Loop Media (LPTV) 7 Feb 232023 Q1 Earnings call transcript

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Loop Media's financial results for the fiscal quarter 2023 ended December 31, 2022.

Joining us today are Loop's CEO, Mr. Jon Niermann; and the company's CFO, Mr. Neil Watanabe. By now, everyone should have access to the fiscal first quarter 2023 earnings press release, which the company issued earlier today at approximately 4:05 p.m. Time. Eastern available Relations is website of the www.loop.tv. at in release section Investor Loop's The

call be will replay this addition, In also company's on available website. the webcast for

call Following your open remarks, the management questions. we'll for

statements differ forward-looking as on risks this to and and actual from Reform and considered Securities Certain comments assumptions subject reflected cause in under XXXX. to results conference Private These made the of unknown well that are those webcast could uncertainties call forward-looking materially are as forward-looking statements statements. Act known Litigation certain these

These of forward-looking place time not risks are with statements to are as the uncertainties call. forward-looking to from undertakes Do which other as this statements. release or SEC. company the undue also reliance filings revision only subject described required law, company's the and to on obligation results of time Except to no revise any the any the in publicly statements, that forward-looking date made being any by of are

company's including -- measures comparable adjusted non-GAAP our reconciled EBITDA financial the have to in recent directly measures presentation SEC with to accordance measures, the business. been most supplemental performance of most of certain GAAP as also rules. The non-GAAP All measures includes

information reconciliation charts to and the You'll furnished find release other in Form press X-K important and earnings the SEC.

Mr. Loop's I the would turn now Jon Niermann. CEO, to over to call like

our carried bottom in continued active good and Thank quarter quarterly just to into has and afternoon, revenue you, first improvements our months year up from everyone. material X momentum XX% Xx fiscal with The up units year-over-year, line. nearly last

Loop our footprint meaningful and out-of-home deep marketing in execution is business. the growth convert a lean of to into ability to Our consistent those advertising expertise digital and testament into Player our dollars

call, As quarter. we less new the second story, model our on -- through the business this last conference to went want in detail for earnings than those only briefly I to Loop touch the is albeit

of MarTech stream, that content out-of-home to video increasing a media of by and sizes. length channels extensive through company a curating, use is and venues this XX and of and stream focuses We with proprietary entertainment business licensed than digital content the all Loop the streaming Loop engagement with our is of customer This venues. filled accomplished their network goal monetizing goal of optimizing of Player a control more stay XXX library includes on than which short-form across and video music at allow our nonmusic channels. music more content,

in the Player distribution and During the now country quarter, throughout have XX markets to metro a the expanded our top Loop new we U.S. presence all areas. of

XX, XX% of December our active to representing investment. from nearly quick and marketing September XX,XXX quarterly efficient units return grew units, our on As XX a

while $XX million only fact, year-over-year, were marketing $X.X million In costs up the increased our nearly same for comparable period. by revenue

new of Our businesses, set office diverse a customers types establishments. buildings include retail various of campuses, added gyms, bars, including and quarter college during the restaurants,

service and because largely thesis demand they it there streaming over our they strategy to can Loop better streaming watching well a Loop as market, that are more Player economics. distributed TV is as validates select the content cable As that free Americans into the is are watch working. whenever it go-to-market specific TV with strong for More our now ad-supported Players want

so service. like try series vibe-enhancing product businesses short-term our for TV movies and the public a Loop work engaging streaming to traditional However, content venues, content eager that ] offers [ demand doesn't makes in of longer-form

new of quickly of content channels offerings, sports target range and content is and the truly another ability Loop. away wide including variety of our highlights, signage PayTV This with that African enables solution, free, customers. traditional large We are go content an offering launched a The all-in-one to Starscapes model and additional that for need draw to Cosmos. terms Safaris is disruptive digital for of in they appropriate and businesses. even charges signage all customize major us We digital league include such content to that recently demographic which

you're at a visits. you any store, or If more repeat restaurant, enhances think retail pet we tire-changing an match could location experience, thus of content encouraging that type and Italian about just of, customer can frequent the

