Dolphin Entertainment, Inc. (NASDAQ:DLPN) Q4 2021 Results Conference Call April 13, 2022 4:30 PM ET
Company Participants
James Carbonara – Hayden IR
Bill O’Dowd – CEO
Mirta Negrini – CFO
Conference Call Participants
Allen Klee – Maxim Group
Operator
Good afternoon, ladies and gentlemen, and welcome to Dolphin Entertainment Fourth Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host, James Carbonara. Sir, the floor is yours.
James Carbonara
Thank you. And once again, welcome to Dolphin Entertainment’s fourth quarter and full year 2021 earnings call. With me on the call are Bill O’Dowd, Chief Executive Officer; and Mirta Negrini, Chief Financial Officer.
I’d like to begin the call by reading the safe harbor statement. This statement is made pursuant to the safe harbor statement for forward-looking statements described in the Private Securities Litigation Reform Act of 1995.
All statements made on this call with the exception of historical facts may be considered forward-looking statements within Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various risks and uncertainties. For a discussion of such risk factors and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the Company’s annual report on Form 10-K contained in subsequent filed reports on Form 10-Q as well as in other reports that the Company files from time to time with the Securities and Exchange Commission.
Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events or circumstances.
Now, I would like to turn the call over to Bill O’Dowd, Chief Executive Officer of Dolphin Entertainment. Bill, please proceed.
Bill O’Dowd
Thanks, James, and hi, everyone. Good afternoon, and thank you for joining us today.
As always, we’ll start with a review of some financial and operating highlights, followed by a full financial review, and then we’ll open it up for Q&A.
Overall, 2021 will be remembered as a transformative year for Dolphin, both with respect to our balance sheet and operating income as well as in our evolution to making investments and assets for which we believe our marketing expertise will greatly influence the likelihood of success.
Let’s start with our financial statements. The momentum from the first nine months of the year carried through to the fourth quarter. Looking at the P&L, we have set another new quarterly revenue record with $10.5 million in revenue, up 57% year-over-year. Each quarter of 2021 set a then record for revenue. Q1 reached $7.2 million in revenues, a record broken in Q2, which reached $8.6 million in revenues; followed by Q3, which set a then record with $9.4 million in revenues. Now we have achieved $10.5 million in revenues in Q4, all of these increases have been entirely organic and a result of the Super Group’s growth and cross-selling of services. And with each successive quarter setting a new record in revenue, obviously, the full year set a new revenue record as well reaching $35.8 million, which is an approximate 49% increase from the prior year.
Next, we look at our operating income, which is the metric by which we gauge ourselves. 2021 was a milestone year in this regard as well as we turned operating income positive after deducting noncash items of depreciation and amortization and a change in the fair value of contingent consideration. We are very proud of this achievement, especially since our expenses included investments in our 2.0 initiatives.
Finally, I’ll make a comment on our balance sheet. While I know that we will be releasing the balance sheet upon the completion of the audit, which we expect to occur in the next few days, I would be remiss if I didn’t point out, and believe me that this feels great to say, in 2021, we reached a working capital surplus with more cash on hand than all remaining debt, including long-term debt, which has allowed us to remove our going concern, a tremendous milestone for any microcap public company.
Now, let’s move to some operational updates on our Super Group, the companies that are making those great numbers happen. We’ll start with Shore Fire Media. Dolphin’s industry-leading music PR firm, which had a great 2021, punctuated by a fourth quarter working on clients and projects who collectively earned 27 GRAMMY nominations, reflecting the breadth of the Company’s roster across R&B, Electronic, Global, Roots, Folk, Jazz, Blues, Gospel, Contemporary Christian, Comedy and other genres.
Shore Fire’s leadership in music PR shows no sign of slowing down. Just last month, helming the red carpet at the Bud Light Super Bowl Music Fest, three nights of All-Star Talent, including Green Day and Miley Cyrus, Blake Shelton and Gwen Stefani with Mickey Guyton; Halsey & Machine Gun Kelly; and other special guests.
