Earnings call transcript Q1 2023

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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 First Quarter Ended March 31, 2023.

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 new to, These of to ability streaming, by usage maintenance including with customer ability include, and not engagement effectively retain of limited fluctuation customer modes but to members, in are compete attract service. form different members for our expansion and existing device our entertainment, of conditions, undertake, economic losses, service of reputation, of liabilities disruptions, founders and Form information of with product consumer key adequate COVID-XX of to failure Fluctuations coronavirus price including on and loss time systems, litigation, Commission, our from third and and content, in quarterly programs, Form personnel, regulation government provide our our threats, general reports in of control health trends, including other and us, service, operating results, the detailed it acquisitions, public risks, new Exchange security to legal the future changes, internet Securities XX-Q. the and effect to brand future taxes, XX-K risks parties website initiatives our for we response and pandemic, time uncertainties the impact filings related obligation Gaia revise publicly to assumes any no or update forward-looking statements.

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

Jirka Rysavy

year revenue I'm cleanup. I both due again after can last member COVID digit And challenging report online lockdown, that everyone. glad results afternoon, adjusted when to EBITDA single Good the and increased positive

in and X,XXX quarter, the third were our members X,XXX returned gain party February, direct the XX. on we to while vibrant first first the January ever added negative March member from During Amazon with the providers still like ending members Gross quarter, membership, we during growth.

April, we being The during during April, is our also rates rather member the marketing conversion In grow time retention. started provider retention, to accelerating benefiting third helped of improve from again. gross hit on mostly growth rates. increase the all at membership year. party the and than expect even low, cost And member by growth the With higher to losses focusing on generating our campaign trial

improvement significant Marketing by during that we per less again positive to time French in start after a quarter and also ended. non-English as The XX% since fourth September make also lockdown viewing first member the COVID improvements member per churn to grow decreased the is did helping. acquisition compared to Another declining investment lower and have Lot of started German cost become quarter. especially CP which since difference. small

mentioned we last over were $X result As work previously, reduce XX efficiency headcounts years mostly They to over we home. spending, from have as million approximately including two from offset contractors. eliminated we experience annualized of a which added

expect pay in impact level in tail quarter. arrangement already While $XXX,XXX profit reaching gross reduction we some employee pre-COVID cost, operating annualized second to The see will the second the Q per of to in partial benefits return still March. this us saving headcount efficiency, of XX% some

specifics talk Now Paul results. will more about

Paul Tarell

months slight XX% past XXXX the to Compared the from return a the year increase million, QX $XX.X the sequential COVID first quarter the were quarter XXXX. first the of revenues ago time during benefiting primarily quarter. related reflecting in for growth in XX base member Revenues declined and XXXX to for our to the due growth

the to over our expect library and to for in first XX.X% have XXXX, content, a to level term. margins release and our continue we remain particularly on as as the expansion of exclusive near And support this the portion new we result, to were gross efforts, them of we our invest XX%. and viewership As increased language during at quarter expected

$X.X to were $X.X quarter revenues, compared member year quarter. costs ago the Total the during or of million acquisition in million, XX.X%

We sequentially, quarters, XX% improvement several costs a with have the customer compared down similar per started our realize acquisition past ago of and period. the benefits over to focus to the year

While are third and distribution return we the The our worst first building largest direct member the both with the have in confidence experience on growth March. larger in to to during our that returned of party continue member beginning of party is our unwinding. COVID the post base half our member contraction partners to we growth basis third quarter, quarter the we through net in partner

expenses, $X.X prior expenses million, Selling the quarter. year. quarter quarter G&A in and the with were marketing in $X.X member first and and the acquisition first is costs the line year Corporate down which excluding from were operating million, slightly in is which ago

quarter. $X.X ending the million, implemented $X.X capital of of payables EBITDA of our significant member deferred Adjusted ago took increase We compared will from during period, our $X.X a $XX.X over period in base the the our in mentioned, the as benefited between measures revenue during reduction past loss to million primarily cost by million revenues a growth as we working deferred quarter have from first in our second sequential starting by result months. March share million We of $X.XX XXXX. year reductions year $X.X to return $X.X was of in Jirka deferred revenues with as million quarter per this the was ago $X.X reduction begin benefits growth compared decline during The offset million million balance of reduce at to the in XXXX XXXX. few revenues December XX. of With the had expenses. the strong the net period. in to to And periods million the advantage net see XX, a or driven of We $X.X in income by quarter

capital to grow from as benefit subscription our our and continue revenues. continue in to we inherent the model working expect recurring base business We negative cycle to member

content to $X forward. the the benefit our into be flows and lack production, from further million investment. the a library from to commitments in cash our necessary. we the begin us our amount Jirka to in if in operations in flows, cash enhancements Due in tied our in-house generate investment and In downturn of capabilities, position Flexibility to to expect the we allows adjust to reductions product quarter and discretion going addition, mentioned excess reinvest to this the a of during and ability of that significant we have timing will back second environment, content production macroeconomic withstand levels contractual

areas our With execution continued July. have over on Gaia progress in and Marketplace anticipated made every launch the discipline accelerating While margins, we're we of growth positive the focused of the operating business. rates to getting tremendous several day quarters key to on back and the past

forward. going We are continue well growing revenues and cash positioned to flows

