Earnings call transcript Q3 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Arena Group Third Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mr. Rob Fink, Investor Relations. Rob, the floor is yours.

Rob Fink

Operator. you, Thank today Officer; call Kraft, Levinsohn, and Chairman Operating Hosting Smith, are Chief Executive Doug Andrew Financial Chief Officer. the Ross Officer; Chief and

comments note Before statements. forward-looking that other historical some like could begin, of statements this to statements are we of may I'd All the facts made than include be during presentation forward-looking. that statements deemed

requirements, concerning future product the and suite to presentation relate contained facts include, and forward historical statements market plans performance growth, and are in not future revenues, introduction looking. events, capital business expansion the company's of limitation, funding. Forward-looking strategy, the the future statements Other also are without additive that company's statements

the to assumptions company be risks, available from based control are to information take in actual cautions writing on are by assumptions or the beyond time to may and that The statements and or company presented unknown where the investors orally company. time on forward-looking and known made company's ability will any predict. the based Such the trends, currently that are beliefs, in presentation by and outcomes factors uncertainties statements this affected

believes of prove these reasonable, assumptions its are not will assumptions guarantee company are to the future Although some that and incorrect. performance however, inevitably be

the be material. result, can be expectations may differences expected future a company's As results its actual those to differ and from

only on that or the discussed to and are use in made meeting trends. company's statements, results cautious are relying known should the filings risks investors based at forward-looking in Certain Accordingly, results SEC. they with the on trends future anticipate are are time which

and be Adjusted measure the made regarding company's Relations to addition, this reconciliation in that this press Information website. Investor In EBITDA, release can the non-GAAP afternoon issued the to was will non-GAAP financial on of be measures. GAAP found references

turn that Ross, yours. is over the like to all call With Ross. I'd to said, call the

Ross Levinsohn

us for today. Thank Thank joining all you Rob. you,

our incredible more we of We our with on at strongest growth any our QX, an audience are That's in in a number with adjusted were of time the United users than quarter in third comScore. XXth time XX in results for generated some we across Group revenue the from the history. now profitable nearly all EBITDA We States In publisher The quarter the been has and company's quarter according largest this XXX and Arena spots properties, engagement history. up expanded million basis. company's at last year. the XX to

QX and our and We significantly from XXXX improved in last advertising yield quarter. digital advertising line from our

on We team growing of growth ad million, than both and proud XX%. driving versus and our costs of continue the digital QX aggressively, our marketing while revenue the so and XX% for Morning business, to by advertising $XX off of see acceleration operating are in growth. We sales managed year side tremendous more starts. acquisitions our was incredible Parade to Read of digital reducing our organic last this of by expenses our ad I'm

incredibly strong. been grown to has nine profit million. the We've $XXX has to million. XX% Gross year, first by our by of the revenue For $XX.X performance months XX% improved

the that of And this consumer EBITDA in year. has $X.X profitability million, the year most adjusted this could I into a we the negative $XX our net full by most see over XX% of has momentum very prouder dynamic has Our improved sector. to mission to not by to build loss and expect QX. climate, million. one continued we industry, of businesses Against difficult and be narrowed our and backdrop our importantly, economic team outperformed

a through Let few take key you results. me

note, last revenue occurred swimsuit our as grew revenue by quarterly the in year $XX.X QX, the history. period, of well had in million in In our versus million in total the without in quarter we combined XXXX year the even this previous quarter. Of we the debut our these year-over-year. highest line as XX% quarter two which face by yet revenue issue, Third a Summer a $XX.X staples the our million the these both second year to Olympics recession, $X third to XX% company's events last contributed and revenue year, of grew

the third XX% quarter, by including in in up Third a year. million last sponsorships revenue, same from Digital period period previous and as quarter XX% record $XX was to last events increased the revenues quarter Other accounts to $X.X the quarter from digital XX% in to total revenue licensing XX% of year. revenue for last XX% advertising million and million and third $XX.X now million during $XX.X XX% grew year. compared the the

