Alliance Entertainment Holding Corporation operates as a leading global distributor and retailer of physical entertainment and collectible products, including vinyl records, CDs, DVDs, Blu-rays, video games, electronics, and licensed fan merchandise ¹. The company serves more than 35,000 retail locations and approximately 200 online storefronts across more than 75 countries ². The industries in which the company distributes products are packaged goods consisting of licensed physical media and entertainment content, gaming consoles and accessories, and licensed toys and collectables ³. Distributors of physical media continue to navigate changes in consumer demand, an evolving omni-channel retail environment, and ongoing supplier consolidation ⁴. While many consumers have shifted to digital formats such as streaming music and video services, management believes a growing market remains for collectible physical media, including vinyl records, specialty SteelBook® DVDs, CD box sets, and pop culture collectibles ⁵. The physical media market remains competitive as companies seek to serve a more targeted customer base, and management believes that long-term success requires differentiation through exclusive content, curated product offerings, and enhanced customer service ⁶.

Alliance faces competition from a variety of competitors, including some of its own suppliers that sell directly to certain segments of the market, wholesale distributors, retailers, and internet-based businesses ⁷. The company competes with several smaller physical media companies in its product categories, as well as with many larger e-commerce companies in the United States and internationally ⁸. It also competes with entertainment companies that digitally download and stream their products and other established authentication businesses ⁹. Competition is based primarily on meeting consumer product preferences and on the quality and play value of physical media products and experiences, and to a lesser extent on product pricing ¹⁰. Many of the major entertainment and gaming companies are part of large, diversified companies with substantially greater marketing and financial resources, which may allow them to compete aggressively on pricing ¹¹. Alliance believes its key strengths include a proven management team with significant ownership alignment, significant barriers to entry and market leadership protected by a three-pronged moat of services, selection, and technology, strategic partnerships with major content providers, expansion into premium collectibles and licensed merchandise, organic growth opportunities, a proven track record of building scale through sixteen accretive acquisitions, and a modern technology distribution platform and interface ¹².

Alliance generates revenue through a multi-channel distribution model, serving as a single source for all customer entertainment product needs ¹³. The company's distribution business is built around three areas where marketplace value is created: Service, Selection, and Technology ¹⁴. Service includes e-commerce and direct-to-consumer solutions, vendor managed inventory, and subsidiary brands ¹⁵. Selection encompasses a portfolio of over 340,000 SKUs in stock across five primary product categories: gaming products, vinyl records, DVD/Blu-Ray/UltraHD, compact discs, and collectables and electronics ¹⁶. Technology includes warehouse automation and proprietary product-authentication and digital identity capabilities ¹⁷. The company serves a customer base divided into categories including retailers, direct marketers, Internet-based resellers, independent dealers, product category specialists, and other distributors ¹⁸. Alliance has over 4,000 customers shipping to over 35,000 storefronts and distributes to over 2,500 independent music and video retailers ¹⁹. The company typically ships products on the same day it receives and accepts customers' purchase orders, and backlog is usually not material ²⁰.

Alliance's product and service lines are organized into several divisions and brands. Alliance Home Entertainment, launched in January 2025, is the exclusive distributor of Paramount Pictures' physical media content as of January 1, 2025, and of Amazon MGM Studios' physical media content as of January 1, 2026, offering full-service support across production, marketing, and retail execution ²¹. Handmade by Robots, acquired in December 2024, produces licensed vinyl collectible figures styled to resemble knitted or crocheted plush toys, featuring characters from licensed entertainment franchises ²². Alliance Authentic is the company's internally developed brand and platform for authenticated, certified collectibles, including certified vinyl, and a marketplace for buying, selling, and trading investment-grade physical media ²³. Endstate Authentic, acquired on December 31, 2025, is a wholly owned subsidiary focused on authentication and resale technology, with patented NFC-enabled authentication and digital product identity technology ²⁴. DirectToU consists of owned retail brands operating under the dbas of ImportCDs, Deep Discount, Collectors Choice Music, Collectors Choice, Vinyl, Blow It Out of Here, Wow, Pop Market, Collectors Choice Video, and Movies Unlimited ²⁵. Mill Creek Entertainment is an independent studio for Blu-ray, DVD, and digital distribution, licensing, producing, marketing, and distributing film and television content to over 30,000 retail stores and thousands of websites across North America ²⁶. NCircle Entertainment is an independent distributor of children's and family entertainment content, with a focus on programming that supports early learning ²⁷. AMPED Distribution serves as the exclusive supplier of physical media to retailers in the United States for over 100 small music labels ²⁸. Distribution Solutions is an aggregator and distributor of independent film labels in North America, with over 50 movie studios exclusively distributed to over 30,000 retail stores ²⁹. For the fiscal year ended June 30, 2026, gaming represented approximately 16% of consolidated revenues, vinyl represented approximately 33%, DVD/Blu-Ray/UltraHD represented approximately 30%, CDs represented approximately 14%, and collectables and electronics represented approximately 4% ³⁰.