we so to outflow and contracts content Universal, music Warner, we labels, this recoupable During we X all the certain renewed years is Sony a for content to contracts see not offerings include note important will our like advances have in solidifying cash further fiscal are paid that come. major music upfront, our quarter, It QX. with these for that licensing,

because the had in is increasing recently years transitioning them, options footprint while have at XX suitable business home made ago. digital out-of-home available started only market consumers locations nearly for streaming Our

conference external the projected As billion XXXX. per market mentioned on reports, to call, $XX last our by digital reach over out-of-home is

at we the by I be to as share. we are retail while Loop broader macro ad challenges we our that vertical, to that realize immune positioning in market increase want momentum note the is not and environment. CTV positive spending there video forefront are the presented media We to

are We this to digital that continued XXXX. quarter ad into seeing that in emerge of the spend reporting in second calendar overall headwinds started has half

expect fiscal in and seasonal QX. election and outperformance our trends offset of quarter, revenue generate cycle our XXXX related continue to the business of ahead November, Despite those benefited contributed second from to growth also challenges, truly to industry grows strong unusually challenging advertising the which fiscal sequential the meaningful a in that we half political During macro no fashion. in believe to we linear

the our sales in happy Turning growth that meaningfully contributing our program to I'm XX% performed during affiliate quarter, to active channels. report exceptionally quarterly units. our well to

and is in focus beginning validating 'XX this investment that our off Our fiscal strategy is and program is to working. pay throughout

the fully time ramp, and operational momentum it and is gain program took results. Although to it delivering for now

ramp efforts, is could large where our development revenue company of focused this for where our quarter. sales programmatic evolution as we fiscal on enough took natural position deals. while a business It's initial a of demand footprint another to interest grew Another we strategic the via we direct start important direct very starting is our step simultaneously that to we generate to ad Loop which

are of We in that ahead. quarters are look to we impact growth and the sales this pleased more to stage forward direct at say of an from

deliver our Looking spend our will of ahead, of in distribution acquisition, predict. we market is believe growth out-of-home pipeline commitment industry and revenue increasing new expanding an to strong year forecasts of significant well believe as network retail we XXXX. customer media Loop to share the digital and continue With efficient advertising partners to gain another several positioned

have our businesses on circulation the million that last mentioned could small- XX,XXX players over call, target As XX surface. with we scratches conference currently to new we barely in medium-sized to

will With the Neil? over results. I that, to call Neil turn financial take our to through you

and afternoon, John, good you, everyone. Thank

remind otherwise review want I that specified. and to commentary financial our comparisons As results, variances the we quarter, to everyone refer our year unless prior

was the from our by deployed May in reported first of as to in release, million to revenues driven well $XX.X XXX% The benefit our Players the increased ago increase more for earnings As quarter market was a which fiscal in launched sharp quarter. XXXX. significantly million the Loop Platform press compared business, into Partner year as $X

business. focus to players Loop XXXX, Going had we September just December Platform program. active the our Players active XX% screens our screens. a Loop It note the Player efforts process to and units initiative our was growth of marketing increased in an market which May any a approximately or launched of Partner XX, on a an compared of on primarily the XX,XXX is The partners finalizing our Partner XXXX our approximately additional driven layer active quarterly not X important we penetration screens, units XX,XXX across in screens XX,XXX XXXX, deeper include increase approximately that total on months. as XX, in with XX,XXX on in quarterly of We're by for XX,XXX of one player is does affiliate Platform

margin $X.X was increased to greater Platform Gross flat. the XX.X% compared to as in the the the dollars carries period. higher revenue the year the ago was margin. decline profit for fiscal gross compared $X.X first operating launch revenue, driven rate which while Partner year XX.X% significantly compared mix gross increase margin in prior profit quarter primarily ago not period. in When did business, million rate Gross The include of by the margin our ago to was to year in period million gross relatively quarter, driven by but percentages a was lower gross margin

related to spend primarily as American. Total SG&A SG&A million for $X.X uplisting $X customer the were acquisition higher to year in retention expenses The quarter and first million due period. compared the well to greater costs marketing, increase company the public to as was ago NYSE fiscal our in

to SG&A the year XX.X% percentage versus XXX.X% significantly a was As revenue, of for prior reduced quarter.

