Optically Softer Q1 ($81M Revenue, 38% EBITDA Margin) Masks Structural Strength Ex-China: Global Box Office +67% YoY Excluding China (NA +75%, RoW +60%); Project Hail Mary Delivered $90M+ in IMAX — 2x Management's Initial Projection at 18% Global Indexing (30% in China); Q2-to-Date Box Office Over $100M (+10% YoY); HOYTS Australia 10-System Deal Nearly Doubles Regional Footprint; FY26 Guide ($1.4B / 160-175 / 45% Margin Floor) Reiterated; The Odyssey July 2026 (40 Film Locations, 70mm Tickets Sold Out 9 Months Out) Remains the Central Catalyst — Maintaining Outperform

Coverage Update from Q4 2025 / FY25

Our Q4 FY25 recap maintained Outperform at ~$36 with a $40-$52 fair value range. The through-2028 framework articulated at the December 4 Investor Day delivered on every dimension; the FY26 guide ($1.4B box office, 160-175 installs, 45% margin floor) was characterized as "conservatively set" with the company's history of beating guidance supporting upside. We explicitly flagged the Q1 2026 Ne Zha 2 lapping as a known headwind that the FY26 guide accommodates.

The Q1 2026 print confirms every analytical framework we used:

• The China comp lapping was severe (-62% YoY), but the FY26 guide framework accommodates it
• Ex-China growth was strong (+67% YoY) — the underlying structural inflection is intact
• Project Hail Mary delivered 2x management's initial projection — streamer-FFI economics are validated at scale
• Q2-to-date momentum confirms the underlying box-office trajectory
• FY26 guide reiterated — no need to revise framework based on Q1 dynamics

The bear case argument from the Q1 print is essentially "the optical numbers are softer than analysts expected." The bull case argument is "the underlying performance ex-China is the strongest in IMAX's history at any Q1 measurement point, and the catalysts in front of us (Odyssey, Dune Part 3, streamer slate) are intact." The bull case continues to outweigh the bear case.

Results vs. Consensus — Q1 2026

Q1 Scorecard

YoY Comparison

Quality-of-Print Callout

Segment Performance — Q1 2026

Content Solutions ($31M revenue / 58% gross margin)

Content Solutions revenue declined 8% YoY to $31M, driven by the China comp lapping. Gross margin compressed from 69% (Q1 2025) to 58% in Q1 2026 — the most-meaningful single segment margin change in the print. The decomposition: China box office declined 62% YoY, which directly impacted Content Solutions revenue (China's local-language take rates are structurally higher than Hollywood take rates per management's prior commentary, so China revenue declines have meaningful margin impact). Box office outside China grew significantly — EMEA +90%, supporting partial offsetting Content Solutions contribution.

The Q1 2026 mix dynamics: Avatar: Fire and Ash carryover (Q4 2025 + early Q1 2026) provided $188M+ in global IMAX box office through the call's update — IMAX's 6th highest grossing release ever with the highest indexing of the Avatar series at 13% worldwide. Project Hail Mary closed Q1 with $90M+ at 18% global indexing. Pegasus 3 was the largest Chinese title since Ne Zha 2 at $28M IMAX in Chinese New Year. The breadth of contribution is real; the China weighting is what depresses the optical numbers.

Assessment: Content Solutions Q1 was a structural test that the segment passes. The 8% revenue decline reflects the known China headwind; the gross margin compression is a function of mix. The underlying ex-China growth supports the FY26 trajectory remaining on track. We expect Content Solutions to recover toward the 65-67% gross margin range in Q2-Q4 as the Hollywood and FFI slate (Hail Mary continuation, Odyssey, Dune Part 3, Mandalorian/Grogu) deliver above-base contributions.

Technology Products & Services ($48M revenue / 56% gross margin)

Tech P&S revenue declined 4% YoY to $48M, with gross margin essentially flat at 56% (vs. 57% Q1 2025). The decline came primarily from lower box-office-driven system rental revenue in China; partial offset from continued maintenance revenue growth across the expanding network and from higher-mix sales-type install economics on the new domestic builds (5 Apple Cinemas, Cinemark 70mm locations).

Q1 installs of 19 systems were in line with Q1 2025's 21 and well above Q1 2024's 15. The install mix: 11 JV systems, 8 sales-type; 11 upgrades, 8 new locations. Geographic spread: Japan, England, France, Singapore, South Africa, China, US — confirming the continued diversification trajectory. Importantly, management is positioning installations of 41 film system locations for The Odyssey — 11 more than the 30 used for Oppenheimer — but these don't count as new installs because they are added to sites that already have laser/digital IMAX.

Assessment: Tech P&S is on track for the FY26 160-175 install guide. The Q1 19-install pace is on the lower end of seasonal trajectory but consistent with the 1H/2H install ramp pattern (FY25 had Q4 65-install peak; FY26 likely sees similar back-loaded cadence). The film-location additions for Odyssey are the under-the-line capacity that supports the Q3 2026 box-office trajectory.

FY26 Outlook Reiterated

The FY26 guide is unchanged at the Q1 print — which is itself a meaningful signal of confidence. With Q1 in the rear-view mirror (optically softer than expected on the China comp), the remaining 9 months of FY26 need to deliver at the FY26 guide pace. The Q2-to-date momentum ($100M+ in box office, +10% YoY), the Hail Mary 2x outperformance, the Mario Galaxy / Michael breadth, and the Odyssey 9-month-forward 70mm ticket sellout all support the trajectory.

Key Topics & Management Commentary

Overall Management Tone: Confident on the underlying business strength, with the CEO opening with a brief health update before turning the call to the CFO. The CFO's framing throughout was anchored on the ex-China growth dynamics and the multi-year framework — "our story is one of strong growing momentum" was the opening rather than apologetics for the optical print. The CinemaCon and CEO Forum activity (April) included Christopher Nolan and Denis Villeneuve previewing Odyssey and Dune Part 3 — material conviction-building events that the prepared remarks emphasized.

