Gaia (GAIA) 30 Oct 232023 Q3 Earnings call transcript

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia, Inc.'s Financial Results for the Third Quarter Ended September 30, 2023.

Joining us today are Gaia's CEO, Jirka Rysavy; COO, James Colquhoun; and CFO, Ned Preston.

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

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 Private Securities Litigation Reform Act of 1995. include that today risks numerous discussed uncertainties. and matters forward-looking involve statements assumptions, The are to not attract but include, These limited and existing new our retain members. members to ability

with expansion of platforms compete for effectively, Our device of ability and customer for to engagement maintenance entertainment, different including streaming. modes

undertake, quarterly new price economic parties and in losses, conditions, failure security in service, loss customer initiatives changes, disruptions, liability service of content, service, our of results, Fluctuation personnel, brand to future future acquisitions, reputation, production we usage key legal website systems, fluctuations operating risks, adequate information taxes. provide general Internet-related for third of

coronavirus litigation, Exchange XX-K and to regulation founders the the health time uncertainties impact risks of us, effect the our Securities with and the public and our time and on and Form pandemic to response including consumer COVID-XX Our other detailed and it programs, in government of from Form of filings reports control including Commission, XX-Q. our trends, threats,

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

results. glad increased from and everyone. afternoon, you, $XX.X reporting third of and million. from we million to $XX.X for I'm Thank continue can positive $XX.X good million up Revenue quarter again sequentially, last year

doubled growth we ending XX,XXX about our with which to quarter, year. last reported XXX,XXX sequentially is members, the above member During XXX,XXX

So the than we the contraction. subscriber by industry-wide post-COVID more recovered caused which losses, XXXX were

quarter members. growth our the direct this in from coming all Virtually is

launch Gaia years and did we by Marketplace. Our X shall last our steady ARPU supplemented continuing as grow the to be of further recent over

any $XXX,XXX, our X% and to during Marketplace employee cost. of third sales over to marketing all-time improved per our less over increased our virtually again And reflecting XX first have rolled XXX,XXX in days annualized our new profit September with high We gross members our in the the generated efficiencies. than quarter

improved and to the or year. per $XXX,XXX during from share, per $X.X quarter $X.XX increased share down $X.X EBITDA million loss million from $X.XX -- Our to last last million or $X.X

We flow end to the with September $XX.X cash million growing million on of XX, $XX.X positive the from last continue to the at generate free cash quarter.

cover and Now marketplace James other James? and about will results. will marketing that the speak new Ned initiative some financial then more

Jirka. you, Thank

So of Marketplace we in initially beta rolled have the our of and truly been out version than less targeting members, September, exciting. a X% results

and achieved offerings. first the This XX members a Within our we sales with to this appeal of of able with in the paid days, marketplace's the marketing X was have connection over we testament all were the costs. strong $XXX,XXX to generate and is achievement

offering which Gaia also us. allows life we just platform, members It's us our is the whilst strategic also focus on represents a offerings move of for lies our as is us to more support feature. in ARPU, meaningful It our metric growth of it expand diversify to It ahead XXXX. significant and cycle conscious a improving launch not and our as the us key forward. step expansion significant Marketplace for a way, we of The demonstrates that the of potential into forward for new

the to that Gaia. with create ecosystem thriving us discount include selection audience, our that courses to will retreats, Marketplace products a experiences, both market our will members resonate a help at carefully to curated offered members and which of benefits be and a

scaling events. with play campaigns on improving our contribute as will growth use which accelerate as efficiency, focus to maintaining we me to flow. and Marketplace untapped cash and our this subscribers flow, marketing will as for a for there will possible we to opportunities and I of free is passion digital in A it our be initiatives a key XXX,XXX especially to believe cash positive marketing whilst lot focus us, role direct-to-consumer quickly as critical

financial Ned talk Now on will more our results.

the increase continuing quarter from the third for contraction revenues industry-wide during were Compared X% million, Revenues Thank consecutive experienced Great. during ago recovered member growth year subscriber quarter, the sequential the the X third a quarters $XX.X the James. return post-COVID our by the and as first to XXXX. grew of you, company XXXX. for base to quarter,

