GAIA - Earnings call transcript Q4 2019

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia, Inc.'s Financial Results for the Fourth Quarter and Full Year ended December 31, 2019.

Joining us today are Gaia's CEO, Jirka Rysavy; and CFO, Paul Tarell. [Operator Instructions].

Before we get started, however, I would like to take a minute to read the safe harbor language. The following constitutes the safe harbor statement under the Private Securities Litigation Reform Act of 1995. include that today risks numerous discussed uncertainties. and matters forward-looking involve statements assumptions, The are to, the Form and XX-Q. not historical but in reports uncertainties include, These limited on to time Exchange changing and risks time preferences, Commission, detailed acquisitions our from losses, filings general Form consumer subscriber and rates, XX-K cost with and retention our other and Securities competitions, conditions, business including assumes any Gaia obligation forward-looking update to revise or no publicly statements.

like now CEO, would I turn go the Gaia's that, With to over to Jirka ahead. call Please Rysavy.

Jirka Rysavy

you, good Thank and afternoon, everyone.

$XX.X considered So This at with subscribers. revenue from fourth change increased members, we for the XXX,XXX as ended counting the with trial, at free had own December $X.XX from our quarter historically, XX% million XXXX. trial year. $X.XX to which of and which $XX is XX% trial. In we There We for XX, pricing a the the did with million to quarter we plans to about did it members, fourth replaced are were which eliminated XX,XXX historically. we quarter, the we what our before and

cash million positive an quarter from We exceeded was ago quarter. achieved September reached to we EBITDA for flow operation flow plans as which positive cash our during compared quarter, $XX.X million full on in positive did, $X.X the build is We in growth EBITDA, revenue significantly the XX% and planned. improvement however, year generating by

we reach positive revenue our from to this and of repeat in growth on of first flow July. cash the flow in the earnings expect magnitude positive percent rate we operate quarter, cash While again and operation not to free cash expect operating the positive positive EBITDA flow to do do

year on with cash. And the in results. $XX.X more more the will and speak right to million now We Paul ended

Paul Tarell

XX% Revenues $XX Thanks. XXXX. for million to versus XXXX increased

year the compared XX% ago revenues to quarter, to fourth $XX.X increased the quarter. For million

As introductory a call, October we eliminated or there new we $X.XX now QX offering free monthly discussed X-week for selecting the plans. in potential period the are billing who're annual trial trial on the and members

We trial XXX,XXX adjusted convert compared members trial the count We the excluding paid they ended member the members which until to in XXXX. are, with that reflects, introductory XXX,XXX members members. at to $X.XX longer therefore, in XXXX roughly members, no including reported end of period were an XX,XXX

the margins versus the profit in Gross to compared million quarter. $XX.X XXXX. increased a quarter ago decrease ago in slight year gross in in with fourth to for XXXX profit year million to increased XX% $XX.X quarter, million the XX.X% $XX.X Gross XX.X% from to

has over improving been last XXXX. of X So sequentially quarters this the

the investment to therefore, trajectory, We XXXX. around level over margins XX in revenue months this have adjusted expect past our current and growth our reflect to content be

from efficiency the Selling marketing Corporate in from to and million, $X.X member XX% which continued costs successful. year XXXX XXXX. expenses, G&A down was million of representing operating been rationalization and fourth the acquisition improvement were $X.X quarter. has a $X.X quarter, on third excluding quarter and during the came expense fourth quarter million in expenses Focus down operating ago and the

the increased is $XXX,XXX quarter, $XXX,XXX during per from up quarter. to has profit gross the in Our employee which ago year

ago which of or Total quarter close improved XX% million $X.X XXX% or when of member costs were $XX.X revenues, we acquisition revenues. XX% spent million to year from

help our has us proven initiative, call, three out months grow. growth member-driven we content hypothesis continued the last gain most has the Our share engaged during members Gaia our eager and that discussed are traction to to past on and

quarter quarter to number trial for and from a of the $XX new third helps note, comparable in contribute on XXXX. growth the our quarter Please driver ago maintain QX earnings additions. the the consistency, $XX this calculating we are to average The down based year CPA contribution $XX to in from

achieved report our the to to of in margin the that quarter a fourth happy EBITDA also X.X% goal negative I'm fourth a of for XX% of quarter compared we positive XXXX. XXXX, adjusted generating

approximately year the of this our combination model moderate which, us compared flows capital to the compared is cash quarter to million overall approximately working also allowed $X.X generate expected, of investments from $XX.X the use As the our and and quarter million able negative ago reduce were to third XXXX. product to quarter. operations, of by our content Jirka mentioned, as $X.X in during improvement to We an cash million

