Earnings call transcript Q2 2023

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Operator

Welcome to The Arena Group Q2 2023 Earnings Conference Call.

I will now turn the call over to Rob Fink, Investor Relations.

You may begin.

Rob Fink

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

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

to relate and statements product transaction introductions capital company's limitation, with company's include the Inventions, the future the statements future revenues, funding. performance future Forward-looking concerning company's the requirements, plans adequacy and strategy, of and business Simplify expansion without or proposed growth, events market

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

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

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

by The law the information, with whether financial SEC. use otherwise. based events new disclaims made, as statements, company trends or to caution or on Accordingly, investors are in results risks update future results discussed anticipate which any at are obligation, revise required of the or relying should future statements, only the forward-looking filings because that time in company's are forward-looking or projections intention and unknown they except trends. or Certain any

was closest measure, to this made Information afternoon the investors.thearenagroup.net. be EBITDA. of the Relations measure release in be Investor on will reference found the can this that regarding at press adjusted the non-GAAP addition, website non-GAAP issued reconciliation to financial measure GAAP In

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

Ross Levinsohn

today. assume asked here I'm share three next has a joining our CEO. and was everyone today, of come with the Rob, role to thanks The Thank long of to Arena way the for of evolution. to us phase all I you the you, last since thrilled And over Group years

closed binding of we announced the intent to that with Inventions today, letter of Bridge we assets combine with signed a Media market Simplify have after Just their subsidiary, Networks. those our

content a innovative and cable platforms Media news, and Driven. streaming media includes production distributed over television facility sports state-of-the-art group national TV, and through portfolio cutting-edge automotive than over-the-air Bridge XXX more have and their also is outlet. TravelHost operate travel a connected television XX and stations, through and Networks whose affiliated brand owned two dynamic MVPD They networks, their OTT, brand two verticals and and programming

of assets has to outcome X-hour strategic reduce been company years portion That debt has rate I fixed five-year advertising part in use a extend B. by As of solution last mentioned, transformative months. at by an a intend will and senior cash consumer to Riley term Arena commitment XX%. the partnership our this addition remaining $XX several the a Simplify Group to our a and ENERGY. three a approximately what proposed cash just also overhang by B. this our held is of notes owned maturity for of from for final great agreed Riley the and brands and a receive a of guaranteed million We group of million Inventions, The including to $XX of investment

reach, partners and They more. our and also been video it to is of of partnership dramatically this ask on and segments diversify market. this into our Riley have with expand grateful the strengthen allows the this business our I amazing to us for balance but only truly for I'm working sheet, Bryant B. Riley us us expected on team the closely and broaden for so solution. Not some deal to couldn't fastest-growing

As terms, regulatory due of part and and of approvals. and approval receipt any shareholder required to of completion the subject diligence the transaction final this

Networks We will lucrative Arena News X XX-hour NEWSnet two expanding as automotive merge The as networks, the their Sports Group and into Driven, travel further and Bridge into Highlights verticals. Media and well TravelHost acquire highly businesses,

the forms, content us gives social now trending news, monetize create, advertisers, our high-quality capability across brands step marketing platform forward all to packages for in relationships sales at transaction Simplify to deepen This and and for us Inventions anticipated create is from for Bridge and and X-hour commitment This incredible and to grateful with platforms. video. businesses. team our ENERGY all I'm allowing distribute premium entire this long integrated iconic to and their Networks our a form, Media

while proven three have successfully Journal Over Illustrated, Pet accelerating The Spun, like established. have brands and brands foundation HubPages. the transaction diversified assets business revitalized Sports the This a strong greatly Helpful past model portfolio that TheStreet we've to brings Parade, Men's years, we upstart and laid like enhance a FanNation, and iconic of

of would accomplishes video of advances on we develop we year, a that last we Together by will with a have Fexy and multi-platform tens many us and transaction our Bridge video Media, this expect what allow vehicle Studios our broaden many in strategy we into years late and video vibrant millions We dollars our are expansion to spent years our acquired creating began when to audience. own. dramatically single transaction

