Rich. Awesome. You kind of touched on this, but clearly, you've said it and now it's happening. It seems like Odyssey is certainly transformative for your business. We were really curious sort of the feedback since it's open now from filmmakers and talent where I know you have really great and strong relationships already. Just curious what you're hearing from the ecosystem, from them and maybe the studios and your exhibition partners. And the best you can, when you take that feedback and you think about how the film's performance could translate into future growth opportunities. I mean some seem obvious, some less, but just curious sort of how you think it will take shape for you in the future.

So, Mike, the good news for you and other analysts and directors and exhibitors is that we didn't wait for the film to open to come up with a strategy. And in fact, as you know, because we spent time talking to you, we started putting a plan together to lean in before the film open. And each area of the company has its own strategy, which we developed in advance and are implementing. So by way of example, in terms of studios and directors, we have a plan and a presentation already put together about what the Odyssey meant to this movie and why they should film going forward. Another plan was in our sales area where our exhibitor clients, people in the middle of the organization know the numbers, but people running them don't. So on a daily basis, we're communicating that outward. And it involves PR involves every aspect of our business. So obviously, we're getting good feedback, but we're not really leaving it at that. We have targeted goals that we're trying to make as we roll out our response to the Odyssey. It's early, but people are very positive.

Our next question comes from Eric Handler with ROTH Capital.

Rich, I know it's been many, many years since IMAX has manufactured a 70-millimeter film projection system. Given the response that you're seeing, not just for the Odyssey, but in recent times as well, is there any way to double the number of 70-millimeter film protection systems out there? Is it financially feasible? Is it from a manufacturing point, even feasible?

So Eric, certainly, we could have more of them, and we're exploring ways to do that. But in a way, it's like a Rolls-Royce. The economics are very difficult to meet and only certain people can afford a Rolls-Royce. So if you wanted to broaden the market for Rolls-Royce, you really have to engineer down the cost. And the reason for that is you need a particularly big box with the aspect ratio, it's very expensive. You need film prints, not only the projector, which costs $50,000 a piece to put in your theater. You need logistics like a forklift [indiscernible] them, so you need a very big projection without boring you and everyone else with the answer, when you get through the numbers of it, there are a finite number of locations that really can support the economics of it. And one thing that's really great about this release and some of the notable ones we've done is they play for a really long time. So when you play for a really long time, you can make the numbers work. But if you wanted to create more and you want to open film releases for a weekend, the numbers just wouldn't work for that. You need a long play time. And by the way, we help subsidize the prints, and we participate in the economics around the print. So we get a significantly higher take rate in those film theaters than we get in regular theaters. So I think economically, that will end to our benefit, but it's finite. You just can't say, why don't you build hundreds of them because there aren't hundreds of places where it would work.

Okay. And then as a follow-up, you touched a bit on this with the prior questions. But given that the Odyssey promotion, it was just IMAX and the movie were so intertwined. How is that changing how -- or what discussions are taking place with, like, Greta Gerwig, Michael B. Jordan for Narnia and the Thomas Crown Affair and future movies that are filled with IMAX.

Well, there's no question that the more a filmmaker leans in, the more it helps the box office. And Chris Nolan and Universal were incredible in the way that they embrace the movie. And I think it's kind of a model of how to really make it work. I've told this story before, but it's worth noting when Sinners opened, our team met with Ryan Coogler. That we said it's not just that it's filmed in IMAX, but it's the way you lean into it. And we met with Michael several times with -- I'm sorry, with Ryan several times, and Ryan really leaned in. And I'm sure you remember, Eric, he made his own book about aspect ratios. He was incredibly responsive and innovative. And [ skinners ] broke out in its category at that time, it was quite successful. So back to the question Mike just asked, we already have a plan, which we're implementing going to the filmmakers who have things scheduled in IMAX film and kind of briefing them on how to be involved with the rollout and capitalize on that. So it's worth noting that we had a call with Warner yesterday who's distributing on Dune Three, and they're already there. I mean you don't have to convince them. They sold out some of the shows for that almost a year in advance. They did a trailer release and live in 10 IMAX theaters. And Denis obviously been very successful with IMAX before, so he understands that. But I think the answer is to meet with filmmakers and studios as early as you can and try and replicate what Chris and Universal do.

[Operator Instructions] Our next question comes from Eric Wold with Texas Capital Securities.

So my question is, I guess, Rich, as you think about the increasing demand that you're seeing from IMAX systems from exhibitors as well as had the expectation that first screen averages should continue to move higher. I know in the past, you talked about not looking to change kind of the revenue share with studios, but kind of lean in more with kind of marketing help from them, et cetera. What about on the exhibitor side? And what have you seen in your kind of current discussions and kind of maybe what's in the recent backlog on new system installations to come in terms of your ability to kind of price those a little more advantageously for IMAX, either both on a sales side lease basis or in the revenue share percentages you get from the exhibitors?

So I think the current model working very well, Eric. And I think there's no reason to snatch defeat from the jaws of victory. So I think our pricing structure works pretty well. We get a good return. The studios get a good return. The exhibitors get a good return. We're not going to be pigs about it. That's not the way we conduct our business. It's more collaborative and partnership. And I just don't think that's -- we've been doing this for almost 60 years. So we're not going to take advantage. But one place I think there is room to make the model better is on price. And in fact, the exhibitors set the price. And frankly, with tickets at Lincoln Square being scalped for $1,000, I think there's room to move up the prices for film. And we've let that be known to the exhibitors in the film area, but it's their decision, and you cover the industry, you know it well. It takes a while for people to change what they've done. But hopefully, they'll see the results here and make good decisions.

Our next question comes from David Karnovsky with JPMorgan.

Rich, it would be great if you could update on China and just the moviegoing trends in the first half and more recently, how do you see performance as being impacted by film quality or consumer trends and just kind of your near-term outlook on the Odyssey and Spider-Man. And then just a separate one for Natasha. Gross margin in Tech Products and Services was over 60%, even with rental contribution relatively low to recent quarters. Can you just talk to the better gross profit margin there?

So David, China's first half, as you know, was disappointing, their performance. In the last couple of weeks, it's actually started to pick up. And Natasha reminded me the names of the films. Food Soccer, maybe a promo of the World Cup. But that did pretty well in addition to some other films. Some of the films moved out of Chinese New Year, and we believe will come out in the second half. The presales for Spider-Man in China have been pretty good. They've been consistent with kind of what Avatar 3's presales were. I think we're over 50% of the presales in China for that movie. So we're cautiously optimistic about that. I think it was a smart move in China by opening Odyssey a month later than it opened in the rest of the world because I think the rest of the world's results will bleed over and will give the movie momentum going in. And they did that with Oppenheimer, and that worked pretty well. So that's another one, I would say, cautiously optimistic. As you know, we're doing Avengers Dooms Day in China, and that -- the other End Game did incredibly well in China. Our opening weekend was something like $45 million. I'm not predicting it's going to do that, but I think that could be a strong title for us. And again, the local language titles. So our forecast is for a better second half than the first half. And you didn't ask this, but in next year '27, they have a much more promising slate that they had this year. I think there are 2 Wandering Earth in '27 and a number of other titles that have done well coming back. So it's the movie business. But again, there is some more optimism creeping in.

David, for the gross margin for Tech Products and Services, I mean, overall, just the level of box office, $284 million of box office, we exceeded our standard of where we talk about the incrementality that starts to kick in over $250 million. So of course, Tech Products and Services gets to benefit from that. Another part of that is we have talked about, particularly in last quarter's call about our contribution of lease incentives to exhibitors and that we would be taking an additional take rate from them. And so you're seeing part of that flow through as well on the Tech Products and Services margin, which we believe will continue as we continue to invest in helping the rollout of systems worldwide. And on top of that, part of our margins just simply comes from box office projections and predictions and based on historical performance. And our box office over the past few years has continued to grow, and that helps towards increasing the average sales price of the system as well, which all flows right to the bottom line.

Our next question comes from David Joyce with Seaport Research Partners.

And thinking about your network evolution, it seems like you did have greater system sales than is typical here in the second quarter. Is there any pull forward? Or is there an acceleration? Or is this an indication that you'll be closer to the high end of your install guidance for the year? And at the same time, though, it did look like you invested less in the JV Screens than you did last year at this point. Is that also a timing factor because you did allocate some of your capital towards share repurchases. Just wondering what your thoughts are on building up the JV side of your exposure.

I think it's hard to predict in a quarter what the mix will be. And I think it's dangerous to assume 1 quarter is a trend. I think the trend -- if I had to defend why it is a trend, even though I don't think it is, we've -- as you know, we've lowered the amount of JVs that we're willing to do in marginal territories. So for example, in China, we used to do a lot more JVs, but we've stopped doing them in some part and also have a more stringent criteria about what the ROI is coming out of China based on performance. So that could skew it. But I really don't think yet that it's a trend. I'd say maybe the other thing is the GBO has been so strong that our partners have said, why don't we own it instead of joint venture to capture more of it. But again, I would be cautious about making much of it. I think Natasha wants to add something.

The other part that to be considered there is last year, and we talked about this last year, we front-loaded the JVs because of certain tariffs and taxes, and we wanted to make sure that we ship them ahead of time. But even as you look at this year, David, we've installed 31 JV systems year-to-date. So it is more than the sales systems. We continue to lean into JVs where the incrementality can kick in and really flow through, especially domestically where you're seeing that happen and in the rest of world region. So we are continuing to invest. Also, we've talked about this, that our cost of sales, we are always finding more efficiencies and looking for that in keeping our cost of sales flat to slightly down as well.

Our next question comes from Stephen Laszczyk with Goldman Sachs.

Maybe as a follow-up to that last question, just on the mix of sales type versus the JVs. Natasha, curious if you could just update us on your latest thinking around EBITDA to free cash flow conversion for the year, if any of that outlook is changing or is remaining similar? And then perhaps related to that, just as you look ahead, it would be great to get your updated sense for how you're thinking about capital allocation and capital returns more broadly.

Yes. I mean for the quarter, we had strong results in most of our business areas. I think you heard in our prepared remarks, our adjusted net income and EPS are up over 65% and -- all of it comes down to just the box office performance. It was a strong quarter. It's our biggest Q2 in the past decade. So that's a pretty big achievement. And I think the other part is we're continuing to install based on our guidance. We have the range of $160 million to $175 million, and we're aiming towards that. We do look at our year as a whole annual performance of growth year-over-year. And so we are continuing to lean into that. Our cash from operations is very strong, as you can see over year-over-year has grown significantly as well and continuing to use that in the business as well. Our cash from ops of $36 million actually would have been $10 million higher, but we've decided to invest through those lease incentives as well. So we are highly invested in growing our network and continuing to as we grow the network, then realize that incrementality through our model and create growth each year for our financial metrics. We're not changing any of our metrics for the year, our guidance for the year on EBITDA. And overall, we're using our cash to essentially invest in our network to grow the network, which will then create more cash for us in our cash flows. And of course, as you've seen, Stephen, whenever we have excess cash flows or find the stock price is being underappreciated, we do then take that cash and invest right back into the business through share repurchases as well.

Our next question comes from Drew Crum with B. Riley Securities.

So Rich, a lot of prognosticators have pegged Spider-Man as one of the top grossing films for '26. Given the presale figures for the Odyssey you shared with us, can you discuss how you're managing Spider-Man across your system? I know you mentioned exhibiting the film in some Asian countries. Do you intend to? Or do you have the ability to incorporate programming in any Western markets?

So Drew, just it's a nuanced point, but you said some Asian countries, we're playing it in China, Japan and Korea, which are the largest markets in Asia. So that gives us a really strong footprint. Unfortunately, Sony dated Spider-Man right on top of Odyssey, and Odyssey is one of the strongest titles. And you're right, the prognosticators are saying, but we've modeled out Odyssey and where it can end up. And we had a pretty aggressive ultimate for it, which I'm almost certain we will beat. We're going to be at $100 million or very close by the end of the day today. So that's a week into it. So I think we look at the big picture and what's the most advantageous thing for us to play, and we're very happy with our footprint with the Odyssey.

Our next question comes from Patrick Sholl with Barrington Research.

Kind of a follow-up on your comments on talking to filmmakers earlier in the process. I'm just curious on how you feel these studios are utilizing just the overall calendar and like how much more opportunity there is to kind of expand that release calendar to better optimized box office, but specifically IMAX's box office?

That's a great question, and it's a great macro question. And the right person to answer is probably the studios. But from a close bystander point of view, I think I agree with what you're alluding to. I mean, did Spider-Man have to date on the third week of Odyssey or was there a better date? Could Avengers have dated differently than right on top of Dune? I think historical trends and what are good weeks and what are bad weeks kind of too much in the zeitgeist of the entire entertainment network. And some studios have taken bold steps. I remember Marvel and Disney dated a big movie, Labor Day a few years ago, and it did really well. It broke out. And frankly, I'm a little surprised studios haven't done that to a greater extent and films have done really well in April and other times. So I think what you're suggesting is actually a good idea. And certainly, we would support that.

Our next question comes from Omar Mejias with Wells Fargo.

Rich, you mentioned occupancy was at 75%. That sounds like a staggering number. Can you give us some perspective on how that compares versus a normal quarter? And how you expect that to trend over the next few weeks given your improved visibility with presales?

So I don't have comps in front of me, Omar, but it's much higher than we typically see for an opening weekend. But as I said in my prepared remarks, I mean, I feel very confident about the legs of this movie. When I said the weekday, it was the best Monday, the best Tuesday, the best Wednesday, I think we'll have the best Thursday. And as I said, the presales for next -- for this coming weekend are as good as they are for a really good first weekend number and our presales for the film network I think virtually the whole network is sold out on the film side for around a month and tickets are on sale now weeks 5, some places 7 and 8. So I'm extremely optimistic that the occupancy will hold up. And if you look at our slate going forward, Omar, we have room to play Odyssey for a pretty long time. We -- there are other films in the schedule, but we started discussions earlier about sharing the network with strong Odyssey places where it's performing really well. So when I said there were unforeseen benefits coming from Odyssey, one of them is we haven't seen a weakening yet. Of course, it will at some point, but the go-forward numbers are very strong.

That's super helpful. And maybe on that point, I think you expect to over-index on your 70-millimeter screens. When is the next contractual obligation for a film to play on your 70-millimeter screens? Or maybe just ask differently, how long can you extend the Odyssey run on your 70-millimeter screens?

It doesn't really work that way, Omar. But the next film release we have is Dune 2 -- Dune 3, sorry, which is around Christmas time, and that was Shot in film in part by Denis Villeneuve. And as I said, advanced ticket sales there are extremely strong. So I think kind of the twin pillars of Odyssey and Dune Three are going to keep those film theaters running pretty high capacity for a long time.

Our last question comes from Chad Beynon with Macquarie.

This is Aaron on for Chad. A lot of our questions have been asked, but maybe we can talk about some of the more early-stage opportunities. So when it comes to the merch opportunity, can you just talk about how fast you think this part of the business could accelerate? And then also real quickly, you recently announced a pretty interesting partnership to develop an IMAX in-vehicle entertainment system. Maybe just talk about the commercial model for that and how large you think the addressable market could be there?

Okay. I'm going to do it pretty quickly because we're running out of time. So in terms of the merchandising opportunity, one of our goals this year was to prove out merchandising as a concept for us. And as you know, a lot of studios, it's a huge number. And even for some exhibitors, it's a pretty big number. So we put a plan together, and we were rolling out that plan. But the popcorn buckets really broke out, as I said in the text, we keep adding more and more, and we're selling thousands and thousands more as we add them. We just can't make them fast enough. I think for this year, we suffered a little because we didn't see how big it would be. But again, the goal this year was more to prove out the model. then to execute in a big way. But we are taking follow-up steps already. There'll be more merchandise dropping around the Odyssey that you'll see online than we originally allocated. We put together a fairly aggressive pattern for Dune and merchandising because we think that's going to be a very successful movie. And we're doing work on next year and modeling out what we can do with it. But I definitely think it's a significant opportunity for us. In terms of the AV partnership we announced in China, there are really 2 things. In the short run, in China, in particular, auto manufacturers sell their cars based on the AV system, especially the high-end cars. And Geely saw an opportunity in doing that and dealing with those manufacturers to help them achieve more market share. And then the second thing is over time, as autonomous vehicles come in, people are going to be sitting in cars with not a lot to do than look out the window. And consumers will differentiate their purchases based on what the entertainment systems are. So I think Ger is just getting ahead by implementing that now. The best part of that is there's no R&D expense or capital expense for us. The way the deal is structured is most of that is absorbed by our partner. So we like not only the opportunity, but the structure of the deal.

And I'm not showing any further questions. I turn the call back over to management for any further remarks.

Thank you very much, operator. You probably could tell from our reactions that we're -- I was going to be very corporate and say very excited. But we've been blown away. We had really high expectations. People at IMAX thought I was a bit of a pessimist, but we've exceeded our high expectations. By the way, it's open and we were really pleased with the weekend. But then we saw the weekday numbers and our highest expectations didn't get us there. And the presales, and I use as an example, LA Live, but there's so many examples. I mean, the media is using the word frenzy around IMAX ticket sales. Filmmakers are very excited where it's gone. A lot of you understand Hollywood where something works, studios lean into it, and this has really worked in a big way. I think we're coming off of the power of our platform. If one movie doesn't do well, like I know a lot of our investors or analysts were in a craze because Grogu did X instead of X plus this. But we're pretty calm about it. We have a portfolio. And -- my lawyers don't like me saying forward-looking statements. But there's no question in my mind, Odyssey is going to do better than what we had budgeted for it. So we are really relaxed and happy in building a company for the long term and grateful that Chris Nolan made this masterpiece leaning so hard into IMAX, and we really look forward to the next quarter when we can talk about the results of all this. Thank you.

Ladies and gentlemen, we thank you for your participation, and this does conclude today's presentation. You may now disconnect, and have a wonderful day.

Hello, and welcome to the Annual General Meeting of Shareholders of IMAX Corporation. Please note that today's meeting is being recorded. It is my pleasure to turn the meeting over to Rob Lister, Chief Legal Officer and Senior Executive Vice President of IMAX Corporation. Mr. Lister, the floor is yours.

Thank you, operator. I'd like to call this Annual General Meeting of Shareholders to order. I'd like to welcome all of you to this year's meeting, which is being conducted via live audio webcast, and thank you for joining us.

The Board has authorized me to chair today's meeting in accordance with our bylaws. Ken Weissman, Corporate Secretary, will act as Secretary of the meeting, and Computershare Investor Services, Inc. through its representatives will act as scrutineer.

Members of our Board of Directors and other members of management are present on today's webcast as well. I would now like to ask Ken to briefly go over some procedural and administrative matters.

Thanks, Rob. I have confirmed that we have not received any shareholder nominations or proposals for business at today's meeting. I have received from Computershare a list of the holders of the corporation's common shares as of the close of business on April 13, 2026, the record date for this meeting.

I have also received the scrutineer's report on attendance, which indicates that sufficient shareholders are present to constitute a quorum as well as the statutory declaration as to the due mailing of the notice of meeting, the proxy circular and proxy statement, the form of proxy and the annual report that contains the 2025 financial statements of the corporation.

These documents will be available for review during the meeting by selecting the documents icon at the top of your screen. Questions can be submitted during the meeting by any registered shareholder or duly appointed proxy holder by selecting the Q&A icon at the top of your screen.

If you submit a question, please include your name and your affiliation and indicate if the question relates to a specific agenda item. We will address questions relating to specific business items when those items are brought before the meeting, and we will address other questions during the Q&A session at the end of the meeting.

Please keep in mind that comments and answers to your questions might include statements that are forward-looking and that they address future results or occurrences. Actual future results and occurrences may differ materially from these forward-looking statements.

Please refer to our SEC and SEDAR filings for a discussion of some of the factors that could affect our future results and occurrences.

Thanks, Ken. I direct that the statutory declaration and the list of shareholders be kept by the secretary with the records of this meeting. Notice having been duly given and there being a quorum present, I declare this meeting to be properly constituted.

The formal agenda for this meeting as set out in the notice is to receive the consolidated financial statements for the fiscal year ended December 31, 2025, together with the auditor's report, to elect directors, to appoint auditors and to authorize the directors to fix the auditor's remuneration and to conduct an advisory vote on the compensation of the corporation's named executive officers. Ken will now discuss voting procedures.

Voting today is limited to shareholders of record on April 13, 2026, the record date for this meeting, as well as duly appointed proxy holders for such shareholders. Voting will be conducted by electronic ballot. We now ask that the balloting be open. If you are a shareholder and you have already voted your shares ahead of the meeting, you do not need to vote your shares again.

But if you use the control number or invitation code to log into the meeting and you accepted the terms and conditions, you will be provided the opportunity to vote by online ballot. If you vote by online ballot during the meeting, any proxies you previously submitted will be revoked.

The polls are now open and all registered shareholders and duly appointed proxy holders who wish to vote can click on the vote icon at the top of your screen. You will be able to see all motions being brought forth at the meeting, and you can select the relevant option next to each proposal.

Voting will end after all items have been brought before the meeting. Rob, we are now ready to proceed with the formal business of the meeting.

Thank you, Ken. The first item of business is the election of 10 directors. Shareholders are being asked to elect the following 10 nominees as directors of IMAX Corporation to hold office until the close of the Annual Meeting of Shareholders in 2027 until their successors are elected or appointed or until the date of their registration or termination.

The nominees are Gail Berman, Eric A. Demirian, Kevin Douglas, Richard L. Gelfond, David W. Leebron, Michael MacMillan, Steve R. Pamon, Dana Settle, Darren D. Throop and Jennifer Wong. Jennifer Horsley, IMAX's Senior Vice President of FP&A and Investor Relations, is receiving any questions that are submitted during the meeting.

Jennifer, can you please advise if there are any questions regarding this business item?

I can confirm that we have not received any questions specific to this matter.

Thanks, Jen. The next item of business is to approve the appointment of PricewaterhouseCoopers LLP as the corporation's independent auditors and to authorize the directors to fix their remuneration. Jennifer, can you please advise if we have received any questions regarding this business item?

I can confirm that we have not received any questions specific to this matter.

Thank you. The next proposal, commonly known as say-on-pay proposal, is to approve on an advisory basis the corporation's named executive officers compensation program. Although the vote is nonbinding, the Board and the Compensation Committee will review the voting results and will consider shareholders' views in connection with our executive compensation program. Jennifer, can you please advise if we have received any questions regarding this business item?

I can confirm that we have not received any questions specific to this matter.

Thank you. We have now completed the items to be voted upon at this meeting. We will pause here to provide one final minute to allow everyone to complete their voting. Your votes will automatically be accepted once the balloting closes.

[Voting]

The electronic balloting has now closed. I ask that the scrutineer compile the results of the votes on all business matters into a report. Results will be published on a Form 8-K on EDGAR as well as SEDAR.

This concludes the formal meeting -- business of the meeting. I will now take any remaining questions on topics relating to today's subject matter from registered shareholders and duly appointed proxy holders. Jennifer, are there any questions?

I can confirm that no questions have been submitted.

Thank you, Jennifer. Thank you, Ken. This completes the business of the meeting. Thank you for joining us today and for your continued interest in and support of IMAX. The meeting is now concluded.

You may now disconnect.

Okay. Great. We're going to get started. You'll notice we have a little bit of a unique setup today. So on my left is Natasha Fernandes, CFO of IMAX. And up on the screen on my right, you'll see Rich Gelfond, CEO. Rich, thanks for being with us today.

Why don't we start with you? It's been a while since investors have heard from you. So maybe we could just start by having you kind of share your perspective on kind of recent business trends, what you're most excited about, what you've been focused on as you've come back from your temporary leave.

Thanks, David, and thanks for agreeing to this unique setup. As you know, I can't travel right now, and I really appreciate the opportunity to speak at the conference.

So in a way, the staging of my comeback is perfect with the summer slate kicking off right now and all that's going on in the business. First of all, my primary thing that I've been focusing on is shareholder value and increasing shareholder value. And to that end, I started coming back in the last week or 2, and we decided to initiate a buyback program a week ago, and we bought in over 12 million shares in the last week.

The stock has gone down for reasons. I understand that some films over-index what you thought they're going to do, some go under. We're on the doorstep of the big movie season. I think people are needlessly worried, but we're not. We're quite confident in the rest of the year and where we're going to end up. And I want to reiterate the guidance for $1.4 million in box office.

So first thing I'm focusing on is shareholder value. We're really focused on filling in the slate for next -- for this year and next year in '28. And without giving you specific titles because they're not all formally agreed to, but more agreed to by word is '28 is almost filled in for the summer. I'll talk a little bit more about it later, but I still think there's a number of things we might do in '26. That make me are the reasons for my confidence for box office for this year.

I'm spending a lot of time working on the brand. I think our brand by virtue of the fact that we're indexing so high in all the movies and our box office is pretty much so far equivalent to what it was last year with Odyssey, Toy Story and Dune: Part Three still to come, which comp very favorable to last year's titles.

So I think on a global basis, the brand has done phenomenal, and there's a lot more we could do around it. And I don't know, David, if you had a chance to see Chris Nolan on either Colbert or 60 minutes this past weekend. And when you understand what we have out there for the rest of the year, I think you'd be as excited as I am.

Got. That's great intro. Natasha, do you want to add anything or...

Yes. No, I think we're super excited. The repurchases, as Rich said, is $12 million so far, and that's been great because we believe that we're undervalued, and it's a great opportunity for us. And I think that we're excited for the slate ahead of us. I wanted to reiterate what Rich said about being on par.

Last year, our biggest title of the year was Ne Zha 2 in the first quarter, and then we went on to achieve $1.28 billion in the year. This year, we are right on par as of today with our box office of last year at this time, and yet the biggest of our slate is yet to come.

Got it. So maybe we can unpack the $1.4 billion of box office a bit. Maybe just help us understand how you build the forecast. And I think it's also important to know how you dynamically manage that throughout the year.

So the way we build the forecast, David, is when we do our budget the year before, we get estimates on a film-by-film basis for everything that's laid out for the next year. And our film department weighs into that, our finance department weighs into it, and I weigh into it based on comps, but other things. Is it film for IMAX? Is it film or is it digital? How long is it playing, all the factors like that.

And we know going into a year that not every film is going to track exactly to the ultimate we put together. So you look at this year and things like Hail, Mary and Michael have done much better than what our budget was coming into the year and other things have done worse than what we budgeted it. But it's a portfolio and much like investors that you're hosting manage there as a portfolio. That's how we manage it. And we're leaning in much more heavily to the programming end of it.

So we used to -- our team was mostly staffed with people who came out of distribution in Hollywood and the jobs of people in distribution is to sell a movie. So if you had gone out and you sold movie X and it wasn't performing, you try and push movie X, and that was the skill set. Well, it occurred to us about 1.5 years ago that, that wasn't necessarily the best way to maximize box office.

So we supplemented our team with people who came out of programming work for either a chain or thought of things differently. So when the box office, let's say, isn't living up to its potential with a particular movie, we swap it out and we put another movie in and things move out of the year, so we move other things in. So it's become a much more dynamic process.

And this year -- or as I say, last year, for Thanksgiving, we played 3 movies, and we maximize box office. And you look recently, we brought back Hail, Mary and Michael was originally slated for like a week or 2, and we brought it back this weekend. So we're playing a much more active dynamic role.

Got it. Maybe following up on box office. We did see a few weeks ago, Netflix delay Narnia into '27, leaving a gap in the schedule around Thanksgiving by definition, that film would have had 100% indexing. So first, Rich, how should investors view that as impacting your forecast? And then as a follow-up, right, if we go back to the Investor Day, you had spoken about Narnia as sort of a cultural event, a game changer. So what is the absence of having that fully exclusive model over the 2 weeks kind of mean to your longer-term ambitions?

So let me answer short term and long term, David. Yes. So I think it's premature to take what people thought Narnia was going to do and subtract it because there's been a lot of demand for that slot. And a lot of people are interested in, obviously, it's a good time of year to release a movie. And I was hoping on this call to be able to announce what's going in that slot, and we're really close.

And I'd be really surprised if in the next week, we don't tell you what's going in that slot. So we're on the verge of replacing it, and you'll be the first to know, but I'm quite encouraged by what we have in there.

Longer term, I think the model that we put together will continue to exist. It may be a different partner. It may be different specific terms. But I'm quite confident that we'll have an IMAX exclusive release that along the lines of what we talked about.

And then the final thing I would say is Narnia itself. So as you know, February is traditionally a very weak month. It's moved to Super Bowl week, which is traditionally a very weak date. We have been working hard with Greta, as you'll recall from the press release.

I think we played a role in Netflix agreeing to open it up very wide. We still have an exclusive for the first couple of days going forward. They're going to lean in with a lot of marketing to it. So if I'm right and we have a really good replacement, the movement today looks like not the best thing, but I think people will be comfortable that it's not only good for us, but good for the whole business because we help turn that into a day and date release wide.

I should probably follow up there and ask you just about your thoughts on Netflix and the significance of them committing to that type of theatrical release, right, just with a longer-term view of supply?

So again, you probably should ask them because they'll really have the better answer. But I think that they -- in doing the diligence for the Warner deal, kind of learn more about the traditional movie business and the role that it could play. So I think certainly, they're leaning in heavier than they were. And I think if you look out longer, I think they'll be more open-minded to things like that.

Got it. You mentioned partnerships with filmmakers earlier. Obviously, that's become central to what IMAX does. I think it's one of the things that sets you apart. Maybe we can discuss this a bit. Obviously, with Christopher Nolan, the Odyssey set to release this summer, that's coming a lot more into view.

So we have something called the CEO forum in IMAX every year, where we gather our exhibitors from around the world as CEOs, and we put together some talent and panels. So this year, we don't usually talk about it, but it was so special. I thought it was worth mentioning at this conference.

So our guests this year were Tom Cruise, Timothée Chalamet, Chris Nolan, Denis Villeneuve, Darren Aronofsky, Jon Favreau and many others. So I don't know who could -- by the way, they don't get paid to do this. They come to speak to our exhibitors. I don't know who else could pull that off. I don't think there is anyone except for maybe CinemaCon. But that's the kind of talent that we put together on a consistent basis.

And you even look at this year, we have Mandalorian coming out right now and Favreau, obviously, is one of the fathers of Disney and these types of movies. And then obviously, we have Denis doing 2 and 3 at the end of the year. And then you mentioned Chris. People work with IMAX, like Joe Kosinski's last year did F1. Next year, he's doing Miami Vice.

So the best filmmakers in the world who have done well want to work in IMAX, and that's really what drives us over time. The Odyssey, I'm -- I never like to jinx anything, but I've never seen something I've been this excited about in advance. And one of the reasons is if you saw Chris in any of those pieces, I mean, he's exuding confidence. But there's way more than that. The cast looks like the red carpet at the Oscars. The -- it's a very expensive movie.

Oppenheimer did almost $1 billion, just shy. And Odyssey has a much more international appeal than Oppenheimer did. And the marketing behind Odyssey, it sold out a lot of its tickets for film theaters a year in advance. We're playing it in 41 film theaters, whereas last time, we only played it in 30. So it just sets up well.

And at CinemaCon, I would say June was one of the surprises of the conference in terms of its reception. It was overwhelmingly received well. I don't know if you've seen the tracking for Toy Story, but it's extraordinary. I saw somebody who said 150 to 175 for the opening weekend. We've got Disclosure Day, the Spielberg movie. We've got Minions. I mean it's just a locked thing. And again, I think the filmmakers leaning into it as evidenced by Chris. Denis on June 3, they put tickets on sale for Christmas, and those are already largely sold out.

Maybe relative to your outlook, I've certainly gotten some investor questions on how to view China for the year. Natasha mentioned the [ Naija Comm]. I think earlier, we saw some titles get moved out of the Chinese New Year period. What's the latest you're seeing in the region? And how do you view the balance of the year?

So the summer looks way stronger than the first half of this year. So there's a lot of good Chinese local language coming in. Also the Hollywood films like Oppenheimer did very well in China. So I think that Odyssey will do well. Also, movies that were not playing in North America because of conflicts, such as Spider-Man and Avengers are going to play in China. And historically, some of them have done very well.

So a very strong Hollywood slate, along with a much stronger local language at the back end of the year tells us that the back half of the year will be considerably stronger than the front half of the year.

Got it. So one of the key drivers of IMAX box office has been higher indexing. We really saw that ramp in particular in the back half of 2025 across a range of film genres. Maybe you can talk to some of the factors like studio marketing, film for IMAX that have resonated with consumers.

And then I want to ask you on film for IMAX, right? If you look at the ads, Disney seems to be leaning into that a lot for Mandalorian. Going back to CinemaCon, they did announce the Infinity Vision program for Avengers. So just how should we interpret that?

Okay. So actually, first, I should start on Mandalorian, which open in the next couple of days. And I must say, I love the forecast for much of the U.S., which is lots of rain. We love lots of rain on Memorial Day weekend when we open summer blockbusters. Besides that, I think people are comparing Mandalorian to other Star Wars movies. And it's different than other Star Wars movies. But IMAX's knew the amount of marketing they put into it. So I'm not going to project the box office on Mandalorian, that's for Disney to do.

But I think IMAX will do a larger portion of this than we've done for any Star Wars movie. And that's partly because Favreau is leaning in so hard and Disney is leaning in so hard. So those are examples when you say about indexing. And the other part of indexing is I'm just amazed that Michael did over 15% in its opening weekend in IMAX.

And Sinners, as you know, did 20% and Hail Mary did over 15%. Traditionally, IMAX does like 10% of a blockbuster. So there's been kind of a permanent change. So yes, I agree with all the things you said in terms of studio marketing, the filmmakers. But I think it has to do with habits that people are forming. Like if you go back, almost all of these big blockbusters have done better than they've done in prior years because consumers are in the habit of going to them, and I really expect that to continue.

You mentioned Disney's Infinity Vision. I think we were going to play Avengers when it was scheduled to release over the summer. We made a deal with Warner and Legendary to do Dune Three. And as you know, we stick by our deals like we did with Mission Impossible. We played a movie about an obscure physicist named Oppenheimer. it turned out okay that we kind of kept our word and did that. And we wish we could have played Avengers and Disney understands that.

And I think Disney is going to do great with it. I hope they do. But the problem for Disney was they didn't have their IMAX screens and other than in China, and I think that was really important to them. So they created kind of a marketing vehicle called Infinity Vision, which enables them to "brand" their release.

It's important to note that there is no additional screens. It's just kind of a branding move on their part. And not only are there no additional screens, but there's no proprietary technology. There is no attempt to really create a separate brand. It's like they're going out to existing PLFs regardless of the dimensions of the theater, whether they're monitoring the experience in the theater. So it's a different kind of thing. And I hope they do well on it, but it has none of the attributes of what makes IMAX, and we're quite comfortable we'll do really well.

