Cinemark Announces Record Q4 Revenue and 560K Movie Club Members

Last week, Cinemark Holdings, Inc. (NYSE: CNK) reported its fourth quarter and full year 2018 results, including all-time high Q4 revenues of $798.5 million,

Membership News: Cinemark Announces Record Q4 Revenue and 560K Movie Club Members

Source: Cinemark

Last week, Cinemark Holdings, Inc. (NYSE: CNK) reported its fourth quarter and full year 2018 results, including all-time high Q4 revenues of $798.5 million, a 6.5 percent increase year-over-year. Admissions revenue was $445.1 million, 0.4 percent increase; concession revenue was $277.5 million, a 6.3 percent increase; and other revenue was $75.9 million, a 67.6 percent increase. Equally impressive are Cinemark’s Movie Club statistics which CEO Mark Zoradi discussed on the company’s February 22 earnings call.

Movie Club membership has grown 26 percent since the end of the third quarter to 560,000 members, exceeding all expectations, according to Zoradi. Broken down, that’s 1,600 members per Cinemark theater. About half of those members were not previously part of the company’s free loyalty program, so the Movie Club is helping Cinemark expand its reach to new customers.

Zoradi also reported that 96 percent of Movie Club members report satisfaction with the program and nearly 75 percent say they are extremely satisfied. Why? Zoradi said it is because Cinemark did its homework before launching the program, identifying the types of features and benefits its customers most wanted. Some of those features and benefits including a low membership price (currently $8.99 per month), a 20 percent discount off concessions, roll over and sharing of unused credits and fee-free advanced ticket reservations.

Movie Club members are not the only ones who win with a membership though. Cinemark is finding that the membership is driving people back to Cinemark theaters.

  • Movie Club members go to the movies three times more than average moviegoers.
  • More than 75 percent of movie credits through Movie Club have been redeemed to date.
  • In a recent survey, 70 to 75 percent of members said they visit Cinemark more often than they did before becoming Movie Club members.
  • Through Movie Club, over 13 million tickets have been purchased.
  • Members are buying more concessions than nonmembers.

“Movie Club was designed to enhance the guests’ overall experience and interaction with Cinemark,” said Zoradi during the earnings call, transcribed by Seeking Alpha. “To say the least, we are absolutely delighted with Movie Club’s first year results. It’s achieving its goals of enhancing our guest experience and driving incremental movie going. Furthermore, it’s transactional framework is a sustainable model for the long-term.”

Membership News: Cinemark Announces Record Q4 Revenue and 560K Movie Club Members

Source: Cinemark

To continue the momentum, Cinemark is rolling its free loyalty rewards program into the Movie Club paid membership program. The revamped program will be called Cinemark movie rewards, and it will include two tiers: one will be the loyalty program and the other will be the paid membership component. 

“Our two-tiered loyalty program will establish an even higher level of engagement with members through more compelling benefits and rewards that are key to long-term satisfaction,” said Zoradi of the changes.

In addition to the success of the membership program, Cinemark reported that North American box office totals for 2018 were $11.9 billion due to increased growth in box office attendance.

Other highlights from the earnings report include the following:

  • Adjusted EBITDA increased 5.6 percent to $198.1 million, compared to $198.1 million in Q4 2017.
  • Net income for the fourth quarter was $19.4 million, compared to $95.1 million for Q4 2017.
  • Earnings per share were $0.17, compared to $0.82 per share for Q4 2017.
  • Cinemark attributed the big change in net income from 2017 to 2018 to several factors including taxation changes and changes in income tax liabilities. 
  • Board of Directors approved a 6.5 percent increase in dividends to $1.36 per share annually.

“I am also pleased to report that, based on confidence in our industry, enthusiasm for the upcoming film slate and our Company’s consistent financial strength, our Board of Directors approved an $0.08 increase to Cinemark’s annual dividend. Inclusive of that increase, we have grown Cinemark’s dividend by 36% and distributed more than $640 million dollars in cash dividends to shareholders over the past five years, demonstrating our discipline in returning capital to shareholders while investing in strategic initiatives to position our Company for long-term success,” said Zoradi in a news release.

Investors didn’t have a strong reaction to the earnings report. As of 3:18 p.m. EST yesterday, Cinemark was valued at $37.20.

Membership News: Cinemark Announces Record Q4 Revenue and 560K Movie Club Members

Source: Google

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Insider Take:

MoviePass’s loss is AMC Theatres’ and Cinemark’s gain. MoviePass has done virtually everything wrong with its movie subscription service. AMC Theatres and Cinemark, who already had loyalty programs and captive audiences, learned from those mistakes and tested their own membership services, tweaking them along the way. Based on membership numbers, Cinemark has done well, exceeding its own projections for its first year. We are curious to see how the revamped, combined loyalty-membership program will impact things. Will it confuse people, or will they more clearly see the benefits of moving from the free tier to the paid tier?

 

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