What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-23 compared with 2024-10-30 · 292 added, 469 removed, 430 unchanged (64% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Presented below is Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for IMAX Corporation and its consolidated subsidiaries (“IMAX” or the “Company”) for the three and nine months ended September 30, 2024 and 2023.

Presented below is Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for IMAX Corporation (together with its consolidated subsidiaries, unless the context requires otherwise, “IMAX” or the “Company”) for the three months ended March 31, 2025 and 2024.

MD&A should be read in conjunction with Note 13, “Segment Reporting,” in the accompanying Condensed Consolidated Financial Statements in Item 1.

As of September 30, 2024, the Company indirectly owns 71.55% of IMAX China Holding, Inc.

As of March 31, 2025, the Company indirectly owned 71.40% of IMAX China Holding, Inc.

(“IMAX China”), whose shares trade on the Hong Kong Stock Exchange.

IMAX China is a consolidated subsidiary of the Company.

For the three months ended September 30, 2024, net income attributable to IMAX China is $5.0 million, of which $3.6 million is attributable to the shareholders of the Company (2023 — $11.0 million and $7.9 million, respectively).

For the three months ended March 31, 2025, net income attributable to IMAX China is $20.4 million, of which $14.6 million is attributable to the shareholders of the Company (2024 — $7.5 million and $5.4 million, respectively).

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain statements included in this quarterly report may constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 or “forward-looking information” within the meaning of Canadian securities laws.

These forward-looking statements include, but are not limited to, references to business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), industry prospects and consumer behavior, plans and references to the future success of the Company and expectations regarding its future operating, financial and technological results.

Certain statements included in this quarterly report may constitute “forward-looking statements” within the meaning of the U.S.

Private Securities Litigation Reform Act of 1995 or “forward-looking information” within the meaning of Canadian securities laws.

These forward-looking statements include, but are not limited to, statements regarding business and technology strategies and measures to implement strategies, statements about the Company’s belief and expectations, competitive strengths, goals, market opportunity and penetration, including opportunities in and expected growth from international markets, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), the Company’s technological capabilities and the differentiation thereof, brand equity and brand awareness and the benefits thereof, industry prospects and consumer behavior, future industry developments, including expected releases and the timing and effects thereof, plans and references to the future success of the Company and expectations regarding its future operating, financial and technological results.

These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances.

However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada, as well as geopolitical conflicts;

risks related to the Company’s growth and operations in China;

industry conditions in China affecting both the Company and its partners;

risks related to the failure of the Company’s exhibitors being able to fulfill their contractual payment obligations;

risks related to the Company’s failure to attract and retain its employee population;

the performance of IMAX remastered films and other films released to the IMAX network;

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conditions, changes and developments in the commercial exhibition industry;

risks related to currency fluctuations;

risks related to the Company’s inability to enter into new sales and lease agreements adversely affecting revenue;

risks related to the Company’s operating results and cash flow increasing the volatility of the Company’s share price;

risks related to currency fluctuations and foreign exchange controls;

the potential impact of increased competition in the markets within which the Company operates, including competitive actions by other companies;

the failure to respond to change and advancements in digital technology;

the failure to respond to change and advancements in technology;

risks relating to consolidation among commercial exhibitors and studios;

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the opportunities (or lack thereof) that may be presented to and pursued by the Company;

risks related to cyber-security and data privacy;

risks related to the Company’s inability to protect its intellectual property;

risks related to cybersecurity and data privacy;

risks related to the Company’s inability to protect its intellectual property and to avoid infringing, misappropriating, or violating the intellectual property rights of others;

risks associated with the Company’s use of artificial intelligence (“AI”) and exploration of additional use cases of AI;

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general economic, market or business conditions;

risks related to sustained inflationary pressure;

risks related to political, economic and social instability;

the failure to convert system backlog into revenue;

the failure to convert system backlog into revenue and cash flows;

changes in laws or regulations;

any statements of belief and any statements of assumptions underlying any of the foregoing;

other factors and risks outlined in the Company’s periodic filings with the United States Securities and Exchange Commission (the “SEC”) or in Canada, the System for Electronic Document Analysis and Retrieval (“SEDAR+”);

and other factors, many of which are beyond the control of the Company.

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The forward-looking statements herein are made only as of the date hereof and the Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

IMAX ® , IMAX ® 3D, Experience It In IMAX ® , The IMAX Experience ® , DMR ® , Filmed For IMAX ® , IMAX Live TM , IMAX Enhanced ® , IMAX StreamSmart TM , and SSIMWAVE ® are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions.

IMAX ® , IMAX 3D ® , Experience It In IMAX ® , The IMAX Experience ® , DMR ® , Filmed For IMAX ® , IMAX Live ® , IMAX Enhanced ® and IMAX StreamSmart TM are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions.

The Company makes available, free of charge, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to such reports, as soon as reasonably practicable after such filings have been made with the SEC and Canadian securities regulators.

Reports may be obtained free of charge through the SEC’s website at www.sec.gov or the SEDAR+’s website at www.sedarplus.ca and through the Company’s website at www.imax.com or by calling the Company’s Investor Relations Department at 212-821-0154.

The Company announces material information to the public through a variety of means, including filings with the SEC and Canadian securities regulators, press releases, public conference calls, and its website at www.imax.com.

The Company uses these channels to communicate with investors and the public about the Company, its products and services, and other matters.

Therefore, investors are encouraged to review the information the Company makes public in these locations, as such information could be deemed to be material information.

No information included on the Company’s website shall be deemed included or otherwise incorporated into this filing, except where expressly indicated.

The information posted on the Company’s Corporate and Investor Relations website may be deemed material to investors.

Accordingly, investors, media and others interested in the Company should monitor the Company’s investor relations website in addition to the Company’s press releases, SEC and SEDAR+ filings and public conference calls and webcasts.

All references to the Company’s website are intended to be inactive textual references only.

IMAX Corporation (together with its consolidated subsidiaries, the “Company” or “IMAX”) is a Canadian corporation that was formed in March 1994 as a result of an amalgamation between WGIM Acquisition Corp.

and the former IMAX Corporation (“Predecessor IMAX”).

Predecessor IMAX was incorporated in 1967.

IMAX is a premier global technology platform for entertainment and events.

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The Company’s global content portfolio includes blockbuster films, both from Hollywood and local language film industries worldwide;

IMAX documentaries, both original and acquired;

IMAX documentaries, both original and acquired (“IMAX Documentaries”);

and IMAX events and experiences in emerging verticals, including music, gaming, and sports.

The Company leverages its proprietary technology and engineering in all aspects of its business, which principally consists of the digital remastering of films and other content into the IMAX format for distribution across the IMAX network (“IMAX Film Remastering”) and the sale or lease of premium IMAX theater systems (“IMAX System(s)”).

IMAX Systems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s history since its founding in 1967.

The customers for IMAX Systems are principally exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, museums, science centers and destination entertainment sites.

IMAX Systems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s history.

The customers for IMAX Systems are principally exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, institutional locations, including museums and science centers, and destination entertainment sites.

The Company does not own the locations in the IMAX network, except for one, and is not an exhibitor, but instead sells or leases the IMAX System to exhibitor customers along with licenses to use its trademarks and ongoing maintenance services for which there are annual payments by the exhibitors to IMAX.

IMAX has the largest global premium format network, more than double the size of its nearest competitor.

As of September 30, 2024, there were 1,788 IMAX Systems in 89 countries and territories, including 1,714 commercial multiplexes, 12 commercial destinations, and 62 institutional locations in the Company’s global network.

This compares to 1,731 IMAX Systems in 87 countries and territories as of September 30, 2023, including 1,651 commercial multiplexes, 12 commercial destinations, and 68 institutional locations in the Company’s global network.