1. The Ex-China Story Is the Real Q1 Performance

"This excellent performance alongside Avatar Fire and Ash lifted our global box office outside of China, up 67% year-over-year in Q1 and partially offset our lower Greater China box office, where we faced a significant comp against last year's massive Ne Zha 2. That includes growth of 75% in North America and 60% in rest of world markets."
— Natasha Fernandes, CFO

The CFO's framing of Q1 makes the ex-China decomposition explicit. NA box office +75% YoY; rest of world +60%; EMEA +90% specifically. These are extraordinary growth rates that would be the central narrative of the print if not for the China comp.

Critically, the Q1 2025 China contribution at 46% of full-year China box office in a single quarter was an aberration driven by Ne Zha 2 ($160M+ IMAX in China alone). The "normal" China cadence is 30% in Q1; Q1 2026 China is closer to 13-15% of the prior year's Q1 base — exactly the kind of comp normalization that the FY25 print prepared the market for.

Assessment: The ex-China growth dynamics are the real Q1 story. NA +75%, RoW +60%, EMEA +90% — these are the structural growth rates that drive the multi-year framework. The China comp lapping is a known headwind that is fully reflected in the FY26 guide; investors who treat the optical decline as a thesis-breaking event are missing the structural inflection.

2. Project Hail Mary as a 2x Beat on Streamer-FFI Economics

"Project Hail Mary, a film for IMAX release delivered an emphatic conclusion to the first quarter and has now earned more than $90 million in IMAX, more than double our initial projections. … We delivered over 18% of the global box office for Project Hail Mary, including 30% market share in China, proving again the strong indexing we command there for Hollywood's biggest blockbusters."
— Natasha Fernandes, CFO

Project Hail Mary is the first Amazon FFI release. The performance is exceptional on multiple dimensions:

• $90M+ in IMAX box office (2x management's initial projection)
• 18% global box-office indexing (FFI premium)
• 30% China indexing — the highest single-title Hollywood indexing IMAX has captured in China this cycle
• Strong sustained performance through Q1 close and into Q2
• The film featured an IMAX 70mm component in 16 locations

The Hail Mary outperformance is the cleanest empirical signal that streamer-FFI economics work at scale. Amazon's decision to launch Hail Mary as an FFI title (with Ryan Gosling, sci-fi, IMAX 70mm component) was a structural choice to use IMAX as the cultural-event launch venue — and the box-office performance validates the choice.

Assessment: Hail Mary is the first major streamer FFI title to substantially exceed expectations. The 18% global indexing matches the upper end of the FFI base rate; the 30% China indexing is exceptional. The implication for the streamer-IMAX flywheel is meaningful: future Amazon, Netflix, Apple FFI titles will be calibrated against the Hail Mary precedent, and the structural economics are demonstrably favorable to IMAX. Narnia (Netflix FFI, Q4 2026) is the next major streamer-FFI test.

3. The Q2-to-Date Momentum

"IMAX global box office in the current quarter-to-date is over $100 million, up over 10% year-over-year. We scored 3 consecutive global opening weekends of over $20 million with 3 very different titles for very different audiences. This is the kind of strength across genres, demos and geographies that drove our record performance in 2025."
— Natasha Fernandes, CFO

The Q2-to-date update is the most-important forward signal in the Q1 print. Quarter-to-date (late-April measurement point) box office at over $100M means the year is already pacing well above the $1.4B FY26 guide. The "3 consecutive $20M+ global opening weekends with 3 very different titles" framing is the programming-portfolio capability explicit:

• Project Hail Mary (continuing FFI sci-fi run)
• Super Mario Galaxy Movie (animated family — 2nd biggest IMAX animated debut)
• Michael (musical biopic — biggest opening ever for the category at 14% NA indexing)

Each title indexed strongly. Family (Mario) is a category where IMAX historically under-indexed (animated films); the Mario performance is a structural new-category data point. Musical biopics (Michael) is a category IMAX has only recently entered (Bohemian Rhapsody, Elvis); the 14% NA indexing is a new high.

Assessment: The Q2-to-date dynamics are the strongest single forward signal in any IMAX print this cycle. The breadth of titles (FFI, family, biopic) demonstrates the programming-portfolio capability operating at scale. The +10% YoY pace exceeds the FY26 guide pacing (which implies ~+9% on the year). The setup into Odyssey July is exceptionally strong.

4. CinemaCon and the FY26/FY27/FY28 Slate Confirmation

"Our promising slate was on full display at the annual CinemaCon industry convention this month, including an exclusive look at Christopher Nolan's The Odyssey, the first film shot entirely with IMAX film cameras. … and a sneak peek at the first 7 minutes of Dune: Part 3, which was also shot with IMAX film and looks to be visually stunning as anything Director Denis Villeneuve has brought to screen. Tickets to select IMAX 70-millimeter screenings of the film recently sold out in minutes, 9 months ahead of its release."
— Natasha Fernandes, CFO

CinemaCon (April 2026) delivered the FY26 slate visibility validation. The CEO Forum hosted Tom Cruise, Timothée Chalamet, Jon Favreau, Christopher Nolan, Denis Villeneuve — "perhaps the most successful in the 13-year history of the event." The Odyssey preview and the Dune Part 3 first-7-minutes were the centerpieces.

The Odyssey: 40 film locations confirmed for July debut (vs. 30 for Oppenheimer; +33% capacity). 70mm tickets sold out 9 months in advance — a forward-window demand signal that has no precedent in the IMAX/Nolan partnership history. The Nolan-IMAX partnership has yielded $700M+ in cumulative IMAX box office worldwide.

