Executive Summary / Key Takeaways

• National CineMedia (NCMI) is solidifying its position as the leading cinema advertising platform in the U.S., leveraging a robust network and advanced data intelligence to connect brands with highly sought-after young audiences.
• The company's strategic investments in programmatic and self-serve platforms, coupled with AI-powered NCMx products like Bullseye and Blueprint, are driving significant new advertiser acquisition and delivering measurable campaign outcomes, enhancing its competitive moat.
• Recent financial performance in Q3 2025 demonstrated revenue growth and improved Adjusted OIBDA, reflecting a rebound in advertiser demand and effective cost management, despite fluctuating box office attendance.
• A strengthened long-term partnership with AMC Entertainment Holdings (AMC), extending through 2042, standardizes ad formats and optimizes payment structures, securing a stable revenue stream and expanding high-value inventory.
• With a fortified balance sheet, including zero outstanding long-term debt as of January 2025, and a commitment to shareholder returns through dividends and opportunistic share repurchases, NCMI is well-positioned for sustained growth as the theatrical market recovers.

The Silver Screen's New Era: NCMI's Data-Driven Advertising Dominance

National CineMedia, Inc. (NCMI), established in 2006, stands as the preeminent cinema advertising platform in the United States. Its core mission is to bridge brands with the highly engaged, young, and diverse audiences drawn to the magic of movies and pop culture. Operating across an unparalleled network of over 17,500 screens in more than 1,350 theaters within 184 Designated Market Areas (DMAs), including all of the top 50, NCMI offers a premium video, full-funnel marketing solution. This extensive reach is underpinned by long-term Exhibitor Service Agreements (ESAs) with major circuits like Cinemark Holdings (CNK) and AMC, and multi-year agreements with network affiliates, granting NCMI exclusive advertising rights. As of September 25, 2025, the weighted average remaining term of these critical ESAs with Cinemark and AMC was approximately 15.9 years, and 12.1 years for all agreements combined, providing a stable foundation for its operations.

The company's journey has seen significant transformations, including its subsidiary NCM LLC's emergence from Chapter 11 reorganization on August 7, 2023, which saw NCM, Inc. regain 100% ownership. This restructuring, administratively closed on March 28, 2025, discharged historical debt and allowed NCM to reset its financial footing. Concurrently, NCMI has strategically evolved its offerings, moving beyond traditional cinema advertising to embrace a data-driven, technologically advanced approach that directly addresses the demands of modern advertisers.

In the competitive landscape, NCMI distinguishes itself from broader advertising conglomerates like Interpublic Group (IPG) and Omnicom Group (OMC), which offer diversified digital and global campaigns, by specializing in the unique, high-attention environment of cinema. While large theater operators such as AMC Entertainment Holdings and Cinemark Holdings also engage in advertising, NCMI's dedicated focus on pre-show entertainment and digital extensions, coupled with its exclusive network agreements, provides a more specialized and deeply engaging platform. NCMI's audience, with a median age of 30, significantly skews younger than traditional media, such as the Super Bowl (median age 48), making it a coveted channel for brands targeting Gen Z and Millennials. This demographic advantage, combined with NCMI's ability to deliver measurable outcomes, positions it as a compelling alternative to increasingly saturated streaming and video platforms.

Technological Edge: Precision and Performance at Scale

NCMI's strategic pivot towards technological differentiation is a cornerstone of its investment thesis. The company has developed and is continuously enhancing its NCMx data intelligence platform, which serves as a core competitive moat. NCMx is designed to provide advertisers with strategic audience insights, performance attribution, and cross-channel reach, moving NCMI beyond a simple awareness-building vehicle to a results-driven media partner.

The NCMx suite includes innovative, AI-powered products that offer tangible and quantifiable benefits:

• Bullseye: Launched in Q1 2025, Bullseye leverages AI to analyze key audience signals and deliver dynamic, hyper-localized messaging at scale. A recent cellular campaign utilizing Bullseye generated over 283,000 verified incremental store visits, representing an impressive 110% lift, showcasing its ability to drive high-impact local activations.
• Blueprint: The newest addition, Blueprint, utilizes real-time renovation permit data to identify homeowners actively engaged in remodeling projects. This allows brands to target high-intent consumers at precisely the right moment, a capability NCMI believes is unique in the market.
• Boost: This solution leverages proprietary moviegoing data and geo-triggered capabilities to target consumers near campaign-specific locations, connecting brands with verified audiences in high purchase intent moments.

