Earnings call transcript Q4 2022

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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, 2022.

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

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

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

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

Jirka Rysavy

you, due some EBITDA members and Thank I adjusted everyone. After to that cleanup. only Rainbow’s glad can positive single in COVID revenue good increased report lockdown digit and the afternoon, I'm news. challenging XXXX,

to in growth at have revenue Adjusted from like party and XXXX. in in XXXX Growth overall came were third $XX.X and revenue, Amazon In seen still members. January ended million We count our from December XXX,XXX the $XX member providers million million $XX.X of million to $XX.X in XXst XX.X% prior $XX $XX.X Gross increased membership profit X% in increased to million February. already while XXXX EBITDA member from million or up direct for XXXX. from increased negative year. XXXX,

result spending, in offset from were a the from included have added last million to we two over XX annualized last mandates. years work efficiency of the experienced which During headcounts, few we home contractors over months, approximately kind $X reduced mostly as that eliminated

savings see second in to the begin the to We benefits of the expect quarter.

and generate And German venture also to increase new French Gaia subscription markets also Mexico second became launch marketing Gaia started focusing and of only with our ARPU And base signed in minimum end on of of Gaia marketplace and efforts Google also part meaningful expense. quarter Amazon results. on new launch to existing agreement to we a to we revenue member Primetime. XXXX, YouTube plan Our

results. Paul the about will now talk to

Paul Tarell

Revenues XX.X% were $XX.X fourth from year up improved million. quarter in ago XX.X% XX% for year revenues for quarter the up the to quarter. Gross with fourth margins the

gross were the year. XX.X% relatively year, margins the For of with prior consistent

continue we release As the new particularly increased our efforts, in on have growing to support language XX%. contents, invest exclusive content our our and portion we to to of over viewership library expansion

Based prior the line quarter ago to leading year to we and the our specific. million from Gaia XX% during of the is party operating partners during in gross and fourth able overall the in did distribution XXXX. in to during Despite down contraction our We expenses, or Selling quarter. with were G&A which expenses prior quarter expect expenses. party typically our fourth however in We level $X.X bring the continue year the expected the XX% the per an content excluding operating member direct member approximately trend acquisition our not on received, year revenues is technology increased and third we base primarily quarter. revenues, party amortization or holiday quarter, were to revenues or acquisition $X.X member reduce third million season, million larger of the marketing margins XX% the growth experience Corporate revenues quarter. by of XX% costs the base to $X.X costs cost acquisition were in experienced quarter ago net during year member XX% to which Total compared decline of headwinds quarter. in to this or led in due analysis base up million customer seasonal we $X.X were third from fourth X% member in to the

which Jirka significant as implemented begin measures few we past the during XXXX. reduction have the months, over We cost to will second of of see the mentioned, quarter benefits

loss connection share to net compared The results included million we during triggered per $X.X In a quarter loss year had had and allowance announced of in $X.X valuation ago our we of in International. or which XXXX $X of XXXX, $X.XX fees. fourth of per settlement SEC or partial million legal benefit $X the income related million $X.X that accrual million the with a third a reflected share quarter the with an of to acquisition We release XXXX period net Yoga prior $X.XX period. net anticipated due with tax the a million, our

from commission final no the and the time. at updates are awaiting further on have settlement proposed approval We this

proposed earnings. no fees settlement, the we our ongoing be will headwind to on With related matter a anticipate legal longer this

or EBITDA in settlement revenues of $X.X Excluding million anticipated XX% XXXX. for compared compared XX% was the Adjusted of revenues Adjusted fees, had million to XX% revenues the quarter. accrual slightly year legal of the ago income of for was million full or $XX.X the in and $XX.X or XXXX. we in positive year million to revenues $X.X XX% net related EBITDA quarter or

of and to result that we as has payments. cycle base the our our declines from Now a subscription working expect generated members’ the capital worked in benefit subsequent have growth to we COVID, upfront from through our negative and working capital begin stabilized rapid member

cash the of will reinvest mentioned from we benefit on from reductions in expenses products library position in our flows generating back our million content and also enhancements. to that and $X we flows in Jirka a begin cash into be excess will the We operations

to us a focused to independence to marketing continuity reinvest growth and and and technological evolving macroeconomic business a us year those growth now post-COVID the environment and generating a flexibility to rolled year flows get adjusting this We or allow during to allow provides the rapidly cash flows. cash for place environment. drivers independence to future expect future of to for initiative to begin the gain sustained ourselves flows in are We for independence, out growth downturn creating revenues back financial cash our past spent of withstand on

hand it back closing I'll remarks. some that, to for Jirka With

Jirka Rysavy

Yes.

