GAIA - Earnings call transcript Q1 2022

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Operator

Please standby. Good afternoon, everyone. And thank you for participating in today’s Conference Call to discuss Gaia Inc. Financial Results for the First Quarter Ended March 31, 2022.

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

we the remarks, questions. for prepared some will call open your Following

assumes XX-K preferences, costs, growth, and risks following Securities that price Harbor in reputation, customer Please we would Litigation include the changing update to competition, forward-looking The general and publicly I started, Gaia risks business from ahead, filings Reform brand XX-Q. Safe the future the acquisitions to or language. Before The would however, like our to retention minute Exchange other Act Rysavy. like obligation With numerous losses, statements. over Commission, of to and no get Private consumer uncertainties time-to-time and under Jirka go changes, detailed acquisition any not uncertainties. statement the call matters take XXXX. Form a member Harbor constitutes including the Securities Safe rates, discussed CEO, involve now are turn to today our These of I that, limited sir. Gaia’s personnel, revise key to loss membership with forward-looking statements assumptions, and on include, but Form conditions, reports read

Jirka Rysavy

increased $XX.X the year The ago everyone. for Thank good per from increasing to revenue you, member count and afternoon, XXX,XXX, quarter. million million. increased the XX% first Member revenue $XX.X quarter to from with average

December. per month from share, the to continue As year in from continue per our $X.XX will year. $XXX,XXX Yoga $XX million to from Growth $XXX over only at annual expenses $X.X as employee as well now. or ago quarter. late Yoga pricing $XXX,XXX income higher amortization profit International improved We million about in talk per $X.X during was almost quarter. the -- $X.X Paul? a acquisition completed the International operation the premium only from $X.XX subscription, now declines double the incremental Net profit reflect drive Paul quarter, and million asset gross of during more our to ago. a was will International first $XXX,XXX operating improve already Yoga employee right ARPU was you per intangible compared and $X.X EBITDAA up and per share The that as years But gross to it’s to million. our during as first

Paul Tarell

were million for same Revenues the quarter to Thanks. first content for slightly declined XX.X% The year. Yoga in compared the on completed a decrease prior XX.X% quarter, due XX% of XXXX. $XX.X Gross is December primarily acquisition as to International XXXX. the of to first for slight to additional XX, up margins the the period result amortization

by Our net for factors that are at were two the adds believe we transitory. quarter time this impacted

of benefit member our XX% represents direct improving dynamics. our over from has which to continued base, retention First, revenues

we However, adds. an which the experienced digital in gross impacted increase cost advertising, of

While we direct exposure that the early markets do in have paid we in began media overseas, disruption to seen events transpiring not March. the any have

was it March experienced receive, contraction the Prime showed not believe in which churn all Prime channels and net the Amazon on during Gaia, pricing via our to available video. result premium on the experienced Amazon Amazon period. we during channels We Prime we data based of Video on third-party Second, increase specific elevated

point. a International the quarter, during in of our the addition $X.XX of increase an limit the members scenario. We this reminder, aggregate of per parties impact overall of mitigate to and revenue strategically per type exposure price in we higher Events+ a As premium offering because third our month the user the to individually average at and Yoga to saw

French platforms allow the to media headwinds revenues flows streaming recent to a grow acquisition month million earnings a year. per the entertainment in to As marketing based will or the $XXX the a the pricing average via to increasing revenues, ago overall us audiences of half and believe up or Based following Events+ $XXX and XX% costs revenue the cash and quarter these year, and continue Total $XX.XX of quarter. offerings million is in we in XX% a German member focus revenues year scaling releases, our domestic reminder, or during $X.X our on were market. strategy year $X.X is member the despite second compared Spanish, efforts Internationals the of on Yoga reports to

of We at XX% have XXXX. as revenues targeted customer acquisition a percentage since of spending July

first seventh overall maintaining the of double-digit result, our revenue a XXXX quarter consecutive profitability. while quarter marks of As growth

