fiscal 2026
Filed Sep 10, 2026Fiscal 2026 Revenue Up 8% to $1.15 Billion; Gross Margin Expands 80 Basis Points to 13.3%
Revenue, gross profit, gross margin and adjusted earnings measures increased, led by strong growth in collectibles, physical movies, CDs and fulfillment fees. GAAP operating income and net income declined, while operating cash flow turned negative because of higher working-capital investment and a $7.8 million non-cash vendor-receivable write-off.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net RevenuesGAAP | $1.15B | – | Increased 8% |
| Gross ProfitGAAP | $152.3M | – | increased 15% |
| Gross MarginGAAP | 13.3% | – | expanded 80 basis points |
| Distribution and Fulfillment ExpenseGAAP | $44.96M | – | – |
| Selling, General and Administrative ExpenseGAAP | $66M | – | increased |
| Depreciation and AmortizationGAAP | $5.36M | – | – |
| Loss on Vendor ReceivableGAAP | $7.8M | – | – |
| Operating IncomeGAAP | $27.2M | – | – |
| Interest ExpenseGAAP | $7.6M | – | Decreased 28% |
| Income Before Income Tax ExpenseGAAP | $18.81M | – | – |
| Income Tax ExpenseGAAP | $5.76M | – | – |
| Net IncomeGAAP | $13.1M | – | – |
| Net Income per Share – BasicGAAP | $ 0.26 | – | – |
| Net Income per Share – DilutedGAAP | $0.26 per diluted share | – | – |
| EBITDAnon-GAAP | $31.78M | – | – |
| Adjusted EBITDAnon-GAAP | $41.5M | – | Increased 14% |
| Adjusted Net Incomenon-GAAP | $23.4M | – | increased 24% |
| Adjusted Earnings per Diluted Sharenon-GAAP | $0.46 | – | increased 24% |
| Net Cash (Used In) Provided By Operating ActivitiesGAAP | $1.7M | – | – |
| Capital ExpendituresGAAP | $1.07M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| VinylSustained consumer demand for physical ownership, premium editions and collectible-oriented releases. | $383M | – | increased 13% |
| CDSustained consumer demand for physical ownership, premium editions and collectible-oriented releases. | $156M | – | increased 25% |
| Physical movieHigher unit volumes and expanding studio relationships, including an exclusive physical-media distribution relationship with Paramount and the addition of Amazon MGM Studios. | $339M | – | increased 22% |
| CollectiblesHigher average selling prices, expanded licensed merchandise offerings and continued development of proprietary products. | $32M | – | increased 45% |
| Distribution and fulfillment feeExpansion of Alliance's role as an omnichannel logistics and fulfillment partner. | $18.6M | – | increased 26% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- During fiscal 2026, the Company repaid $10.0 million of related-party borrowings.
What drove it
- Gross-margin improvement reflected stronger margins in physical movies and collectibles, increased contribution from premium and exclusive content, favorable product mix and returns activity, and lower wholesale freight costs as a percentage of sales.
- Physical movie growth was supported by higher unit volumes and expanding studio relationships.
- Collectibles growth was supported by higher average selling prices, expanded licensed merchandise offerings and proprietary-product development.
- Alliance ordered 5,000 additional totes for its AutoStore system, increasing capacity to 57,000 totes and supporting higher throughput while maintaining fulfillment labor efficiency.
- The average effective interest rate declined to 6.1% from 9.2% following refinancing with Bank of America in October 2025.
Concerns
- Fiscal 2026 included a $7.8 million non-cash write-off of a historical vendor rebate receivable associated with Tastemakers following the counterparty's cessation of operations.
- Selling, general and administrative expense increased to $66.0 million from $56.0 million, primarily reflecting higher payroll and employee-related costs, consulting costs and professional-service costs.
- Inventory and trade receivables increased at rates above the Company's 8% revenue growth, contributing to the year-over-year decline in operating cash flow.
- The Company had $74.3 million outstanding under its revolving credit facility.
What to watch
- Management's objective in fiscal 2027 to convert a greater share of earnings into operating cash flow by moderating working-capital growth relative to revenue, increasing inventory productivity and strengthening receivable collections.
- Growth in higher-value collectibles, premium and exclusive content, and proprietary products.
- Execution of physical-media distribution programs with Paramount and Amazon MGM Studios.
- Expansion of NFC-enabled authentication and digital product identity capabilities through Endstate Authentic and Alliance Authentic™.
- Operating leverage from automation and technology investments.
