Q4 2019 Earnings Call

as soon as no obligations have

Okay update or revise any forward-looking statements with that? I would now like to turn the call over to Gaia CEO, please. Go ahead.

Thank you and good afternoon everyone. So Revenue increased 24% to 14.7 million fourth-quarter and 29% to fifty four million a year.

And fourth quarter, we eliminated the 99-cents trial from our pricing plans and replace it with a free trial. The end of the quarter is 599 thousand subscribers. This is video and Counting as we did historically the change from what we did is directly the members which were 99 cent trial which before we consider members of which we had about 37,000 a December Thirty One 2018. We built on positive ebitda. We reached in September and achieved for full quarter this 24% Revenue grows as planned. We did however significantly exceeded our cash flow plans by generating 3.6 million and positive cash flow from operations during the quarter, which was in 1111 and half million Improvement compared to the year ago quarter.

Do not expect to repeat the magnitude of the positive operating cash flow to gain in the first quarter. We do expect to operate this positive and positive cash flow from operation are from revenue growth rate to reach positive earnings and free cash flow in July the end of the year is seven and a half million in cash and Paul will speak to rep now Morimoto results, thanks revenues for 2019 increased 29% to fifty four million versus 2018 for the fourth quarter revenues increased 24% to 14.7 million compared to the year ago quarter as we discussed on the Q3 call, we eliminated the 99 cent introductory trial period in October and are now offering a free trial for potential new members who select either the monthly or annual billing plans.

We are therefore no longer including these trial members in the reported member account until they convert to paid members. We ended 2019 with 598600 numbers compared to adjusted $510,300 members which reflects excluding roughly 37,500 members that were in their ninety-nine-cent introductory trial period at the end of 2018.

For 2019 increased 28% to 46.9 million dollars versus 2018 gross profit in the fourth quarter increased to 12.8 million from 10.5 in the year-ago quarter with a slight decrease in Gross margins to 86.9% compared to 87.5% in the year-ago quarter, but this has been sequentially improving over the past three quarters of 2019. We have adjusted our content investment over the past twelve months to to reflect our current Revenue growth trajectory and therefore expect margins to be around this level in 2020.

Selling an operating expenses excluding marketing and number two position costs in the fourth quarter or six point seven million dollars, which was down nine million from the third quarter of 2019 corporate and G&A expenses came down to one point three million in the fourth quarter representing a 24% improvement from the year-ago quarter.

Focus on continued operating efficiency and expense rationalization during 2019 has been successful our gross profit per employee has increased to $384,000 during the quarter which is up from 311000 in the year-ago quarter.

Total number acquisition costs were seven point four million or 50% of revenues which improved close to 50% from the year-ago quarter when we spent fourteen point three million dollars or 120% of Revenue agent.

I remember driving growth initiative we discussed on the last call has continued to gain traction during the past three months and it's proven out or hypothesis that are most engaged members. Are you to share guy contracts and help us grow the contribution from this new growth driver helped contribute to reducing our average CPA for the quarter down to $61 from a comparable $91 in the year-ago quarter and $67 in the third quarter of 2019. Please note to maintain consistency. We're calculating the Q4 number based on trial Editions.

I'm also

Happy to report that we achieved our goal for the fourth quarter of 2019 generating a positive adjusted ebitda margin of 2.7% compared to a negative 75% in the fourth quarter of 2018.

As expected the combination of this and are negative working capital model allowed us to generate approximately 3.3 million dollars in cash flow from operations, which as you mentioned is an improvement eleven point five million dollars compared to the year ago quarter.

We're also able to moderate our content in product Investments to reduce our overall cash used during the quarter by approximately 5.7 million dollars compared to the third quarter of 2019.

With our current cash balance of 11.5 million continued improvements in retention as we mature Our member basis average tenure the early traction. We're seeing in member-driven growth and life is premium memberships. We are comfortable with our ability to get two free cash flows in July of 2020 with our current liquidity.

without I would like to

Open up the call for questions operator.