this The made progress in management possible. including our business we revenue expansion margin advancing have growth, made expense model, and transaction

further The consolidation the is partner, years debt and well well-capitalized for infusion, capital growth the extension ahead. positioned Group in Arena a and new experienced With

continued resources we promising cost continued reap to quarter, operational while our most vigilance the During of benefits have opportunities. growth the our allocating and discipline to

highlights. key A few

as quarter. grew a to quarter Our in increase our increased XX% compared digital by second prior by revenue. challenging largely by million, $XX.X year to a driven market, total Despite revenue ad advertising the X% XX% RPMs

our We service on competitors, Operative. a continue compared higher, programmatic CPMs to monetization our quarter second benchmarking, XX% by as to according benchmarks than were provided industry see as premium average, market-norm to digital STAQ reporting

began our we significant and in in to revenue the offset see quarter. according page from during These to efforts through certain monthly strengths decrease categories, a video average Analytics. Google contribution of e-commerce views the impact diversification Additionally,

second throughout operating quarter cost expenses decreased Our and the even grew year. we reflection as of made a we headcount have revenue, reductions the

$X.X breakeven, of environment. year very Our of second significant the EBITDA to $X.X tough nearly as in $XX,XXX prior loss adjusted was of quarter, in a loss representing a improvement quarter a even compared million million a

Sports views according monthly page to an vertical, sports saw anchored Analytics. Illustrated Google in Our by X% overall decrease average

which and Google by was Discover. breaking Search news trending The on somewhat focuses and Google Spun, impacted and sports, Facebook and

note, And ComScore number brand. ComScore for However, this by the was category, finished strong word our growth from ever. month two earlier in in highest our received the we today, partially offset of ranking at sports Sports July, on Illustrated that FanNation of the network,

post recently We which data second launched an FX from according now FX launch site, ComScore site is focus to months FanNation largest and eight the MRI-Simmons.

from growth as trending PGA the in-depth acquisition through late boost traffic Additionally, SI in Tour kick our traffic year and Golf in and the saw of remainder year coverage. season. anticipate last Golf and rebranded news from strong Morning We the Read sports we a breaking our off LIV vertical of football

covers, and versus launch, of ComScore median to than the an according doubling articles Fox, from Brooks Stewart, four Kim broke data billion and last year. Petras, guarded written XXX more Swimsuit every SimilarWeb. Illustrated edition Our traffic amazing over release announcement XX,XXX The the XXXX traffic Megan Martha Nader, Sports impressions about record

from As we continue a in women's to than as of growing more the evolve dynamic interest into brand representing doubled swim this advertisers year's launch. see we number we empowerment, sponsors

would launched also fashion, promising and between early results. have Swimsuit deals beauty in with Amazon everything We an on SI storefront

had as ComScore. Our quarter monthly finance TheStreet XX.X top average to and increase page to in compared reached year of prior quarter with Analytics, by a according to according vertical, the million anchored May XX% XX business by the Google an websites traffic views record

diversifying subscription personalized tools. launched in users with offered Tornado, set comprehensive products. expanding Global exclusive levels, partnership by launched FundStrat financial recently Tornado, powered experience a with investing and Also, TheStreet June, Tom one-stop of content which education all partnership Advisors of with first-of-its-kind our Lee, and is a app, In our investing in a investing we that and TheStreet the provides

a digital, with we in strong year acquired the XX% a prior since to continues to marked Parade growth average in April see and page year according monthly Google the compared increase property to Analytics. quarter, as views

entertainment covering We are base new by and partners adding content astrology. expanding publishing our

like in and podcast by hosted Journal, Maher December, with John a Random, and engaging conversations Jon we partnership weekly Ice acquired which recently Club Cube, with our featuring Men's Bill Hamm Mellencamp. guests announced

broaden our our The to coverage consumers as partnerships as publishing added and sneakers, and minimal wine streaming to with such playbook. upfront specialized brand We topics also continue TV we at in continues to execute resonate advertisers cost. editorial

and sites, continue network brands. acquisition increased of to including our all our Magazine, featuring their content broadly, launch dramatically adventure fast these and we recently diversify streams More five to an signed Our new agreement we revenue Powder across verticals. Surfer, have channels Bike