Our the and to yield RPMs quarter quarter expanded, XX% as XX% year. compared same to second third the this last as growing compared growing year, we seeing period improve. are of

gross second and contributed million $XX.X X% a the million of SI prior of was our XXXX the SI approximately profit this release Olympics to year launch place the This which decrease Again, of slight a Third in to quarter. year, million, swimsuits Swimsuit quarter revenues. included compared took Summer profit quarter. $XX.X prior in quarter $X year the gross together

key costs period, growth X% growth our aggressively during to manage Our XX% reflecting driving only against expenses of our year-to-date operating same the in areas. while increased by revenue commitment

quarter quarter XXX% million $X EBITDA the million of Adjusted Third to XXXX. by million loss net comprised charges. the Of $XX.X to more for was $XX.X million of note, compared quarter that was in non-cash than improved third more of $X as million. $X.X than

print last an a agency an of $X.X $X fees. in result was subscriptions of accounting benefit accounting and However, in million benefit year, the million

million a the loss adjusted improved by last EBITDA same of as $X.X during compared XX% $XX year. or million to year-to-date period of Our loss a $XX.X million to

of given our challenging deliver for These from the laser today, fourth backdrop very results the business and plan, strength times operations year sharing and to EBITDA years. the full adjusted in focus expect We are the positive quarter XXXX. demonstrate our economic our we and especially two company, universal over the on laid foundations pullback we've almost competitive the of the set past

During the past emphasized business, results are XXXX our we have it's investments off. transform made investments from that calls, that I and those to quarterly few these paying and that XXXX clear in earnings strategic

While our our and industry growth shareholders. dialing our others both bottom accelerate, employees on are our in back, driving and our for top company, our the continues value to lines, partners,

disciplined these manage given about our to we be deploy course, and how Of resources how we times, and extremely our we where uncertain continue business.

for accelerate keeping on a are investing our We've both I actions taken spending headcount the As across continue close years. future aggressively, operations in the in which this not eliminating areas, months the and business earlier, and eye optimize built highlighted our manage operations, coming to high-growth to and we and we board. quarter believe

set for In wind We broad September, that made we we Parade acquired print assets announced completed we down a ads difficult AMG the decision April. business. when in had to of the acquisition

five future years the we Parade spent months, businesses wind Over digital employees we in about very this invested the Afon of and thank should want print and that the many I'm and who the incredible working asset, down to on all concluded have brand. operations. parade past this confident I the

shifting one only been digital that a business, providing to business, and entertainment consumers. While our operation Parade's from down will many especially not we strengthen protect are Parade's lifestyle so operations legacy for to high-quality content in resources years, we close it's that's by but never print easy of to confident

to monthly That and year decision is page average already quarter management up sequentially Analytics. up Google revenue are paying QX the to is under digital compared XX% previous QX, prior off. according Parade's XX% to compared views

for We I'd from our in throughout continuity service partners. had distribution like industry work Craig to Kevin tireless mention digital the great by to incredible the with working team with have and closely led than side. parade with our the work on opportunities of partners XXX care side more e-Edition. expanded on many digital taken and us to our interest of partners their newspaper significant with We've ensure newspaper those

with continue highly assets acquire can We look partner we for or a to accretive that in way. either

opportunities expand portfolio vertical to of and coming brand pipeline our the months. healthy a model have We in

Read, and In acquisition September, in year our brought playbook, for our now. time expanding By SI Group has to fully are Golf a growth that dynamic that we other golf most acquisition history. the the our bringing with the will we've and announced Arena of the our see Morning across we've content we golf Morning properties. audiences during partner, launch into The strong golf confident whom over traffic subsequent high-quality Read driven we partnered for same the

to licensing. see where We opportunities Arena value particular, e-commerce also most growth and in diversifying across devoting the are the and syndication and resources Group, we

in sold QX. over X.X business e-commerce illustrated grow Our with in street million via products sports continues the in to

rate During we coverage e-commerce a and beyond. XX% QX Prime a on capabilities Day extensive our to and in click-through expand plan across brands. July, We multiple XX% our in continue averaged rate to conversion