As of March 31, 2025, there were 1,810 IMAX Systems in 89 countries and territories, including 1,738 commercial multiplexes, 11 commercial destinations, and 61 institutional locations in the Company’s global network.

This compares to 1,772 IMAX Systems in 89 countries and territories as of March 31, 2024, including 1,697 commercial multiplexes, 12 commercial destinations, and 63 institutional locations in the Company’s global network.

(Refer to the table under “IMAX Network and Backlog” for additional information on the composition of the IMAX network.)

IMAX Systems provide the Company’s exhibitor customers with a combination of the following benefits:

• the ability to exhibit content that has been enhanced through the IMAX Film Remastering, which results in higher image and sound fidelity than conventional cinema experiences;

• the ability to exhibit content that has been enhanced through the IMAX Film Remastering process, which results in higher image and sound fidelity than conventional cinema experiences;

• advanced, high-resolution projectors with specialized equipment and automated theater control systems, which generate significantly more contrast and brightness than conventional theater systems;

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• advanced sound system components, which deliver more expansive sound imagery and pinpointed origination of sound to any specific spot in an auditorium equipped with an IMAX System;

• specialized theater acoustics, which result in a four-fold reduction in background noise;

• specialized theater acoustics, which result in a four-fold reduction in background noise than conventional cinema experiences;

• ongoing maintenance and extended warranty services;

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In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image.

Together, these components cause audiences in IMAX locations to feel as if they are a part of the on-screen action, creating a more intense, immersive, and awe-inspiring exciting experience than a conventional cinematic format.

The Company believes that these components cause audiences in IMAX locations to feel as if they are a part of the on-screen action, creating a more intense, immersive, and awe-inspiring experience than a conventional cinematic format.

As a result of the engineering and scientific achievements that are a hallmark of The IMAX Experience , the Company’s exhibitor customers typically charge a premium for films released in IMAX’s format versus films exhibited in their other auditoriums.

The premium pricing, combined with the higher attendance levels associated with IMAX films, generates incremental box office for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX network.

The incremental box office generated by IMAX films combined with IMAX’s unmatched global network footprint and scale has helped establish IMAX as a key premium distribution and marketing platform for Hollywood and foreign local language movie studios.

The premium pricing, combined with the higher attendance levels associated with IMAX films, tends to generate incremental box office receipts (“box office”) for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX network.

The incremental box office generated by IMAX films combined with IMAX’s leading global network footprint and scale has helped establish IMAX as a key premium distribution and marketing platform for Hollywood and foreign local language movie studios.

The Company achieved a box office record in the first quarter in 2025 of $298.2 million, including booking fees, from 33 new films and other content released during the quarter, highlighted by the performance of Ne Zha 2, a Chinese local language animation film.

The Company continues to evolve its platform to bring new, innovative events and experiences to audiences worldwide.

The Company has a footprint of connected IMAX Systems capable of delivering live, interactive content with low latency and superior sight and sound.

During the first quarter, the Company partnered with Sony Pictures for the exclusive release of Becoming Led Zeppelin.

In addition, the Company continued to partner with A24 for a monthly one-night-only IMAX releases of classic A24 titles, including in the first quarter Talk to Me , Moonlight, and Spring Breakers.

The Company partnered with NBC universal for the SNL50 The Homecoming Concert screening in five North American IMAX locations.

The Company also partnered with DAZN for the PSG v Marseille Le Classique Match screening in select IMAX locations across France.

As of March 31, 2025, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound.

Furthermore, the Company can deploy its StreamSmart TM technology to deliver live events to virtually any theater around the world.

As a premier global technology platform for entertainment and events, the Company strives to remain at the forefront of advancements in technology.

The Company offers a suite of laser-based digital projection systems (“IMAX Laser Systems”), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers today.

The Company further believes that its suite of IMAX Laser Systems are helping facilitate the next major renewal and upgrade cycle for the global IMAX network.

The Company further believes that its suite of IMAX Laser Systems is helping facilitate the next major renewal and upgrade cycle for the global IMAX network.

The Company utilizes AI for image enhancement, streaming technology, and data analysis to improve various aspects of its business.

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(i) Content Solutions, which principally includes content enhancement and distribution services, and (ii) Technology Products and Services, which principally includes the sale, lease, and maintenance of IMAX Systems.

The Company’s activities that do not meet the criteria to be considered a reportable segment are disclosed within All Other.

(See Note 13 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1).

The Company’s activities that do not meet the criteria to be considered a reportable segment are disclosed within All Other (See Note 13 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1).

Content Solutions

The Content Solutions segment earns revenue principally from the digital remastering of films and other content into IMAX formats for distribution across the IMAX network.

The Content Solutions segment earns revenue principally from studios and other content creators for IMAX Film Remastering.

To a lesser extent, the Content Solutions segment also earns revenue from the distribution of large-format documentary films and IMAX events and experiences, including music, gaming, and sports, as well as the provision of film post-production services.

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IMAX Film Remastering is a proprietary technology that digitally remasters films and other content into IMAX formats for distribution across the IMAX network.

In a typical IMAX Film Remastering and distribution arrangement, the Company receives a percentage of the box office receipts from a movie studio in exchange for converting a commercial film into the IMAX format and distributing it through the IMAX network.

The fee earned by the Company in a typical IMAX Film Remastering and distribution arrangement averages approximately 12.5% of box office receipts (i.e., global box office (“GBO”) less applicable sales taxes), except for within Greater China, where the Company receives a lower percentage of net box office receipts for certain Hollywood films due to an import tax.

IMAX Film Remastering digitally enhances the image resolution of films for projection on IMAX screens while maintaining or enhancing the visual clarity and sound quality to levels for which The IMAX Experience is known.

In addition, the original soundtrack of a film to be exhibited across the IMAX network is remastered for IMAX digital sound systems.

IMAX remastered soundtracks are uncompressed for full fidelity.

IMAX sound systems use proprietary loudspeaker systems and proprietary surround sound configurations that ensure every seat in an auditorium is an optimal listening position.

In a typical IMAX Film Remastering and distribution arrangement, the Company receives a percentage of the box office from a movie studio in exchange for converting a commercial film into the IMAX format and distributing it through the IMAX network.

The fee earned by the Company in a typical IMAX Film Remastering and distribution arrangement averages approximately 12.5% of box office (i.e., gross box office (“GBO”) less applicable sales taxes), except for within Greater China, where the Company receives a lower percentage of net box office receipts for certain Hollywood films due to an import tax.

IMAX Film Remastering digitally enhances the image quality and/or resolution for projection on IMAX screens while maintaining or enhancing the visual clarity and sound quality to levels for which The IMAX Experience is known.

IMAX Film Remastering is completed for the image of films released to the IMAX network, creating a unique IMAX version that is optimized for IMAX’s proprietary digital projection systems and format.

In addition, the original soundtrack of a film to be exhibited across the IMAX locations is remastered into a unique IMAX digital audio format.

IMAX sound systems use proprietary loudspeaker systems, designs and proprietary surround sound configurations to ensure every seat in an auditorium is an optimal listening position.

IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film.

Collectively, the Company refers to these enhancements as “IMAX DNA.” Filmmakers and movie studios have sought IMAX-specific enhancements in recent years to generate interest in and excitement for their films.

Collectively, the Company refers to these enhancements as “IMAX DNA”.

Filmmakers and movie studios increasingly seek to infuse more IMAX DNA in theatrical releases to realize a filmmaker’s creative vision more fully, while generating interest and excitement among moviegoers.

Such enhancements include shooting films with IMAX cameras to increase the audience’s immersion in the film and to take advantage of the unique dimensions of the IMAX screen by projecting the film in a larger aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen.

