Executive Summary / Key Takeaways

• Strategic Digital Evolution: National CineMedia is aggressively transforming into a data-driven, technologically advanced cinema advertising leader, leveraging its NCMx platform, programmatic offerings, and self-serve solutions to capture premium video ad budgets and deliver measurable ROI.
• Unmatched Audience Reach & Immersive Environment: NCMI maintains its dominant position as the largest cinema advertising platform, offering unparalleled access to highly sought-after young, diverse audiences (median age 30) in a uniquely immersive, high-attention environment that differentiates it from saturated digital and linear TV.
• Fortified Financial Position & Shareholder Returns: The company boasts a debt-free balance sheet, a new $45 million revolving credit facility, and a commitment to shareholder returns through a $100 million share repurchase program and reinstated quarterly dividends.
• Pivotal Partnerships & Operational Enhancements: The recently extended AMC agreement standardizes show formats and aligns payment structures with performance, enhancing inventory monetization and solidifying NCMI's national leadership.
• Optimistic Outlook Despite Headwinds: While Q2 2025 faced macroeconomic and tariff-related ad spend caution, Q3 guidance reflects strong pacing and new business, with management optimistic about sustained box office recovery and advertising demand through 2025 and 2026.

The Silver Screen's Enduring Allure: NCMI's Core Business and Market Leadership

National CineMedia, Inc. (NCMI) stands as the undisputed leader in U.S. cinema advertising, operating an expansive network across over 17,500 screens in more than 1,350 theaters, encompassing all of the top 50 Designated Market Areas. Its core offering, the "Noovie Show" and the Lobby Entertainment Network (LEN), connects brands with a uniquely valuable demographic: young, diverse audiences, predominantly Gen Z and Millennials, with a median age of just 30. This demographic consistently outperforms traditional media benchmarks in engagement. In an advertising landscape increasingly fragmented and attention-scarce, cinema offers a premium, immersive video format that commands superior consumer attention compared to linear TV, digital, social, and podcasts.

The broader industry is witnessing a significant shift in advertising budgets. Brands are increasingly moving away from saturated streaming and video platforms, where ad fatigue is common, and turning to cinema for its broader reach and deeper engagement. NCMI's strategic response to these market dynamics is a robust digital transformation, focusing on data-driven solutions and flexible buying options to solidify its competitive moat and capitalize on this evolving opportunity.

A History of Resilience and Strategic Evolution

NCMI's journey began in 2006, built on foundational, long-term exhibitor service agreements (ESAs) with major circuits like Cinemark (CNK) and AMC (AMC), and network affiliate agreements with others such as Regal. These exclusive rights to sell advertising formed the bedrock of its extensive platform. A strategic move in 2013 saw NCM LLC divest its Fathom Events business, retaining a minority stake, to focus on its core advertising operations.

A significant test of the company's resilience came in April 2023 with NCM LLC's Chapter 11 bankruptcy filing. However, the company successfully emerged in August 2023, with NCM, Inc. regaining full ownership. This restructuring discharged historical debt and allowed for a fresh start, though it did involve the termination of the Regal ESA, impacting associated beverage revenue. Post-bankruptcy, NCMI has aggressively pursued capital management strategies, including the approval of a $100 million share repurchase program in March 2024 and securing a new $45 million senior secured revolving credit facility in January 2025. This new facility, a cash flow-based loan, significantly reduced interest expense and allowed NCMI to achieve a debt-free balance sheet, providing substantial financial flexibility.

A pivotal development in April 2025 was the five-year extension of the ESA with AMC Theaters through 2042. This agreement standardizes the show format, aligns payment structures with performance metrics, and resolved prior litigation, further solidifying NCMI's national leadership and enhancing its inventory monetization potential.

Technological Edge: NCMx and the Future of Cinema Advertising

NCMI's core differentiated technology lies in its NCMx data intelligence platform and its expanding suite of digital advertising tools. This platform is central to NCMI's strategy, enabling it to compete effectively with broader digital media companies on data-driven, outcome-based results. NCMx supports nearly half of NCMI's sales revenue, with targeted insights leading to over 30% higher engagement and a directly attributable 50% sales lift for advertisers. The company has also observed that its QR code download rates are "by far the highest" in the industry, providing a powerful mechanism for real attribution and consumer follow-up.