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

Jirka Rysavy

for Yes, additional on to ARPU Technology marketing July launch should expenses. week to in our and the a was as the increase next April existing members with planned. and we Gaia start in successfully offering minimum be track finalized which Marketplace, focus it launch on will

please. the business cash open we so our the remarks, million XX, flow more our For being for for remainder than to cash of generate credit good Operator on would concludes I expect have we the summary, cash $XX.X year. it line the the to balance like we and on as the March this questions. And borrow

Operator

[Operator Instructions]

Street. the comes question of from Lake Argento Mark with first line Our

Mark Argento

of the got. could revenue the you're Good just speak, us mentioned doing had as Paul. quarter was Hey, Jirka. to kind see prepaids? terms a up, month to nice Paul, you walk mix you there kind you in what's through third how that, party mechanics just then versus can month direct Hey, versus and deferred you subscribers, more of of of

Paul Tarell

monthly. Sure, get a the working to indirect the shift capital benefit we members. our collecting remitting to We it money that's base good, as growth and of there the so from direct versus partners astute observation then the members member negative us

terms that's versus and a monthly the then monthly good look member XX:XX the direct monthly And about pick-up annual So vary plan. the base annual. of at member of in existing XX%, on and when that between our And signups mix signups, on versus base, XX% we new there. we the new our between we're plan convert annual of

Mark Argento

anything price done side in taken Then have it. pricing or recently? Got pricing, any terms you of the on increases

Paul Tarell

sharing We But comfort that we studies doing think preferences I is other COVID, levels the from unwound are been in watching think now Netflix doing from room. the we've some down. and know I people And players as crack what with and world consumer prior are not. models tested launching password We what they're have right as the industry have being are is doing. AVOD

environment macroeconomic we I waiting opportunity think we're final have an to a And this to decision. year on it. So eye plays before studies. of on move out definitely prior we just we're But how the see the rest it the up based make keeping

Mark Argento

conversion things kind acquisition. a Then in do one on just of as or one, see What better conversion cost Did out terms normalize little to you there? last guys bit acquire? of customer you see

Paul Tarell

campaigns. the that Yes, of way so that we're more the three focused of it's, on Jirka retention. our cost we're mentioned, at on less retention think And look conversion, I and focused month as is we one

about to to as early five well So it of make CPA by the then rate how on as because conversely, ago, we're And and that's might cut it based for the actually measured campaigns. they're as doing of makes that slightly months to retains. retaining what and we're this type we our efficient, sense given that it sense spending. benefits pay campaign reflects started finding it more really, And that not of tweaking actually quarter other conversion a campaigns, relates

Jirka Rysavy

definitely acquisition, from is first our As helping us. it's costs decrease said, I but quarter, member but And, XX% for that better. the significant not very our to which actually are conversion, is fourth retention actually

the even the were on be percent, of I'll lowest in actually April than As in so quarter. in company, happy first losses the the it's And very better I and result. so the history the getting with basis said, with

So it's what's they for bode very encouraging kind of us. happening

Mark Argento

is per down. So that acquired dollars or minus XX% that total spent XX% customers

Paul Tarell

flat, the acquired is customer, For spend roughly.

Mark Argento

it. Got

Jirka Rysavy

it's, in customer trial. cost when call at trial, convert a we the but get so per from What the of member talking look to CPA, of somebody they actually they, we cost acquisition, we are cost after

Mark Argento

does content, any? you similar are in to final what's to get for me moderated, terms of, the expectation on how going And last if year, that spend

Paul Tarell

a line. contractor of that that the of reduction spending in on as of our of it the which statement Jirka and at through combination look we content cash think side, that terms mentioned flows side flows was was product in plus the levels I investing the Well, part development

is relates to that come to year. number going as prior the So down it

as that see this I to at said we relates continue up what prepared of our we But might our a spend in really it language invest our levels overall can as line, to how to my growth we mix As we're it's markets, in of content spending evaluating invest. in discretion remarks, if accelerate really there. foreign we

might we content deteriorates, the pull environment keep we if back. and up macroeconomic if So the ability growth, ramp we to seeing have

Jirka Rysavy

to I ended, obviously, started said, Yes, we because tried to to people as we the start to to decline, revenues our kind used to the not viewing viewing, expect are as it’s generally quarter. hold, be COVID first we it start but but to, grow where but due grow customer again of growing COVID running but viewing content the after

better content, the revenue. at to much it kind new generally of to it's we mark, peg a look benchmark So try to but