In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image.

The Company has a Filmed For IMAX ® program for select films under which filmmakers craft films from their inception in numerous ways to optimize The IMAX Experience .

The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives a higher market share for IMAX.

Management believes that growth in international box office remains an important driver of growth for the Company.

To support continued growth in international markets, the Company is focused on the expansion of the IMAX network and has sought to elevate its international film strategy, supplementing its slate of Hollywood films with appealing local language films released in select markets, including China, Japan, India, France and South Korea.

More recently, the Company has further expanded its strategy by distributing local language films in both native and foreign markets.

The following table provides detailed information about the films that were released to the Company’s global network during the three and nine months ended September 30, 2024 and 2023, respectively:

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

The Company’s Filmed For IMAX ® program enables filmmakers craft films from their inception to optimize The IMAX Experience and provides incremental and bespoke marketing support.

The box office metrics demonstrate audiences respond extremely favorable to Filmed For IMAX ® titles, resulting in a higher market share for IMAX.

Management believes that growth in international box office represents an important growth opportunity for the Company.

The Company’s strategy to capitalize on this opportunity includes expanding the IMAX network into underpenetrated international markets and growing the number of local language films released, particularly in China, Japan, India, France, and South Korea.

As the popularity of local language films has continued to increase, the Company has extended its content strategy to distribute local language content beyond native markets.

During the three months ended March 31, 2025, local language films exhibited across the Company’s global network generated over $202 million in box office, representing 68% of the Company’s global box office, including the Chinese local language film, Ne Zha 2 , which became the highest grossing IMAX release of all time in China.

The following table provides the number of new films and other content that were released to the Company’s global network during the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended

Hollywood film releases (1)

Local language film releases:

China 10 12 18 21

Japan 4 4 12 7

India 3 1 7 4

South Korea 2 1

Malaysia 1 1 1 1

Thailand 1 — 1 —

Indonesia 1 —

France — — — 1

Total local language film releases

Other Content Solutions

The Company distributes large-format documentary feature films through its global commercial network and institutional theaters.

The Company traditionally receives as its distribution fee either a fixed amount or a fixed percentage of the theater box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues.

In May 2024, Amazon Content LLC (“Amazon Content”) acquired the worldwide rights to the Company’s original documentary, The Blue Angels , which was filmed with IMAX digital certified cameras and produced in collaboration with Dolphin Entertainment, Bad Robot Productions, and Zipper Bros Films.

The full-length documentary was released to select commercial locations across the IMAX network on May 17, 2024, and a 40-minute version will be released to institutional locations beginning in early 2025.

Additionally, the Company had limited commercial network releases of the documentaries Skywalkers:

A Love Story The IMAX Experience and Fly:

The IMAX Experience , in partnership with Netflix and National Geographic, respectfully.

Upcoming documentaries in production include The Elephant Odyssey, a documentary in collaboration with Beach House Pictures Pte Ltd and China International Communications Group, which was announced in 2023 and is expected to be released in 2025, and Stormbound , an additional feature documentary produced by Academy Award-winning producer, Adam McKay, which will be released in 2025 followed by The Lost Wolves of Yellowstone .

Traditionally, the Company receives as its distribution fee either a fixed amount or a fixed percentage of the theater box office and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues.

In the first quarter of 2025, the Company released the institutional 3D version of Blue Angels across select IMAX locations in North America, Europe, and Australia.

Upcoming documentaries, which are currently in production, include Stormbound , a feature documentary produced by Academy Award ® -winning producer, Adam McKay, The Lost Wolves of Yellowstone , and Patrouille de France, all of which are expected to be released in 2025, and The Elephant Odyssey , a documentary in collaboration with Beach House Pictures Pte Ltd and China International Communications Group, which is expected to be released in 2026.

The Company continues to believe that the IMAX network is a valuable global platform to launch and distribute original content, including documentaries.

The ownership rights to such films may be held by the film sponsors, the film investors and/or the Company.

As of March 31, 2025, the Company had distribution rights with respect to approximately 65 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders.

In addition, the Company continues to evolve its platform to bring new, innovative IMAX events and experiences to audiences worldwide.

As of September 30, 2024, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound.

In the nine months ended September 30, 2024, the Company partnered with Pathé Live for the exclusive release of Queen Rock Montreal, which became one of the Company’s highest grossing concert films ever, along with 2023’s Taylor Swift:

The Eras Tour .

In addition, the Company hosted an IMAX event, Andre 3000:

New Blue Sun , and entered into a partnership with A24 for a monthly one-night-only IMAX release of classic A24 titles, including Alex Garland’s highly acclaimed Ex Machina , Uncut Gems , and Hereditary .

Additionally, the Company hosted multiple IMAX Live TM events, including screening the NBA finals across multiple IMAX locations in the Asia Pacific region, the screening of The Beach Boys:

IMAX Live Experience , the special advance screening and live event for Megalopolis:

The Ultimate IMAX Experience , the live pre-show Q&A with the cast of Twisters , and in partnership with NBC television network, extended its live coverage of the 2024 Paris Olympics Opening Ceremony to select IMAX locations throughout the United States.

The Company provides film post-production and quality control services for large-format films, whether produced by IMAX or third-parties, and digital post-production services.

As of March 31, 2025, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia, and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound.

In the three months ended March 31, 2025, the Company partnered with Sony Pictures for the exclusive release of Becoming Led Zeppelin.

The Company also partnered with NBC Universal for the SNL50:

The Homecoming Concert screening in five theaters in North America, and DAZN for the PSG v Marseille Le Classique Match screening.

In addition, the Company continues to partner with A24 for a monthly one-night-only IMAX release of classic A24 titles, including Talk to Me , Moonlight, and Spring Breakers in the first quarter of 2025.

The Company provides film post-production and quality control services for films, whether produced by IMAX or third parties, and digital post-production services.

In addition, the Company also provides IMAX film and digital cameras to content creators under the IMAX certified camera program.

Technology Products and Services

The Company works with filmmakers, studios, and artists end-to-end from content creation through content delivery.

The Company provides IMAX film cameras to select IMAX and third-party productions and certifies a suite of high-end digital cameras to shoot in the IMAX format under its Filmed For IMAX program.

In addition, the Company provides post-production — including its proprietary DMR process — and quality control services for films that are distributed across the IMAX network.

The Technology Products and Services segment earns revenue principally from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems.

To a lesser extent, the Technology Products and Services segment also earns revenue from certain ancillary theater business activities, including after-market sales of IMAX Systems parts and 3D glasses.

Sales and Sales-Type Lease Arrangements

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Joint Revenue Sharing Arrangements

The Company provides IMAX Systems to exhibitors through joint revenue sharing arrangements (“JRSA”).

The Company provides IMAX Systems to exhibitors through joint revenue sharing arrangements (“JRSAS”).

Under the traditional form of these arrangements, the Company provides the IMAX System under a long-term lease in which the Company assumes the majority of the equipment and installation costs.

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The Company retains title to the IMAX System equipment components throughout the lease term, and the equipment is returned to the Company at the conclusion of the arrangement.

Under certain other joint revenue sharing arrangements, known as hybrid arrangements, the customer is responsible for making fixed upfront payments prior to the delivery and installation of the IMAX System in an amount that is typically half of what the Company would receive from a typical sale transaction.

As with a traditional joint revenue sharing arrangement, the customer also pays the Company a percentage of contingent box office receipts over the term of the arrangement, although this percentage is typically half that of a traditional joint revenue sharing arrangement.

Hybrid joint revenue sharing arrangements take the form of a sale.