NCMx is continuously innovating with new products:

• Bullseye, an AI-powered product, leverages audience signals to deliver dynamic, hyper-localized messaging at scale. A national telecom brand, for instance, utilized Bullseye to deliver 253 AI-generated ads, resulting in double-digit gains in foot traffic to locally promoted stores within two weeks, leading to a campaign renewal.
• Blueprint, the newest addition, uses real-time renovation permit data to identify homeowners actively engaged in remodeling projects, offering brands like Home Depot (HD) the ability to reach high-intent consumers at precise moments.
• Boomerang has increased post-theater engagement by 20% across 15 deals, while Boost expands audience reach by 3x across premium video channels, effectively connecting cinema to TV audiences.

Beyond these products, NCMI is accelerating its investment in programmatic and self-serve offerings, recognizing the industry's shift towards flexible, closer-to-campaign-date solutions. Programmatic advertiser volume grew over 50% quarter-over-quarter in Q2 2025, with approximately 70% of these advertisers being new to NCM. The company plans to triple its programmatic footprint by year-end 2025, anticipating accelerated growth into 2026. The self-serve platform, which empowers local and regional companies to automate campaign planning and execution, saw revenue increase over 30% year-over-year in Q2 2025 and achieved its biggest quarter since launch in Q3 2024 with sales up 96% quarter-over-quarter. An AI feature integrated into self-serve achieved a 72% automation rate, saving over 28 hours of agent time. These advancements are expected to contribute "meaningful revenue" starting in 2026. NCMI's collaboration with Snowflake for data clean rooms further enhances its ability to securely share and analyze audience information, enabling precise targeting and attribution while safeguarding privacy. This technological leadership creates a significant competitive moat, driving higher average selling prices (ASPs) for premium inventory like Platinum, lowering operational costs through automation, and expanding NCMI's market positioning.

Competitive Landscape: Dominance in a Shifting Arena

NCMI operates in a competitive environment, facing both direct rivals in cinema advertising and broader digital advertising platforms. Direct competitors include Screenvision Media, which offers a similar network and ad formats, and advertising arms of larger media entities like AMC Networks Inc. (AMCX) and Interpublic Group of Companies (IPG). NCMI's strengths against these direct competitors are its unmatched scale and exclusive network effects derived from long-term theater partnerships, which provide stable access to a vast, engaged audience. Its immersive premium video format ensures superior consumer attention, a critical differentiator.

NCMI's technological advancements, particularly the NCMx platform, provide a significant competitive edge. While competitors like Interpublic Group may possess greater scale and broader technological sophistication, NCMI's specialized focus allows for deeper expertise in cinema-specific advertising and more effective operational execution. The company's innovation in personalized, automated advertising at scale, as demonstrated by Bullseye, positions it ahead of many traditional media companies.

Indirect competition comes from digital advertising platforms such as Google (GOOGL), Meta (META), Netflix (NFLX), and YouTube, which offer alternative, often more accessible, and potentially cheaper ad solutions. However, NCMI is actively building programmatic capabilities to compete in the Connected TV (CTV) space, recognizing that the programmatic world can represent 50% to 70% of an advertiser's open-to-buy dollars. NCMI's ability to deliver measurable ROI through its NCMx platform allows it to attract advertisers who are increasingly moving away from saturated streaming and linear TV platforms in search of more impactful and accountable ad spend.

Despite its strengths, NCMI faces vulnerabilities. Its revenue remains highly dependent on box office attendance, making it susceptible to unpredictable film slates or shifts in consumer behavior. The evolving upfront market, with advertisers increasingly demanding flexibility and buying closer to the air date, necessitates agile sales strategies. Additionally, local and regional ad revenue remains sensitive to economic uncertainty, requiring sustained effort for growth. NCMI strategically positions itself by emphasizing its unique immersive environment, unmatched scale, and data-driven targeting capabilities to attract advertisers seeking high-impact, measurable results, outperforming traditional linear TV in upfront pricing.