Turning to 42West, Dolphin’s entertainment PR powerhouse. They were busy in the fourth quarter as well from the promotion of the latest James Bond movie to Steven Spielberg’s adaptation of Westside Story to — and just like that, the heart stopping a revival of Sex in the City. If you’re watching it, chances are 42West promoting it. But you don’t have to take my word for it. The Observer just released its ranking of the best PR agencies in America 2022, a widely respected list of the 50 most powerful public relations firms in the nation. 42West was ranked number 2 in the country. Once again, the highest ranking of any entertainment PR firm. The Observer notes 42West, led by CEO of Amanda Lundberg, yet again is recognized for its elite PR services for film, television and corporate PR management with clients including nearly every studio and streaming service, several A-list talent and impactful brands like Fandom, Bond, Turner and Riot Games. Congratulations to everyone at 42West for such an incredible recognition.
Moving along to Be Social, Dolphin’s influencer marketing group. It was a busy quarter that included partnerships with Japanese media franchise juggernaut, The Pokémon Company. These social group talent influencer campaigns also included McDonald’s, Capital One and SKIMS clothing line cofounded by Kim Kardashian. In addition, Be Social and its influencer network worked on projects for fashionable footwear room wears [ph] which made Oprah’s Favorite Things list as well as Sports Illustrated Swimsuit magazine and fashion collections for Nordstrom.
Moving to the Viewpoint Creative, Dolphin’s respected creative relations agency and video production boutique. Viewpoint brought home 4 Gold MUSE awards in this year’s international competition, Viewpoint’s work with clients HBO Max, AAA Northeast, the Leary Firefighters Foundation and First Look Media won the categories of video TV program, video insurance, video documentary and video public service and activism, respectively.
Finally, we’ll talk about The Door, our leading culinary hospitality and lifestyle PR firm. During the fourth quarter, The Door was busy promoting the New York City Wine & Food Festival launching the Rachael Ray’s book, This Must Be the Place, and Dan Richer and Katie Parla’s book The Joy of Pizza. It sounds pretty good, both of which became New York Times category bestsellers and finding room to promote National Peppermint Bark Day for client Häagen-Dazs.
If you’re eating, drinking or making a reservation for it, chances are The Door’s promoting it. And once again, you don’t have to take my word for it. The Door also made the Observer’s widely respected ranking of 50 most powerful public relations firms of the nation. The Observer notes, The Door led by Co-Founder, President, Lois Najarian O’Neill; and Co-Founder, CEO, Charlie Dougiello, was credited for overseeing the launch of Dolphin Entertainment’s NFT studio last year, along with providing a unique integrated marketing approach for many high-profile clients, including Williams-Sonoma, Citarella, Häagen-Dazs Sir Kensington’s, fast casual chain PLNT Burger, the Francis Ford Coppola Winery and the Expo to Dubai.
That is tremendous recognition from the esteemed Observer, and I’d also like to recognize Charlie, Lois and the entire Door team for playing an essential part in the Dolphin 2.0 initiatives we’re going to talk about in a few minutes.
All right. As a reminder, for anyone new on the call or to the Dolphin story, we define the work of our Super Group under Dolphin 1.0 is the very best at marketing pop culture. And we define what we called Dolphin 2.0 as using pop culture to market assets that we own. The whole point of assembling the Super Group of entertainment marketing companies and putting them within a public company is so that we can take ownership positions in assets we create wherein our form of marketing expertise will influence the likelihood of success. Simply put, we want to own some of the types of things that we know we can market better than anybody else.
In terms of a business model, broadly speaking, there are two types of Dolphin 2.0 initiatives. Ones where we develop assets in the categories of content, consumer products or live events, and ones where we receive ownership stakes in other people’s companies that have assets in those three categories.
Let’s talk about the second type of Dolphin 2.0 investment first. I’ll start with Crafthouse Cocktails. In December 2021, we announced a strategic partnership with Crafthouse Cocktails, a pioneering brand of ready-to-drink all-natural classic cocktails created by world-renowned mixologist, Charles Joly and esteemed restauranteur, Matt Lindner. Real quality ingredients, balanced cocktails and authenticity at every level have been hallmarks of the brand since day 1.
