IDW released its quarterly financial report for the three months ending on July 31, showing a big drop in revenue and profits. Net income was down over 91% from the previous year.
IDW reported its decreased overall income:
Income from operations decreased by ($2,321,000) for the three months ended July 31, 2017 compared to the three months ended July 31, 2016 due to several factors. Decreases in operating income from IDW, IDW Entertainment and CTM in the amounts of ($1,467,000), ($187,000) and ($667,000), respectively, due to lower gross profit in all three segments, totaling ($1,185,000), more fully described below, and an increase in selling, general and administrative expenses of ($1,220,000), principally due to an increase in non-cash stock compensation across segments of ($674,000), among other net changes.
So what caused the drop? Well, in the publishing area, IDW explained:
Publishing revenue decreased by ($751,000), principally due to industry cyclical downward pressure driven by market leaders, as well as the timing of significant major brand titles that are expected in the fourth quarter of fiscal 2017.
Increased cyclical downward pressure driven by market leaders, of course, refers to Marvel tanking in sales this year, which has a cascading effect on everyone else. But that wasn't all. IDW showed a decrease across the board, though it is hoping things will pick up for the rest of the year:
IDW changed its book channel distributor on April 1, 2017, a significant and strategic change for IDW. As expected, this resulted in decreased sales in the transitional three months ended July 31, 2017. IDW expects sales to increase during the remainder of the fiscal year, and in the long term, significantly increase the company's presence in the book market. IDW also experienced decreases in IDW Games revenue of ($311,000), principally due to the effect of a specialty order in fiscal 2016 over fiscal 2017, and the timing of multiple new titles that were released in the comparative quarter in fiscal 2016. IDW also experienced a decrease in digital publishing and licensing revenue totaling ($349,000) related to the timing of its revenue sources in these categories, and other net changes of ($24,000). IDW Games has a number of high-profile games scheduled for the upcoming 2017 holiday season, which are expected to be recognized in the fourth quarter of fiscal 2017.