Dune Part 3: First 7 minutes shown at CinemaCon. Shot with IMAX film cameras. Pre-release ticket sales already strong.

Beyond 2026: 2027 already includes 10 FFI titles (Miami Vice, Star Wars: Starfighter, Thomas Crown Affair, Avengers Secret Wars, The Batman 2, etc.). 2028 has 5+ confirmed FFI titles including the just-announced Disney Pixar Incredibles 3 (FFI with IMAX exclusive 1.43 aspect ratio).

Assessment: The FY26 slate visibility is now the deepest in IMAX's history at any pre-summer measurement point. The Odyssey 70mm sellout 9 months out is the cleanest empirical signal that Odyssey will be the highest-indexing FFI title in IMAX's history. The Incredibles 3 FFI confirmation extends the FFI category into mainstream animation — a meaningful new addressable content pool.

5. The HOYTS Australia Deal as the Capital Geographic Diversification

"With our biggest deal ever in one of the most productive markets in the world, our 10-system agreement with HOYTS in Australia and New Zealand, which will nearly double our footprint in the region."
— Natasha Fernandes, CFO

The HOYTS Australia/NZ 10-system deal is the largest single Australian agreement in IMAX history. Combined with the existing HOYTS relationship and prior signings with EVT and Village, the deal positions Australia for a near-doubling of the regional footprint. Australia per-screen averages can reach $4M — exceptional vs. global average. The country is currently 13% penetrated against the expanded 4,500-zone TAM articulated at the December Investor Day.

The broader signing context: 42 YTD signings across 10 countries with 18 partners. The geographic distribution is the new structural reality of IMAX network growth:

• 3 domestic signings
• 9 Australia (driven by HOYTS deal)
• 10+ China
• 7 Japan
• 7 EMEA (Spain, France, Germany, Netherlands, Egypt)
• More than half of YTD signings are new locations (vs. upgrades)

Assessment: The HOYTS deal is the largest single-quarter signing announcement IMAX has made in any market outside the US/China this cycle. Combined with the Japan 7-signings YTD and the EMEA 7-signings, the Q1 2026 signings represent a meaningful geographic broadening of the network. The TAM analysis presented at Investor Day (4,500 zones) supports the multi-year continuation of this geographic-broadening trajectory.

6. The Q1 Margin Compression Is Not Structural

"Adjusted EBITDA declined in line with revenue, down $6 million year-over-year to $31 million. As a result, adjusted EBITDA margin was 38% compared to 43% in the prior year. We remain confident in our forecast of total adjusted EBITDA margin of more than 50% in the coming year."
— Natasha Fernandes, CFO

The Q1 adjusted EBITDA margin of 38% is the lowest quarterly margin in recent memory and the most-meaningful single optical concern in the print. The decomposition: the China revenue decline (-62% YoY box office) compressed the Content Solutions gross margin by 1,100bp; the absolute revenue decline of $5M flowed through to a $6M EBITDA decline (effectively negative margin on the YoY revenue change).

Additionally, the CFO explicitly cited marketing investment as a margin compression factor — "we actually are focused this year on marketing. You've seen that the Dune tickets and the Odyssey tickets have all been moving and particularly in June, we put those out for sale already, which means we've been marketing. And so in Q1, of course, we took some marketing charges ahead of time."

The CFO's reiteration of "more than 50% adjusted EBITDA margin in the coming year [2028]" — within the Q1 print context — signals that the through-2028 framework is intact. The Q1 38% margin is a single-quarter outlier; the FY26 margin guidance at 45%+ floor remains.

Assessment: The Q1 margin compression is a function of the China comp dynamics + deliberate marketing investment ahead of Q2/Q3 releases. It is not structural. We model FY26 EBITDA margin at 45-46% (Q1 38%, Q2-Q4 averaging 47-48%) — consistent with the FY26 guide framework. The through-2028 path to 50%+ remains achievable.

7. The Disney Infinity Vision Brand and the Avengers Question

"From our view, we feel it's a pure marketing play to try and offset the fact that they don't have an IMAX platform or brand for Avengers Doomsday. It doesn't offer the consumer anything that they couldn't get yesterday. … Essentially, we have the most immersive proprietary architecture in our auditoriums and consistent delivery of that across all of our 1,800 locations as we monitor that in real time and 24/7 for control and quality. And so I think the biggest part about it is the fact that we are a consistent platform and delivery for consumers."
— Natasha Fernandes, CFO

Disney's pre-release marketing announcement of "Infinity Vision" — a new premium-format branding initiative associated with Avengers — generated brief market concern about whether Disney was attempting to compete with the IMAX brand. The CFO's response is decisive: this is a marketing play, not a competitive structural shift. Disney has used IMAX as the premium platform for every Marvel release through 2025; the Infinity Vision branding represents a Disney-specific marketing layer rather than an alternative format.

The structural moat (technology consistency, brand equity, filmmaker relationships, exclusive aspect ratio, global network) is not replicable by a Disney marketing initiative. The 2026 slate confirmed at CinemaCon includes Marvel content; the Q4 2025 Avengers: Doomsday is included in the FY26 IMAX release calendar.

Assessment: The Infinity Vision concern is a positioning artifact, not a structural threat. Similar to the FY25 "PLF consortium" media report (which we addressed at initiation and resolved at Q3 as a non-issue), the Disney Infinity Vision is a marketing layer rather than a competitive PLF entrant. We treat this as cyclical noise that may briefly pressure the stock without changing the multi-year thesis.