During were $X.X selling costs million were and and revenues, marketing of quarter acquisition X% XXXX, G&A operating of and million of excluding expenses member $X.X corporate the first XX% or and revenues. or expenses,

International. revenues, both quarter. related As ago include the first year But did a line percentage with of Yoga elevated expenses they are in quarter to the

align mid plans with revenues forward. better April, in implemented expenses cost rationalization we to However, going

was quarter. We to have reduce coming we’ll or increase over efficiency be and months. identified operating million the XX% and $X.X EBITDA these revenues of expenses implementing areas other in the

million from the to have an million in the or basis per continuing per quarter. absolute operations second ago continued share, EBITDA dollar year since turned $X.XX when on share metric. XXXX, quarter on or compared this We Net $X.XX was positive we $X.X of grow income $X.X

business Overall, was course of expenses primarily mentioned, was the $X.X reflects operating exited Jirka which the operations part impact due from the the that acquisition. of International reduction million, from to acquisition. the discontinued legacy we increased International the intangibles amortization net elevated associated income with loss as transactional Yoga As sales and Yoga

$X.X as was year our from in overall balance March $X.X XX, of cash million which reduction XXXX, payables balance million, reflects end. Our of an

focused $XXX executing million As be while we to profitability. revenue look maintaining on continue XXXX, into we focusing -- run year the rate, on

demonstrate, while excited the up With would questions. to call growing to to about continued to and revenues Gaia profitable. discipline I from like Operator? continue opportunities and we global for for scale maintaining We be open the have benefit financial the that, our

Operator

Thank you. we’ll Securities. from And first B [Operator question Riley Eric take our Instructions] Wold,

Eric Wold

mind do the I and advertising I guess, you Hey, percentage first and apologize, quarter, amounts Paul, on repeating Paul the miss spent in that? Jirka. off, dollar I a

Paul Tarell

was XX% Sure. or this of $X.X for revenues million quarter. It

Eric Wold

you. Thank trending how the Any as ad us rates of an we well kind read on of period. versus And how might a advanced those maybe the or during are update shift ago of end to trend what now quarter, year? kind the give average as near-term saw the of on year on first

Paul Tarell

transition winter period from Yeah. We -- spring. still benefiting and lockups -- before of to were we year COVID last the the the in we the

at extremely at seen So going level as to from But gone relief. it’s year. be have low into we’d end last honest, are things February, we year, some This haywire. mid-March if saw some earnings call, said good in that some then was kind a some and And and really days relief the And of the window days recall went it of February. you the volatile, we out we were aren’t.

to we the conversion is I But control conversions. impressions you media a marketing, give and is So more the that awareness more of are email don’t customer of disintermediate doing have get and pay just we’re what to cost leveraging way to doing. acquisition cost focusing can for those because on ways really internally on the a what need really the read

Eric Wold

terms that kind joined Thank lot of see the us during focus the be retention know hitting do kind of to longer give recently some pandemic kind of attracting? you. somebody still Escalon those, during between of around those then, Maybe you’re various in within is recent base growth and and monthly platforms years, with what trends Maybe are got the And your then been or of pending the a that sense a the a that that more of [ph] have subscribers going has seeing viewership on kind of I you not wall subscriber the strong. of obviously, been subscriber with cohorts? term you of has what those can renewing, sticking to subscriber

Paul Tarell

in Yeah. is there. a couple There questions

I’ll it. So unpack

and and with majority potentially never or that consistently the challenge trends the cost first continued rate. So I’d on the they’re very initial the annual, high months six paid high sticky seen or stay being of and at very the is to the plus we’ve monthly coming monthly combined to just renew be members, of media a month seeing is one trying membership of whether time. are intending six long we’re period of say that for where retention people period a

subscriber members are for month, we’re to we think about And people online, come dabbling, back new into want really those monetization supported for of risk, the that our might put that’s all to member and so to well. sign up I risk sticky, mission expand that reinvest be move that us services for need important the creation, mission ultimately, at one. and vision to that able that our opportunities we dollars things fact watch, don’t the think they’ll to so of we the other it’s why then seeing industry-wide at the I continue and one have put are that into content to on as really retained talk next a with and

a that found really that So can on the doing find let continue and acquisition they’re internally, and be can to That’s really content can’t they we volatile. else very right customer them then it’s that for what for home. focused to they us know paid everything ensure that how on they given anywhere about Gaia the costs media find markets the we’re looking

I think in… that question the last was

Eric Wold

Okay.