for the have I own million we during the look we questions. I no million. $XXX to to our summary, forward for balance to cash business XX,XXX And to customer it fully and over December cash future of with open about thank will we net XXXX, cash. was titles well million you debt we joining. value million. XXXX. to XX replacement Just over value Operator? the say, with want it's you that, of $X $XX.X of I base our And And expect With generate speaking new of everyone for $X the want want on as

Operator

comes question with Argento Capital. [Operator from Mark Instructions] Lake Our Street first

Mark Argento

What Just you're generated bit little XXXX. wanted anticipating a down dial for growth $X for contemplate? number drill of free on better does million the or that cash to million bit. to Just that little that to subscriber a $X cash kind in in wanted

Jirka Rysavy

are any going so say subscriber that lost longer, of to we peak, ahead kind we to before on the refocus we COVID be customers. Well, our stay want of but let's

keeps basically services to allows expect non-tangible Gaia mostly to the Marketplace, above when purchase the launch to also but that really which we percentage. So Gaia grow different, members

customers a of interested are so we participate. customer base did And to our and to survey over our half

free those flow So cash generated. between two this those is are

launch Marketplace of end -- quarter the so the And quarter. expect like Gaia second we of to third the end

Paul Tarell

in jump bit. I'll little a

this now that focusing expand point seasoned potentially to mentioned, And We're terms AVOD is of coming other, we take user really very evaluate of customer into ethos. our privacy that majority and and and really see streaming to evolving did an a constantly at the to We focused, goods and Jirka industries looking of how wouldn't opportunity increase really new at given our which fit guidance revenue from. Gaia now but our brand with watch, interesting brands advertising that and what we're that non-tangible advertising. other a in it's for for what not been model, they as given the lot has into changes moved into. money players online So from want base revenue challenging ethos and us, the we of average per existing to have on the has looks sticky content acquisition that are member tangible become in trying

value new few on over So add we've we allow on members then generate back how cycle our we've years. much revenues to to on that really and flow without focusing past incremental do depended customer acquisition the it and focused cash so the

Jirka Rysavy

even And also our party it's big in members first from of party. advantage members want always think the over to XX%. business, actually direct I keep the we XX% this third And still and we party be kind third like to start actually time still to third point grow of represent our the going saw below March, growth the of because direct beginning

can we more what maybe were it's third weeks two do than expect ago So be parties. year. to we we business grow direct But our about this really optimistic

Mark Argento

does to overall that or the growing contemplate X, So base the you… X subscriber are

Paul Tarell

that mentioned there end just Jirka he think that I what Well, the added. at

transaction we I think our revenue it, between are it's net important party let's and net where anywhere are processing et our direct the from understand partner, a at XX% at full about just revenue members you based perspective fees, on our third for account depending that member price it members retail when once that you think call cetera. XX%

necessarily it's net So is it's growth off the the count and on. member direct that revenue, of flow about member comes the income the the we're focusing business and about not what generation the solely, cash

our up to for we because get in prepared as seen macroeconomic to And subscription be get external over largest partners. control it's work. into behind remarks, paywall able have a they the And third can't our a to contraction we questionable party control distribution it. mentioned partner, how as to sign those environment, services gate less have incremental We we've I our and

our really for So business, profitable direct we things and is run is the long the which can in more which actually focusing we're us. stickier on control,

Jirka Rysavy

to COVID loss get peak that peak post above not only said COVID to we clean-up, our we this but we the offset also the members. on expect what And expect have

Mark Argento

And direct. use? good your number you XX% currently said sub just to clarify, of to is roughly that Is so base a

Jirka Rysavy

say, measure the right or range. keep the will on party, Yes, direct to grow direct always let's third try XX% And a little XX% And faster something it -- and those revenue. as of XX% decline it's a bit members. will now, between think, in I party than we like revenues. percent the business We probably members third

