GAIA - Earnings call transcript Q4 2020

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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 30, 2020.

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

Following some prepared remarks, we'll open the call for your questions. And before we get started, however, I'd 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, Securities XX-K and not historical but our on uncertainties include, These limited Form time the Commission, changing and risks in preferences, including detailed acquisitions reports from losses, with general XX-Q. consumer subscriber Exchange rates, and costs the Form retention filings other and and competition, conditions, business our statements. obligation no or publicly to forward-looking assumes Gaia revise update any turn the with over I'd that, like to And CEO, Gaia's Rysavy. floor Jirka now to go Please ahead.

Jirka Rysavy

Thank you, and good afternoon, everyone.

a So XXXX cash positive ended while our to Revenue we all the quarter million. goals, for positive on growing and very income the note, XX%. over XX% for net achieving revenues year generating increased flow $XX.X

ended even We the $XX,XXX as $XX.X to in XXX%, Even actually to absolute XX.X%. dollars gross to reduce year improvement from XX% by quarter adds XXX,XXX with to $XXX,XXX. of were percentage overall representing profit for partially increased $XXX,XXX margin the this revenue a ago from due XX% expenses gross for our from the members, of to able our a and net quarter million employee of per $XXX,XXX to year. we with growth, $XX.X million and Our

fourth revenue. share, flow we from of of $XXX,XXX EBITDA During operation XX.X% XX% of the revenue per quarter, cash and generated million of $X.XX or or income net of $X.X million $X.X on

revenue loss $X from positive $XX.X $X.X EBITDA $X.XX loss improvement have a by year transitioned a million share, from year, we positive or of an $X.X a XX% million of or improved $XX.X million For million. a million million share. of of $XX per the to income $X.X which is to or last

of the average to Our $XXX. lifetime member $XXX improved from over also value

the million the the the $X.X end quarter. and grew $X.X an use a a million, reversing at to for year year position to million year the for $XX.X cash of so to cash Our increase

and on While these legacy for our exclusively focus direct-to-consumer Yoga best we metrics July digital products sold Gaia represents since building all times the XXXX Gaian-branded in offering.

I over completed to We platform revenue able -- to of since and sustainable Since continue growing the while grow video sale products cash profitably final to growing the flow. then phase XXXX, have our XX% call annual is would positive pure-play transition positive of streaming grown we the in compounded to Yoga growth at And quarter. X.X% results. will XXXX fourth now rate negative more time the speak Paul members XXXX of improving have CAGR. XX% at XX% EBITDA XX% margin and in revenue and to is Same the from of in it, XX%

Paul Tarell

in Revenues XX.X%. $XX.X million, margins for an to improvement the gross XXXX Net quarter margins increased with XX% also to revenues improving XX% XX.X%. to gross with for million, $XX.X increased to fourth

forward. maintain to net able going represent margins be line to gradually expect ended We improve in for growth expectations the XXX,XXX quarter. or We year the with our these which members, with

expenses, or Corporate quarter. quarter were the in the million. fourth operating For maintaining and grow the also marketing needed positive percent, and in G&A million of in XX% members across were while quarter fourth the to XX% threshold member XXX,XXX or to continue and acquisition and cash revenues excluding flows. down and costs, we revenues million revenues, the $X.X profitability year-ago $X.X expenses year, added XX-plus Selling from of $X.X

or were during XXXX, revenues revenues. costs, of million acquisition the absolute a XX% XX% $XX.X Total dollars and and million $X member acquisition or revenues of selling in spent XX% $XX.X of excluding we expenses, from were a percentage million member and revenues. both meaningful improvement XXXX, or where For as operating marketing costs quarter of

XX% to new of I'm to revenues happy impacted for members And our XX% XX-plus first renewing and In rate. year annual the these maintain became October, and to our months cohorts quarter financial shifted almost of continuing ago of were million at As and able began achieved quarter. revenues our through discipline market in first or groups, starting but numbers been competitive on take our $X.X advertising anticipated, This very we in new from with new still million XX% the EBITDA the we sign rate the report quarter. in or from data the between from these X% of we've sub-XX% mid-December. goals to members retaining October we renewals our digital ups. five annual when for that CPA, of percent of XXXX improved a $X.XX