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

result level to growth XXXX them and gross investments, the were of language the of at growth the quarter term of we the strategic expand business. a these support near offerings As our this for remain third expect and we margins XX.X% as during tactically

quarters. Total member quarter to $X.X were or growth continuation and from aligned member the XX% quarter, during of second the acquisition which a our direct base, the million quarter costs. second we our In first costs in revenues is third experienced

in Selling reductions year member third quarter, decrease and year employee the quarter. or is costs, $X.X in credits XX% was completed marketing This revenues, improvement X% earlier period. to and during million the the the and from $X.X excluding due prior expenses, acquisitions or of retention a operating which tax filed were million cost

from the third half period payroll the in improvements and $X.X Corporate year to were aforementioned quarter G&A cost prior credit. tax million, due XX% and the expenses the first the in down

a of negative improvement primarily periods. we driven The $X.X quarter increase year million or recorded the period. per expense to third compared in by $X.XX the a revenues loss the reductions of was between ago During loss million share of and XXXX, in $X.X

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

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

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

product our capabilities our content our needed a absence going macroeconomic expect generating in excess as the production into we discretion This addition, in enhancements to production, and us tied flows continue environment, investments. flows withstand Due back significant if position have operations a cash library in contractual to and cash In of we levels reinvest and to content to of from to in necessary. be forward. of the investment the downturn we timing our amount to our flexibility allows commitments in-house adjust

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

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

Yes.

growth our increase XXXX further in continuing with of ARPU. expect to member We growth

of For which next XXXX, increase revenues. with should price XX% growth part the our planned It's about members in help targeting are we of year. XX% members strong new in second in growth our the for growth the ARPU, about

gross business. expect increase started our per And personally to also continue benchmark. We place to I since Gaia our the that we profit believe employee streaming in best is

XXX,XXX now members download how see middle I goal of while company the to members positive is can at simple and XXX,XXX encourage of free presentation our cash XXX,XXX investor visit fast to to ir.gaia.com means to pro in flow. to the grow the forma, Our average, continuing you that look year. annual a generate

would We this update hour. probably within an

EO on our also here our board know solely into James and XXXX see years, without dependent to X XXX,XXX over FMTV any COO FMTV and we merged business to months, promote few I Over plan James, GAIA CMO, the funding, to the approval, subscribers as had I Gaia SVOD it outside mission skills. position and for next subject James' in and same grew to marketing

in before, hope main would we to businesses. video statement reach of James member the differentiation and creation it's from the which streaming milestone. Executive launch to annual our role all part community our report continue would mission average talked my on Chairman. Gaia should to XXX,XXX other focus as community, we Gaia and of I be after me final I

our this So remarks. concludes

So Operator? to questions. to I would like open

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

we subscriber to were you a and been success stronger question. like the seeing perspective, actual just environment had cost quick a a what acquisition out of on you're Can that acquire adds modeling. touch looks from sub, in? Just sub lot than kind channels It a the there what your

-- quarter. it's year obviously last think a was than than I different environment, quite it's it second better fundamentally the bit. Well, It's not

growth our doubling the pure think internal. is I

I think CMO. James have really didn't a lot. helped We

a now. little So right cheaper he's kind similar maybe domestically. than of the of functioning much of more And to the on the it's quarter, second kind acquisition, CMO COO cost

as more positive. pretty And where we internal bump -- and member additions And now. next of a be stuff. want the there main increase from are places things of part America internal we much I expect, bit all -- in when XX% saw room. little of mostly cards you churn to But will like was the the little again to. some business kind our that existing, said, for I still the because create the Latin We I right the which think year And of bumps have definitely --

I is focusing a rate add especially Sure. in also on lot with would Mark, that conversion marketing my we're and optimization. team growth the focus and

guest conversion, of is focus This member XX now. days. to really days, XX card a first So conversion, key XX ours days,

now to the CPA we're rate have the costs, on of we're the in macro improving in conversion it's throughout also So marginally that costs, for in that's coming of that year us. the but we if still until with start CPA there down environment, is less our side, the improvements compare which the And otherwise, or seeing because down efficiency whether competition improvements come especially optimization. with year, working

that year really marketing improvement a well. of in very for and is seek mine see the focus to core I 'XX XXXX more So efficiency as in

just that from I terms in think in you of the that thinking to And of ARPU impact pricing QX pricing? year. helpful. year? What said of an are have the you're terms That's going latter in take How to of of big the could you pivoting part next --