QX partners business Our new the anticipate future. expanded our and existing and added licensing we growth far syndication and further expectations revenue in deals, we as exceeded

area team views where social of to follower strong high-growth market. video saw all development to focus audience we continues the this also see across Our channels growth on social as record continue we

year. XX been nine up the from XX clear that It's the as August same our strong largest and our yet spots and more September, according XXX up time XXth number growth our audience has the to from from than working In spots in playbook last Overall, brands. ranked comScore, Arena across again. Group number publisher U.S. strategy in the are XX

number sports In category Sports continues the Group sports reaching the in according spot in our rankings with grow audience comScore Illustrated to to September. the vertical, our Media four

is of brand last print, of compared audited the yesterday, a ranked first nine and Illustrated Magazine a measured magazine Sports audiences XXX addition, report, video. In months as magazine audience web of mobile XXXX to brand measure as comparison released the web, across Media the alliance year. for fastest-growing its second total

These content are from Sports, the Nation and depth of playbook of trending from journalism our Parade reflect sports acquisition spun from the teams April. our and started applying We've content, part Sports from sports our huge AMG which acquired the we to news breadth for Illustrated and Athlon breaking sports publishing fan partners. high-quality our in as also to team deep to achievements

been As continued the Street's a the -- a increased average monthly finance playbook. to year-over-year. average Analytics, vertical, Google quarter-over-quarter the diversify It's the voices. revenue according to traffic see repeated Street it our to tripled advertising have for growth digital and we've result, the in views the quarter Jim views third than as Cramer since testament In quarter monthly fivefold strong Street's page full left Athlon's been more has near we and success editorial of third year another page the

according quarter, platforms the social in year engagement with We content compared to on XX% as a Street's resonate ListenFirst. the continue to to Facebook in well increase see QX prior

news Stock have our New Exchange, We Twitter QX, of XX% according in video and as to ListenFirst, producing live views focus York the we the also content. by opened floor desk as to continue on compared to QX increased on high-quality video have

We're broke the XX continued Parade, in April, of the and growth since comScore our allocate Parade, by businesses. about very optimistic vertical the driven In we at for Group I'm proud last digital time, that to lifestyle growth strong top in acquiring Lifestyle our the Print just publishers. on the as month, anchored parade.com property first we share resources Parade from business traffic the have rankings all especially lifestyle to

that across Pages have number double now our strategy content expanded plans our Hub business, playbook to XXXX. in XX and sites with At

this share Smith, I'd about all of of QX achieved we've monthly million through the verticals total I'd the like let but page beyond, the first, growth our strategy, Doug? that year. fourth Chief $XX.X Officer, period outlook of for grew to proud take quarter views to result I'm a numbers. our Hub the last Doug As more Financial XX% our in and same across or from this by extremely our quarter. average you Pages like

Douglas Smith

Ross. Thank you,

$XX third quarter revenue million million results. third represented total Let of of last and XX% our me to our Breaking XX% up revenue turn last $XX.X digital me, -- for the XX% XX% the quarter excuse revenue, year. total versus the to was revenue million, quarter, of the year. down third In compared grew approximately $XX.X

improvement versus accounting of acquisition much a across in the well lift Parade major of for growth direct Digital as was in the advertising advertising, was revenue of mix priced digital last increase a the this all result of as growth. a Athlon page properties of the XX% quarter and traffic yield the digital higher of view. product. year. This was by is XX% was driven $XX.X revenue yield higher XX% with by up of driven balance organic, the third improvements business advertising which our of per traffic a lines XX% growth The million

offset third XX% of the of the in influx was year. users new $X.X was quarter decline subscriber we Digital at versus This as transitioned to subscription increased as revenue tripling the Street, to of driven year million, some Street by in $X.X million quarter new compared by prior at down the the products that digital the catering to this base year's largely digital Ross traffic advertising near prior the mentioned. our

digital million of fact launch Illustrated XXXX. largely revenue and during with as growth of year-over-year leverages The and outlay of partners, the licensing in added and licensing Despite last XX% driven $X syndication existing Other incremental no revenue, syndication that our licensing million increased $X.X expenses. by with the the content to growth quarter of well new syndication, quarter Swimsuit third third Sports to revenue it and the is by as relationships existing Magazine year.