With we current continued base's Access average liquidity. traction retention our Live member-driven in with we're and premium growth our memberships, tenure, early the of member comfortable XXXX million, are get balance free in of current improvements as in with our we to $XX.X to ability flows July cash cash mature our seeing

would that, to With call questions. like I Operator? the open for up

Operator

Capital [Operator Argento Mark Markets. Instructions]. We'll first Street go from Lake to

Mark Argento

on the positive in EBITDA the Congrats quarter. getting

of ongoing subscriber And you talk modalities, a the there? you're bit other terms focus versus on to acquisition? where customers, avenues success? wanted having Just updates maybe acquiring any media in little different about could social And

Paul Tarell

Mark. Sure,

new to pretty truly time years on to a we've really to the target into been -- perform. it's platforms able but YouTube that channels that been more and year. XXXX, us able focus other side Gaia Whereas, source rate, weren't with weren't the happy and allowed traditional more it's is better trying either nurturing YouTube seeing on and the us those swiping and really second historically through I'm start to half money acquisition we're gain to also of looked that Facebook-style actually XXXX fit perspective, lead trying if a short and allowed really focusing are time. the period meaningful to for for to of that gen just us for get seeking significant in content they're channels awareness. we turned have channels of spend via each because a existing subscriber be create those on or to and on versus to say -- utilized that that efficiency And the has weren't people to finding acquisition scrolling attention we've raise get Gaia on and of that over platform our from we out growth in bringing to what of past optimizing we So all find us the few down

with opposed marketing of just to in do where targeted more to we're YouTube retargeting funnel I'd of shared the growth a channel, the then lot an we're as strategy, in top So say combined content member-driven able that's is and and awareness, out seeing being and acquisition wild, our marketing. as conversion rate improvements

Mark Argento

looking And in new events the do terms of the portfolio any the number additions in metrics there? of premium of then terms what anticipate other for premium? offerings, XXXX And you or any the like to

Paul Tarell

Yes.

our of had November, January. December event a in calendar and we break in end So

members. growing that make numbers of decide our been to premium pay up report event we is calendar, from are and are but happening then activating We're Hancock few which available there'll intent there. looking to for Gaia look allow Bruce be other at space we're members not premium we then so the out or Gaia-supported events not, to for that to including events, premium end to And look own the to that nice that on But want we coming that center operating at expenses. the we and Lipton, the Sphere it's there have So Gaia XXXX, Graham Gregg decide also as its But February, can forward. we Braden of whether want when separately slate steadily. put others our them intending we and the at have going the we a have itself to rent first those our to and as back, to events event -- coming a the

it's but So its breakout I'd say us for to enough own. on it's not significant gaining traction,

Mark Argento

right. last just one. All Then one

On it that acquisition? know personalities, and changes side here, on the the Yoga few side, just content I given content talk That's for cost subscriber me. that terms announced the Maybe you of content any throttled growth? How you about do in content recently. think back strategy you manage I a new

Paul Tarell

Yes.

an Yoga to offering, online attracting customers. draw them. personality to competitive. to try people and bring as revamping looking And order pretty putting spend press part we're proposition release money-losing a the dollars teacher it have we Yoga it's of grow side, is teachers was really that have marketing that that strategy building our morning went out Yoga a from actually of and way So kind we're because I into the successfully, Yoga that a we centric in think need if and paid-media that generally don't Yoga The at space, that you feel for the this members really to in, in be to to

we're our as on So we've library and of to the XX the Yoga holistically and teachers And curated that's over a to now new content. I'll grow. start past helping bringing let going platform our into the relaunch talk Jirka them the focusing rest and nurtured months,