These technologies enable NCMI to offer a level of personalization and outcome-based results that it could not credibly claim just three years ago. The company's premium "Platinum Spot" exemplifies this, consistently delivering exceptional results. A recent tech advertiser's campaign achieved an impressive 89% ad recall, surpassing industry benchmarks and driving strong gains in brand relevance, excitement, and preference. Similarly, the 4DX format achieved approximately 85% ad recall in an automotive campaign, generating triple-digit lifts in awareness. These performance metrics underscore the power of NCMI's immersive cinematic experience in driving superior brand outcomes.

NCMI is also aggressively expanding its programmatic and self-serve offerings to align with broader shifts in the advertising landscape towards flexible, closer-to-campaign-date solutions. In Q3 2025, programmatic revenue was approximately four times higher than the prior year, marking NCMI's strongest programmatic quarter ever and growing 82% sequentially. Notably, the vast majority of clients acquired through programmatic channels are new to cinema advertising, significantly expanding NCMI's addressable market. The company expects to triple its programmatic footprint by year-end 2025, with additional platforms coming online in early 2026. The relaunched self-serve platform, seeing Q3 2025 revenue up 23% quarter-over-quarter, further streamlines campaign execution for midsized and regional advertisers, with predictive AI models now identifying and routing high-value local leads. These technological advancements are critical for NCMI's competitive moat, driving higher utilization, better monetization, and ultimately, enhanced financial performance and market positioning.

Financial Performance and Strategic Momentum

NCMI's recent financial performance reflects a business in transition, demonstrating resilience and strategic execution amidst a dynamic market. For the third quarter ended September 25, 2025, total revenue increased by 1.6% year-over-year to $63.4 million, aligning with management's expectations. This growth was primarily fueled by a 41.9% increase in national advertising utilization, despite a 10.6% decrease in network attendance and a strategic 14.4% decrease in national advertising CPMs aimed at boosting utilization. Adjusted OIBDA for Q3 2025 rose to $10.2 million from $8.8 million in Q3 2024, exceeding expectations due to modest top-line growth and disciplined cost management.

However, the nine months ended September 25, 2025, saw a slight revenue decrease of 2.9% to $150 million, primarily due to macroeconomic uncertainty impacting advertiser spending in the first half of the year. National advertising revenue for this period saw a modest 0.5% increase to $118.5 million, driven by a 17% increase in utilization and a 2.1% rise in network attendance. Local and regional advertising revenue, more susceptible to economic headwinds, decreased by 15.8% in Q3 2025 and 21.5% for the nine-month period, influenced by reduced contract activity in categories like healthcare and retail, though partially offset by growth in travel and government sectors.

Operational efficiency has been a key focus. Total operating expenses decreased by 6.7% in Q3 2025 to $65.2 million, largely due to a $2.5 million reduction in legal and professional fees following the Chapter 11 case and a $1.1 million decrease in stock-based compensation. Amortization expense also saw a 16.8% decrease in Q3 2025, benefiting from the reduction and extension of the useful life of intangible assets related to the 2025 AMC Agreement. The company's fixed charge coverage ratio stood at a healthy 5.40 to 1 as of September 25, 2025, well above the required 1.50 to 1 covenant under its new credit facility.

Fortified Balance Sheet and Shareholder Returns

NCMI has significantly strengthened its financial position. On January 24, 2025, NCM LLC secured a new $45 million senior secured revolving credit facility with U.S. Bank National Association (USB), maturing in January 2028. This new facility allowed NCM LLC to fully repay its $10 million outstanding balance and terminate its previous Revolving Credit Facility 2023, resulting in a meaningful reduction in annual interest expense by $1 million and a lower cost of debt by over 200 basis points. As of September 25, 2025, NCM LLC had no outstanding borrowings under this new facility, with $44.4 million in maximum availability, underscoring its robust liquidity.