from of you TheStreet across If are new in launched of Sports one you the Samsung the Parade users, and Illustrated, April. new may app millions news have seen device stories Galaxy

for to partners continue our syndication We seek content. new

year-over-year. have e-commerce quarter growing with second strong business quarter our this seen XXX% extremely growth in revenue We

head back into to half of grow holiday season. the expect the we the We year, that this as continue particularly will through

we further Doug like take partnership Chief Before you for to talk the next numbers. remainder in Financial year, our outlook the of with Bridge Doug? Smith, our I'd our and steps about the Media through Officer, let

Doug Smith

Ross. you, Thank

in was to in advertising, year, strong for from very the second quarter up Revenue and reflecting last of million the turn the $XX.X me XXXX quarter X% $XX.X digital million, our Let e-commerce second growth results. businesses. of video approximately

revenue prior decline million revenue XX% revenue travel. Digital offset increase quarter which second year. of XX% than of in $XX.X $XX.X due to quarter page last quarter. more total million revenue was growth our view, this XX% represented $XX.X million versus advertising to year per in digital of from grew and in two-thirds our a This the nearly the in Total increased

down of was partner compared prior $X.X ad million on to million continue as of $X.X the resources our free the content. Digital we or as supported quarter $X.X focus million subscription in year to revenue most

the SI $X.X around Syndication quarter third year Licensing as of a reflected as were to they Swim just this extended launch all sponsorships year which year was million, recognized of decrease the the compared last into to the that launch. prior opposed X% when were quarter, revenue and

increased advertising part in Total of April million acquired both million the of properties, Outdoor in print of from results were to as which Sports Athlon X% quarter, the year last the acquisition in $XX.X year. Media Illustrated prior and reflects growth which Parade $XX.X the

million year prior quarter. percentage Gross X% and efficiency in and profit represents $X.X increased editorial time year-over-year this gross to a $X.X in margin This compared by million revenue. XX%. decrease manage gross content advertising a XX% to and of or or digital increase seven XX% That our reflects and costs costs our of million the in to same continued efforts growth. to the a million $XX.X at increase $XX.X was profit drive point Driving improvement a in

operating undertaken expenses half as General year by to or prior the XX%, reductions and ad decreased higher X% the $X.X million, to a increased $X.X branded primarily from to direct due campaign. administrative costs grown million or our of Total first down related million expenses, year. percentage to by through $XX $X impact expenses XX%, has primarily the marketing in which total quarter. headcount of million of however, decreased the due or Selling by million content, cost $XX.X and

$X.X income Non-operating in an by expenses and increased of driven as interest tax $X.X expense levels we increased taxes a million, the reflecting primarily million second year. $X.X of debt last of million benefit million in $X.X increase quarter higher the by recognized

representing to $XX,XXX was year-over-year a the in quarter to loss a million As compared quarter, million loss same of in last adjusted net quarter million a loss prior compared EBITDA year or XXXX nearly improvement as $XX.X $X.X XX%. breakeven as representing result, $XX.X the year, an improvement. $X.X or second $X.X million was million

XXXX, $X.X and of cash $XX.X We as $XX.X used of of at Looking net was the we to under million up cash $XX.X credit, in as the at to quarter activities year equivalents December end at with million prior XX, of compared XXXX. In operating million million borrowed XXXX. million half in the period. the liquidity, ended cash $XX.X we million from $XX slightly had compared million line had the our first $X.X

Bridge certain signed their subsidiary Networks. Media Inventions we've discussed, of Ross a As with letter binding intent to Simplify assets of acquire

receive group will Networks by million of and the brands As approximately also Arena The ENERGY a Simplify, operations. including guaranteed Bridge advertising cash $XX of of the investment, transaction, Group part X-Hour owned million five-year commitment $XX a from Media