Thank you. If you would like to ask a question at this time, please press star followed by the number one on your telephone keypad. If you're calling from a speakerphone, please make sure your mute function is off to ensure your signal can reach our equipment again, I'm going to ask a question. We'll go first to Mark Argento from Lake Street Capital markets your line is open.

Good morning guys take her outside getting even positive and the quarter just wanted to focus on ongoing subscriber acquisition and maybe talk a little bit about different modalities. Um, you know, social media versus, you know, other avenues in terms of acquiring customers. We're we're having success and any updates that are dead.

Sure. Hey, Mark. So from a subscriber acquisition perspective, we've really been focusing on optimizing all of our existing channels that we've utilized over the past few years and with Bringing Down the top a growth rate. It's allowed us to really start to get efficiency on each of those platforms individually, but it's also allowed us to create more time to focus on nurturing either new channel or channels that historically weren't we weren't able to get to perform. I'm happy to say that YouTube is actually turned into a pretty significant Legion and acquisition source for us in the second half of the Year. Whereas if we looked in 2017 and 2018, we weren't really able to spend meaningful money on that platform to raise awareness and what we're seeing on the other side of that is that those people that find us via YouTube or tend to be better fit for a guided because they're seeking out content and finding Gaya versus the more traditional Facebook style wage.

like being into scrolling through

And trying to gain attention for a short period of time so I'd say we're seeing a lot of improvements in YouTube as an acquisition Channel and that's combined with our member driven growth strategy where contents being aired out in the wild and were able to then do retargeting and more targeted conversion rate marketing as opposed to just awareness top of the funnel marketing.

And then in terms of the the premium offerings any any new additions to the the portfolio there and and what do you anticipate 20/20 looking like in terms of the month the number of events or any other metrics for the premium?

Yeah, so we had a break in our event calendar and no end in November of December in January. So it's been growing steadily would not intending to report those numbers. We going forward but we looked at 1:20. We have our first event coming up at the end of February and from the premium tier Gaya supported events. We have a nice founder including Gregg Braden coming back Bruce Lipton Graham Hancock and a few others that are on the Slate for their but we're also looking at activating that the guy is fear as it's not an event center. So they'll be other events that are happening there that we then can decide whether we want to make them available to our premium members or not. But the intent is to have that space pay for itself when you look at the Renton operating expenses and then allow guide to decide which of the events we want to put out to our premium members. So I'd say it's gaining traction, but it's off.

significant enough for

To break out on its own.

All right, then just one last one on the content side and all your notes. If you knew content, you know personalities, I think on the yoga side recently bought a just talk about any strategy changes in terms of content acquisition. You know, how do you manage that in content costs here, you know give it a throttle back the subscriber growth. That's it for me.

Yeah, so I think from the the yoga side we're actually looking at kind of revamping the way that we're building our yoga marketing and really putting it teacher Centric and Saddam has released. It went out this morning was part of that strategy because we really feel that in order for yoga to grow successfully. We need to have the teachers be attracting members to them the same yoga space is an online offering is pretty competitive. And if you don't have a personality to draw people in it's it's a generally a money-losing proposition to try and spend paid media dollars to bring in yoga customers. That's a relaunch as we've nurtured and curated are yoga Library holistically over the past twelve months and now we're going to start focusing on bringing our new teachers into the platform and helping them grow and then I could talk to the rest of the content. Yeah, we have still very good lineup, you know, it just announced last year, but very few actually published yet as a as a series. So we coming Thursday.

so I would like and it's

For these numbers is the name is actually mean much to you. But until you know, Bruce Lipton has this defining Nassim haramein, uh, and um, then we have money, you know several new series or season of new series which we successfully tracked so we will shift more to wage. What do we call Produce contents interview series. Uh, and so it's it's significant upgrade from last year with the content lock.

Correct.