The fixed upfront payment is recognized when the lease term commences and is recorded within Revenues – Technology Sales.

The contingent rent is recognized as revenue over the lease term and is recorded within Revenues – Technology Rentals.

Under most joint revenue sharing arrangements (both traditional and hybrid), the initial non-cancellable term is 10 years or longer and is renewable by the customer for one to two additional terms of between three to five years.

Under certain other JRSAs, known as hybrid arrangements, the customer is responsible for making fixed upfront payments prior to the delivery and installation of the IMAX System in an amount that is typically half of what the Company would receive from a typical sale transaction.

As with a traditional JRSA, the customer also pays the Company a percentage of contingent box office receipts over the term of the arrangement, although this percentage is typically half that of a traditional JRSA.

Under most JRSAs (both traditional and hybrid), the initial non-cancellable term is 10 years or longer and is renewable by the customer for one to two additional terms of between three to five years.

The Company has the right to remove the equipment for non-payment or other defaults by the customer.

The contracts are non-cancellable by the customer unless the Company fails to perform its obligations.

The revenue earned from customers under the Company’s joint revenue sharing arrangements can vary from quarter-to-quarter and year-to-year based on a number of factors that drive box office levels including film performance, the mix of IMAX System configurations, the timing of installation of IMAX Systems, the nature of the arrangement, the location, size and management of the theater and other factors specific to individual arrangements.

Joint revenue sharing arrangements also require IMAX to provide maintenance and extended warranty services to the customer over the term of the lease in exchange for a separate fixed annual fee.

The revenue earned from customers under the Company’s JRSA can vary from quarter-to-quarter and year-to-year based on a number of factors that drive box office levels including film performance, the mix of IMAX System configurations, the timing of installation of IMAX Systems, the nature of the arrangement, the location, size and management of the theater and other factors specific to individual arrangements.

JRSAs also require IMAX to provide maintenance and extended warranty services to the customer over the term of the lease in exchange for a separate fixed annual fee.

These fees are reported within IMAX Maintenance, as discussed below.

Joint revenue sharing arrangements have been an important factor in the expansion of the Company’s commercial system network.

Joint revenue sharing arrangements allow commercial theater exhibitors to install IMAX Systems without the significant initial capital investment required in a sale or sales-type lease arrangement.

Joint revenue sharing arrangements drive recurring cash flows and earnings for the Company as customers under these arrangements pay the Company a portion of their ongoing box office receipts.

The Company funds its investment in equipment for joint revenue sharing arrangements through cash flows from operations.

As of September 30, 2024, the Company had 894 locations under joint revenue sharing arrangements in its global commercial multiplex network.

The Company also had contracts in backlog for 302 systems under joint revenue sharing arrangements as of September 30, 2024, including 92 upgrades to existing locations and 210 new locations.

JRSAs have been an important factor in the expansion of the Company’s commercial system network.

JRSAs allow commercial theater exhibitors to install IMAX Systems without the significant initial capital investment required in a sale or sales-type lease

JRSAs drive recurring cash flows and earnings for the Company as customers under these arrangements pay the Company a portion of their ongoing box office receipts.

The Company funds its investment in equipment for JRSAs through cash flows from operations.

As of March 31, 2025, the Company had 893 locations under joint revenue sharing arrangements in its global commercial multiplex network.

The Company also had contracts in backlog for 346 systems under joint revenue sharing arrangements as of March 31, 2025, including 152 upgrades to existing locations and 194 new locations.

IMAX Maintenance

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Streaming and Consumer Technology

Streaming and Consumer Technology includes the Company’s Streaming Technology software offerings and IMAX Enhanced product services.

Streaming and Consumer Technology includes the Company’s Streaming Technology software offerings and IMAX Enhanced products and services.

Streaming Technology consists of several software products, including:

• IMAX StreamSmart – works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings.

• IMAX StreamSmart – works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings for both on-demand and live content.

• IMAX StreamAware On-Demand – all-in-one quality assurance and quality control to automate and standardize checks for comprehensive content integrity and regulatory compliance for third-party content libraries, across an entire video compression workflow.

• IMAX StreamAware On-Air – real-time monitoring software for live streams, which enables users to monitor video quality across their networks and to identify and address streaming issues.

These AI-powered products allow streaming platforms and broadcasters to automate workflows.

• Stream it in IMAX Enhanced - end-to-end technology solution that dynamically improves video and audio fidelity for live and on-demand content.

These products are powered by IMAX VisionScience ® , an AI technology that allows streaming platforms and broadcasters to automate workflows.

The Company believes that these products allow users to deliver the highest quality viewing experiences to their subscribers while reducing costs.

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IMAX Enhanced provides end-to-end premium technology across streaming content and best-in-class entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features:

• IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms, including Disney+;

• IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms;

• IMAX’s proprietary remastering technology, which produces more vivid, higher-fidelity 4K HDR images on premium televisions;

• IMAX’s signature sound, which was specially recreated and calibrated for the home to unlock more immersive audio.

To be certified as IMAX Enhanced, leading consumer electronics manufacturers spanning 4K/8K televisions, projectors, A/V receivers, loudspeakers, soundbars, smartphones, personal computers, tablets, and more must meet a carefully prescribed set of audiovisual performance standards, set by a certification committee, along with some of Hollywood’s leading technical specialist.

At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Xiaomi, Sound United and Honor, among others.

As of September 30, 2024, more than 300 IMAX Enhanced titles have been released across five of the biggest streaming platforms worldwide:

Disney+, Sony Bravia CORE, Tencent Video, iQiyi and Rakuten TV.

Over 15 million IMAX Enhanced certified devices are estimated to be in the market today.

As of March 31, 2025, more than 300 IMAX Enhanced titles had been released across six of the biggest streaming platforms worldwide:

Disney+, Sony Pictures CORE, Tencent Video, iQiyi, Yonku and Rakuten TV.

Over 15 million IMAX Enhanced certified devices are estimated to be in use today.

IMAX Streaming and Consumer Technology is part of the Company’s next evolutionary step to extend the IMAX brand and technology further into new use cases, including streaming entertainment and the consumer electronics market.

All Other also includes revenues from sources including one owned and operated IMAX System in Sacramento, California;

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the provision of management services to three other theaters;

renting the Company’s proprietary 2D and 3D large-format film cameras;

and offering production advice and technical assistance to both documentary and Hollywood filmmakers.

IMAX NETWORK AND BACKLOG

The following table provides detailed information about the IMAX network by type and geographic location as of September 30, 2024 and 2023.

The following table provides detailed information about the IMAX network by type and geographic location as of March 31, 2025 and 2024.

For additional information regarding the composition of the IMAX network, see “Marketing and Customers” in Part I, Item 1 of the Company’s 2024 Form 10-K.

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Institutional

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(3) Period-to-period changes in the table above are reported net of the effect of permanently closed locations.

(See “Risk Factors – The Company faces risks in connection with its significant presence in China and the continued expansion of its business there.” and “– The Company may not convert all of its backlog into revenue and cash flows” in Part II, Item 1A of this Form 10-Q and “Risk Factors – General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems,” and in Part I, Item 1A of the Company’s 2023 Form 10-K.)

IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,714 IMAX Systems operating as of September 30, 2024, representing a market penetration of only 47%.

(See “Risk Factors – The Company faces risks in connection with its significant presence in China and the continued expansion of its business there,” “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows,” and “Risk Factors – General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems” in Part I, Item 1A of the Company’s 2024 Form 10-K.)

IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,738 IMAX Systems operating as of March 31, 2025, representing a market penetration of only 48%.

The Company believes that the majority of its future growth will come from international markets.

As of September 30, 2024, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada).