8. The Streamer Partnership Trajectory Continues to Compound

"We've also added several high profile releases to our slate, including the film for IMAX sequel to Brendan Frasers, The Money in 2027 and highly anticipated film for IMAX titles in 2028, including Paramount and Activision's live-action feature film, Call of Duty, directed by Peter Berg and written by Berg and Taylor Sheridan, Joe Kosinski's Miami Vice 85 starring Michael B. Jordan and Austin Butler and A24's Elden Ring video game adoption."
— Natasha Fernandes, CFO

The forward FFI pipeline continues to deepen. New 2027/2028 FFI confirmations announced at the print:

• The Money 2 (2027 FFI) — Brendan Fraser sequel
• Call of Duty (2028 FFI) — Peter Berg directed, Taylor Sheridan written
• Miami Vice 85 (2028 FFI) — Joe Kosinski (F1, Top Gun: Maverick director), starring Michael B. Jordan and Austin Butler
• Elden Ring (2028 FFI) — A24 video game adaptation
• Incredibles 3 (2028 FFI) — Disney Pixar, IMAX exclusive 1.43 aspect ratio

The trajectory of FFI pipeline expansion: 7 FFI titles in summer 2025; 12+ in 2026; 10 in 2027; 5+ confirmed for 2028 with more in development. The video game IP additions (Call of Duty, Elden Ring) are particularly noteworthy — gaming IP is a structurally underserved category for FFI, and these confirmations extend the addressable content pool beyond live-action and animation.

Assessment: The FFI pipeline expansion is structurally bullish. The video game IP additions (Call of Duty, Elden Ring), the animated FFI (Incredibles 3 with exclusive 1.43 aspect ratio), and the continued Kosinski / Nolan / Villeneuve filmmaker partnerships demonstrate that the FFI category continues to expand both in volume and in addressable content types. The through-2028 framework's revenue CAGR target is increasingly supported by structural FFI pipeline depth.

9. Lease Incentives as Network Growth Investment

"IMAX cash flow from operations was $4 million compared to $7 million in the prior year and includes $8 million in higher year-over-year lease incentives provided to exhibitors to support the building of new IMAX auditoriums. This investment reflects the continued prioritization of our use of available capital to invest in growth, including partnering with exhibitors to expand and upgrade our network through joint revenue sharing arrangements."
— Natasha Fernandes, CFO

The Q1 cash flow from operations of $4M is lower than the prior year's $7M, but the decomposition is informative: $8M of incremental lease incentives provided to exhibitors. This is the strategic capital deployment that the company has signaled at the Investor Day — using available balance-sheet capacity to accelerate exhibitor partnership formation in high-PSA markets (Japan, Australia, France, Germany).

The CFO's framing: "Investing the $8 million to help grow the network faster ahead of the fantastic slate that we still have ahead of us coming and as well into '27 and '28, I think that's the opportunity for us." The strategic logic is clean: with high FY26-FY28 slate visibility, accelerating network growth captures more box-office economics across the multi-year framework.

Assessment: The lease incentive strategy is the explicit operational expression of the capital allocation framework articulated at the Investor Day. The $8M Q1 investment is small in absolute terms but represents a structural shift toward capital-accelerated network growth in priority markets. We expect similar magnitude lease-incentive deployment in Q2-Q4 as the company continues to lean into high-PSA partnership formation.

10. The CEO Health Disclosure and Operational Continuity

"Natasha will handle today's call and Q&A session. But before I turn it over to her, I wanted to provide a brief update on my recovery from pneumonia. I'm happy to share that I'm making excellent progress, and I'm gradually resuming oversight of the business and involved in all key strategic decisions. Our management team is doing an outstanding job and will continue with their day-to-day responsibilities as well. … With the incredible start to the second quarter and a fantastic slate ahead, I'm as excited as I've ever been about the IMAX business."
— Richard Gelfond, CEO

The CEO opened the call with a brief health update — recovering from pneumonia, gradually resuming oversight, retaining involvement in all key strategic decisions. The CFO led the prepared remarks and Q&A. The disclosure is the appropriate transparency.

The operational impact: minimal. The CFO has been on the earnings call for every Q1-Q4 print this cycle as a co-presenter; she handled the entire Q1 call with no operational gaps. The management bench introduced at the December 4 Investor Day includes deep depth across content, distribution, technology, and finance. The CEO retains involvement in strategic decisions; day-to-day operations are running.

Assessment: The CEO health update is the appropriate transparency without operational concern. Gelfond has been the public face of IMAX for 25+ years; his eventual transition to executive chair (whenever it happens, which is not imminent) is a known event that will be managed deliberately. The current management team has the depth to operate independently with strategic guidance from the CEO. This is not a material thesis-altering event.

11. The Q3 China Slate Recovery

"We expect IMAX box office in China to be more evenly spread throughout the year versus 2025, where 46% of our China box office came in the first quarter, well beyond the 30% we normally see. … For China, I think the best of it is that we're managing it on an annual global portfolio, and it gives us the ability to stack our slate for the best results. … this year, there's a lot of Hollywood titles that have strong potential in China, like the Odyssey and Dune, but also the local language slate is stacking up as well, and we do expect there to be several titles released into the summer."
— Natasha Fernandes, CFO

The Chinese slate recovery into Q2/Q3 is the explicit framework for normalizing the China comp. Penghu and Once Upon a Time in the Middle East (both delayed from Chinese New Year 2026 to mid-to-late 2026 due to production timing) are confirmed to release later in the year. World War (May 2026), The Devil Wears Prada (US), and Avengers: Doomsday are the Hollywood titles with strong China potential. Spider-Man: Brand New Day will release across the Greater China network. The 2026 Chinese New Year was characterized as "B slate" comparable to 2024 — better Chinese New Year results require a return to 2025-level Chinese New Year cadence (which requires production timing to support it).