acquired $XX.X we $X.X by the so Print largely This were prior could primarily $XX.X in addition as of X% year the of reduced more during quarter we XXXX. planned decrease million, $X.X to publications, profitable Illustrated that on related a decreased Magazine subscribers. million base revenue Athlon quarter, to million second offset from the focus was from million from which Sports rate the to the

compared $XX.X profit year quarter. profit to to the million a Gross decreased in $XX.X slightly gross prior million of

and increase of a quarter, Our million, down second shutting fulfillment Parade the that $X.X the quarter print printing Athlon the business. a month, result cost year was the of which unprofitable we increased to revenue largely costs We acquisition free versus due distribution by of the in XXXX. this aspects of in XX% eliminating would prior the be primarily announced of

compared were the recorded was in to by expenses decrease in quarter year million quarter. the termination primarily year prior that $X.X in prior Total selling and were driven costs of operating lease the a due of and marketing in decrease $XX.X in million quarter stock-based This selling $XX.X advertising and or $X.X to fees a expenses marketing of of largely and in $X.X million $X.X compensation primarily cost million was to million. $X.X decrease and million. reductions The decrease acquisition costs costs agency subscription million

partially circulation management Athlon result of million, was increases million of were This cost increases by account of of $X.X teams payroll selling and the of marketing properties. $X both offset addition and support in a which and of the

million charges. third $XX.X totaled million as intangible As $XX.X to development of the compared XX%. a quarter, other platform of was assets of Over noncash were million charges an result, the charges, in stock-based depreciation net These amortization year $XX.X loss XXXX million. prior or improvement compensation, quarter non-cash losses of XXX% and and $X.X including noncash

that related prior $X.X approximately to third the added decline year quarter primarily an to third XXXX prior fees both was EBITDA print is X% benefit million, adjusted million agency subscriptions to the a compared of accounting as million quarter the $X numbers. and and in in this year $X

borrowing at $X the million working cash quarter, net in of million these liquidity, payments and million In capitalized expenditures. a equivalents $XX.X $X.X cash $XX.X development of payments had million. we was $XX.X repurchase common Primarily $X.X used million payments the to $X.X cash stock under million compared XX Looking was operations restricted million acquisition million at line ended and in tax capital net and platform offsetting and $X.X of to We June credit. year-end our at quarter at XXXX.

comments. to that, Ross call for back I'll With the closing turn

Ross Levinsohn

audience QX Doug. optimizing Group, further for hard-core the focus growth, eye has a and on towards been quarter and profitability, growth. an record Arena operations Thanks, a revenue

come. for outlook, am the sharpen and to remain and economic continuing optimistic our have our despite visibility and XXXX, focus I performance We QX to the for in about extremely QX we are QX positive. what's

Our industry strategy companies improving strong audience across The segments our and revenue and our in our uncertain as and data. playbook across working is are economic KPIs. against growth key market M&A struggle with

opportunities strategy. fit We accretive for are will to and that that look our continue

transforming great the are digital to in We brands operate age.

anchored great models we've strong future XX in That throughout the has are with by into those accelerating enabled businesses and last and audience will dramatically are one-two profitability improve made verticals investments brands. value We months to and shareholders. integrating us our fruit today driving the bearing margins by by business and revenue punch our the for growth,

And with that, that I'd you, have. operator. love to you answer any Back questions to

Operator

Ladies and Instructions] gentlemen, now is [Operator you. the open Thank for questions. floor

your Lake Capital. coming is of is question first Mark, live. Your Argento Street from Mark line

Mark Argento

Hey Congrats good little continuing a drill models a wanted to bit. afternoon here along especially in guys. I pick really to down environment. strong on this just – quarter

You had mentioned RPMs.

pretty to need be You solid.

Just what maybe here kind financials post juxtapose could wanted trends you're thanks. or seeing sports versus lifestyle quarter? segments, of well, you various to as see Also, the

Ross Levinsohn

over RPMs yield. hey best in improve. Mark outlets, years. and coupled laid that lot doing and is being paying led seeing sales the seeing is Ziac That really numbers always continue team the reported There's Street, to I'm a off. it Foss of it groundwork thanks. stress couple the the including as but our quarter have Sure, growth audience the Jeremy across all hard daily QX to almost is work last We're relates by really we that industry. those and We're clearly comScore referencing, of with Adi our

in expansion is we've obviously, our RPMs, in per X,XXX on growth our our businesses. So we've seen seen And which revenue pages.

obviously some visibility year. optimistic. at the So this we're have the into of and QX for We're rest point

going I positive in to were QX. And certainly EBITDA be think adjusted we're said, as I we --

be I will positive the we’ll for be think we QX, year. and adjusted think in I whole EBITDA

say which I digital break The tremendous across our growth don't Street at fairly that our across jump out. consistently newest. if all Street, board lifestyle then growth that we just a within across referenced in Group, vertical, is So you'd Sports segment-by-segment continued Doug, I obviously, those free Group. feel Sports But on there ad can of numbers side seeing to the the Parade, optimistic we're brands on growth some is basis, what and our like.