It's because thinking focus probably to people -- September, people and members. of of strategy. annual allow on And Well, somewhere and we us Not closer new to going the wouldn't kind about more and we help come but QX now raise a will move do monthly retention to that leave about for it XX% same are -- annual $X to on kind probably probably QX. come not hope price. going cannot of that's annual. The we're the be right middle will to also we the we the takes so

when hidden take and conversion. price will -- is we said probably members for grow we that's expect new also But I XX% members revenue a because we'll XX% and of that kind increase

members -- the wouldn't fast we as I So revenue. as grow as mean, revenue fast

our the So revenues. goal -- but revenues the growing -- is obviously

or grandfathering either we say be I saying, or members. think grandmothering Jirka to second would existing what was we it, our how

up price retention by point. hope between promise ongoing So years, touching longer we there much the cohorts particular, there we members. stay than on that is it create longer price rates And membership, X play They monthly or more skew beneficial not a more bigger our year. their stay one to upfront and to for then annual brand. in point, will difference a can annual our that which us price X monthly In annual existing because will customer the we a conversions on existing see than as churn and

skew to much possible. term want membership we more as to as so And commit

Mark, Ned. And is this

question last around of the was your part think the I ARPU.

offerings with plus along part offers that of that future outline think of our so this, marketplace. And in with of was of we some James up, The all anticipate which you. meetings other I combination will the around last do of of other be would obviously, that all ARPUs our we plus the the spearheading your question. increase, can the take course, But

obviously, with perspective? that's And that more of uptake opportunity? you then terms marketing it, behind or no from encouraged aggressiveness business, And in at the No, guys' dollars Yes. Marketplace all the timing terms in helpful. make does of that you super good pretty change

product. the focus for of side, to be plan executing SKU marketplace. the internally on at The retreats our core physical minute out offering as building us our our or is main aggressive than courses curating and experiences From X as possible around we than verticals

in for background moment. version we to And the will products at testing a that keep of we and retail of that. expanding Jirka the with and Gaiam strong community once has of more can continue best, to in perform get we'll base offers, roll this a the that to that marketing, and wider see continue e-commerce, huge our membership and given have And we'll we previous place, our data inform as have what out potential

mostly to members. of -- the basically want because only to be with kind we it's We Yes. really target selective our products

XX% it, which not promote of would for what say existing outside, will obviously, be not It's I from -- members. if we buy you won't So you're at member, least revenue but can now. it -- our a

And members discount. also get a XX%

$X,XXX and if buy member and XX% a come trip, it's you discount. to So get better a become

So it's kind beginning I'm of Gaia to around of as of that, kind going kind going we're it of at -- to community. but look the

want talk we seasons will like So of launch now pre-civilization of show our attract most what two really right to really pushed what's Civilization, which was our items show, called people, we especially viewed kind time. Ancient we through about have

priced at tour as Egypt $X,XXX, and basically quick pretty sold per those high $XX,XXX on really pre-civilization so trip. prices, typically And the we launched

and so overall want our offering. with disappoint -- we don't customers business lucrative very very it's we be but selective to the So

there, think that of one content a investment a model, a in like perspective summarize have to thought a because but Mark, I as there speaks component it's offerings marketplace community the that the from QVC offering. Costco well. way, is, an we conscious final in And discount also It's to version membership

a that's focus. way -- summarize the a it's to quick So

way And XX% we it if how so strips, kind provide also discount. in the you the look take we of at XX%, it model we

So only rest the revenue hits and we vendors. as treat outside the operating income, effectively, the XX% the

to margin. high So it's be going relatively a

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

about you revenue I James, think you, got the Marketplace. the kind bit explained little I Jirka, it. position. on to I new ask And for a going was but congratulations of

revenue $XXX,XXX Gaia that of that share that the that's the commission Marketplace Is that So you your number on say, how gross of did? works? sale

basically through that, No. -- original, From It's tour sale was was revenue what report we million. $XXX,XXX. about would the the one one, we was $XX

are while. the talked direct be emphasis but third-party really haven't specific some third-party there one? channels color? you a your on on -- in around about you you channels? of Obviously, was thought Is us I doing -- color acquisition bit a give any that? Can to member a what's well, seems Or putting

