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IMAX (IMAX +5%) is on the big screen today. Its stock is up nicely after the company reported robust Q4 global box office receipts. IMAX posted $277 mln in grosses for Q4, which was its best Q4 tally since 2017. A big tailwind in the quarter was a terrific performance from Spider-Man: No Way Home, which posted robust sales of $83 mln. Dune and the James Bond film No Time to Die were other big hits, each grossing more than $40+ mln.

This strong result caps off a bounce-back year in 2021 that saw full year sales grow 146% yr/yr to $638 mln. Of course, performance in 2020 was badly impacted by the pandemic, so comparisons were easy, but investors should nevertheless be pleased with 2021's results. Helpfully, film producers have remained committed to the IMAX format; IMAX is seeing more releases than ever that are "Filmed for IMAX". IMAX stated that there is "no question that audiences worldwide are returning to the movies and, in particular, IMAX".

• Our take is that these results are not only good news for IMAX, but they are also a good sign for movie theaters generally. There have been some fears that the pandemic could cause a structural shift in demand away from theaters. A lot of people invested in their at-home viewing experience during the pandemic, and various movie studios adapted their film release practices, at least temporarily, to accommodate limitations on theater operations. This data should help to ease those fears to some degree. It shows that consumers still love the huge screens and immersive experiences of IMAX and theaters generally.
• Also, this data signals that consumers are adapting to the pandemic. Widespread availability of vaccines is one key factor that has supported consumers' confidence in venturing out more to spaces like movie theaters.
• Looking ahead, there is a huge industry backlog of quality movies scheduled for release over the next couple of years. Many releases were put on hold during the pandemic. At least ten releases are on the 2022 slate that are Filmed for IMAX or include IMAX-exclusive expanded aspect ratio. Upcoming films include Top Gun: Maverick, Thor: Love and Thunder, and Black Panther: Wakanda Forever.

We do not want to overstate the importance of just one quarter. However, we think today's press shows that consumers have pent-up demand for watching movies and that there is still a place for watching on the big screen even as home theaters become more common. Also, the movie industry should benefit over the next couple of years from a slate of high-demand movies that were delayed during the pandemic and that are now being prepped for release.

Finally, IMAX is a stock that was in need of a boost; it mostly traded sideways over the past year, and the emergence of Omicron has weighed on the stock in recent weeks. The Q4 sales result is likely not enough by itself to get the stock moving again, but it's an encouraging incremental data point. If movie sales continue to be strong in Q1 and especially this summer, that could be enough to finally get the stock sustainably moving higher again.