All right, good afternoon, everybody. Or is it? I'm on East Coast time. Maybe it's still morning. My name, for those of you that do not know me, my name is Eric Handler. I'm the Media and Entertainment Analyst here at Roth MKM. Happy to have with me today, from IMAX is Natasha Fernandes, who is the company's Chief Financial Officer. Natasha, welcome.
Thanks, Eric. It's a pleasure to be here. Thanks for having us, and it's sunny weather outside and lots of good times, and lots of people here too. It's a fantastic conference.
Thank you. So I actually want to sort of jump right in to sort of what's going on with IMAX right now, because the big movie you have playing on your screens right now is, is Dune. And Dune is, 20% plus global market share, 25% I think I saw this weekend in North America. Filmed entirely with IMAX cameras. Oppenheimer, which just won pretty much every major Academy Award, 2 weeks ago, they were also filmed with IMAX cameras, with substantial over-indexing. Why aren't more movies being shot with IMAX cameras, and how do you think about growing that part of the business? Because clearly, big movies with IMAX cameras, people recognize it, and it's working.
IMAX is the future of cinema, and I'm sure you've heard Rich say that. We say that. We believe it. You know, he got a shoutout as well as IMAX at the Academy Awards. You know, we have had outsized performance across Dune, especially recently. We're the best platform for the out-of-home and awe-inspiring experiences. Let me give you an example. So Dune, for instance, the opening weekend, we had 18% indexing on less than 1% of the screens globally. The second weekend, 22% indexing. And now this third weekend, 24% globally, indexing. And you said it with high indexing in domestic, but also in Japan, 45%, China, 30 mid-30s %.
Just our indexing is showing that positive reinforcing of a growth dynamic happening, and more and more directors and studios wanting to associate themselves with IMAX, and exhibitors realizing this and demanding more IMAX systems, which you're seeing that ripple effect, which, you know, you see through our signings and our system footprint growth as well. And so there's been a significant number of conversations, and the conversations have increased more recently, with filmmakers using IMAX cameras, following the success of Oppenheimer and now Dune. Denis Villeneuve has been out there talking about, "I filmed it 100% with IMAX cameras compared to the first one, which was much less," and also he's saying, "You have to see it in IMAX. That's the way I filmed it." And that's what's showing in the indexing numbers.
We have a record number of films in production with IMAX cameras right now, especially as you look out towards that slate that's coming up in 2025. Nearly half of the announced titles of Filmed for IMAX, and we expect more to come, with at least 10 that will happen. And essentially, when a Filmed for IMAX, we basically have our box office averages about 26% more than other titles. And that's where you're seeing that, you know, we have that positive momentum behind pushing a title to perform even better than it would have been expected. And Oppenheimer is a really good example of that, where no one would have expected how well that would have done. But having IMAX behind it pushes it even further. And you're right, all films should not be filmed with IMAX cameras.
It's not meant to be that way. It has to be that special type of content and film and story for it to really have the success behind it, so that the number can work for us. And I do want to say, and I think we've mentioned it before, that we're actually manufacturing more IMAX film cameras. I know Rich has mentioned it before too, but the old cameras are very heavy and loud, and so we've been in a heavy R&D cycle of looking at what we can do to basically make these more filmmaker-friendly cameras as well.
Should have, like, an IMAX camp for directors where bringing.
Oh, we have a semi-one, sort of. We have Nolan right behind us in making sure that because it's the only type of camera he wants to use, and there are others that are coming up in there too.
That's great. As we look at 2024, your global box office expectations for this year are, you know, flattish, with last year. Comparisons do look challenging, at least from a Hollywood perspective. Can you sort of outline the key drivers you expect to achieve for flattish, global box office this year, and from there, maybe talk about some of the excitement coming in 2025 and 2026 as well too?
We feel really good about the slate for 2024, and I know you mentioned that we're flattish, but the industry is saying down overall, right? And so that is where we feel bullish about our performance. And so if you look at it starting with Hollywood, we did start the year off slow, but truly we're anything but slow these days. Dune, which is essentially this year's Oppenheimer, is expected delivering just as we expected it to. And I can see.