$X.X For from revenues, XXX%. of during to flow our almost XX% million revenues XXXX, from negative of operations XX% EBITDA million And $X.X an to sequentially the improved improved of or cash XX%. million also or up or we the negative improvement $X.X quarter from million million $X.X by quarter, $XX a third

$XX.X generated from from flows operations, of improvement in a used operations million million $XX.X For year in million $X.X a cash the year, cash we ago. full

per loss the ago income a per share to for million net year cash full of $X.XX million $XX.X year, or $X.X XXXX. of to in $X.X the cash million income generate share to able loss $X.XX For $X million of per $X.X million quarter. or we a to we net million or per of $X.XX in share in year, compared fourth net of compared compared in net used And of XXXX. $X.X the $XX.X generated XXXX share were in quarter the We or generated

mentioned, generating generating and growth Jirka pure-play percent, profitability forward. As XX-plus platform, have completed maintaining while going our of revenue cash transition a to of we streaming video-on-demand sustainable capable

creators of are and us production our allows world-class other devoted for facilities to that vision and have a that We our team mission content produce internally own the of hour a content streaming per incurring. also to platforms cost content fraction

of us represent basis monthly from a Our other clearly on our original productions viewership and offerings. XX% differentiate

to the five laid years. continuing are As build on XXXX and on solid foundation have financial to focused and the we past over look operational we we beyond,

events initiatives offering, now we to several in will premium have and allow XXXX us a revenue growth solid we XXXX content, which which language that live have launched engaged program beyond Spanish recently for community, an most we finally, expansion, our only believe language including to booked. in our German, original scheduled and our members. beta including native accelerate and We invite our French access Gaia

very with While call up some will questions. for And open time are I'd take for we holds to pay these initiatives to the off, Greg? the DIA. about like future what that, excited

Operator

first And Darren have Instructions] Aftahi. we Roth from [Operator Partners, Capital

Darren Aftahi

prepared on of how growth? Paul, little maybe questions; Congratulations as two one, And on the kind that in a transition deeper of some initiatives in of remarks go then terms drives your subs guys traction new the than XXXX, we nice start Can you the what these are in seeing quarter. you then into you and on other channel? derivative mentioned, terms an of of And mix side, rate? annual seeing good marketing where I'm you just are of coming curious, kind

Paul Tarell

Sure.

to were, majority the start and that. which we're really on XXXX, we premium premium for that COVID subscription. events So focus have able access now of initiatives pushing the is push we're starting audience, that But live probably during smaller with didn't to remember, you access then we launched on inability one to a that offering, was the having really events, albeit $XXX that the XXXX, in -- three due outlined our $XXX to but lab I annual offering

those revenue around be really to content catalyst and able will on that also it events events. we being intend the So we've and both filmed as members convert having archive build the up a to already of then coming

Second piece was the language expansion.

XXXX, early we and So investment we and German, only focus site French launched in French to But roughly XXXX. cash then out our Spanish really Spanish. get built profitability from generating to flow a as in and functionality and paused further German late really perspective

a we're so new will way we This to growth now platform the catalysts our French Gaia building also we the from German twofold is out members, that really market value opportunities further start and existing So the create library It the channels engagement final word-of-mouth historically. as And but and us up our via the continue community. about talked at perspective. with content member it that stickiness with to we've is for the marketing on increases Spanish, for should looking driven piece then did build that there. same open

is really built really was of ago, what global not And a the so culmination set this we a which years five content out just do community, to platform.