Balance sheet and cash flow
- Cash was $ 814 at June 30, 2026, compared with $ 1,236 at June 30, 2025.
- Trade Receivables, Net of Allowance for Credit Losses of $811 and $867, respectively, were $ 111,038, compared with $ 95,027.
- Inventory, Net was $ 126,599, compared with $ 102,848.
- Working capital increased to $62.4 million at June 30, 2026, from $45.4 million a year earlier.
- Revolving Credit Facility, Net was $ 73,721, compared with $ 55,268.
- The Company had $74.3 million outstanding under its $120 million revolving credit facility, with $45.7 million of remaining availability.
- The facility also provides, subject to certain conditions and lender consent, for up to $50 million of additional borrowing capacity.
- Net Cash Used in Investing Activities was $ 2,021, compared with $ 8,134.
- Net Cash Provided By Financing Activities was $ 3,300, compared with Net Cash Used In Financing Activities of $ 18,571.
- Net (Decrease)/Increase in Cash was $ 421, compared with $ 104.
Analysis
Alliance reported fiscal 2026 net revenues of $1.149 billion, up 8% from $1.063 billion. Growth was broad across the reported categories: vinyl revenue increased 13% to $383 million, CD revenue increased 25% to $156 million, physical movie revenue increased 22% to $339 million, collectibles revenue increased 45% to $32 million, and distribution and fulfillment fee revenue increased 26% to $18.6 million. The release attributes physical-movie growth to higher unit volumes and studio relationships, while collectibles benefited from higher average selling prices, licensed merchandise and proprietary products.
The earnings mix improved. Gross profit increased 15% to $152.3 million, faster than revenue, and gross margin expanded 80 basis points to 13.3%. Management cited stronger margins in physical movies and collectibles, premium and exclusive content, favorable mix and returns activity, and lower wholesale freight costs as a percentage of sales. Adjusted EBITDA increased 14% to $41.5 million, adjusted net income increased 24% to $23.4 million, and adjusted diluted EPS increased 24% to $0.46.
GAAP profitability declined despite the higher gross profit. Operating income was $27.2 million versus $30.1 million, and net income was $13.1 million versus $15.1 million. The period included a $7.8 million non-cash write-off of a historical vendor rebate receivable associated with Tastemakers. Selling, general and administrative expense also increased to $66.0 million from $56.0 million, principally due to payroll, employee-related costs, and consulting and professional-service costs. Lower financing costs provided an offset, as interest expense decreased 28% to $7.6 million and the average effective interest rate declined to 6.1% from 9.2%.
Cash conversion was the principal weakness. Net cash used in operating activities was $1.7 million, compared with $26.8 million of net cash provided in fiscal 2025, as working capital increased to $62.4 million from $45.4 million. Trade receivables and inventory increased faster than revenue. The company ended the year with $45.7 million of availability under its $120 million revolving credit facility and repaid $10.0 million of related-party borrowings.
Alliance provided no quantitative fiscal 2027 outlook. Management's stated priorities are profitable growth, cash generation, operating leverage, inventory productivity and receivable collections. Key operating markers are the scaling of the physical-media relationships with Paramount and Amazon MGM Studios, continued collectibles expansion, AutoStore capacity expansion to 57,000 totes, and development of authentication and digital product identity capabilities.
Management, verbatim
Fiscal 2026 demonstrated that the strategy we have been executing is strengthening both the quality of our business and our position across the entertainment ecosystem.
Jeff Walker, Chief Executive Officer of Alliance Entertainment
Fiscal 2026 was a year of strong execution for Alliance Entertainment. We expanded gross margins, grew gross profit faster than revenue and delivered growth in adjusted EBITDA, adjusted net income and adjusted diluted earnings per share.
Amanda Gnecco, Chief Financial Officer of Alliance Entertainment
Our focus remains on driving profitable growth, improving cash generation and increasing operating leverage as we continue to scale the business.
Amanda Gnecco, Chief Financial Officer of Alliance Entertainment
Not in the filing
stated, not guessed- Quantitative fiscal 2027 guidance for revenue, gross margin, operating expenses, tax rate, earnings, EBITDA, cash flow, capital expenditures or any other financial metric was not provided.
- Prior guidance was not provided.
- Free cash flow was not reported.
- Quarterly and prior-quarter financial metrics were not reported.
- Segment-level prior-year revenue, segment-level profitability and segment-level margins were not reported.
- Share repurchases and dividends were not reported.
- A reported GAAP income-tax rate was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.