Earnings call transcript Q2 2023

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia's financials results for the second quarter ended June 30, 2023.

Joining us today are Gaia's CEO, Jirka Rysavy and CFO, Ned Preston. [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 the to, platforms ability not attract but and with include, These limited entertainment, of and including legal customer brand to maintenance impact existing different effectively, third our modes threats, conditions, our taxes, in our time new of effect our reputation, retain parties other pandemic including regulation Commission, liability members, information the and streaming, compete our future response and COVID-XX with personnel, of disruptions, device production service and XX-K of to to filings customer it, including of expansion for Internet-related the coronavirus engagement for operating members to quarterly failure our service, results, time key website that detailed for initiatives to usage fluctuations new in XX-Q. founders' public systems, of general acquisitions, of Form provide future economic uncertainties we in trends, reports price and us, loss our Form health of changes, service, and fluctuations security losses, programs, content, ability on risks, undertake, Exchange government from and the and adequate risks control consumer Securities litigation,

Please CEO, Rysavy. would that, assumes to Gaia Jirka any revise ahead. turn to no obligation to now like I Gaia's call or statements. With publicly forward-looking update the over go

Jirka Rysavy

the $XX.X to but contraction it's industry-wide second can from million, $XX.X increased down during to positive subscriber Good from again million and afternoon, results. Revenue that everyone, quarter post-COVID last for million the glad report experienced I'm of we $XX.X XXXX. due quarter still sequentially

this subscribers. quarter by increased is direct growth the during XXX,XXX, count coming Member from our virtually to X,XXX all the

by of is members. shall in $X.XX the to Our supplemented in from It be showing in XXXX. now in to rolling it increased XXXX is to Marketplace, Gaia as our and steady which $X.XX select $X.XX further which now growth group launches $X.XX of ARPU, XXXX XXXX a

in the XX% We still operating completed expenses a and were reduction a quarter. I the net now quarter our of balance cash to $XXX,XXX that first about Ned still quarter, contracts of ago million, about related reported the was than the in has would Total during result $XX.X on including returned staff let and loss, our The expenses company incurred the higher as year XX GAAP generation. was speak a June results. more cash

Ned Preston

XXXX continuing sequential quarter were for Thank you, the increase the the during slight second in a $XX.X hard to in ago subscriber year the benefited growth member Compared consecutive revenues against experienced to primarily QX due for Jirka. which declined growth XXXX. half compare XXXX. second a to million, first Revenues our COVID-related X% quarter, the base return of quarter, from the XXXX, and

quarter, our invest to the to in new efforts. and continued release particularly we language In expansion content, support

our language $X.X to during near quarter term we investments, As a revenues member to remain XXXX, expand in the level the this growth support quarter expect growth strategic year these offerings at them the million gross Total as of the of $X.X of compared or and the XX.X% ago business. tactically result XX% were during second million the acquisition were and in margins we quarter. costs of

in from member which the our down past benefited costs cost acquisition quarters, experienced our to direct growth quarter, from the In efforts per X% with over In the customer base, second optimize we several a quarter. quarter, continuation the is customer acquisition we first sequentially.

is contraction member a in we largest The member the the building of are direct third-party through both the base that of partners, the third-party our to worst reversal is post-COVID Additionally, confidence a member growth our unwinding. quarter first return the and we our witnessed in growth experienced we among which bases quarter. during

the incurred company's in the $X.X related the as costs of that year second during a Selling and of This and acquisition member year quarter expenses second G&A $X.X revenues, quarter. were increase the up down marketing XX% were X% quarter cost from prior result slightly or first improvements corporate and prior including million of end the and period. revenues, contracts were or completed expenses, Corporate reflects operating expense in which the XX% the period. is million of from

realize first and will business We XXXX anticipate state in improvements the reductions the of support the benefits undertaken expect cost the of financial forward. the the second in most of of to quarter half cost the going

second share periods. compared quarter the or ago The per in we of income a loss $X.XX was net the the of million to primarily between recorded year negative period. XXXX, by million $X.X revenues reductions During net decline $X.X driven in the of

$X.X Adjusted was free EBITDA revenues the million quarter, of generated or cash. in and we XX%

quarter from the for an million second increase year period. revenues $X.X of the ago $XX.X million, deferred were Our

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

position enhancements expect operations flows cash excess addition, and library we from flows forward. continue In we content in back to be going our to in of production the into reinvest a generating cash

flexibility and we tied lack environment, investments. significant timing macroeconomic our in the withstand commitments Due in have levels a necessary. investment us our adjust to and to our amount in-house of as production, content if This our allows to of downturn needed to the production contractual capabilities discretion

of are numerous going flow accelerating well With business. Gaia to positioned launch quarters on operating we Marketplace, to revenues key focus past execution and to of margins, and positive growing areas return forward. company's we continue a disciplined and progress the the cash tremendous continued the have for made several Through the improvement remain growth on over positive