And meaningfully and contribute XXXX so all to in beyond. to will XXXX start the three those of of hopefully half back contribute and

Jirka Rysavy

should about members. also XX% ask rate. XX% part the of There annual take -- it's to That was about new a

Paul Tarell

then And from of that where final or for people well. perspective. say be in marketing continue in seeing well hanging been we on XX% a able continuing the take it across and promoting and build. pretty us. It's we're Yes. seeing that monthly there content It traction what at to just And pretty he are much online, pieces annual expect terms XX% were We're nicely. messaging to with I investor-driven on to working range. whether depends to Everything the referrals and would the the member-driven asked pretty coming community build we board. to organic is the

Darren Aftahi

more if squeeze want just one just in. I And

marketing kind growth? goals it EBITDA help you keeping and spend try As steady where of reaching and the of you rate margins kind growth balance that to ever think have, now you accelerate the to profitability the you between dip about of a be? is in would kind growth just and want Or

Paul Tarell

Yes.

to the to initiatives drive don't cash marketing flow of are flexing outlined that that that in growth. meant there be ways I really necessarily we free I dollars have keep to some think investing

some really shapes QX just in perspective drive So trying and while of start though, to the more reasonably from flows, cash can flows model terms really start similar look higher. cash how revenue margins you line to to point, and to earnings will line that continue EBITDA it bottom growth. then up, managing focus out of pretty so how generate will the going top to to and played on At XXXX reinvest

question, like to what to can planning into we go that spring, rate, while at. we can't. prudent that's add we're would not business But be would we're happened efficient say, being plan decision that if have a it. initiatives last So says where at looking opportunity the market subscribers today drive But to said, how there's need you it? dip really We we that the a another to answer your don't

Operator

Markets, Moving have on from Lake Mark Capital Argento. we Street

Mark Argento

currently, But thoughts updated that thoughts quarter. with addressable channels And get Congrats on wanted you. I gone a maybe with you curiosity out is think a you just or the have an and see it do has thinking suppose public for maybe have comp content? as the you're out some well know screen or to up is the and content how portfolio in of offering the you about there. that your current good your about for today? competitors talk nice could bit just can TAM, you tam maybe of I little that you you as how big around your domain market Sub

Jirka Rysavy

the what The potential, confirmed a can kind health story, ago. four transformation we problem because X% see -- streaming growth. addressable it's have as we of what it's the basic members, million it's increasing we stuff. of of should fast -- higher there say, of million, were market getting is go not million potentially and a different it's overall saying would and market, probably XX X a or I kind mean, if of We easy X I as how all somewhere years kind the But at addressable

is working unique have curiosity I content like don't a want really say, do model stream. and pretty rather to I more the look. than Hulus going -- is, on relatively stay different and to definitely let's believe it and capital in a Netflix way as margin. a the it in how recommend something good this negative And and the market, we it's the stuff. would They goal as Our of of we

kind years this everything So of positively professional kind the ago of look glad this expanding to at so organization. were kind hit that are of went we said community we surprised. transition later as we building the to kind of in have plus year, kind We launched we kind we of profitability. of year. and MBAs there, a very of two and based two how We We it actually also room. want go is places, sales year, really is kind using which What

because growth growth can XXXX the affect really rates higher will that so from we And get some believe starting XXXX. we to

Paul Tarell

those things more Yes. market at a at audience think we top in And of we than level then refine demand understand to channels, terms we're have current how about granular and a in perspective, we it's be granularity how channels much the just from to lower really it. continuing -- consumer an looking because we

rather continuing So it's ultimately make they about how launching aware topics and and areas than getting over how to sticky channels into members and really we them refine as of new become serve of interest then engaged more people members become Gaia and time? just we new

Jirka Rysavy

time first was that as our is percentage we see just flow always earnings, working than Actually, higher capital, which a Yes. a go. is negative the cash

Mark Argento

Great. And then one follow-up quick. just

talk assuming if terms about you you percent two, below growth kind can something would. the maintain I'm something to growth, it's but between growth. XX%, do relationship maintain the subscriber you In of revenue need growth know maybe and XX-plus the between you that like you revenue of feel just growth? relationship What I revenue you sub

Paul Tarell

Yes.

revenue there's convert upsells $XXX the to One And drivers So average that is offering. number user. we of million can the members. ideally, is all of per people existing the two that premium of

our incremental net revenues, that So piece third-party Those attributed the XX% roughly is all they're with less for the at of $XX.XX come stated about members -- month. no than that's our so then marketing a through it. revenue are second And partnerships. our per to se

So which line generally with growth XXXX, offset things got revenue those nicely have us growth. in subscriber for two pretty

the going it slightly how access mix from build would knowing be So forward, will say I'd offering. revenue premium think members that as that's we perspective, out a behind about I live

Jirka Rysavy

of kind to than I the think forward. we members, It's two revenues have increased the we what ago, much said. Paul years XXXX, since pretty -- for More But prices bump going

Operator

Frankel to Instructions] We'll [Operator move on Steven with Colliers.