Now Crafthouse Cocktails is a company that’s almost 10 years old. They have an award-winning product line. And they wanted the Super Group led by The Door to help market their product. They pay us a cash fee every month to do just that, and we also receive an ownership stake in the company in return for the added value of the services and relationships extended by the entire Super Group.
We structured our relationship with FanJolt, another Dolphin 2.0 initiative that we announced in the first quarter of this year in the same way. FanJolt is a new online experiential platform, creating memorable interactions between fans and a curated list of premier talent to support their favorite causes. The platform features Rafael Nadal, Aaron Judge, Jewel, Ashanti, Kevin O’Leary, Josh Richards, Jen Selter, Daymond John and Patrick Mahomes’ 15 and the Mahomies Foundation and Tua Tagovailoa’s Tua Foundation.
And similar to Crafthouse Cocktails, with FanJolt, we receive a monthly cash fee for our services, and we also receive an equity stake in their company in return for the added value of the services and relationships extended by the entire Super Group.
With respect to these types of Dolphin 2.0 initiatives, we typically look to receive somewhere between 5% and 10% of the equity in the respective company in addition to the monthly cash fee.
With respect to the other types of Dolphin 2.0 initiatives, wherein we develop assets that we are excited to market, we do not receive a monthly cash fee since we would often be simply paying it to ourselves. But correspondingly, we take a larger ownership position in the product or venture. Examples of these types of Dolphin 2.0 investments would be Midnight Theater and the NFT marketplace we have been building.
Let’s start with Midnight Theatre. On October 12, 2021, we announced the acquisition of an ownership stake in Midnight Theater. Contemporary variety theater and restaurants that will anchor the $4.5 billion development from Brookfield, known as Manhattan West. As we’ve previously shared for Dolphin, the Midnight Theater is the most exciting live venue concept we have seen in a very, very long time. It will be a truly modern variety theater paired with a fantastic restaurant, which is a combination that is missing in the cultural landscape today.
We expect to open the restaurant in June of this year and be in previews this summer with the theater with a grand opening and a full 7-day a week theatrical calendar in the fall. Dolphin will manage all aspects of publicity and marketing for the venue, both the restaurant and the theater as well as facilitate talent and commercial relationships within both the entertainment and culinary industries. We’re hopeful that Midnight Theater creates a relatively straightforward or predictable range of modeling because even though it has two components, a restaurant — by the way, the restaurants called Hidden Leaf and the theater — Midnight Theatre, I should add, it has a third component, a bar named James Carbonara’s landing spot. It has many of the variables already defined for the model.
Why? Because there’s a certain number of seats in each, so you can model out an average ticket price and the number of turns in the restaurant, you can do the same in the theater with an assumption of a number of shows per week, and this will quickly get you to a revenue model. And of course, we will look to operate the venue at a reasonable profit margin standard in the industry. In success, of course, we will look to add locations around the country and around the world. You can quickly see how this opportunity can become very exciting for a company at this stage of Dolphin in 2022.
We invested $1 million into the venture for a stake of approximately 13%. We also invested in the options for up to another approximately 25%. As you can tell, we’re very excited for Midnight Theater.
Now, I’ll turn to NFTs. As a reminder, last August, we announced our partnership with FTX U.S., the leading cryptocurrency exchange and wallet provider with over 1 million active users and over $10 billion of average trading volume per day. That was as of last August, I’m sure they’re much higher now.
Our goal is to create a program global NFT collections targeting all of Dolphin’s verticals, including the sports, film, television, music, gaming, e-sports, culinary, lifestyle and charity industries. We then brought in award-winning visual designer Anthony Francisco from Marvel Studios, where he was the senior visual development artist responsible for designing iconic characters across the Marvel Cinematic Universe.
Following that, in December, we announced artwork had begun on Creature Chronicles: Exiled Aliens, Dolphin’s first generative NFT collection which will feature 10,000 unique custom crafted avatars of an ancient race of aliens designed by Anthony himself.