XX% As five a million on a to diluted date consideration, the a million common Simplify will of share PIK currently stock have years approximately million coupon from with per $XX preferred value. of fully closing from $XXX the company equity, $XX a ownership will represent at basis receive and a combined which of our we term at outstanding. cash to use We $X by this debt approximately term reduce the XX% intend

to is fixed estimates And as new nature businesses at of XXXX. maturity the transaction has this complex after transaction of to Due we're debt guidance also the to December our remaining close are quarter Ross been a December Riley the of year the our XXXX, and being and from has XXXX mentioned, agreed provide will re-evaluating extend B. the XX, The of transaction, XX%. XX, expected to in only integrated. fourth closed full and rate

like back over the turn now comments. I'd to to for call Ross closing

Ross Levinsohn

well-capitalized Iconic sheet Doug. advertisers, with platform and proven video platform, an innovative now growth and a brands, balance Thanks, an playbook opportunity. a strong partnerships for and expansive technology

to months Group in the Arena video, in believe transaction partner with be roadmap years. of part integral marketplace be have along bring things believe coming the We Media, strategic our excited digital we them many by I are we The launches connected Bridge working an of will future years This and digital roadmap. to forward going that couldn't ahead. us found that an the more been always and the forward. These have ideal and in I

Our are have to I as and sharing our them. we ongoing discussions forward look updates on partnership

months close We it expect integrate the that the the six will end fully to our of from four And to take by now we to businesses. year. mentioned, expect as deal Doug

college on we the transaction, not by NFL lose this It way. on will our football execute future. our is we business and While the existing focus optimizing for season

considered continue to vigilant about same at will the time our and that future remain the our combined capabilities investments carefully of businesses. making We base cost and we believe drive are

influencer recently and made expand the vibrant key partnerships creator have space. to with into several We hires

powerful with We forward earnings core believe that consumers is a force brands on together, This our I future the look to to connect and sharing the and creators love. they of are more you content with calls. business

our founder, newest choppy I through thank years their want to our work partners thank very commitment industry. Manoj media whose our wait orders our started. to and the Networks thank in employees want tireless at I who our can't Lastly, and substantial. get for We Bhargava, to Media supported future is investors to of their through have Bridge several and us the future last

any And questions. with would to I answer that Operator? love

Operator

going your to [Operator Argento Instructions] is question Street. Our come Mark, first Lake Mark is from with open. line

Mark Argento

guys afternoon Thanks. transaction well. Hey, as and the quarter guys. congrats decent good a in Good afternoon on

assets know the and mentioned you you the of you where Are leverage, I understand some terms a television networks see couple they potential better of more in guys distributed Just have bit networks. leverage maybe things. on some leverage. you wanted that combining that and to how traditional they of Maybe on have those cable? talk a nationally can what like those little are practical

Ross Levinsohn

bet. Thanks, Mark. you Yes,

years, of And operated television last XX and the in distribution So affiliates. core on XX side, they've over XX owned X.X couple states. buying the stations have they so. or They're at been their years and

think programming. news programming with linear distribution. are a as those channel, news They So about and you can terrestrial sports programming that networks

They other web ranging that outlets those programming more. video many Amazon, also there's Fubo within to many, They from for have to are channels distributing to Apple XX unique and there very obviously across MVPD So Roku properties. also in integration our opportunities distribution.

throw programming And the own We're Magazine, also OTT space. in also which of future of and an to leg distribution. TravelHost on which a us names, OTA and travel the merging combination source. and a video has in really MVPD They so not automotive is and property video of Driven, bunch a and CTV assets web out gives up the

content our growing be travel and instantly. we'll dramatically sort of So automotive sections

have In to side, as our that talked solving we've three at on partners a been our us addition, months last we've a of the the been the in great it extend about been with how Riley solution. we on really that for each has next challenge B. what obviously, and partners few us to know, here out two extend debt over line conference over and while debt you years. it bit working get finish And calls, reduce

great very partnership looking overall companies some partnership Simplify our with and has a in a who the media strong on somebody with out accomplished owns has and backed. of sheet, Bridge of up many who ENERGY There's believes that other started already. So incredible at with other that and is a he that about And obviously balance sets and this some new The and with frankly, company businesses investor and really the career, future many, news assets Wire a Media career, owning. X-hour and very Manoj,

