Alliance Entertainment offers a compelling investment case as the undisputed leader in the physical media distribution market, with unmatched scale and deeply entrenched relationships with nearly every major content producer and retailer. As the largest player in its field, Alliance’s extensive reach and scale create an impenetrable moat, solidifying its dominance in the distribution of music, movies, video games, and collectibles. The company serves as the critical gateway between content producers and major retailers like Walmart, Amazon, and Best Buy, as well as thousands of independent stores globally.

In fiscal 2024, Alliance executed a dramatic financial turnaround, achieving $4.6 million in net income, a $40 million improvement from the prior year, and a significant increase in adjusted EBITDA to $24.3 million. This recovery underscores the company's focus on operational efficiencies, including automation and cost-saving initiatives, which drove a 24% increase in gross profit and a 260-basis point improvement in gross margin to 11.6%. Higher-margin direct-to-consumer sales, which grew to 36% of gross revenue, also contributed to these gains. As Alliance continues to prioritize profitable product segments and streamline operations, its EBITDA margins are expected to return to historical trends of 4-5%. For the trailing 12-months ended September 30, 2024, adjusted EBITDA increased to 2.4%. Additionally, with a stronger balance sheet, including a 45% reduction in debt in FY24, Alliance is well-positioned to capitalize on future growth opportunities while maintaining its leadership in the physical media space.

Looking ahead, Alliance is well-positioned for continued success, leveraging its strengths as a capital-light, low-cost provider with unmatched reach across the industry. The company's clear strategy focuses on expanding market share, improving margins, and driving EBITDA growth. One key growth area is in underpenetrated channels like digital video streaming, where Alliance’s scalable and efficient solutions can deliver cost-effective results for content creators. Exclusive distribution agreements, which generated over $250 million in sales in fiscal 2024, are expected to further bolster Alliance's momentum moving forward. Moreover, mergers and acquisitions remain a core element of Alliance's growth strategy. By expanding its product categories across music, movies, gaming, and collectibles, the company aims to diversify its offerings and strengthen relationships with key retail partners, further solidifying its leadership for years to come.