In March of this year, we announced our partnership with Flower Girls. Flower Girls is a fine art female-led NFT collection of 10,000 unique Flower Girls by revered artist, Varvara Alay. Launched in December of 2021, the Flower Girls has surpassed over $15 million in sales to date and is donating 20% of profits from both primary and secondary NFT sales to a variety of children’s charities voted on by the community.
In February, more than $400,000 was donated across children’s charities, including $200,000 to St. Jude Children’s Research Hospital, a client that is also on Dolphin Entertainment’s extensive roster. The Flower Girls also give an additional 5% of profits towards collecting children’s NFT art, supporting and empowering the next generation of artists.
Dolphin is activating its entire network of leading marketing and promotional agencies to amplify the Flower Girls charitable initiatives as well as expand community benefits and increase value for Flower Girls holders. Dolphin will also leverage its unique position to explore meaningful and exciting new opportunities for brand growth across all lifestyle and entertainment verticals, including, but not limited to, scripted and unscripted television series, digital and traditional publishing, consumer products, music, gaming and events. And of course, we will promote the leaving sugar out of future Flower Girls NFT collections as a partnering venture.
So you can see that we have worked hard over the past several months to allow us to take advantage of our efforts in the NFT space. This coming summer, we expect to have other Flower Girls announcements in Q2 and to launch Creature Chronicles: Exiled Aliens for sale in Q3. Each of these collections will have a retail value in the seven figures, which allows the NFT — each NFT collection to represent significant potential upside for Dolphin, once we go on sale.
So, I’ll pause there. In summary, we’re extremely pleased with these first four Dolphin 2.0 initiatives, and hopefully, today’s conversation provided some additional detail. Just one year ago, on December 31, 2020, we had not yet started exploring Dolphin 2.0 initiatives. We always talked about January 1, 2021, is the starting line for Dolphin because by then, we would have scale with our Super Group, we had 6 companies that have been acquired and that we would begin to explore what we wanted to make investments in. By December 31, 2021, we had launched the first three of these Dolphin 2.0 initiatives, the NFT marketplace was being built, Midnight Theater had been — we had acquired an ownership stake, and we obviously entered into the strategic partnership with Crafthouse Cocktails. We added a fourth initiative subsequent to year-end, which is the FanJolt social media app.
In closing, I would like to also reiterate that these 2.0 investments are on top of a growing 1.0 business that has led to record revenues for four quarters in a row, including more than 57% year-over-year revenue growth in the fourth quarter. We are profitable and growing with a pristine balance sheet and now we are at a point where we can see Dolphin 2.0 flourish. This was our thesis when we uplisted to NASDAQ four years ago and began assembling the Super Group.
Thank you for joining us on this ride. And to that end, I’ll now turn it over to Mirta Negrini, our Chief Financial Officer.
Mirta Negrini
Thank you, Bill, and good afternoon, everyone.
I will now discuss results for the year ended December 31, 2021. Revenues for the year were approximately $35.7 million as compared to $24 million for the year ended December 31, 2020. Overall operating expenses for the year were approximately $41.2 million compared to approximately $26.7 million in the prior year.
Operating expenses are composed of direct costs, payroll and benefits, selling, general and administrative costs, changes in the fair value of contingent consideration, depreciation and amortization and legal and professional fees. Direct costs for the year ended December 31, 2021, were approximately $3.9 million compared to $2.6 million in the prior year.
Payroll and benefit costs for the year ended December 31, 2021, were approximately $23.8 million compared to $15.9 million in the prior year.
Selling, general and administrative expenses for the year ended December 31, 2021, were approximately $5.8 million compared to $4.8 million in the prior year. Legal and professional fees were approximately $2 million compared to $1.2 million last year. Operating loss was $5.4 million, which included noncash items from depreciation and amortization of approximately $1.9 million and changes in the fair value of contingent consideration of approximately $3.7 million. This compared to an operating loss of approximately $2.6 million in the prior year, which included noncash items from depreciation and amortization of $2 million.