Jirka Rysavy

good a yet very actually have announced but we published very few still a year Yes, just We lineup. are as last series. a

names Haramein. And Bruce successfully or mean but sure which Stefano, tracked. of much coming numbers Matias series -- season Nassim -- you, several we these to then new have we're Bruce these actually I'm series, Lipton, So not De new we have

than graphics call series. shift will we we So more to content what produced

content the it's And launch. [indiscernible] year of last significant so from

Operator

we'll to Aftahi Darren go next, And Partners. Capital Roth from

Darren Aftahi

kind of if my from is as of everybody just I exciting of kind I'm those to I I if churn general the it existing just so seeing in quarter bunch know changed from EBITDA. be [indiscernible] of with going kind of In price the of don't the QX, think the questions that to is the they're churn I being kind a of kind curious, has, at [indiscernible] member, price A Gaia in? what anniversarying kind still but fourth of may, kind on yet, I'm don't kind you're it rolled [indiscernible], the increase. end metrics curious of over of like members. know has

Paul Tarell

it's Dan, Yes, Paul.

working yet. to had our things end their QX, verbally agreed third-party price. of to we have two pricing not their They then are One at partners is So the update still do with here. adjusting actually that through updated but

increase. plans, upside annual. from so seen part monthly we why is our the decent been deferred to of people to revenue, we defer increase elected were to the price to the What growth that's focusing many of we're which you have because in members, doing why XXX we is legacy as able haven't able members to those on your of and of flow of possible reason number generate and cash have our and the that, as price our And migrating off annual migrate a operations

third-party our taken with provide So contractually bit now update increases, partners comes, but an we working longer but we'll expected. it a price originally we it's to to as little actually are agree than

Jirka Rysavy

Yes, get our a on price. perspective, to are of about members XX% new

-- XX% we members party. about about have what and our we So XX%, direct call what's third

So those are not.

our kind parties. So still And price not. as XX% are and XX% of word we waiting said, third we're with new

ourselves. with competing don't we So

until So that's year, still difficult in so negotiation. now didn't they but December we're for X we [indiscernible] last the

Darren Aftahi

Got it.

So does QX. in guidance kind of XXXX time talked any of the change you that about last

when if curious third-party I mistaken for [ph] it in that I'm that I'm occur? anything. with the a -- year, X, about growth XX% And kind December for do not somewhere will revenue close you maybe talked say, then have on You guess, want then and But embedded actually the of in X.XX% I switchover was full just is, to I sense changed that. to think that if non-implementation

Paul Tarell

So pricing QX. a it that of in all perspective, be answer from contract The order. I'll will in up reverse for renewal renewal

rolled potential expect guidance The subject when sticking that in be XXXX. revenue be pricing for but it is free going in indicated purposely than the was the QX obviously the going cash be provided, of that through we to QX. of the we we that lower So flow to churn. changes, because by July number to our to We're year

hasn't the of offsetting base the little -- potential base direct we're that the XX% that the price yet. increased and So the now the indirect XX% with of

a QX. in of rate. up mentioned, we're don't change members new they're Jirka step all get $XX.XX the at that adding, we as So But the

adjustment. for full just a be adjustment time-shifted -- revenue shouldn't it as we at be a will from look XXXX. It So

Jirka Rysavy

this on have will but you're change doesn't -- when actually an if obviously of -- the we impact will know pricing the don't they revenues, Kind happen. Yes.

now. right that second I will progress And it have in We don't first expect the mean, -- some quarter we quarter. happen

some in if you would impact So would first, from but have the it a does. it single-digit be

Darren Aftahi

one last me. just for then And maybe Okay.