I think over the weekend you said it is now surpassed $100 million.
It has surpassed $100 million, which is fantastic, and we still have two weeks left in the month to go. The numbers behind it basically show that it's the IMAX Experience. You know, based on where we are, we're actually tracking to be one of our better Q1s as well. Regardless of the slow start to the year. Looking ahead, as we look at the slate for the rest of the year, the slate actually looks better than it did last year, despite, you know, where we were at the beginning of the year. I think that's what we need to remember is, like, last year, the second biggest title for us was Super Mario Bros. at $50 million. This year, you're looking at a really good flow of titles.
So we started with Dune, but we're, you know, we're headed into Godzilla Kong, which is actually starting in March, so we'll get a good lift of at the end of the quarter. Then, I'm going to look at my notes for this one. I think we're heading into then Fall Guy, which has great reviews, by the way.
The greatest South by Southwest.
I actually didn't expect how great the reviews would be, but they are really good. Planet of the Apes, which actually has a very positive sort of noise around it, and it's a really good fit for IMAX. I mean, a big ape on a huge screen, it sort of makes sense. Furiosa, which is part of the Mad Max franchise. Q3 has two that could potentially be billion-dollar titles with Despicable Me 4 and Deadpool. And Q4, unlike in 2023, where Q4 really had not much, Q4 could be really strong with respect to Joker, which actually is probably one of our favorite titles. And there's Wicked and Gladiator and potentially Mufasa in there too. So, we should actually have a really good finish to the year. And so, as you look at just the Hollywood slate, it looks much stronger than it did last year for us.
Then shifting to local language, I mean, the momentum is strong in 2023, which we had $227 million of local language box office, or 21% of our total box office for the year, which is higher than our prior record. It beat it by 30%. So we expect a record number of local language titles. And I think some of the titles, particularly in China, is Ne Zha 2, and OutKast, which Filmed for IMAX as well.
I believe you guys have said previously that the summer in China is actually positioned better than what was traditionally the normal peak of the year, the Chinese New Year festival. This summer actually should be bigger.
It actually does look like Ne Zha 2, the first one, did $34 million. And so then we have Ne Zha 2 plus The Outcast plus some other titles this summer. And last year's summer actually was one of our best summers in China too. So it looks like there's been a shift as well in the timing with respect to China and, you know, when people are attending, during their breaks. Then as you look out to 2025, 2026, well, there's a lot to look forward to. There are at Filmed for IMAX titles, as I mentioned. Plus, you're looking at, which includes some, like Mission: Impossible, Captain America, Thunderbolts*, The Bride!, How to Train Your Dragon, and 2026 has huge titles. I mean, we're going to end the year with Avatar.
Well, I was going to say, 2025 has this little franchise called Avatar, and you did pretty well with the prior 2 versions.
Yeah, just a little bit. It carries over, right? It's a 2025 and 2026 sort of.
Actually, I'm putting you on the spot, Karen. I don't know if you remember it, but for people that aren't familiar, Avatar, how much did you guys generate for Avatar 2?
$150 million, right? $250 million total, so $150 million split in one year, $110 million, I think, in the other year, so $250 million, $260 million, yeah, overall. Worldwide, like, and now we have a bigger footprint. So you think about two years later, we're going to have more screens out there. That's just amazing.
Let's jump ahead a little bit, you know, just let's talk about your footprint because in your last earnings call, you just increased your sort of addressable market, and, you know, both in North America and internationally. Can you still talk a little bit about the runway that you have, and where you see some good opportunities? I think, and I also think a lot of people are surprised that you still have some pretty decent expansion opportunities in North America.
