IMAX CFO: Navigating the Business Logic of Movie Magic with Rigor

By some measures, IMAX CFO Natasha Fernandes is both a typical CFO and an unlikely movie mogul.

Fernandes, 44, did not grow up with movies, still has to make a deliberate effort to learn about industry stars and players, and considers herself more of a back-office finance executive who happens to work at an "interesting" company, she told CFO Dive.

"The funniest thing about my position is that I've never really been part of Hollywood," Fernandes said, noting that she does now go to the movies often—enjoying most genres except horror—but you won't see her at many premieres or red-carpet events. "The CFO role doesn't necessarily come with all the glitz."

Fernandes' pragmatic style belies a fact: she has achieved something still rare for women—rising through the ranks at IMAX for about 15 years before taking the top finance job at the giant-screen cinema company in 2022. Currently, women make up only 17.8% of CFOs at Fortune 500 and S&P 500 companies, and the average age of new CFOs is about 51, according to a recent study by Crist Kolder Associates.

A homegrown talent

When Fernandes was named CFO, the Toronto-born executive was called a "homegrown talent" by CEO Rich Gelfond, who praised her strategic thinking, acumen, and determination.

She has spent most of her career at IMAX, which is headquartered in New York, Toronto, and Los Angeles. After earning a Bachelor of Business Administration in accounting and finance from Wilfrid Laurier University in Ontario, Canada, Fernandes became an audit manager at Big Four accounting firm Deloitte, according to her LinkedIn profile. In 2007, seeking a move out of public accounting, she jumped to IMAX in a financial reporting management role.

After joining, she built the financial reporting team and was responsible for accounting for all of IMAX's revenue recognition and implementation of accounting standards. She then became director of financial reporting and assistant controller, before later serving as corporate treasurer and deputy CFO.

Beyond a strong work ethic and drive to continuously improve, Fernandes attributes her rise to her willingness to take on different roles—including the treasurer position she wasn't initially interested in—and the relationships and connections she built while working across various finance positions.

"My success has a lot to do with having a front-row seat over the years in front of people who were paying attention to my work," she said, noting she wonders how younger generations will get that experience if they work remotely. "Ultimately, when the CFO role at IMAX opened up, it was about who... nominated me and how others supported that decision."

Fernandes, who is of Trinidadian descent, also offers some encouraging advice for executives from diverse backgrounds: be confident. "You've gotten to this level because of your competence and your track record of success... so part of it is, in a room full of male peers or people from different backgrounds, believing that you belong in that job," she said.

Necessary discipline

Fernandes, who earned a total compensation of $1.48 million last year, according to a securities filing, has won praise from analysts. Her open communication style—including providing more guidance on metrics like EBITDA margins and an effective corrective to IMAX's past tendency to overspend on new initiatives—analysts say are welcome changes.

"My usual skepticism toward a new CFO has dissipated," Alicia Reese, vice president of equity research for media and entertainment at Los Angeles investment firm Wedbush Securities, said in an interview. Reese said Fernandes plays an "important role" in expense management and in how the company funds growth and keeps new initiatives manageable.

"In the distant past, IMAX made some fairly large mistakes on new ventures before Natasha came on," she said. "But it's clear that the new initiatives IMAX is pursuing now are disciplined, and I think she takes a hard look at the potential returns before deciding how much to invest in a new project."

Among the missteps before Fernandes' tenure was a poor-performing investment in Marvel's "Inhumans" television series. Company executives said on an Oct. 26 call that IMAX's investment in "Inhumans" resulted in an $11.1 million impairment charge in the third quarter of 2017, according to a Seeking Alpha transcript, while noting they would take a more "moderate" approach to capital investments.

Luring audiences back

Eric Wold, senior equity analyst at B. Riley Securities who has covered IMAX for over 20 years, also said he sees Fernandes charting a more cautious financial course. "She's more disciplined about where she spends, how she spends, and who she partners with, and you've seen that in the results," he said in an interview.

As the movie industry works to lure audiences back to theaters post-pandemic while facing fewer films to show due to last year's Hollywood strikes, financial headwinds still impacted the company's second-quarter results. IMAX's revenue fell 9% year-over-year to $89 million, but beat the consensus estimate of $75 million that was expected, Wold wrote in a July 25 report. Meanwhile, Fernandes said the company's market share of total North American box office so far this year has risen to 5.2% from 3.2% in pre-pandemic 2019.

Wold, citing those box office share gains, as well as IMAX's strategy of reducing its reliance on Hollywood films by offering more documentaries (like "The Blue Angels," about U.S. Navy pilots) and a slate of strong blockbusters (like "Deadpool & Wolverine"), rates IMAX a "buy" and calls the company "the strongest play on the global box office recovery."

A ticket to see "Beetlejuice Beetlejuice" in IMAX in Chicago costs about $27, versus about $19 for a standard screen. But Wold noted IMAX doesn't set ticket prices, and he doesn't think the premium will deter audiences, insisting there is demand for premium experiences. "Surprisingly, in this tough macro environment, we haven't seen consumers pull back on buying premium tickets or concessions. It's a relatively inexpensive escape," he said.

Whales, bears... and ROI

IMAX, founded in the 1960s, has evolved its business model since its early days, when it was known for nature and science documentaries, typically shown on large screens in museums with stadium-style seating. Its beginnings were described by CEO Gelfond as the "era of whales, bears, and seals," according to a 2022 New York Times article. Fast forward to today, and the business model has changed significantly, with the company pushing hard over the past decade or so to show so-called Hollywood "tentpole" films, Wold said.

Now, following the writers' strike, the company is again looking to diversify to reduce its reliance on big-name films. For example, it has been bringing concert films, Chinese-language local films, and screenings of one-off events like the Paris Olympics into the IMAX system, Fernandes said. As CFO, she spends a significant amount of time analyzing whether these new alternative content offerings can deliver better returns, she noted.

"I basically look at what the ROI is, and if you're going to pick a film, what does the greenlight model look like?" she said. "We're deciding whether we want to participate in distributing content on our network."

The company uses what it calls a "capital-light" business model; it doesn't own or operate the theaters that show its content. Instead, it's essentially an entertainment technology company that licenses IMAX screens, technology, software, and camera systems to theater operators, studios, and other partners. As of June 30, there were 1,780 systems in operation globally, up from 1,718 a year earlier, according to a securities filing.

Despite industry volatility, the company's balance sheet is relatively strong, thanks in part to a convertible bond deal Fernandes led in 2021 while serving as corporate treasurer. The deal included $230 million in convertible senior notes with a 0.5% coupon due in 2026, and was one of many steps the company took to stabilize its finances after being forced to shut its global network early in the pandemic.

"It was a really good document," Fernandes said of the debt. As for her exit strategy, she is already evaluating options ahead of the notes' maturity in the second quarter of next year and is in ongoing talks with banks.

It's that kind of institutional knowledge that makes some analysts prefer internal CFOs like Fernandes. "It's helpful that she came from within," Reese said. "It's a great path... when you rise up through finance, you have so much knowledge of the company."