So here we are, we're at a conference focused on tech and AI. But what I want to ask you about is what I think is your most differentiated format, which is IMAX 70-millimeter film. Actually, I said this to Natasha, one of the ways I sometimes measure demand for IMAX is to look at Lincoln Center availability. for 70-millimeter, right? I remember for Project Hail Mary on opening weekend, there was nothing, right, every single showtime. So Rich, what resonates so much about this format? And how do you capitalize on it?

Well, again, I don't want to spend too much time on this, but Chris Nolan said in the 60 minutes interview, he said, if you want to go big and you want to go to something really special, you do IMAX film. And he's right about that. He's so right about it that we re-upped over the last year, and we created a new camera to enable real-time dialogue in a film shot completely with IMAX cameras. It's a much quieter solution. And I think he might have said on that or Colbert that the performance is different because the old version of the camera was loud.

So I think the film just says to the audience, it's really special. It's the biggest, it's the best. We've now found more theaters to release it in. And what was really impressive, David, about Hail Mary is it wasn't even filmed with the film cameras. It was filmed with digital cameras and then printed out to film. So we're aggressively promoting either using the cameras or printing it out with film. We have a program where we're visiting with the studios.

We're visiting with the filmmakers. And there's a lot of interest in film now that there are more theaters that can show it. And I said this before, both Dune and Odyssey have already sold out a lot of their film screenings for -- in the case of Dune, 6 months from now. So I think film is really going to help the brand, help attendance and see very significant box office for those movies.

Got it. Right. So since the pandemic, IMAX has seen significant growth in local language that's moved beyond China. You've gotten notable traction in India, Japan. Maybe just for investors who are less familiar with international box office, what's important to know about local versus Hollywood mix, how that factors into your program strategy, how that's played into your network growth abroad?

Yes. I think local language films, an important point is they don't only play in the country of origin, they also play in other countries. So a lot of the Japanese anime has done better in China than it did in Japan or for that matter, even in the United States. So we release films that have local appeal in a number of countries.

The biggest ones are China, Japan, Korea, but they include more -- I think Indonesia and Malaysia, we have films. And what they do is they drive local audiences to come to IMAX for local films, and they increase utilization rate at the theaters and they increase the economics for the theater operators. And what that does is drive the financial return, and that drives more signings, that drives more installations.

It drives the whole flywheel that makes IMAX work. And if you look at what's driven our growth over the last few years, it has a lot to do with local language. I think this year, we'll have like 75 local films. I don't remember exactly the number, the percentage that Natasha could jump in, but I think it was like 25% of our box office last year. So it's become a significant part of what we offer.

And should we discuss also, Rich, just the role of alternative content in kind of filling out the schedule, including during the week where some of that gets utilized?

Yes. It's the same thing, David, about capacity utilization. Like how do you find things in the off times or the non-blockbuster times that puts spots and seats. So a week or 2 ago, we did a Formula 1 race in Miami. I think we're doing the Monaco Grand Prix either this coming weekend or next coming weekend. And the Monaco Grand Prix place at 9:00 in the morning. So you're not really infringing on your slate, but you're bringing people in, in the Miami Grand Prix a lot of business.

Music is one place we've done very well with, particularly Led Zeppelin did especially well. Taylor Swift did particularly well. So we're trying to mix and match and find out what brings people in with the lowest cost structure because, again, you don't have the play time to really amortize the marketing cost. But it's been a supplement that's been working well for us. And we just hired someone who comes out of that world. So I think you'll see us do bigger things and more things, and we'll continue to evaluate and decide which are the things we should do and what doesn't work.

I think what's great about local language and alternative content for us is that as we continue to aim towards growing our total box office and growing and hitting those targets that we've talked about at Investor Day, for instance, it's growing all parts of the legs of the stool as opposed to looking at just one.

So Hollywood, where it used to be 90% of our box office, now it's about 65% to 70% of our box office, but we're growing Hollywood still. And then you're growing local language and you're growing alternative. And that's where we can guide to $1.4 billion and then continue to look at how we can grow that every year because you're getting more content in the stream. I mean the biggest part is that we're doing 120 pieces of content this year where that was half that a few years ago, right? So looking at the opportunity for growing that to create the higher utilization.

Obviously, a natural driver of indexing is your network growth. In December, at the Investor Day, you raised the TAM to 4,500 systems. I think that's less than 40% global penetration. So Rich, what are the key strategic levers to execute toward that target? And there's an obvious also just a question about the macro and whether that's impacting just the pace of the installs or signings.

I think it's really the theater economics, David, like last year was a record domestically for IMAX box office and the per screen averages were very high. And I don't think it was accidental that last year, we added 7 more chains in North America, which is a mature market. So that's a pretty notable accomplishment.

So I think the way it works is you look at what the return is like to the exhibitor based on the box office in that region or that country, and that drives incremental sales, and that's why we got comfortable with raising the TAM -- years ago, I don't remember how many, but we thought we could only have 90 theaters in China, and that was our TAM.

But now it's 800 theaters open. And I think our TAM is, I don't know, 1,400 or approximately that. So I think the better the box office does, the further the reach, the more the capture. It ties into what we talked about earlier, the brand and capacity utilization, and that's what really drives your growth.

Maybe we just follow up on the domestic opportunity, right? I guess theater owners, they weigh IMAX potentially against other proprietary brands, ScreenX, D-BOX, the own brands. I'm curious what opportunity you see to further fill out the U.S. footprint, either with the big 3 or just a longer tail of operators.

Yes. There's a lot of potential in North America. And as you know, we do sale deals and we do joint venture deals and hybrids. And what we've been able to do is use our capital efficiently to help. You had asked about the macro as part of your question, which is some of the macro issues because we have so much cash is we can supplement the economics or change the structure.

And I think there's no doubt that North America during the pandemic, obviously, the exhibitors didn't have the capital. But we were able to be profitable during that period and continue to grow because we use our capital smart. So I do think there are opportunities, and I don't remember the TAM. Again, if Natasha does, she should add it. But I think there's a way to go.

Yes, there's a lot of opportunity. And I think as we just go back to the global question, David, I think what people don't actually know because we haven't talked about it a lot is in the past year, we've actually signed deals with 23 new exhibitor partners globally. And that's like -- that's across 15 countries. And so there's a lot of opportunity for us to continue to execute against that TAM that we put out at Investor Day, and we've been doing that, chipping that away and making a really big impact from that perspective.

But also what's great is what we've seen from our experience is as soon as you -- we sign up with an exhibitor partner, they come back for more IMAX like AEON in Japan is a perfect example. 2 years ago, we signed up for 2 systems. They want to test and see whether or not that would be -- would be successful for them having an IMAX. And instead now, they've come back several other times now at this point and signed for more systems with us. And that's growing in a market like Japan, where we have such good opportunity for a high return box office and incrementality into our model. So I think that, that's really important.

Got it. Natasha, let's just touch upon EBITDA margin. So the guide for the year, I think, has a floor of 45%. Maybe just talk to the incremental gross profit dynamics on box office and then cost efficiency actions on SG&A that underpin that.

Yes. There's a lot of opportunity for incrementality in our model, and you saw that clearly through last year. This year, with $1.4 billion, that will come through at a higher rate, which is why we moved our sort of range from being low 40s last year to being 45% plus for the mid-40s. And that really is the opportunity for us.

As soon as you hit over the $250 million of box office in a quarter, we have that 85% incrementality flow-through on each additional box office dollar. But then you couple that with all of the SG&A actions we've taken, I mean, we took significant restructuring last year. We've looked at internally just how do we have cost efficiencies and keeping a steady workforce, but then looking at technology because as you grow the business, the first inclination in any business and company as you're growing is, okay, we need to invest more into people and resources.

But I think we've done -- the team has done a really good job of looking at how do we operate more efficiently and look at using tools and technology. We started doing digital delivery for a lot of our network, whereas we used to manually nail out all of those keys to theaters. When you look at operating a global company, those add up, right? And so I think we have a lot of opportunity to keep looking at that, but I think we've made really good progress so far, too.

On free cash flow, IMAX has guided to conversion of roughly 50% in '26 and growing thereafter, and that's net of growth CapEx a nice pickup from recent years, implies better working capital dynamics. Maybe you could just walk through how you're managing that and then how that growing cash flow factors into your kind of willingness to invest in different structures.

Well, the incrementality of the EBITDA margin, for sure, immediately flows right through to your free cash flow. But then a lot more opportunity in that our cost of the films stays static, right? And so a lot of that incrementality not only flows through, but then the dynamic that you have when you have a free cash flow conversion where you're capturing all of that box office in the year, I think our strong balance sheet helps us there, too, because we're being thoughtful about where we invest or can we invest as we did in first quarter in putting forward capital towards growing the network faster.

And once you grow that network faster, it will essentially grow the box office faster, and you'll get to capture that earlier in the year than later and continue to capture that in the 10-year cycle of our systems as well. But I do think you've seen the incremental step that's happened in our free cash flow last year, and it will just continue as we keep growing our network and in turn our box office as well.

And I think that's all very good. And of course, we're spending to grow our network and invest back in it. But then also, as Rich started off the call today, doing buybacks as well when we see an opportunity to do that.

I want to circle back to the buyback that you just mentioned. I think going into it, the authorization you had was around $250 million. I think it's fair to say IMAX has been an astute buyer of its stock. Maybe just discuss what governs your philosophy and just here and now on the current buyback.

Yes. I think part of that is just our -- we have a strong balance sheet. So what are the competing priorities? One would be growing our network and through the investment and joint revenue sharing arrangement.

The second piece would be stepping that up from doing this concept of lease incentives to be able to provide a little more help in capital towards growing the footprint in new locations, particularly domestically, is what we've been focused on.

And then third, the buybacks. There are always other opportunities that come up, and I think that's where you keep a little bit of capital to make sure you're ready to do those. We're not a highly acquisitive company. So it's not like we're going out and doing a lot of M&A. But I think that there are little pieces of our capital structure that could be achieved and cleaned up as well as we look towards deploying capital, too.

Great. Rich, we've got time for one last question. Maybe it would be great to just get you to sum up your current thoughts on the business and the path ahead.

Yes. As I said at the beginning, David, I mean, we couldn't be more excited. There's never been a summer slate that looks like it does now. I think we pretty much -- unless movies have moved out of the year, we pretty much managed our portfolio and predicted it quite well.

I think our outlooks are generally spot on. I remember a few years ago when a big movie moved out of the year, we couldn't account for that late in the year it moved coming out of the pandemic. So I think we feel very good about where we're situated.

And I think a lot of investors trade us on a week-by-week box office kind of thing, but that's not the right way to look at it. And I think they're missing pun intended, David, the big picture if they don't look at the holistic of what IMAX is and our strategy, how it's working.

All right. That's a good note to end on Rich. It's great to see you. And Natasha, thanks for being here.

Our pleasure.

Thank you, David.

Okay. Thanks, Rich.

Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter 2026 IMAX Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Jennifer Horsley, Head of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for IMAX's first quarter 2026 earnings conference call. On the call today to review the financial results are Natasha Fernandes, our Chief Financial Officer; and Rob Lister, our Chief Legal Officer.

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 regarding forward-looking statements. Today's call as well as the accompanying slide deck may include statements that are forward-looking 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 are made 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.

Before we begin, Rich would like to provide a brief update on his recovery, and then the call will turn over to Natasha.

Thanks, Jennifer, and good afternoon, everyone. Thanks for joining us today. Natasha will handle today's call and Q&A session. But before I turn it over to her, I wanted to provide a brief update on my recovery from pneumonia. I'm happy to share that I'm making excellent progress, and I'm gradually resuming oversight of the business and involved in all key strategic decisions.

Our management team is doing an outstanding job and will continue with their day-to-day responsibilities as well. I want to send my sincerest thanks for your well wishes and kind words of support over these past few weeks. I greatly appreciate it. And I appreciate your time and attention today. With the incredible start to the second quarter and a fantastic slate ahead, I'm as excited as I've ever been about the IMAX business.

With that, I'll turn it over to Natasha.

Thanks, Rich. With the heart of our formidable slate now rolling out, we remain very confident in our 2026 guidance, including a record $1.4 billion in global box office this year. Our story is one of strong growing momentum. It is clearer than ever that IMAX is evolving into something bigger, a global platform for blockbuster films, events and experiences, with the most defined by our technology, relationships and brand, enabling a diversified dynamic content portfolio across Hollywood, local language, documentaries, music, sports, gaming and more.

Project Hail Mary, a film for IMAX release delivered an emphatic conclusion to the first quarter and has now earned more than $90 million in IMAX, more than double our initial projections. This excellent performance alongside Avatar Fire and Ash lifted our global box office outside of China, up 67% year-over-year in Q1 and partially offset our lower Greater China box office, where we faced a significant comp against last year's massive Ne Zha 2. That includes growth of 75% in North America and 60% in rest of world markets.

Our platform has kicked into high gear. IMAX global box office in the current quarter-to-date is over $100 million, up over 10% year-over-year. We scored 3 consecutive global opening weekends of over $20 million with 3 very different titles for very different audiences. This is the kind of strength across genres, demos and geographies that drove our record performance in 2025. We delivered over 18% of the global box office for Project Hail Mary, including 30% market share in China, proving again the strong indexing we command there for Hollywood's biggest blockbusters.

The Super Mario Galaxy Movie was our second biggest animated debut of all time as we continue to grow with family audiences, one of the fastest-growing segments of the box office. And Michael delivered our biggest debut all time for a musical biopic with strong 14% indexing in North America. In local language, Toho's latest Detective Conan in Japan earned a franchise best $3.2 million in IMAX and Dhurandhar 2 notched our second biggest opening weekend ever in India.

Our promising slate was on full display at the annual CinemaCon industry convention this month, including an exclusive look at Christopher Nolan's The Odyssey, the first film shot entirely with IMAX film cameras.

Everything we've seen and know tells us that it will be something truly special and another incredible entry into our partnership with the Nolans that has yielded over $700 million in IMAX box office worldwide, and a sneak peek at the first 7 minutes of Dune: Part 3, which was also shot with IMAX film and looks to be visually stunning as anything Director Denis Villeneuve has brought to screen.

Tickets to select IMAX 70-millimeter screenings of the film recently sold out in minutes, 9 months ahead of its release. Both filmmakers joined us for our recent CEO forum in April, perhaps the most successful in the 13-year history of the event. At the annual event and exclusive gathering of global exhibition CEOs representing at least 3/4 of the world's box office, we also hosted Tom Cruise, Timothee Chalamet and Jon Favreau.

It has truly become a signature event for our company and the only C-level gathering where exhibitors, filmmakers and talent and studio chiefs from around the world can engage in strategic off-the-record dialogue about the industry. It also underscores the power of our team and our brand to connect and lead across the ecosystem and deliver value to our partners in countless ways beyond our technology.

The Odyssey and Dune stand alongside Jon Favreau's The Mandalorian and Grogu and Greta Gerwig's Narnia at the top of a list of major tentpole films leaning heavily into IMAX in 2026. That includes 1 week run to launch highly anticipated releases, including film for IMAX release Mortal Kombat 2, Steven Speilberg's Disclosure Day, a return to Sci-Fi for the legendary director, Toy Story 5, which will look to continue Pixar's resurgence, Super Girl, also film for IMAX, a follow-up to last year's hit Superman, Minions & Monsters, the latest installment of this franchise phenomenon and the live-action version of Moana following the animated sequels billion-dollar performance in 2024. And we see great potential in other film for IMAX titles, including Zack Cregger's Resident Evil, Street Fighter and the End of Oak Street as well as upside in Tom Cruise's Digger and J.J. Abrams' The Great Beyond.

We have a growing lineup of expected Chinese films this year, including 2 releases, Penghu and the film for IMAX title Once Upon a Time in the Middle East that shifted from Chinese New Year and are expected to release later in 2026. We also expect to play Spider-Man: Brand New Day and Avengers: Doomsday across our locations in Greater China and our first film for IMAX releases from Japan and India, Godzilla Minus Zero and Ramayana Part 1 and next year's Varanasi anchor an excellent local language slate internationally.

We've also added several high profile releases to our slate, including the film for IMAX sequel to Brendan Frasers, The Money in 2027 and highly anticipated film for IMAX titles in 2028, including Paramount and Activision's live-action feature film, Call of Duty, directed by Peter Berg and written by Berg and Taylor Sheridan, Joe Kosinski's Miami Vice 85 starring Michael B. Jordan and Austin Butler and A24's Elden Ring video game adoption.

We also continue to program experiences beyond feature films to strengthen our offering from Formula 1 to some supersonic music projects in the pipeline. Formula 1 is exceeding our expectations with strong presales heading into this weekend's first race in IMAX, The Miami Grand Prix. As we've seen with Project Hail Mary, Baz Luhrman's EPiC, Apple's Formula 1 coverage and The Mandalorian and Grogu, content owners are increasingly leaning on IMAX as a powerful global launch platform with exclusive advanced releases, previews and events.

Audiences know that the IMAX experience begins well before and extends far beyond our immersive visual and sound technology. We work directly with the greatest filmmakers in the world on image capture with our proprietary film and certified digital cameras. We offer more picture through our exclusive IMAX expanded aspect ratio. We remaster every film, event and experience we distribute to ensure the highest quality presentation. We monitor all 1,865 of our locations around the world for quality control in real-time 24/7.

And as a result, we have incredibly passionate loyal fan base. Our audience engagement scores consistently rival blue-chip brands like Netflix, Nike, Marvel and Amazon. In short, there is no better platform for blockbuster success than the IMAX global platform. This simple fact continues to drive strong global network growth. Last year, we grew IMAX's footprint by 4% in the U.S. and more than 8% in the rest of world markets. Our momentum reflects how exhibitors worldwide view IMAX and the long-term productivity of the network.

With IMAX still less than 50% penetrated globally in our latest zoning analysis, we continue to see meaningful runway for growth. Year-to-date, we signed agreements for over 40 new and upgraded IMAX systems worldwide across 10 countries with 18 partners, most recently with our biggest deal ever in one of the most productive markets in the world, our 10-system agreement with HOYTS in Australia and New Zealand, which will nearly double our footprint in the region.

Importantly, our sales activity is well distributed geographically with 3 domestic signings, 9 in Australia, over 10 in China, 7 in Japan and 7 across EMEA, including Spain, France, Germany, the Netherlands and Egypt. With more than half of our signings representing new IMAX locations, which are a meaningful driver to our network economics. At the same time, we are selectively upgrading high-performing locations where we see clear opportunities to drive incremental box office.

We are seeing particular strength in key high box office markets like Japan, where we have already signed 7 systems year-to-date, continuing the momentum of our 13 signings in 2025. We also expanded our relationship with VieShow in Taiwan with upgrades that will transition the entire circuit to IMAX with laser. We continue to broaden our exhibitors onboarding new partners in Spain, Germany and France. And looking ahead, we are engaged in numerous additional opportunities with leading exhibitors across key markets. We look forward to keeping you updated on our progress.

Let's turn now to our first quarter results. Starting with the bottom line, first quarter adjusted net income grew 33% to $10 million, while adjusted EPS grew $0.17, up $0.04 year-over-year. IMAX delivered revenues of $81.4 million, a decline of $5 million year-over-year, driven by decreased revenues in Greater China. Revenue outside of Greater China grew by $15 million.

Gross margin declined to $46 million from $53 million in the prior year. Operating expenditures, which includes R&D and SG&A, excluding stock-based compensation, was $28 million for the quarter compared to $30 million in the prior year, reflecting our continued strong cost discipline and timing of spend.

Adjusted EBITDA declined in line with revenue, down $6 million year-over-year to $31 million. As a result, adjusted EBITDA margin was 38% compared to 43% in the prior year. We remain confident in our forecast of total adjusted EBITDA margin of more than 50% in the coming year.

In our Content Solutions segment, revenues declined 8% to $31 million due to the tough comp in China against last year's massive hit in Ne Zha 2. Box office grew significantly outside of China, including 90% growth in EMEA, while China box office declined 62% due to an exceptionally strong Q1 in the prior year and the timing of major releases this year.

We expect IMAX box office in China to be more evenly spread throughout the year versus 2025, where 46% of our China box office came in the first quarter, well beyond the 30% we normally see. Content Solutions delivered gross profit of $18 million, a decline of $5 million driven by lower box office and gross margin declined to 58% versus 69% in the prior year.

Turning to our Technology Products and Services segment. IMAX delivered revenues of $48 million, a decline of 4%, driven by lower box office-related system rental revenue in China. Gross profit margin of 56% was in line with gross profit margin of 57% the prior year. We're off to a solid start with system installations installing 19 systems in the first quarter compared to 21 in the prior year and 15 in Q1 of 2024. Of those 19 systems, 11 were joint revenue sharing systems and 8 were sales arrangements, 11 were upgrades and 8 were new locations. These new locations again showcased our diversifying network footprint spread across Japan, England, France, Singapore, South Africa, China and the U.S.

Turning to cash flow and the balance sheet. IMAX cash flow from operations was $4 million compared to $7 million in the prior year and includes $8 million in higher year-over-year lease incentives provided to exhibitors to support the building of new IMAX auditoriums. This investment reflects the continued prioritization of our use of available capital to invest in growth, including partnering with exhibitors to expand and upgrade our network through joint revenue sharing arrangements. This strategy will empower IMAX to take full advantage of our expanding brand and market share and the promising slate that continues to take shape for the years ahead.

We maintain a strong capital structure, thanks to our asset-light model, and focused execution as well as the work we did last year to refinance our convertible notes and expand our revolving facility. As of March 31, we held $146 million in cash and $300 million in debt with a net leverage of 0.86x.

To conclude, the best is yet to come in what we believe will be a record year for IMAX, and our momentum is building. Our exhibitor partners share our excitement for IMAX, our slate and the value we deliver, which is why we've added more than 30 partners worldwide in the past 2 years and continue to dramatically diversify our footprint. As our global box office and network grows, our increased scale will drive expanding margins and cash flows. And we will remain focused on keeping operating expenses substantially flat.

We remain very well positioned to achieve our 2026 guidance, including record global box office of $1.4 billion, 160 to 175 system installations worldwide and adjusted EBITDA margin in the [mid-40s percent] at -- with at least 45%. There has never been a better time to be in the IMAX business. We continue to deliver clear evidence that IMAX is not just outperforming the market, but helping to expand it, attracting audiences, growing incremental box office and driving value throughout the ecosystem.

Thank you. And with that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question is going to come from Drew Crum with B. Riley Securities.

Rich, good to hear you on the call. Natasha, just on the adjusted EBITDA margin guidance with a floor of 45%, does that assume a global box office of $1.4 billion? And if so, just trying to understand how the margin would be flattish year-on-year with an incremental $100 million plus in box office?

Drew, so yes, margins really -- it does fluctuate normally quarter-to-quarter. But as you look at the whole year, $1.4 billion box office, I understand the incrementality will come through, but we've chatted about this even on the last call as well is that there's always a mix between the regions of box office, whether you have local language or Hollywood and the amount that we're investing into marketing in this year. There are a lot of Hollywood titles that are significantly larger titles than last year.

And as we look towards that, our goal would be to lean in heavily into IMAX and marketing, the titles as well. And so that's where the margins can ebb and flow. And of course, you can capture more than the 45%, but this is just from a guidance perspective, providing that guidance with respect to the floor of the 45%. But of course, there's opportunity in that.

Okay. That makes sense. And then any disruptions created by the U.S.-Iran conflict during late 1Q or early 2Q? Anything -- you've seen anything contemplated in your annual outlook?

No, not at all. It's not for us. We know we have about 35 locations within the region in the Middle East and majority are continuing to operate. We haven't experienced anything significant that has -- will impact our plans for the year as well. And as you heard, we continue to expect to install 160 to 175 systems as well. So if you look at the way that we're building out our entire worldwide network, there's many countries that we're leaning into. And one of those is Australia that we just signed the deal with this week and announced as well.

Our next question will come from Michael Hickey with StoneX.

Rich, Natasha, congrats guys on a great quarter, good -- great start to the year. Obviously, a lot more to come. Just on the Australia deal, nice to see some growth from that region. Just curious if you could sort of frame it for us, Natasha, the growth opportunity network-wise in Australia and Japan? And then the follow-up, I'll give you now, just what you see from those regions as well in terms of relative PSAs and local language development in terms of films?

I think it was a really important deal for us. I mean, for the longest time, we had only about 2 locations this past year in 2025, we ramped up and installed some more locations in time for Avatar and started the year with about 10 locations and now adding this new deal. We're sitting with the potential to double -- more than double our footprint in Australia. Australia is one of the strongest performing regions and countries for us.

Some of the locations have TSAs up to $4 million, which is absolutely amazing. And I think that that's the opportunity is the ticket price varies over there as well. And so knowing that you have the opportunity to have outsized performance from a mix of not only growing your network, but you're also getting the leaning into IMAX and the higher ticket prices. I mean it's been one of our priority markets as well. We're only about 13% penetrated. So there's a lot of growth and opportunity there.

And as you look at Japan, we signed another 7 systems in Japan this quarter. Last year, we signed 13. And off of the success of Demon Slayer in local language in Japan, we're continuing to do that. I did announce in the prepared remarks, and it was heavily shown at CinemaCon as well, Godzilla Minus Zero, as our first local language film for IMAX title in Japan, which they're leaning in very heavy into IMAX with that as well. And Japan is only 47% penetrated. So a lot of opportunity there. And those per screen averages remain just as strong as they've ever been, which is very good because I think as we start to expand in Japan and continue to grow that network, you contemplate whether or not the per screen averages will move, but they've actually shown considerable strength there.

And the next question is going to come from Eric Handler with ROTH Capital.

Natasha, starting at your Investor Day last year, you did mention how IMAX was selectively looking at opportunities to maybe put some more capital into their deals above and beyond just sort of like the cost of the screen installation. This $8 million of higher lease incentives, is that part of that strategy? How do you measure ROI with those investments?

It is, Eric, actually. it was a significant expenditure for us in the quarter, and I'm sure you saw that it impacted our cash from ops, but I see that as a good thing. Investing the $8 million to help grow the network faster ahead of the fantastic slate that we still have ahead of us coming and as well into '27 and '28, I think that's the opportunity for us. And we do value and really look at what the opportunity for a return on it is. So first of all, always using that capital for new locations and not simply for upgrades.

So that would be new box office potential for us, but also in high-performing markets and with partners that we know that we can expand and have a greater penetration as well. And so -- and we know that they'll lean in. And all of those things working together, we've been able to value out what that arrangement will look like. And each arrangement does look different as well. But of course, all within the respect of making sure that we hit our return hurdles, and also just for the opportunity to continue to quickly expand the network, therefore, grow the box office. And as you know, that will continue to not only grow the box office, but then grow the network, and it works in a nice cycle from that perspective.

And then I wonder, as you look further into markets like Australia, Japan, EMEA, are these more JV type deals? Or are you looking -- are they doing more -- are they more interested in like [ straight ] sales?

Actually, it's a mix, Eric. It can be -- it's dependent on the partner. It's dependent on the way the negotiation goes as well. But I think part of it is, we also like to have a good mix within our revenues and the way that we build out the network. So sometimes it's been JVs and others, it's been sales. Japan, for instance, hybrids are a really good opportunity there where not only do you cover the cost of the system, but then you get to participate in the box office performance. And that actually is a fantastic model for a lot of markets like Europe as well and Australia and France, in particular, in Europe has been very good for that, too. So I think that's a really good way to be able to capture the box office potential and the incrementality that can flow through our model.

And our next question is going to come from Chad Beynon with Macquarie Capital.

Rich, glad to hear you're progressing well and looking forward to talking to you soon. Natasha, with respect to China, the comment that you gave earlier just in terms of the weighting or I guess, what we saw last year, this year being more balanced. Consumer feels to be improving. Your indexing is strong. Can you roughly talk about the slate for the rest of the year, whether it's local language versus Hollywood? And really just what gives you the confidence that China will come through in '26?

For China, I think the best of it is that we're managing it on an annual global portfolio, and it gives us the ability to stack our slate for the best results. I mean you can have unexpected outsized performance, look at Ne Zha 2 last year, right, from a local language title or from other titles. I think the biggest thing to remember, Chad, is that as a company, we're not so much focused on the geographies as much as we're focused on the overall slate for our company. And what's great about this year is there's a lot of Hollywood titles that have strong potential in China, like the Odyssey and Dune, but also the local language slate is stacking up as well, and we do expect there to be several titles released into the summer.

And the May holiday is coming upon us this weekend as well, and there's a couple of titles there, including World War, which is supposed to do -- which is tracking very well in China as well as obviously, The Devil Wears Prada and some Hollywood titles going there. So I think what's been good about China is that we're going to be able to create a good mix between both Hollywood and local language and in order to capture the wins this year. And then there's other IP that will perform well there as well, like Post Toy Story.

And then, of course, we're going to look towards the rest of the world and other areas. What's really good, Chad, is that the rest of world regions, if you think about the fact that we've grown over 8% in the rest of world outside of China and domestically, we've grown over 4%, that's where you can also start to see that you capture box office from many regions, not simply focusing on China, but looking at how do we make sure we have a good mix globally and continue to capture those market shares. And it's enabled us to have a trailing 12-month market share of 3.8%. And with that, we've grown our rest of world market share as well in the quarter. So that's been great.

And then maybe takeaways from CinemaCon? It seems pretty positive from investor standpoint. But how are you guys feeling just in terms of the content beyond '26, whether it's the quality or just the number of titles that you took away from CinemaCon or CEO Forum?

CinemaCon, it was great this year. I mean -- we saw you there. And the -- I think the buzz around CinemaCon was so uplifting this year compared to last year. I think the industry is excited. It's going to be a great year for 2026. I think the best of the slate is definitely ahead of us for IMAX with lots of films for IMAX coming, including the Odyssey in June. But I think the other part is if you look out to the future years, I mean, what's very positive is that we have a strong demand and our slate and content visibility continues to strengthen, and we continue to make moves on that every day to strengthen and solidify that.

I mean 2027 is already approaching 10 FFI titles. And there's some really large ones in there, too. In 2028, we actually have 5 announced FFI titles, plus we just confirmed today with Disney Pixar that Incredible 3 will be released as a film for IMAX title, and it will feature IMAX exclusive 143 aspect ratio. So I think what you're seeing is that exhibitors clearly are seeing our growing market share and the growing demand by consumers for IMAX across film genres and content. And there's just so much excitement about not only this year's slate, but also the slate going forward in '27 and '28.

And our next question is going to come from David Karnovsky with JPMorgan.

Natasha, with Disney's Infinity Vision announcement, there hasn't been a lot of details on this, I'm interested in your view. Is it your understanding they're trying to kind of unify PLF formats under a brand or is this just kind of specific to Avengers? And is there any kind of read-through that we should have to kind of your relationship with the studio?

David, from our view, we feel it's a pure marketing play to try and offset the fact that they don't have an IMAX platform or brand for Avengers Doomsday. It doesn't offer the consumer anything that they couldn't get yesterday. And so Marvel fans, we believe that they're among the savviest, most discerning moviegoers out there. And there's a reason why we're the undisputed leader in premium cinema worldwide. No one can match our relationship with filmmakers, our image capture with our proprietary film and digital cameras, our post-production and exclusive expanded aspect ratio.

Essentially, we have the most immersive proprietary architecture in our auditoriums and consistent delivery of that across all of our 1,800 locations as we monitor that in real time and 24/7 for control and quality. And so I think the biggest part about it is the fact that we are a consistent platform and delivery for consumers. And that's sort of how we feel about the announcement with Infinity Vision.

And then I just want to ask one on gross margins for content. Obviously, the year-over-year is impacted by the box office, but there have been some quarters where you put up a higher margin on a similar level. So I just wanted to understand if there are any kind of unique puts and takes to think about it for Q1?

Sure. I think margin will fluctuate normally quarter-by-quarter, and it's similar to box office cadence. When you see the margin percent kind of moving with the box office, and of course, I know what you said about box office and our ability to still deliver on margins in other quarters. And I think part of that is we actually are focused this year on marketing.

You've seen that the Dune tickets and the Odyssey tickets have all been moving and particularly in June, we put those out for sale already, which means we've been marketing. And so we are marketing titles well in advance right now for this year. And so in Q1, of course, we took some marketing charges ahead of time, but we think that those returns are in front of us. And as you heard, I did reiterate our guidance for adjusted EBITDA as well.

And the next question is going to come from Omar Mejias with Wells Fargo.

I want to give Rich my best wishes and in wishing him a speedy recovery. Natasha, maybe first on signings. I think 1Q this year had 23 signings versus last year, 95. Just curious, can you frame this, how much of this is timing related and if this has any impact on install cadence throughout the year?

Yes. I think we're seeing good pacing and ramping of installations and signings. I mean, year-to-date, actually, our signings are sitting at 42. And what's great is it's across 10 countries. And -- so that's fantastic. And I think there -- it's not indicative versus what we had last year. Last year was one large deal for AMC, and we did note that as well. And so for us, that's timing. I mean we are focused for installations, on getting installs in, and we had 19, which is a great number. It was across 8 countries in the first quarter.

One thing that you can't see through our financials is how focused we are on getting installations in high-performing sites, but secondly, on getting installations in for film systems in advance of the Odyssey. And so we do expect to have 41 film system locations in for the Odyssey versus 30 that we had for Oppenheimer. It's about 40% more. And what's key about it is that you're not seeing that counted as installations because we're going into sites that already have a laser or digital system. But once the film is distributed, the productivity of these -- the locations will increase significantly. And so we've added a lot of key locations already for the film systems, and we're highly focused on that.

And on the signings front, I mean, we have the 10-system deal with HOYTS, but then also, we've had over 10 signings in China, 7 in Japan, 7 in EMEA, including Spain, France, Germany, Netherlands, Egypt. I think what's great is that more than half of our signings actually represent new IMAX locations. So a meaningful driver for our network economics and includes some that will install this year as well.

That is very helpful. And maybe one more for me. There were some media reports talking about the $50 movie ticket as a ride for certain films in premium theaters. And just want to get your thoughts on how widespread is this? And how much more room for growth from a theaters perspective you think there is in this fund, especially for some of the biggest titles across some of the PLS locations?

Sure, Omar. I mean we've talked about this before, of course, too. We don't set ticket prices. Of course, we believe there's opportunity in the ticket prices, but it's not something that we do set. I mean we saw the Dune tickets go on sale and then all of a sudden, you saw them go on aftermarket sales as well, right? So I do think there's opportunity, but I think the -- it's a whole experience.

And so exhibitors need to think through what's the opportunity for different films, for different days of the week, for different showtimes and a lot goes into that. It also goes into whether they're capable to do that with their systems that they operate as well. And so I think that's kind of the potential that you see before everyone as to how do you continue to grow box office as well.

And the next question will come from Eric Wold with Texas Capital Securities.

Two questions. I guess, one, Natasha, as you look at the backlog, I know you've worked on in prior years cleaning up the backlog with agreements that maybe stay in there. Any remaining opportunities in the backlog to kind of work with exhibitors to accelerate installations, move locations around to other zones that may be earlier in kind of the queue or shrink zones going to drive new deals?