As of March 31, 2025, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada).

Revenues and GBO derived from international markets continue to exceed revenues and GBO from the United States and Canada.

Risks associated with the Company’s international business are outlined in “Risk Factors – The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales and future growth prospects” in Part I, Item 1A of the Company’s 2024 Form 10-K.

In the nine months ended September 30, 2024, the Company’s revenue generated from its Greater China operations represents 25% of consolidated revenue.

As of September 30, 2024, the Company had 808 IMAX Systems operating in Greater China with an additional 254 systems in backlog.

In the nine months ended September 30, 2024, the IMAX network generated over $114 million in box office from local language films, representing approximately 16% of the Company’s total box office in the period.

The Company is also seeing its local language films increasingly generate significant IMAX box office in markets outside of those in which they are released .

The following tables provide detailed information about the Company’s commercial multiplex network by arrangement type and geographic location as of September 30, 2024 and 2023:

September 30, 2024

The following tables provide detailed information about IMAX Systems operating in multiplex locations by arrangement type and geographic location as of March 31, 2025 and 2024:

March 31, 2025

Commercial Multiplex Locations in IMAX Network

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772 121 845 1,738

(1) Includes Sales, Hybrid Sales and Sales-Type Lease deal types.

(1) Includes Sales and Sales-Type Lease deal types.

(2) Period-to-period changes in the tables above are reported net of permanently closed locations.

September 30, 2023

March 31, 2024

Commercial Multiplex Locations in IMAX Network

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791 138 768 1,697

(1) Includes Sales, Hybrid Sales and Sales-Type Lease deal types.

(1) Includes Sales and Sales-Type Lease deal types.

(2) Period-to-period changes in the tables above are reported net of permanently closed systems.

The following table provides detailed information about the Company’s backlog as of September 30, 2024 and 2023:

September 30, 2024 September 30, 2023

The following table provides detailed information about the Company’s backlog as of March 31, 2025 and 2024:

March 31, 2025 March 31, 2024

Systems Dollar

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Total 355 161 $ 230,961 $ 6,805 377 65 $ 232,792 $ 17,353

(1) Includes Sales, Hybrid Sales, and Sales-Type Lease deal types.

(1) Includes Sales and Sales-Type Lease deal types.

(2) The consideration owed under traditional joint revenue sharing arrangements is typically a percentage of contingent box office receipts rather than a fixed upfront fee or fixed annual minimum payments.

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however, hybrid joint revenue sharing arrangements typically provide for contracted upfront payments and therefore carry a backlog value based on those payments.

(3) Includes 22 IMAX Systems (2023 ― 38) where certain of the Company’s contracts contain options for the customer to elect to upgrade system type or to alter the contract structure (for example, from a joint revenue sharing arrangement to a sale) after signing, but before installation.

Current backlog information reflects all known elections.

The backlog reflects the minimum number of commitments for IMAX Systems according to the signed contracts.

The dollar value fluctuates depending on the number of new arrangements signed from year-to-year, which adds to backlog, and the installation and acceptance of IMAX Systems and the settlement of contracts, both of which reduce backlog.

The backlog reflects the minimum number of commitments for IMAX Systems according to signed contracts.

The dollar value fluctuates depending on the number of new arrangements signed from year-to-year, which adds to backlog, and the installation and

acceptance of IMAX Systems and the settlement of contracts, both of which reduce backlog.

The dollar value of backlog typically represents the fixed contracted revenue according to the signed IMAX System sale and lease agreements that the Company expects to recognize as revenue upon installation and acceptance of the associated system, as well as an estimate of variable consideration in sales arrangements.

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If the agreement is terminated, once the Company and the customer are released from all their future obligations under the agreement, all or a portion of the initial rents or fees that the customer previously made to the Company are recognized as revenue.

Certain of the Company’s contracts contain options for the customer to elect to upgrade system type during the term or to alter the contract structure (for example, from a joint revenue sharing arrangement to a sale) after signing, but before installation.

Certain of the Company’s contracts contain options for the customer to elect to upgrade system type during the term or to alter the contract structure (for example, from a JRSA to a sale) after signing, but before installation.

Current backlog information reflects all known elections.

The following tables provide detailed information about the Company’s backlog by arrangement type and geographic location as of September 30, 2024 and 2023:

September 30, 2024

The following tables provide detailed information about the Company’s backlog by arrangement type and geographic location as of March 31, 2025 and 2024:

March 31, 2025

IMAX System Backlog

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252 94 170 516

(1) Includes Sales, Hybrid Sales and Sales-Type Lease deal types.

(1) Includes Sales and Sales-Type Lease deal types.

(2) Worldwide Total of 516 includes 254 new IMAX Laser Systems and 161 upgrades of existing locations to IMAX Laser Systems.

September 30, 2023

March 31, 2024

IMAX System Backlog

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177 101 164 442

(1) Includes Sales, Hybrid Sales and Sales-Type Lease deal types.

(1) Includes Sales and Sales-Type Lease deal types.

(2) Worldwide Total of 442 includes 261 new IMAX Laser Systems and 62 upgrades of existing locations to IMAX Laser Systems.

Approximately 31% of IMAX System arrangements in backlog as of September 30, 2024 are scheduled to be installed in international markets excluding Greater China (2023 — 37%).

Approximately 74% of IMAX System arrangements in backlog as of March 31, 2025 are scheduled to be installed in international markets (2024 — 32%).

The Company’s system backlog in Greater China represents 45% (2024 — 46%) of its total current backlog, including 191 new IMAX Systems and 43 upgrades (2024 — 195 new and 10 upgrades).

(See “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows.” in Part II, Item 1A.

of this Form 10-Q.)

(See “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows.” in Part I, Item 1A.

of the Company’s 2024 Form 10-K.)

Signings and Installations

The following tables provide detailed information about IMAX System signings and installations for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

The following tables provide detailed information about IMAX System signings and installations for the three months ended March 31, 2025 and 2024:

Three Months Ended

System Signings:

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Total IMAX System signings (2)

(1) Includes Sales, Hybrid Sales and Sales-Type Lease deal types.

(2) Includes IMAX System upgrades of one and 69 for the three and nine months ended September 30, 2024, respectively (2023 ― six and 18 upgrades, respectively).

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

(1) Includes Sales and Sales-Type Lease deal types.

(2) Includes IMAX System upgrades of 58 for the three months ended March 31, 2025 (2024 ― no upgrades).

Three Months Ended

System Installations (1) :

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Total IMAX System installations (3)

(1) Two and four IMAX Systems were relocated from their original location for the three and nine months ended September 30, 2024, respectively (2023 ― one and three relocations, respectively).

When a system under a sale or sales-type lease arrangement is relocated, the amount of revenue earned by the Company may vary from transaction-to-transaction and is usually less than the amount earned for a new sale.

(1) Three IMAX Systems were relocated from their original location for the three months ended March 31, 2025 (2024 ― one).

When a system is relocated, the amount of revenue earned by the Company may vary from transaction-to-transaction and is usually less than the amount earned for a new sale.

In certain situations when a system is relocated, the original location is upgraded to an IMAX Laser System.

(2) Includes Sales, Hybrid Sales and Sales-Type Lease deal types.

(3) Includes 32 and 43 IMAX System upgrades for the three and nine months ended September 30, 2024, respectively (2023 ―12 and 20 upgrades, respectively).

(2) Includes Sales and Sales-Type Lease deal types.

(3) Includes seven IMAX System upgrades for the three months ended March 31, 2025 (2024 ― three upgrades).