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

Jirka Rysavy

the of now profit over staggering reached is gone, of being annualized gross recently per this action high our Well, our employee all-time $XXX,XXX.

for to July in quarter would can member half be for and revenue, Operator, open running the out growth a like ARPU this to for rolled And above we our -- to stronger I improve beginning year. remarks, Maria. that growth look of it the Gaia the number please? concludes the that, questions. second Marketplace pace with the Please, and With second plus our

Operator

[Operator Instructions].

first Lake Argento question with Our from Street. comes Mark

Mark Argento

down cost-effectively seeing bit point? at to be buying you spend. of wanted are in ad acquire customer cost on out think subscriber types drill seeing to this just a acquisition, it's And of other the Are sustainable little going I acquire trends able kind of do online cost. acquisition you there? What to the to you keywords or terms

Jirka Rysavy

the has the overall -- as right was when from COVID. definitely we'll this now much Generally, last see year of the cost negative environment still more acquisition to improved opposed

were where about this So hope that, that on as will target revenue we continue generally because to a year, to higher it efficiencies depends of end of be good. kind start efficiencies. kind XX% We it the of And of XX% I is.

came COVID quarter gone, also was second with Second, back slowest quarter. seasonality and historically our

by to overall members bit results. retention. So on we are of the improved we for on start is low Does retention pleased definitely as growth kind a some now talk it than focusing I the just think focusing were your helped just with the rather new for higher little of And to answer about question? we be with start cost it initiative,

Mark Argento

like Yes. environment hopefully helpful. continues there. the sounds No, yes. No, that's It

quarter. mean your you Is see did think I remarks, that quickly. what nice Just I'm guys I to being in Obviously, say flow that cash gears you positive hearing? did positive -- you prepared with forward? cash shifting you flow anticipate the in going

Ned Preston

the for That Thanks question. Ned. it's Mark, Yes. correct. is

and we So QX was continuing in big a that for anticipate positive do forecast that quarter the half. for second us transition moving cash, to

Jirka Rysavy

Yes. a way, Improvement was about quarter between quarter first in the -- the million direction. $X.X in positive from

kind gone, the the that tale all staff that with we of obviously, improve. being that of hope So will reduction

Mark Argento

It's good to hear.

one Just last me. for

look just In what the that over us rollout? there terms of refresh a does two? of we you Or or Marketplace, how out for in the terms next stage on quarter could should

Jirka Rysavy

Yes.

rolling members, of people. about it So see the right of We're now members to amount and kind kind small to we a it response. active XX,XXX putting just from XX,XXX of

know market several mostly kind to it screen people of we ways those because to So on a as target. can how of there's display we

rather of ties to lot series. Ancient experience kind our we're Civilizations products, first looking our a product as for like And than

a civilization. [indiscernible] with conference have also We

-- So as book to going marketing of a We range. keep. out, XX,XXX price jobbing [indiscernible] to to haul We XX% to we X,XXX that's -- about we booked we won't that, have would tool kind XX% it we're only will probably of Egypt, are a margin. be about which obviously to is keep what

-- get side. However, members, the of our come that, if that XX% from discount, members our they

it So goes. that's how roughly

smooth. running to slowly we other increase experiences of number then it's going some And of potential products. We're people. We had the see

the of end to go revenue, hopefully improve really of we as think it I the that ARPU something our start it's and So should also year, course. meaningfully

Operator

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

Thierry Wuilloud

questions I this Is But there? few was subscribers a some you the quite that there. earlier covered curious that momentum Can some told color language continuing? good give you year. foreign on us you Mark had

Jirka Rysavy

with year. as like We and over did COVID. years have, the to kind went dealing we didn't this last quarters increasing. already languages as That's invest started the environment, it. We want and fight were Yes. it's ahead of of We marketing more couple cash a in reserved challenging was we the and X didn't last

was offering, the So before. existing French for we especially German. language did spend ready it and on Spanish getting a in

those of strong countries, are in languages European a there. There the And to those you really some anytime kind obviously, new of So we're the languages. curve. going of language, kind not is we on especially offering go ahead

both the being see retention far acquisition cost and in better so we So than U.S.

spending in right than of countries probably spend the revenue more as we're those now. percentage U.S. So in a we

So increasing. of international overall, kind our

overall because it's direct. right now Our about international membership, XX% our

parties So our in all on YouTube, Comcast, third they're like English. almost

X/X. percentage, one you I probably our if percentage direct, they're either take the of it's as at Netflix, a more but look So high our about XXs on if

providing So the years, our grow, right next I international over few percentage the now will what trend we sustain. feel will expect