Yes. I think we -- obviously, we have good visibility into our backlog. We're at about 430 systems. We do come through that backlog. We actually did an exercise a couple of years ago, which I know we've talked about that we kind of walked through our backlog and made sure everything is -- that we're able to roll it out, and we've updated our plans, and we continue to do that. And so we feel good about our backlog. There is always opportunity. There are -- some of our exhibitors are global exhibitors.

So they operate in different countries. And so there are opportunities when they sign deals that sometimes we'll shift it from one country to another, and we've done that very recently as well. And so I think that we're -- our team is very active and skilled in that. They are in constant communication with the exhibitors and are tracking a list. It's all list managed as well, and they have a lot of experience in that area.

Got it. And then just last question, I'm not sure we discussed this in the past, I apologize if I missed it. But looking at the historical model that you put on the website, it looks like 30 or so systems in China were reclassified from hybrid JVs to STLs. Anything that -- I guess, what was the rationale behind that? Is that -- will that have any impact on your revenue share going forward from those agreements?

I think you saw that right in the documents. And from time to time, we always go through an assessment of locations and they might come up for upgrade or renewal and we decide whether or not we're -- both parties together decide whether or not we are ready for an upgrade or renewal or whether we want to wait a little longer for that. And at some point in time, we'll transfer the title. And so it will shift from a JV over to a sales type, but nothing that kind of changes the box office dynamic for us on that. And so I think from that perspective, nothing material that we would need to note from it.

And the next question is going to come from Steven Frankel with Rosenblatt Securities.

Natasha, India has been a market that's had a lot of potential, and you had some good progress with some local language content. But historically, there have been, let's call them, backlog conversion problems. It's taken longer than you thought to get some of these theaters open. Where are we in that process today?

Yes. I think we still have a lot of opportunity. I think we're only about 28% to 30% penetrated in India. So a lot of growth to be had. And you're not wrong, it does take long to install and get permits and complete an installation. But what you haven't maybe seen is that we have grown that network over the past few years. And we have been signing with different partners in India as well. And so that's been a good opportunity for us.

One thing that, as you mentioned, is the local language. For us to be doing the Ramayana Part 1, there will be -- that's -- this year, there will be a Part 2 and then Varanasi, all film for IMAX titles in India. That's a really big deal because over 90% of their box office is local language. And so the big opportunity for us is to continue to show how well local language can perform in IMAX in India, and therefore, it will stir up that conversation for future growth there as well.

And then one quick follow-up on that. What are the ticket prices like on a film for IMAX title in India relative to traditional Indian ticket prices?

On that one, Steve, I may have to get back to you because we've never done a film for IMAX title yet in India. So we're going to see what they go for later on this year, but we will keep you updated on it.

And our last question will be coming from David Joyce with Seaport Research Partners.

A little bit more on the local language side. How do you expect the next couple of quarters to comp year-over-year with China box office and total local language box office versus the prior year? And overall, for this year, do you expect local language to be able to grow versus 2025? Or are the couple of really big titles last year a little bit too much of that hurdle?

David, I think the -- our local language underpinnings are strong. I mean the rest of world, our local language has continued to increase over the last few years. Of course, last year was very strong with the Ne Zha 2 effect. But if you actually take out China, you can see that our local language is growing. And even this year, we expect it to continue to grow. And there's a lot of diverse content.

Within the past year, we've done 9 new countries, like -- local language coming from 9 new countries. Actually, this quarter, we had our first Taiwanese title as well. And so I think that there's a lot of opportunity. But I think what's even more important is that with the Hollywood slate, it is making sure you have the right mix to make sure that we penetrate into the right markets with the right type of film.

And so if Hollywood is going to do better for a particular period, we will lean in, in that. And if it's not, then we'll lean in on the local language. And that's what's great about all of the different pieces of content that we have and all of our content partners worldwide. With having over 60 content partners worldwide, we have the ability to lean into alternative content. We've been doing music films as well.

We did Epic this past quarter for Elvis, and we've done some other pieces of content. We have the F1 races coming this weekend and other opportunities of other local language that we've been doing. We've been doing a Japanese anime rollout as well and in South Korea been doing some content. So I think our whole goal is to make sure we're doing a whole portfolio between our Hollywood local language and alternative content to make sure we're maximizing box office and leaning in.

And even on that, like this past week, we did a fan-first event and brought back Steve Racer for our fans and -- on a night or a couple of nights that we wouldn't have really had much box office brought in over $1 million. And so I think our whole goal is to look at utilization and maximizing box office, and we're highly focused on that.

Great. And if I could just tack on a short one. On the CapEx side, you invested $4 million in JV equipment this quarter. I think that was on maybe 11 installs. Is that a decent kind of ratio for future JVs? Or how else would you think that investment might trend this year?

A little bit of timing plays in there, too, David. Like sometimes we're investing this quarter, and it will come through on a cash outflow, but we might have installed the system already in April, for instance, right? And so I think you just look at the average prices that we've kind of worked through before. And I think that's the better -- best way to do it. But you're right, like looking at it from the installs is the first starting point and then kind of adding in a little bit for knowing that upcoming installations will happen too.

But our whole goal this year, I mean, we've talked about even our CapEx for the year is somewhere between $30 million to $35 million and could be up by $10 million to $15 million just based on us investing in helping our exhibitors roll out faster as well. And we do have a very strong balance sheet to be able to achieve that. And in doing that, we'll be able to capture more box office as well.

Thank you. And I would like now to turn the call back over to Natasha for closing remarks.

Thank you again for joining us today. As you heard, we are hitting our stride at the right time and very bullish as we head into the summer blockbuster season. We've had strong year-over-year growth, and we've already seen that in April with over $105 million achieved in April and over 15% growth year-on-year.

The fact that we've seen a slew of recent hits outperform at the box office and that we're continuing to drive strong market share with a variety of audiences and genres. These are all great signs as we unveil one of our strongest slates in history and build on that to grow our network worldwide. We look forward to keeping you updated, and we'll talk to you soon. Thank you.

This concludes today's conference call. Thank you for your participation.

Good morning, everyone. Please note that for important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures, please see the handout available at the registration area or at the Morgan Stanley public website.

With that out of the way, my name is Sean Diffley from Morgan Stanley Media and Entertainment Research today. And today, we're very excited to be joined by Natasha Fernandes, the CFO of IMAX. Thank you for being here.

Well, Sean, thanks for having me.

So obviously, a lot of big news in the space. First, I wanted to get to the big news on the studio front. So Paramount, Warner merger. So Netflix stepped away from the process. So I wanted you to talk about how that impacts IMAX, how you're thinking about the slate going forward and any other considerations we should be thinking about?

So IMAX is a global platform. I mean, we work with over 60 content partners around the world and partner with all the major studios. So that obviously includes both Paramount, Warner's, Netflix as well, but also new studios like Amazon MGM and Apple, and then a lot of local language studios as well. So I think from that perspective, we're very diversified in who we operate with and partner with.

IMAX and Warner's, we've had a history going back many decades, and we have a really strong partnership. Many of Warner's titles are filmed for IMAX and they really lean into IMAX in their -- in the way that they deliver their content and the way that it's marketed as well. So we believe in the strength of our Warner's relationship. And even Paramount and Skydance. We have a long history with David Ellison and Skydance and a great relationship actually, and we've done many films with them. I mean, this past weekend, we just did Scream 7 with Paramount. And so I just think that we're sitting in a very strong position, either whichever way this would have gone, I believe that IMAX is in the right position to deliver the best blockbuster content across our global platform.

The one thing is that all studios are coming to the forefront of wanting to have a partnership with IMAX, particularly with respect to the filmmakers wanting to have a partner with IMAX to be able to deliver that -- deliver their content across our global platform. So I think we're in a very strong position, and this will take some time for us to all settle out. And -- but in the meantime, we have a strong slate in front of us in '26, and we have over 60% filled for '27 and beyond still filling up. So I think, overall, we're sitting in a very good position.

Great. So clearly, the market likes this outcome more for you than the Netflix outcome, but that was a helpful answer. Obviously, you do a lot with both studios and are positioned well given how things will play out. So you had an Investor Day back in December. You walked through a bunch of puts and takes. Maybe you could share with us what you see as the biggest drivers of growth going forward for IMAX over the next few years?

Yes. We have multiple growth drivers. One would be just our Filmed for IMAX program. And more recently, in the past year, we've really leaned into this program with filmmakers. Our relationships with filmmakers has really changed the way that our business operates. We first operate with filmmakers. In a lot of cases, filmmakers are coming directly to us first. And then we're working with the studios after. And I think that, that has shifted significantly, not only in the content that we are distributing across our IMAX platform, but the way that it's distributed, the way that it's marketed. So that's leading towards growth because it's leading towards consumer behavior growth, right? More consumer demand for IMAX and wanting to see films made with our cameras in our locations across the globe.

But the other part is the growth of our network. Part of our strategy is to continue to grow our network. We grew it 3.5% last year overall. But if you looked at just the segmentation of that, we actually grew at over 8% in the rest of world, international markets, and then we grew at 4% domestically. And you start to think about how do you continue to capture more market share? Well, that's exactly how. Like domestically, we captured over 5% market share with only 1% of the screens. And in the rest of world, we only have just over 2% of the market share. So if you continue to grow our rest of world footprint, that really is the opportunity there as well.

And then lastly would be the diversification in our content. So creating the opportunity for ourselves by having local language and having Hollywood content, but also alternative content as well in other like concert films and live events, that creates higher utilization. So higher utilization in our network creates more growth across both towards revenue, incrementality and cash flows.

Excellent. So the IMAX window is becoming an increasingly important thing that studios consider when they're thinking about their theatrical release. Given that there's a limited number of weekends in a year and demand is growing, how do you navigate this bottleneck?

Well, I think that the opportunity sits in looking at what's the content out there? How much is the studio and the filmmaker leaning into it? How is it tracking, like looking at the tracking information? And then how is it being marketed, right? And really looking at what is our opportunity to maximize the weekend? Like look at this past weekend, we captured $16 million of box office on this weekend, last weekend of February, that really there wasn't originally much playing. It was a carryover title from last weekend. And then we just recently pulled in Scream 7. Then we programmed Twenty One Pilots' concert film. We had the Revenant 10-year rerelease with a live Q&A as well. And then we did a whole slew of local language titles across our global platform. So really looking at what is that opportunity to maximize on every particular weekend.

And we spend time with the filmmakers. We spend time understanding the films and looking at does that make sense for the IMAX network. And if they're leaning into IMAX, what does that mean? Does that mean we want to give them more of the network and really give them more weeks as well. Like the Odyssey coming up, we know that's going to be a winner for the year. And so 100%, we've committed 3 weeks to that title in our film locations and -- because we know that, that film is going to do well, and we're 100% behind Christopher Nolan in the production of that film.

Great. So you preempted my question. So getting a ticket for a blockbuster opening weekend can be extremely difficult. Odyssey is an amazing example. You sold out almost immediately after they went on sale. Is opening additional screens with the same partner in the same theater complex an opportunity here? And is that already factored into the TAM that you've outlined?

The one good thing is I think people will -- you just have to wait a little longer, maybe opening weekend will be sold out, but just wait a little longer. We'll keep it open in the IMAX theaters and you can get a Odyssey ticket. But I do think that there is an opportunity not necessarily to open a second screen in the same location, and we talked about this a little bit at our Investor Day as well. But can you -- do we open a second screen in the same zone? And those would be zones that are high-performing zones where those locations are constantly sold out on opening weekends, then there's an opportunity, for sure, for a second screen in the same zone, but not necessarily a second screen in the same complex.

We don't -- we've evaluated and don't really see the benefit of that. I mean, when you think about a complex with 20 screens, it's not -- every screen is not highly productive, right? So when we pick where an IMAX screen is going to be, we really look at what's the productivity of that screen going to be because we want every single one of our screens to be successful.

Great. Turning to China. This business can be a bit less straightforward for investors to build conviction around. Maybe you could talk about the evolution of the China box office, local language film supply versus Hollywood content in the market? Just how you think about how that impacts your business and how investors should model it?

China is a great market for us. I mean IMAX in China is a very strong brand. We have a really strong presence over there. We are one of the top 3 box office generators in the country as well. And so we have fan clubs. We actually have IMAX fan clubs in different major cities in China as well. And -- so we're very popular. And the brand and just the -- it's like equated to luxury as well, and that's very important in that market.

Really, when you're looking at the slate, it's a diverse slate. It's a mix of local language, but not only local language Chinese, local language Japanese and other titles as well. I mean, Demon Slayer was one of our top performers in China last year and that was a Japanese title. And then also Hollywood content. And last year, of course, was driven by Ne Zha II, which was a huge blockbuster for China. But this year is going to be a little -- look a little differently. It will be more diverse with having a lot more Hollywood in there. There'll definitely be local language content in there. But there'll be family films as well. And then there'll be Japanese titles coming through as well.

And how do you think about differentiation versus competitors in the Chinese market?

I mean, one is our brand, our IMAX brand. We take over 5% of the market share over there as well. And the way that studios are leaning in, we're also using our technology. Filmmakers are using our cameras as well. Marketing, we do a lot of unique marketing things directly with the studios and with the exhibitors, specifically catered to IMAX as well. So I do think that we have a really strong presence.

We actually have 100 employees over there. We have a full operating office and our CEO, Daniel, is well ingrained into the industry as well and connected. And so that's also all very helpful. And I think part of it is the partnerships, like China is a very big relationship business and country. And so I think that we've built that out over there, too.

Great. Turning back to North America. You recently talked about doing more with F1. How should we think about more sports content coming to IMAX and how alternative content broadly is key to your success?

This recent announcement with F1 has been -- it's been really good for us. We've gotten a lot of good feedback from it. We've actually -- we originally only expected to do about 50 locations for domestically. And we've had a lot of exhibitors come back to us and say, "How do we get this?" So looking at what are the opportunities for expansion there, too. But -- and we said we'd only start with 5 races, but we never know like whether or not we'll -- there's an opportunity, obviously, to grow that, too.

I think part of it is working with Apple. We did the F1 movie with them last year. It was highly successful. I think it was our second top Hollywood film last year. And then moving into these live races, I think, is another opportunity. But we've also worked with [ Cosm ] to do soccer in Europe. We've done the NBA in China. We've done League of Legends, so gaming, e-gaming. And I think live content is -- it's a whole market out there, right?

So when you're looking at the opportunity to create higher utilization on the IMAX screens and looking for diversity and looking for growth, I think that's where -- those are the fillers. Those are what's going to help you, are you going to have major Hollywood releases or are you going to have some local language, but there's always opportunity for more programming. And so this is where you get that chance. And you think about an F1 race on a Sunday morning, that's an opportunity because the theater would have been closed, right? And so now you're creating some more box office for not only IMAX, but also for our exhibitor partners who are working with us.

That makes a lot of sense. I'm embarrassed to admit that I watched the F1 movie on the flight here.

Oh, don't even say it. Don't even say it.

Obviously. I wish I saw it on IMAX.

That's embarrassing.

It is. I knew I was waiting for some responses. I know. So you could throw [ tomatoes ].

You need to see it on IMAX. We might have to just rerelease it for you to see...

That's kind of what I was asking. If you would do that for me. So I wanted to talk about international ex China. Which markets do you see as the fastest growth and which are most underpenetrated and you see yourself turning your attention to next?

The rest of world has a really big opportunity for us. I mean since 2019, I think we've grown our rest of world footprint about over 30%. So just starting there, there's a lot of growth to be had. We are only at about 30% penetration right now. So a lot of opportunity when you look at our TAM and ability to grow that market.

And then Japan last year, I think we grew over 17% for Japan just in 1 year. And that was coupled with the fact that Demon Slayer was coming out. So a lot of our exhibitors were wanting to be open for Demon Slayer because they knew that was going to be a huge title and it was for us. It was an over $80 million title for us, and we released it. We were the only premium screen for it to be released first. And then we had an exclusive window and then it went to all the screens. And so that was a really big opportunity.

Australia, we -- I think we've more than doubled where we were last year. I mean, we -- last year, I think we started the year at 2 screens and then we ended by over 10 screens for Avatar. Europe, France, we've had a lot of growth. Germany, we've had a lot of growth. We just did our first German title last year, and that led to more growth.

And last year, I think we did 4 new markets for different types of like local language titles. And even this year, we just -- we're now doing a Brazilian title, 2DIE4. And what we've noticed is as you start to do those local language titles in the market, it starts to open up the opportunity to expand the network. And the rest of the world really is that big opportunity.

And I mentioned the market share, like if domestic in China are sitting at over 5%, but our rest of world market share is just over 2%, you can see where the opportunity for growth is. And that's all incrementality in our model. It's not costing us anymore to distribute that film to those markets. So when you look at that incrementality in our model, it will just flow right through to gross profit and our bottom line and cash flows.

That's great. That makes a ton of sense. And as we think about kind of ex U.S. growth, how do you think about FX and inflation affecting your economics internationally, including pricing, costs, receivables, collections, et cetera?

I mean we are a global company. So I'm not going to say we're not subject to it. Definitely subject to FX and inflation. But all of our contracts include CPI inflation. So we do also charge inflation on our contracts to offset some of that. Our box office is impacted by FX. But even if you looked at last year, it wasn't impacted as much year-over-year by FX because it's so global in the way. So while some countries may increase, some will go the opposite direction and they can offset each other, too. So I think that, that's what's helpful about a global model as well.

Got it. Okay. And your business has shown the operating leverage in the model by both improving margins and cash flow. Can you describe some of the dynamics and that give you confidence on this expansion that it can continue for the coming years?

Definitely, I mean I manage the P&L with our executive team. So I'm very confident in our ability to deliver on what we've promised. I mean, we ended the year with 45% EBITDA margins above our guide last year for 2025. It's multiple factors. One is the box office and the incrementality that comes through in that box office. And this year, we're guiding towards $1.4 billion. So it's a higher box office level, but our costs do not grow at the same rate as our revenues. And so there's a lot of opportunity for the incrementality to fall through in our model, and you would have seen it even just very clearly in 2025, where not only did the adjusted EBITDA margin come through at 45%, but also our cash conversion rate was at 46%. So it was -- it came through at a very high rate as well and the opportunity to grow that. And we said that, that would grow to over 50% in the next few years as well.

And part of it is looking at where do you find opportunities for cost savings or for continuous head count analysis, which is stuff we do as well. And on the operational side, looking at SG&A and all of those pieces. So it's a full model of looking at where your opportunities are and thinking through how do you maximize that return for your shareholders.

Excellent. Turning to capital allocation and the balance sheet. You recently refinanced your convertible debt. Your cash flow profile looks very healthy going forward. With that in mind, what's kind of your ideal leverage and liquidity profile for the business?

I think we've done a lot of work in 2025, and we set the balance sheet up in a really strong way for the future between doing -- renewing the revolver and expanding it by $75 million, but then also securing the convertible notes and refinancing those as well at only 0.75%. I think our balance sheet is in a very strong position for the future, and it enables us to do the future investment in JVs and growing our network. It enables us to do share repurchases, enables us to do expansion for different R&D investments as well, like how we did the film cameras last year. I think that it's all very important for us to protect our technology mode and continue to advance that as well. And so really making sure that we have the capital to be able to do that.

And a follow-up to that is how do you think of the trade-off between buying back stock and investing in the network, especially when the content slate is really heating up?

I don't necessarily see it as a trade-off. I think there's opportunities to do both. Like we have a track record of providing and using our excess cash to do share repurchases. We've even borrowed to do share repurchases as well in the past couple of years. And so we do see that as a good use of our capital. But one thing we see right now imminently is growing our network would actually provide a greater and faster return right away in that the faster we can grow our network is the more that the incrementality will fall through our model and be able to, every year, beat our best, right? And then that's the goal is to continue to create growth year-over-year. And growing that network enables for us to capture more market share to increase our cash returns and then, of course, those cash returns will go to shareholders.

Got it. Okay. And AI is obviously like the topic of the conference. I'm curious, how do you view IMAX in an AI world? Obviously, getting into a theater and kind of experiencing that firsthand is almost the way to solve people drowning an AI slot. But how do you think about AI impacting your business more broadly?

I mean when you look at going to the IMAX experience, I'm not sure that's going to see something AI created necessarily. But I do think that there's roles that AI plays. I mean you look at -- we're global. So we're in 91 countries, and we're doing over 100 pieces of content a year or plus. And so when you're looking at that, you look at versioning, you look at like dubbing, for instance, and there are opportunities for AI to do that instead of someone manually typing all of the versioning through, right? You look at cost reductions on the remastering side and the ability to use software and algorithms to be able to enhance and create the IMAX versions of film, opportunity is there as well. And then, obviously, just as any other company in your back office, looking at ways to use AI to create efficiencies through the way that you operate and therefore, save on SG&A as well.

So I see it -- the other opportunity for us would be as a revenue driver when you look at programming. One of the things that we've started to do in more recent years, and that's part of the reason that we've had such success in executing against our targets is because of looking at the ability to program our screens to create more opportunity to -- for higher utilization. And using data, like collecting data, large sums of data and sifting through that manually can be cumbersome and very hard and a very long and arduous process, right? But if you're using AI to collect that data and analyze it and then tell you, "Well, actually this location is only showing 3 shows, whereas they had capacity to show 5 shows." Well, now you just created 2 more shows full of revenue for yourself, right?

And so looking at that, looking at, okay, where does horror titles play because they don't play everywhere well, but maybe they may in select markets well. Historically, we would have had to pull out our spreadsheets to see where a past horror film played well. Well, now you can use data to collect that very quickly to be able to say, "Okay, let's pivot very quickly and program."

So adding new content into your pipeline can be easier now, like the fact that we just added Scream in, now we could easily program that through and know where to play it and to be able to maximize box office. Same thing we just added this coming weekend is The Bride, and we just added Hoppers in just a couple of weeks ago into the slate. So looking at how do you constantly work towards maximizing your programming opportunity before you, and AI is a good opportunity for that.

Really helpful. I want to open it up and see if we have any questions in the audience.

[indiscernible].

Yes. So for those of you who didn't hear, the -- our relationship with exhibitors and globally as well. We have really strong relationships with our exhibitor partners. I think we have over 250 partners across the world that we work with. And I know that many of them have their own sort of platforms and -- but they also have an IMAX. And I think that's part of it is understanding that IMAX is one of the offerings they can have, and it's a very strong offering that meets consumer demand. I think that's what drives a lot of the behavior you're seeing with not only the way that we're expanding with exhibitor partners, but also the future and the ability for us to continue to expand comes out of the fact of consumers demanding IMAX.

And you're looking at even now content coming exclusively to IMAX. Well, with Narnia coming out later this year, so exclusively to IMAX, or even these F1 races, exclusively to IMAX, there is that opportunity where we are -- our goal is to bring more box office, not only to IMAX, but to our exhibitor partners, and I think that that's where we're able to help lift the industry as well by contributing more in that way by us working through our relationships with content producers and creators to bring more content. And we generally have very good relationships with our partners worldwide. And I think you see that, by the way, not only do they come back to the table and upgrade their existing locations, but they're usually upgrading and expanding to new locations as well. And so I think that, that gives us -- that shows sort of the way that our relationships work with them, too.

[indiscernible] But would it be possible just to discuss a little bit more the strength in China and Japan in 2025, and what the timing of that will look like in 2026 just from a comp's perspective? I know we've already is, but I'd love to just make sure I'm understanding it correctly.

So I'm sure you're thinking about the Ne Zha effect from last year and how 46% of China's box office came in through Q1 last year, and that's not what it's going to look like this year, for sure. This year's going to be a lot more balanced in the way China's box office comes through this year, mostly because 2 of the films that we had originally thought would come through Chinese New Year actually are now looking like they'll come through in the summer period, which is Peng Hu and Once Upon a Time in the Middle East, which is a film for IMAX title. And then the potential for Creation of the Gods III somewhere in the summer/fall as well.

And then there's a stronger Hollywood slate this year in China. And so that also will contribute. Project Hail Mary is coming in now. We started the year with Avatar, but Project Hail Mary. There'll be Star Wars, and Odyssey should do very well in China. We'll actually get to split screens in China later in the year with Avengers and Dune, and have both playing there. So I think that you're going to see this year a little more balance between local language versus Hollywood.

I think China last year for local language is probably closer to 70% of the year of the entire year. Whereas this year, you might see it come through a little more balanced, not only from the split between low language and Hollywood, but also throughout the year a little more even. Now the way that we look at it from a global perspective, I mean, we've guided towards $1.4 billion, that is all of our regions, though, contributing, right? And when we look at the way that even last year, domestic and rest of world contributed, they are contributing generally at a faster pace because you're growing your network there as well. But also we're taking more market share naturally by the marketing, by the filmmakers leaning in, by just consumer demand as well. And so I do think that you'll start to see domestic and rest of the world continue to grow at a faster rate as well, all contributing towards our global goal of $1.4 billion.

And you rattled off some of the franchises that you're most excited about. But if I had to pin you down to maybe 1 or 2 in 2026 that you think could maybe present the biggest upside surprise to IMAX at the box office, what would they be and why?

I'd love to say Odyssey, but I don't think anybody thinks that's going to be a surprise. It's definitely going to be the title that delivers this year. I think Narnia is -- it's a great experiment. And so we're all looking forward to seeing what that will do because it will be launched -- IMAX will be the launch platform for that title. I'm excited about, I think, well, Michael, and I'm excited about that title. I'm also excited about Project Hail Mary. I actually just recently started reading the book, and it's a very good book. So I'm excited to see what that title will do as well. But then you have clear winners with Dune coming in later in the year or 2.

This year has a lot more hits. You can see a lot more hits between Project Hail Mary, Super Mario, Michael, Star Wars and then Odyssey, of course, going to be massive. But then leading into later in the year, you're going to have Narnia and Dune as well. And then you've got all these family titles. Which -- we've been capturing more market share on family titles, too. Like Toy Story 5 is coming, Minions as well. And so I think you'll start to see the year fill in, in a really strong way.

You're getting me excited. It feels like...

You can't watch things on the plane.

I know. It is embarrassing.

It's not -- that's very embarrassing actually.

Just listening to you rattle off all those titles, does it feel to you like 2026 is really the year that we kind of got out of the strikes and all the issues around that, and we're kind of hitting our stride? Like what -- how would you assess the '25 versus '26 and beyond?

I mean '25 was a record year for us.

For IMAX, yes.

I mean we guided to $1.2 billion. We delivered $1.28 billion. So I think we've already hit our stride, but we're continuing -- our goal is to keep raising that bar and executing against it. I do think the industry as well is growing stronger. And so I think that, that will also be helpful overall to the entire industry. And I think that we're growing our screens, and I know that we're contributing as well to that, and that's been a good place for us to be.

Great. And if we were to look into the future and we got to 2028, what would you want investors to say IMAX did better than anyone else out there across kind of media and entertainment over that 2-year period?

Well, I'm the CFO, so I'm going to say that we executed better than anyone else did, for sure, because that's my goal is to make sure that we're always executing against what we did. But also that we over deliver -- in the end, we deliver better than what we put out there as our guidance. I think that, that would be a really great thing for investors to be able to sit back and just like we did in 2025, to deliver stronger than what we guided.

Excellent. Perfect place to end. Thank you so much, Natasha.

My pleasure.

Good day, and thank you for standing by. Welcome to IMAX's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jennifer Horsley. 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 Fernandes, 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 regarding forward-looking statements. Today's call as well as the accompanying slide deck may include statements that are forward-looking 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. Rich?

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 $405 million worldwide with 67 international releases from 14 countries, including 2 of our top 5 in Ne Zha 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 5 of the 10 best picture nominees. Every one of Warner Bros.' 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 metrics, 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 films for IMAX tentpoles, headlining a record of at least 12 films 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 Grogu, the big screen debut of the massively popular Disney+ former TV series from Director John 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 film for IMAX space adventure that is earning excellent buzz and will screen in IMAX 70-millimeter 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 $1 billion, a diverse collection of distinctive and filmmaker-driven releases that we believe hold real upside from Michael to Zach Cregger'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 60% 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, a 4-film event.

With 2 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 Ne Zha 2 and we continue to diversify our content slate, securing an agreement with Apple to stream live broadcast 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 4-pronged 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 U.S., AMC, Cinemark and Regal, that advance key strategic priorities, including new locations in Los Angeles and New York with Regal and 3 new IMAX 70-millimeter 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 5 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 pay for themselves given our strong market share gains and the impressive film slate lying ahead.

In sum, 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 percent. And adjusted EPS reached a new full year record of $1.45, an increase of $0.50 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 2 of the largest local language titles Once Upon a Time in the Middle East and Penghu 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 a 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 the 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're expanding in the strongest box office markets, including in the U.S., 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 onetime charges, $15 million for the strategic repurchase of over 99% of the convertible notes due 2026 and $7 million resulting from a noncash 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 percent.

Full year adjusted EPS was $1.45, up $0.50, 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 $0.16 per share. No tax benefits were recognized for the onetime 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 the 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 0.7x.

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 a 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, 2 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 1 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 Twenty One 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.

[Operator Instructions] Our first question comes from Omar Mejias with Wells Fargo.

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.

So Omar, I don't think you could take 10 days and talk about the state of the Chinese box office. I think when you look at China, Chinese New Year was kind of, 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 and 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 will 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 a new deal with Apple to air F1 races. And based on your investor presentation, it looks like you have a big slate ahead. So how much runway does IMAX has 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 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 is underperforming or move something if it's overperforming.

But there are a couple of very big international films this year. One is called Ramayana, which is an Indian 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 Ne Zha 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 in number of international films -- local language films than we had last year. And we're pretty comfortable with how they look at the moment going out. I think that's going to continue to be an important part of our business.

Our next question comes from Eric Wold with Texas Capital Securities.

A couple of 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, kind of maybe an average ticket price increase for IMAX showings as exhibitors look to take advantage of kind of this shift in moviegoer demand? And 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 kind of 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, 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 to -- for price increases in there. And 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. And 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 a 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 more developed markets and then 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 I mean, they're aware, and that's one reason they buy in because they understand the price premium. And they understand it more as a percentage than an absolute number because obviously, in India, the premium -- the 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.

Our next question comes from Michael Hickey with StoneX.

Rich, Natasha, Jennifer, congrats, guys, on amazing development. First question, Rich, just on your film cameras, really remarkable run here you've had with centers in '25 and getting 16 Oscar nominations is really remarkable and one battle for another as well, which I think was on your digital cameras...

Sorry, Mike. We got like over 50 Oscar nominations overall.

Totally. I just focused on centers, but you're right. I mean it's truly incredible. And '23 was Oppenheimer. This year, you've got Odyssey, you got your next-gen cameras with Odyssey, which are quieter and lighter. One, I guess, how do you know -- I'm curious how you're going to answer this, Rich. How do you know the right films to pick? Because some are obvious, but when you look at something like centers, I mean, that was not obvious. And obviously, that's been an incredible success.

How are you -- and I'm sure it's an ecosystem thing, but 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, there's installations, maybe a better opportunity to scale more of the 70-millimeter film opportunities or just relationships with filmmakers, talent and your competitive moat overall? Just sort of curious how this builds your overall opportunity over time.

So Mike, it's a perfect time to ask you that question because I've been out in L.A. for over a month right now. And I've been meeting with filmmakers, I've been meeting with studios. I've been meeting with producers, and you're quite right, the demand is very elevated from over it was before. So I'll give you a couple of categories of answer, like something that never would have happened years ago. But like well-known filmmakers who you know will approach us and will say, I want to do an IMAX film and they'll actually do like a pitch and they'll come in and they'll tell us why -- what it's about and why they want to do it in IMAX and why it's important to them. And that's a category -- 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. So one example would be 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 and a huge success in IMAX. And then we did F1 with him, which is not as well-known IP, obviously, and it became one of our top films of the year. So Joe is working on his next project, which is Miami Vice. And he came to us and then we started talking to him about the different opportunities to shoot in IMAX and different tools, and we're still working our way through that.

And then it will be studios who will say, by way of example, Warner knows they've got 30 Oscar nominations. So they're looking at their slate, the people who run the studio, and they're going a filmmaker and they're saying, hey, have you thought of shooting this with either IMAX film or IMAX digital cameras? So there's a lot of opportunities that come in. And I think maybe the most promising one is the filmmakers who worked with us before and film for IMAX and their desire to use IMAX technology.

So there are a lot of ways, but having spent the last month with a level of meetings that I've never seen before and the types of talent coming in and executives, there's lots of projects coming in. And without spending much more time on this, if you don't know the filmmaker that well, you look at their reputation, you look at other things that they've shot and what it looks like. A big thing for us is -- the filmmakers is also leaning into the IMAX of it all. And a great recent example of that was Ryan Coogler and Sinners, as you probably remember, 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.

The second question, big film for you, Narnia, very important film, very important partner. And I think if anyone you sort of crack here, it seems like [indiscernible]. Just curious, as you continue to [indiscernible] or whoever on the team you're talking with, do you get the sense that they're more motivated, Rich, to make this movie. Do you also feel like that 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 to I guess, sort of your excitement for Narnia, the input from Netflix and the future opportunity you would see with that really for yourself and the broader.

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 it in IMAX. And together, we planned to talk this through with Netflix and brought Netflix into the fold. So the most important thing is that Greta is incredibly excited. And when she thinks about how to make the movie and she thinks about the sets and she thinks about the magnitude and scale, she really leans in. And 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. And that's the thing that probably makes me the most confident.

In terms of the business model, I mean, 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. And we're always talking to them about different ideas. My hope when I did this deal was this model is going to work so well, and I'm not talking about only the box office. But remember, the point of it is to create a buzz and a cultural event.

And I think when Greta releases this in IMAX, it will be a cultural event. And I think they're going to get the benefit from that of increased streaming hits after that. Remember, it's a series of books. It's not a one-off, and it's going to help build an event. And I think 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, which is going to lead to a number of good things.

[Operator Instructions] Our next question comes from Chad Beynon wit Macquarie Capital.

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 that 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 world?

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. And obviously, exhibition has had its challenge in its traditional industry. And I think it's certainly looking for growth opportunities for its network and its strategy. And I think they look at their box or someone else's box next door that's selling out and is getting very attractive paybacks.

I think that's going to have a big influence. And using some examples for markets 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 and 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 I think in general, it's looking at performance and trying to replicate it and bring it forward. But then you add some kind of obvious things like the slate this year, and there's lots of movies, as I said in my prepared remarks, whether it's Mandalorian or whether it's Odyssey or whether it's Dune: Part Two. And 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 you look at the performance of those theaters by being open for Avatar, their ROI and their payback period were far superior to what would have been if they waited. And our team around the world is using that data and sharing it. And I think that's what'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 is very good. So we're seeding some of those markets by using a small amount of our capital to help jump start them. So I'd say all of that.

Our next question comes from Steve Frankel with Rosenblatt Securities.

Rich, you had a big install quarter in Q4. Given the demand situation, how much more can you ramp your team and to take that to another level?