Thierry, reports for our will your flat congratulations, that of speak third pending has I course. me. approval, compared into you direct to been or board to growth. directly thank It party membership

but get keeping new alignment growing a current rolling contribution, it we aggressive plan more in Amazon to direct with our our particular, that party in expansion seeking doesn't -- to is is third partner, I'm which of sure be with too However, third-party in with by be to particular, revenue out third-party making territories high in or our in which distributor, balance third-party XXXX Prime. it largest

QX, the with New within video correct, Zealand, with the are rep prime and renewing Zealand And -- time. plans Amazon over of be we in a have the we channel with we of just this, to So one Australia, period process agreement Australia executives expand well. for a our met as meeting Amazon term New the of the to longer already for sorry, I'll weekend QX/QX them I have and the for confirm and infrastructure.

is my very court, and expansion seeking party. this our in I'm third to So expand international with much

Yes, increases with we we actually going initiation, plan because triggered do. renegotiation Amazon, to the price our to we're

new give them price. with higher the we So of kind notice a and agreement to signing had

by initiated us. actually was negotiation this, cause was that So

And sales. about also when $XXX,XXX you asked the question

get sold. So it $XXX,XXX. XX days, actually The first was we the tour is

it. the it revenues tour, sell creates like it months took $XXX,XXX the but So trip first about from X.X from to single

also international ARPU we've the difference about talked your from a Is focus members conversation in there the versus about We've growth. U.S. and big in talked international members? previous ARPU, on

some actually of which short which us. didn't work of down, mean, the Latin kind with scaling we America, I we're -- not play prices There's but lower No. really for

Europe basically -- very charge we it's in as would prices, would the we charge So pretty here. similar much

it's much ARPU right pretty now. the So same, -- for

One, ARPU is the Jirka And increase middle that price next circa Thierry, in of which about year. the increase year. there add I are X for drivers planned already mentioned, would

be to focus year. attribution have increased our on expanding that Events+ I is the third $XXX revenue something spoken tier XXXX. in an at would set premium for That's and addition on marketplace that, my then also In what about a we've sight with Gaia

each year. the So throughout levers X ARPU be improving next will of those

continuously. Yes, as actually was we now the now get part and increased mission, to cash want our always accelerate can ARPU, a it the that where positive because kind place of of flow to generate we we

bigger ARPU right now. So the focus will much become

definitely be than more revenue the members. would focus the numbers So our of

So be the of is Marketplace. initiative -- Events+ this as Sphere Sphere the premium Gaia the and why our increasing focus. it's going or Gaia forward, like ARPU That's price going pricing to

effectively, to grow So say we're we XX%, members XX% want that all dramatically, we the to it. and what you'll would going that doing ARPU revenue, keep see they we're increasing of

Great. last Jirka. Maybe a question,

that mean Gaia tell you what on me on said does it on Is it when it Or you you community. did focused mentioned events? You live what Marketplace? the mean? will focus Is your on be community? focused focused Can Gaia you

to If mission see you'll comp, bottom what you the is. the of guided our go

So much at ago, It's world. kind but We -- that look is decided, I the what the a different community was built events by talking split we the between something launching that's time of pretty I'm community too year where right decided -- we now it. already about about. the much in

launch it. it's a to So not time

So bit. a we little restructured

like what things in you the them, we And know find of hear years. the month people basically are obviously with what is percentage and So now are what more lot every X/X a have over number -- community. year watching, X/X so Gaia people increasing a our And a increasing, like would X X-year as it's the people they and us to one we interested. than of that's watching they're

what's We're be it's you to to that's that. the all of our use venues, a as what So part going going mentioned focused.

differentiation I for think that final will be the us.

SVODs years. in X in look you other If become

something on a what that. else want keep nobody niche that in it based to have We be community way, and -- that This it's SVOD business, and loyal has. we will

hall if on I meet decentralized amongst like had to some of mentioned, way Thierry, Jirka part where parties And get one be is that, to can a form would together of alluding town and many a things say forms and Jirka members that watch ups. organized in

our of closing reached like question-and-answer have to the turn over now Rysavy would comments. the back session. Mr. for I end We floor to

you, you results we and to joining, Well, everyone, fourth much. for forward report quarter we look you thank March. speaking with very the when Thank in

This concludes conference. today's

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