Net loss was approximately $6.4 million, which included noncash changes and fair value of liability of approximately $3.1 million and approximately $0.3 million of a gain on extinguishment of debt. This compared to a net loss of approximately $1.9 million, which was positively impacted by non-cash changes in the fair value of liabilities of approximately $0.9 million, a gain in extinguishment of debt of approximately $3.3 million, and a loss of approximately $1.5 million on the deconsolidation of the Max Steel variable interest entity for the year ended December 31, 2020.
Basic and fully diluted loss per share was $0.85 per share based on 7,614,774 weighted average shares outstanding. This compares to $0.35 basic loss per share based on 5,619,969 weighted average shares and $0.58 fully diluted loss per share based on 6,382,937 weighted average shares outstanding last year.
Cash and cash equivalents as of December 31, 2021, were $7.7 million compared to $7.9 million last year.
That concludes my financial remarks. I will now ask the operator to open the phone lines for Q&A. Operator, would you please poll for questions?
Question-and-Answer Session
Operator
Absolutely. Thank you. [Operator Instructions] First question is coming from Allen Klee with Maxim Group. Your line is live.
Allen Klee
Yes. Hi. Congrats, good beat on my numbers for the quarter. Good momentum. So, the questions that I have starting off, if I look at what your revenue was for the quarter, how — was all this revenue from the Super Group’s, or was any of it from the 2.0 so far?
Bill O’Dowd
All of it was from the Super Group. We haven’t recognized any 2.0 revenue until this summer.
Allen Klee
Got it. Okay. And then, you said — just in the timing of just to make sure I got it correct. Did you say that Midnight Theater, the restaurant will start in June and then the theater in the fall, Flower Girls will be in 2Q and Exiled Aliens will be in 3Q?
Bill O’Dowd
Yes. Allen, that’s right, except the one more caveat that the restaurant — and first of all, thank you for the kind words at the start of your comments. We’re very happy with our quarter as well. So, thank you. The Midnight Theater, the restaurant we anticipate opening in June, we’ll start the theater in previews. We have a variety of different acts we’re booking now for the summer. It’s a fully immersive theater experience. It will be a really great spot for music, for Broadway cabarets, for comedy acts, for a wide — magic acts, a wide variety of entertainment. We’ll be doing previews of different types of acts over the summer. We have some pretty exciting announcements coming over the next several weeks.
And then, the whole theater will have a grand opening in the fall with a full seven-day a week schedule of entertainment to go with the theater — excuse me, with the restaurant. So, that’s the timing for Midnight Theater, yes.
And then, in terms of the NFT collections, we’ve been building our ability to and have now finished our ability to sell NFT collections, taking a credit card, we’re excited for that. We have the Flower Girls partnership that we’re extremely excited by. We expect the Flower Girls announcement. We’re excited to share here in Q2, maybe be on the lookout for that. And then, we expect to have Exiled Aliens, the Creature Chronicles collection from Anthony Francisco finished and on sale in Q3.
Allen Klee
And when you said you expected seven-figure revenues from the NFTs, was that referring to the Exiled Aliens drop and the Flower Girl drop, each one of them?
Bill O’Dowd
Yes. Each collection will have a total retail value in the seven figures. So, that’s the expectation from your mouth, you got here, Allen, as we embark on this journey. But Flower Girls, the first collection did sell out, they achieved a $2 million initial sale of the — excuse me, $2 million of the revenues from the initial collection and then they’ve generated over $13 million of secondary sales, stands for total collection revenue of over $15 million.
Allen Klee
Great. Okay. And then, any commentary on the outlook for 2022? I mean, when I look at you, I would — simplistically, I would think that your Super Group’s business should be better as the economy opens up, The Door recovers, there should be some and cross-selling that should probably be up year-over-year? And then for 2.0, it’s kind of just the timing of when it’s all going to kick in. But if there’s anything you could add of the — and if there’s any seasonality to think about in the business?