As of September 25, 2025, NCM held $32.9 million in cash, cash equivalents, restricted cash, and marketable securities. The company's capital allocation strategy prioritizes both strategic investments in its advertising platform and consistent returns to shareholders. NCM, Inc. is owed $21.9 million in deferred available cash distributions from NCM LLC, which, along with existing cash balances, is expected to fund Tax Receivable Agreement (TRA) payments, income taxes, stock repurchases, and future dividends. The company has committed to a quarterly dividend of $0.03 per share, with the most recent declaration on October 30, 2025, payable on November 26, 2025. Opportunistic share repurchases are also part of the strategy, with 5.8 million shares repurchased since the program's inception.

A pivotal strategic partnership was solidified on April 17, 2025, with the Second Amended and Restated Exhibitor Services Agreement with AMC Theaters. This agreement extends the partnership by five years to 2042, standardizes the advertising show structure to align with NCM's broader network, and adjusts the payment structure to performance metrics (attendance, screen count, advertising revenue) starting July 1, 2025. This not only secures a stable revenue stream but also expands high-value inventory, particularly the premium Platinum Spot, which was previously limited by AMC's unique show format. The agreement is expected to minimally impact Adjusted OIBDA margins by 1.5 to 2.5 points, but NCMI anticipates incremental revenue from the improved agreement to offset these increased fees and support Adjusted OIBDA growth.

Outlook and Risks

NCMI is optimistic about the remainder of fiscal 2025 and beyond, expecting sustained momentum from Q3 to carry into Q4 and into 2026. The fourth quarter of 2025 is historically NCMI's strongest period, with a highly anticipated film slate including "Wicked for Good," "Avatar Fire & Ash," and "Zootopia 2" already generating significant advertiser excitement. The company has guided for Q4 2025 revenue between $91 million and $98 million, and Adjusted OIBDA between $30 million and $35 million. This outlook accounts for an additional week in the fiscal fourth quarter, which is expected to boost attendance but may lead to lower revenue per attendee due to softer demand in the post-Christmas, pre-New Year period, resulting in higher exhibitor access fees.

For the full year 2025, NCMI anticipates a high single-digit percentage increase in SG&A expenses, reflecting strategic investments in sales team expansion, targeted marketing, and operational infrastructure. Capital expenditures are also projected to increase by $2 million to $3 million, primarily for delayed 2024 investments and upgrades to IT systems, sales technology, and research tools. Management views these investments as crucial for driving sustained growth and enhancing efficiency.

Despite this positive outlook, NCMI faces inherent risks. The business is seasonal, and interim results are not necessarily indicative of full-year performance. Macroeconomic uncertainty, as evidenced by tariff-related advertiser hesitancy and reduced government spending in early 2025, can impact advertising budgets and delay spending decisions. While NCMI's intangible assets were not impaired in Q2 2025 following the AMC agreement, management's estimates for future cash flows are subject to change, potentially leading to future impairment charges. Furthermore, the company has potential future payment obligations of up to $277.2 million under minimum revenue guarantees in network affiliate agreements, contingent on attendance thresholds. However, NCMI's strong fixed charge coverage ratio and disciplined expense management provide a buffer against these operational and financial uncertainties.

Conclusion

National CineMedia is charting a compelling course for growth, transforming its business through strategic technological investments and fortified exhibitor partnerships. By leveraging its NCMx data platform and expanding programmatic and self-serve capabilities, NCMI is not only attracting new advertisers but also delivering quantifiable results that resonate in today's performance-driven advertising market. The recent financial performance, particularly the rebound in Q3 2025, underscores the company's operational resilience and effective cost management.

With a robust balance sheet, a clear capital allocation strategy focused on shareholder returns, and a strengthened long-term alliance with AMC, NCMI is well-positioned to capitalize on the ongoing recovery of the theatrical exhibition industry. The company's commitment to innovation, particularly in AI-powered hyper-localization and data-driven attribution, provides a distinct competitive advantage against both traditional and digital media rivals. As the box office continues its momentum into 2026, NCMI's strategic initiatives and technological leadership are poised to drive sustained revenue growth and enhance shareholder value.