Operator

with [Operator Instructions] Tower comes Our Thierry from Research. question Water Wuilloud next

Thierry Wuilloud

inefficiencies you the at work correctly? by office, caused first question maybe Maybe the that mentioned. on an am basically inability COVID or savings Is unwinding reading to the that were that that of and I

Paul Tarell

correct. it's No,

to have that we As at of get the Monday, in the keep COVID came, from have little office this work being kind and not least habit. we of in half home employees bit

So like kind inefficiency was from home we work to -- else. of of terminated everybody it's finally and that close the XX% the

so of close eliminate headcount. And eliminating we things. kind those We XX% the of could was basically to

of that's [Canvas] with saving. expenses salary related the well. the it overhead headcount your the So most There's really some is related. of other most purely as But and reducing

Thierry Wuilloud

difference different and the there subscribers bump mentioned mentioned? on during between these your at been maybe is foreign and I'm different you English has just or the dynamic French up like that territories you there subscribers? that you Then the look if same subscribers losing COVID. a with dynamic language you a signed Are German language, the and wondering lose COVID But some the people a

Paul Tarell

because Yes, a until didn't launch really we different summer. trajectory, we languages on meaningfully past those are marketing on this

saw didn't we like have rapid and the we growth on side. deflation the English So

of is new terms of look you And when the So it's in much small higher the really net at overall a off percentage accretive than subs. obviously, it been business. base,

German. in we or have new languages region And actually out. interested to partner. years over in out that mentioned prepared is comes now and seven we've is And his get of control. positive seen growth there we remarks, developments new and in new what markets Amazon, French entirely eight been able historically And Jirka seen party launch typically the with you a So Gaia as rolling or when a third timeline new distribution launch the have our last

Mexico we with have launch bank when them. don't with members to getting we Amazon to are are try we come but to those on So signed ready online and going

we are also for a regions South region. preliminary We discussions New of Zealand then America other couple Amazon and discussions some with Australia them for and in in have with

but So primary could not focus. that accretive be it's a

Jirka Rysavy

German bit German stepped lower And kind lower because markets cost churn. markets, in especially also a kind this year the really French little pedal of French and and we so and of acquisition have little most on far

definitely are are grow But we moving spend, last -- to overall but positive there money a development regions. definitely to from those for it's it So in can is limit some the how more there we much actually they quarter.

Thierry Wuilloud

are markets -- Amazon you and of channels indirect, do or general? mix in the speaking you to more or comparable subscribers somewhat English these they direct or also indirect, So towards have are a subscribers geared the are

Paul Tarell

Mexico. And and it Spanish it's for no There distribution have no at direct as and German, direct. only So said, Amazon is I that as party it's present German. the hasn't as launched agreement the it third And French Prime yet, in all is French for for sits now. Spanish partners, because distribution activity same we Video with

Thierry Wuilloud

of should it there? efforts, party I mean, mentioned it the terms efforts, briefly color You YouTube third the is in we Amazon focused Is on distributors? any YouTube, what

Paul Tarell

we talked Amazon when length look channels we general their say They trend about that's absent the seen or have pretty contracting at are and last overall have that I'd month so, across there. Yes, premium in all we here. the

launch we did in the November. them YouTube On update,

they on work to still their However, side. some kinks out have

promote we quite we to the our of rapid progress been and to YouTube and where terms in offering teams not expected from there. making but be weekly So updated market that are are they yet, on ability

particularly and allows region figured US it's there. them have roll out, into terms ability and once other the agreement pretty roll plans with we deploy should we'll with them So go countries future, to our of to full choose. really it out ambitious they when see they to drive ready and in promotion languages to the to our continue marketing efforts get us along if But to

Thierry Wuilloud

should year. some Okay, good make answering be that hopefully and great. top questions, Thanks that expense growth line for guys. Thank for base my will Well, -- reduced a you.

Operator

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

Jirka Rysavy

forward with much. Thank we look Well, you And our everyone. when to thank you May Q. report very early you speaking we first in

Operator

Thank great conference. Have disconnect. that you. may All today's a parties afternoon. And concludes

Gaia (GAIA) 6 Mar 232022 Q4 Earnings call transcript