Douglas Smith

the a higher I to No, I of advertising get we would yield points. we mix important thing as mentioned, think of to also is I our as direct opposed that's you most digital see hit one continue where that improving add, that programmatic pricing. higher also

CPMs So that it. is well the underlying driving the in the as improvement what's mix in as improvement

Ross Levinsohn

reference, a same XX% RPMs and year. the last grew as QX it just over were this Mark, QX period year our they I but the in script, up hit XX% to

acceleration So lot business, on excited seeing We're got out Doug of big there we're lifestyle about lot the QX. shows in things. There's deals. lot opportunities of launching. some, side direct side the TV volatility a seeing movies of as stock well. sports, as a our on ad We've the of yield obviously, lot a of We're a selling holiday and said. opportunity of world, more We're commerce

a that is can to. there we point lot So

the which event we sponsorship always of company addition, Illustrated and usually is in Sports In anchor will the strong for very an advertising. December, be announcing Sportsperson attracts and the year

Mark Argento

color. in bigger release, maybe of in the additional better script, or out time, a there, of kind but was of publishers the understand in That I wanted licensing able given these helpful. continue called as boxes that of a one. be the content. also content. of to check breadth in really I business the the other kind and of think for breadth of the that kind Thanks opportunity press other just and some opportunity bunch over terms significantly just you're of And grow I to syndicate to content guys revenue the you the -- then but you noted the quick one could

Ross Levinsohn

question. great Yes,

didn't on one of So the script. that we touch note in thing

QX, significant addition a not SI the to in XXXX and year. this line. there contribution line in There that in to said, is we that contribution As was happened a significant That Swimsuit XXXX. in was

about you it moved but business actually extract SI the So Swimsuit we and growth, if showed it's into greater quarter. another XX%

we how content acceleration we're So monetize seeing we're in that real producing.

We've with in got it once ranging from digital monetize others. we with companies multiple across times. traditional terms, board, some produce we great partnerships and media the MSN companies, simple it So and can

Illustrated whether and So is Parade what take trusted of quality Apple we're great the to content or distribute it Street. that or And that's seeing places, the MSN We're take brands multiple or be to or times thing ability to part it about newspapers the move around the around. content country. able like multiple and it Sports

significant yes, have and So grow. that hopes us, for we very to that's think a we high line business. for already going only It's

Mark Argento

guys. Great. Thanks

Operator

Thank you very much.

is from Wolfe XXX line Capital. your Your Degree next live. of Daniel is question coming Daniel,

Daniel Wolfe

Ross Doug, of quarter rest and the Hey team the well. great and as

in that out I But ad advertising other the share is before historically because As of are that that and looking taking tech place separating out performance? out know seeking benefit. all that we look is where that winning running into there that's really the are having you down, how you really you because market massive trouble, you -- what they is customers are for are really performance-based new these layoffs, are are advertisers news opposite. trouble? you publishing groups is as that mind see performance, it and Or guidance from spoke guys about that -- your And you a high

Ross Levinsohn

stress There is the marketplace. question. Yes, great in

are around. shifting think dollars I

probably probably for anticipated. than and television -- digital. we you'll print as before That's a scatter think see well I market anybody larger assets much as true had

is, In quality a seems, of also performance not digital sort the there dissecting the the online, brands. of big or it some only our publishers of competitors move earnings but

the So seeing seeing real some in are of the country opposite. biggest the pressure. We're publishers

growth that of attributable think to I is terms our in of audience. some

a of lot have to hard our are doing. direct custom Some attributable is of them. doing components the it that work deals that teams to We're

out need, lifting. understanding So heavy listening advertisers what to they and that's we're and

and an then a work our looking about the it a attaching to brand doing not for it's that's meaningful It's sponsor a So or and specific for tracking back-end it. audience. of segment brands way in just a

of hard combination a brands. brands, think center our consumer, content And audiences’ deliver trusted content, at to great the is really the of I from of teams great work growth experiences it's it. it great our for great So trusted