Assessment: The China business is structurally healthy with timing-driven Q1 weakness. The Q2/Q3 China slate (Penghu, Once Upon a Time in the Middle East as FFI titles, plus Hollywood titles like Odyssey and Dune Part 3 that historically over-index in China) supports a recovery in Chinese box-office contribution. We do not model another Ne Zha 2-magnitude title in 2026 (single-title $160M IMAX is the kind of outlier that is hard to predict); the base case is a more balanced China year contributing $200-250M to FY26 vs. $325M+ in FY25.

Analyst Q&A Highlights

FY26 Margin Trajectory Despite the Q1 Compression

The opening Q&A topic probed how IMAX can deliver mid-40s EBITDA margin for FY26 when Q1 came in at 38%. Management's response: Q1 is structurally the lowest box-office quarter (which it has been; this is the company's framework); $1.4B box office for the year would deliver mid-40s margin; the marketing investment in Q1 was deliberate. The 45% floor is the conservative end of the range; the actual outcome depends on box-office mix (more Hollywood vs. more local-language) and marketing optimization.

Q: "On the adjusted EBITDA margin guidance with a floor of 45%, does that assume a global box office of $1.4 billion? And if so, just trying to understand how the margin would be flattish year-on-year with an incremental $100 million plus in box office?"
— Andrew Crum, B. Riley Securities

A: "Margins really -- it does fluctuate normally quarter-to-quarter. But as you look at the whole year, $1.4 billion box office, I understand the incrementality will come through, but we've chatted about this even on the last call as well is that there's always a mix between the regions of box office, whether you have local language or Hollywood and the amount that we're investing into marketing in this year. There are a lot of Hollywood titles that are significantly larger titles than last year. … And of course, you can capture more than the 45%, but this is just from a guidance perspective, providing that guidance with respect to the floor of the 45%. But of course, there's opportunity in that."
— Natasha Fernandes, CFO

Assessment: The "of course, you can capture more than the 45%" framing repeats from the Q4 FY25 print. The Q1 38% margin print does not change the through-FY26 trajectory; the 45% floor remains achievable with normal Q2-Q4 cadence at the implied $1.1B+ remaining box office.

Geopolitical Disruption and the Middle East Locations

A question on whether the US-Iran conflict during late Q1 / early Q2 disrupted IMAX's Middle East operations. The CFO confirmed minimal impact — IMAX has 35 locations in the region, and "majority are continuing to operate." The FY26 install guide (160-175 systems) and the Middle East signings (Egypt YTD, broader region in active discussions) are unaffected.

Q: "Any disruptions created by the U.S.-Iran conflict during late 1Q or early 2Q? Anything — you've seen anything contemplated in your annual outlook?"
— Andrew Crum, B. Riley Securities

A: "No, not at all. It's not for us. We know we have about 35 locations within the region in the Middle East and majority are continuing to operate. We haven't experienced anything significant that has — will impact our plans for the year as well. And as you heard, we continue to expect to install 160 to 175 systems as well. So if you look at the way that we're building out our entire worldwide network, there's many countries that we're leaning into."
— Natasha Fernandes, CFO

Assessment: The geopolitical disruption is minimal. The 35 Middle East locations are a meaningful contributor to the regional box office but not a top-3 geography. The FY26 trajectory is unaffected by the regional dynamics; the broader 4,500-zone TAM and the Australia/Japan/EMEA growth opportunities provide diversification.

Australia Growth Opportunity and Per-Screen Average Economics

A question on the Australia opportunity and the relative PSA economics. The CFO walked through the Australia framework: 2 locations in early 2025 → 10 locations entering 2026 → 20+ with HOYTS deal; PSAs up to $4M (exceptional); 13% penetrated against the expanded TAM. The local-language strategy will also support Australian box-office growth through the year.

Q: "On the Australia deal, nice to see some growth from that region. Just curious if you could sort of frame it for us, Natasha, the growth opportunity network-wise in Australia and Japan? And then the follow-up, just what you see from those regions as well in terms of relative PSAs and local language development in terms of films?"
— Michael Hickey, StoneX

A: "I think it was a really important deal for us. I mean, for the longest time, we had only about 2 locations this past year in 2025, we ramped up and installed some more locations in time for Avatar and started the year with about 10 locations and now adding this new deal. We're sitting with the potential to double — more than double our footprint in Australia. Australia is one of the strongest performing regions and countries for us. Some of the locations have TSAs up to $4 million, which is absolutely amazing. … We're only about 13% penetrated. So there's a lot of growth and opportunity there. And as you look at Japan, we signed another 7 systems in Japan this quarter. Last year, we signed 13. … Japan is only 47% penetrated. So a lot of opportunity there. And those per screen averages remain just as strong as they've ever been."
— Natasha Fernandes, CFO

Assessment: The Australia and Japan opportunities are the clearest examples of the multi-year geographic-broadening thesis. Australia at 13% penetration and Japan at 47% penetration both support continued 15-20% annual network growth. Combined with the Apple Cinemas / Cinemark / Regal domestic dynamics, the network growth trajectory continues to compound.

Lease Incentives ROI and Capital Deployment Strategy

A question on whether the $8M Q1 lease-incentive investment fits within the strategic framework articulated at Investor Day. The CFO confirmed it is — "investing the $8 million to help grow the network faster ahead of the fantastic slate that we still have ahead of us coming." The ROI framework: investing in new locations (not upgrades) in high-performing markets with strong partners. Each deal economics are evaluated against ROI hurdles.

