D-BOX Technologies Inc. (“D-BOX” or the “Company”) (TSX: DBO) a world leader in haptic and immersive experiences, today reported financial results for the second quarter ended September 30, 2024.

“We are pleased with the positive momentum we’ve seen this quarter across our revenue streams despite a challenging environment. We are diligently executing our strategy by focusing on three key commercial markets – theatrical, sim racing and simulation and training – all of which have shown revenue growth this quarter. By scaling our operations, we are surpassing the topline inflection point and positioning D-BOX for continued and enhanced profitability. We are also encouraged to see the industry slowly regaining momentum following last year’s disruptions,” said Sebastien Mailhot, President and Chief Executive Officer of D-BOX.

Q2 2025 Operating Results
In the second quarter, revenues reached a record $12.1 million, up $1.3 million, or 12%, over the prior year. This included a record $8.9 million from system sales, up 3%, and a record $3.2 million from royalties, up 49% from $2.1 million last year, driven by our increased footprint and the success of blockbuster release “Deadpool & Wolverine” in the second quarter.

Our system sales in the Entertainment markets totaled $6.8 million including $6 million of revenue in theatrical and sim and racing – two key commercial markets – which together were up 21% over the prior year. Revenue growth in these markets was primarily driven by the continued rollout to major theatrical customers, highlighted by the addition of 22 net new screen installations, bringing our total to 955 screens as of September 30, 2024. Sales were further supported by the growing deployment of sim racing centers and the strengthening of our customer and business relationships, notably with the Federation Internationale de l’Automobile (FIA). Our third key commercial market, Sim and training, ended the quarter with $2.1 million in system sales, up 3% from the previous year, pointing to stability with our industrial customers. Revenue growth in system sales was partly offset by the $1 million impact of exiting the direct-to-consumer hardware market, as previously communicated. This reflects our strategic decision to concentrate on our best-performing commercial markets.

Overall, we are pleased with our record sales performance in the quarter, with growth in all three strategic end markets, underscoring our growing footprint and an improving industry backdrop. While we highlight this outperformance, it’s important to consider the variability in quarterly sales and the importance of assessing D-BOX’s performance over a trailing twelve-month period.

D-BOX generated gross profit of $6.4 million, up $1.5 million versus the prior year, driven by higher revenues and improved margin performance. Gross margin of 53%, increased by 8-percentage points from 45% last year, primarily due to a higher proportion of revenues from royalties and a favorable channel mix within system sales as we exit the lower-margin direct-to-consumer hardware market. We emphasize the significant positive impact that a higher proportion of royalties, as part of our total revenues, has on our profitability. However, we caution that this revenue stream can fluctuate due to the seasonality of new theatrical releases and varying consumer responses.

Operating expenses of $4.2 million in the second quarter were essentially in line with the prior year. As a percentage of sales operating expenses improved by 4 percentage points, reflecting sales leverage. The Company generated operating income of $2.2 million, or 18% of total revenues, compared to $0.6 million, or 5% of total revenues in the same quarter last year. The increase in operating income reflected higher sales and a higher gross margin. Adjusted EBITDA1 was $2.9 million, or 24% of total revenues, up from $1.1 million, or 10% of total revenues a year ago.

As a result, the Company achieved a record quarterly net profit this quarter of $2.1 million in the quarter compared to net profit of $0.4 million a year earlier. At quarter-end, D-BOX had a cash position and undrawn credit facilities totaling $13.2 million.

Year-to-date Operating Results
Total revenues for the first half ended September 30, 2024 were $20.9 million, down $0.5 million, or 2% over the prior year. The decline was primarily driven by a decrease of $0.9 million in system sales, partly offset by an increase in revenues from royalties of $0.4 million, or 9% over the prior year. Our system sales in the Entertainment markets were down 1%, as high-single-digit growth in theatrical and sim and racing were more than offset by the impact of exiting the direct-to-consumer hardware market as detailed above. Sim and training system sales were down 16% due to the timing of orders versus last year. Gross margin of 53% increased approximately 5 percentage points compared to last year reflecting a higher proportion of revenues from royalties, a more favorable market mix within system sales and the impact of exiting the lower-margin direct-to-consumer hardware market. Operating expenses of $9.0 million were essentially in line with the same period last year. As a result, operating margin of 10% and adjusted EBITDA as a percentage of sales of 15% both increased 4 percentage points versus the prior year period. Reflecting lower financial expenses compared to last year, net income increased by $0.9 million to $1.8 million, up two-fold from the first half of last year. Cash flows from operating activities totaled $3.0 million compared to $0.9 million in the prior year, mainly due to higher net profit and lower working capital investments.

About D-BOX
D-BOX creates and redefines realistic, immersive entertainment experiences by moving the body and sparking the imagination through effects: motion, vibration and texture. D-BOX has collaborated with some of the best companies in the world to deliver new ways to enhance great stories. Whether it’s movies, video games, music, relaxation, virtual reality applications, metaverse experience, themed entertainment or professional simulation, D-BOX creates a feeling of presence that makes life resonate like never before. D-BOX Technologies Inc. (TSX: DBO) is headquartered in Montreal with offices in Los Angeles, USA and Beijing, China. Visit D BOX.com.