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Funimation's Parent Navarre Posts First Quarter Results

Navarre Corporation, the parent company of the anime distributor Funimation, announced its fiscal results for the fiscal year 2008's first quarter, which ended on June 30, 2007. Net sales were US$137 million, up 3.7% from the same quarter last year. Net income was US$5.4 million, compared to US$0.6 million in the same quarter last year.

Navarre credited its publishing segment, which includes Funimation, Encore, and BCI, with US$29.6 million in net income (an increase of 13.8%). Specifically, it credited part of the growth to "the release of Afro Samurai, and strong sell-through of Dragon Ball Z season sets." Funimation also saw continued growth in digital sales through iTunes, and it recently added anime to XBox Live Marketplace.

This morning, as part of its 2008 first quarter conference call (the linked webcast will be archived for 12 months), Navarre repeated the information presented in its press release and SEC filings, while adding additional information.

Funimation showed a 60% net sales growth in the first quarter of 2008 versus the first quarter of 2007 (Q1 2007). The impressive Q1 2008 sales were partially due to the shift of the release date of Afro Samurai from Q4 2007 to Q1 2008. As a result, the company expects Q2 2008 to be a little "softer" than Q1, but also expects sales to pick up again by Q3. Funimation currently have 12 new shows "in the pipeline" to be launched in the remainder of fiscal 2008, with the strongest titles expected in Q3 and Q4.

Kerry Deacon, president & CEO of Navarre, also attributed the growth to better than expected sales of Funimation's new shows, saying “Funimation also launched Peach Girl and Suzuka in the first quarter, and we're very pleased with their initial performance. Our new titles continue to perform better than expectation[sic], both Peach Girl and Suzuka…were about 10-15% ahead of expectation.”

Dragon Ball continued to be credited as a strong earner due to Funimation's continued remarketing of the franchise. Deacon said that Dragon Ball's sales were “quite frankly a little better than we anticipated…. It's really revived itself and [is] becoming more and more important.”

The iTunes Store accounted for approximately 75% of all digital sales at Funimation (the other 25% are split between Total Vid and XBox Live Marketplace). Currently Funimation has 11 properties available on iTunes and expects to have 15 to 16 by the end of the calendar year.

No mention was made of the discontinued animeOnline.com venture, which was discontinued after the June 30 end of Q1.

Deacon discussed the vague possibility of acquiring companies to bolster the strengths of Navarre's various publishing companies, including Funimation. “We would like to keep on to our strengths if we made any acquisition, rather than jump out to a publishing field that we're not in today.”