Paul Tarell

trend. viewership on …

Eric Wold

Yeah. Viewership.

Paul Tarell

Yeah.

in that. that’s what reverting viewership a off generally, two people as during I’d had terms and things where were of out and the mean COVID. the COVID to see with really of able front I So it’s how having daily for impact the get be relates half, we’re We’ve at say, we’ve years obviously are to to past spending back And normalize But we pre-COVID behaving. year they things in been the potentially weren’t peaks monthly time two it expected and and do to years. screens think that to looking the back out and to ability to we less and go really of of do saw plus

Eric Wold

Appreciated Got Thanks. Paul. it.

Paul Tarell

bet. You

Operator

you. Thank

move on Street. Argento with Mark we’ll Next Lake to

Mark Argento

how flow over you little about about next to are quick Jirka. the Paul. a free quarters? kind guys EBITDA thinking flow Talk have from conversion cash adjusted Hey, Hey, and of cash a few I the couple got bit ones.

Jirka Rysavy

quarter Well, saw first the in we with we much assimilating pretty the December what even did that expensive have you XXth. like extra in when expenses acquisition, --

stay of So in still kind a quarter, could the profitable we with that but stuff. hit of first lot that

we which line. on look our to markets, want a positive goal our we stay will question thing be at. to really is And that trend. to try in to general per positive the But So stay se you aggressive there’s how want it’s international on

Paul Tarell

what to at the the closely Yeah. cash at absent end whichever say little the flow if and to things or of look this our of between the the you with and I’d adjusted and further P&L line item a unpack the operations from the quarter of pretty dynamics cash bit year. timing EBITDA, flow it quarter want end statement, last EBITDA tracks and you like measure acquisition use, happened the actually

covers to we that and So, a content approximate XX% revenue our as forward percentage then going investing of cash that in operations from pegged but that’s XX% as look should how have at range EBITDA model generally, side. we investment roughly the flow the the is

And perspective, several regime, a positions, we NOL in so won’t unforeseen taxpayer our tax change cash the a be for some years. tax meaningfully barring from given

allow better flow grow slightly can and to metrics So P&L better you into dynamics as the than operate through us than continue to cash breakeven how the breakeven see we or revenues. flow

Mark Argento

typically refresh what what content percentage content, -- you for a as just for think specifically, guys that when and budgeting -- of And sales? about CapEx me, you

Paul Tarell

to in as through the including XX% pegged flows it roughly P&L All piece, is we’ve the royalty which at. XX% what

see means pretty how cash can side, that’s that flow been So consistent. the you on what

to million year. production of back QX out and are bit weekly heavier light payments range, time holidays year $X in of then can in and for the of we shows those because in you is a is as acquisition quarter the If the the million of QX and many try the somewhere just a $X obviously as are ramp depending of up year. our episodic on able the related to the as half ongoing our first get we the

Jirka Rysavy

Yeah. I reiterate… to want

Mark Argento

All right.