RESULTS OF OPERATIONS

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(i) IMAX box office performance and the securing of new IMAX films and alternative content to be exhibited across the IMAX network;

(ii) the signing, installation, and financial performance of IMAX System arrangements, particularly those involving IMAX Laser Systems;

(iii) the success of the Company’s investments in business evolution and brand extensions into streaming and consumer technology, and the distribution of live events to the IMAX network;

(iv) revenues and gross margins earned by the Company’s segments, as discussed below;

(ii) the signing, installation, and financial performance of IMAX System arrangements;

(iii) the success of the Company’s investments in business evolution and brand extensions into streaming and consumer technology;

(iv) revenues and gross margins earned by the Company’s segments;

(v) consolidated earnings (loss) from operations, as adjusted for unusual items;

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and (viii) short- and long-term cash flow projections.

The CEO is the Company’s Chief Operating Decision Maker (“CODM”), as such term is defined under United States Generally Accepted Accounting Principles (“U.S.

The CODM assesses segment performance based on segment revenues and gross margins.

Selling, general and administrative expenses, research and development costs, the amortization of intangible assets, provision for (reversal of) current expected credit losses, certain write-downs, interest income, interest expense, and income tax (expense) benefit are not allocated to the Company’s segments.

The Company has organized its operating segments into the following two reportable segments:

The Company’s activities that do not meet the criteria to be considered a reportable segment are disclosed within All Other.

(See Note 13 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1).

Results of Operations for the Three Months Ended September 30, 2024 and 2023

Net Income and Adjusted Net Income Attributable to Common Shareholders

The following table presents the Company’s net income attributable to common shareholders and the associated per diluted share amounts, as well as adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share for the three months ended September 30, 2024 and 2023:

Three Months Ended September 30,

(In thousands of U.S.

Dollars, except per diluted share amounts)

Per Diluted Share

Net income attributable to common shareholders

$ 13,896 $ 0.26 $ 11,990 $ 0.22

Adjusted net income attributable to common shareholders *

$ 18,855 $ 0.35 $ 19,410 $ 0.35

*Refer to “Non-GAAP Financial Measures” for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP amount.

During the three months ended September 30, 2024, the Company’s revenues decreased by $12.4 million, or 12%, while net income increased by $1.9 million or 16%, when compared to the same period in 2023, driven by a lower level of IMAX box office that was more than offset by decreases in costs and expenses resulting from corporate and operational initiatives and timing of expenditures, as discussed below.

Revenues and Gross Margin

During the three months ended September 30, 2024, the Company’s revenues and gross margin decreased by $12.4 million, or 12%, and $11.7 million, or 19%, respectively, when compared to same period in 2023 principally due to a lower level of IMAX box office performance driven by a less favorable mix of film content available to play across the IMAX global network, partially offset by higher IMAX Systems installed under sales arrangements.

The following table presents the Company’s revenue, gross margin, and gross margin percentage by reportable segment for the three months ended September 30, 2024 and 2023:

Revenue Gross Margin Gross Margin %

(In thousands of U.S.

2024 2023 2024 2023 2024 2023

Content Solutions

$ 30,129 $ 44,214 $ 16,449 $ 26,407 55 % 60 %

Technology Products and Services

57,971 56,169 31,964 33,761 55 % 60 %

Sub-total for reportable segments

88,100 100,383 48,413 60,168 55 % 60 %

All Other (1)

3,352 3,513 2,606 2,547 78 % 73 %

Total $ 91,452 $ 103,896 $ 51,019 $ 62,715 56 % 60 %

(1) All Other includes the results from Streaming and Consumer Technology and other ancillary activities.

Content Solutions

Content Solutions segment results are influenced by the level of commercial success and box office performance of the films and other content released to the IMAX network, as well as other factors including the timing of the releases, the length of play across the IMAX network, the box office share take rates under the Company’s Film Remastering and distribution arrangements, the level of marketing spend associated with the releases in the year, and the fluctuations in the value of foreign currencies versus the U.S.

For the three months ended September 30, 2024, Content Solutions segment revenues and gross margin decreased by $14.1 million, or 32%, and decreased by $10.0 million, or 38%, respectively, when compared to the same period in 2023.

In the third quarter of 2024, box office generated by IMAX films totaled $239.5 million and represented IMAX’s third highest third quarter box office of all time.

The decrease of $107.6 million, or 31%, decrease versus the prior year comparative period of $347.1 million, driven in part by a less favorable mix of content globally which included fewer blockbusters, as well as a challenging compare to the prior year that included over $180 million in box office from Oppenheimer , the Company’s fifth highest grossing title of all time.

In the third quarter of 2024, IMAX box office was generated by the exhibition of 44 films and other content (37 new and 7 originally released in a prior year), including Deadpool & Wolverine , which generated IMAX box office of over $83 million.

In the third quarter of 2023, IMAX box office was generated by the exhibition of 41 films (34 new films and 7 films originally released in a prior year).

The impact on revenue from the lower box office experienced year over year was partially offset by the revenue earned from higher revenues from alternative content including A24 title release Everything, Everywhere All At Once , NBC’s 2024 Paris Olympics Opening Ceremony, Korean concert film IM Hero:

The Stadium , and limited release documentaries FLY:

The IMAX Experience and Skywalkers:

A Love Story The IMAX Experience .

The Company continues to build out its alternative content strategy, including evolving its documentary strategy, as a way to increase utilization and revenues across the IMAX System footprint.

In addition to the level of revenues, Content Solutions segment gross margin is influenced by the costs associated with films and other content (documentaries, live, alternative and other) exhibited in the period.

The costs associated with films and other content can include production, post-production, distribution and marketing, which are expensed as incurred.

For the three months ended September 30, 2024, gross margin percent was 55% compared to 60% in the prior year period, with the decrease being driven primarily by a lower level of IMAX box office year over year.

Technology Products and Services

The primary drivers of Technology Products and Services segment results are the number of IMAX Systems installed in a period, the costs associated with each installation, lease payments tied to the box office performance of the films released to the IMAX network, as well as the associated maintenance contracts that accompany each installation.

The average revenue and gross margin per IMAX System under sale and sales-type lease arrangements vary depending upon the number of IMAX System commitments with a single respective exhibitor, an exhibitor’s location, the type of system sold, and various other factors.

The installation of IMAX Systems in theaters or multiplexes, which make up a large portion of the Company’s system backlog, depends primarily on the timing of the construction of those projects, which is not under the Company’s control.

The following table provides information about IMAX Systems installed and the associated revenue recognized at that time, except for traditional joint revenue sharing arrangements as revenue is recognized over the lease term, during the three months ended September 30, 2024 and 2023:

Three Months Ended September 30,

(In thousands of U.S.

Dollars, except number of systems) Number of Systems Revenue Number of Systems Revenue

New IMAX System 12 $ 11,363 14 $ 11,215

Upgraded IMAX System 8 9,424 2 883

Total IMAX Systems

20 20,787 16 12,098

Included in the table above is one IMAX System which was relocated from its original location (2023 ― one IMAX System).

In certain situations when a system is relocated, the original location is upgraded to an IMAX Laser System.

For the three months ended September 30, 2024, Technology Products and Services segment revenue increased by $1.8 million , or 3%, while gross margin decreased by $1.8 million, or 5%, when compared to the same period in 2023.

These results reflect an increase in system installations under sales arrangements that offset the impact of a lower level of rental revenues, which is box office dependent.

Rental revenues decreased by $6.9 million, driven by GBO from joint revenue sharing arrangements which decreased by $35.2 million in the third quarter of 2024 when compared to the prior year comparative period, from $159.5 million to $124.3 million.

For the three months ended September 30, 2024, gross margin percent was 55% compared to 60% in the prior period with the decrease being driven by the lower level of IMAX box office year over year.