Bill O’Dowd
Sure. Yes. No, thank you. We think so too. First quarter is always the slowest for many of our subsidiaries. So, it wasn’t really surprising that last year, same was true. The first quarter was the lowest, but the growth has been steady. And as I mentioned at the top, it’s all organic, and there are no acquisitions that affected those numbers.
Our last acquisition was effective as of January 1st of last year, the Bender/Helper. So, it really, quite frankly, we feel validated. It proved the thesis for Dolphin 1.0 that our acquisitions can cross-sell with each other. And the fact when you have the leading or the leaders in their respective fields. I mean, let’s just brag about 42West for a hot second, to be ranked, the second most powerful PR firm in the country, right, in any industry.
Again, the leader in entertainment, then you’re going to receive your fair share of the growth of the industry. And the advent of these streaming services, I think probably everybody on this call subscribes to more than one streaming service. As we like to say back in 2018 and 2019, when we’re putting the Super Group together and was on the road, there’s going to be all this content coming. Somebody’s got to promote it, right?
So, this organic growth, the cross-selling, it’s working, we’re growing. And then, why we think we built a better mousetrap was that we could take our profits and invest in owning some assets that we could take, obviously, we’ll have much bigger upside if we own the assets that we’re promoting. And I’d be remiss if I didn’t point out the Crafthouse Cocktails example. I mean, here’s an example of what we can also do. There are a lot of companies out there that have consumer products or live events that would want this group of marketing leaders to market their product.
So, we can better monetize our services by taking a cash fee every month like we would normally do than taking an equity stake in the venture to be able to access the 42West and the Shore Fires and the Be Socials because they know that if we market their products or services that they’re more likely to achieve their goals, whether it’s to do a fundraising round to sell the company, to just grow the company, have some type of liquidation event in the future. So, that’s exciting for us.
Those types of deals are equally exciting for us. And then, when you add to that, the huge optionality of something like a Midnight Theater, or an NFTs business, then that’s what we mean by we think we have a better mousetrap. We have the optionality of big swings like biotech companies or others, but we’re not the leading cash along the way. We’re actually making cash along the way. So, that’s I think our outlook for 2022 is the satisfaction of getting to this point.
2.0 is going to generate revenue just a couple of months. Midnight Theater’s open, Flower Girls will have an announcement, we’ll have Creature Chronicles on sale. That’s all very exciting for us.
Allen Klee
That’s great. And then, on average, the margins will be higher than your company average for 2.0. Is that reasonable?
Bill O’Dowd
Yes.
Allen Klee
Then Super Groups, I mean, 2.0 will be higher than Super Groups?
Bill O’Dowd
Yes. Yes. I mean, we have a very, very solid — provide services business, right, as we can see, and people that know our story have seen this being built over four years. But as someone who may — who did 20 years of content ownership, right, also before, in success, if you own the asset you’re marketing, you’re just going to make a much, much higher margin by definition, right? You can provide great marketing services for James Bond. But I promise you, the people that own James Bond are making more than we are. I’m just picking absurd example, right?
Well, it’s the same across every layer. If it’s a food festival, if it’s a music festival, if it’s a consumer product, if you own the product, you’re going to make a lot more. And there’s certain — and I guess, that’s the underlying assumption of our thesis, too, Allen. There are certain products where the marketing makes a bigger difference to whether they’re going to succeed, right?
Think of marketing liquor or think of marketing beauty and cosmetics products or think of marketing perfume or think of marketing whatever you have as an example in your head where having the ability to market it and create consumer adoption is far more valuable than say, doing the same thing for an automotive — automobile, right? I mean, the quality of the product matters a lot on the automobile, right? So, I think that’s what we’re looking for and use our marketing to the greatest monetary advantage for ourselves and our shareholders.
Allen Klee
For items — for the NFTs that you can create a brand that has — becomes an annuity that you do continuing stories, continuing drops, what do you think is reasonable for how many like drops can be done a year?