Yes. It's just a question of timing, Steve. So if you ask me how many we could install in the fourth quarter? The answer is an awful lot because it's like -- analyze it like a supply chain. So can you order the parts in advance? Can you do the designs? Can you deploy the teams? So sort of in any given year, it's a much larger number than we're doing now. If you said to me, people want to open for Hail Mary in 3 weeks, it's more difficult to do that. But over the longer term, I never used the word infinite, but you certainly could open a lot more if you wanted to. There's not much constraint on that.

Our next question comes from David Joyce with Seaport Research Partners.

Given that you've got a lot of cash on your balance sheet now, how are you seeing your mix of sales versus JRSAs this year? Given that you've got more of that cash and it's a strong box office here, how are you thinking of the relative ROI between those approaches?

David, we see it as a lots of opportunity for us to use our balance sheet, and we talked about it at Investor Day as well, but the opportunity to look at those top-performing zones and could we help the installation go faster by essentially seeding the money, as Rich was just talking about and in return, getting some sort of change in our deal type as well or change in our economic -- our standard economics so that we could get that return as well, but have the theaters open earlier. And I think that, that's the opportunity that we have with a strong balance sheet with our liquidity position sitting at $550 million. It is a significant opportunity in front of us to roll out our backlog at a faster pace and also look at more opportunities. And we talked about it at Investor Day of second screens or top-performing locations, flagships.

And so we think that while we look at not only investing in our business with respect to our own technology and the way that we operate in the Filmed for IMAX program, and we invested in cameras. There's also the opportunity to look at expanding the network. And I think what's been great is this past year, we expanded our domestic network by 4%, and we expanded our rest of world by over 8%. And so we are using our capital in the right way right now, and we see the ability to ramp that up.

Our next question comes from David Karnovsky with JPMorgan.

This is Kiscada Hastings on for David Karnovsky. I just want to ask on STL installs and upgrades this year. Is there any insight you can give us on expectations regarding market mix? You've been talking about more opportunities in the U.S. and whatnot. Should we expect revenue per install and revenue per upgrade to be relatively stable year-over-year?

So generally, yes, I think that we have a standard sort of selling price. Now the opportunity is that the box office grows, and you would have seen it in the incrementality in our model in 2025, the JV systems, we have the ability to capture more box office there and as our box office grows. And so I think that as you look at the mix, we did guide towards 160 to 175 systems with a mix of 45% to 55% sales to JV mix. So I think we're still tracking towards that. That's what we've guided publicly, and we'll keep working towards that. I think the opportunity, though, is looking at how do we capture more from those JV locations as the box office grows there as well. And that was one of the significant contributors to us not only having the over 45% adjusted EBITDA margin, but also our cash flows that came in at a record level.

Our next question comes from Eric Handler with ROTH Capital.

Just sort of a follow-up to that last question. Wonder if you could talk about how you're thinking about capital allocation at this point. You don't have debt due until 2030. You should have more free cash flow than last year. How are you thinking about buybacks? You've had good luck -- you've had good returns with the JRSAs. Where else can you sort of invest internally that you think would get high returns as well?

So Eric, I think the best place we can invest is in our network growth. And that's because when you look at PSAs this year compared to last year, when you look at the films that we have in '26 to slate, but maybe more importantly, you look at the backlog of films in '27 and '28, like we have an insight that most operators around the world don't have, which is we know what our slate is going to be going forward. And we have kind of a unique perspective on how it's going to perform. And we have a perspective also on how IMAX fits into the ecosystem. So if we have an opportunity to leverage our network growth or leverage our returns through maybe steering a deal one way or the other way. We think the releveling of IMAX is probably the best opportunity there is in terms of where to put our money. Now I would also add that people didn't think of it this way, but Natasha mentioned it briefly in her remarks. But when we issued our new convert and we took out the old convert, we could have taken out the shares that were in the money in 2 ways. One, we could have given people shares; or two, we could have used cash. And we took them out with cash, which effectively lowered dilution and was analogous to a share buyback. So obviously, we're open to being opportunistic in various ways, but we're very focused on how to capitalize on our growth.

Our next question comes from Patrick Sholl with Barrington Research.

Just in terms of installing into like a second screen in a zone versus entering a new market, is there sort of any difference in the return profile or the speed of getting to sort of like, I guess, a steady state of PSAs?

There doesn't appear to be a difference because if we're putting a second theater in a zone where the exhibitor is, it's -- you see a very successful zone and the brand is well known there. So you're leveraging off of your previous success. And I know we've been saying for a while that we're going to do more of that. But we've actually taken some concrete steps with different exhibitors and identified specific locations where we would put a second screen in and are discussing with exhibitors. And seemingly, they have a more open mind to it than they did in prior years, especially coming off the strong results in '25. So I think you should model it as a similar return profile, but I'd be surprised if you didn't see some of that materialize this year.

Pat, the other thing to consider is that we have a very experienced team who is involved in the analysis of the returns on locations and really assessing what is best for the IMAX business. And I think that's one thing we've proven over the years is that as we continue to expand, we're expanding in locations that are returning to our bottom line as well. And we do analyze each of our locations as we look through signing new deals, signing upgrades, signing whether it's second screens or flagships and assessing to make sure that it hits our ROI hurdles.

Yes. And I think I'd also like to remind you that the converts we issued, the interest rate is 75 basis points. So this is a well-priced capital for us.

Our last question comes from Drew Crum with B. Riley Securities.

Rich, I want to go back to the discussion around alternative content and the partnership with Apple TV for Formula 1. It looks like the initial launch is U.S. only. Do you have the ability to add international screens? And more broadly speaking, how are you thinking about bringing more live sports into your programming mix? With 2026 being a World Cup year, is that a consideration?

Sure. So the answer is the international -- your first part of your question with F1, Apple only controls the North American rights. So we made the maximum deal we could have made with Apple. But we are exploring the possibility of looking at international races, and we are following up on that. But again, that wouldn't be through Apple. That would be through others, and we announced this in the last 2 days. So it's a little premature to expand on it yet. But yes, we would be interested in finding a way to expand that.

In sports, we've been offered a lot of opportunities in all kinds of different sports. But sports is complicated. It's got to be the right formula. It's got to be the right match with the IMAX experience. These rights issues, as you know, are very complicated and expensive. So you've got to model it through and see which sports have a good return and which don't. We have had some discussions about the World Cup. But again, there's interesting issues there because the finals of the World Cup are on the same weekend that Odyssey opens. So it's not -- you can't just stick your finger in the air and say, "Oh, that would be a good idea." There's complicated issues around all of these. But again, there's a lot of interesting things going on and stay tuned. I think some of them will come to fruition.

I'm not showing any further questions. I'd like to turn the call back to Rich for any further remarks.

Yes. So thank you very much, operator, and thank you all for joining us. I really appreciate people who have invested in us for a period of time because 2025 really brought the pieces together. And as a management team, we had high hopes and we always believe that all the pieces could come together and put us in a new place. And I've tried -- the quantitative results are evident in what we reported. And the qualitative ones are less evident to you. But if you were living my last month in L.A., they would be equally obvious to you. And it's very gratifying to be seen as a different company in such an important position, not only in Hollywood, but around the world. And I think our job is to make sure that we use that place and we use our momentum to continue the growth rate and maybe even make it higher and really capitalize on where we've come into and making sure that we take full advantage of that opportunity. And thank you all for joining us.

Thank you, ladies and gentlemen. This does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

[Audio Gap] Mark Jafar, Global Head of Communications for IMAX Corporation. Thank You much for being here everyone at IMAX for IMAX Investor Day 2025. We are very excited to welcome all of you. Those of you who are in our offices here in Los Angeles. and everyone who's joined on the live stream all around the world. And we are very, very excited to share our strategy for building on this record-breaking year at IMAX for driving long-term sustainable growth at the company and for delivering returns, strong returns for all of our shareholders. .

And we think we're just getting started. So let's get started today with today's agenda. First up, we'll have a conversation with our CEO, IMAX CEO, Rich Gelfond, to talk about our growth outlook and strategy for the company. Next, our Chief Marketing Officer, Anne Globe, will join to share some brand-new insights on our audiences in the IMAX global brand. Then our new Chief Content Officer, Jonathan Fisher, and our new Head of Global Distribution, Heather Morgan will join to discuss our growing IMAX content portfolio worldwide. After that, we'll have a Q&A with our CEO of IMAX China, Daniel Manwaring, to provide insight on the vast evolving opportunity that we see in this big market for us.

Then our Chief Commercial Officer, Giovanni Dolci, will join us to talk about our plan to grow the IMAX global network. And then we'll take a look at IMAX's end-to-end technology platform with IMAX Global President of theaters, Mark Welton. And finally, our Chief Financial Officer, Natasha Fernandes, will walk you through our long-term financial plan, including 2026 guidance and our 3-year financial targets.

And of course, we'll save plenty of time for questions for all of you at the end in the room here. For those of you who are here in person, the presentation will be followed immediately by a nice lunch on the patio, and then we'll have an exclusive advanced screening of Avatar: Fire and Ash in glorious IMAX 3D, a full 2 weeks before anyone else will see it in the world.

One note for everyone watching at home, we will have a number of brief exclusive videos throughout the presentation that unfortunately, we are not at liberty to share on the live stream. So we just ask you kindly to bear with us as those play, no more than a few minutes each, while they roll, and we'll be back shortly. And for those of you in the room, please know photos or videos as those videos play out. Thank you again for your time, your interest and your investment in IMAX.

And with that, let's roll our video and then we'll talk to Rich.

[Presentation]

All right. Rich, it's been a while since we've had an Investor Day at the company, I think, since 2017, in fact, why are we doing one now?

It's a matter of how we communicate our story. So the way we interact with most of you rather than on a one-off basis is through our quarterly earnings calls and each quarter, we'll talk a little bit about what happened in that quarter and what's happening in the next quarter. But in fact, there's a much bigger picture of what's happening with IMAX. And we felt it was time to sit down with our investor group and really explain. And I think we think of it as a level reset meaning that IMAX was this company that's been around for almost 60 years, and it's gone through a lot of phases.

But I think we needed all as a group to kind of step back and say what's happened over the last period of time and more particularly what's happened this year. And IMAX really is at a new level. And when we designed the day today, we thought we would start with kind of this brief intro that I'm doing. And then we would have you meet the management team and the people who are implementing all of these initiatives.

And I think you'll come out of it feeling like you have a different understanding of IMAX because it's very easy to say what's the issue of the week and what's happening this quarter and what's this movie. But the data throughout the entire company shows that we are in a very different place. And it's kind of an auspicious day to start because yesterday became the highest grossing year in the history of IMAX. So we broke our record -- I promise you, it seems, I don't believe in coincidences. But it must have been a sign that we scheduled this 4 months ago, and it's exactly that time.

But when you go through kind of every piece of our business, whether it's films that are being shot with IMAX cameras or whether it's film, it's digital cameras or film cameras, whether it's financial performance, whether it's new technology that we've come out with this year, whether it's your noticing when you come through the Midtown Tunnel in New York, you drive down Hollywood Boulevard that every sign says IMAX on it. And in fact, in many of the cases, IMAX is bigger than the title of the movie.

Just so much has changed about our business in terms of the reset. And we think to know where we're going forward, you really have to understand that underlying change. And our business, and to be really honest with you, all, one of my most difficult task is getting our management team to even understand how much has changed. So this last weekend for Thanksgiving, we put together an [ ultimate ] and a forecast for our movies and what Zootopia was going to do and what Wicked was going to do and some of the management team, Mark will tell you, that it drives you crazy because I don't think our own team understands how much we're in a different place than where we were before.

So for the last holiday weekend, we set a record by doing $41 million worldwide and say, okay, it's a movie business. Everybody makes up some kind of phony record every weekend. But this time, though, we beat our prior record by 70%. So when you're in a business that's more or less linear, you beat your record by 3% or 5%. But in fact, we beat it by 70%. And I think when you see people take you through their businesses, you'll see that's not a one-off, whether it's signings, whether it's installs, whether it's backlog of theaters to be installed, whether it's backlog of movies coming in the next couple of years, every aspect of our business has kind of moved to another level.

And then I think you're all sitting there and say, okay, what is the future hold for IMAX. So as this trend accelerates, IMAX becomes an incredibly valuable player, either as a wholly differentiated, publicly traded company or as part of a larger company with the keys to unlock even greater value in our strong business worldwide. And we're very excited about all of those possibilities.

And we're going to run our business to maximize value in every possible way. We're uniquely able to leverage the shift to premium and consumer demand for great experiences had to become a springboard for other growth opportunities. The opportunity, The Odyssey, Narnia and expanding the total market for IMAX systems now is the right time to talk about IMAX's future.

So you mentioned the story of the day earlier. I think the story of the week, the story of the month, potentially the story of the year that everyone is asking about is the potential sale of Warner Bros. Discovery. I'm curious what your thoughts are on the bidding process there, which seems to be heating up by the minute and how potential sale could impact IMAX.

Warner Bros. is for sale? .

Yes. I'll show you the article.

I hadn't heard about that, Mark. So it's been rumored in the press that there are 3 potential buyers for Warner Bros. And as you know, we have great relationships with Warner Bros. But fortunately, we also have terrific relationships with all the potential buyers. And I think we have some insights into how each of them might run the business differently. And I think we're not going to share those until it's clear that there's a winner.

But I think the most important insight from our point of view is that whoever wins, we believe IMAX will win. And we've been through a lot the last 7 years, whether it was a global pandemic or whether it was consolidation happening in the industry or whether it was acquisitions like when Disney bought Fox. And every time, there's been alarm bells that have gone off, what does this mean for IMAX's future and every one of those, we've actually built our business better. We built it stronger, [indiscernible] on the pandemic.

I mean while a lot of people thought about survival during the pandemic because of our asset-light model, we use that period of time to think about the next place as we go, you are seeing the result of all that planning right now. So to be a little bit more specific about it, we've had a relationship with David Ellison and with Paramount for 2 decades, at least, we've done a lot of their biggest movies of both Paramount and David Ellison because they only recently came together.

So whether it was Top Gun with Paramount, which we -- by the way, with Paramount and David Ellison or whether it was The Mission movies, Paramount has incredibly leaned into IMAX over the years. And in our private discussions since the acquisition, they've assured us that they're leaning really hard into theatrical and some people from Paramount were there last night, who are actually pulling us aside and saying, you should hope we win because we're going to go really all in to IMAX, if that happens.

And I believe it, in addition, Anne Globe, who you'll meet soon, our CMO, who I know for over 2 decades. Anne was the CMO of Skydance for 6 years before she joined IMAX. So in addition to the corporate relationships, Anne, myself and a lot of others have a lot of strong individual relationships. If it's Comcast, that's the winning bidder, we have a phenomenal relationship with Universal and Comcast. As you all remember, we -- the Academy Award went to Oppenheimer, which was made not only with the Nolans but with Universal and you'll see a clip later at the Academy Awards. They shouted out IMAX as being essential to why that movie worked.

We're doing Odyssey with them this year. We're doing Wicked right now with them as we speak. But we have a much longer history, I'm sure before many of you were involved with the company, but we did the Fast & Furious franchise. We've done Minions. We have very deep roots with them, and I'm very comfortable that if they were the winner in the Warner sweep stakes that they understand the importance of IMAX very much.

And then the other one, Netflix, which has been more buzzed about in recent days. We have a really good relationship with Netflix. And we have a different view than a lot of exhibitors do. A lot of exhibitors put a good guy and a bad guy labels on different companies. But we've really gone out of our way to work with Netflix. And you'll hear a lot of talk today coming from us about Narnia and Narnia is a movie being made by Greta Gerwig, which comes out next Thanksgiving, and it comes out exclusively in IMAX theaters around the world for a month.

And I want to repeat that exclusively in IMAX theaters, and there is a 28-day window. So if you want to see that movie anywhere in the world before it streams, you need to go to an IMAX theater. And just to give you some context for Oppenheimer, we did, I think, $170 million while it was playing in other places in the world. And the fact of -- this will be the first IMAX exclusive release. And the reason it happened was that it was Greta's idea, Greta really said probably a year before we made the deal that I'm making a movie that deserves to be shown in IMAX and needs to be shown in IMAX.

And again, it took a fairly significant period of time but we negotiated with everybody important at Netflix, including the CEO and Chief Content Officer over a very detailed distribution plan, which includes theatrical marketing. It includes the way they're marketing the movie is see it in IMAX and see it in Netflix, see it both ways. Yesterday, some of our investors with one of the analysts went over to Netflix for one of these bus tours. And they asked the Netflix people, how do you feel about IMAX?

And what the Netflix management said is, we love this model that we're doing on Narnia, and we'd like to do more of it. In fact, the proof is in the pudding, they've come to us to do other pictures like that during actually this year. But we felt strategically so good about Narnia,we want that to prove itself out before we move on to where we go with Netflix.

Also, I believe, for what it's worth that the regulatory authorities would not approve a deal with Netflix unless part of that deal was there'll be a theatrical release. And am I -- do I know that as a fact, no, but I've been in my chair for almost 32 years, and I not only know all the studios and the players and the exhibitors, but I know a fair amount about how [ Windows ] and Netflix and theatrical interrelate because we were in the middle of that during the pandemic.

The other thing is that Warner Bros. has contracts that run through 2029 that guarantee a theatrical release. So no matter who owns Warner Brothers, those contracts have to be honored. And one reason we did the Narnia deal is, I've always felt that if you just have the same point of view and you sit in the same spot, your industry dies. And I think even warring parties in this industry realize that there's got to be new models and new middle ground set. And I've thought all along that, Narnia, and I know this is an overstatement, but it's really going to change the theatrical world because I think exhibitors who said never Netflix.

Once they see what this movie is going to do. And I think Netflix -- and I don't know if you've read the comments coming from Netflix even from Ted has said, IMAX is such a differentiated experience than the living room that we get the fact and we want to do more things that way. We also did Frankenstein this year in a limited release with Netflix, and we have a number of projects on the drawing board. So whoever wins, I think IMAX is going to be a winner. I don't think it's obvious how this road is going to twist and turn. But I feel quite confident that we're in a good place.

You mentioned transformation and managing changes, there is seemingly no greater sea change to the industry than AI. But that's not something that you've kind of beat the drum about as many have. What's the company's approach there?

Look, we recognize that AI is going to be a big part of everyone's future and particularly in the entertainment industry. But we're not -- except for a limited stat, and I'll get to in a minute. We're not creating AI tools. We're more users of AI than creators of AI. And I just felt it was inappropriate to jump on the bandwagon and to over promise that has many of the companies you guys probably invest in, where the AI future.

But if you back away from it, IMAX is a platform and it's a global platform. And what we do and the more content there is, we have a limited supply. So the thing that IMAX really sells and allocates is this beachfront property, this window to the world curating in 90 countries and 1,800 theaters. So as there becomes more content, the big beneficiary is IMAX. And there's no question in my mind that more content is going to be coming out of AI. The costs are lower. Special effects, price comes down.

We started a few years ago with 6 studios. Now among the 200 pieces of content that we released this year, we deal with sports leagues, we deal with music companies, we deal with gaming companies and adding on a whole supply of AI content is only going to be good for us. And you're all going to ask, does that mean you're going to change your take rates? Does that mean you're going to change your marketing? And the answer is, I don't know. We'll see how it plays itself out.

But it's only good for us to have more content. And we have a little bit dipped our toe in the water, Mark. So there's a thing called the AI film festival, where they give out awards for the best AI film and IMAX the winners, the final round is actually in IMAX and it has been for the last couple of years. So we work with those companies. And as a matter of fact, we have an event called the CEO Forum, where we talk about the future of entertainment with IMAX exhibition partners and such studios, and our AI panel this year had the Head of AI at Lucasfilm.

We have the Head of AI at Nvidia. We had people from USC Film School, we had studio people. So we're very much see that as an opportunity. But we just don't know exactly where it is. And one thing we don't want to do is overpromise where we don't know where it's going. On a smaller scale, we've been using versions of AI for a long time. So as you can see, we upraised the movies. So a film will shot in digital or 35-millimeter and you put it on a big screen like this is just not going to look that good. And we have a process called DMR, which relies on some conventional tools but also relies to a certain extent on AI or AI-related tools, and that facilitates our business.

We're using AI today in a lot of our marketing approaches, whether it's analyzing data or whether it's coming up with drafts of different creative materials where we used to have to pay agencies to come up for 3 ideas. We're using AI to come up with 30 ideas. You'll hear a lot about the fact that we monitor our content in real time in every theater around the world 24/7. We have a [ knock center ] it's called and AI will enable us to get more inputs. So what we've traditionally used it for is to set the sound in the theater. So if this theater was half empty, you would set the -- you would calibrate the speakers in a different way than if it was full.

So this real-time center helps us calibrate that. But we get enormous amounts of data. It also tells us if the bulb is getting dull. So you don't -- when you go to IMAX you know that it's the optimal experience and the filmmakers know it's the optimal experience. So we have all this data we weren't able to access. So we're working on internal projects like inventory management. So how long from now is the going to blow. The -- our systems now are laser, when are the laser is going to burn out? How can we maximize light input into these things. So we're very much see it as part of our future, but we just don't know exactly the path.

You mentioned IMAX beachfront property, right, and the scarcity of that. Certainly, there's other players in the industry who are looking at IMAX and saying, like, how do I get some of that for myself. So I'm wondering how you think about increased competition from [ PLFs ].

Yes, I'm looking at AI also, and I'm thinking of competing with Nvidia because there's a lot of money there. But you just have to sort of have a basic culture and tools. So IMAX has 115 people doing R&D. The POS, I think if you added them all up, it's probably about 5. And I think their R&D is mostly on the formula of the butter for the popcorn as well as how much electricity to bolster the bulbs that go in.

I mean we're just a completely different culture and a completely different enterprise. And our enterprise is based on the idea of quality and filmmaker friendly. And that's what we exist to do. The PLFs make all of their money or most of it on selling popcorn. We don't sell popcorn. I personally don't like popcorn, please don't quote me on that. It's not what we do as a company. So for someone to say, we're going to compete with IMAX. And there's the brand. The biggest thing is it's an end-to-end solution.

So we capture the images, either with IMAX cameras or we convert the images with IMAX proprietary algorithms into the input that goes into our system. Every other PLF. The first time they have seen the film is when it comes in the mail or it's streamed in. On Odyssey, with Chris Nolan, we've been working with him for that on that movie for 1.5 years, 2 years, maybe more. We built a new generation of cameras through our engineering department, which you'll hear a lot more about from Mark Welton and others later in the presentation.

And another example would be the F1 movie when Apple and Joe Kosinski and Jerry Bruckheimer decided to make the movie about a year, maybe more 1.5 years, we met with them. And they said, look, we don't really want to make the movie unless it's going to come out of IMAX and they had had a very good experience to say the least with Top Gun. And they design something like a dozen miniaturized IMAX cameras, which fit on each of the racing cars and they're remotely controlled.

So when you watch the film and it's turning corners, the cameras are turning and there's lots of other aspects to it. So on the image capture side, we're very much involved. I mentioned to you that when the movie is in the theater, we're the only ones monitoring in real time is that the way Joe Kosinski wanted it to be seen. The marketing around it. I mentioned that briefly earlier. When Anne comes up, she's going to show you some of the specialized design that the studios put together for IMAX, and we have a marketing team that goes out there. And again, I think I'll stop abusing the PLFs. But their marketing team is busy marketing, whether it should be the big popcorn or the small popcorn or packaging popcorn.

I mean I know it sounds like I'm being a bit of an A hole here. but they're in a different -- it's just a different business. It doesn't do what we do. I think back to when -- I don't know how many of you know the history, but I was part of a group that bought IMAX in an LBO an 32 years ago. And when we came to meet with the IMAX then management team, I asked a question, I said, IMAX's uptime is 99%. Suppose it was 98%, how much more money can we answer -- could we make? And the answer was, we won't answer that question because our question is how do we get it to 100%.

Now I'm not suggesting we didn't change some of that philosophy because we like making money better than the private ownership did. But it's just -- it's in the paint. It's part of what this is. And if you just think about the idea of competing with us, I should mention one other really important thing. And that's the infrastructure of theaters. We're in the best street corners in 90 countries. So whether it's the 68th Street in New York or the London Science Museum or the best location in Tokyo, the cost of those buildings is close to $10 billion, and those locations don't exist.

So when I read in the paper, the SCOOP and Bloomberg that a startup is going to compete with IMAX, frankly, we're always on our game, but it's just not an incredible threat. I think we've been in business almost 60 years. I just don't think you build something like this overnight. And I hope you come out of this presentation, understanding more of the complexity and details that make IMAX what it is.

Switching gears, local language film making and international filmmaking have been an increasing contributor to box office over the last several years. How is that reshaping the global box office and IMAX's business?

So the inspiration for local language films came during the pandemic because what happened was Hollywood is pretty much shut down, as you know. But our company is so diversified. And I think as someone will go through a slide, around 40% of our box office is domestic, but the rest is from around the world. So in all but the first year, the first few months of the pandemic, IMAX was cash flow positive and didn't burn through cash.

And it was that diversification, which really helped us. So we weren't spending a lot of time on new Hollywood movies. And we didn't lay people off. We kind of kept people on special projects. And one of them was really how to diversify globally and how to get more local language content. And we spent a lot of time and a lot of effort, and it wasn't visible at that time. But it was very much a strategic goal for us.

And in 2019, we had like 3 local language films in India. And I think this year, we have like 20 or 25. And our box office this year, about 35% to 40% has been local language films. And local language has 2 components. So it's an Indonesian film in India, but it's an Indonesian film, in Indonesia also. And it's a French film in France, and it's a French film in Belgium.

So one of our recent great successes has been anime. You know about -- most of you know about Demon Slayer, where we've done almost $100 million. And most of that is in different countries like our most successful Japanese opening ever in China was Demon Slayer, where it had a huge weekend. So it's not just the local territory, but it also boosts our international footprint. And Gio, who will talk about global sales is going to talk about how that's also helped our expansion efforts.

Because if you're in Korea, you don't only want to see Hollywood films. You want to see Korean films. So the more content we have available there, it really helps boost our theater network. And then some of this was luck, some of it was prescient, but the studios were so focused on streaming and getting a Netflix multiple that they missed the fact that pre-pandemic, they had 80% market share in the world.

And now in '24, they had 60% market share in the world. And that's because local language was creating content that was resonating in those markets. And I think there are only 2 companies that really saw that and capitalize on that. And 1 is Netflix and you know local language has been a big part of their momentum. And the other one is IMAX. I bet a lot of you don't know what a big part of our box office that is. So we're going to continue to lean into local language and it's continued to be a more important part of our company.

So a lot of new, new-ish faces on the IMAX senior management team. Tell us a little bit about who we're going to hear from today.

Okay. So you sort of told them at the beginning. So I'll go a little bit briefly but after my presentation is Anne Globe, as I said, not only does Anne have a lot of experience with studios, but amazing amounts of relationships that always amazes me how many people in a restaurant come up to Anne. And we have a very long-standing relationship, has been helpful and her team gets a lot of credit for the marketing changes.

Then we're going to go into our content side of the business, and we recently hired Jonathan Fisher. And in the world of coincidence, which, as I said, I don't believe in it, so but it was. Jonathan started when I just started the negotiations with Greta and with Netflix. And Jonathan was a senior executive at Netflix for 5 years, and he's proven to be extremely helpful as we navigate this changing world. And reporting to Jonathan is Heather Morgan, and it's also a little bit of an unusual hire. We had hired people who had experience in Hollywood, had a lot of experience in exhibition. So she worked for AMC on the programming side. She worked for Harkins. She worked for getting the other one...

Alamo .

Alamo Drafthouse and she helped program. And I think you guys know that when you're in the IMAX business, we program the screens. So AMC, Regal, and [ Wanda ] they don't program it, we program it. So we had the thought, why don't we get someone who knows a lot about programming to help figure out the slate for us and put it together. And besides Heather reporting to Jonathan, there is a lot of the alternative content, the foreign language content. He becomes the air traffic controller for the 200 pieces of content they put on the screen. .

Then after Jonathan, Daniel Manwaring, who is our CEO of IMAX China, Daniel ran parts of CAA in China for more than a decade. He also has a financial background, and he has unbelievable relationships in the Chinese film community. And we thought that would be especially interesting to you all because you don't get face time with Daniel frequently. And then after Daniel, Gio Dolci, Gio has been at IMAX for 13 years. He spends more time on a plane than any pilot, I know, like literally the guy who lives around the world. And he has lots of relationships with the exhibitors, as I know we talk a lot about our relationships with the filmmakers and the studios.

But like the CEO Forum, which I mentioned, we have just fantastic relationships on a global basis. And Gio manages those, and he'll talk to you about what our growth prospects are there, then Mark Welton, who oversees, he has a fancy title, like President of Theater, as you know, everyone in Hollywood as a President of something. But Mark, along with the video we put together will tell you about our technology and the role that our technology plays in the whole IMAX experience.

And then finally, the wrap-up will be somebody who won't be interested in listening to at all, which will be Natasha, who will give you guidance and numbers and things that if you are interested in. So I suspect you'll all be interested in that.

So 1 last question, Narnia, as you mentioned a year from now, it will be playing exclusively in IMAX theaters around the world. How are you feeling about how that project is coming together?

So this is one where you could see I'm pretty passionate about the IMAX business. But this is one that my team has to hold me back because I think, as I said before, that it's really going to change the world. I know that sounds like a lot of hyperbole. But Greta is making this movie for IMAX and then is fully understands that when word gets out of what this movie is, it's going to create a cultural event. .

So for us, the goal is not only to do good box office and IMAX, but to prove out that IMAX can create worldwide events where they didn't exist before. So we want Netflix to do well in streaming. That's part of our goals in this. And again, when we negotiated with Netflix, we were in a very unique position because the exhibitors have a history and the exhibitors also have an animosity at some level because they see themselves as competitors. But we don't compete with Netflix.

I mean does anyone here have a television set that looks like this screen. And I think we recognized it. So we had a very productive negotiating session. We said, we're not doing it unless there's a theatrical marketing budget. So there is. And we're not doing it unless there's a blockbuster budget for this movie.

And trust me, there is a very blockbuster budget for this movie. And the premiers have to be in IMAX. And Greta has to go on talk shows and talk this is a real blockbuster movie that's being made for both. And then I guess I do have to talk a little about why I'm so excited about it. This is not your mother's or your grandmother's Narnia, The music in it is unbelievably contemporary music, which IMAX fans like, and I'm not going to say specifically, but things like Pink Floyd and the [ Dorrs ] and that kind of music, which people go to see in IMAX. And the movie itself is going to be -- it's being filmed at the largest sound stage in Europe. I went on the set where there were hundreds of people and multiple green screens and is filmed at multiple locations, and you're going to see a clip in a second.

And if you can't see how passionate Greta is about it, then you'll have to wait to see the movie to see how awesome it is. So when I look at the most important movies, coming out for us in '26, for me, it starts with Avatar in January then the Odyssey and a lot of people will be talking about that. But the cast to the Odyssey looks like the award section of the Academy Awards. The budget behind that movie, the marketing campaign, most of you probably know that we put tickets on sale a year in advance and are the ones we put on sale. we sold out, The Mandalorian, Star Wars, Jon Favreau invented special technology to film that movie for IMAX. Dune: Part Three, Denis Villeneuve is filming a good part of the movie with IMAX film cameras.

I left one out, how can I leave one out.

Mandalorian, Dune.

Mandalorian, Dune and then the movies, which have an amazing buzz already are things like Hail Mary and like Michael, the Michael Jackson story. So but of all of that, including those movies, the one I'm most excited about is Narnia because I think of its potential to change IMAX and to change the business.

Great. Well, thank you, Rich. Let's take a look at that clip.

[Presentation]

Okay. I'm Anne. I'm going to balance the scales a little bit by saying that I love popcorn just in case anybody is curious. I've been at IMAX for almost 2 years. As Rich mentioned, just before that, I ran marketing at Skydance Media and at DreamWorks. I know some of you from the DreamWorks days. I'm pleased to talk to you today about all the great momentum we have had recently with our filmmaker and studio partners. Hopefully, you've seen a lot of stuff in the marketing in the community. And of course, it all starts with our fans. IMAX has become a cornerstone of event film campaign, signifying a can't miss theatrical experience.

As you can see here in this great Times Square billboard for the recent blockbuster Wicked For Good, a real favorite this holiday season. And this [ Wild N Whacky's ] Zootopia 2 Sandy, both films contributing to our record-setting Thanksgiving results this past weekend. IMAX has been spotted everywhere, like in the subway where this summer, you may have seen this giant Mission Impossible signage or many of you have been traveling from New York.

If you've been through JFK, you may have seen this tran takeover. And at tentpole premiers as some of the year's most notable films where IMAX is front and center as our studio partners encourage audiences to see their films in the best way possible. In some cases, the IMAX brand is the most notable cinematic message. We're always working very closely with our studio partners to build these groundbreaking campaigns and create custom elements like [indiscernible] for the most anticipated film of the Year, Avatar. Now I'd like to share with you our upcoming TV spot that features IMAX.

[Presentation]

I'm going to keep talking. We recently commissioned a new study with NRG to bring you the most up-to-date brand and audience data, and it shows amazingly that 76% of moviegoers are more likely to see a film in a theater if they know it's an IMAX release. Plus this is a great one. IMAX continues to add value to the life cycle of these films with 70% of moviegoers saying, they're more likely to watch a film when it comes to a streaming platform if they know it was released in IMAX.

The study shows that IMAX brand awareness is on par with top well-known entertainment brands like Spotify, HBO Max, ESPN and Pixar, but with even stronger fan engagement. Our fans are really passionate and recommend IMAX with the same level of advocacy as top tech streaming and global consumer brands like Nike. IMAX is known for building community at the scale of the most coveted brands in entertainment, including high-quality content creators like A24, Marvel, DC, Pixar and even the game Giant Nintendo. Most importantly, our brand strength has helped power the increase in our global market share.

As Rich mentioned, our 2025 GBO is now at a record high of 3.8%, up 23% over last year alone. We're also up 16% domestically, capturing 5.2% of the box office, all on less than 1% of screens. All in all, we're very capital efficient at IMAX, getting great value from these big studio campaigns and focusing our resources on selling tickets, which benefits all of our partners in the ecosystem.

The results are clear with a record number of 5 films this year, opening in the U.S. with more than 20% indexing. All due to audience momentum. Not only do we excel with fanboys, as you might expect, but the IMAX audience is really everyone. We have significant momentum with males and females alike of all ages. We're seeing our strongest growth among teens 13 to 17 year olds, ensuring our audience base will continue to grow into the future.

This team and young adult audience contributed greatly to our 19% average indexing on recent anime hits like Chainsaw Man and Demon Slayer. Plus, we're also over-indexing in the growing core category with an average of 14% of opening weekends for this year's top hits, Sinners, Final Destination, Weapons and The conjuring. I can wholeheartedly recommend all those films.