Thierry Wuilloud

Great.

not color or your you more your real consumption your of members, seeing In situation? subscribers, the differences there do post on that COVID consumption any terms guess, your whole U.S., just but you're your all content I of -- have

Jirka Rysavy

the subscribers still mean, to, have mid-XXXX, which more we're those and mid-XXXX subscribers after like COVID everywhere Well, during there. But wave when I the we when COVID, compare talking especially left. we it from more post viewing to

going travel high. we COVID could came down, it and now viewing can the do COVID used we increases Obviously but increases they actually it quite Again, like see they again. to on -- but of we start we to is year, post of of quarter, the free COVID, saw last this kind time to first I which year, kind people So in a say that have starting saw the kind have now. to decrease year. mean see I obviously, this before We went see

Thierry Wuilloud

Okay. -- on Any events updates balance Can you the of for have some us do the year? update give you some scheduled there?

Jirka Rysavy

Sure.

We have X weeks. about

Ancient kind We X XX main XX, about is have which of of one -- our of our we the key Civilization, what call conferences. speakers, which is conferences,

it's a I later. So August, think, of XX coming, another XX, few weeks one like with

So and cadence all increase to you promotion with kind our will of we're of plus through -- a see probably bit obviously probably of little the going have -- disruption events COVID. we

we of up So before. where kind we're stopped picking

-- So second it's this focused I a part we But I it. Marketplace be beginning And year. better way it of will we didn't until year, I have to think getting launched, the focus on the of it. on promote Gaia how also think it think this

Operator

from comes Mark Street. question next Argento with Lake Our

Mark Argento

follow-up. quick a Just

going just for the maybe kind that just company the strategy of X,XXX, update down, fee So here. XX,XXX on an everything

maybe little and high it low after the Now all. post to cost Jirka, COVID point? more the at aggressively? what's little normalizing how and the acquire the this we're growth effectively we right environment higher-level of a you in where strategy the kind you lean overhang, into like the and -- level, subs Maybe we're going at what kind COVID you're the of then But of a given and you given higher seems world seeing, able just maybe guys a are to think that now kind you're see again,

Jirka Rysavy

the actually it's see my as couple of could really B of kind it's the the Well, It's that and have I additions. team team point a good like level, we new new to -- of this click, kind and as like started a a chemistry-wise. from C it's because from we now

heading. And obviously pleased growth feel increasing that. where So I'm and we're good with with I very ARPU, pretty the about

cash So I think you can acceleration positive expect producing, and flow. company with the say,

flow. want positive I the cash cash growth. versus And growth, question, to think a staying start increase think flow But I at to we the really

generate we but growth, dollars back want basically, flow cash do more flow. not positive negative the So free stay we cash go to in on and we in put it we

grow pretty negative simple that's think as flow. right it as pretty is, the it's I going now, fast much cash we where in without can So

employee, on these cost the which to up which per $XXX,XXX, gross there. the as profitability we think is positive be employee, long start and keep fast it as strategy. you there which And think And is levels, that profit for I can the from would staying cash flow as flow grow well. I as come can the while -- we it's kind cash of But is as

Ned Preston

Yes. And bit $XX of of runs just It's just XXX, full-time I'll and when because I just ability the as needed But why that's that I Ned. a been Gaia. person company spend, just big just to that could, revenue. employees for reason for It little pull here And leverage. seen very over if a million came Mark, around marketing I've this right really is I'm that the driving a with the elaborate reasons. month. around the is It impressed with increased levers impressive. XXX efficiencies the the to

the plan here, but execution as of earlier, to against much the existing just really look So leverage to the in model. said what is we my I look I that forward very commentary continued forward upside

Jirka Rysavy

of came year, revenue. cash how about customer of gross XX% something slowdown at and And what compared you down. same keep points to the new a that XX the basically net-- that it's we we because from but content cash it But a also number, margin we that's ratio as was changed what line call call the mentioned, contribution, or XX% if cost margin It talked leverage, will -- our putting look Ned -- with actually new purely have increased basically kind less have growing to to what mention last Ned revenue much a it we actually amortization revenue. basis to

margins our expanding as point, we're where cash the talking flow. from So cash free are actually

Operator

There are to floor back now I turn would Jirka no comments. time. the further questions closing this at to like Rysavy for over

Jirka Rysavy

everyone, thank forward much. quarter, our when report we very early look which you, to Thank in should with for Well, you third be we joining, speaking November. and you

Operator

Ladies and this conclude does gentlemen, conference. today's

may You lines your at you participation. disconnect time. this for Thank your

Gaia (GAIA) 31 Jul 232023 Q2 Earnings call transcript