Financial Performance: Building a Stronger Foundation

NCMI's recent financial performance reflects both market challenges and the early benefits of its strategic initiatives. For the second quarter of 2025, total revenue was $51.8 million, a 5.3% decrease year-over-year. Adjusted OIBDA for the quarter was $0.7 million, a significant decline of 90.8% year-over-year, leading to a net loss attributable to NCM, Inc. of $10.7 million. These results were primarily driven by macroeconomic and tariff-related uncertainty, which negatively impacted advertiser willingness to spend, particularly in national (down 1.2%) and local/regional (down 34.7%) advertising, and a 28.1% decrease in national advertising CPMs. However, these declines were partially offset by a 24.2% increase in network attendance and a 12.3% increase in national advertising utilization. Operating expenses saw a slight decrease of 0.3% due to administrative cost reductions and lower amortization resulting from the AMC agreement. Non-operating income increased by 116.7%, boosted by a gain on the re-measurement of the tax receivable agreement payable and reduced interest expense following debt termination.

For the six months ended June 26, 2025, total revenue decreased by 6.0% to $86.6 million, with national advertising down 3.7% and local/regional advertising down 25.3%. Adjusted OIBDA for the period was -$8.3 million. Full-year 2024 results saw revenue of $240.8 million and Adjusted OIBDA of $45.7 million, with Platinum advertising product revenue more than doubling year-over-year.

NCMI's liquidity position is robust. As of June 26, 2025, the company held $40.3 million in cash, cash equivalents, restricted cash, and marketable securities, and notably, zero outstanding debt. The new $45 million revolving credit facility, maturing in January 2028, provides ample liquidity, with NCM LLC's fixed charge coverage ratio at a healthy 6.30x, well above the required 1.50x. The company is committed to returning capital to shareholders, having repurchased 3.3 million shares for approximately $18.8 million year-to-date through Q2 2025 under its $100 million program. A quarterly dividend of $0.03 per share was declared on August 5, 2025, payable on August 29, 2025. It is important to note that $18.2 million of cash held by NCM LLC is not available for NCM, Inc.'s dividends, income tax, or TRA payments.

Outlook and Strategic Momentum

Management approaches the second half of 2025 with optimism. For the third quarter of 2025, NCMI expects revenue to be between $62 million and $67 million, with Adjusted OIBDA projected between $7.5 million and $11.5 million. This guidance reflects improved advertiser commitments and sustained theatrical strength, with ad sales commitments pacing ahead of last year's levels. Management anticipates stable CPMs and improved inventory utilization, driven by new business rather than merely deferred budgets, despite an expected year-over-year decline in box office attendance due to tough comparisons.

For the full year 2025, NCMI projects continued box office momentum, with a strong and well-paced theatrical slate expected to reaccelerate performance during the critical fourth quarter holiday season. Highly anticipated tentpoles like Wicked for Good, Avatar: Fire & Ash, Zootopia, and Tron Ares are poised to drive attendance recovery and reinforce cinema's appeal as a premium advertising environment. Management is optimistic about attendance growth in 2025 and 2026, aligning with major analyst forecasts, and views 2025 as the first "normalized year" of consumer behavior since 2019.

Strategic investments will continue, with a planned high-single-digit percentage increase in adjusted SG&A expenses to expand the sales team, enhance marketing, and strengthen operational infrastructure. Annual capital expenditures are also set to increase by $2 million to $3 million, primarily for IT system upgrades, sales technology, and research tools, all aimed at driving sustained growth and efficiency. The AMC agreement is expected to offset increased fees and support potential adjusted OIBDA growth, with reduced amortization expense from intangible asset adjustments. NCMI expects to triple its programmatic footprint by year-end 2025, with meaningful revenue contributions from programmatic and self-serve offerings beginning in 2026.

Conclusion

National CineMedia is undergoing a significant transformation, leveraging its foundational market leadership and an aggressive digital strategy to redefine cinema advertising. By investing in its NCMx data platform, expanding programmatic and self-serve capabilities, and solidifying key exhibitor partnerships, NCMI is building a robust, data-driven ecosystem that delivers measurable value to advertisers. While macroeconomic uncertainties and box office volatility present ongoing risks, the company's debt-free balance sheet, commitment to shareholder returns, and clear strategic roadmap position it for sustained growth. NCMI's ability to connect brands with highly sought-after young audiences in an immersive, high-attention environment, combined with its technological innovation, forms a compelling investment thesis as the theatrical industry continues its recovery and the advertising landscape shifts towards performance-based, flexible solutions.