Our total IMAX fan community is also growing with over 11 million followers on a worldwide basis, up about 20% in 2025. Hopefully, you're already following us on your favorite social channel. And if you're not, please join up. We've got a lot of great steps planned for 2022. Of course, [ posts ] with top talent are always really popular, like this surprise appearance from Brad Pitt. Sadly, we could not get Brad Pitt here today. But interestingly, 2 of our top 10 posts this year came from our growing anime fan base with a global Japanese blockbuster Demon Slayer, resulting in almost 8 million views and 400,000 engagements.

Our fans also love everything that is unique to IMAX, like this behind the scenes look at our film reels and projection process for the huge hit centers. We had over 6 million views. Plus nothing compares to Chris Nolan to spark a wave of fan excitement at any time, like even on his birthday when we posted this happy birthday post and it generated 4 million views. We're now offering [indiscernible] merchandise and apparel by recently expanding our consumer products line with seasonal branded merchandise drops, so you can get a jump on that holiday shopping at imax.com.

And overall, our box office has really been driven by a loyal, passionate fan base which sets the stage for us to transcend the ordinary in 2026. So now I'm very excited to end the session with that little preview they gave you. And I think, hopefully, you all got these 3D glasses, so you put these on. We are about -- you're going to be the first people ever to see this new piece that we are going to debut later this month with Avatar. Hopefully, you're familiar with our countdown that you saw when we kicked off the presentation today, you're the first audience to see this special exclusive IMAX countdown. So let's see if it's actually going to play. Let's go.

[Presentation]

It's hard not to get excited when you see the most successful filmmakers in the world affirming what we know to be true IMAX is a global platform that offers the best canvas for creators and the most immersive experience for fans. We've invested significantly in proprietary technology and partnerships throughout the industry. In over 6 decades, we've built huge brand equity. Our unique, highly advantageous business model ensures that we are positioned to continue growing, whether that be with the biggest Hollywood blockbusters, Chinese films that break $2 billion in box office or local language and alternative content titles that super serve our global footprint and passionate fan bases.

We take home an average of 18% of every IMAX tickets sold, and content owners and exhibitors know we're worth it. I've spent my career at the intersection of content strategy, data analytics and finance at leading companies, including Netflix, Illumination, Universal Pictures and the Walt Disney Company.

In my role as the Chief Content Officer, I strategically manage a content portfolio that has more than doubled over the last 5 years to ensure we are strengthening the ecosystem we've built among our creative partners, our IP holders, exhibitors and of course, our fans.

Today, we want to talk to you about our path for continuing to grow our business and deliver stronger results year after year. We are focused on further strengthening our indexing growing our local language business, increasing the flexibility in our slate and using [ old ] content to augment box office and increase brand affinity.

We have been increasing how we leverage data and analytics with strong results, and we have huge opportunity to use AI to further improve our capacity utilization to meaningfully increase our box office and revenue. Partnering with me is our new Head of Global Distribution, Heather Morgan.

Thank you. Good morning, everyone. Hello. As Rich mentioned, I've spent my career in theatrical exhibition creatively programming content and designing experiences that drive audiences to the big screen. Today, I'm absolutely thrilled to have had the opportunity to leverage this expertise on a global scale, partnering with our incredible leadership team to shape the future of IMAX while continuing its legacy.

The position that we hold today at the very center of the film ecosystem has been decades in the making. Jim Cameron worked shoulder to shoulder with IMAX and perfecting how to shoot in 3D for the original Avatar. Michael Jackson, Moon walked across our office while working on his 2009 concert documentary, this is it. The history of IMAX could fill volumes. But our story is just getting started.

And now we're investing in future generations of filmmakers, working closely with Ryan Kugler, Michael B. Jordan, Zach Kreger, Greta Gerwig and many others to write the next chapter. Working with brilliant creatives, both within and outside of IMAX, we curate content for our platform to reach more than 80 million fans through over 250 exhibition partners on 1,800 screens worldwide and counting.

Today, Jonathan and I are excited to share IMAX's strategy to offer a unique, diversified global content portfolio that mobilizes audiences and builds affinity for the IMAX brand. Now that affinity may begin with our filmmaking partners, but the studios and IP holders that supply our content are critical to our success. We have vastly expanded and deepened those relationships over the past 5 years.

Several years ago, we relied primarily on a small number of Hollywood studios to source our content. And while Hollywood remains the strong core of our business driving roughly 65% of our global box office, we've dramatically expanded our roster of partners to meet the evolving tastes of audiences around the world. We now actively partner with more than 60 content owners worldwide. They represent streaming platforms, studios of every size, music labels, major league sports teams, video game developers and more.

Audiences today are resounding in their feedback. They want optimal experiences, and they want maximum variety. IMAX gives them both. From Hollywood tentpoles like Avatar and breakout hits like Sinners to local language juggernauts like [ Najat 2 ] and iconic concerts like the Grateful Dead to inspiring documentaries like the Blue Angels, we have increased the number of films and events that we program, reaching nearly 125 new pieces of content this year. And that isn't everything we play. It's new pieces of content only.

If you include every single event that's played on our screens this year, it totals over 260. All of these events coalesce and puts us on track to deliver more than $1.2 billion in global box office. As Rich mentioned, this week, we broke our company record for the highest global box office achieved in a single year, unseating 2019 with $1.13 billion. And as Anne shared, our market share is at a record high. This momentum will continue. Next year's slate looks incredibly strong, anchored by 5 massive tentpole titles that are all deeply IMAX-centric, Avatar: Fire and Ash, the third installment to our 2 highest grossing films of all time, will lead our start into the new year.

As Mark mentioned, this afternoon, before audiences anywhere, we offer you the opportunity to watch this cinematic masterpiece, the very best way possible right here in IMAX. In May, we'll bring you The Mandalorian & Grogu. In close collaboration with Director, Jon Favreau, we did indeed build custom version of [ Apple Vision Pro apps so that he could frame and optimize shots specifically for IMAX, while onset in real time. In July, of course, we're going to begin the The Odyssey with Christopher Nolan, the first narrative film shot entirely with IMAX film cameras.

And as Rich mentioned, in July, exactly one year from the release of the film, we put tickets for The Odyssey on sale in 26 of our 70-millimeter film locations and nearly all of them sold out within an hour. His last feature, Oppenheimer grossed more than $185 million in IMAX box office representing a staggering 22% of the film's total gross. We believe that the sky is truly the limit for The Odyssey.

Next Thanksgiving, as you've heard, will bring you Narnia from Greta Gerwig, an IMAX exclusive event that has all the makings of the global cultural phenomenon that she created with Barbie. And rounding out the year, we'll have Dune Part 3, the first denis Villeneuve saga that is captured with IMAX film cameras. There was such demand for its predecessor Dune Part II that some IMAX locations were showing it literally around the clock and the anticipation for this next film is even higher.

There is far more than that in store for next year. If you were in an IMAX auditorium over Thanksgiving just as I was, then you saw the same thing I did. Excited kids, teams and moms, packing the house to watch Zootopia and Wicked, along with all the dads who are pretending like they didn't want to be there. Those 2 films delivered -- you're laughing, you know it's true. Those 2 films delivered a combined $40 million in IMAX box office, becoming the highest grossing Thanksgiving weekend in IMAX history, exceeding last year's record, as Rich said, by 70% proving that families, not just fan boys want to see their favorite franchises in IMAX.

For them, we have multibillion-dollar franchises, Super Mario, Toy Story and Minions, all returning to IMAX in 2026. And with video games looking like the next big IP driver of blockbuster movies, we'll have Mortal Kombat II, Street Fighter and Resident Evil. There is much more on next year's slate than I could probably cover today, but I would like to end with something special. The King of Pops Heart thumping biopic Michael with his nephew Jafar Jackson in the starring role. I could try to describe to you how epic this film is going to be, but there is literally no way that I would do it justice. So instead, I would very much like to show you, you are the first audience anywhere in the world to see this exclusive clip of Michael.

[Presentation]

That's good. It's so good. All right. As you can see, the Hollywood lineup for 2026 does indeed look amazing, but we are not stopping there. In the clear sign of demand for our platform, our 2027 slate is already over 50% booked, truly an unprecedented milestone for this company. And the emerging quality of that slate is outstanding. To give you just a small taste, we'll have Miami Vice from our phenomenal partner, Joe Kosinski, who pushed the envelope of IMAX technology with both TOPGUN MAVERIK and Apple's F1. We'll have Star Wars: Starfighter, starring Ryan Gosling. Our team visited the set and the film is poised to recapture the imaginative tactile, swashbuckling spirit of the original trilogy.

We'll have the Legend of Zelda, a long-awaited live-action adaptation of the iconic video game series full of lush world's heroic scale and a mythic story that fans have been living inside for decades. And of course, 2 wildly anticipated Saga conclusions, Spider-Man: Beyond the Spider-Verse and Avengers: Secret Wars. Once again, leveraging the immense demand for our platform to create unprecedented long-term visibility into our slate, we have actually already begun locking in select titles for 2028.

To name just one for today from Director, Sam Mendez, will have the Beatles, 4 interconnected theatrical biopics, each telling the captivating story of the band that created the mania from the perspectives of John, Paul, George and Ringo. Now you may be thinking that this sounds like a lot of film and you would be correct. With just 1 IMAX screen per theater complex and only 52 weeks in the year, there are far more studios and filmmakers who want their films to be released in IMAX than we could ever accommodate.

To maximize our utilization, we are implementing a dynamic programming strategy where multiple Hollywood titles and events play together on screen, such as Wicked For Good and Zootopia are doing currently. This is a notable departure from the way we operated just a few years ago and is just one of the many avenues through which we are proactively maximizing the value of our platform.

Another avenue is our film for IMAX program in which films are shot with IMAX cameras and are specifically created to be seen in our format. This means that we, the filmmakers and the studios are all telling consumers that the very best way to experience these films is in IMAX. As you heard in the video, Ryan Kugler said, these films have an expanded aspect ratio. This is exclusive to IMAX, which means it isn't just the same image made larger. Moviegoers are actually seeing more picture in the frame, images they wouldn't see in any other format. And when this happens, it drives meaningful results.

When a title is filmed for IMAX, we see 28% higher IMAX indexing. In 2025, 4 filmed for IMAX titles opened over $30 million with 20% indexing, which were centers, Mission Impossible, F1 and Tron: Ares. This year, our 10 Hollywood film for IMAX titles generated $442 million or about 35% of our IMAX global box office and every single one of those landed in the top 20 highest grossing films of the year.

Our positioning of these films drives greater interest, greater conversion and greater box office. IMAX doesn't just choose tentpole titles. We create tentpole titles. In just 3 short years since we've launched the Film for IMAX Program, it has become arguably the most sought after and influential seal of quality that this industry has to offer. We have 12 Film for IMAX Hollywood titles slated for 2026 and 9 already identified for 2027.

And while we can't tell you absolutely everything that's going to be playing on our screens in the years to come, I can tell you that it extends far beyond the boundaries of Hollywood.

We continue to open our aperture, expanding into new awe-inspiring experiences across the creative spectrum. While space is limited and content options are abundant, we believe there is room for more seats at the IMAX table, specifically in the form of expanding tenerships with the industry's leading streaming companies. We've positioned ourselves as a preferred partner for streamers, as a premium out-of-home experience that is differentiated and that announces a film is truly cinematic. This year, we partnered with Apple to bring Joseph Kosinski's octane-fueled F1 into our theaters, propelling the film to over $600 million worldwide.

IMAX alone generated over 15% of that box office. This past October, we partnered with Netflix to bring Guillermo del Toro cinematic Frankenstein to select IMAX locations around the globe, and we hosted multiple live events with Guillermo and Star Oscar Isaac in our theaters. And of course, in November, we are bringing visionary filmmaker Greta Gerwig's bold, reimagining of the world of Narnia, exclusively to IMAX screens around the globe as a film for IMAX title.

Within the first month of me joining IMAX, as Rich has mentioned, I had the privilege to work on structuring Narnia deal with Greta and our partners at Netflix. It was a fortuitous opportunity given my background. And I'm still not sure if this was the primary reason that Rich hired me. But be that as it may, this was an exciting proof point right off the bat for me that IMAX is an essential part of the movie ecosystem and we're positioned to execute groundbreaking deals that no one else can deliver.

We have one of the most singular creative voices and commercial forces and film, making a truly epic blockbuster film that will only be available in IMAX for fans around the world. Ted Sarandos was asked why Netflix had partnered with IMAX on Narnia, and if this was a change to the Netflix's approach to traditional theatrical windows. Ted's response was the following: "I doubt anyone has a screen as big as an IMAX screen at home. It is a differentiated consumer experience." We couldn't agree more with him.

Over the next 2 years, we already have 4 films from Amazon MGM Studios confirmed on our slate. We began the year with Mercy starring Chris Pratt, followed by project Hail Mary, the film adaptation of the New York Times #1 best-selling novel starting Ryan Gosling. And in 2027, we have the The Thomas Crown Affair directed by and starring Michael B. Jordan. Streaming and technology companies see strong brand alignment with IMAX as we are a premium tech-driven offering focused on pushing traditional content boundaries.

And we reach a worldwide audience in ways that no other company can do. Local language content is something we are uniquely positioned for given our footprint of 1,800 locations in 90 territories. With this global footprint, we serve an international fan base and our local language initiative delivers on 4 key pillars: First, it delivers more of what fans are looking for as we're seeing in the increased results in home territories. Second, in certain circumstances, these titles can become global hits as we've seen with Demon Slayer, Chainsaw Man, J-Hope, Hope on the Stage and even the release of the classic studio Ghibli title Princess Mononoke.

Third, local language titles improve our scheduling and flexibility and can help us sustain our results even during periods where Hollywood titles aren't at their strongest. And last but definitely not least, local language titles are particularly valuable to our exhibition partners and our commitment to growing this vertical continues to provide invaluable support to our sales team and expanding the footprint. We are on track to deliver a staggering $400 million in global local language box office, representing 37% of our total performance.

To put that in context, in 2019, we delivered just $131 million from local language titles. By the end of this year, we will have distributed approximately 68 local language titles, originating from 15 different territories, and we will continue to grow the volume and footprint in 2026 and beyond. This year, in South Korea, 40% of our IMAX box office has come from local language titles. In Japan, that number is 67%. And in China, it's 74%. And audiences want to see more of their local films in IMAX.

All right. Now is the part of my presentation where I get to throw just a bunch of data and stats at you. So strap in, please. We really could do this all day. So I'm just going to highlight a few extraordinary performance metrics, which illustrate the value of local language titles. '25 box office champ Ne Zha 2 delivered a staggering $167 million in IMAX box office. And in response to fan demand, we played the film in 27 markets worldwide, including 2 runs in North America. Last month, Demon Slayer: Infinity Castle opened in China, delivering the highest IMAX opening weekend box office attendance and indexing ever for a Japanese title in that market.

At $95 million, it is now IMAX's second highest grossing local language release of all time behind Ne Zha 2. And it isn't just new releases that fans want to see. They also want to see their favorite classic films presented with a never-before-seen level of quality and scale. We recently finished a phased global release of Studio Ghibli 1997 Classic Princess Mononoke, which generated over $15 million in IMAX box office.

Prior to Demon Slayer, Princess Mononoke earned our biggest opening weekend for a local language title ever in the United States on a film that's nearly 30 years old. But we aren't just standing pat and doing what we've always been doing. We are looking to innovate and expand our commitment and our moat in local language content. Today, we are excited to announce a long-term deal between IMAX and GKIDS to extend our partnership on Studio Ghibli titles.

Beginning in 2026, we will be releasing multiple titles from Studio Ghibli with more details to come. The future of anime has never looked stronger and IMAX is strategically positioned to be an integral part of it. In addition, content exclusivity is a key component of our local language strategy. We are leveraging our strength to secure exclusive windows and ensure we are the first place where fans can view their favorite films and events.

Last month, we exclusively debuted the domestic release of K-Pop sensation, J-Hopes's concert film Hope on the Stage. Last night, in partnership with GKIDS, we exclusively debuted Jujutsu Kaisen,, execution Omnibus in the U.S. This Monday, in partnership with Neon, we will be the first and only screens showing the North American release Of No Other Choice. We're also further expanding film for IMAX into local language film making, releasing in time for Diwali 2026, Indian Cinema Mogul, Namit Malhotra, brings Ramayana Part 1, an adaptation of India's iconic Epic and the most anticipated Indian film next year.

The momentum continues as Oscar Winning Director, S. S. Rajamouli, India's most commercially successful filmmaker and the Director of RRR unveils his next film, Varanasi, followed by Ramayana Part II during Diwali 2027. Both will be filmed for IMAX.

And in Japan, we are expanding our partnership with Toho on the first film for IMAX Japanese title and we will be excited to bring you more details on that title very soon. Year-round, we provide fans unforgettable experiences beyond theatrical features, ranging from music and concert films, sporting events, gaming tournaments and rereleases of iconic films often never before seeing on IMAX. Alternative content drives not only incremental box office revenue, but brand affinity among audiences beyond regular moviegoers.

Just this year, we've released titles from The Grateful Dead, Prince, Depeche Mode and Pink Floyd, to name a few. And as we mentioned earlier, these events also drive increased capacity utilization and efficiently fill gaps in the Hollywood slate. Our teams jokingly last August old content August, but it's no joke that music and rereleases carried us to year-over-year domestic box office for the month that was 117% better than the exhibition industry as a whole.

By year-end, our alternative content events will have generated over $30 million in incremental box office, an immeasurable return in fan engagement. We are doubling down on these efforts, projecting nearly 20% growth in the box office that these events will deliver next year. Music, in particular, has delivered great results for us with titles like becoming Led Zeppelin and Pink Floyd live at Pompe. Becoming Led Zeppelin was released exclusively for a week in IMAX and was the #7 film in the domestic box office on its opening weekend.

Pink Floyd was the #6 title where IMAX contributed 82% of its opening box office on a weekend where we were playing the incredibly successful centers for most of our shows. It is now very possible to release a film to great results exclusively in IMAX and then to use that IMAX release to launch additional value throughout the rest of the life cycle. And we're not just telling ourselves this. The industry sees it as well. We are excited to announce that in February, just as we did with becoming Led Zeppelin, we are partnering with Legendary filmmaker, Baz Luhrmann and Neon and Universal Pictures for a 1-week exclusive IMAX run of EPiC: Elvis Presley in Concert.

I saw this film, and it had me singing and dancing in my seat, which I promise you're glad you weren't there to see that. But given how great the film is in IMAX, we do want to share this trailer of what the King will be bringing to all of you and all of our fans in February.

Can't to see it again. We've delivered over half of our top 20 highest grossing music events in just the past 2 years. And speaking of music exclusivity, we are continuing our partnership with Universal Music Group's Mercury Studios. We've already successfully collaborated with Mercury on Queen Rock Montreal and Prince's [indiscernible] both exclusively in IMAX. And next week, we're Rereleasing Stones at the MAX, the groundbreaking 1991 concert film shot with IMAX cameras that many have called the greatest concert film ever made.

And in February, we'll have Eric Church, Evangeline vs. the Machine comes alive. The concert film for his Grammy-nominated album, again exclusively in IMAX. And while some artists work the stage, others [ create on the court ]. I'm very excited to announce our next original documentary project, Stephen Curry: Portrait of an Artist, directed by acclaimed filmmaker, Gotham Chopra in a collaboration with the NBA, Tom Brady's Religion of Sports and Stephen Curry Unanimous Media. We are currently in the market with this project and expect to announce a distribution and streaming partner by early next year under the advantageous multi-window model we established with Blue Angels.

What should be clear by now is that IMAX is in a different position than we have ever been before. with our best-in-class end-to-end technology, our deep filmmaker and studio relationships and our global footprint, we offer something no one else can. And with these differentiators, we are able to set our own destiny, and optimize our slate in ways that would have been impossible just a few years ago.

We are redefining what success looks like in our industry. Around this time last year, we shared our expectation for our 2025 box office to hit $1.2 billion. What would be a record performance for us in a year that was not expected to set records at the overall box office. Now I remember meeting with a senior executive at one of the major studios, someone I've known for over 15 years. And he mentioned this figure to me. He rolled his eyes and told me that he didn't really know what we could be basing that on, but good luck to us. Well, we're happy to share that we are well on track to exceed $1.2 billion of box office. This week, on December 2, we already exceeded our previous best year ever with nearly a full month to go, and Avatar: Fire & Ash still to be released. We definitely don't take anything for granted, and we know we must continue to execute on all fronts, but it is clearer than ever that if you're a creator or a content owner, there is no better, more immersive global platform for your work than IMAX

Thank you. .

All right. Thank you, Jonathan, and Heather. We are very happy to welcome to the stage now. IMAX China's CEO, Daniel Manwaring.

So for those of the folks here and at home who don't know you, can you give a little bit of a background on your experience in China?

Sure. So I've been in China for 20 years. I started my career in finance. Before joining IMAX, I was with CAA for a little over a decade, as Rich mentioned, leading our Motion Picture division there as well as our film finance group. I represented Chinese talent. I've worked with Chinese studios now for very long time, probably over 12 years.

And I was also fortunate to have met my wife and she is also in the business. And so we're a filmmaking family.

Yes. Not for nothing, your father in law if I may, is considered the greatest filmmaker in Chinese history [indiscernible]

Also my words, but yes, I agree.

So tell us a little bit about the IMAX China operation and what your team looks like for those of us who aren't familiar.

Yes. So I think 1 of the to being successful in China is localization. And we've got a fully localized business there. We are, I think, the epitome of what a Western brand is in terms of brand power and all the stuff that I'm going to talk about with our releases and our content. But we -- at the end of the day, we run a very localized mission. So we have 100 employees there. I'm the only westerner who oversees our offices Shanghai and in Beijing. But everything from our NOC offices, as we mentioned earlier, to our marketing divisions to our accounting, I mean, these are all Chinese employees. And I think that's a real key to being successful in China, you have to localize.

So looking At 2025, as it almost wrapped up, how has the year played out versus your expectations? And what do you see ahead for 2026?

Yes. We've done a phenomenal job this year in entertaining Chinese audiences. What I love about this year is the way the content is looking like it's going to sort of diversify towards the end of the year. In terms of a level of local language Chinese content, which will probably make up somewhere between 58% and 60% of our total box office, around 35% being Hollywood. And then from Japanese animation, which has had an incredible run in China.

Just looking at some of the numbers, we've had 40 million people come through our cinemas in China and that's up over 63% year-over-year. A lot of that was driven by, obviously, an incredible market share. Year-to-date, we're at 5.3%, which was driven by a 73% year-over-year increase in our box office compared to 2024. So the numbers say a lot. We're really proud of that. Hong Kong, Taiwan, Macau, they're also going to have record years this year.

It's been really great to see our platform there, just elevate and get ready for next year. And we've talked about some of the successes. Obviously, Ne Zha 2, we were really successful in capturing a huge portion of that box office. And it wasn't by accident. We've got a really fortunate position with our brand in China where we get to see these films ahead of time. And we knew well in advance. That was going to be a whale of a movie, and we positioned properly. We're really proud of that number. But then Formula One coming in, in June and doing 42% of that box office on less than 1% of the screens, and Demon Slayer. And then obviously, most recently, Zootopia, which still has very long legs and that's all before Avatar 3. So we've got a lot to look forward to.

Yes. And speaking of any sense of what's to come in '26. .

Yes. So next year, Chinese New Year falls for February 17, which is a little later than normal, we are getting 1 extra day, which is a really positive thing. We most likely won't start to see films date for Chinese New Year until around January. That's typically very normal. Right now, it's kind of like all the horses are in the pen and people are trading horses for which slots are going to go Chinese New Year and versus the summer. But we do have a pretty good idea of some titles that are going to be coming up for that period. .

Some of them, I'll mention, [ Pangu Jean ], which is a big war epic movie, not dissimilar from like a Brave Heart as anticipated to possibly go Chinese New Year. [ Jangimos Scared Out ] will very most likely go during Chinese New Year. That has got an incredible cast. I mean it's -- to Rich's point on Odyssey, it's like a red carpet-type cast. We also have Pegasus 3, which is a franchise that we've done very well in, in the past. The lead actor of that is a gentleman named [ Shentong ] who is probably one of the biggest actors in China and has not had a movie this year. So it will be the first time audiences get to see him again.

The Boonie Bears franchise, which is always a consistent winner during Chinese New Year as well as potentially a spin-off of [indiscernible] movie, who did the Detective Chinatown series, which we have a long history with being very successful. So there's a lot to look forward to. And that's just 2026. And we're also finally -- and this is pretty rare to be honest, we're seeing some transparency even into 2027. So I can tell you now, The Wandering Earth 3 and 4 are actually currently in production. I visited that set a few months ago, and it is just something like nobody seen before. I mean this is may not be on the level of Narnia, but for China, it is massive.

Also, the 3 Body Problem, which was a series that maybe many of you have seen on Netflix. That is widely known as China's most famous and sought after SciFi that is going to be directed by Zhang Yimou as well, and that will be likely releasing in 2027. Those dates again, not confirmed, but it's going into production, and we're pretty hopeful of that.

Godzilla Kong, another one of those coming to China. They have always done really well for us there, Frozen III. And then there's another film called Death Stranding, which is based off of a gaming IP that has a lot of huge following in China that I think could also see some success there.

So when you get behind some of those eye-popping box office numbers that you mentioned earlier, what kind of content is working at the Chinese box office. And then to answer the eternal question, is Hollywood back at the Chinese box office?

Well, I'll answer the second question first. I think last weekend was a nice answer to that question. We're doing over $20 million on Zootopia II was a really strong signal that, yes, Hollywood will always have a place in China. And I think the key to your first question is what leads to a successful movie in China.

Number one, it's got to be an event, right? It has to be something that culturally resonates with people. It has to feel like an event. It has to feel big. And that's something that plays to our advantage tremendously. I also think that people are -- for many years, there was a lot of ways in which Chinese studios could kind of manipulate the system a little bit, whether it was purchasing your own tickets on that first Friday to show a huge opening day or manipulating some of the word-of-mouth statistics. That's all changed. We've seen a large return to normalcy.

And that's a really healthy thing for the market, particularly word of mouth. I mean, word-of-mouth is driving everything in China right now. And that transparency between what people feel when they walk out of the cinema and what's on social media only seconds later is just so narrow now. Again, that's somewhere where we are really fortunate to succeed because as of now, we generate about 30% of the word of mouth on any given IMAX title. And what I mean by that is if you go on some of the ticketing apps, you'll see if the review was done by someone who watched the film in IMAX, there's a small IMAX logo right next to it. And those reviews rise all the way to the top.

They're the most thorough, they're the most honest, they're the most transparent and most importantly, authentic. So we make up a big part of the word of mouth. A lot of the ticketing platforms really rely on us for that, and it's a great position to be in.

Yes. And so how do you collaborate with filmmakers and studios to create those events [indiscernible]

Sure. So it starts really early. It starts as early as the development stage actually. We will oftentimes go into meetings with a Chinese film maker, and he's still finishing the script and he's talking to us about where he wants this aspect ratio to come in and how it can be presented on IMAX in the best possible way. I'm doing dozens of set visits throughout the year, mainly focused on our film for IMAX titles, of which this year we did more than any other previous year.

But we're a real partner during the development and production process. And then obviously, it doesn't end there. It actually gets even more important when we start to talk about the distribution. Now our platform in China contributes the second highest amount of box office, second only to Wanda, which is our largest client. So we command quite a bit of weight when it comes to distribution and the studios and the filmmakers make sure that they get in with us early to ensure that the distribution of their film is done properly on IMAX.

So yes, that's a little insight as to our process.

And also give us some insight into the role of China Film Bureau and the government and what our relationships are like there?

Sure. Well, I'll start a little bit with policy. That's always been a topic of interest is what is the policy like in China. And I have to say it's extremely favorable right now. We're seeing basically almost every single film that wants to get is getting in. And not only is it getting in. In fact, I think this year, every studio film that was asking for a day and date release was able to get that. So the policy right now is let's get back to business. They -- the film Bureau has their own KPI. They're trying to maximize box office and they want to do whatever is possible to bring more foreign content in as well as boosting the Chinese language content.

Now with respect to our relationship with the Film Bureau, I have to say it's a pretty unique one. They see us as a local company in many ways, but they see us as a foreign expert. So we're invited into backdoor sort of rooms and meetings that most foreign companies are just simply not invited to. Very often, they're leaning on us when they're making policy changes when they're thinking about how to grow box office, we're part of those conversations. So it' a very unique position to be in, and we work with them very, very well, and we don't see a change anytime soon in that progress.

So shifting gears a little bit, what is the strategy for network growth in China?

Sure. So currently, we operate 800 theaters in China. We span across 220 cities. 90% of those cities have a population of over 1 million. And in fact, 17 of those cities have a population of over 10 million. So it's easy to think, well, 800 theaters in China. What does that really mean? When you look at the numbers of the populations of these cities, it is really, really big. .

Now going back to your question about growth, we're going to be really surgical in how we grow. We are already looking at replacing a lot of current PLFs there. In fact, we signed a deal with Wanda earlier this year that I think represents certainly a part of how we intend to expand. Part of that deal was going in and replacing a large number of their own PLF, which is called Wanda Prime as well as a lot of the top Dolby sites that Wanda also operates.

So we really like that. We really like targeting high-traffic areas, cinemas and complexes that have a proven history of box office that we can model out really well and going and stealing theaters away from our competition. In addition to that, though, I think there's also a lot of other areas to grow in. We just recently opened a theater in Urumqi in Xinjiang. We have a theater that's doing very well in Tibet. China is a big place. There's always going to be these new areas in which you can grow in, and we're constantly looking for those as well. So it's sort of a bifurcated approach on doing upgrades and renovating and taking over existing complexes as well as continuing to keep an eye on new construction and new areas.

So Wanda, as you mentioned a number of times, our biggest -- still our biggest exhibition partner in the world, how is that relationship changing and evolving and growing.

Yes. Our relationship with them is phenomenal. As many of the folks here might know, Wanda Film was acquired by Ruyi earlier this year. We had worked with Ruyi for many years, even before this acquisition. The transaction was backed by Tencent, which has offered a lot of great synergies with Tencent. We have worked with them for many, many years on the film side of the business. But now we're doing even more. We've done 2 of the Legal Legends matches for which Tencent owns [ Rio Games ]. We're looking to do a lot more on the e-sports front. We really like that demographic. .

And Wanda is they see us as a strategic partner to their growth. Post the transaction of Ruyi and Wanda, we've seen Wanda start to upgrade their lobbies faster than ever. I think we even have an image here of one of those lobbies. They're really in the process of just leveling up their entire network, and they've made it very clear to us from day 1 that IMAX is a crucial part to that.

So fortunately, we're in a fantastic position with them right now.

I missed 1 thing. Sorry, I want to mention this because I think probably today, we'll be announcing a strategic partnership with them to go out and develop more merchandise. So because of these beautiful lobbies, there's a lot of shelf space that is available there to bring more merchandise into those those systems. And it's going to be a combination of sort of our own merchandise that Anne showed a little bit earlier, but we're also going to be really focusing on the localization of the IP that makes sense for China there. So whether it's co-branding, small figurines, with Chinese characters and IP that resonates or partnerships with Japanese companies who are releasing films and have certain products that we know the Chinese are going to be really excited about.

Obviously, [ La Bubu ] came out of China. They're very good at making acute fuzzy things that people buy. So we see that as a really interesting opportunity and a chance for us to open up a new realm of getting closer to our customers through the use of that merchandise.

So how do you plan to do that overall over the next couple of years? What are your strategic priorities? And what do you see as the greatest opportunities for IMAX China?

Sure. Well, first and foremost, network growth. We're never going to stop growing as well as market share and box office growth. Those will always remain our highest priorities, no matter what. So I've talked a little bit about, I think, how we're going to approach that. We're also going to be really doubling down on digital. We see that as an incredible force in growing our market share. We've used a lot of new data techniques this year to get to this record high market share that we've had so far.

So we're going to be focusing on digital. We're also going to be really looking hard at our B2C relationship, our direct relationship with the customer, forging that consumer journey that starts in the cinema, but really follows a life out of the cinema and connects to their WeChat, connects to the products that they buy, developing that ecosystem around the IMAX brand.

One thing that just constantly gets me excited, and I see this often. In fact, I was talking to someone last night who had also seen this on their feed in social media. Very often, you'll be swiping on TikTok or one of the local content platforms, and you'll see people taking pictures of their IMAX tickets. And it's almost like a badge of pride that they bought the IMAX tickets and they're boasting about it on social media.

I mean you see it throughout -- We've seen it tremendously through Zootopia, but you see it during Chinese New Year. And that to us, I think, is just such a compelling direct example of how influential our brand is in China. So continuing to grow that stickiness with the consumer. I think is going to be something that we look really hard at as we grow.

Great. Well, thank you very much, Daniel. Daniel Manwaring, CEO of China.

Thank you.

Morning, everyone. Thank you for being with us. As Rich mentioned earlier, I've been with IMAX since 2012. And over this period, by main mandate has been to grow the IMAX network. So today, I have to start by telling you that at no point in time in these 13 years, I've ever seen an appetite for IMAX as strong as I've seen today. And at no point in time, I've ever seen an opportunity for future growth as big and as global as I'm seeing today.

And this obviously makes me very excited. It's really that simple. More cinema operators want more IMAX systems. And given how markets and consumer trends are evolving, we see more opportunity than ever before to add more IMAX locations to our estate. So today, I briefly want to touch on why this is happening. I want to give you some insights on the opportunity as we see it. And then I want to tell you, of course, what we're going to do to capture that opportunity.

In my view, the best and most concrete proof point of the appetite for IMAX is our growth trajectory over the years. IMAX went from being in a handful of locations in a couple of markets to now having you heard it, 1,800 venues in 90 countries all around the world. Sometimes, I like to remind myself that we are actually in more countries than Starbucks is. And it's about to get even better. I mean if you look back, you can see that there have been some pivotal points in our history when our growth model really got supercharged.

One of them, if not the biggest one of all, was the first Avatar release in 2009. That's when IMAX went from selling 35 systems a year prior to then selling 220 systems the year after that Avatar release, quite incredible. And what we're seeing now is that we're writing to another 1 of these historical moments. We are heading into a 12-month period where the sequencing of extraordinary IMAX titles, we really supercharge our growth.

Some of those titles are the ones that were referred by other earlier. I mean Avatar: Fire & Ash, then

The Mandalorian & Grogu, The Odyssey, Narnia, Dune Part 3, we really expect peaks in box office, which drive peak in sales and will ultimately drive peaks in our growth. And since I'm seeing the Narnia, [ Avatar ] up on screen, I've got to tell you I was also privileged to be on the Narnia set back in September in the U.K. with Rich and of course, I cannot tell you anything. I would like to tell you a lot of things, but I'm going to mention that I've rarely seen anything of that quality and that scale. So I'm really looking forward to it.

Now let me tell you why we are experiencing this extraordinary momentum. There are many factors that drive the opportunity for IMAX. But the fundamental reason lies in the unique end-to-end model that IMAX operates, which is essentially a self-feeding virtual cycle geared for growth. The more IMAX systems we put out there, the more relevant the format becomes for all the stakeholders in the industry, starting with filmmakers. Filmmakers commit to IMAX, and that enables IMAX to have a very special unique version of the movie on our canvas, exclusive to IMAX. With that in mind, we see audiences seeking out that very special content.

