National CineMedia (NASDAQ:NCMI) reported higher second-quarter revenue and advertising sales as theater attendance increased, while also announcing a definitive agreement to acquire digital elevator and lobby advertising operator Captivate for an enterprise value of $275 million.
Chief Executive Officer Tom Lesinski said the proposed acquisition would expand NCM beyond cinema advertising into office and residential properties, creating a premium video and digital-out-of-home platform spanning theaters, office buildings and residential locations.
Second-Quarter Results
NCM reported total second-quarter revenue of $58.4 million, up 12.7% from a year earlier. Advertising revenue rose 14.3% to $54.4 million, including approximately $45 million in national advertising revenue, up 9%, and $9.5 million in local advertising revenue, up 48.4%.
Attendance across NCM’s network increased 19.3% year over year. Lesinski said the theater industry recorded its strongest second-quarter box-office performance since the pandemic, supported by a broad film slate and late-quarter demand for R-rated horror releases “Backrooms” and “Obsession.”
However, management said strong attendance did not fully translate into the advertising yield generally associated with broader, mainstream franchise releases. The company cited the greater concentration of R-rated horror titles, which it said are typically more difficult to monetize, as well as weaker-than-expected performances from “Supergirl” and “Star Wars: The Mandalorian and Grogu.”
Chief Financial Officer Ronnie Ng said advertising utilization moderated during June despite healthy attendance, though NCM increased CPMs year over year in each month of the quarter. The company also said some domestic advertising budgets shifted toward the FIFA World Cup 2026.
Operating expenses totaled about $71.2 million, including higher attendance-driven exhibitor fees and $2.7 million in one-time costs related to NCM’s operational transformation. On an adjusted basis, operating expenses were $56.3 million, with exhibitor fees rising 22% year over year and selling, general and administrative expenses declining 7%.
NCM posted an operating loss of approximately $12.8 million and adjusted OIBDA of approximately $2.1 million, a 200% year-over-year improvement. Unlevered free cash flow was negative $2.1 million, a 70% improvement from the prior-year period.
For the first half of the year, total revenue was $92.4 million, compared with $86.6 million a year earlier. Adjusted OIBDA was negative $8.5 million, compared with negative $8.3 million in the prior-year period.
Local and Programmatic Growth
Management highlighted local advertising as a key contributor to the quarter. Average local advertising revenue per attendee increased 24% to $0.07. Lesinski and Ng attributed the performance to investments in the local sales organization, personnel changes, expanded premium inventory associated with the company’s AMC lobby initiative, improved pricing and growth in categories including retail, entertainment, gaming and travel.
Programmatic revenue rose 45% year over year, though management said it remains a modest portion of total advertising revenue. During the quarter, NCM added Magnite to its supply-side platform relationships, which Lesinski said now cover 90% of the programmatic digital-out-of-home market.
The company completed implementation of its operational transformation plan and reported $2.7 million in year-to-date savings. NCM said it remains on track to generate about $11 million in annualized run-rate savings, including up to $6 million by the end of 2026.
Captivate Transaction and Financing
NCM said the Captivate acquisition is expected to close in the second half of 2026, subject to customary closing conditions and regulatory approvals. The companies will continue to operate independently until closing.
Captivate generated approximately $64 million of revenue and $19.3 million of adjusted EBITDA in 2025, compared with $45 million of revenue and $12.5 million of adjusted EBITDA in 2023. Ng said Captivate’s adjusted EBITDA margin was 30%, with approximately $3 million of annual capital expenditures.
The $275 million enterprise value represents about 10 times Captivate’s pro forma EBITDA, according to NCM. Ng said the calculation includes at least $3.5 million in annual run-rate cost synergies expected within the first year after closing, as well as Captivate’s 2026 outlook.
- NCM expects the combined platform to include more than 48,000 digital screens across 185 designated market areas, including all of the top 100 markets.
- Management said Captivate brings access to business-to-business advertising budgets and an affluent professional audience, while NCM contributes cinema audiences and a local sales organization.
- NCM said it sees cross-selling potential because it currently has about 330 advertisers, with only around 30 overlapping with Captivate advertisers.
- Management identified potential network expansion in 11,000 additional Class A office buildings and another 10,000 residential buildings.
The acquisition will be financed with $275 million of new committed term debt. Available cash will be used to refinance NCM’s existing revolver and fund transaction expenses. NCM ended the quarter with approximately $46.1 million in cash equivalents, restricted cash and marketable securities, and approximately $12 million in total debt.
The company expects net leverage at closing of approximately 3.9 times, including expected synergies and savings from its transformation plan. Ng said management expects the asset-light combined business to generate free cash flow that will be directed primarily toward debt repayment over the next two to three years.
Accordingly, NCM is pausing its dividend and share-repurchase programs. The company said it is not providing a forward outlook while the Captivate transaction is pending.
About National CineMedia (NASDAQ:NCMI)
National CineMedia, Inc is a leading U.S. out-of-home media company specializing in cinema advertising. The firm operates a proprietary network that delivers high-impact advertising content to moviegoers across a broad footprint of theaters, offering brands a targeted and immersive way to engage audiences in a captive, distraction-free environment.
Founded in 2003 and headquartered in Centennial, Colorado, National CineMedia began as a joint venture among several major exhibition chains.