For the three months ended September 30, 2024, All Other revenue and gross margin decreased by $0.2 million and less than $0.1 million, respectively, when compared to the same period in 2023, principally due to the performance of the Company’s one owned and operated theater.

Selling, General and Administrative Expenses

The following table presents information about the Company’s Selling, General and Administrative Expenses for the three months ended September 30, 2024 and 2023:

Three Months Ended

September 30, Variance

(In thousands of U.S.

Total Selling, general and administrative expenses

$ 31,466 $ 36,282 $ (4,816) (13 %)

Share-based compensation (1)

(5,036) (4,865) (171) (4 %)

Total Selling, general and administrative expenses, excluding share-based compensation

$ 26,430 $ 31,417 $ (4,987) (16 %)

(1) A portion of share-based compensation expense is recognized within Costs and Expenses Applicable to Revenues, and Research and Development.

(Refer to “Capital Stock and Reserves — Share-Based Compensation” in Note 11 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1.)

For the third quarter of 2024, the lower level of Selling, General and Administrative Expenses year over year is driven by inclusion in the prior year of $3.1 million in transaction expenses associated with the proposal to acquire the outstanding shares in IMAX China.

Also contributing to the decline year over year is the timing of expenditures, adjustments in certain estimates relating to payouts in connection with our streaming and consumer technology division as well as management’s continued focus on operational efficiencies, which were partially offset by the impact of higher inflation during the period.

Research and Development

The Company believes that it is a premier global technology platform for awe-inspiring entertainment and events with significant proprietary expertise in digital and film-based projection and sound system component design, engineering, and imaging technology, particularly in laser-based technology.

A significant portion of the Company’s research and development efforts have been focused on the IMAX Laser Systems, which the Company believes is capable of illuminating the largest screens in the IMAX network and provides greater brightness and clarity, higher contrast, a wider color gamut and deeper blacks, while consuming less power and lasting longer than existing digital technology, to ensure that the Company continues to provide the highest quality, premier cinematic experience available to consumers.

The Company has continued research and development aimed at creating more affordable laser-based solutions with various screen sizes for its commercial multiplex customers.

For the three months ended September 30, 2024, the Company recognized a net cost recovery for its Research and Development activity of $0.3 million, compared to an expense of $2.8 million during the same period in the prior year.

In the third quarter of 2024, the Company concluded that technological feasibility of the new IMAX film cameras was achieved resulting in the capitalization of costs incurred.

The Company intends to continue research and development to further evolve its end-to-end technology.

This includes bringing connectivity to the Company’s global network to support live and interactive events worldwide;

developing new IMAX film cameras and certifying additional digital cameras;

further improving its proprietary Film Remastering and distribution process for the delivery of content for both theatrical (including local language content) and home entertainment;

and further improving the reliability of its projectors, as well as enhancing the Company’s image and sound quality.

Within the Company’s Streaming and Consumer Technology business, there is ongoing research and development in perceptual metrics involving novel measurement and optimization techniques.

Investments are also being made to expand existing and/or develop new technologies which are expected to further enhance video quality, delivery, and creation across devices.

Furthermore, the Company intends to invest in activities that will capture opportunities to create/build AI and automation into its operations and processes.

Credit Loss (Reversal) Expense, Net

For the three months ended September 30, 2024, the Company recorded a credit loss reversal of $1.1 million, as compared to a credit loss expense of $0.5 million recognized in the prior year primarily due to increases in collections of the Company’s account receivables, primarily in China, as exhibition partners continue to improve their cash position post pandemic.

Management’s judgments regarding expected credit losses are based on the facts available to management at the time that the Condensed Consolidated Financial Statements are prepared and involve estimates about the future.

As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect.

(Refer to Note 3 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1.)

Interest Expense, net

For the three months ended September 30, 2024, interest expense was $2.2 million, representing an increase of $0.8 million, or 51% when compared to interest expense of $1.5 million during the same period of the prior year primarily due to a higher level of borrowings under the Credit Facility in the current period.

For the three months ended September 30, 2024 and 2023, interest income was $0.6 million and $0.7 million, respectively.

For the three months ended September 30, 2024, the Company recorded an income tax expense of $2.4 million (2023 — tax expense of $6.6 million).

The Company’s effective tax rate of 13.4% for the three months ended September 30, 2024 differs from the Canadian statutory rate of 26.5% primarily due to tax rate differences in foreign jurisdictions and a decrease in the valuation allowance which was partially offset by an increase in tax reserves, tax return adjustments and withholding taxes.

The Company’s effective tax rate of 30.4% for the three months ended September 30, 2023 differs from the Canadian statutory rate of 26.5% primarily due to tax rate differences in foreign jurisdictions which was offset by an increase in the valuation allowance, tax return adjustments and withholding taxes.

(Refer to Note 10 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1).

Non-Controlling Interests

The Company’s Condensed Consolidated Financial Statements primarily include the non-controlling interest in the net income or loss of IMAX China, as well as the impact of non-controlling interests in the activity of its Original Film Fund subsidiary.

For the three months ended September 30, 2024, the net income attributable to non-controlling interests of the Company’s subsidiaries was $1.4 million, a decrease of $1.6 million, when compared to the same period in 2023, primarily due to lower IMAX box office earned in Greater China.

Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Results of Operations for the Three Months Ended March 31, 2025 and 2024

Net Income and Adjusted Net Income Attributable to Common Shareholders

The following table presents the Company’s net income attributable to common shareholders and the associated per share amounts, as well as adjusted net income attributable to common shareholders* and adjusted net income attributable to common shareholders per share (1) for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

The following table presents the Company’s net income attributable to common shareholders and the associated per share amounts, as well as adjusted net income attributable to common shareholders* and adjusted net income attributable to common shareholders per share for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In thousands of U.S.

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Revenues and Gross Margin

For the nine months ended September 30, 2024, the Company’s revenues and gross margin decreased by $29.3 million or 10% and $28.8 million or 17%, respectively, when compared to same period in 2023, principally due to weaker IMAX box office performance driven in part by the Hollywood strike impact on the film slate and a less favorable mix of content across our global network.

These year over year declines were partially offset by the sale of commercial and streaming rights for an IMAX documentary and higher revenues associated with alternative content.

The following table presents the Company’s revenue, gross margin and gross margin percentage by reportable segment for the nine months ended September 30, 2024 and 2023:

For the three months ended March 31, 2025, the Company’s revenues and gross margin increased by $7.5 million, or 10%, and $6.3 million, or 13%, respectively, when compared to same period in 2024, principally due to a higher number of installations and stronger IMAX box office performance driven by the record Chinese New Year period.

The following table presents the Company’s revenue, gross margin, and gross margin percentage by reportable segment for the three months ended March 31, 2025 and 2024:

Revenue Gross Margin Gross Margin %

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Content Solutions

For the nine months ended September 30, 2024, Content Solutions segment revenues and gross margin decreased by $8.4 million, or 8%, and $9.7 million, or 15%, respectively, when compared to the same period in 2023.

In the nine months ended September 30, 2024, box office generated by IMAX films totaled $696.5 million, a $192.4 million or 22% decrease versus the prior year comparative period of $888.9 million driven in part by the Hollywood strike impact on the film slate and a less favorable mix of content globally which included fewer blockbusters in 2024.

During the nine months ended September 30, 2024, IMAX box office was generated by the exhibition of 104 films and other content (83 new and 21 that were originally released in prior years), including Dune:

Part Two ($145 million) , Deadpool & Wolverine ($83 million), Godzilla x Kong:

The New Empire ($41 million), Inside Out 2 ($39 million), and Alien:

Romulus ($39 million).

Additionally, in the nine months ended September 30, 2024, local language films exhibited across the Company’s global network generated over $114 million in box office, representing 16% of its total box office.