Bill O’Dowd
Well, funny part — that’s a great question, Allen. And we have a lot of experts in-house on how it works in the analog world for marketing collectibles to the consumer. The truth is no one else. I mean, the NFT collections started really less than a year ago today. So, you’re always going to get a transparent answer. And the truth is we’re going to experiment.
We think that the market can hold at least two drops per year per brand, and we’ll see if we’re right. And part of that is going to be how well you can engage the community. These people are buying NFTs to participate many of them in online communities around the brand. And we — where we think we have a big advantage is that we can deliver a lot of community benefits. We have experiences, we can share with our communities, we have prizes and giveaways. We can supply that, quite frankly, very few others, if any, can provide because of backstage or invitations to venues and et cetera, et cetera, so.
And then what we’re also excited about is something like Flower Girls is there’s a great brand, right? It’s got great art, it’s family-friendly, it’s charitable. And what can you do with Flower Girls, there are a lot of brand extensions for that type of community. And many of those brand extensions, and I don’t want to give away anything that we may be working on or we’ll have to announce shortly, fall into the areas of expertise of our companies. So, that’s exciting for us, and that’s why we selected that female-fronted NFT collection to partner with. We’re very excited about that collection. And they’ve done very well. They sold out, like I said.
Allen Klee
That’s fantastic. So, for Midnight Theater, I’m just trying to remember, there — Midnight Theater is — it’s 160-seat venue. And then, the restaurant is 75 seats plus 20-seat private dining, 40-seat bar, lounge. Are there any public companies you could point us to just to think about like reasonable, like you said that we could model this based on number of seats and assumptions? Do you know if there’s any industry rule of thumb that you could point us to for that?
Bill O’Dowd
Yes. And without getting into specific guidance preopening or anything, it’s a tricky one. I’m excited to talk a lot more about Midnight Theater over the subsequent earnings calls. I will say, if you think about, for lack of a better word, I’ll say, cool spots like that, do you look at certain groups that have that type of pedigree, whether it be TAO, obviously that was bought by Madison Square Garden, or others that could create locations around the country and around the globe. Where we think we have a difference, of course, is that our venue will have that high-quality restaurant, high-quality bar, but it’s got a theater, right, for live performance.
And as you can imagine, we think we’re uniquely positioned to not just promote the come in there, but facilitate the relationships with the industry or the industries. So, there really is no direct comp because you could say in the old days, House of Blues, but I’m not sure they would have thought of themselves in the same vein on the restaurant and bar side. They — and they were for music only.
So what would you consider to be something similar? But we also think that’s the huge opportunity, right? The many people on this call are in New York City, very, very few places can offer a full night out in one location, and we can. And of course, it’s within a drop-dead gorgeous complex. I mean, it takes two city blocks what Brookfield built. It’s incredible. And right across the Plaza from us is the other restaurant that’s Danny Meyer’s restaurants that just got nominated for James Beard award, right?
But if you want entertainment and a high-quality restaurant in the same venue, then we think we have something unique, so. But I think when you start modeling around those types of comps, I think you’d get pretty close.
Allen Klee
Okay. Great. And you have so much on your plate, does producing movies still fit in there, or is that a maybe, or how do you think about that?
Bill O’Dowd
Allen, I think you just have to wait a very short period of time for that vertical to open up for us. Going back to 2.0, we’ve been consistent in saying that the 4 legs of that stool for us will be taking ownership stakes in other people’s companies. So that’s Crafthouse, that’s FanJolt. It will be our own content, which hasn’t started yet, but patience. It will be our own consumer products, which has started. And to us, that’s NFTs in a weird way, Midnight Theater, because I mean that data practically encompasses all the categories. And then, of course, our own live events. So, I think it’s fair to say that we expect the content vertical to open up shortly, and the live event is probably closer to the end of the year for obvious reasons. We’re coming out of COVID, we’re feeling good. The music tours that our clients have booked are holding, music festivals are opened up.
So, when the world — the world is hungry for live entertainment, so we think we can get into live events by the end of the year, and content sooner.