Jirka Rysavy

other … don’t entertainment at know, player. these here that the have costs, of you content pressure really as any you and on Netflix see you

So all. at didn’t affect us it

to actually what’s positive any pretty It’s then last stuff We there. didn’t production, for the business, very like So then increases that’s basically we unless don’t we be how do animation better increase talent. or happening. to music and the to control it’s years having because decide very more over see more several that, goes related that, we more would structure much like have

Mark Argento

Last one for me.

you more you types On they long-term? subscribers is the to come do or and leverage off did traditional it. aggressively like tend What’s platform? then -- drive Do few up guys the premium with you that the offering, in those events the looks -- able pick see back of of that schedule what Thanks. stick are That’s you, year-after-year how content quarter. to and customers and a

Paul Tarell

Yeah.

bet, Mark. You

more and it and a multiple sold did tickets a of conference had speakers in-person over we that that in out saw yes, we of weekend draw. different so We versus format, an we just sold March one the quite a in-person really So, that style for speaker had format, was slightly quickly. our was bit out event

business One the that of business. the the sake want in we of have live in live events that for we though, to events don’t is acknowledged, be the being things

quality focusing of those on not frequency And those so events, of we’re events.

offering. XX one a we’ve So probably with completed content the that do into this we’ll end, And events. higher out had on overall from quarter or fits XX think I today, here sell

all of past COVID it’s So are content being the to have it value members those still That in that’s events a the said, impacted to standalone for lifecycle again, years. new relatively that is has the and library available coming. the early of independent Events+ there, starting two

we we the that we’re decent amount straight to trends. to on focusing renewals that in been seeing won’t short-term, upsells I think And some historically, of speak that Events+ on primarily have positioning that get are I So signups, of whereas also in about to content But ideas long-term interest say will of do a a terms lot can the we how we so growth from and in offering. net putting members. of existing we’ve

Jirka Rysavy

separate of it. back, already directly overall, think, lot And looking though kind it’s And of subscription more great this margin we separate that the there. as of you it a see Paul on -- profitable even solidly would was It’s sell I premium like increase introduced and and business, overall it’s our but go also of kind said, you we that kind kind upsell, helping, people obviously, we ARPU. a of rely see

the obviously they to subscription you subscription. regular the So because includes in if buy premium

Mark Argento

Thank you.

Operator

And Thank Research. with you. will [Operator we take Thierry Instructions] Wuilloud next Water Tower

Thierry Wuilloud

with is Hey. Obviously, Any afternoon. Yoga can any few the Anything -- -- more the color now of additional couple more how of Yeah. -- Couple color further on questions. months acquisition business? going? Good experience the on share? that you

Paul Tarell

Yeah. Sure.

a get COVID. of being the growth a significant in pretty along when they’d a during it, it those able to as price from on it seen For result that following that weren’t were pretty we them we bought good unwinding

have that the our line able we really back it on we into growth. resources work complete, first. to timeframe. we’ve now that we engineering on then obvious too early once management can might as we’ve done getting platform, revenue system work growth focused And business down acquired and start -- from were on to on leave we why internally we’ve visibility significant for really same somewhere three a standing revenue on and But that looked the XXX% it’s a months legacy the see It’s to have same have QX, it, that to the with of other it risk been basis. office there. initiatives January be that’s and starting strategic to focused way December, growth so we at that business completed do and Since the be part in So it. that we’ll slight long focusing do in about started QX that that responsible is that do they side But should late the stabilized for the to sight product when the so help XX% see drive plus it alone of subscription we we’re losses integrating the

Thierry Wuilloud

when on -- international market original need Do Question there? existing content? you or Great. you of when take your about need opportunities, you is new you at you do How a content a that? go translation

Paul Tarell

Yeah.

really the French here, add past two color been little he’s been the libraries So a supplement I’ll then years to Jirka over I’ll content and driving we’ve and subtitling because international opportunistically and content on. dubbing doing things. of side in start the Spanish let We’ve of acquired that bit

to For or German to but appropriately. for is that content we’ve that in priced requirements find been able acquire, looking size our anything meets been we -- haven’t

original And long as in well to going you want as German French color behind why let so a the both in we’ve is it as little started German, which growth. content relates producing any to Spanish terms of will bit Yoga and form there. if be add I is content, Jirka content,