We see audiences seeking out IMAX screens, and that drives higher box office in IMAX. Higher box office means higher revenues for our exhibitor partners who want to do more IMAX locations. And the model keeps feeding itself. If you allow me, it's like a multiplier effect, the more resources you put out there in the marketplace, the more growth you get.

Very importantly, our model is really geared towards delivering benefits and tangible value to all the stakeholders in the ecosystem. We want filmmakers to leverage IMAX to put their creative vision on our canvas on the best possible screens and presenting the best possible quality. We want studios to leverage IMAX to use their box office. We want exhibitors to use IMAX to bring more audiences into their theaters.

We want to enable everybody to deliver an exceptional entertainment experience and make more money while they're doing that. The relationships that we have with this stakeholders are really critically important to what we do at IMAX. With cinema operators, for instance, we're not in the business of selling a piece of hardware and then off we go to the next transaction. Our philosophy is to treat our clients as partners. So we go into every deal into every transaction with a view opening a venue that will then deliver value to that partner.

And then we liaise with that partner over the years to make sure that, that is indeed the case over time. Look, in the same way as Rich mentioned, we have relationships with world's best filmmakers. We also have relationships with the world's best cinema operators. These are relationships that have taken us years, sometimes decades to build and many flights in my case.

But it's also what makes IMAX what it is and it makes our model almost impossible to replicate. We curate these partnerships. For example, for our exhibitor partners, we run an event for our 40 top clients around the world every year, we get them together for an off-site gathering, inviting the CEOs of the world's best cinema operators so that we can discuss key topics affecting the industry, but also very importantly, so that we can spend the time together. It has become a family for us.

We have chief executives flying from all over the world, from Australia, from Japan, from France, you name it. And we invite very special guests, industry executives, talent and filmmakers. Guests in previous additions included the likes of Christopher Nolan, Tom Cruise, Denis Villanueva and Joe Kosinski and many, many others. We also leverage key industry gatherings, but in a very different way than anybody else does.

Speaking of flights tomorrow, I have a joy of enduring a 20-hour journey to get from here to Bangkok for CineAsia, which is the most relevant conference in that part of the world. We're going to be there, but we're not going to do what everybody else does. We're not going to have a booth on the trade show floor, we're not going to do a PowerPoint presentation. Instead, we're going to make a point of meeting face-to-face with all the key stakeholders in the industry over there, specially exhibitor partners. We're going to understand how their markets are doing. If their IMAX locations are delivering the performance that they are supposed to.

And of course, we're going to talk about the next steps in the partnership. Not just that, though, with our positioning in the ecosystem, we're going to leverage our access to all stakeholders to introduce them to each other. For instance, we sometimes are asked to introduce CEOs of local exhibition chains to studio heads and vice versa. All of this is to say that we are really proud of how we relate to our customer base. And I actually believe that the video that you just saw is very tangible proof of how our partners are looking at IMAX.

And this approach is what made IMAX what it is today. The good news is that it works, and you don't have to take my word for it. The data speaks for itself. Especially in recent years, we have proven that we can not only continue, but we can actually accelerate our growth path. Looking at hard facts, we are on track to close 2025 this year with at least 166 system signings. To put that in perspective, that's 16% more than our system signings in 2019.

So we're doing better sales-wise than in the so-called much revered pre-pandemic year. Since 2019, we also increased the size of our network by 15%. At the point in time when, as you would know, the global cinema screen count actually decreased by 3%. So it's really undeniable that the appetite for IMAX is at an all-time high. And something I think it's worth noting is that, that demand and that opportunity is as global and diverse and balanced as it has ever been.

The appetite for IMAX is truly a universal phenomenon. Up until recently, our sales were typically driven by one or key -- or 2 key growth markets. If you look at the decade of 2010 to 2020, it was the U.S. first and then China accounting for the lion share of our signings. That's no longer the case. I mean, 10 years ago, 2016, for example, China accounted for 75% of our system signings. This year, China is on track to account for 13% of our system signings with all other regions of the world making a very material and balanced contribution to that total.

And that's a great thing because our growth story is no longer tied to 1 or 2 markets. And the same goes for our clients. Look, during a time where the industry has been facing so many challenges, we are bringing more and more exhibitor partners into our business. We see more and more exhibitors choosing IMAX. In the past 5 years alone, we've added 56 partners to the IMAX business, going from 201 partners back in 2019 to now 257 partners.

So our customer base is expanding massively. And that may seem like a small data point. But for us, it's incredibly important because we are proving that the IMAX model is viable for a very diverse array of cinema operators and not just for a handful of big chains. So that's critically important. And of course, it's not just about sales. It's also about deploying the theaters that are contracted. And we have developed an amazing track record in being able to fulfill those installations. Our growth is fueled by our ability to make those projects real.

This year, we expect to end the year with up to 160 installations, which, as you will know, is at the very top end of our earlier guidance. And as you will hear from Natasha later on, we expect this momentum to continue into 2026. But the most exciting part of the story is that we are still very far away from our end goal. Based on our last TAM analysis, we are at only 39% of global penetration by open venues. So there are over 2,700 zones that could be served by 1 IMAX of venue and yet do not have one.

And you'll have to excuse me excitement, but for someone who works in sales, this is a dream scenario. I mean we have continued appetite. We have a model that we have proven works extremely well. We have locations that keep doing better and better. And we have hundreds of places around the world that are still underserved, places where people would want to go and watch an IMAX movie, but they don't have an IMAX venue to go to. This is a very good position to be in. But I do want to tell you a bit more about that TAM analysis.

Some of you may be familiar with the fact that we tend to update this analysis every couple of years usually. So the last time we did that was 2023. And at the time, we concluded that there were 3,600 trading zones around the world that could sustain an IMAX venue. This year, we reran the analysis. And when we looked at the data, we actually concluded that, that number is closer to 4,500. You would ask why what happened? Are you guys going crazy.

And the reality is that we are in a completely different position. We are in a different position as a business and as a company, as you heard from Rich, we are in a different world in terms of consumer demand. And very importantly, with IMAX being in a different position, our clients are also in a completely different world. their performance increases as our performance improves. I would say there are 5 key main reasons for the increase in TAM. And in no particular order, the first one is certainly that IMAX [ virtual cycle ] model that I was talking about earlier that multiplier effect. The more IMAX systems we deploy, the more opportunity to add more systems because demand increase. And let's remember, markets change over time. They evolve or we understand them better.

China, I think, is a very good example. When we approached China 15-or-so years ago, at the time, I believe we thought that there was space for up to 60 IMAX venues in the territory, now we have 800. The second reason for the increasing time is certainly tied to increase the consumer appetite for IMAX and the increased IMAX market share.

It's well documented that consumer spend for premium cinema going is at an all-time high. And IMAX is taking an even larger share of that spend. So at some point back in the days, we thought that $20 million in overall box office, not just IMAX was needed to support successfully one IMAX venue. That number is now much lower because a larger portion of consumer spend in cinema going goes into premium and especially into IMAX.

We actually believe that nowadays, we need about $7 million in box office spend to sustain successfully one IMAX venue. The third reason has to do with our methodology, which I have to say it's more sophisticated than it was before. Thanks small part to the availability now of very good AI power tools that make our life easier. They let us understand way better the markets in which we trade or the markets in which we want to trade. For example, there are tools out there that we can use to estimate consumer drive times or whether in that particular area consumers are willing to spend for premium entertainment.

The bottom line is that we understand our target markets better than ever before. The fourth reason you heard it loud and clear from my colleagues, it's the content offering. It's stronger than ever before. And especially, I would say, it's as differentiated as it has ever been. The film for IMAX program allows us to put a very different version of the movie on our canvas and it's a version that nobody else can have. Our efforts in local language, for instance, are making titles available in IMAX that have never been seen in our format before. And the IMAX releases with film prints, for instance, add yet another element of differentiation that nobody else can have.

The fifth and final reason that I would quote for our increase in TAM is the power of our brand and the marketing associated with it, which as you heard from Anne, is as strong and as prominent as it has ever been. You would have now all seen those posters with the big IMAX logo, bigger than the movie title. That stuff drives demand and with increased demand comes an increase in the opportunity. So with this amazing runway ahead, how do we get to 4,500 venues around the world.

Doing what we've been doing so far is certainly part of the recipe, but it's not the old story. I should also note that operating in 90-plus countries means deploying and devising strategies that are customized for each one of these territory. So it's really difficult to generalize, but there is some common ground. So today, we identified 4 key areas of opportunity that we thought it would be worth discussing with you.

First of all, there are undoubtedly some heavily underpenetrated markets out there that deserve an IMAX venue be because the appetite is very strong. Performance has been extremely strong and yet they don't have one. These are the proverbial low-hanging fruit. In the past, we often talked about the likes of Australia, Japan, France. By the way, anyone would like to delve deeper into a specific territory, I would be very happy to do that. That's my passion and my life.

Today, we picked an example. We thought we would talk about Indonesia because we don't talk a lot about Indonesia, but it's a very good example of a market where our growth is tied to the overall growth of the industry in that particular territory. It's also a very good example of our TAM evolves over time. I mean in 2019, we had Indonesia zoned for 16 IMAX venues.

Today, we have 18 IMAX venues open and very successful. Indonesia currently has 2,400 cinema screens, serving a population of 280 million. To put that in perspective, the U.S. has 40,000 cinema screens serving a population of about 340 million. So it's undeniable that the cinema industry in Indonesia is posed to growth. The screen count will increase and IMAX is very well placed to be part of that growth.

In the past 2 years alone, we almost doubled our network size in the market. To enable this growth, we have also deployed a very customized content strategy. I don't know how many of you would know, but Indonesian audiences love horror movies. To the point that 5 of the top 10 box office titles last year were horror films. So what did we do? We made Indonesian horror blockbusters available in the IMAX format. And this had an amazing effect on the performance of our venues.

So you can expect that we will continue this effort in the years to come. We're also deeply embedded in our relationship with Cinema 21, which is by far the market leader in the territory. We are part of their considerations when they look at new venues, new projects. So with all of this in mind, we believe that Indonesia can actually sustain up to 60 IMAX venues with the main hurdle timing-wise, being, obviously, the development of the cinema and retail infrastructure in the market besides underpenetrated global markets besides that low-hanging fruit, the past few years have really shown us that the North American market continues to be an amazing growth opportunity for IMAX.

I remember having a very heated argument with someone who was telling me that the U.S. is saturated for IMAX. That couldn't be more wrong. Actually, our opportunity in North America is twofold. First of all, the big chains are doubling down on IMAX, you would have all read about our deal with AMC earlier this year, our deal with Cinemark a couple of months ago. They want more IMAX venues because they deliver again tangible advantages. We are, in fact, currently in talks with certain big players to identify the next batch of new locations that we would add to our network.

But it's not just about the big chains. It's especially in the last 2 to 3 years, have really shown us how there is a much increased appetite for medium- to small-size players. These are operators who are putting very interesting entertainment offerings out there. Sometimes they are replacing older infrastructure. sometimes they're actually going to compete with that infrastructure. And for us, this is very positive because, first of all, buying from these players widens the target market. And with that, we're able to pick the best locations to go in. But also, quite frankly, it puts competitive pressures on the bigger players, and that's very good for our growth and our model. So we believe that this broadening of target market will have really a positive impact on us in the years to come.

And when we look at where we can grow, we are also believing that existing trading zones have become underserved. And with that in mind, there is an opportunity to add more IMAX venues into existing zones where an IMAX location is already located. Let me explain this in a bit more detail.

As you may know, part of the value proposition that IMAX presents to the exhibition partners is the provision of an exclusivity zone, a radius around the venue where we commit that we're not going to open another IMAX. Over time, both exhibitors and IMAX started to realize how some markets have really outgrown their zones. This ties back to the point about the TAM changing and the increased appetite for the format. Over time, we have seen cinema operators adding additional IMAX venues within the same trading zone, quite simply because there is more demand than there was before.

As a matter of fact, across North America alone, there are 74 zones where one or more IMAX venues have been successfully added already to an existing zone and very importantly, without cannibalization to the existing venue. And we're gradually starting to see this phenomenon in other parts of the world, places like the U.K. or Japan. And we believe that there is way more opportunity in that space. We actually estimate that there are about 200 existing zones around the world that have already IMAX venue where we can successfully add at least another IMAX locations. So that plus 200 zones is part of the 4,500 revised TAM that I was talking about earlier.

Some of them are a no-brainer, like think about New York City. The entire New York City area has only 7 IMAX venues for a population of about 8.5 million. Manhattan alone has 4 IMAX venues only, all located between 69th and third Street. So there is nothing outside of that pocket. There is undeniable -- undeniably an opportunity out there with these existing zones.

Finally, but very importantly, but when we think about ways we can boost our growth, we see a strong opportunity to leverage our capital position to enable transactions that would not otherwise be possible. There are many great cinema operators out there with very viable businesses, which, unfortunately, at this specific point in time are capital constrained. These are cinema operators with whom we would like to add more IMAX venues and they would like to add more IMAX venues with us, but they have a liquidity issue, and it's a short-term liquidity issue.

So what we are doing is that we are devising new deal structures where we will look at funding certain high-performing locations where we see a very high ROI opportunity. And we believe that this is a way to get quicker, faster into better occasions that would not otherwise be possible with a win-win situation for all parties involved. I want to conclude with a brief reference to what we sometimes call the IMAX flagships.

There are some IMAX venues around the world that have really established themselves as flagship destinations. These are places that people take planes to go to, to watch a move in. Some of them is because of their architectural profile. -- some of them is for features, the screen size. Some of them is for heritage. I mean we have some locations that have been out there for decades, the BFI IMAX in London, AMC Lincoln square, the Melbourne museum.

But there are also some new ones that have been built in recent years. Grand cinema sanction in Tokyo, which is the one that you see up there is an amazing IMAX venue located on top of a high riser. And remember visiting it for the first time, it was in construction, they took me up this very narrow staircases. And I got to that lobby, and I had the most amazing view of talking that I've ever seen.

And that is the IMAX lobby and then you go into this incredible auditorium. And I thought to myself, I think people will fly from all over Japan to try and watch a movie in this space. And sure enough, I met someone a year ago who confessed that they flew 12 hours from another continent to watch a movie in this venue. So by the way, this is a venue that is regularly amongst the top 5 best-performing IMAXs around the world. And there are more. I mean, Trompalasta in Germany is the largest IMAX in the world, which has been recently built or more of the Emirates in Dubai was recently redesigned and refurbished and now has set a new bar for premium cinema going.

We believe that these projects are really important at a point in time where consumers are seeking out experiential entertainment. So we're going to do whatever we can to enable these projects in as many locations as possible. And the good news is that we have conversations currently ongoing for flagship destination theaters at least in every continent of the world. So you can expect to see more of these places that we really believe carry the IMAX brand and allows us to explain to the world what IMAX is all about.

Thank you for enduring my monologue. I hope I've conveyed why I started the presentation by saying that I'm really excited about what's going on at the moment and why I believe there has never been such a good time to be in the IMAX business. Thank you.

Please welcome Mark Welton, our Global President of IMAX theaters.

Good morning, everyone. I don't know who suggestion it was that technology has to follow both content and sales. But anyway, with -- I'm really happy to be here with my fancy title, as Rich said, I lead our global sales development and operations teams across 1,800 theaters in 90 countries and also oversee our technology and operation office in Ontario, Canada, Mississauga. And so today, I'm going to try to bring a little bit of technology to Hollywood. I've been with the company now 29 years. And really what's remained the same throughout has been the core values of our technology, which is passion, innovation and [indiscernible] quality.

Our technology, really, as I think Rich mentioned, is really the foundation of our business and really the engine that drives the most moviegoing -- the most immersive movie-going experience there is. It's really -- it really connects, I've been traveling recently and meeting a bunch of clients. And from London to Dublin to Korea, to Dallas, and it really resonated me that our technology really connects that brand we talked about to not only to our exhibitor partners, but to audiences around the world.

Really, our technology is a purpose-built ecosystem. And what do I mean by that? Well, it all starts in the sales process. Our sales teams work with our partners, and we pick the most iconic best locations there are. Then we have designers that design the locations from the ground up. We bring in our project managers. We bring in our installers, and they work with our clients to, first of all, deliver every -- open every location on time and really kind of create where the magic happens. And then so if you take the proprietary design, you take the wall-to-wall screens, the projection, the sound, the post production tools, like Rich mentioned, the camera platform and our 24-hour monitoring system, it really works in like one seamless IMAX platform.

I'm always -- I'm often asked is, do we have competitors. We do have competitors. But really, they can't do what we do. And what do I mean by that? Well, I'm going to give you just a very brief example because I'm under the gun here. I was meeting with one of our partners a little while ago, a couple of weeks ago, and we were talking about our locations, we're opening next year about the design and locations about what type of projection is sound. We are talking about the seating, the carpet, the portal, et cetera, and I was informed that they were going to put a PLF in the same complex.

So in my mind, I looked at and said, well, maybe you can save on some construction costs. And they looked at me and they said, "Well, we're just putting a laser projector in a standard box with standard sound", and that was the difference, right? They don't have 100-plus designers, technicians, engineers working daily to make the IMAX experience better. They don't have a 24-hour monitoring system. They don't have an in-house production team. And they surely don't have relationships with filmmakers like Chris Nolan and Denis Villeneuve that actually consider our camera platform, the gold standard of cinema.

At IMAX, we're not a collection of parts. We're really a end-to-end solution, as Rich mentioned, that wants to make the IMAX experience every day. Together, if you take the technology, the post production tools like DMR. If you take our camera platform our monitoring system, and of course, our global network reach, you really create a competitive moat that no one can match.

So let's talk a little bit about innovation. IMAX has a legacy of innovation, right? 40 years ago, we were the pioneers of stadium seating. 30 years ago, as we mentioned, we developed the proprietary digitally mastering DMR process that transformed film into the IMAX format. And recently, we ignited the modern 3D revolution with titles like Avatar. And we continue to evolve today. We have worked every part of the IMAX experience over the years. We went from the design. We went from film projection to digital projection, to laser projection both for our iconic sites and for our commercial sites.

We actually went from film cameras to digital cameras and actually back to film cameras, which I explain later. And that evolution still continues today. As I said, with our DMR process, which again takes out the grain of every frame makes a sharper resolution, as I think Rich mentioned, we have moved it into the cloud. This has been a real catalyst. It gave us more creative control, quicker delivery and a real catalyst for our local language program. And we've talked a little bit about our NOC centers, network operation centers. But if you're in Mumbai or if you're in Springfield, Illinois, our NOC centers in Toronto and Shanghai monitor the systems 24/7, 24 hours a day, 7 days a week in real time.

They track the brightness, they track the performance, they track a calibration. And now recently, we've used AI to bring it together and to help us prevent problems better -- predict problems, and prevent solutions -- prevent problems sorry. This really has helped to reduce our costs. because, as I said, it's -- I think Richard mentioned this, but it helps us. We have depots all over the world, so it helps manage our [indiscernible].

We have technicians all over the world, so we can better organize them and have them ready for business when we need it to them. And that's really -- what's really transpired now is our system uptime is 99.92%. Now think of this, 99.92% in 1,800 theaters in 90 countries. It's just amazing. And that same spirit fuels our partnerships with filmers that really push and challenge us, pushes our technology forward and sets IMAX apart. And nowhere does that commit more evident than working with one of the greatest filmmakers of our generation. After the box office success and after success of Oppenheimer, Chris Nolan approached us.

He wanted to shoot his next film entirely with the IMAX cameras. Problem -- and it would be actually the first Hollywood production to ever do so. The problem was there was one catch our existing IMAX camera fleet couldn't do what Chris wanted. But we thought, hey, listen, if Chris wants to do it, let's try to make it happen. So Chris and his cinematographer [indiscernible] met with our engineers. And they worked over a 2-year period, especially engineers who want to try to develop a camera system that was quieter, that was lighter that was more flexible to allow Chris to show his artistic vision of his movie.

As I said, I've been there 29 years now. To me, the result was extraordinary what we did in 2 years. We developed a new generation of IMAX film cameras that not only kept the iconic quality and scale of our existing games. But there was more a modern design, modern software, smarter design and more flexible to allow Chris to shoot his next movie. But the break-throughs didn't stop there because even though we reduced our existing camera noise by 30%, it still wasn't quiet enough to shoot those intimate sounds in dialogue.

So our engineers got together again. And the same 2-year period, last time they built a film and closure system or what we call sound blimp [indiscernible]. And this substantially reduced the noise of the cameras. So the first time ever, our filmmakers could shoot in sync sound and capture clean, usable dialogue while filming. Ultimately, this breakthrough allowed Chris to use the IMAX film cameras to shoot his entire film Odyssey with IMAX. And in his words, he said, this is a game changer. I have to read this one. It allows intimate moments of performance on the world's most beautiful format.

So this same spirit and what's next drives everything we do at IMAX, the constant pursuit to make every part of the IMAX experience even better. We're advancing the next evolution of projection. We're looking at how do we make our sound mixes better and more efficient. But remember, we have to bring that into that purpose-built ecosystem. And all to ensure that every IMAX location delivers that same clarity that same brightness that power of the scale that I talked about earlier. And as we did with our film cameras, we're really looking at how to reimagine our film projectors. Can we make them smaller? Can we make them lighter? Can we make them scalable so that more audits and more filmmakers can experience a iconic format.

And what we've done with Odyssey by the time Odyssey is released next summer, we've actually now increased the number of film locations by 25%. So we'll Odyssey will be in 40 film locations next year. For nearly 6 decades, we have pushed the limits of sound MH scale and this legacy of innovation and quality will shape the future of IMAX going forward. Now let's take a look.

[Presentation]

Thanks to my colleagues who presented this morning. And now it's time for the most exciting segment, the numbers. And in IMAX's case, it really is true as we are in a record year with much more to come. Today, I'm happy to be here to share IMAX's financial strategy and outlook and underscore our unwavering commitment to sustainable growth and shareholder value.

Let's recap what you've heard today from the IMAX management team about the pillars of our business and our future. IMAX is a global entertainment technology company with 1,800 locations in 90 countries, setting the pace with industry-leading camera content remastering, projection and sound technology. Our iconic brand is fueling fandom IMAX inspires filmmakers and empowers exhibitors and studios to deliver the world's most immersive experiences.

Our asset-light model is a strategic advantage, driving high margins and low leverage. And with 700 employees worldwide, we achieved what others cannot, scaling impact without scaling costs. Our licensing and recurring revenue model provides a foundation of financial stability and predictability that gives us the confidence to invest, innovate and grow. And above all, we are laser-focused on delivering long-term shareholder returns through balancing investment in our future with returns through share repurchases.

Turning to our business model. We have 2 major operating segments: Content Solutions and technology products and services. Our Content Solutions segment captures revenues generated through our relationships with studios and content creators from Hollywood blockbusters to local language, alternative content and documentaries. And most of this revenue in this segment is tied to IMAX box office performance.

The Technology Products and Services segment, or TPS, captures revenues generated through our relationships with exhibitors. All of our IMAX systems, whether sold or leased are generally covered under 10-year agreements, which have a greater than 90% renewal rate. IMAX system sales arrangements represent systems sold for an upfront or fixed payment and a nominal box office percentage payment over the 10-year term. System rentals represents IMAX systems that are leased in exchange for rental payments and tied to box office performance. Included in all of our contracts are maintenance services, which reflect recurring revenues associated with the 24/7 location monitoring that you just saw in the tech video, over $60 million of fixed revenue annually and growing with our network.

Combined between content solutions and our TPS segments we generally translate 18% of every IMAX box office dollar to revenues. And outside of our 2 major segments, we have a nominal revenue stream in streaming and consumer technology. which we see as an upside opportunity as we bring IMAX quality to a whole new market. And our global revenue has good diversity, providing durability and stability and is fairly evenly split between domestic, Greater China and the rest of the world.

As an asset-light business, our operating costs do not significantly increase year-over-year creating a powerful opportunity for strong and increasing flow-through to earnings per share, EBITDA and cash flows, which we are focused on using to return value to our shareholders.

IMAX's riding and shaping macro trends, the blockbusterization of content is real, and IMAX is at the epicenter. Audiences crave premium event-driven experiences and we are increasingly the destination for those unforgettable moments. Demand for the IMAX experience is surging across filmmakers, studios, audiences and exhibitors.

Content with an IMAX release helps to deliver the best global monetization outcome. And higher demand for IMAX drives network growth, allowing us to penetrate further into existing markets and expand into new markets, as Gio highlighted.

And lastly, our content portfolio is more diverse and dynamic than ever with over 200 pieces of content that Heather described and a focus on programming to maximize the utilization of our global network. The bar is set high and we are raising it. Our priorities are clear: strong top line growth, visible margin expansion and increasing cash flow conversion.

For top line growth, we are focused on translating the increasing strength of the IMAX brand that Anne highlighted, which is growing the fandom among filmmakers and consumers into tangible box office and growing -- increasing our utilization rates and in turn, market share gains. This momentum is not just words, but it's backed up by the numbers with our market share up 46% since 2019 as we expect to end the year with 3.8% on for our global market share on just less than 1% of the screens, reaching our highest point in IMAX history.

We continue to show proof points of how our business model differs from that of exhibition. Year-to-date November, domestic box office is up 1% year-over-year. IMAX is up 27% in North America. And globally, IMAX is higher by 34%, with this top line growth comes visible margin expansion. And today, we will be walking through how the drivers and our ever-increasing scale is resulting in a significant operating leverage in a steady march higher in our margins.

And lastly, as margins expand to flow through to cash is a very high level and the increase in conversion to adjusted EBITDA to free cash flow, supporting higher levels of investing in the business and shareholder returns. This is not just progress, it is propelling us forward. Before I pivot to our outlook, let's take a minute to review our year-to-date results for September. They point to IMAX operating at a new level, exceeding expectations and capturing momentum in the business.

Strong growth in our operating metrics of IMAX box office, system signings and installations combined led to revenue growth of 10%, adjusted net income, up 32% and adjusted EBITDA higher by 26% and cash from operations up 65%. In short, we are achieving double-digit revenue growth and notably bottom line growth that is more than 3x that of revenue growth. Our year-to-date adjusted EBITDA margin is a substantial 45% compared to 39% a year ago. And these results are not just strong, they are a testament to the power of our model and the passion of our team to deliver.

For 2025, we set ambitious goals, and I am pleased to announce that we are exceeding them. Earlier this week, we officially achieved an annual record for box office of $1.13 billion. And when we set this guidance a year ago, many doubted us. But with more to come in Q4 and including the ongoing success of Wicked for Good and Zootopia 2 and the most anticipated film of the year, Avatar Fire and ASH, we are now tracking to more than $1.25 billion. And for reference, both Avatar 1 and 2 were released in mid-December with IMAX capturing over $100 million in the year of release.

To date, 133 system installations have been completed this year, and we are tracking to the very high end of our full year 150 to 160 system installation range. And lastly, for adjusted EBITDA margin, which we guided to the low 40s is expected to be at or above 43% for this year. And today, we are excited to announce guidance for 2026 that reflects strong growth across all metrics. Box office of approximately $1.4 billion with mega titles in every quarter, Avatar rollover in Q1, Star Wars Mandalorian in Q2, The Odyssey in Q3 and Narnia in June in Q4. With 9% to 12% IMAX box office growth in 2026, we expect these mega titles will be catalysts for growth in system installations year-over-year.

Our system installations guidance for 2026 to be between 160 to 175 systems and supporting this level of installations is a committed backlog of over 470 systems including detailed rollout plans with our exhibition partners. With this higher level of box office at $1.4 billion and continued network expansion, we anticipate positive flow-through to adjusted EBITDA margins in 2026, landing in the mid-40s and more specifically at or above 45%. Our brand, industry relationships, technology moat and executional track record provide us with the confidence that IMAX is leveling up for another record year.

A key tenet you've heard repeated throughout today is the increased visibility we have into our future financial drivers coming from 3 factors: first, greater content diversity providing both programming optionality and the ability to achieve higher levels of box office even in slower moviegoing periods.

Secondly, increased demand by filmmakers and studios for the prime real estate of IMAX windows, driving earlier dating and visibility to future film slates.

And third, the committed IMAX system backlog along with a proven history of replenishment through system signings. Considering these factors, we are providing a 3-year outlook for revenue, adjusted EBITDA and adjusted EPS and free cash flow conversion, reflecting both growth and profitability.

For revenues, cumulative average growth of high single digit to low double digits, this revenue growth will be driven by 2 inputs, high single-digit to double-digit box office growth and mid-single-digit expansion of the IMAX network. For adjusted EPS and adjusted EBITDA margin percent with revenue outpacing that of costs and expenses, we see margins steadily stepping higher and reaching over 50% adjusted EBITDA margins by 2028, and adjusted EPS expanding at twice the rate of that revenue growth.

For free cash flow conversion, we see our margin expansion translating to a higher level of operating cash flows and thus, adjusted EBITDA to free cash flow conversion reaching 50% by next year 2026 and climbing higher from there. Let's review our long-term targets, starting with revenue growth. Revenue growth is driven by 2 pillars: network size and IMAX box office, which comes from network size, utilization rates and ticket prices.

As Gio highlighted, we see tremendous global expansion potential with 4,500 possible zones and 1,800 current locations. Our model assumes mid-single-digit annual network growth. This expansion will drive box office growth alongside higher ticket prices and utilization. And while we don't set ticket prices, supply-demand dynamics for IMAX should naturally push prices higher, especially at our film locations.

On utilization, diverse content programming across our global network and increasing consumer demand for the IMAX experience will flow through to higher attendance levels. Notably, a 100 basis point increase in utilization at $75 million to $100 million in IMAX box office. Combining network growth, utilization gains and ticket price increases -- this supports our projected IMAX box office average growth through 2028. And while we do not have an in-house view of global box office growth over the next 3 years, recent estimates from PCs entertainment Outlook report showed box office growing to almost $37 billion by 2028.

Coupled with our modeling, IMAX share of box office could grow by 30% or more. Our business benefits from significant operating leverage reflected in steady growth in adjusted EBITDA margins with relatively fixed costs scaling our network and box office drive strong incremental flow-through to the bottom line.

Two key points on this. When annual box office exceeds $1 billion for each incremental IMAX box office dollar above this level, we capture an incremental margin of 85% after factoring in our average of 18% for our revenue take rate. In TPS, network growth delivered strong margin expansion with gross margins averaging about 50%, boosted by performance of the IMAX leased locations. This positive incrementality combined with disciplined SG&A growth in the low single digits positions us to achieve adjusted EBITDA margins above 50% by 2028.

Our path towards 50% free cash flow conversion by 2026 and expanding thereafter is anchored by expanding margins, disciplined capital allocation and a content strategy that fuels IMAX box office growth with operating leverage at scale and structural tailwinds in working capital, including improved timing of exhibitor collections and over $250 million of tax attributes that will significantly reduce cash taxes.

We are positioned to drive robust cash generation and enhance long-term shareholder value. Our capital-light model and execution have resulted in a strong capital structure. As of September 30, we held $143 million in cash and $261 million in debt with a net leverage of 0.7x. And this year, 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 just last month, we refinanced our 2021 convertible notes with $250 million of new notes at a very attractive 0.75% interest rate, only 25 basis points more, while in a much higher interest rate environment than the almost 0 in 2021. And through this transaction, we were able to simultaneously retire over 99% of the prior notes, which we did with cash of $46 million to ensure no dilution.

Importantly, we also took out a capped call on the new note raising the effective conversion price to $57 and more importantly, protecting our shareholders from dilution up to this level. Together, the cash payment for the outperformance in the old notes and the new capped call equates to approximately $70 million strategically spent to protect our shareholders from potential dilution and, in our view, is a kin in some respects to that of a share repurchase.

Our strong capital structure gives us the flexibility to meet all of our long-term priorities. First, investing in growth. We currently invest about an average of $35 million annually to expand the IMAX network under joint revenue sharing arrangements. And given our strong balance sheet and growing free cash flows we see an opportunity to strategically invest and increase the system-related growth CapEx by 30% to 35% or approximately $10 million to $15 million annually. -- through new deal structures that accelerate growth in high-return locations driving future revenues and cash flows.

Second, returning excess cash to shareholders we've returned over $175 million since 2020 and have a strong track record of opportunistic share repurchases even drawing on our revolving facility to do so when appropriate. The investment case for IMAX is clear and compelling. IMAX is built to outperform as global entertainment evolves. We are capitalizing on our unique tailwinds and leveraging our expansive moat and demonstrating financial strength that delivers for shareholders. We are entering a new era of growth. And in my 19th year at IMAX, I could not be more excited for what's ahead. and I believe our shareholders should be equally excited about the upside opportunity that IMAX will deliver. Thank you.

Thanks, Natasha, and thanks to all of our presenters today. Also thanks to the audience. both here in the room and on the live stream for dedicating time for this event and your attention. We're now, as you can see, going to set up for the Q&A portion of our of our day. A few things to note on the Q&A. In addition to today's presenters, we're going to have joining us for the Q&A, IMAX's Chief Technology Officer; Pablo Calamera, for the Q&A, we ask everyone to wait for us to get you a microphone to ask your questions. So those in the live stream can hear as well. Please direct your questions to Rich. He'll be the traffic Director up here on the stage. We also request that you limit yourselves to 1 question so that we can get to as many people as possible.

I'd also note that the management team will be with you at lunch, and so you will have the opportunity to engage with them at that point as well. One minute now, I think we can get the executive team now on the page. We'll have Mike runners on both sides. If you raise your hands, we'll get to you and I'll kind of point in direct as well.

Great. I think I see Eric there with his hand up. We'll get things started.

I was intrigued by -- in Gio's presentation, you talked about deal -- new deal structures, leveraging IMAX liquidity. You already have the JVs where you're putting forth the capital for your partners. There's -- you've got a hybrid and then the exhibitor can purchase outright. So where on that spectrum is there an opportunity for additional liquidity opportunities.

Do you want to answer?

Sure. So in my presentation, Eric, I actually talked about it as well that we would be up I think testing -- all right. Can you hear me? I talked about increasing our annual investment right now of $35 million by about 30% to 35%, another $10 million to $15 million a year. It would be our JV structure, but doing it in a much larger way in that right now, we only contribute the system and in very rare cases, a little more than that. But when you think about the balance sheet of the exhibitors and some countries or in specific locations where we feel like there could be a very high return for putting our investment in where that film rental rate could go higher as well and you think about a year like 2026, that's ahead of us with $1.4 billion and then continuing to grow after from that and growing our market share, that's where you can see that the return on that type of investment by doing the JV model and then putting up for some of the actual capital to build out the actual fit out of the theater on top of contributing the system.

In a way, Eric, there's like an imbalance of information because when they're looking at it, they're looking at the model going backwards we're looking at the model going forward. So the returns are very attractive for us to do that. And at the same token, we're certainly not going to bet our balance sheet on it.

Great. I think I see mic there.