our million revenues loss first first for loss loss of we compared $X.XX operating as per share to We fiscal the XXXX. significantly loss fiscal of the a million in expenses a per Net our XXXX expect fiscal to leverage to continue $X.X loss increase in share of while was moderate or quarter with loss increases. a million to maintaining net improve quarter for same XXXX. or $X.X of improved a the comparable $X.XX of of in to million a compared fiscal $X.X EBITDA period Adjusted the period in $X.X

Exchange music to equivalents sheet. million as to to $X.X was spend on balance nonrecurring September NYSE $XX.X The XX, related our was uplist XX, licensing cash Jon earlier. the Turning fees, compared on highlighted and decrease American by costs to to primarily our million Cash including XXXX. XXXX, expenses, and payments marketing greater driven related and December

December on XXXX. to we compared million million December of $X.X As XX, debt of XX, XXXX, total had $X.X

We exhibit year-over-year growth and quarter-over-quarter. continue both tremendous to

our profitability of beyond. distribution our drivers to fiscal marketing the and ongoing commitment in will and primary Our growth for driving Players the expansion XXXX Loop be and

for picked efficiently in been current quarterly increasing to that we has our to units when poised the Players ] earlier, up profitability active improve to back plan softness of months the Loop digital alluded and penetration Jon growth Despite and [ ahead. advertising be growing market continue

to I'd our updates like prepared remarks. on This We to call. concludes next look thank our today. everybody for forward further listening conference providing

will to it now you. We back questions. open Operator, for up

Our first question Instructions] Aftahi [Operator Darren Partners. from with ROTH will come Capital

about A may. see. Nice improvement. if the line on Good bottom to especially the few quarter, job I

weakness and seeing of strength? environment, can just overall perhaps where about First, you you're talk macro the areas maybe

Darren. Sure.

So I last we something on touched time. think it's

I think know, important. as overall, is we seasonality

calendar always QX year. the of the is So worst

plans that. So spend, of in advertising terms around cyclical everybody

about it and that are a clearly, and all the dip. reports digital excited CTV and where you if advertising overall, industry trends, an growth with area an impact has But at still take in look had the think I we're we the out-of-home.

it a little elections For the half well a it great and where than our year to But lot continuing then and overall. spend, go. that, a just off the going the did bit. we're then, to reports first to kind of part projecting had second of excited holiday quarter, the extremely towards are And as other fiscal seems dipped be the again, where we is

Neil your existing Great. speak and -- Can is Can you calendar kind partner, touched traction layering kind the the to beyond maybe you 'XX? how of partner on of pipeline for looking you're on your there program. one

For Network? the Partner

Correct.

Is that what you were talking? Yes.

we hardware. the a that on, is this we That's that X So familiar, growth, had we proprietary which one business our large and touched tremendous that for we just where Loop aren't quarter. those saw the the of to for Player, components focus have

started last roll where next phase we that launch. planning Network, on summer, partner people's it's going have and Partner to we other testing rolling hardware, use to And into the that plan we this multiple discussions over partner a out we years. where and we're that we then the For in launched

we're is hardware. certain other sure wide. grow. of for that area a because Darren, great continuing to fit It's got of just it kind growth right see testing to continued that want a it is to that we just be it's involves focused we us, before we So on And go make the

pipe. I think you'll So start down the coming of to that some see

to converted is Partner Network pretty a normal. it full Darren, When the May, environment was entered and type then this test a in quickly rollout. we And

partners that we're stage rolled and multiple have certainly that months in anticipating that follow here. be were out now, to We in testing to

Great. me. more A few for

been just margin. the has should think a X So XX% we on about the the in mix But kind going how I steady know forward? last cost goods of influences around gross figure and gross modeling from margins gross margin, perspective, of quarters. pretty

You're right, Darren.