Operator

the of with question Research. Tower next line comes Our Thierry from Wuilloud Water

Thierry Wuilloud

change few Nice Paul. are existing marketing a are issues. marketing able more, down, success with Hi, the quarter. color. Mark effective costs more more Jirka. having Hi, But strategy? with The being a acquisition maybe something more couple Or maybe you just covered it, is just you. bit and dollars? you a be to did Thank the

Paul Tarell

said, combination a in, of channels dollars what's dynamic cost spending perspective, it's that and at what's that the effective the campaign and retention. more the we it we're with from the but just looking think I volume and of not already marketing being as acquisition,

we as as to writ and pull of targeted to obviously then going changes secondarily, And helping evaluating more as large share the and that's go testing after that more to privacy And we drive customers marketing to And always challenging it's data. on use is become to marketing and and that. channels platforms to availability so new continue continue and to we're online. given market their not try impacted particularly growth, tune how going hyper to that's targeted or people back change, only kind

Jirka Rysavy

also had several And especially in new the people we marketing, lead.

their start that they I plays So role. imply to also creativity, think the

to So I the think it's people. also credit

Thierry Wuilloud

Great.

the what's who breakdown the go made it new about anywhere, the to in How between you breakdown lost the last introduced? is you members year, you've you what's of few Somewhat quality the kind members? program now hardcode retention, improvement are versus not similar that have a that question -- between actions going maybe an existing versus members the of

Jirka Rysavy

Well, things, industry people two obviously, who there like wide. COVID and wasn't are they very first, much had it us pretty I challenging just it on we were during really streaming, leaving we mean was get microenvironment, anybody

of kind So that come aspects was kind added still by year, of really a end fall. months, down kind of make on price probably change because they of third the ended own like to couple the start actually the first part other most it. and of like end by they of fully at beginning, some so were their the that year, of But over. There to Amazon,

see of us for kind is that gone don't anymore. trend that at we least So

but on algorithm that but kind start to was have that lead new high impact retention. acquisition they longer and in recruit eliminating be the a and of normalize. not trials, campaigns, the it's mainly new might on didn't think but So I by only the we But is they retention, efficient, the a campaign, focus campaign, conversion cost to of cost biggest they what

when So that really positive was like summer, mean, kind did late probably in the we I paying main actually we change dividends. of good it's And started. as fall.

the main it. that's think behind I So driver

Paul Tarell

that infrastructure members. from Yes, the always we you term payment lack will, credit losses file tinkering, to on and get better our unsuccessfully annual working cards optimize of and particularly then if passive being on we're processing for charged, a

focus really active just So of an the going losing what we credit that's and because stale. people cancellation. member a of existing our kind bread base, butter on card isn't with That's those

of back memberships about improvements that versus volume make as so. think is well. said annual is And annual what line, monthly what on I you passive those we to And can composition compound the every on going to percentage starting so we're when as make increase improvement members losses to our we of point

Thierry Wuilloud

Paul, Okay, spends great. spread is severance quarter a that or they And, over costs, question the you. for The were time? in

Paul Tarell

time, over to that they're agreement. rules accounted basically the continue for, have the they to way spread of the they're It's by abide

And hold so we back them. and then payments pay the

they how of much wind their an were severance just is So let their do that people it's these given the notice we on didn't contracts, contracts know, contractors, time But accrual. down. wound needed as majority with underlying the fact timing so just it to and and artifact down we those not then periods a of when

Jirka Rysavy

notice Yes, some the we have of we end we notice can mean, there give have US, notice especially the works period. them, to of outside if so but commitment, to through give so fee have a contract, before of them contract, committed no the end is we we the a I we pay period, them to of when contractors companies, the for terminate.

Thierry Wuilloud

question for last service Marketplace any gearing of, that, responding, are any the they're you the sense terms have how if in for getting the I'm wondering you Gaia on how around on color they're a maybe Okay, providers, any, up that? incremental color

Jirka Rysavy

think be I just our first for like that question quarter, week a finished technology. more would we ago,

So to be done done was time, want in be by we that kind of because glad April. on really

selling start the we we So have product. but it's live didn't working, it's effectively basically

just have If stuff. branded side, you for and right you go on Gaia basically now that just merchandise

see happen see I things part from say yet. of positive. And the get that we I a kind challenge But lot it's a of it’s that stuff kind cannot of start retention just But very and cost and another So provider's I would is of all something to working have tested. kind positive. really actually that of definitely on

I about So feel very good our company.

Thierry Wuilloud

for Great, point you see in it guys. very the member nice to inflection the well, That’s Thank counts. me, much.

Operator

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

Jirka Rysavy

Thank forward which with Thank would early you we report will our second when everyone quarter to for we joining. much. look very speaking you at be like you And August.

Operator

your you at this And disconnect your this Thank time. you line today's for And conference. participation. may concludes

Gaia (GAIA) 1 May 232023 Q1 Earnings call transcript