Congratulations on an incredible year, a great presentation. Thank you guys for doing this. Very insightful. The -- I guess the question on Narnia, Rich, you said it was sort of transformative maybe to the industry and to your business. Obviously, we've seen big hits before when Avatar first released and what that did to your business.

Do you see a similar situation here in terms of that being an active catalyst to maybe installations or a new content strategy that can be incremental to your growth opportunity?

I'm going to let Gio give you his reaction when we left the set of Narnia.

Yes. I was -- I told Rich, this is going to be a game changer for our business. And look, of course, it's impossible to predict in detail. But we definitely see it as a catalyst. And as was I was trying to convey that there have been some pivotal points in next year with titles psychotic, but then I focus particularly on Narnia, I think that will be a game changer. Think about exhibitors, cinema operators that can have access to certain types of content overperforming content through an IMAX venue.

You obviously want more of those venues, and we want more of them as quickly as possible.

So Mike, when -- I don't know if any of you guys realize this, but right across the street, the old Spruce Goose hangar, which is now Google's big office here. Jim Cameron rented it to do a film called Avatar 1, and he invited me pretty early in the process. And he put up like 1 of those screens that you show the slides of your kids growing up -- and he showed me like, I don't know, 15 minutes of Avatar. And I call back some of my colleagues in New York and I said we're going to be in a different business when that movie came out. And I definitely have the same feeling about this.

And again, don't really right now want to talk about the financial model. But I think the way we could -- IMAX could evolve in that ecosystem, such as things like earlier release windows or different distribution patterns. I think we do think it could have a similar effect.

Great. Thanks, Mike. I think next question there with Omar.

Well, thanks for the presentation. Jonathan or maybe Natasha, you talked about implementing the dual programming strategy to drive capacity utilization -- can you elaborate a bit on the expected changes from this new strategy and the potential impact on capacity utilization and the flow-through to the bottom line and how that plays a role in the in the new guidance, obviously, in the mid-40s in the long term to your guidance of north of 50%.

Jonathan, I think why don't you just talk about the strategy and then Natasha, you could talk about the financial impact.

Sure. So thanks, Omar. Look, I think the opportunity for us is really to be as flexible and nimble as possible. So we will, as you heard, FFI is a key part of our building our slate and that does go with hand-in-hand with an exclusive window on those titles. But where we see real opportunities as well, we started in a meaningful way last Thanksgiving, and had our most successful Thanksgiving ever when we were programming Gladiator, Wicked and Moana.

And then this year, we just -- as you've heard, we beat that by 70% in programming Zootopia and Wicked for good. So I think the opportunity we see is to be nimble and to find the right mix -- so we will be doing a combination. We'll continue to lean into exclusive windows. But where there are those either non-FFI periods or real opportunities to maximize revenue, we'll do that as well.

And I think I think, Omar, what you've seen this year alone is the fact that, that strategy is working tremendously for us. And you think about where we are year-to-date of being up 34% and globally versus where domestic is just at 1% year-to-date. That's a big difference. And that comes from that programming agility that Jonathan is talking about in making sure that globally across our footprint, we are playing, whether it be in Indonesia playing an Indonesian title or in Poland playing a Polish title and then here in North America playing a Hollywood title, that's what's adding up to that box office and gives us the confidence to even go out with our guidance of 1.4 for next year.

One thing spend a lot of time talking about during the presentation was the use of analytics, including AI. So Hollywood is like talked a lot about the gut -- we've kind of had it with the gut. And one reason Heather was brought in was to use good hard data to increase that capacity utilization. So Heather, maybe you want to address kind of what you think the opportunity is?

Yes, absolutely. Natasha can I have your mic may Hello? Perfect. Yes. So in terms of increasing capacity utilization, so we know that the demand, not only just to see a certain film, but to see it in IMAX is stronger than ever. And when we've gotten data from our exhibitor partners to look at our capacity utilization in their auditoriums, we know that it's been increasing from pre-pandemic to current when you compare both weekdays and weekends. So we are already seeing this type of programming strategy increasing our capacity and fill rates in the auditoriums.

And it's simply because, as I mentioned, consumers want more variety of their films, and they want to see them in IMAX. So the more films and more events and more content we can play, we can keep the same people coming to the theater multiple times or capitalize on different demographics and psychographic groups.

Add in there a little bit, too. Actually, I'll just say that we've talked a little bit in a few of these sessions to about data. So data is a place that we've actually invested quite a bit. So while the data maybe has been there in the past, I think with Jonathan and Heather here actually surfacing that data to make more data-informed decisions on the programming was a major shift and I've seen it here. I've been here 6 years, but it's changed quite a bit already, and it was largely driven a lot by the talent, but also the data systems have evolved quite a bit in that time. And AI will be a part of that as well.

Thank you. Just to follow up on the last question. Do you see a place in other markets besides China for dynamic allocation of screens like they do in China, where if it does well on Thursday and Friday, they get more share of the screens. -- if you're going to balance 2 titles in a weekend.

Jonathan.

Yes. That is something we're already leaning into. So as we talked about, we are starting to more FFI titles in local language as well. But we've grown the local language volume. We will have 68 titles this year. Next year, we're going to grow that by let's call it, 15%, plus or minus. And part of that gives us the opportunity to be flexible to schedule within and around Hollywood titles that are working. So we're already doing that. And I think as we grow that volume of local language, we'll be able to increase that flexibility in local territories as well.

One thing you might surprised about is the studio's willingness even with exclusive windows to carve out some room for local language. So as you know, Japan has a very different distribution pattern than the rest of the world. And you'll find this a little shocking, but even Disney has been very open-minded about carving out time for local language films. So we should shout that out, that our studio partners have been just much more flexible, which helps a lot in expanding the China model elsewhere.

Talk a little bit about the success in China last Chinese New Year with that.

Yes, happy to. So during Chinese New Year, on any given year, we're we're programming 4 to 5 films at a time. We've continued that strategy actually through other windows throughout the year. We do that for a number of reasons. One, sometimes you don't know which film is going to break out. You may have 1 or 2 that you think have a really high possibility, but it enables us to really capture whichever film truly is going to break out.

More importantly, China is a big country. And a lot of films play differently in different territories. So we often find ourselves in positions where we're programming on local language title for the South for a genre that works really well there. And at the same time, we're playing another film that works much better in the north, capturing more box office and more market share as a whole. So it's a program that has worked for us really, really well in that territory.

Next question.

Thank you. It's David Joyce the Seaport. It's great to see the continued volume-based momentum in growing the network and taking more share at the box office and the operating leverage that emanates from that -- but what might the opportunities be on the pricing side? Like your take rate has been pretty static for a long time. What's your philosophy on that, either from your your desire to try to increase your take rate or your contractual ability given the demand for more and more exhibitors wanting to add your screens?

We have a fairly strong point of view on that question, which is that you really want to be part of this ecosystem and the team and pushing big studios, especially when the number is shrinking on higher take rates is probably not a great way to live a really long life -- so we've tried to use our leverage in different ways, such as what Anne was talking about the marketing and maybe an you'll follow on for a second and just talk about what we've been able to get but we've been able to use our leverage in very significant ways without playing with kind of the Holy Grail, which is the take rate.

So Ann, before you do the marketing, Daniel, though, has actually had some success in China in pushing the take rates because the dynamic is a little bit different. So explain that. And then the last point I'll add is we can't set the prices. The exhibitors do. But I think there is opportunity on the pricing side, and we could have discussions that are well within the balance of the antitrust regulations and doing that. I'll give you a very simple example. We don't -- the exhibitors don't charge more for film than they do for digital and they're sold out months in advance. And if I were pricing, I would think that would be a pretty good opportunity. So we've just -- I think that's where there are more opportunities than on the split. So Daniel, why don't you talk about that for a second?

So very recently, actually, we've closed 2 deals in China where our take rate has gone up significantly. It's not something that we publicly disclosed in the numbers, but it's a trajectory towards, I think, an area where we have a little more flexibility, and we can play a little bit more of a role in that. Also, I think it's important to note on our local language titles in China, our take rate is higher just by nature of those contracts. So I'll turn it over to Ann to talk about some of the other ways in which we're leveraging that. But I do see for that region in particular, there may be some growth potential there.

Yes. I think what Rich is talking about is we just have a totally unique deep partnership with the studios, and that is how we've been able to really create these great events. The results have been clear. So they have taken the approach of really integrating us into the marketing, of course, with our -- working very closely with them to get those campaigns up and out around the world. But we've seen a big win for both parties and our filmmakers as well, right, with increased indexing, increased opening weekends, general increase at the box office and more fans coming into the ecosystem.

So then we can remarket to them whether it's for a big studio release or all content or a music event that just keeps bringing more and more people back to IMAX and everyone benefits. So that has been the approach, and it has been working.

To get into detail on the context of that count down for the Mandalorian. But it's kind of incredible how it came about. But Disney came to us and said, we're distributing Avatar and Mandalorian is a big film for us next year. So could we design a special piece to market the Mandalorian given how many eyes will watch Avatar. And that thing caused a fortune to put together and to distribute and that was their initiative and none of our costs. So rather than playing around with take rates, those are a lot of the opportunities.

Thank for all insights. Just quickly, building on Mark's presentation. Going forward, do you change your strategy at all or in terms of all these innovations, these new products, these new capabilities you're doing for the directors? Does that increase your patent portfolio or so forth?

Yes. I'll touch on that a little bit. So I mean we do have a pretty -- there are some things that we are having is just trade secret because things that our patented are obviously fully disclosed and reverse engineering is not that hard. We do have a pretty I'll say, a strategic patent plan, the things that we do patent and things that we decided to just keep trade secret. So it is balanced.

All right. If there are no further questions, I'll just say a few words. But after I'm done, we have a really nice courtyard on a nice day in California to where we can sit outside. And we arrange the table. So you'll have the opportunity to sit with members of management, you might be interested into. So if China's your particular address, you could spend more time with Daniel and Natasha, I'm sure will be overwhelmed with questions, but -- and then you can move around a little bit. So we'll be available to follow up on that.

I hope we accomplished our objective today, which was, as I said at the beginning, to really show you there's been a complete reset in the IMAX business. And as I said, the other part of the objective is, I think, Natasha, Gio and I are people who meet with you all a lot, but there are a lot of talented people behind the scenes. So I was also when I was sitting there thinking, Mark's been here 29 years, Natasha has been here 19 years, Gio has been here 13 years. It's not a Johnny come lately, team. We've been around a lot of time.

And I think one of the last questions about leverage, I think you don't want to really talk about that that much because not a thing your counterparties enjoy hearing about. But given the relationships we have with the filmmakers and the exhibitors and our place in the ecosystem, and I'm sure you guys have read some of the press that says a lot of the filmmakers really insist that their movies be made in IMAX. So it's really put us in a unique and a very good place.

And turned out that this was the perfect time to lay all that in front of you. And we're grateful for you coming and we're grateful for your support, and we love to reward people who believe in us. So -- thank you, and we're happy to continue this outside.

So I think that now concludes the live stream. I'm going to give a couple of logistics details for those in the room. As Rich mentioned, there's going to be a lunch or overdo. For those who are interested, we will have a tool available at about 12:30, you can see now joining the Q&A.

Good day, and thank you for standing by. Welcome to the Third Quarter 2025 IMAX Corporation Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jennifer Horsley, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for IMAX's Third Quarter 2025 Earnings Conference Call. On the call today to review the financial results are Rich Gelfond, Chief Executive Officer; and Natasha Fernandes, 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 regarding forward-looking statements. Today's call as well as the accompanying slide deck may include statements that are forward-looking 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 morning'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 turn the call over to Mr. Richard Gelfond. Rich?

Thanks, Jennifer, and thanks, everyone, for joining us as we review an exceptional quarter for IMAX. We delivered our highest third quarter revenue ever with $106.7 million and our best ever quarterly cash flow with $67.5 million. We drove growth of more than 30% across gross margin, net income, adjusted EBITDA and earnings per share. Our third quarter earnings exceeded those of our first and second quarters combined. The third quarter of 2025 was our highest grossing Q3 ever at the global box office with $368 million, up 50% year-over-year. Signings of new and upgraded IMAX systems surge passed our full year total for 2024 with 142 through September. and we are approaching 100 installations year-to-date. We now expect to hit the high end of our guidance of between 150 and 160 installations for the full year.

You've heard me say that IMAX has been moving into a new position that we've been steadily building something bigger. Throughout the year, we've delivered operating results that exceed expectations and transcend the broader marketplace. Early on, many thought our full year guidance of $1.2 billion in global box office would be difficult to achieve. We're now very well positioned to deliver on that guidance. Following our Q2 earnings call, our stock dipped with many noting that the Q3 Hollywood slate looks soft on paper, and we proceeded to deliver a record quarter. IMAX is quite simply a different company than it was just a few years ago. This quarter is the latest and maybe the clearest example yet on how far we've come. We're consistently delivering a diversified dynamic portfolio across Hollywood blockbusters, local language titles and alternative content, and we further separated ourselves from exhibition as a result.

In Q3, domestic box office declined 11% year-over-year. IMAX was up 29% in North America. And globally, IMAX was up 50%. In prior years, when IMAX posted big results, you could usually point to a single defining title, Avatar, Top Gun, Oppenheimer. But now our performance is increasingly driven by the full breadth of our content strategy. In the third quarter, we had a big film for IMAX Hollywood hit in F1 for which we dramatically over-indexed. But we also had a powerhouse Japanese language release in Demon Slayer, Infinity Castle. We hosted successful music events from Print and -- the Grateful Dead. We flexed our muscles in horror, not historically a genre associated with IMAX with strong openings for -- the Conjuring and weapons. We even leveraged the IMAX experience to breathe new bi into legacy titles, most notably with our successful rerelease of Jaws.

IMAX is not just a premium format. We're a platform for event content that spans genres and the globe. And that diversified portfolio and the marketing prowess of the IMAX brand as a beacon of must-see theatricality make us much more valuable to our studio and exhibition partners than ever, which continues to drive strong installation and sales activity because audiences in 89 countries and territories around the world know that for all inspiring experiences, you must see it in IMAX.

The third quarter saw the conclusion of our record run of consecutive film for IMAX blockbusters through the summer, but it also demonstrated our ability to drive success beyond releases shot with our cameras. The halo effect of IMAX extends across a wider collection of films, events and experiences than ever. F1 -- the movie was our highest grossing Hollywood release of the year with $97 million worldwide to date, more than 15% of the film's total box office on less than 1% of the screens. Our success with F1 was powered by our deep collaboration with Apple on the film, the latest example of how IMAX has emerged as a premier partner for streaming platforms. We now have 4 blockbuster openings on the year, Sinners, Mission Impossible, F1 and Tron Ares, for which we generated at least 20% of the domestic opening at just over 400 North American screens. That's a feat we've achieved less than a dozen times in our entire history, and 4 of those came in the last 6 months.

It's also been a watershed year for our local language strategy as evidenced most recently by Demon Slayer. The global anime phenomenon has earned more than $73 million to date in IMAX. It's our biggest Japanese film of all time. It delivered our biggest September opening ever in North America and astounding feat for a foreign film, and we indexed 19% of its domestic debut. We're optimistic the film will secure release in China, too, where recent Japanese anime titles, including First Slam Dunk and Suzume have played very well for us. We've now generated more than $356 million in local language box office year-to-date, shattering our previous record of $243 million set for the full year 2023. And international films account for 36% of our global box office year-to-date, up from less than 20% last year.

As we look ahead to the stretch run of the year, the slate is significantly stronger than last year's Stripe depleted offering. November includes 2 IMAX-friendly releases in Predator Badlands and -- the Running Man. We've used our leverage to program another strong Thanksgiving slate locking in Zootopia 2 and Wicked for Good early. This put us in a position to get tickets on sale before most of the market with both titles looking strong and tracking. And we continue to round out our slate across music, sports, gaming and exclusive experiences. Building on our success with -- the Grateful Dead and Print in August, we have a concert event with Depesh Mode next week.

In December, we'll host the long-awaited rerelease of our seminal Stones at the Max, the beloved 1991 concert film, which IMAX made with the Rolling Stones and the only concert film shot entirely with IMAX film cameras. In our second year, we'll expand our offering of the League of Legends gaming tournament next weekend in China with up to 219 locations. And we partnered with Netflix on a buyout promotional event in support of Guillermo Del Toro's Frankenstein. Of course, the year concludes with Avatar Fire and Ash. Our teams have been working with Disney on the launch for a year to ensure that the brand association between IMAX and Avatar that has yielded record-breaking success for our companies continues.

With our network continuing to grow and our market share surging worldwide, we expect to deliver another strong performance with the franchise. With the carryover of Avatar, 2026 look strong right out of the gate, highlighted by Christopher Nolan, the Odyssey, Greta Gerwig's IMAX Exclusive Narnia and Star Wars: -- the Mandalorian and Grogu, Super Mario Galaxy Movie, Toy Story 5 and Dune Part 3, which will have an IMAX 70-millimeter run in select locations.

Additionally, a very compelling 27 slate continues to take shape, including Joe Kosinski's Miami Vice, which will be filmed for IMAX, Star Wars: Starfighter directed by Sean Levy from Deadpool and Wolverine; Michael B. Jordan, the Thomas Crown Affair, Avengers Secret Wars and -- the Batman 2. Our team was in London last month, visiting the filmmakers and sets of many of these upcoming releases, including Narnia and Star Wars. And it's clear these are IMAX-sized productions leaning heavily into our technology and format. Our visibility into our Hollywood slate continues to grow even as we opportunistically program local language blockbusters and alternative content events and experiences throughout the year.

Turning to our networks business. signings to date have already surpassed the number of signings we had for the full year 2024. We're having a lot of success in international markets we prioritize for growth. In Japan, we're pacing towards our single best year for network growth ever as we expect to end the year with 10 installations, representing a nearly 20% expansion of our footprint. And in Australia, we expect to install 6 new systems for the full year, more than doubling our footprint to 10 locations nationwide. Year-to-date, we completed 60% of the installations we targeted for the full year 2025.

The level of activity in the sales pipeline is also strong. We just completed an agreement for 2 new locations in Singapore. We signed multiple agreements this year across 2 priority markets, France and Germany, and are in conversations for new locations in Italy and Spain. We're in discussions regarding new locations in the Middle East, and we continue to drive opportunity with new and existing partners alike across North America, including our recent agreement with Apple Cinemas and several potential new locations across the underpenetrated Southwest region.

Given our continued sales momentum and our backlog of 470 systems worldwide, we have clear runway for strong network growth in years to come. In sum, we delivered excellent financial results in the third quarter. As the year draws to a close, we look forward to hosting an Investor Day in December and sharing our strategy for how we grow our performance over the next several years. We continue to believe the best is yet to come.

As we look ahead to a year with no less than 4 massive tentpoles, the Odyssey, Narnia, Dune Part III and the Mandalorian and Grogu, for which IMAX is at the center of the filmmaking, marketing and distribution. IMAX has never been better positioned creatively, commercially or strategically. And we're focused on strengthening our position, executing with financial discipline, continuing to provide the most immersive entertainment experience on the planet and delivering for our shareholders. Thanks. And now I'll turn it over to Natasha to walk through the financials.

Thanks, Rich, and good morning, everyone. IMAX's third quarter was one of the best in our history, showcasing our global scale, our agility in programming and diverse content portfolio and in turn, the profit and cash incrementality in our business.

Third quarter IMAX box office of $368 million was 50% higher year-over-year and exceeded Street estimates by more than 25%. Signing for IMAX systems at the end of September was 142, already eclipsing full year 2024, and system installations are now tracking to the high end of our guidance range of 150 to 160 systems. From a profitability perspective, our operating leverage shine through in Q3 with an adjusted EBITDA margin of 48.6%, up a substantial 630 basis points year-over-year. and adjusted EPS of $0.47, up $0.12 year-over-year. Our profit incrementality flowed through, contributing to cash from operations of $67.5 million, which set a new quarterly record and was up more than 90% year-over-year.

As I said on last quarter's call, these are not just numbers. They are a direct result of growing demand by filmmakers, studios, exhibitors and consumers for the IMAX experience. Our Q3 global market share reflected that, increasing 49% year-over-year to 4.2%, marking a new IMAX high. Our goal, though, is not to just outperform the market, but to expand it, drawing more consumers to theatrical, eventizing content while opening the aperture to bring audiences more of the entertainment they seek, whether Hollywood, local language or alternative content. This works for us, but it helps our studio partners, it supports our theater customers, and it is responsive to consumer demand for the best possible experience. All of this has resulted in year-to-date performance that positions us to meet or beat every one of our full year guidance measures.

Taking a closer look at our Q3 results. Overall, we delivered revenues of $107 million, 17% growth over the prior year third quarter of $91.5 million and achieved gross margin in Q3 of $67 million, which grew 32% year-over-year. This resulted in a 63% margin, which is a 740 basis point improvement over the prior year period, reflecting high incremental profit flow-through from the stronger box office performance.

Looking at our results at the segment level, Content Solutions revenues of $45 million increased 49% year-over-year, driven by the significant growth in IMAX box office, which, as Rich described, was propelled by a diverse mix of content globally. I am especially pleased with the programming agility we demonstrated. We released 4 fewer Hollywood titles in the quarter than the prior year, and yet we were able to grow box office 50% by consistently capturing higher opening weekend market share and leaning more into local language while adeptly filling in with alternative content. Overall, this led to the third quarter global market share of 4.2% on less than 1% of screens, driven by a remarkable 6.1% share of domestic box office. And the setup for Q4 looks very positive with major titles in front of us, including Avatar Anchoring the year.

Content Solutions gross profit of $32 million showed tremendous growth, up 94% or $15.5 million year-over-year, while gross margin reached a record 71%, up a substantial 1,600 basis points from the 55% gross margin in the prior year, spotlighting the significant incrementality that results from higher levels of box office. Technology products and services revenues of $60 million was up $2.4 million year-over-year with gross profit of $35 million, resulting in a 58% margin, up approximately 250 basis points year-over-year, driven by both growth in our global box office and maintenance revenues that more than offset a lower level of systems installed under sales arrangements. System installations in the quarter of 38 systems compared to 49 in the prior year reflected in part the more balanced timing we're seeing this year with a higher level of first half installations. As of today, we are at approximately 100 system installations. And as highlighted earlier, we now expect to be at the high end of our system installation guidance for this year.

And the momentum for signings continues with 19 signings in Q3 and 142 September year-to-date, already exceeding the 130 for full year 2024. The diversity of signings is especially encouraging. We have achieved near record signings in Japan of 11 systems, many of them are in new and exciting locations in underpenetrated areas in the country, and they're performing exceptionally well since opening. We've built momentum in Germany with the successful release of our first-ever German language film in Q3 that resulted in a very strong opening weekend, and we expect we'll have 4 new German locations open by the end of the year.

We are very excited about the growth in Australia as well, where we have had signings with multiple customers and expect to exit the year with 10 open locations compared to 2 locations a year ago. And in the U.S., we expect to expand with new regional partners, including 5 signings with Apple Cinemas in the quarter with 1 in a highly desirable central area of Philadelphia. Operating expenditures, defined as research and development and selling, general and administrative expenses, excluding stock-based compensation, was $30 million in the third quarter which was consistent with the second quarter, however, increased year-over-year as the third quarter of 2024 benefited from adjustments to performance payouts related to our SCT business and from the timing of capitalization of film camera costs. We continue to focus on looking for ways to better use technology and scrutinizing work processes to find productivity opportunities across our business.

Overall, our strong operational performance led to a third quarter total consolidated adjusted EBITDA of $52 million, which increased $13 million or 34% year-over-year, driven by higher revenues, which mostly flow through to gross margin. This resulted in an impressive adjusted EBITDA margin of 48.6%, up approximately 630 basis points year-over-year and giving us a year-to-date adjusted EBITDA margin of approximately 45% relative to our full year guidance of low 40s percent. Third quarter adjusted EPS was $0.47, up $0.12 year-over-year, driven fully by strong profit growth as our Q3 tax rate of 19% was a headwind of $0.03 year-over-year. Our September year-to-date tax rate is 24%, which is consistent with a normalized effective tax rate and what we would expect for the full year.

Turning to cash flow and the balance sheet. Cash flow from operations of $67.5 million set a new quarterly record. This excellent result reflects the very positive incrementality in our model as well as the timing of collections of the larger first half box office titles. September year-to-date cash flow from operations was $98 million and has already exceeded by 40% 2024 full year operating cash flows of $71 million. Year-to-date free cash flow before growth CapEx is $87 million and equates to an adjusted EBITDA conversion of 68%, a very strong result through 9 months. As previously communicated, we expected operating cash flows to show strength and growth this year. Similar to total adjusted EBITDA, the dynamics of cash flows are quite positive as box office expands, leading to incrementality, particularly considering the cash flow characteristics of our joint revenue sharing contracts, where the capital expenditure is at the beginning of an average 10-year contract term.

Turning to investing cash flows. We continue to prioritize use of our available capital to invest in the business, including $24 million spent on growth CapEx year-to-date related to partnering with exhibitor customers to grow and upgrade the IMAX network through joint revenue sharing arrangements. This represents an attractive return on investment opportunity as numerous large partners, including AMC, Wanda and Regal are ramping up investment in IMAX as they upgrade their complexes, including bringing IMAX in to replace other premium formats as they look to capture more of the market share gains IMAX is delivering through our film for IMAX program and the exceptional slate ahead of us in 2026, 2027 and beyond.

Our capital position remains very strong with a Q3 ending cash balance of $143 million, an increase of $34 million from the second quarter. In our capital structure is $230 million of debt from our convertible senior notes due in April 2026 that bear an interest rate of 0.5% per annum with a capped call leading to a $37 per share conversion price. With our strong liquidity position and available facilities, we have the ability to be opportunistic as we assess the timing of when to address these notes and the nature of the instrument, whether that be with our revolving credit facility or through new notes. Debt, excluding deferred financing costs, was $261 million, and our current available liquidity is approximately $544 million.

In conclusion, the team continues to execute well. We are successfully capitalizing on our strengthening position in the theatrical ecosystem and the growing contribution we can make to the industry. We are deepening partnerships with studios and filmmakers, programming with agility, our global commercial network of over 1,750 locations, connecting with our fan base to bring more of the Hollywood, local language and alternative content they're seeking out and partnering with existing and new exhibitors to bring the IMAX experience to more moviegoers. The model is working. The operating leverage we have discussed is coming to fruition. We are gaining market share and meeting or exceeding expectations across our guidance measures of IMAX box office, installations and adjusted EBITDA margin. But to be clear, we are not resting on our laurels, and we are focused on delivering results through the end of the year and beyond.

As we look past 2025 into 2026, there is good visibility into IMAX's future system installations as well as the film slate. We have a backlog of nearly 500 systems and an addressable market less than 50% penetrated with potential for additional zones. We also have an increasingly clear view into the film lineup for 2026 and beyond, including significant mega title catalysts on the horizon. We believe IMAX has never been in as strong a position, and we have scheduled on December 4, our first Investor Day since 2017 to share the compelling opportunity we see in front of us, how we will execute to capture it and in turn, deliver strong shareholder returns. We'll dive deeper into what we see as the next era of IMAX, expanding our global content pipeline, accelerating network growth and advancing the IMAX technology that continues to redefine the cinematic experience. With that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from the line of Eric Handler of ROTH Capital.

I wonder if you could talk a little bit about your margin potential. I mean, 71% for Content Solutions off of a record box office. I'm curious, and you had 100% incremental margin off of that. So at what point does your box office-- where does the box office get to where all of a sudden you see just margins start spiking? And then as far as the costs are concerned, how stable are the costs in the Content Solutions business? And is that number going to have to grow as you continue expanding? Or is that something maybe with AI, you can keep flat or maybe even down?

Eric, thanks for the question. We're still pleased with the operating margin in the quarter. The 71% is a high for us. And we've talked about this many times about the incrementality in our model. And I think Q3 was the perfect opportunity to display exactly what we referenced when we talk about over levels of $250 million in quarter of box office and how the incrementality flows through at essentially an 85% rate. And it could be higher. It just depends on what our costs are for -- that we choose to do for marketing and some of the discretionary costs that we have.

But there is a lot of opportunity to continue to grow our margins and especially as you hit the even higher levels of box office, which is obviously a record year that we're trending to this year with the $1.2 billion. And from a cost basis, when you look at it, we actually don't have a significant increase in costs expected just because our -- the basis of our costs are pretty stable. We remaster and we find efficiencies and leverage -- operating leverage in that because as you distribute to more countries, it doesn't cost us any more money. We're already doing versioning and marketing in all of those countries. And on the SG&A side, we've been able to keep everything relatively flat with small amounts for inflation each year. And I think we've done a really good job on that front as well. And so overall, our goal is to continue to show increases in our margins and allow the flow-through to happen all the way down to cash.

Great. And then, Rich, as a quick follow-up. exhibitors can see that your market share is growing quite nicely. I'm just curious, as theaters see more film for IMAX movies coming, you have the halo effect raising the market share for non-FFI movies. How are -- is the volume of request for proposals just skyrocketing at this point? Or maybe you could talk about that dynamic a little bit.

Yes. I mean, as you know, we already beat last year in signings with a quarter to go. So we've actually delivered more signings. But yes, there are a lot of activity going on around the world. And I think it's not just looking backwards, Eric, what FFI was, but it's looking forward to '26 and also '27 and '28. We've never really had a backlog of films going that far forward. And I think if you're an exhibitor and you're looking at your return on investment and you look at the number of films that IMAX has coming out in the next few years. And I would even add to that, even FFI films, I don't remember the exact number. But I think for '26, we have double digits of FFI films already ready to come out and we're doing FFI films in '27 and '28. So I think the way you asked the question kind of answers itself. The fact we've done so well at '26, '27 and '28 are filling in in advance, have driven a lot of activity in the market.

Our next question comes from the line of Eric Wold of Texas Capital Securities.

I guess kind of following up a little bit on the last question on kind of on the exhibitor kind of demand side, think about from the other way, I guess as you think about the limited amount of real estate for content that you have each year and understanding that, for example, '26 is mostly spoken for with content already under contract. I guess what is the best opportunity to really drive from your end or work with the exhibitors to drive greater box office revenues on that content? For example, where can you further leverage marketing to drive attendance and drive people into the theaters on that content? And I know you can't necessarily push price from your end, but why aren't we seeing more ticket price leverage for IMAX films from the exhibitors given the clear demand from moviegoers, especially given the limited runs that most of your films have in their theaters. Why aren't they taking price even more so on IMAX films?

Eric, first of all, just to put it in context, when you said there are a limited number of slots, I just want to remind you that this year, we'll have 140 pieces of content. So it's not like we can't program more things or multiple things at the same time. In slower times of the year, we could have 2 or 3 films sharing screen time, and we've been doing that. So there is room to fit more content.

And in terms of price, as you saw with the Odyssey, we put some film tickets on sale a year in advance and the ones we put on sale sold out. So that's usually a sign that under price elasticity, you can raise the price. As you correctly said, that's a decision the exhibitors have to make, but not us, but particularly in a year that's heavy in film like '26 with Odyssey and Dune and other things that will be coming out. I wouldn't be surprised to see exhibitors press it a little bit, particularly in the film area. And then finally, obviously, the name of the game is capacity utilization, which is related to market share. And this year, as our market share has grown so nicely, capacity utilization has gone up. But still, capacity utilization is relatively low as it is in a lot of entertainment businesses. And I think there's an opportunity in that area as well.

Our next question comes from the line of Drew Crum of B. Riley Securities.

So I had a couple of questions on 2026. I guess you're likely to address this at your Investor Day, but any preliminary thoughts on 1Q and your ability to grow box office as you lap a tough comp from Neha 2? And then separately, I noticed in your press release and your prepared comments, you highlighted 4 massive tentpoles. Absent from that was the Avengers, which I think historically has enjoyed success on IMAX screens. Just curious if there's anything to read into that omission.

No, dating though, typically a year in advance moves around. So it's very hard to pinpoint exactly what the movies are going to be and what dates they are. So I think we're just trying to be conservative in what the slate is looking like. And I think the point we made was that we have 4 or 5 movies next year, which include in the first quarter, the carryover of Avatar, it includes Mandalorian, it includes Odyssey, it includes Narnia and it includes Zoom. So actually, the question you asked, we had a Board meeting yesterday about the comp of [indiscernible] next year. But I just named you 5 movies that I think will exceed whatever their comp was this year.

So as you know, we're a diversified portfolio. And you can always in any year, say, well, you have this really good film. How are you going to replace it? And the answer is you look at the whole slate and you look at how it's going to come together. And we'll, at our Investor Day, talk about guidance for '26. But suffice it to say that looking at it very early, we think it will be stronger than '25.

And our next question comes from the line of Omar Maj of Wells Fargo.

Maybe just more broadly, you recently announced the first IMAX Investor Day since 2017. And I'm just curious, why is now a good time to get together and share what's ahead for IMAX? Just if you could share what you're most excited about for IMAX in the years to come, that would be great.

I mean, Omar, not to be kind of an a hole about it, but I think we have a lot to talk about in terms of how '25 performed and how '26 will perform. Then it kind of close off my answer to Eric Handler's question. I mean there's never been a film backlog the way there is now. And even like I said to the last question, I think we'll provide a lot of context around some of those movies in which we've seen a lot of them, and we know a lot about them. And I think just putting titles on a slide is different than giving a context.

But I think if IMAX is in a 1 year or a one trick pony, I mean, we think we have sustained growth going for years ahead. And I think we thought it was really important. I mean, we believe we have a new level set for IMAX. So as you probably know, films that we used to do 10% of the box office, blockbusters, we're now doing 15% of the box office. Again, a question that was just asked about the activity on the on the theater side and signings, what's going on. We just think it's the right time to put the story together and put numbers to it. And obviously, our stock has had a nice little run. But from our point of view, we think it's the beginning of the run. And I think we have a lot of data to support that.

And then I'd say one other thing would be since '17, we have a lot of new talent in management that a lot of investors have never met. And I think it's just a good idea. I know Natasha and Jen and I have met a lot of investors, but we have a pretty deep bench, and we think it's a good time to let the investors talk to that bench and get their color on things.

Great. And maybe just a quick follow-up on the global opportunity set. You obviously have momentum in the business and a great 4Q slate ahead that ends with Avatar Fire and Ice. What countries or regions do you think IMAX has the biggest opportunity to drive incremental installations and grow the network? And any color on that would be helpful.

So the reason that's a hard one to answer is because of my last answer, which is that there's been kind of this reset in what the box office could look like. And when you start to put in numbers in that reset, the ROIs look differently and our ability to invest in JVs and make a better return look differently. So I think we're really assessing how to generate more growth around the world. So if you look historically, this year, Japan has been very strong. Western Europe has been very strong. Even North America has been very strong, and we announced a couple of deals there. And I think there's more to come in North America. But I don't want to be constrained so much by the past, and that's the kind of thing we'll go into more detail on Investor Day because I think the performance and the numbers open up different opportunities.