Partner the it about lower I think a has but we margin as in gross talked percentage, Network no, expenses. essence, carries rate

know into we're So as growing also plans future very our that, the profitability margin flow-through because that's the profitability lean brand That certainly close are. expansion. Partner what growing the area to the and Loop Players being is kind said, to we and to Loop But are well. Players the of our of Network

are what From a percentage. leaning as I and kind toward modeling Players a that still think the we're in your as percentages mix it's as expecting, far the of a Network you have versus perspective, more Loop line with Partner mix

Neil little add and to a Darren, let perspective more me that.

positive those better that of as aware it's we're impact. where that, is but as certainly think start sure you're getting to footprint type level margins a I you where to pointing that you starting our stage lots will have are, is will that of grow. have think times, and And important. we a more deals And this some of little And of influence deals we terms out. have in worth the And growth that start I'm we do. we grow

So I on Jon. dovetail one, that could

ramped fast small XX-month to maybe over given So think kind licensing question, your you've quantify of negotiate Like you are licenses have I you in do quarter. that period. the into the how cash content the time XX- gets Or but I yet? upfront this [indiscernible] out another that But costs, ] to it as an a saw going maybe your usage comment I has put grown? Can saw ability leverage? guess, you is it even have very to the [ in queue, in and too on, real business you deals about you rapidly better entity still of forward the content

what And at earlier. No, clarifying we was trying I thanks do. That's for to question. the get

we an upfront me back. that then of point So let things for mentioned basically out there. a could as music -- recoup couple and It's there's side, you the that

relationship of we of only So really, deal. type have that that's content that the type

share there's we The share. more type pipeline, the of in rev a grow as of others leverage And are that arrangement. more clearly, of terms

the rev fronts think I and both be for that then we on believe on pay beneficial to an those as that's just side review It's us to music to off would to through investment to that's going initially, quarters. scale. us just we the pure share of content in better the is quarters So is gets everything roll made all other start going come. for that we And as I

quantifiable a amount upfront Great. the license? Is there on

of mean part No. we No. that I don't disclose the contract.

actually you in much basis, Just of the on like let way. all recoupable executed me is a if percentage ask How upfront on another you your KPIs?

all, I that. say A majority. can About

dead lockdown another a for kind of pretty of $X marginal whatnot. are Fair with that enough. that number a Or -- it That's cash scales? is horse. growth about the Said a that OpEx, I'll of investment? guess, and some like quarter revenue? won't where good kind A how could the million think Cash I with had we few sort that biggest fast uplisting as business know do areas But last you scale of more new way, onetime me answer. and where the and the I I how pass beat million OpEx, has on. $X

as be first Darren, think, quarter-over-quarter. amounts. that from reduced quarter, to we as is to $X have and forward, And uplist in some expenses will was to and mentioned did contract continues amount our million that we some our that leverage the content about related as nonrecurring burn renewals cash recurring. ] amount we That increase [ go the relative of far normal as I

down of in in we perspective, had So from the incremental those significantly the onetime reducing start costs quarters. QX rest as and think pacing I start your nature we some

quarter clearly along the pace each XXXX. reducing think we as I you'll see throughout recurring So OpEx,

it. Got

the new you perhaps terms could of where other verticals me. mix. think, momentum I seeing make you kind in where one Just But Jon, perhaps of spoke like little some you in traction? last The more for X,XXX where and then QAUs a curious traction quarter, you're more over-indexing maybe areas bit just you're and feel what I'm

we out So some the those in called that's of why script.

the various at seeing If really look across you we're it board. -- the

that focus us. obviously a as thing advertisers. all And tire it is for cetera. mean. that appealing are a we're college seeing area change, [ can and XX call are we footprint more which a about, about had We've in excited in retail, because bars those and the auto grows, -- of what parlor, tattoo an it's we've And of gyms, campuses bump those et to we're key but I nice of retail, just are wanted whether for very ], excited out any type think So that restaurants, types added and dealer really top markets,

So our be, to continue delivery that has focus where it. to name grocery, is C-store, retail, really where been that's you that been, has and medical, going

session. like back concludes question-and-answer turn the I Jon would any This to over closing conference to our for Niermann remarks.

everyone to I thank bringing this heading, you and care, to as our business updates who [indiscernible] joining continues its themselves -- team business who phase We're today joining next continues excited -- well us. I to apologize team is of look about as for forward to growth. our commit Take where and for providing thank on well next as call. our the would like I call as commit further

The you conference now for today's Thank concluded. presentation. has attending

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