Alliance Entertainment Earnings Report: Vinyl Lifts Fiscal 2026

The news: Alliance Entertainment Holding Corp. (Nasdaq: AENT), a wholesale and e-commerce distributor of physical music, movies and other entertainment products, filed its Form 10-K on September 10 for the fiscal year ended June 30, 2026. Net revenues rose 8%, or $86.0 million, to $1.149 billion. Net income fell to $13.1 million from $15.1 million, as higher operating expenses outran gross profit growth.

By the numbers:

• Net revenues: $1,148,986 thousand, versus $1,063,457 thousand
• Operating income: $27.2 million, versus $30.1 million
• Adjusted EBITDA (non-GAAP): $41.5 million, versus $36.5 million
• Adjusted net income (non-GAAP): $23.4 million, versus $18.9 million
• Vinyl sales: $383 million, up 13%
• CD sales: $156 million, up 25%
• Physical movie sales: $339 million, up 22%
• Cash used in operations: $1.7 million, versus $26.8 million provided a year earlier

Why it matters: The annual earnings report shows physical media still growing at scale. Alliance credited demand in physical formats, exclusive distribution agreements and its mix of sales channels. In music, vinyl unit volume rose 7.4% and average selling price 4.8%; CD units rose 17.6%. Movie units grew 20.8%. The company says it holds exclusive physical media distribution agreements with Paramount Home Entertainment and Amazon MGM Studios.

Profit moved the other way on a GAAP basis. Operating expenses rose to $125.1 million from $102.7 million, including a $7.8 million loss on a vendor receivable and higher selling, general and administrative costs of $66.2 million. The gap between GAAP and adjusted figures widened from a year earlier: adjusted EBITDA adds back the $7.8 million vendor receivable loss along with deal costs, equity compensation and warrant fair-value changes, and the reconciliation is in the filing.

The big picture: Growth consumed cash. Inventory increased by $23.8 million and trade receivables by $17.5 million, which pushed operating cash flow negative and lifted working capital to $62.4 million from $45.4 million. In fiscal 2026 the company entered a new $120 million revolving credit facility with Bank of America, replacing its White Oak facility, and drew about $17.0 million net on the revolver. It repaid $10.0 million in related-party loans from Executive Chairman Bruce Ogilvie. Interest expense dropped to $7.6 million from $10.6 million.

Customer concentration is a stated risk. The top three customers produced about 45% of net sales and the largest about 21%, up from 15% a year earlier. Vinyl distribution customers named in the filing include Walmart, Barnes & Noble and Amazon.

What’s next: The filing lists 50,979,630 Class A shares outstanding as of September 10 and 60 million contingent Class E shares. Watch whether revenue growth converts to operating cash in fiscal 2027, and how the company manages its reliance on a few large retailers.