Yeah, we updated our zone analysis . So we do zone analysis every few years. So we figured it was time to update that. So we've increased it by about another 10%. Essentially what it means is if we have 1,700 screen locations worldwide right now, we believe we could get to 3,600 screens worldwide. So that means we have still another 50% plus growth in front of us, which is mostly in rest-of-world markets. About 70% is available to us in rest-of-world markets. But domestic, you're right. We still have a great opportunity there, and which is what we saw through last year. We signed deals in North America. 20% of our signings and installations last year was in North America.
I think that that's part of where there still is expansion opportunities in really good markets where we're not penetrated yet. Like Texas with EVO is one of those locations those markets where we have a really good opportunity. We just signed that deal last year with them and also, actually opened theaters with them in 2023 as well. So, you know, as you look at the potential for another 1,900 IMAX systems worldwide, more than doubling our network, you look at that rest of world opportunity. Japan, we have 50 open. We have a potential for 126 locations. India, we have 30 open. We have a potential for 150. Australia, we only have two. And I think Rich mentioned this before because he went to Australia in Q4 last year, but we have two systems in all of Australia.
There's a much more significant potential of at least 40 over there. And there's the demand in domestic, I mean, just with the new partners and the health of those new partners and just the change of moving to, like, for instance, EVO is an entertainment complex, which for us, that's exactly we believe we're in an awe-inspiring experience. And so part being part of an experience sort of complex makes sense for our brand too.
Okay, and let's also focus on, you know, how some of these international markets are doing for you because a lot of times when people say, oh, we have an international business, and it, you know, it's a fraction of what North America is. But can you maybe talk a little bit about what you're seeing in your average revenue per screen in Japan and Australia because they are pretty sizable. And also, I think a lot of people were very surprised when you have said that the average revenue per screen in India is right on par with North America, which I think opened up a lot of eyes.
Yeah, you think about where can you expand. And so we have the ability to expand in markets like China or in, you know, other regions, but do you want to? You start to think about what's your opportunity out there. And as you look at the rest of world regions, Japan's a market that has per screen averages of $2 million, and whereas China is a quarter of that. And so do you expand and put your capital in one market or the other market? And while you want to do all markets, where do you really push your focus and, you know, getting a higher per screen average in those areas? Well, that's going to get us the bigger bang for the buck, at least in the immediate term.
In the long term, it'll continue to grow and create, basically a healthy competition among the exhibitor partners too because some of these regions, they're so underpenetrated that the exhibitors don't even realize it until one exhibitor gets in there, like in Japan, for instance. And then all of a sudden, you'll have all these other exhibitors saying, well, wait a minute, the zones are going to disappear. And we've actually been seeing that in France as well and Germany where, you know, we signed with a partner in France and then all of a sudden the other partners came along and said, well, we thought the zone would be available for a long time. Well, no, it's not going to be available because the per screen averages in some of those markets are over $1 million.
And so, you know, what's our opportunity sitting out there? Think about it as we expand our screen footprint. You're not only expanding the screen footprint. You're getting revenue from the sale or the lease immediately, but then you're getting this effect of it's ongoing revenue streams from the performance of the films because the studios are then paying us for that film content. So growing your footprint every year, last year we grew at 4%. If you grow at mid-single digits on average every year, then you're growing your box office as well, which is a different customer altogether in it being the studios.
Since you didn't mention it, can you maybe talk about what you've been seeing in terms of your average revenue per screen in Japan and Australia just because they are pretty significant numbers?
About $2 million is where Japan is. Australia, I think, is quite similar as well. And I think that's why we're so excited about the opportunity and, you know, the other component of that is the local language titles you're playing there too is fitting right into what the consumers want, right? They really want to see their local language, particularly in Japan and France as well. And so as we're able to provide that local language content, that's what's creating better returns for us too because it's great. Hollywood's great here in North America, but it doesn't mean that's the content everyone wants to see in the rest of world. And that's why we've been able to guide towards similar box office level because we feel really confident about our growth strategy for local language. Think about it.