Steven Frankel

quarter. for think I I the reported CPA the missed

start So maybe you there. just could

Paul Tarell

in was my low QX. I It it the as prepared mentioned, headwinds time, market, so in was the in had included remarks XXs some we advertising was Steve, this it -- roughly not for but

Steven Frankel

kind Okay. you today? still And are seeing that of election, materially? post Or those advertising has market change rates

Paul Tarell

was think So sooner demand buyer election. of not the of start capture trying into factor going it was a holiday of to season. the function really I It what QX. a it made amount That's the spend in

as QX and the was right XXXX. rates, pretty to the all as way it it So deadline but rates not we elevated that dissipated. until go before Christmas, been saw go tending And has much historical up before the it to shipping of nearly good back in QX

So $XX forward, that to we'll we're settle at right on now? a is basis range the my somewhere that expectation normalized $XX in and going with in line

Jirka Rysavy

Yes.

I have then think we -- April, May, of little a have in for there was surprised kind it market bit. especially the the

lot stable. the because if it kind spend try year, year during year respond. Christmas to to of back you pull they everybody third opposite before a overall I as would quite it's balance Christmas. advertisers how of and quarter next ago from and left for second But have say, kind to because a look maybe of then they was a So budget The kind of were

have room, so much lifetime -- growing, And as value, spend. So we also, to far to keep I we it's we use as want but -- it. our mentioned, -- how like didn't have rhetorically more more have what

kind our from to overall as of and You percentage dropped that of a of XXs. see now low marketing XX dramatically kind revenue XXX-plus

us It's want there's how gain. think definitely I it's to the we say, to relatively would stable. market, up I So strategically

Steven Frankel

of equivalent out to -- you on in to And rates? is subscribers? Okay. the kind Or international domestic with percent installed need consumption front, base of your on more consumption what And there international? content today line flesh get your is do

Jirka Rysavy

it, you're of kind kind users world. overall depends It the are members how international the around call if of, right low talking -- XX%. So let's now

we the of kind you So basis, it two. the also in The Germany, that before usage use, be call different. other and of very those kind about Spanish, right? say, U.S, we're look would look in some that it's it's of there's we like, offering how for same So because people definitely primarily kind many at people attention, in on but they're let's get German we what if like example, separating languages German, subscribers Germany who, usage,

you like Argentina. compared If speaking, Spain to Spanish European at look like

very, very it's So different.

to rather So look country then I than think you the by have language.

answer kind stuff. get to the countries, try So be go the The we generally, similar complex markets things more of ever more numbers if credit they get average more complex. America, and people to much will developed But South have you card it. to used once

Steven Frankel

the mechanisms there in The payment future?

Paul Tarell

Yes.

we enterprise-grade that in a as that new reasons we the from these onboard payment of expand geographically. one billing an we can transaction into out XXXX, that's so partners and engine start our processing swapped solution So perspective to homegrown

of on to payment more geographically that. that we'll be one in areas in to is able place now relevant XXXX, options that expand that's the infrastructure to be So support looking the getting

Operator

and Ladies like now call closing to that our of to Mr. conclude additional or portion does remarks. I'd for gentlemen, turn session any back Rysavy question-and-answer the the call.

Jirka Rysavy

forward joining, you, we we early Thank be report this Well, should May. of which to with speak year, everyone, quarter you will and thank for first look very in you thanks, and when much. the

Operator

right. for our gentlemen, All does again, call ladies is Once conclude today's that teleconference. and today

do lines your your this disconnect appreciate may time. participation. You We at

Gaia (GAIA) 2 Mar 212020 Q4 Earnings call transcript