The box-office performance of Disney's (NYSE:DIS) Black Panther in February helped prove what IMAX (NYSE:IMAX) shareholders long have known: Moviegoers are willing to pay up for a premium experience to see their favorite blockbuster. For the third successive quarter, however, IMAX has exceeded investor's expectations, while Wall Street shrugged its collective shoulders.

For the just-completed quarter, IMAX reported revenue of $85 million, up 23% year over year, handily beating analysts' consensus estimates for $79.3 million. Improving margins helped the company deliver adjusted net income of $13.4 million, up from $3.9 million in the prior-year quarter. IMAX generated adjusted earnings per diluted share of $0.21, up from $0.06 in the prior-year quarter, blasting past expectations of $0.11 per share. 

Infinity Gauntlet Glove from "Avengers: Infinity War" reaching for the IMAX logo.

Avengers: Infinity War is breaking IMAX records. Image source: IMAX.

Improvement everywhere you look


Q1 2018

Q1 2017

Year-Over-Year Change


$85 million

$69 million


Operating income (loss)

$16.7 million

($0.51 million)


Net income

$12.1 million

($0.88 million)


Earnings per share




Data source: IMAX First-Quarter 2018 Financial Release. Chart by author.

It's important to note that IMAX delivered these impressive results despite the fact that overall North American box office fell by 2% year over year during the first quarter -- meaning a larger percentage of the movie-going public chose IMAX when venturing out. 

Box Office

Q1 2018

Q1 2017

Year-Over-Year Change


$86 million

$75 million


Greater China

$89 million

$70 million


Other international

$71 million

$67 million



$247 million

$212 million


Data source: IMAX First-Quarter 2018 Supplemental Slides. Chart by author.

Global box office continued its impressive rise, up 16% year over year, and showed increases in each reporting segment. 

IMAX also reported growth in both its major business segments. Network business, which includes digital remastering and joint revenue-sharing arrangements, increased 14% year over year, to $44.9 million, while theater business -- which includes system sales -- shined, jumping 50% over the prior-year quarter, to $34 million.

A growing network of theaters

Exhibitors continue to invest in IMAX technology to gain an advantage. The company reported 45 theater signings in the current quarter, up from 38 in the prior-year quarter. The company also installed its systems in 16 theaters, up from 15 during the same period last year. This brings the backlog to 529 systems, up from 524 in the prior-year quarter.

The most notable thing about the company's results is that IMAX is delivering on a promise it made to investors last year. You may recall that in mid-2017, the company announced an initiative to reduce costs, increase box office, and buy back $200 million in shares over the coming four years.

Those initiatives appear to be taking hold. Gross margins improved to 59.6% of revenue, up from 52.1% in the year-ago quarter. IMAX's expenses, as a percentage of revenue, also declined, to 6.6% of current sales compared to 7.5% in the prior-year quarter.

"Our first-quarter results were strong from both a financial and strategic standpoint. We modified our programming strategy, demonstrated operating leverage and set the table for the successful launch of IMAX with Laser, which was bolstered by over 150 signings to date," said Richard L. Gelfond, IMAX CEO.

This quarter's off to a blockbuster start

For the second quarter, analysts are expecting earnings per share of $0.29 on revenue of $103.44 million. IMAX doesn't provide quarterly guidance, but there are indicators of a solid quarter ahead.

IMAX revealed that Marvel's Avengers: Infinity War, the first movie shot entirely with IMAX cameras, opened to a record-setting global box office of $41.5 million for IMAX on 715 screens, making it the third-largest opening in the company's history. The film set opening weekend records in North America, but that was just the start. IMAX locations in 19 territories, including Korea, Brazil, Italy, and Mexico, reported their best opening weekends ever. The superhero team-up film has yet to debut in several important markets, including Russia on May 3 and China on May 11.

With all that going for it, IMAX is the best show in town.

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