Advertisers may RFPs we've holding that the have that pretty I seen all money, be and think of that money is still out flow strong. but been some, of think we there matter.

just I've we've of think optimistic Daniel. QX the biggest but where sequential early, a for quarter-over-quarter, the positive. some I Yes, each of I into competitors, we've is really, a And but what two generally we're mentioned, sit about lot and So it very indications in was lot we part marketplace headed quarters stress said, growth of the today. least as our there's seen really nothing QX, for And at our business. and are strong of

Daniel Wolfe

you've at point And as on and the you the substantial full past, bottom along is quarter point a you if bottom positive really, we year line? inflection but of really path with you're that acceleration potentially also that things of continue acceleration a substantial hitting of mentioned line, in we're That’s that the forward that in only as at in about pretty not on we're inflection see growth where line think top the the the EBITDA, having core this sort on, business but and the great. that next point to going Do well. think start

Ross Levinsohn

the several talked about it last calls. I over do. We've

system, our visibility, better a about. much have built, infrastructure that we've lot which the talked we've We

team, cetera. data, the have We have spent tools our we our the sales in that investing our in real in money et people, in in platform,

this them whether businesses we a partner very, the own them in We onto way. platform, drop to or accretive with very ability have we

That, that them our as being coupled okay, distressed once experiences got with accelerated I'd ecosystem brands real eight what or but into from count were to either results they we've profitability the with taken brands of where dramatically. doing

We on studies have case that. of a lot

running, last think both bodes the are we're in dramatically And acquisition business there, what the a I pressure think -- and companies there real the And is in that are that well get think way. we're faster on lot through wisely. for a to come in in it When is a of out disciplined We've a about do we're under, companies in also organically, And lot we highly in that playbook really down lot how stress bigger, opportunity seeing have I and landscape doing that acquire. for very, work grow we're development if the months. seeing future. the audience prices the M&A us accretive very but been you of we of can we six there this

Daniel Wolfe

guys, it look That’s catching to great. soon. Thanks and again forward up you. keep Thank up

Operator

Thank you very much.

question is is from line B. Riley. Dan, Your next Day your Dan live. of coming

Todd Sims

for is on guys. Hi Todd Dan. actually This

just to So Parade, thinking and one the and about XXXX? G&A modeling question I within had in selling move was at should all-digital how we lines the be marketing OpEx

Ross Levinsohn

that? do jump on Doug, want you to

Douglas Smith

Yes.

our press in we G&A a inside there's as in in a was release the but there significant So the conversation sales force line, not lot whole indicated just G&A from the had. of the business,

well their revenue. in reduction But will of Parade as production revenues the line. So editorial that with costs, of the we in print are of cost print business bulk cost some or in between see which as included cost content their expenses costs

Todd Sims

then come should to think the one Can in you looks for margins little expect it from for commentary on you this give a -- XXXX Looks gross we like year trend And okay. me. any XXXX? under where Great, XX%. in kind more of full

Ross Levinsohn

We didn't what year giving guidance do guidance. with acquisition because we and the determine to the business. our to going haven't we're give need Parade been this Well, of

give fourth out position will it in But -- a probably we'll guidance be be into -- think the in I quarter, XXXX. not looking So to that time. this

Todd Sims

Thank Great. very you much.

Operator

you. Thank

Fichthorn questions Okay, will John, don't any in remarks. live. [Operator have your is line John is Dialectic further is I of Instructions] coming Capital. the your question queue, hand now live. back appears next over for line Your from we John gentlemen, closing any

Ross Levinsohn

employees joining and today this everyone I our work future. into about that's the thank Thank you. first them and for for we're year, months, hard super thank and to nine an all just optimistic I for incredible quarter thank just gone us want mostly and want to the

joining, we'll for next all talk you So and to thank quarter. you

Operator

This so much, and today's does call. gentlemen. you conference conclude Thank ladies

disconnect time, phone your for you a may wonderful at day. have lines this participation. and Thank You your

The Arena Group Holdings, Inc. (AREN) 9 Nov 222022 Q3 Earnings call transcript