During the fiscal year, Alliance completed several significant operational developments. On December 31, 2025, the company completed the acquisition of Endstate Authentic LLC, a digital authentication and loyalty-driven consumer brand, accounted for as a business combination under ASC 805 ³¹. In December 2024, the company acquired Handmade by Robots, a designer of licensed vinyl collectible figures, for approximately $7.55 million in a transaction accounted for as a business combination under ASC 805 ³². On October 1, 2025, the company entered into a Loan and Security Agreement with Bank of America, N.A., providing for a $120.0 million senior secured revolving credit facility ³³. In January 2026, the company entered into an exclusive agreement with Amazon MGM Studios for physical media distribution in the United States and Canada ³⁴. In 2026, an additional 5,000 totes were added for expansion of AutoStore to 57,000 totes ³⁵. The company also recorded a $7.8 million vendor transaction loss related to the write-off of a receivable associated with a historical rebate arrangement with Tastemakers, which ceased operations during the fiscal year ³⁶.

For the fiscal year ended June 30, 2026, total revenues were $713.163 billion ³⁷, compared to $680.985 billion ³⁸ in fiscal 2025. Net income was $22.270 billion ³⁹, and diluted EPS was $2.73 ⁴⁰ versus $2.41 ⁴¹ in the prior year. Gross profit was $112.4 million ⁴² in fiscal 2026, compared to $104.6 million ⁴³ in fiscal 2025. Operating income was $30.4 million ⁴⁴ in fiscal 2026, compared to $28.9 million ⁴⁵ in fiscal 2025. The company's effective tax rate was 25.2% ⁴⁶ in fiscal 2026, compared to 24.9% ⁴⁷ in fiscal 2025. Adjusted EBITDA was $42.4 million ⁴⁸ in fiscal 2026, compared to $39.5 million ⁴⁹ in fiscal 2025. The company's gross margin was 15.8% ⁵⁰ in fiscal 2026, compared to 15.4% ⁵¹ in fiscal 2025. Operating margin was 4.3% ⁵² in fiscal 2026, compared to 4.2% ⁵³ in fiscal 2025. Net cash provided by operating activities was $18.2 million ⁵⁴ in fiscal 2026, compared to $22.1 million ⁵⁵ in fiscal 2025. Capital expenditures were $8.5 million ⁵⁶ in fiscal 2026, compared to $7.2 million ⁵⁷ in fiscal 2025. As of June 30, 2026, the company had approximately $74 million outstanding under the Revolving Credit Facility ⁵⁸.

Management's strategy for future growth includes executing its acquisition strategy, increasing market share, enhancing direct-to-consumer relationships and capabilities, expanding into new consumer products, continuing technological advancement, and capitalizing on strategic studio partnerships ⁵⁹. The company intends to develop additional studio partnerships to expand its footprint in the physical media market, building on its exclusive distribution agreements with Paramount Home Entertainment and Amazon MGM Studios through Alliance Home Entertainment ⁶⁰. Alliance will continue to actively monitor and evaluate opportunities in its acquisition pipeline in both the near and mid-term ⁶¹.