[Operator Instructions] And our next question comes from the line of David Joyce of Seaport Research Partners.

In thinking about your programming strategy, how do you weigh the pros and cons along with the various economic impacts of running concert films or rerunning a recent release like Formula 1 or an old one like Jaws Grand is the 50th anniversary versus showing a new theatrical release like Jurassic World that you were not able to show earlier in the summer?

Yes. Well, just to get the facts straight, Jurassic World came out the same week as F1 did, and we had committed to F1 already. So I mean that's the first rule is that when we commit to something, we sign a legal contract and we can't change that, although we could try and fill it in from show to show. But for the core part of your question, not every week has films that are going to break out. So we try and use alternative content or local language films more in the slower periods or bring back as you asked about. So we look at our calendar for this year and next year. And for example, we know that on July 17, Odyssey is coming out. So obviously, we're not going to bring back a film or show a concert film on that weekend. But on other weekends, there's just no big releases coming. So we know that way in advance, and we'll make plans for how to fill in the schedule.

And one thing, another context to put it in is we recently hired someone who has experience doing programming on the exhibitor side, and they're working with our distribution team to try and maximize the box-by-box programming with our Chief Content Officer, Jonathan Fisher. And if you look at the third quarter, that's the perfect example where we plugged in a lot of things and we mix and match. So just one example because it comes to my mind is the weekend with weapons open, we played weapons a lot, but not everywhere, and it did really well. But Formula 1 still had a lot of gas in the tank and to use a bad analogy. But that's now close to $100 million. So we're able to mix and match a little bit more and particularly in the periods where there's no obvious winner. And Q3 was the perfect example of that. That's what really drove the outstanding box office.

And is there a margin differential? Like is there marketing on some sorts of content that tilts the scale for you one way or the other?

Not really because, for example, we brought back Jaws, but we timed it to the 50th anniversary of Jaws. So we didn't have to put up a lot of the marketing. The studio put it up in connection with the 50th anniversary. This weekend, we're playing on the Springsteen concert. And what we did was that was timed to the theatrical release of the Springsteen movie. So it comes with a lot of marketing. So as we try and figure out what slots to put them in, one of our considerations is not having to put up significant incremental costs.

Our next question comes from the line of David Karnovsky of JPMorgan.

Maybe just 2 quick ones for Natasha. The full year guide implies a little bit lighter of margin in Q4. Just wanted to understand the puts and takes there in terms of install mix, box office or whether there's any kind of marketing consideration for Avatar. And then just similarly for working capital, how should we think about the balance of the year given those big titles sitting in the final weeks?

Sure. David, I'm not sure I heard the first part of your question, but I think the second part was about SG&A and then box office, correct?

No. The question was basically about margin in Q4, the guide implying that being down a little bit from what you've done year-to-date. Just wanted to understand the puts and takes there and then the outlook for working capital given Avatar is sitting late in the year.

Yes. So our guidance for EBITDA margin was updated to low 40s in last quarter. Year-to-date, we're at just under 45% at 44.9%. And the first half was at about 43%. So I think the individual quarters, obviously, we see they drive different margins. But we have said this before that Q4's margin, we expect that we'll have incremental dollars for Avatar marketing, which we will spend in Q4, but the Avatar box office will come in not only in Q4, but then we'll get it in Q1 as well. So you'll have lower cost in Q1 with respect to marketing on Avatar. And then -- from a cost perspective, we'll hold a few more events versus Q3, for instance. We obviously attend several conferences along with our Investor Day that we're planning in Q4. But other than that, there would be nothing that significantly hinders the margin from continuing along its pace towards our guidance of low 40s percent.

Working capital?

And on working capital, I mean, from a cash flow perspective, this was a record quarter for us. And as we look at cash flow, and we've talked about this before, but when you look at cash flow on an annual basis, that's essentially what we're aiming towards continuing to grow that conversion rate and hitting at above 50% and continuing to grow that on an annual basis is essentially where we keep moving, and I'm sure we will work towards updating and providing more insights and guidance into our cash flows in the future as well at Investor Day.

[Operator Instructions] Our next question comes from the line of Mike Hickey of -- the Benchmark Company.

Rich, Natasha, Jennifer, congratulations guys on a great Q3. First question from us, just looking at your market share here year-to-date, Slide 11 in your deck, 3.8%, definitely setting a record. It looks like domestic 5.2%; China, 5.3% and rest of world, 2.4%. So I guess the question, Rich, is how you're thinking about rest of world market share gains relative to your forward growth targets. It seems like rest of world could be a great unlock opportunity for you. Or is there something structural holding you back from achieving sort of the market share that you're seeing in the U.S. and China? And then I have a follow-up.

The only thing holding us back, Mike, is more theaters. So obviously, in growth markets like Vietnam and Indonesia and places like that, we have much less penetration in India. So you have lots of screens, big populations and not as high a percentage of IMAX theaters. So obviously, we'll target those, which ties to an earlier question and try and build up the theaters. But there's nothing endemic about those markets, just there's not as many IMAX theaters. And by the way, it a little bit goes the other way because as we double down on local language films like we've had local language in Malaysia, in Indonesia, in Saudi Arabia, as we step up our local language, that will obviously increase our market share in those territories. So there's nothing broken. It's just an opportunity that we need to fill in more.

And then last question, I promise I'm not being a wise guy here, Rich, just on your installation growth potential for '26. Curious your thoughts there just given the extreme success you guys have had in 2025, which might be slightly a pull forward or not. But just curious your confidence here on '26 and the signings have been very strong.

So let me be clear. There's no pull forward there. It's a result, the reason at the high end is we had really good signings here, and we have such a good slate and good slate ahead of us in '26. that I feel very good about where we are this year. Obviously, we raised the range of our guidance. And for next year, Mike, if you look at the correlation between film slate, film for IMAX and the large movies, it should be a positive year. Again, however, we're in the middle of our budgeting process. And hopefully, by Investor Day, we'll be able to give you more concrete guidance.

Our next question comes from the line of Pat Scholl of Barrington Research.

I just had a question on alternative content. I mean you laid out your visibility for the broader Hollywood sleep. Can you maybe just talk about the visibility that you have into the alternative content to sort of even out those box office periods?

We have some visibility, but a lot of it arises in a couple of months before it comes out. And we're doing -- I think it was in my script, I don't recall, but we're doing the League of Legends in China, which came about. It got finalized, I don't know, 2 weeks ago, and we're doing over 220 theaters for the finals and then we're doing the semis in the quarters. So it's both. Some things will be -- like we have a music, 2 music projects, one in February and one in May, which we're in the middle of documenting right now. But on the other hand, there will be other projects that will come up more or last minute and some of the live events where directors speak around those -- their movies, that tends to come together a little bit later. On the sporting things, I think, come a little bit later. The music -- especially the music docs, they come more in advance because the studios know when they're being released. So it's a combination of the type of content.

We have time for one last question. And our last question comes from the line of Steven Frankel of Rosenblatt.

Rich, you guys have pointed out that local language has consistently been over 50% of the box office mix in China over the last couple of years. Do you think that's a permanent change that your penetration into Tier 3 and Tier 2 markets means more local language? And can you do things to kind of accelerate that local language growth in China going forward if you think maybe Hollywood has peaked as part of the mix there?

Yes. I mean I wouldn't get pinned down to an exact percentage, Steven. But I do think that local language is permanently going to be a bigger part of the box office than it was before. And I think you put your finger on one of the answers, which is because of 2 or 3 and 4 markets and our increased penetration there. And I also think, and this is important, that we've done a better job of penetrating the local markets there. So our CEO there, Daniel Manwaring, is extremely connected in the film industry there, and our team has done a very good job, and the results speak for themselves. With that said, I wouldn't give up on Hollywood box office.

So for example, Avatar traditionally does very well in China. It's getting in the same day as it got in the U.S. So I would expect to see strong results there. Zootopia at Disneyland in Shanghai, there's a separate part of it called Zootopia Land. So it's a very big franchise over there, looking into '26. The Nolan movies do very well. And obviously, the Odyssey is a very high profile one. Dune has done well there in the past. So again, that's why I'm not sure about particular numbers and percentages, but I do feel like local language will continue to be strong, but don't give up on Hollywood quite yet. I mean -- and you should just be reminded in that context that our take rate on local language is higher than our take rate on Hollywood films in China, and that's because of the theatrical split. It's not an IMAX anomaly. It's just Hollywood films get a lower split than local language. So financially, that's a pretty good thing for us to keep in mind.

This concludes the question-and-answer session. I'd now like to turn it back to Rich Gelfond for closing remarks.

Yes. Thank you very much, operator, and thank you all for joining us today. I met some pre-pandemic was on a tremendous growth curve. And as you know, '19 was our best year ever at that point. And then unfortunately, not just for IMAX, but a lot of the world, the pandemic slowed it down. And we've been using the time since the pandemic to build up a lot of different pillars for future growth, and they include things like local language content, different ways of looking at marketing, alternative content, not just local language in one country, but across many countries, rationalizing our cost structure. And I think in 2025, I mean, we saw good years in '23 and '24, but all that really came together. And we kind of broke out. And I think if you want to find a quarter that epitomizes that more than anything else, it's the third quarter we just finished.

And I said this during my remarks, but I think you can't summarize it any better than to say the North American box office was down 11% in the third quarter and the IMAX box office globally was up 50% in the third quarter. So if that doesn't show how we've separated ourselves from people in different businesses that some people confuse, I think this quarter painted a very clear picture. And as you could tell from Vikash and my tone on the call, when you look at the slate and you look at a number of other factors, I think we're very optimistic that we can maintain kind of that momentum going forward. So thank you all very much, and we'll talk to you -- hopefully see many of you at Investor Day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Welcome to our 32nd Annual Media and Telecom Conference. We're thrilled to start the day with Rich Gelfond, CEO of IMAX, and Rich has a lot to talk about today.

So you've clearly managed your business extremely well and what is only -- can only be described as a very challenging box office environment post pandemic. What impact has your global programming strategy had on your business?

A really significant impact, Jessica. As a matter of fact, if you look at the theatrical industry, in general and particularly North American box office, it's having a very challenging year.

For IMAX, this will be a record year. And we've guided to $1.2 billion in box office revenue, and we're tracking very well against that number. As a matter of fact, the only reason I'm going to reveal this is because online at the end of every month, we post our box office, so we're going to post it today. So quarter-to-date, we're at about $270 million, and consensus is $286 million, and we have a month to go.

So while others in theatrical have kind of been negative and saying the box office is terrible, not to go too overboard with it, but quarter-to-date, we're up 40% from last year. And the North American exhibitors in North -- with their box office is down14% quarter-to-date. So we're just in a completely different business. And we've been saying that for years. And this is -- last year, I guess, the first year investors really understood that much more, and our stock has been on a tear, and we're close to a 5-year high on a consistent basis. But who cares about that? What I care about is how the business is doing, and it reflects very much reality. So some of the key points, I'm sure we'll get into this, is we've really pivoted where we do not just North American movies, but global content.

So 1/3 of our box office year-to-date is foreign language film. We're doing a film now called Demon Slayer, which is a Japanese film, and it has already become the biggest film in Japan in the history of IMAX. I don't remember exactly the number offhand, but we're releasing it in 40 other countries. And this movie will do really high numbers for us. And I bet most people here never even heard of the movie.

And I think one of the bigger issues with Hollywood is that they have a mantra, which is streaming, streaming, streaming, and they've been just so focused on streaming. So pre-pandemic Hollywood's market share was 80% of content. Last year it was 60%. So if I were running a company, I think I'd have a lot to answer for losing 40% market share over that period of time, but everybody seems to be doubling down on streaming whereas the only ones I can think of are IMAX and Netflix that have really been looking globally for box office and it's been really...

I was going to say that you sound like the Netflix of theatrical. So you take a lot of local content and it translates.

Yes. And it's not just in the country, it plays in. Demon Slayer is a good example because we're showing that in 40 other countries. And then just briefly, we also do alternative content. So in the last week or 2, we've done a dead rerelease of a film, a Dead live concert from Golden Gate Park. We have prints playing right now. Later in the year, we have the Stones. So we all -- we program it like almost like, someone who owned a box would program it. We did League of Legends in China, the final and it's sold out in 160 theaters, pretty quickly.

So we have a totally different view. We think -- we know we have a platform and we're in 90 countries, and it's just a different business.

All Right. We will get back to some of those, the comments that you made. But in a world where premium or demand for premium is so great. How do you think about the positioning of IMAX in the overall landscape?

Well, I think your point about premium applies beyond theatrical. So if you look at sporting events, things like F1 or Formula One or you look at concerts, the public post pandemic seems to really be seeking out premium experiences. And we have competitors, their biggest similarity is they have an X in the name that's how they compete with us.

But the public really wants premium experiences, and they're willing to pay extra for them. And our market share has gone up consistently. We have a 40% higher market share than we had pre-pandemic. And one of my favorite statistics is in indexing in the United States in our 50-plus year history. Before this year, we had 5 films where we did over 20% of the box office on 1% of the screens.

In the last 3 months, we've had 3 films that have done over 20% of the box office on 1% of the screens. And when you look at the demand, because part of your question was how do you sustain that? The ecosystem really gets numbers. So the studio is really leaning in. The directors are certainly leaning in. And what we do is we have a film for IMAX program where we use IMAX Cameras both film and digital to capture images.

And for 2026, we already have 11 films committed, which is about the number we had for all of this year and '27, '28, we even have films for '29. So I think it's become like a virtuous cycle where I talked to one director last week who called me up to talk about the next few films he was making. And he said, well, I need dates for '27 and '28. And he said, we got to talk about it now because I'm not going to release the film if it's not released in IMAX.

So on that topic films for IMAX films, I think you've more than doubled the number of titles this year since -- in the past year or almost doubled. Can you talk a little bit about how you're able to drive studios and filmmakers to use the technology in production?

Yes. As a matter of fact, I like to think about how much content we put through the network. And this year, we'll have 130 separate piece of content. So that includes Hollywood films or local language films or alternative, all that. We don't have to push it through this demand. So this anecdote, I was telling you about the filmmaker, I mean, he called me last week on vacation to make sure that he gets these dates. And there are projects out '28, '29, where the filmmakers are driving it and the studios are driving it.

And one of our most difficult nuts to crack not surprisingly, historically was the Walt Disney Company because they're so -- their brand is so strong, and they lean into their brand, but they observe that IMAX was doing all this over-indexing. So really, it started on their own they said we want to lean in heavily to the IMAX brand, and they do it really way in advance. So Avatar is the end of this year, we already with them have great brand campaign centered obviously around Jim Cameron in the movie, but IMAX is a really big part of it. So it's much more their ability to read the financial results and then they're coming to us.

Right. So what is the typical difference in how these films perform, the films in IMAX versus call it a regular film like...

Well, in IMAX, we used to be about 10% of the domestic box office for kind of a blockbuster sort of like a Marvel film or another kind of action film. But this year, we're doing 15% on those kinds of films. So if you're dating a blockbuster film, it kind of sounds hard for me to believe, even though I'm saying it is a lot of the studios plan their release schedule around the availability of IMAX screens. And a lot of behind the scenes trading takes place where a studio is saying, "I'm going to release a film on this date," but we're booked with someone else, and they move the date.

There were 2 films dated on the same day, Predator from Disney and Running Man from Paramount this year and that we were going to share screens for both of them, but they worked it out, so they moved the dates. So now we have a full week to play Predator and a full week to play Running Man. So it's kind of ironic because all this is very much in the background, but where we play a strong role in curating how these films fall together, like it's not an accident that a lot of blockbusters aren't dated on the same date because the studios really want an IMAX release.

And do you envision a point in time where most or all of your films across your network are filmed for IMAX?

I don't think so, Jessica. And the reason is we like to do special films. So obviously, coming up in '26, one of the most special is The Odyssey that Chris Nolan is doing. And Chris approached us, I don't know, 1.5 years ago to say, could I have July 17, 2026. And we usually don't make this bigger commitment, but we committed 3 weeks to him to do that. And increasingly, that's very much what happened. So in '26, we're playing the new Star Wars, the Mandalorian film. We locked that down. I don't know, 6 months, 8 months ago.

If you think of the real Avatar we locked up a long time ago. So the studios and the filmmakers recognize the incremental box office. And also, this kind of sounds weird, especially at a financial conference because you would think it's all about the money. But for the filmmakers, it's about more than the money, it's about painting on the biggest canvas on the planet, and it's the way they want their movie shown in the way they want to do it.

So when they work with us, and they have really good financial results. And we've done tests where you ask how much the audience likes a film after they've seen it in IMAX and you ask how much they like the film seeing in a regular theater. And by the way, it's -- we -- they are separate groups who ask, but that you get a much higher like score. So it actually -- it makes the film better for the audience and going back to one of your earlier points, especially at a time where people are leaning into premium and especially coming off a time when they got a little tired of watching everything on the couch and taking all kinds of breaks and their kids coming in and out, this has become a much more popular way to watch movies and the filmmakers really know that.

So there's a lot going on. We've kind of alluded to streaming or talked about streaming a little bit already. But -- so I'm going back to that. There's just so much going on in theatrical production and distribution even with the streamer. So you have Amazon, MGM with coming releases, Mercy and also Project Hail Mary. Apple released Formula F1. Netflix, K-Pop Demon Hunters went from streaming to theaters. So now with the streamers coming to theaters, could you talk about the implications for this on your business and theatrical overall?

Well, first, at a very high level, what drives IMAX are the slots that we have. So even though I said there's 130 pieces of content, the main blockbuster slots, I don't know, there are 15 of them that drive a lot of the box office during the year. And you have the studios competing for those slots. Well, now you have the streamers competing for those slots. So if there are 5 people competing for these slots, you now have 8 because you have Apple and you have Amazon and you have Netflix. So like in any business, having a stable supply but more demand. I mean that's a really good thing for your business in the most simple terms. And we made a particular push into streamers.

A lot of people have treated streaming or theatrical as like a religion. I'll never show something streamed or I'll never take my product and put it in a theater. But we have a much more pragmatic view and I really think we're going to succeed at. It's the new model, it's going to be some kind of hybrid. And we figured out that we want to be part of that hybrid. So a couple of very quick examples. In F1, which was produced by Jerry Bruckheimer and Joe Kosinski directed it, both of whom did Top Gun and they did Top Gun with IMAX, where we're really successful.

A year or 2 before they started the movie, they came to see us. And they said, tell us what an IMAX date could be because we haven't succeeded theatrically and we want to lean into theatrical. So we were a part of it. Their distributors were Warner Bros, but they didn't hire their distributor until about 6 months after we reached a deal. So they did an unconventional route. They didn't go through a studio. They want us. And we're close to $100 million in IMAX in F1 and the film has done about $600 million worldwide. So we're about 15% of the global box office. And it's a different movie in IMAX. So I wouldn't say that about every movie, but if you see it is just a completely different movie. And then I don't know.

As you know, I could talk about this for a month, but Narnia is coming out the end of '26 and that's a Netflix film. And everybody knows that Netflix has had kind of a bias against theatrical and everybody is fighting with everybody else. So Greta Gerwig is the one who really started it. She felt that she was really making an IMAX movie. And she always wanted to make an IMAX movie and she and we came up with a plan, where we talk to Netflix. And so -- in Thanksgiving of '26, the film is coming out in IMAX a month before it comes out on streaming. And the agreement we made, which -- you understand, we didn't have to do that movie. So we're not like a theatrical North American exhibitor that needs the content we have more demand than we have supply. So we were able to drive a deal that worked for IMAX, which is one where we said. Okay, we'll do it, but we want theatrical marketing.

We want Greta to do her interviews, real premiers, you'll see the marketing, which we're already working on, much of which is going to say, see it on IMAX and in Netflix and it's exclusive to the IMAX network. So our roughly 1,800 theaters worldwide. So if you're not in the IMAX business, you're not showing that movie. So I think that's a tremendous opportunity.

And we saw this weekend even with the K-Pop movie that Netflix released that despite at a high level, people fighting, the audience is really happy to see the right movie which you could stream in a theatrical way. And it's really worked. And Netflix can see it for themselves, but at Netflix, I think there are a lot of people, including Ted to some extent, that think this is a good experiment and are looking forward to the results of it. And I know it's hard to believe, but we get along really well. We're working together. And I do think the other part of your question had to do a traditional exhibitors. I do think over time, there's going to be a model where theatrical and streaming work together, I think this weekend was just the beginning of it. And I do think not only because of the slots, but because the filmmakers will be significant beneficiaries of that.

No, all things definitely seems to point to theatrical even with Netflix, which is a huge change. But there's also other stuff going on in the industry. It seems like finally, after years and years of expecting this, that media consolidation is just seems inevitable. And we're starting to see the beginning with Paramount and Skydance and this ramp in speculation about legendary and Lionsgate or Lionsgate and somebody, likely sale of Warner Bros, post the split from Warner WBD. Are there any implications of all of this on your business?

Yes. I think they're mostly good ones because I think what you do is you bring more capital to studios or entities that are undercapitalized. So Paramount guidance is a really good example. So David Ellison announced that, I guess, some conference recently, that he's going to do, I think, 20 blockbusters sorts of films rather than Paramount was doing 80 a year just because of the capital constraints that they were operating under. And I don't remember the number, but we've done probably 15 movies or more with Skydance over the years. We have a great relationship with David and with Jeff. And we're already discussing more movies that they could do in IMAX. So that's kind of one example.

And then your other part about consolidation, another place I would go is like Amazon MGM. So Amazon was very kind of leaning away from theatrical, and then they bought MGM. And on the list, you mentioned Hail Mary and Mercy and a number of other movies, they're very interested in IMAX release.

And then there's the numbers. I mean, despite what some people say, you can't deny the fact that a theatrical release enhances the value of streaming. And in fact, we did a study. I don't talk that much about it because it's not the most scientific thing, but I think directionally is important, where we showed consumers, movie posters and some of them said, see it in IMAX and some didn't. And we said, how likely would you be to want to see this movie in streaming. And again, one reason I want to push it too hard because it was almost too good to be true. But when you put the IMAX name on the poster, so many more people said they want to see the streaming version. I think F1 is going to be a great test right now because Apple really held a fairly long window originally, they made it for streaming.

But I think we're going to see great streaming numbers. And I think it's going to work for them. And then I think the exhibitors like we just saw this week and are just going to decide how is it better for me not to play that content? I mean I just think it's like kids in a sandbox. But when people kind of get real about what's best for their business, they're going to converge in a way that's going to be good for everyone.

So maybe moving on to markets outside of the U.S. I mean you generated the majority of your revenue outside of North America. How much more runway is left for growth in these markets where you still seeing somewhat underpenetrated?

So we give out kind of guidance about what the addressable market is. And the last time we did that was 3 years ago, where we're going to have an Investor Day later this year. We're going to give out a new or revised version. But we're about 50% penetrated now of our total addressable market. Even the U.S., which is one of the most penetrated, we made deals with 8 new different chains last year.

In Australia, last year, we had 4 screens and the year before, we had 2 by the time Avatar opens this year, I think there'll be 10. So it's the kind of thing. It's a very weird dynamic because people say, well, it works in Malaysia and Korea and Japan, but it's never going to work in Australia. And then surprise, it works in Australia. And then you have the theater chains compete with each other, and that's what's going on now in Australia. So that's why it's grown so rapidly.

Another really rapid growth market is Japan, where we've had 11 signings so far this year for new theaters and the most we've ever had, I think, is 12. Western Europe is still very underpenetrated. Obviously, the Middle East is really good growth area for entertainment in general. And for IMAX, the disposable income is high. The IMAX ticket premium, they could afford it. So that's a very good market for us. A little ways probably a little farther back is South America. There are a lot of -- I hate to use the word at a conference like this, but there are a lot of tariffs coming from South America, and it's really hurt our growth in the region because they're so high. And obviously, that world is changing fairly rapidly. So we'll see what happens there.

Most of our growth will come outside of North America. And by the way, 2/3 of our revenues are outside North America now. And before anyone asked the question, the economics are virtually the same, anywhere in the world. So it's not like a subsidized thing. And Formula One, I think that 2/3 of its business outside of North America. So I think again, for a relatively small company, were really global, and I think that will really sustain our addressable market over the next number of years.

I don't want to front run your Investor Day, but have you said what your network potential is?

We haven't and we probably will do that at our Investor Day. Other than to say it's about double where it is now, we haven't said that.

So in the first half of this year, your local language box office is already over 50% higher than in '24. How do you view local language content evolving as a percentage of your mix?

So if you go back to a pre-pandemic around in '19. In China, local language did pretty well for us. But that was about it. And I don't remember the number. I think it was probably 10% of our box office local language. In '23 and '24, it was around 20% of our box office. And as I said, this year, we're about 1/3 right now. But earlier in the year, as you know, there was a Chinese film called Ne Zha 2, which did over USD 2 billion, mostly in China, but globally. So we were -- it was 40% of our box office. So now it's settled down to around 33%. But as I said, Demon Slayer is going to be a pretty big movie. I think 40% is a reasonable goal over the next couple of years, but it could be a lot more than that.

So a little anecdote that's right up to date is, we had a very good second quarter. We beat on almost every line and our stock went down 15%. And the reason was, everybody said, "Oh, August, it's going to be a terrible month, Fantastic Four is the last of the blockbuster movies coming out of Hollywood. And we tried to say we have Demon Slayer, we have alternative content this that. But investors are very much in this North American mindset. And had they sold off the North American exhibitors that would have been right because as I said, they were down 14%.

Well, we're back higher than we were then because we're quarter-to-date, up 40%. And I think that's one of the biggest disconnects as people think of our business like they think about North American exhibitors, but the local language business is huge. And there's been a huge change in the local language business in the last couple of years, which is that we did very well in the country where the film was from. So if we did a Japanese movie, it did very well in Japan or a Chinese movie in China. But they've started to migrate. So a lot of the box office. So I don't want to remember the name of the movie, but Anime is very successful globally. So some of the anime movies we've done give us more box office in China than they give us in Japan. And that's a trend. I definitely see happening.

And again, I think eventually, it's an opportunity for Hollywood, but they're still so obsessed with this streaming narrative. And again, nobody asked my opinion so they can run their business the way they want. But I think that's an obvious way to go. And I think you'll see more of that.

Right. How do you think about allocating capital across regions? Do you see opportunity here in the U.S., China? Or is rest of the world more interesting?

Well, we have 2 models for our theaters. One is where we sell our equipment and one is where we do joint ventures and just a high-level version of our model, when you blend it all in addition to upfront payments for our systems, we get around 18% of the box office. So if somebody buys a ticket, we get paid by the studio and we get paid by the exhibitor. We get paid more if it's a joint venture because obviously, we've gotten less money upfront, whereas if that's called a sales-type lease. So we've been a little bit cautious about our capital.

So a bad story probably, but one not so bad for us is we had 60 theaters in Russia, which are all closed now, but we didn't joint venture any of them. We sold them. So we got cash upfront. So when that happened, it didn't really have a dramatic effect on us. So Jess, it really depends very much on the territory. So in China, we used to do more joint ventures, but we've cut it back as the global situation has changed a little bit. So I think since we're generating more cash. I think you'll see us allocating more to JVs in the right territories. We did a pretty big deal with AMC this year and a pretty big deal with Regal, where we did a number of theaters in the U.S. and some foreign markets.

So we think about it less by region and more by country. And again, Japan is one. We love doing JVs with because their per screen averages are so high. Again, we get a percentage of the box office. So you'd rather do a joint venture in Japan than you would in India because the box office is so much higher. So I think that's maybe a better way to think about capital allocation.

Okay. And then maybe moving on to some of the things on the content. For years, franchises in Superhero films dominated the box office, but more recently, they've had big success at best. And we've seen some of the original IP do really well. How do you view these dynamics?

So I think it's good for IMAX because of Warner's 7 movies in a row that have been #1, every one of them was an IMAX film. So Sinners is a pretty good example. For those of you who haven't seen it, I'm sure you know, it's basically a vampire story about the Jim Crow South. And you wouldn't -- that doesn't scream IMAX to you. But Warner Brothers and we both really leaned into the fact that it was filmed with IMAX film, and it was the first movie after Oppenheimer, which won the Academy Award and did a $1 billion -- close to $1 billion.

And Odyssey, which is the next one being filmed with IMAX film cameras. And the narrative was Autumn filmmaker, filmed with IMAX film and Ryan Coogler really leaned into that narrative. So it broke out in the first week and obviously, it was a great movie by a great filmmaker that's not a formula that works. So if it's not a really good filmmaker. But I think it kind of says to the public that this is a special movie. It was shot with IMAX film cameras. And I'm sure most people here heard the anecdote that we and Universal put tickets on sale for Odyssey, a year in advance. And we only put some on for the film ones, and it completely sold out a year in advance. So that's kind of the power of the IMAX brand to have something -- I mean no one had seen a trailer and no one -- Chris Nolan is notoriously secretive about his product, but it's sold out.

And like in New York, I think it's sold out in 1 minute. So I think for original IP, it helps us because us we can really help distinguish it from other IP. I also think the media is way too quick to generalize. So yes, Superhero movies haven't done quite as well. But if you look like one example, Fantastic Four, this was the best Fantastic Four in the franchise ever. So I think you have to scratch a little below the numbers to see what's really going on. And who would have thought that this year, Horror, I guess that's another example like Conjuring opens next week. It's tracking extremely well and final destination, which Warner did really well. And Sinners did really well. So I think people's taste change, obviously, Westerns used to be a big deal and they're not anymore. So I think the studios are just going to be flexible and understand that they need to go in different directions.

Right. And you -- over the years, you've experimented with a lot of different kinds of content. I mean you mentioned earlier, some of the concerts, prints and the rolling stones, et cetera. You've done live events, you've done some sporting stuff, you have experimented. Can you -- what's been successful and how big of an opportunity is this for IMAX?

So as I said, I was really surprised by League of Legends. By the way, we not only sold out, but at a higher ticket price than the regular IMAX ticket price. But the other thing that was good about it was it brought a completely different audience in who learned what IMAX was. So they came back presumably to do other things. This recent run of films we just did. So we did prints over a couple of days of rerelease and we did $2 million this weekend on it.

This week -- prior weekend is a really interesting example. We did about close to $15 million over the weekend, and we did $3 million on a 50-year-old movie Steven Spielberg's Jaws. I was worried about it because I thought the Shark might not look so good, 6 stories high, but apparently, it looked okay. And then we did the Sinner movie, we brought back Formula One, which still has playtime in it and did well. There were 3 or 4 local language movies together. But as a way to give you context, this year was really a rapid change we've been building to this year. And IMAX was on a great trajectory until the pandemic came and then obviously, the pandemic affected us.

And last year was -- '24 was our best domestic box office ever. So it's not like this is overnight, but it's been happening over time in this way. And we shifted our focus a little bit to how to program these theaters a little bit better than just blockbuster films coming out that weekend. We have a different philosophy about doing it. So our original budget for this weekend was $4.4 million, our internal budget. And we did $15 million. So I'm using that as an example of just how much our business has changed and the way we're managing it has changed.

Diversified portfolio. So given the strength -- I have to ask this question because everyone has to ask an AI question. But I mean given the strength of your brand, the reputation is the most premium offering with leading technology, what are the opportunities and the challenges of AI for IMAX. Then just maybe talk a little bit about how you're currently integrating AI in the business and how you think that might even change over time?

So the most obvious example, which we're doing is just how to make our business systems better. So whether it's how to make programming decisions by getting more data and analyzing more deeply how things play, you'd kind of be surprised or maybe you wouldn't be by how data a lot of the analytics are. Well, we're playing a film that's kind of similar to Mission Impossible 2. So it will do the same as Mission Impossible 2. But you could use AI tools to be a lot more sophisticated than that and we're doing that.

We monitor every IMAX theater in the world in real time. So whether you're in Shanghai or you're in St. Louis. When you go to an IMAX theater, we know how whether the bulb is getting old, we know whether the sound is loud enough. I know a lot of people think IMAX, wow, it's a brand, how exciting, use your brand. But it's -- the brand is the sum of the parts. The brand isn't something that exists outside. But we get tons of real-time data, and we're trying to figure out ways to better capture that data and could we control our inventory better by understanding something is going to break 2 months from now, so save costs.

We're obviously using it the way a lot of other companies are in the finance area, finance marketing. And then we're using it in the image enhancement area to some extent. But remember, we don't only film with our cameras, but we take other content, and we blow it up. And obviously, Jaws would be one example. It wasn't filmed last week. And there are a lot of tools out there that help you clean it up again, as I said, I was really personally afraid of what that chart would look like but there are a lot of tools available that can make it better.

And then, of course, there's a whole question of the software aspect and what it does to filmmaking. And I know there's a lot of controversy over what role it's going to play. And I would say, we're not trying to invent new allocations but we're -- we pay close attention to it and where it's going and how it's going to change filmmaking. And actually, I was on the set of the Mandalorian, the new Star Wars movie, that Jon Favreau is using in. And by the way it's not AI, but the way they have new tools that can help film and IMAX version at the same time you can film a regular theatrical version is completely different than you could have done years ago.

For those of you who don't know, we have a different aspect ratio. So IMAX is much more vertical than the letter box and horizontal. So you would take one version and then you would blow it up or you wouldn't. And Favreau and the Disney team invented a tool ironically, they'll talk more about this using the Vision Pro, where at the same time, he could shoot an IMAX version to a different aspect ratio and shoot a regular version. So these kinds of tools of filmmakers, whether they're strictly AI or they're more coming out of the innovation that's coming out I think will help us further differentiate our content.

Okay. So in the less than a minute we have left, I just want to -- I have to ask the question, but as you look out over the next 12 months or through '26, what are you most excited about? What do you think the surprise will be?

So those are 2 different questions. What are we excited about? And what could the surprise be? So you cannot be excited about Odyssey. It's the first film ever shot completely with IMAX cameras, and we spent a fair amount of money and we developed a new generation of cameras, which has a lot more features and is much more flexible. And the principal photography is pretty much done. And as you know, the cast is like red carpet in itself. And Chris' track record in Emma is obviously quite enviable. So very excited about that. For this year, very excited about Avatar. I've seen, I don't know, 20 minutes of the footage and I think it's dumb to bet against Jim Cameron. I think he -- guy knows what he's doing and extremely excited about that.

And then again, next year, the new Star Wars movie coming out really excited about. And then surprise ones, I'm trying to think about that this year, my pick was Formula One. And I think it was the surprise of this year. I'm just not going to go out there, Jess, because I hate to -- and as you know, I like saying whatever I think, whatever the consequences. But I just think it's a little too early to say what it's going to be, but there are a lot of kind of original content. And again, I'm not naming these, but one of them like Amazon MGM is do a Hail Mary, which has gotten a lot of positive views around it.

And I think Disney always comes up like this year it was Lilo and Stitch, they always have things that you haven't thought about it before. And how could you bet against Warner with the Winning Street they're on right now. And I've looked at some of the Paramount stuff coming. So I'm quite sure there will be, but it's too early to identify them.

Great. With that, we're totally out of time. But thank you so much.

Okay. Thank you.