So in this ahead. we're where excited us pretty coming and darn about will us take diversify this be months and really the can where

Mark Argento

is kind those I maybe little And EBITDA? kind guys of want a business? you're guidance. a of don't to material the businesses that we to balance but with? kind businesses helpful. bit. But on those through up us and Just here I you guide, little going what are like? are you have walk but you math talking Did know frame combined revenues maybe know sheet, us the of when combining about help combined That's look are of do not think We provide bit said about proforma, you a what can the

Ross Levinsohn

those yet. provide to just going not numbers We're Yes.

merger we the be our tremendous marketers do, much highly with to believe work and businesses obviously and have open up to We advertisers. accretive will opportunities but

think big And I fragmentation to is digital like and and yield that remind able to on it also a platforms platforms, to partner of being I that put them also think highlight our then will XXXX marketers to advertisers. positive local the and and that things expand there very job results. think you money great I all we've you what's year, properties sort of technical is a and television good and types and craziness political one, consumer now access market really spent lost on should the be with that in have and video have be great platforms a for probably first for of lot really and done a to content, having I'll the you digital all us. of of some pretty distribution all well a deliver bode

So will guidance and to incredibly with not going it We're be do this today, bring about we're back we'll numbers. excited you us. where but to

Mark Argento

question. Great. then And just last

In through terms of walk us what kind just ad does the that of guarantee, maybe practically? mean

Ross Levinsohn

five-year million. a It's deal for Yes. $XX

million So pretty do against expense that. low a the equally spread year, $XX math,

to bottom combined So entity. that line dollars should significant the for drop the

Mark Argento

then on the trying I'm guys you press the you year? some put it end sure this the And by closed Great. say release. of anticipate, But get to you

Ross Levinsohn

LOI we don't a a but with mean, of Yes, for have we some and sure. again, Riley. binding I it, agreement control we signed with them have

feel get to it we and like we're hustle very line. and going work finish So the quickly to on

Mark Argento

luck Good Appreciate guys it. congrats. Great. and

Ross Levinsohn

Mark. Thanks, Thanks.

Operator

with Riley. our B. next And Instructions] Dan from is going come question Day [Operator to

open. is Your line

Daniel Day

as I've million thanks really finish I can you a just couple like questions line. getting and Hey, a what for taking just deal congrats across the again But questions, guys, the nice a imagine. ask got here. on looks

contributed different text-based really of existing interesting kind of about are So live the Are were Bridge these So assets webpage assets sports sort two just talked primarily from Media. the dominated. of you I you in two and news kind networks? think that these own,

couple So of just Ross, you've for been in industry here. this decades

is they're -- or you the or for Just versus table something right to what smaller those different Group those about owner? done? you've for Journal the brings assets, assets the acquisitions Arena maybe Men's why talk like the Parade And to how just playbook think

Ross Levinsohn

something obviously we've is this about. thinking mean I been sure. Yes,

launch Fexy space the television, on saw basis. year, of You earlier linear and a acquisition in got into were network up we video have Free-Ad-Supported we deal our us opened five this It excited brands. that advertising around new adventure channels, shows that buried fast our are my signed about of which on distributed a TV two somewhat They was commentary lane that. food produce here a to

money have properties, So social the with it. direction. been with and far hottest the going. there lifestyle could we really of discussions, you to pretty a on us video. than you're way much good programming major every advertiser have in can this taken discussion has lots in in over component New gotten all the they platforms, of has And discussions, following a where dominant our we lot It's TikTok and advertisers, studio moving sports away This the that's floor invest the the job probably video and a across aggressive quietly see Stock lots properties. it. Exchange. more We is become a or we world of video. York social very sector an Reels see the all we they do in It's of in Instagram marketer if Obviously, form see of is have while gets more do Facebook course in road, of by and our space, have want more we and much YouTube down We video single wanted quicker enormous, that their really other ourselves