Jirka Rysavy

I We overall, of from a international their obviously that you because growing mean, can it’s see them. and is still little market segment show have over we the Yeah. domestically Netflix grow share. two-thirds still it’s for well

market is be go their the Spanish, right members not like a closer be Brazil, necessarily systems se German. focus now Yoga standing, main per to definitely like years about there and when said couple but but Paul it will what want soon probably over XX% International in enter French we So that, would or together. especially to say bring need business, But Yoga to we to and about we there’s there necessarily International separate in we International but got them we self internationally do Yoga separate of of have kind new next strategically. want not of Portuguesa

Thierry Wuilloud

That Thanks. does it for Great. now. me

Operator

Bob will move Pennington Thank you. to Capital. next And we Evans, on

Bob Evans

thank somewhat my Good similar. was -- my for sounds cash cash question are flow taking cash EBITDA flow like the earlier, you afternoon flow it was and answered question. The and

subscription current you in generate, I one free terms call stock of of trading rate advantage to take less Anything It that more ballpark has the generation? that cash -- Given thoughts know buyback has of use and the you’re company’s per that $X current it, at capital aggressive more sales. flow at and valuation? strategically of share this times or cash than flow of cheapest in more any growth revenue or year

Paul Tarell

the business smallness understand to contrast ours, recognized a get the and do Definitely opportunity Yeah. I be bigger similar flow of doing because of our streaming focus of that But get to from mark, share will size the on we $XXX to discipline and we’re the are that the investors. for that stark to outside is internal see as we goals from question, of from or We revenue specific and heavily growth. of it which is comment so is majority on can cash Bob. that our money what reinvest back into debt is perspective, won’t financial one players the our we an tied losing funding are valuation million cash in our equity to that other a still And feel over say repurchase. that part

the to we float money valuation really if to this So the pull like opportunity time. to and work back put focus revenue feel is at growth drive rather even that’s there’s that internal attractive, better than our

Bob Evans

Okay.

for growth So you’re to over prioritize revenue float going now?

Paul Tarell

Yes.

Bob Evans

Okay.

Bye-Bye. for Thanks the clarification. Okay.

Operator

Stephens to on Thank Lee you. We’ll [ph]. move

Unidentified Analyst

the comment Yes. Good departure Warkins? Can the of on results. you Brad afternoon. Congrats on recent

Paul Tarell

recent. wasn’t It Yeah.

Jirka Rysavy

would he’s pretty okay, long a close of after about he work so plus than with years, so ago went was felt, And year for we there age talk two us of and time and good. and how, be, Brad about for kind That we more should XX fell talked well, -- kind to for retirement and years. a XX years like, ago me maybe with it’s

Paul Tarell

realized a Yeah. And new position. and retire. friend the that with he on wasn’t him I close what to a think is news I’m is ready you’re still took commenting he what he

why a a in, his that his been to the that’s role. So back of Gaia he’s over and employee him company. still new his news hat he’s anything from started taking But the a of friend perspective, year put base. He’s it’s Gaia new related it’s in role. the back left the ring not But

Unidentified Analyst

been Understood. few a was recent think you it sort updates to the million seen. that? more was -- for around I on that there Is I timing we more Okay. was asset that know there think was XX-Ks, hidden $XX that. Thank any I And had news there was going or when don’t what of a can have you’re when valuation There a that. recent that back to and reveal that about going about

Jirka Rysavy

on of We I kind that, of would of kind update don’t think year. the some end you really update but see by

Unidentified Analyst

you. Thank Okay.

Operator

Thank host, that now back for your I’d you. And to does like conclude question-and-answer additional over call our the closing remarks. turn any Jirka to session. Rysavy,

Jirka Rysavy

we look Well, when you be report quarter, we with August. which joining and our will early thank in Thank for you. everyone, forward to second you, speaking

Operator

Thank you. your that We does participation. And teleconference. do today’s appreciate conclude

You now disconnect. may

Gaia (GAIA) 2 May 222022 Q1 Earnings call transcript