Allen Klee
Great. And I know you’re not really — you’re not giving guidance, but any thoughts on like how you’re thinking about the financial discipline of managing revenue growth relative to expense growth?
Bill O’Dowd
Sure. Well, I mean, if I could give Mirta and the team at Dolphin, a big pat on the back, I mean, we were on this call a year ago and said, we’re going to manage ourselves to make the 2.0 investments in 2021 out of the cash that we were generating. And I feel really good about where we ended when — on that P&L subtracting the noncash items of depreciation and amortization, and the change in the fair value of the contingent consideration, we landed income — operating income positive after making the investments in the NFT marketplace and others.
So, I feel good about that. I think we will start to see our revenue exceed — continue to grow, is what I’m trying to say, sorry, the operating income continue to grow. And then, with some of these opportunities, it’s always been — just what are the opportunities that present themselves to us and do we want to take them. And if so, how we manage our own cash accordingly.
But we’re profitable and we’re growing, and I think we’ll continue to stay, so even while we’re making these investments. Obviously, within a very short period of time, the 2.0 investments, we expect will generate outsized returns, right? So, it would just be a matter of investing a fraction of what we’re making. Right now, we’re choosing carefully because we’re growing our profits in this year and last year or this year and next year as we are making the first of the investment.
Operator
[Operator Instructions] Up next, we have Greg Greenberg, private investor. Greg, your line is live.
Greg, can you hear us? Your line is live. Greg seems to be having technical difficulties. [Operator Instructions] I will put you back in the queue. Up next, we have Brian Swift [ph] with Security Research Associates.
Unidentified Analyst
Hi. Last year, you had a lot of noncash-type charges, which I assume were from a message, made prior. You said you only did one deal in January of this year, other than the fact that you may do more deals in ‘22. Do you — how do you envision those types of charges? Is that like a nonrecurring thing, or are we going to see more of that because it kind of made your year-end statement? It looks like you’re losing a lot of money instead of the positive cash flow that you talked about.
Bill O’Dowd
Sure. No, thank you for the question, Brian. We had some of those fair value instruments that are expiring or ending the puts end after last year, and that created large fair value swings in any given quarter or any given year. The contingent — when we bought the companies for the Super Group, we provided the bulk of those acquisitions had earnouts, and that’s the contingent consideration. Proud to say how well the companies did in making their earnouts, which is what you want to see, I think, but they create noncash swings as well.
So, we’re pretty much through that. After last year, there’s only one company left with an earn-out that will be earned, we anticipate by the end of this year. So a lot of these noncash items are expiring almost — and it’s quite possible that all of them will by the end of this calendar year. So, we’re almost through those noncash items.
Depreciation and amortization will stay with us, as you can imagine, for a while, but the bigger numbers that created the bigger swings, like in last year of the noncash items, should be — we should be finished by the end of this year.
Operator
Next, we have Greg Greenberg. Greg, can you hear us. Your line is live. Okay. He has technical difficulties. We can’t hear you from our side, Greg. [Operator Instructions] We have no further questions in the queue. I’d like to turn the floor back to Bill O’Dowd for any closing remarks.
Bill O’Dowd
Well, thank you. And Greg, if you’re out there, feel free to reach out to James Carbonara and be happy to line up the call with you. I’m sure it’s frustrating not to be able to get the tech to work. And obviously, James does a great job for us, and it was our honor to name the bar theater after him, just kidding. But thank you again to everyone that has followed our story.
Obviously, we are very proud of the last year, hit some really nice milestones on a financial perspective, but that’s only the start. 2.0 is why we built this company. We’re excited for the investments we’ve made. We’re excited for both types of 2.0 investments, the ones where we take smaller ownership stakes in other people’s companies and the ones where we take a more active role and a larger stake in developing assets. And we think that combination of a profitable company, a profitable base that’s growing with those types of upsides is what makes us a little different, and hopefully, something that gets people excited to be — to invest in and be a part of the journey. So, thank you for those who are, and I look forward to speaking to everybody again in just a few short weeks. So, thank you everybody for the time. Bye, bye.
Operator
Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.
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