2 min read | Published on 11 Sept 2026, 01:43 AM |Updated on 11 Sept 2026, 01:43 AM
Reviewed byAshish TScanX News Team
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- Revenue rose 8% YoY to $1.149 billion, led by 22% growth in physical movies and 45% in collectibles
- Gross margin expanded 80 bps to 13.3%, driving 15% growth in gross profit to $152.3 million
- Adjusted EBITDA increased 14% to $41.5 million, while GAAP net income fell to $13.1 million due to a $7.8 million write-off
- Operating cash flow turned negative ($1.7 million used) as working capital investments outpaced revenue growth
*this image is generated using AI for illustrative purposes only.
Alliance Entertainment Holding Corporation (NASDAQ: AENT) reported fiscal 2026 revenue of $1.149 billion, an 8% increase from the prior year. Adjusted EBITDA rose 14% to $41.5 million, driven by margin expansion and growth in physical media and collectibles.
The Plantation, Florida-based entertainment commerce platform saw gross profit increase 15% to $152.3 million, with gross margin expanding 80 basis points to 13.3%. This improvement outpaced top-line growth, reflecting a shift toward higher-value premium formats and proprietary products.
Financial Performance
GAAP net income fell to $13.1 million ($0.26 per diluted share) from $15.1 million in fiscal 2025. The decline was primarily attributable to a $7.8 million non-cash write-off of a historical vendor rebate receivable associated with Tastemakers following the counterparty’s cessation of operations. Excluding this and other non-recurring items, adjusted net income increased 24% to $23.4 million, or $0.46 per share.
| Metric | FY26 | FY25 | Change |
|---|---|---|---|
| Net Revenue | $1,149 million | $1,063 million | +8% |
| Gross Profit | $152.3 million | $132.9 million | +15% |
| Gross Margin | 13.3% | 12.5% | +80 bps |
| Adjusted EBITDA | $41.5 million | $36.5 million | +14% |
| GAAP Net Income | $13.1 million | $15.1 million | -13% |
Operating income decreased to $27.2 million from $30.1 million, impacted by the vendor write-off and higher selling, general, and administrative expenses, which rose to $66.0 million from $56.0 million due to payroll increases and strategic initiative costs.
Segment Growth Drivers
Revenue growth was broad-based across key categories:
- Physical Movies: Revenue surged 22% to $339 million, supported by exclusive distribution relationships with Paramount and Amazon MGM Studios.
- Vinyl: Revenue increased 13% to $383 million, reflecting sustained demand for physical ownership and premium editions.
- CDs: Revenue rose 25% to $156 million.
- Collectibles: Revenue jumped 45% to $32 million, driven by higher average selling prices and expanded licensed merchandise offerings under its Handmade by Robots brand.
Distribution and fulfillment fee revenue also grew 26% to $18.6 million as the company expanded its omnichannel logistics capabilities.
What the Numbers Show
The divergence between GAAP net income and adjusted profitability metrics highlights the impact of one-time charges on reported earnings. While GAAP net income declined 13%, adjusted EBITDA grew 14%, indicating that core operational performance strengthened despite the $7.8 million non-cash loss. Furthermore, gross profit growth (15%) significantly outpaced revenue growth (8%), demonstrating successful margin expansion through product mix shifts toward premium formats and collectibles rather than volume-driven sales alone.
Balance Sheet and Liquidity
Operating cash flow turned negative at $1.7 million used, compared to $26.8 million provided in the prior year. This reversal was driven by increased working capital investments, with inventory and trade receivables growing faster than revenue to support anticipated demand. Working capital rose to $62.4 million from $45.4 million a year earlier.
Interest expense decreased 28% to $7.6 million, benefiting from a lower average effective interest rate of 6.1% following a refinancing with Bank of America in October 2025. The company ended the fiscal year with $74.3 million outstanding under its $120 million revolving credit facility, leaving $45.7 million in availability.
How sustainable is the current margin expansion strategy given the significant increase in SG&A expenses and working capital investments?
What specific risks do exclusive distribution agreements with Paramount and Amazon MGM Studios pose to Alliance Entertainment’s long-term revenue stability?
Will the negative operating cash flow persist as inventory levels remain elevated to support anticipated demand for physical media?
