Despite a slight dip in overall revenue, Alliance Entertainment is finding continued success in the physical media market, particularly with vinyl and CDs. The company’s latest earnings report, covering calendar Q4 2025 (fiscal Q2 2026), reveals a 3% year-over-year increase in vinyl sales and a roughly 5% YoY rise in CD sales. This performance underscores a surprising resilience in physical formats, even as digital streaming dominates the music landscape.
The Florida-based distributor reported total revenues of $369 million for the quarter, a 6.3% decrease compared to the $394 million earned in the same period last year. This decline was attributed to lower sales in gaming hardware and arcade games, which offset the gains made in music and collectibles. However, Alliance CEO Jeff Walker emphasized the strength of the music sector during a recent earnings call on .
“Vinyl and CD sales are extremely strong right now,” Walker stated, highlighting upcoming releases from major artists like Bruno Mars, Harry Styles, and BTS. The company also revealed that in 2025, Alliance sold over 16 million vinyl records and more than 13 million CDs. Walker addressed the common narrative of the CD’s demise directly, noting, “Some people say, CDs are dead, who buys CDs anymore? We still sold 13 million CDs last year.”
The positive performance in CD sales was partially fueled by Alliance’s exclusive distribution agreement with Virgin Music Group, secured through its AMPED Distribution division beginning in . This partnership significantly boosted unit volumes and contributed to the overall growth in the format.
This continued demand for physical media aligns with broader industry trends. Research firm Luminate’s Year-End Music Report for 2025 showed that US vinyl sales increased for the 19th consecutive year, growing by 8.6% YoY to reach 47.9 million units sold. Notably, more than 4 in 10 vinyl records were purchased at independent record stores, demonstrating the enduring importance of these retailers in the physical music ecosystem.
Alliance isn’t simply relying on existing demand; the company is actively innovating within the physical media space. They’ve launched Alliance Authentic, a premium vinyl collectibles platform designed to preserve new releases as certified, uncirculated collectibles. Each record is individually numbered, sealed, and equipped with an NFC chip linking it to an authenticated digital record, addressing the growing market for collectible and verifiable items.
Further expanding its technological capabilities, Alliance completed the acquisition of technology company Endstate and established Endstate Authentic, an NFC-enabled authentication and digital product identity platform. This platform aims to provide authenticated ownership, provenance, and verified resale across premium physical goods, extending the lifecycle of collectible products beyond the initial sale.
Walker explained that these initiatives are about more than just selling records. “With the launch of Alliance Authentic, we’re extending that strategy into premium vinyl collectibles by introducing The Ultimate Vinyl Collectible, enabling fans and collectors to Own a Piece of Vinyl History through authentic, certified, and individually numbered releases sourced directly from rights holders,” he said. “This initiative builds on our strengths in physical media and reinforces our focus on high-value, enthusiast-driven products.”
While overall revenues experienced a decline, Alliance demonstrated improved profitability. Gross profit increased to $47.1 million, up from $42.3 million the previous year, resulting in a gross profit margin of 12.8%, an improvement over the 10.7% recorded in the prior-year period. Net income also saw a significant boost, rising 33% YoY to $9.4 million, and adjusted EBITDA increased to $18.5 million.
“Our second quarter results reflect continued execution against the profitability baseline we established last year,” Walker added. “As we look ahead, we’re building on a much stronger foundation. The acquisition of Endstate and the launch of Endstate Authentic mark an important step in expanding Alliance beyond distribution into authenticated collectibles, digital product identity, and recurring platform-driven revenue.”
Alliance Entertainment, which went public in via a SPAC merger, appears to be navigating the evolving entertainment landscape by doubling down on the enduring appeal of physical media while simultaneously investing in technologies that enhance its value and authenticity. The company’s strategy suggests a belief that there remains a substantial and engaged audience for collectors and enthusiasts who seek a tangible connection to the music they love.