Q: "Natasha, starting at your Investor Day last year, you did mention how IMAX was selectively looking at opportunities to maybe put some more capital into their deals above and beyond just sort of like the cost of the screen installation. This $8 million of higher lease incentives, is that part of that strategy? How do you measure ROI with those investments?"
— Eric Handler, ROTH Capital

A: "It is, Eric, actually. It was a significant expenditure for us in the quarter, and I'm sure you saw that it impacted our cash from ops, but I see that as a good thing. Investing the $8 million to help grow the network faster ahead of the fantastic slate that we still have ahead of us coming and as well into '27 and '28, I think that's the opportunity for us. … always using that capital for new locations and not simply for upgrades. So that would be new box office potential for us, but also in high-performing markets and with partners that we know that we can expand and have a greater penetration as well. And so — and we know that they'll lean in. And all of those things working together, we've been able to value out what that arrangement will look like. And each arrangement does look different as well. But of course, all within the respect of making sure that we hit our return hurdles."
— Natasha Fernandes, CFO

Assessment: The lease incentive strategy is being executed cleanly. The $8M Q1 deployment is a small absolute number but a structurally important strategic shift. We expect similar magnitude lease-incentive deployment in Q2-Q4 (potentially compounding to $30-50M for the full year) — well within the available balance-sheet capacity ($146M cash + $375M revolver).

China Slate and the Q2/Q3 Recovery Path

A question on the China slate visibility and the recovery from the Q1 Ne Zha 2 lap. The CFO confirmed the Q2/Q3 China dynamics: more balanced year, multiple titles releasing into Chinese summer (Penghu, Once Upon a Time in the Middle East), Hollywood titles with strong China potential (Odyssey, Dune Part 3, Avengers: Doomsday, Spider-Man: Brand New Day). The "annual global portfolio" framework — IMAX manages the slate globally and stacks titles for the best overall results.

Q: "With respect to China, the comment that you gave earlier just in terms of the weighting or I guess, what we saw last year, this year being more balanced. Consumer feels to be improving. Your indexing is strong. Can you roughly talk about the slate for the rest of the year, whether it's local language versus Hollywood? And really just what gives you the confidence that China will come through in '26?"
— Chad Beynon, Macquarie Capital

A: "For China, I think the best of it is that we're managing it on an annual global portfolio, and it gives us the ability to stack our slate for the best results. I mean you can have unexpected outsized performance, look at Ne Zha 2 last year, right, from a local language title or from other titles. I think the biggest thing to remember, Chad, is that as a company, we're not so much focused on the geographies as much as we're focused on the overall slate for our company. And what's great about this year is there's a lot of Hollywood titles that have strong potential in China, like the Odyssey and Dune, but also the local language slate is stacking up as well, and we do expect there to be several titles released into the summer."
— Natasha Fernandes, CFO

Assessment: The China recovery thesis is structurally healthy. The Q2/Q3 China slate (Penghu, Once Upon a Time in the Middle East as FFI, Hollywood titles) supports normalization. We model FY26 China contribution at $200-250M (vs. $325M+ in FY25) — a meaningful YoY decline but not a thesis-breaking event given the ex-China growth dynamics.

India Backlog Conversion and Local-Language FFI

A question on India network growth and the path to converting the India backlog. The CFO acknowledged that India installations have historically been slower than other markets due to permit/construction delays. However, the India network is growing through new partner signings; only 28-30% penetrated; the local-language FFI titles (Ramayana Part 1 in 2026, Varanasi in 2027) are the structural catalyst that will lift the country's local-language IMAX box office.

Q: "India has been a market that's had a lot of potential, and you had some good progress with some local language content. But historically, there have been, let's call them, backlog conversion problems. It's taken longer than you thought to get some of these theaters open. Where are we in that process today?"
— Steven Frankel, Rosenblatt Securities

A: "I think we still have a lot of opportunity. I think we're only about 28% to 30% penetrated in India. So a lot of growth to be had. And you're not wrong, it does take long to install and get permits and complete an installation. But what you haven't maybe seen is that we have grown that network over the past few years. … For us to be doing the Ramayana Part 1, there will be — that's — this year, there will be a Part 2 and then Varanasi, all film for IMAX titles in India. That's a really big deal because over 90% of their box office is local language. And so the big opportunity for us is to continue to show how well local language can perform in IMAX in India, and therefore, it will stir up that conversation for future growth there as well."
— Natasha Fernandes, CFO

Assessment: India is the multi-year secular growth opportunity. The Ramayana Part 1 (2026 FFI) and Varanasi (2027 FFI) are the cleanest signal that the local-language FFI strategy is now reaching India. With 90%+ of Indian box office in local-language, the FFI titles position IMAX to capture an outsized share of Indian theatrical economics. India's installation pace will remain slower than Japan/Australia, but the long-term TAM is substantial.

Sales-to-JRSA Mix and the Network Economics

A question on whether the recent geographies (Australia, Japan, EMEA) are more JV-type or sales-type deals. The CFO confirmed mix — "actually, it's a mix, Eric. It can be — it's dependent on the partner. It's dependent on the way the negotiation goes as well. But I think part of it is, we also like to have a good mix within our revenues and the way that we build out the network." Specifically, Japan hybrid deals (cover system cost + participate in box office) are particularly attractive.

Q: "I wonder, as you look further into markets like Australia, Japan, EMEA, are these more JV type deals? Or are you looking — are they doing more — are they more interested in like straight sales?"
— Eric Handler, ROTH Capital

A: "Actually, it's a mix, Eric. It can be — it's dependent on the partner. It's dependent on the way the negotiation goes as well. But I think part of it is, we also like to have a good mix within our revenues and the way that we build out the network. So sometimes it's been JVs and others, it's been sales. Japan, for instance, hybrids are a really good opportunity there where not only do you cover the cost of the system, but then you get to participate in the box office performance. … France, in particular, in Europe has been very good for that, too. So I think that's a really good way to be able to capture the box office potential and the incrementality that can flow through our model."
— Natasha Fernandes, CFO

Assessment: The hybrid deal structures in Japan and France are structurally favorable — IMAX captures both the upfront system economics AND the ongoing box-office-share economics. As the network grows in these high-PSA markets, the hybrid deal mix expands the multi-year revenue base.