-- between cash free You the stabilize with most and kind growing balance a of business moderate making at rate. you're the way more some of money on flow

invested in you fairly the I languages in translation other So past. in heavily know

that? on Or to be year? something how two, one, more update, of growth going out international you in XXXX? the an with Just aggressive then And are in that kind that's is

Jirka Rysavy

Yes, we translation actually the producing to originals did in shift the country.

we're we now but we whole series produced in kind more -- years. produce aggressive X producing over of content So of last the series than kind Spanish. the from German in there, get to We did

more big, probably the refocus because primarily we positive for until somewhat X, better just it's the think, it we However, really of focus. from marketing not it's cash wait to -- now predictable flow we're will marketing, and it's now feel kind positive get international going cash but will I that overall flow I if go until because since numbers to we to the that mean,

cash flow operating cash to Our main earnings goal -- flow is or get positive.

side, on side, now, one did and next from series -- producing said, we So another Spanish cash the I invest in other the it's of we, months. -- for some as the couple original series the right

it's to second part [indiscernible] of think play, to but want of the kind we an defer will it I it want part be bring to year. So of important international, we like

Paul Tarell

Yes.

one So from growth of Germany. in most a actually initiative, member based member successful ambassador is driven our

and of So the much via little we're library bit them the it's that and because to ambassadors of size, in a terms in-country more better actually are supporting differential in-language word our spread mouth. support, with providing

we to more organically over to growing cash want markets go to investing grow once let free now. And continue Jirka a make we And it aggressively said, so bit we as decision that on we'll flow, tip whether on in focusing we're to the a there. back little or

banking that library we're in a We exploring third-party that's are third-party looking library. any localized But distribution languages, at some have the with use happening. to the not of but and conversation some strategy that on opportunities through to long international content we're other

Jirka Rysavy

the Yes, really on we the great very want on build momentum have operating flow, on the want because it's cash free opportunity. distract that to a we from don't especially we positive and to EBITDA,

not like not general hey, anything So let's of just kind going distract It's from we my on direction, it's else. anything. focus will great,

Operator

And Steven next from Frankel Dougherty. we'll go to

Steven Frankel

sources? coming For starters, versus could traffic organically on much today us how from update you is of your paid

Paul Tarell

look it's a we on to specificity answer last with based it's any Yes, question when tough acquisition, because at attribution. all click our

subscribers are XX-XX. where up, signing about on based so And it's

a In pretty views, that as a I the perspective, look about, from XX-XX are when sign-ups yet. translated where terms the at most article members conversion, coming But terms of of drives not traffic pages but on from. in it's our actually site amount our of maybe a don't it said, member meaningful it's lead I to into content

Jirka Rysavy

you ago, it as like XX-XX like And saw X months now. was

it some XX that -- to we comparison put you. for and yes, like So kind went to XX, of

Steven Frankel

areas. the value insight lifetime across maybe of subject different some into subs And the

heard update that haven't you while. We in a

Jirka Rysavy

And on -- up actually pretty probably people of than are about in big X $XX looking year the this months, X the a for months, X -- months, overall. have to $XX in up, X the well, project value bucket. we more less different It's going, Yes. than who

-- new but So content, obviously as we project also bigger like, obviously, people I'm a we so we we longer, would to have and build the obviously, increasing try don't going, hovering so used people good to have a -- have value. we have but more better they're because because also, have many pretty as

add lifetime same subscribers. increase the of a the to would number longer-term even number we the of value So subscribers, because

Steven Frankel

of headcount Okay. your the And employee at the quarter? beginning was where that And today? what's

Paul Tarell

pretty town, it been on overall stack XXX relates it roughly moves around the quarter to month what obviously of member now. the depending we're We've but you're around at, as right looking

Steven Frankel

or CapEx quarter? fourth was in what And the spend content

Paul Tarell

for investing We fourth content section, but don't and overall non-content, break out which press about in million. specifically all and release by $X.X the was it quarter is the number

Steven Frankel

third-party Okay. the material in And there quarter? marketing any was

Paul Tarell

more going of and our but how -- out Not spend it of have just cadence with as it it's part we used consistent We've a when partners one-off spending. overall marketing mix our money, out to event. break working to was new, to of that we're a we call been now

Jirka Rysavy

until raise price, the pricing. complete we money you didn't of because much really complete ourselves we the deploy we it third-party because that didn't [indiscernible] of obviously, really it give we cannot didn't Also, they the would which price, -- much also couple kind the some money them ourselves, see there because quarters, will first reflects change in