So we space. in we like the to be felt needed

talked the call, quarterly creator we last video-based. all lot is a about space, On the which

digitally is as amazing able distribution Illustrated value we power an Sports big of do matter is television what networks Having with still us. or for print or jump really product a amazing that quickly have of very, may small power incredible. be no very talk the have of both of I the direction been The we've in we television solid could. is I an moving So this been the how as and to conversation marketer network and linear keep athlete print every still and stable. that about palatable. really In

XX to or used they're a accept getting Manjo's XXXX He news just And a for "You in to be it they they tuned fast people best in doing phrase we're today it highlight the purest want they give the fast. probably form as get any age, catch of about is, back was news in type couple an want of networks, things, to highlights this brought When they and some jump I their us excited though. our more of local when were and the the Bridge noise start. we where been And and there going. New wants give highlights cable they up simplest networks sports shows really the doing, and goal we the that we'll the and news. to What with noise content WINS ours, to building about want day radio the So incredible its us I without we And vision on and and Not of to station called be, that This and news minutes, and get these York even City, a around he's can. I commentary we've first real team form. and doing and want with was grew it. they're met world." in about delivering listened and it what they diversified, all a all of think, and market news of that, this still I with that how form were when want at were two its love you a what sports, that. think it and is sports news in it in lot purest you the they is

they in So bring and I think programming. and digital addition, great great bring, brands and travel. linear great good automotive over-the-top distribution and brands. And great bring distribution in some we obviously, They

we're really is than equals places it from to a one bringing more same not the So because We're lot plus one strength relative overlapping. different two company. two

we'll diversified like company a with very media and more more So core. technology at strong look our very,

Daniel Day

Thanks, that over-the-top stuff do sort bring with over? the a or and with you're your anything long-form with able And type the to Ross. company you of video lot of flexibility do just kind the that to push video kind Can think just with do obviously, more with just, How documentary of to is? licensing much agreement in content. That's things you Illustrated, helpful. ABG and long-form Illustrated Sports given do of just way there what about Sports have

Ross Levinsohn

Yes, sure.

to portion space. and however, deal Our short-form about digital and certainly tend Sports and talk Studios launched a XXX developing like states, digital them to highlights which play year real made long-form a and strong. last with a They that is this on we Illustrated currently. commitment to Studios stick platforms. think, opportunity quick very them to across They the XX after agreement Again, do significant quick level reaching have long-form about have programming. in real SI platforms, ended hits been they've opportunity there's I in in we'd at to of talking here. population linear, an Obviously, be to the distribution in we obviously, we'll to a properties

have to there's think here, it's spoken and real I additive very them, and and So I excitement. accretive

Daniel Day

more quick one one. Just

things own out auto worth now? that partner are Just that here. you of Are there kind auto but or launch maybe on good you travel of the haven't to or two being new are properties any there seem gotten and tuck-ins calling verticals travel shine before

Ross Levinsohn

we've amount but different content travel there, Parade filming has a Swim fair on always in different content on some travel we Men's nothing and do when and We we're major. locations, shoot interesting years, certainly through or really Yes. done travel countries the shooting in Journal of that

start a on Both it. for is We're this obviously have greatly but been us. jump accelerate this automotive travel really and So roadmap. our will some content, doing

industry. and based The Media Bridge is that relationships thing incredible other in really is automotive Detroit the have interesting in

with exist. that them digital to footprint that and video leveraging the about excited we're those a linear go opportunities with for conversations So real providing

for So really, all and this I of good business a our us really as whole. think accelerate will

Daniel Day

over. Thanks, guys. I'll turn it

Ross Levinsohn

Okay. Daniel. Thanks,

Operator

any look It in are there doesn't more queue. Okay. questions like

So I'll go ahead remarks. and turn to it back closing Ross over for

Ross Levinsohn

and a Yes. all day and be The appreciate well. where Group joining with headed with I couldn't his and much. we're team as more about Thank Arena we you for very our excited investors and Manoj it's great you

talk call for the on all next conference we'll you thank So you attending. to and

Operator

call. your Ladies and this concludes gentlemen

You may now disconnect.

The Arena Group Holdings, Inc. (AREN) 14 Aug 232023 Q2 Earnings call transcript