What They're NOT Saying

1. Specific FY26 box-office expectation by quarter beyond "Q1 lowest." Management framing supports Q1 being the lowest box-office quarter; we model Q2/Q3 as the strongest given Odyssey + Dune Part 3 + Mandalorian + Hail Mary continuation.
2. Specific Avatar: Fire and Ash final IMAX box office. The $188M+ figure through the call's update represents most of the lifetime IMAX box office; we model the final at $200-215M (IMAX's 6th highest grossing release ever).
3. Specific buyback authorization or share repurchase activity. The convert refinancing was characterized as a buyback-equivalent (acknowledged), but no explicit new buyback authorization was announced.
4. Specific implementation timeline for HOYTS Australia installations. The 10-system deal will roll out over multiple years; specific 2026 vs. 2027 vs. 2028 install allocation is not disclosed.
5. Specific Project Hail Mary contribution by quarter. The $90M+ figure is total IMAX box office; the quarterly allocation between Q1 (launch) and Q2 (continuation) is not detailed.
6. Specific The Odyssey IMAX 70mm capacity utilization expectations. Tickets sold out 9 months in advance for select 70mm screenings; specific revenue per location is not disclosed.
7. Specific Disney Infinity Vision impact on Marvel/Disney IMAX content. Management addressed the Infinity Vision narrative as a marketing play but did not detail the IMAX-Disney revenue framework for the 2026/2027 Marvel slate.
8. Specific tariff or macro-related stress test. No formal macro framework was articulated; the FY26 guide implicitly assumes a continued strong theatrical baseline.
9. Specific timing on Rich Gelfond return to full operational involvement. The CEO is "gradually resuming oversight" and "involved in all key strategic decisions" — but no specific return-to-full-time-operations timeline is announced.

Market Reaction

• Pre-print setup: IMAX closed April 30 at ~$33. Stock had pulled back from ~$36 over the Q1 quarter on broad-market volatility and the known Q1 China comp headwind. YTD -8%; trailing 30-day -3%; trailing 12-month +18%.
• After-hours / next-session move: Stock indicated +2-4% pre-market following the print on the strength of (a) the ex-China decomposition narrative; (b) Project Hail Mary 2x outperformance; (c) Q2-to-date $100M+ momentum; (d) FY26 guide reiteration; (e) HOYTS Australia signing.
• Volume: Pre-market volume elevated to ~2x average.
• Peers: AMC, Cinemark, Regal Holdings all trading sideways to slightly positive. The broader theatrical exhibition group benefits from the Hail Mary indexing validation and the Odyssey forward-window demand signals.

Interpretive read: The market is processing the Q1 print as "thesis intact despite optically softer headline." The 38% Q1 EBITDA margin is the lowest quarterly margin in recent memory, but the underlying ex-China growth dynamics (+67% YoY) and the FY26 guide reiteration support the thesis continuity. The Project Hail Mary 2x outperformance and the Q2-to-date $100M+ momentum are the cleanest forward signals; the HOYTS Australia signing is the network-growth highlight. We expect the stock to grind toward $36-39 over the coming weeks as Q2 indexing data confirms the Hail Mary continuation, Mario Galaxy family momentum, and the Odyssey forward-window demand signals. The next major catalyst is the July Odyssey release.

Street Perspective

Debate 1: Is the Q1 Margin Compression a Thesis Risk or a Known Headwind?

Bull view: The 38% Q1 EBITDA margin reflects (a) the China comp lapping (Q1 2025 had Ne Zha 2 at 46% of full-year China box office in a single quarter); (b) deliberate marketing investment ahead of Q2/Q3 releases (Hail Mary launch tickets, Odyssey marketing); (c) lower box-office dollar base across which to spread fixed costs. The FY26 guide of 45% floor margin is achievable with normal Q2-Q4 cadence. The Q1 margin compression is structurally explainable and was telegraphed in the FY25 print.

Bear view: The 38% margin is the lowest quarterly print in recent memory and raises questions about whether the operating leverage flow-through has been overstated. Some of the marketing investment may not deliver immediate ROI; the China weakness may extend beyond Q1 if local-language slate underdelivers. The FY26 guide of 45% floor margin requires meaningful margin expansion in Q2-Q4 vs. Q1.

Our take: The Q1 margin compression is a known headwind that the FY26 guide accommodates. We model FY26 margin at 45-46% (Q1 38%, Q2-Q4 averaging 47-48%) — consistent with the guide. The structural operating leverage framework (85% incremental EBITDA conversion above $250M quarterly box office) remains intact; Q1 was below the box-office threshold for the framework to kick in. The bear point is overstated.

Debate 2: Does The Odyssey Justify FY26 Box-Office Upside?

Bull view: Christopher Nolan's first feature shot entirely with IMAX film cameras; 40 IMAX 70mm locations (+33% vs. Oppenheimer's 30); tickets sold out 9 months in advance for select 70mm screenings. The Nolan-IMAX cumulative partnership has generated $700M+ in worldwide IMAX box office. If The Odyssey indexes at 17%+ globally (above the FFI base rate of 15%), FY26 box office can reach $1.5-1.6B (vs. the $1.4B guide). The Project Hail Mary 2x outperformance in Q1 is the empirical demonstration that FFI economics can exceed expectations.

Bear view: The Odyssey is a single title; even at exceptional indexing, the FY26 box-office upside is bounded by the broader slate. The FY26 base case of $1.4B implicitly assumes Odyssey at the FFI base rate (15% global indexing); upside to $1.45-1.55B requires multiple tentpoles to over-index simultaneously. The market is already partially pricing in this upside (stock trading at ~$33 reflects ~$1.45B FY26 box-office expectations).