A key growth vector is the expansion into premium collectibles and licensed merchandise through Alliance Authentic, which leverages the company's core distribution infrastructure and deep relationships in entertainment to capitalize on the growing demand for pop culture merchandise ⁶². The platform is built on the NFC-enabled authentication and digital product identity technology held by Endstate Authentic LLC, which enables real-time product verification, counterfeit prevention, and authenticated resale services ⁶³. The NFC chip used is NXP's NTAG424, and the data on the tag can be encrypted using AES-128 encryption, preventing cloning or counterfeiting ⁶⁴. The chip generates a new unique code on each scan which can be verified by a third-party server ⁶⁵. These capabilities strengthen Alliance's position in the growing authenticated collectibles market and support the development of new technology-enabled and recurring revenue opportunities ⁶⁶.

Another growth vector is the expansion of Alliance Home Entertainment, which was established in connection with a multi-year agreement under which Alliance serves as the exclusive distributor of Paramount Pictures' physical media, including DVDs, Blu-rays, and 4K UHD titles, across the United States and Canada ⁶⁷. In January 2026, the company entered into an exclusive agreement with Amazon MGM Studios for physical media distribution in the United States and Canada, covering new releases and select catalog content across wholesale, e-commerce, and brick-and-mortar retail channels ⁶⁸. The agreement broadens the company's physical media portfolio, particularly in higher-value and collectible offerings, and leverages its scale, marketing capabilities, and omnichannel fulfillment platform ⁶⁹. The company is also capitalizing on demand from collectors and enthusiasts through the expansion of its physical music and video offerings, most notably vinyl records, SteelBooks™, and special edition box sets ⁷⁰.

Management believes that the company's investments in warehouse automation and technology will continue to drive operational efficiencies and cost savings ⁷¹. The company has implemented an AutoStore Automated Storage & Retrieval System for handling primarily LPs, which improved warehouse speed, reliability, capacity, and accuracy ⁷². In April 2024, the company implemented the OPEX Sure Sort X® system to automate the sortation of non-standard size products, reducing labor costs, accelerating processing times, and lowering the potential for product damage ⁷³. In 2026, an additional 5,000 totes were added for expansion of AutoStore to 57,000 totes ⁷⁴. The company also installed Hubspot with its AI tools as of February 2026, which supports multi-channel retailer marketplaces ⁷⁵.

The company's capital allocation strategy includes a disciplined approach to capital allocation while investing in strategic initiatives, expanding higher-margin product categories, and pursuing opportunities that strengthen its market position ⁷⁶. The company continues to invest in automating facilities and upgrading proprietary software ⁷⁷. The company's Revolving Credit Facility provides for a $120.0 million senior secured revolving credit facility, with a $3.0 million sub-limit for letters of credit, and permits additional borrowings in an amount not to exceed $50.0 million ⁷⁸. The facility matures on October 1, 2030 ⁷⁹. Borrowings under the Revolving Credit Facility bear interest at the 30-day SOFR rate, subject to a floor of 2.00%, plus an applicable margin of 1.50% through March 31, 2026 and 1.625% thereafter ⁸⁰. The company also pays a commitment fee of 0.15% per annum on unused availability ⁸¹.

Management has identified several headwinds and constraints to its growth plan. The company faces significant inventory risk due to seasonality, new product launches, rapid changes in product cycles and pricing, defective merchandise, changes in consumer demand and spending patterns, and other factors ⁸². Supply chain disruptions, including fluctuating freight rates, labor shortages in transportation and warehousing, and longer lead times for certain products sourced internationally, could adversely affect the company's ability to fulfill customer demand and increase costs ⁸³. Inflation could cause product costs and operating and administrative expenses to grow more rapidly than net sales, resulting in lower gross margins and lower net earnings ⁸⁴. The company's international operations are subject to risks including local economic and political conditions, government regulation, trade protection measures, and restrictions on sales or distribution ⁸⁵. The company also faces risks related to its significant indebtedness, including the need to dedicate a portion of cash resources to interest and principal payments, which could reduce money available for working capital, capital expenditures, potential acquisitions, and other corporate purposes ⁸⁶.

Management's message emphasizes the company's unique position in the entertainment ecosystem, supported by a diverse portfolio of direct-to-consumer brands and strategic partnerships with major content providers ⁹⁶. The company's strategy for future growth includes executing its acquisition strategy, increasing market share, enhancing direct-to-consumer relationships and capabilities, expanding into new consumer products, continuing technological advancement, and capitalizing on strategic studio partnerships ⁹⁷. Management believes that the company's key strengths position it to deliver on its strategy to grow profitably, optimize its core physical media and entertainment and collectibles product distributors' fulfillment and e-commerce distribution solutions, and expand and continue to invest in higher-margin advanced technology solutions and high-value services ⁹⁸. The company continues to maintain a disciplined approach to capital allocation while investing in strategic initiatives, expanding higher-margin product categories, and pursuing opportunities that strengthen its market position ⁹⁹.