Leading local language titles distributed across the IMAX network in the nine months ended September 30, 2024 included the Chinese films Pegasus 2 and Yolo , the Japanese film Haikyu!!

, and the Korean concert film, IM Hero:

The Stadium .

In the nine months ended September 30, 2023, IMAX box office was generated by the exhibition of 84 films (67 new films and 17 films that were originally released in prior year) including Oppenheimer , which generated box office of over $180 million, and local language Chinese titles Wandering Earth 2 ($49 million) and Creation of the Gods 1:

Kingdom of Storms ($32 million).

The impact on revenue from the lower box office experienced year over year was partially offset by the revenue earned from the completion of the sale of worldwide rights to the Company’s original documentary, The Blue Angels , to Amazon Content during the period as well as from higher revenues from alternative content.

In addition to the level of revenues, Content Solutions segment gross margin is influenced by the costs associated with films and other content (documentaries, live.

alternative and other) exhibited in the period.

The costs associated with films and other content can include production, post-production, distribution and marketing, which are expensed as incurred.

For the nine months ended September 30, 2024, gross margin percent was 55% compared to 60% in the prior year period.

The decrease was due to the lower level of IMAX box office receipts and the higher mix of self-produced content being released during the period, including The Blue Angels .

Content Solutions segment results are influenced by the level of commercial success and box office performance of the films and other content released to the IMAX network, as well as other factors, including the timing of the releases, the length of play across the IMAX network, the box office share take rates under the Company’s Film Remastering and distribution arrangements, the level of marketing spend associated with the releases in the year, and fluctuations in the value of foreign currencies versus the U.S.

For the three months ended March 31, 2025, Content Solutions segment revenues and gross margin increased by $0.2 million, or less than 1%, and $1.5 million, or 7%, respectively, when compared to the same period in 2024.

In the three months ended March 31, 2025, box office generated by IMAX films, including booking fees, totaled $298.2 million, a $30.9 million, or 12%, increase versus the prior year comparative period of $267.3 million, while IMAX box office excluding booking fees totaled $280.7 million, a $20.0 million or 8% increase versus the prior year comparative of $260.7 million.

The growth was primarily driven by the stronger IMAX box office performance of the IMAX local language film slate in 2025.

During the three months ended March 31, 2025, IMAX box office was generated by the exhibition of 34 films and other content (33 new films and 1 re-release), including the following Hollywood titles, Captain America:

Brave New World ($27 million) , Mickey 17 ($11 million) , Mufasa:

The Lion King ($10 million) and Interstellar ($10 million) which was originally released in a prior year.

In the three months ended March 31, 2025, local language films exhibited across the Company’s global network generated over $202 million in box office, representing 68% of its global box office.

The Chinese local language film, Ne Za 2, became the highest grossing IMAX release of all time in China ($161 million, including booking fees) and contributed to the highest grossing Chinese New Year in the Company’s history.

In the three months ended March 31, 2024, IMAX box office was generated by the exhibition of 26 films (19 new films and 7 re-releases), including Dune:

Part Two , which generated box office of over $132 million.

In addition to the level of revenues, Content Solutions segment gross margin is influenced by the costs associated with films and other content exhibited in the period.

These costs can include production, post-production, distribution, and marketing, which are expensed as incurred.

For the three months ended March 31, 2025, gross margin percent was 69% compared to 65% in the prior quarter period.

The increase was due to the higher level of IMAX box office and the profit that incrementally ensues when individual titles generate higher levels of box office.

Technology Products and Services

Nine Months Ended September 30,

The following table provides information about IMAX Systems installed under sales arrangements and the associated revenue recognized during the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In thousands of U.S.

5 unchanged sentences

Total 13 $ 10,584 6 $ 5,239

Included in the table above are four IMAX Systems which were relocated from its original location (2023 ― two IMAX Systems).

Included in the table above are three IMAX Systems that were relocated from their original locations (2024 ― one IMAX System).

When a system under a sale or sales-type lease arrangement is relocated, the amount of revenue earned by the Company may vary from transaction to transaction and is usually less than the amount earned for a new sale.

In certain situations when a system is relocated, the original location is upgraded to an IMAX Laser System.

For the nine months ended September 30, 2024, Technology Products and Services segment revenue and gross margin decreased by $19.8 million, or 12%, and $18.7 million, or 19%, respectively, when compared to the same period in the prior year, The lower level of revenue is primarily driven by a lower level of rental revenues which is box office dependent.

Rental revenues decreased by $14.1 million, as a result of GBO from joint revenue sharing arrangements which decreased by $85.0 million or 20% in the nine months ended September 30, 2024 when compared to the prior year comparative period, from $435.7 million to $350.7 million.

For the nine months ended September 30, 2024 gross margin percent was 54% compared to 58% in the prior period, primarily the result of lower rental revenues, as described above.

For the nine months ended September 30, 2024, All Other revenue and gross margin decreased by $1.1 million, or 12%, and $0.4 million, or 6%, respectively, when compared to the same period in 2023, which principally reflects the performance of the Company’s one owned and operated theater coupled with the mix in revenue from the Company’s Streaming and Consumer Technology operations.

For the three months ended March 31, 2025, Technology Products and Services segment revenue and gross margin increased by $7.4 million, or 17%, and $5.5 million, or 23%, respectively, when compared to the same period in the prior year, The higher level of revenue is primarily driven by a greater number of sales installations and renewals and a higher level of rental revenues, which are box office dependent.

Rental revenues increased by $0.5 million, as a result of growth in GBO from JRSAs, which increased by $14.7 million, or 12%, in the three months ended March 31, 2025 when compared to the prior year comparative period, from $125.4 million to $140.1 million.

For the three months ended March 31, 2025, gross margin percent was 57% compared to 55% in the prior period, which primarily reflects the higher level of revenues, as described above.

For the three months ended March 31, 2025, All Other revenue and gross margin decreased by $0.1 million, or 7%, and $0.7 million, or 56%, respectively, when compared to the same period in 2024, which principally reflects the lower box office performance of the Company’s one owned and operated theater.

Selling, General and Administrative Expenses

The following table presents information about the Company’s Selling, General and Administrative Expenses for the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30, Variance

The following table presents information about the Company’s Selling, General and Administrative Expenses for the three months ended March 31, 2025 and 2024:

Three Months Ended

March 31, Variance

(In thousands of U.S.

3 unchanged sentences

(4,720) (4,337) (383) (9 %)

Total Selling, general and administrative expenses, excluding share-based compensation (2)

Total Adjusted Selling, general and administrative expenses (2)

$ 28,742 $ 26,920 $ 1,822 7 %

2 unchanged sentences

(2) See “Non-GAAP Financial Measures” for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP amount.

For the nine months ended September 30, 2024, the lower level of Selling, General and Administrative Expenses year over year reflects the inclusion in the prior year of $3.1 million in transaction expenses associated with the proposal to acquire the outstanding shares in IMAX China.

For the three months ended March 31, 2025, the higher level of Selling, General and Administrative Expenses year-over-year reflects the timing of industry events, marketing expenses, and higher professional service fees.

Research and Development

The Company has continued research and development aimed at creating more affordable laser-based solutions with various screen sizes for its commercial multiplex customers.

For the nine months ended September 30, 2024, Research and Development expenses were $4.0 million, representing a decrease of $3.4 million, or 46%, when compared to Research and Development expenses of $7.4 million during the same period in the prior year.

The current period expenses reflects the capitalization of costs related to the development of the new IMAX film cameras upon the conclusion of technological feasibility.

This decrease was partially offset by continued investment in other R&D projects including developing new Streaming Technology product offerings.