Five years ago, local language was like less than 5% or a drop to us, right? It was really just in China. But now we've expanded to so many more other markets, and we're at our highest local language last year. We said we'd grow it year-over-year. We continue to develop those relationships with the local language studios as well. So there's a lot of opportunity out there.
Let's shift gears a little bit and talk about the opportunity with alternative content. Last year, it was not an IMAX-specific movie, but Taylor Swift was the biggest movie of the fourth quarter. More recently, you've had Queen Rock Montreal in select markets, and that provided an unexpected boost to your box office. How is IMAX looking to capitalize on this type of incremental business? You know, I remember 1991. There was a Rolling Stones movie in IMAX. You know, what other concerts are in your vault that, you know, could benefit the shoulder periods of your seasons?
Well, in 2024, we had a Queen Rock Montreal concert. So I think, you know, we can go back decades and bring back other content too. But alternative content, it's poised to step up in IMAX the way that we are, pushing towards an awe-inspiring experience. And that is growing for us. You know, this year alone, we've done Queen Rock. And then on the other hand, we did André 3000, which I don't know if you know, but he's like a one of The Outcast band members, but it's like this flute experience and completely different. A month in a few weeks, actually, we're going to be doing Suga, who's a member from BTS. And so on April 10th and 13th, I think there's just so much more opportunity out there and it's concert films are a natural fit for just an experience, an out-of-home experience.
I don't know if you went, but like I think you went to Taylor Swift. Seeing it on the large screen, you can't even see them that well when you watch the screen and you go and see them live, right? You're sitting so far back and their screens are so small in the concert venue. Go to the IMAX location and people are dancing and singing and it's a whole event around it. And you know, there's some more bespoke smaller kind of carve-out events that we do. And I think the one thing you think about is what's the other potential? We've done some NHL. Do you do some NBA? Do you do some other sports events? And I know there's licensing rights, but we've gotten some of those. Like we've done NHL in some U.S. markets and also in Europe.
And then, you know, you think about one-off events. Like are there other potential esports or gaming or, you know, other kind of contents? And then are there other concert films in the vault that you bring out? Are there other film titles in the vault, just not even a concert film, other historical titles that you bring out and you bring back and do a series like a Wednesday every month or something on lower utilization days? Like think about ticking up that utilization just a little bit more. That's millions of dollars to you.
Right. And actually, along those lines, I think it was last week you guys signed a deal with A24 that you're going to be doing a weekly series with them, I believe.
That's it. That's exactly what I mean. So it's exciting because you think about you show one of the iconic films every like on the first Wednesday of every month or one of the Wednesdays. It's just creating that utilization on a night when you would have lower utilization.
Great. Let's do some final big picture thoughts here because we're down to less than a minute, but your global footprint is expanding. You've got a lengthy backlog and expanding TAM. You're doing more local language. 2025, 2026 looks like a great content cycle. Where do you see this company two years from now?
I think we're coming on a period of really good clarity after the, you know, we've come out of the strikes and the pandemic and all of that. And you're looking at what the slate looks like in the future. As we continue to diversify our content, we believe we're a destination for awe-inspiring experiences. And as you open that aperture of what an experience looks like and what content can be in there, we believe that we can not only take more market share, but in the end, you're growing your financial model as well.
And the attractiveness of our financial model, like for a company to give, you know, high gross margin percentages, high EBITDA returns, we just see that continually growing, grow our system footprint, grow the box office, and then continue to shift as consumer demand sort of shifts and moves more towards IMAX as well. And you know, of course, and I'm sure everybody it's on everybody's mind where our stock prices these days. It, we expect it to be well above where it is now. And I, you know, you think about, you know, how what we continue to do in that. And part of it is, you know, we've bought back significant amount of stock over the past few years, 175 million or almost 20%. And I think that that's where, you know, there's opportunities. And so we believe in our stock. We believe in pushing it forward.
We believe in just how the IMAX platform will be the next place for the industry as well.
Okay, well, 25 minutes goes fast, but I think we covered a lot of ground. Yeah. So Natasha, thank you so much for.