Shares of Alliance Entertainment Holding Corporation (NASDAQ:AENT) jumped after the company reported broad-based growth in revenue and adjusted earnings on September 10.
The company reported its financial and operational results for its fiscal year ended June 30, 2026. Net revenues reached $1.15 billion, up 8% year-over-year. Gross profit increased 15% to $152.3 million, while gross margin expanded to 13.3% from 12.5%, an improvement of 80 basis points.
“The market for physical entertainment continues to evolve toward premium formats, collectible products and more specialized distribution, and those changes are playing directly to the capabilities we have built over more than three decades,” CEO Jeff Walker said.
Adjusted EBITDA rose 14% to $41.5 million, while adjusted net income increased 24% to $23.4 million. Adjusted diluted earnings per share also climbed 24% to $0.46.
Alliance Entertainment Holding Corporation saw strong growth across its key physical entertainment businesses during the fiscal year. Vinyl revenue increased 13% to $383 million, while CD revenue jumped 25% to $156 million.
At the same time, physical movie revenue also increased 22% to $339 million. This growth was driven by higher unit volumes and the company’s expanding studio relationships. The company’s exclusive physical-media distribution relationship with Paramount, along with the addition of Amazon MGM Studios during fiscal 2026, further strengthened its position as a distribution partner for content owners across wholesale, retail, and e-commerce channels.
Higher Costs Weigh on GAAP Results
Despite the growth in adjusted results, Alliance Entertainment Holding Corporation’s GAAP profitability declined during fiscal 2026. GAAP net income declined to $13.1 million from $15.1 million, while GAAP operating income fell to $27.2 million from $30.1 million. The company said the results were partly affected by a $7.8 million non-cash write-off.
Operating cash flow was also affected by higher working-capital investment as the company focused on supporting its higher revenue base and anticipated customer demand. Working capital reached $62.4 million as of June 30, 2026, up from $45.4 million a year earlier.
Inventory and trade receivables grew faster than the company’s 8% revenue growth during the year, which contributed to the year-over-year decline in operating cash flow.
Selling, general and administrative expenses also rose to $66 million from $56 million. The company said this increase was primarily driven by higher payroll and employee-related costs needed to support growth, along with increased consulting and professional-service expenses related to strategic initiatives and public-company operations.
What the Numbers Say
Hedge fund interest in the stock increased slightly in the second quarter of 2026. According to Insider Monkey‘s database, 4 hedge funds held positions in Alliance Entertainment Holding Corporation in the second quarter of 2026, compared with 3 in the first quarter.
Meanwhile, short interest stood at 9.89% of the company’s float as of August 31, showing some level of bearish positioning in the stock.
Analysts, however, remain positive on Alliance Entertainment Holding Corporation. As of September 11, the stock had a consensus Buy rating and a median 12-month price target of $8.50. This suggests a potential upside of about 32.40% from the current stock price.
The company’s fiscal 2026 results showed growth in revenue and adjusted profitability, supported by higher demand for vinyl, CDs, and physical movies. However, rising operating expenses, working-capital needs, and weaker GAAP earnings remain key risks for investors to look out for.
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