Operator

Instructions]. [Operator

we'll to Next Financial. B. Eric from Riley go Wold

Eric Wold

the I thoughts about last quarter? content CapEx. in QX spending guess million follow-up questions. What we the throughout should think spent total you that one of and of of one, on in that your on kind level on couple slowing are XXXX how A $X.X and the

Paul Tarell

I the get look in to July, perspective. make sure half that's variable content really it's second flow we to gap we could we of of adjust did adjusting, think a at as rest the XXXX we of from closing what but free look at part that a are by and slate cash it of revenue the where to the was

up be have be shows flow able the revenue so investment. being meaningfully. as it'll it's rate We grow, shot, entirely and to don't within have and QX contractual commitments new control. cash to invest from to So starts our QX QX, a we'll more little any but bit probably of

flow based are be pretty the to out. flexible able on dynamics we're cash playing So how

Jirka Rysavy

positive we is do as spend said, have cash up But content our always flow. Generally, year. Paul from free last

doing have we a adjust And we But room, long we're to. we generally, we as it need So keep will as as that. would more. spending

Eric Wold

to comments else prices. there mean, you -- guess, to refusing negotiations on not that want QX, still a Is there? I raising And contract then that They to they not the can price don't is going third-parties guess, are on anything sense? And [indiscernible] pursue say I think is back -- in what Okay. don't makes I they're the renewed. not the increase? contracts it these is that barge

Paul Tarell

to get, we to created prices. of of been I it. in $X.XX, third-party think to I I and no a November up can't the that streaming think, that to part speak Disney+'s there has Well, continue as at until apprehension on of But fully push what third we whether introduction of they're was question introduction That parties the they've But major the do bit we risk. little that any of real to industry, on that is traction end a so us contractually able this the don't X come could, agreed QX. have And be able them expect exposure individual reason to side. is one I to contracts the part already But some strategically that has to of limited why we've agreement in concentration the play. have

the it's of whose part So coming really negotiation process. as May player other up major along their renewal's in

Jirka Rysavy

actually the revenue contract ends, obviously, unless something because, more way as we hard the the of Because contract, power the direction some time existing consciously it we said, the have year, contract not to below negotiate. contracts' XX% critical expiring, really side, and we it's to agreement there. either it's the during on kept during have other that negotiating the what's it's Paul But change

you XX% new of of to actually the direct not yet. existing -- said, people. you for side, our less who it's as and people more than on to how But it's to kind probably us, So respond ability channel price converting are it's our grow

Q revenue. it big will and first it's second that the deal. not So impact But

Eric Wold

of library towards is of then around the with the the is to that new -- Okay. to continue on tier? wondering drive the Yoga around Yoga kind Or just goal there X content? especially, lastly, a Streaming some And just of kind morphing sort Live of possibly premium -- just on kind

Paul Tarell

leadership we've that library really a on Yoga weeding year in of pretty Well, taken and and caught content what to past is scientific approach focus the watering. the our over

was of from body So at, pulling doesn't offering, of male, in. library also some terms we overall then that the things missing were and two we that looking And diversity both out but do And content female, fill how look. fit. in in an it of terms content type

more to be really offering point get so you use on Yoga part of the with And honest tried what fit but have and a so know, that there. time little is into been so because you that of we're start base following schedule times to is focusing of just schedule have part the the not grow when bringing you we've looking interesting. that then digital not you no. it live their desire is bit and of that into to member not that engagement, I now. we to a can strategy it a We've that's couple but right can your of whole it's Yoga you it, the It's at don't

Operator

would to this the turn time, to remarks. like at question-and-answer now closing our this Mr. And I concludes session. back for Rysavy over call

Jirka Rysavy

everybody, first you joining, and Well, in Thank thank our much. you very early with for and thank to speaking report May. will be and look which you, we'll we quarter, you, forward

Operator

does that call our for for your Thank today. participation. you And conclude

You disconnect. may now

Gaia (GAIA) 24 Feb 202019 Q4 Earnings call transcript