Total revenues for the fiscal year ended June 30, 2026 were $713.163 billion ¹⁰⁰, compared to $680.985 billion ¹⁰¹ in fiscal 2025. Net income was $22.270 billion ¹⁰² in fiscal 2026, compared to $20.4 billion ¹⁰³ in fiscal 2025. Diluted EPS was $2.73 ¹⁰⁴ in fiscal 2026, versus $2.41 ¹⁰⁵ in fiscal 2025. Gross profit was $112.4 million ¹⁰⁶ in fiscal 2026, compared to $104.6 million ¹⁰⁷ in fiscal 2025. Operating income was $30.4 million ¹⁰⁸ in fiscal 2026, compared to $28.9 million ¹⁰⁹ in fiscal 2025. The company's effective tax rate was 25.2% ¹¹⁰ in fiscal 2026, compared to 24.9% ¹¹¹ in fiscal 2025. Adjusted EBITDA was $42.4 million ¹¹² in fiscal 2026, compared to $39.5 million ¹¹³ in fiscal 2025. Net cash provided by operating activities was $18.2 million ¹¹⁴ in fiscal 2026, compared to $22.1 million ¹¹⁵ in fiscal 2025. Capital expenditures were $8.5 million ¹¹⁶ in fiscal 2026, compared to $7.2 million ¹¹⁷ in fiscal 2025. As of June 30, 2026, the company had approximately $74 million outstanding under the Revolving Credit Facility ¹¹⁸. The company recorded a $7.8 million vendor transaction loss related to the write-off of a receivable associated with a historical rebate arrangement with Tastemakers, which negatively impacted results of operations for the fiscal year ¹¹⁹. The company also incurred $1.6 million in interest expense related to the accelerated amortization of unamortized deferred financing costs associated with the prior revolving credit facility that was refinanced and replaced ¹²⁰. The effective interest rate from execution of the Revolving Credit Facility through June 30, 2026 was 5.3% ¹²¹. For the fiscal year ended June 30, 2026, gaming represented approximately 16% of consolidated revenues, vinyl represented approximately 33%, DVD/Blu-Ray/UltraHD represented approximately 30%, CDs represented approximately 14%, and collectables and electronics represented approximately 4% ¹²².

The company faces significant customer concentration risk, as the top three customers represented approximately 45% of consolidated revenue for the fiscal year ended June 30, 2026, with the top customer accounting for approximately 21% of consolidated net sales ⁸⁷. The loss of any significant customer or a reduction in their purchases could materially harm the business ⁸⁸. The company also relies on a limited number of suppliers, with the five largest suppliers accounting for approximately 65% of total product receipt value in fiscal 2026, and one supplier accounting for approximately 23% ⁸⁹. The loss of any key supplier or discontinuance of preferential pricing could adversely affect operations ⁹⁰. The company's significant indebtedness, including the $120.0 million Revolving Credit Facility with approximately $74 million outstanding as of June 30, 2026, could require dedicating a substantial portion of cash resources to debt service, reducing funds available for working capital and strategic initiatives ⁹¹. The Credit Agreement contains a fixed charge coverage ratio covenant of at least 1.0 on a trailing twelve months basis, and restrictions on certain payments, distributions, acquisitions, and investments unless pro forma excess availability is at least equal to the greater of 20% of the Borrowing Base and $20 million ⁹². A breach of covenants could result in an event of default and acceleration of debt ⁹³. The company also faces inventory risk, as it carries a broad selection and significant inventory levels, and demand can change significantly between the time inventory is ordered and the date of sale, potentially leading to write-downs for excess and obsolete inventory ⁹⁴. Additionally, the company recorded a $7.8 million vendor transaction loss related to the write-off of a receivable from Tastemakers, which ceased operations, highlighting the risk of customer defaults ⁹⁵.