Our take: Odyssey is the central FY26 catalyst, but the FY26 box-office trajectory does not depend on a single title. Dune Part 3, Mandalorian and Grogu, Project Hail Mary continuation, Narnia (Q4), and the 12+ FFI title cadence collectively support FY26 box office at $1.45-1.55B (low end of our range). Odyssey above 17% indexing pushes the upper end of the range; Odyssey at 15-16% indexing supports the $1.45B base case. The risk is asymmetric — modest Odyssey underperformance (12-13% indexing) creates limited downside; meaningful outperformance (18%+) generates substantial upside.

Debate 3: Is the China Headwind a Multi-Year Issue or a Single-Year Comp?

Bull view: Ne Zha 2 was a single-title outlier ($160M IMAX China contribution). The structural China business is healthy — 47% of full-year China box office in Q1 2025 was an aberration; the normal cadence is 30% in Q1. The Q2/Q3 China slate (Penghu, Once Upon a Time in the Middle East, Avengers: Doomsday) plus the local-language FFI titles support normalization. The 2025 China weighting was the outlier; the multi-year trajectory normalizes back to growth.

Bear view: The Q1 2026 China decline (-62% YoY) is severe and creates a multi-quarter headwind if the Q2/Q3 China slate underdelivers. China has been a meaningful contributor to the FY25 record performance; without a Ne Zha 2-equivalent in FY26, the absolute China box-office contribution may decline 20-25% YoY. The structural China dynamics (consumer spending, exhibitor relationships, content slate) need to remain favorable.

Our take: The China business is structurally healthy with a single-year comp issue. We model FY26 China contribution at $200-250M (vs. $325M+ in FY25) — a meaningful YoY decline but not a multi-year structural shift. The Q2/Q3 China slate is the test; if Penghu and Once Upon a Time in the Middle East over-deliver, China contribution can recover toward $260-280M. The bear point is overstated relative to the multi-year framework.

Model Implications & Thesis Scorecard

Model Update

• FY26 estimates (slightly tempered): Revenue ~$470-485M (+15-18% vs. FY25 $410M); EBITDA ~$215-225M (mid-40s margin); EPS ~$1.85-2.00; Box office ~$1.45-1.55B
• FY27 estimates: Revenue ~$515-540M (+10-11%); EBITDA ~$245-265M (mid-to-high 40s margin); EPS ~$2.20-2.45; Box office ~$1.55-1.65B
• FY28 estimates: Revenue ~$555-585M (+8-9%); EBITDA ~$275-305M (50%+ margin); EPS ~$2.55-2.85; Box office ~$1.6-1.75B
• Long-term framework: High-single-to-low-double-digit revenue CAGR through 2028; operating margin 50%+ by 2028 (per company framework); FCF conversion ~50% in 2026 growing to 55-60% at maturity

Thesis Scorecard

Rating & Action

Maintaining Outperform. The Q1 print is the cleanest test of whether the IMAX thesis survives a known headwind quarter. It does. The optically softer headline ($81M revenue, 38% EBITDA margin) masks structural strength: ex-China global box office +67% YoY (NA +75%, RoW +60%, EMEA +90%). Project Hail Mary delivered $90M+ in IMAX (2x management's initial projection) at 18% global indexing and 30% China indexing — the cleanest single-title validation of streamer-FFI economics at scale. Q2-to-date box office over $100M (+10% YoY). FY26 guide ($1.4B / 160-175 / 45% margin floor) reiterated. HOYTS Australia 10-system deal nearly doubles regional footprint. The Odyssey July (40 film locations, 70mm tickets sold out 9 months out) is the central catalyst. The through-2028 framework (50%+ margin, 2x EPS:revenue, ~50% FCF conversion growing) remains intact.

Fair value range maintained at $40-$52. Stock at ~$33 pre-print (down from $36 over the past 2 months on broad-market volatility); we expect modest post-print recovery to $35-37 and continued grinding higher into the July Odyssey catalyst and the August Q2 print.

What would change our view:

• Upgrade further: Project Hail Mary continuation in Q2 above $100M total in IMAX (vs. current $90M+); The Odyssey 70mm sellout pattern extending to all 40 locations; Q2 box office above $375M (implying $1.5B+ FY26 trajectory); Q2 EBITDA margin recovery to 47%+; explicit buyback authorization announced.
• Downgrade to Hold: Q2 box office below $325M (suggesting the Q1 weakness is structural rather than China-comp); The Odyssey indexing below 14% on opening weekend (suggesting FFI premium compression); Q3 China slate execution issues (Penghu or Once Upon a Time in the Middle East underdelivering); macro-driven theatrical attendance softness materializing in Q2.

Key watch items into Q2 2026 (August 2026):

• Q2 box-office trajectory — particularly Hail Mary continuation, Super Mario Galaxy hold, and early Odyssey indexing
• The Odyssey opening weekend indexing on July debut (target: 17%+ global)
• 40 IMAX 70mm location capacity utilization on Odyssey (target: 90%+ sellout for first 2 weeks)
• Q2 EBITDA margin trajectory (target: 47%+ recovery from Q1's 38%)
• FY26 install pace vs. 19 Q1 + projected H2 ramp (target: 50+ installs in Q2)
• Signings momentum (HOYTS deal implementation, additional EMEA partner additions)
• Q3 China slate visibility (Penghu, Once Upon a Time in the Middle East timing)
• 2027 FFI title pipeline expansion (additional Star Wars, Avengers, Apple/Amazon/Netflix announcements)
• Capital allocation execution (any incremental lease incentive deployment, potential buyback authorization)
• CEO health update at Q2 print (if material change to operational involvement)