Q1 2021 Livexlive Media Inc Earnings Call
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Ladies and gentlemen, please standby. This is the operator today's conference is scheduled to begin momentarily until that time your lines will be again play Sony music hold thank you for your basins.
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Ladies and gentlemen, thank you for standing by and welcome to the live by live Media Q1, 2021 earnings Conference call.
This time, all participants are in listen only mode and after the prison speakers presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
If you require any further assistance please press star zero.
I'd now like to hand, the conference over to your speaker today, and we Greenstein Investor Relations. Please go ahead.
Thank you.
Good morning, and welcome to live media business update and financial results Conference call for the company's first quarter ended June Thirtyth plenty funny.
Joining me on todays call, our Rob Alan CEO, and chairman arm mid teens, founder and executive Chairman of podcast, one Mike Symmedrx, So I'm generally Mccormick president.
I would like to remind you that misstatements me on today's call are forward looking at our based on current expectations forecasts and assumptions that involves area.
These statements include but are not limited his statements regarding the since your performance of the company, including expected future financial results on future growth in the business.
Actual results may differ materially from business, that's on the call for a variety of reasons.
Referring to the company's filings with the Fccs information about factors, which could cause the companys actual results could differ materially from these forward looking statements, including those described an annual report on form 10-K for the year ended March 31st 2020 quarterly report on form 10-Q for the quarter ended June Thirtyth 2020, and subsequent assay.
He filing you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the Companys earnings release, which is posted on its investor relations website at IR Salt life, Ecpfive Dot com and the company encourages you to it periodically visited <unk> IR website for important contact the following discussion includes.
Responses to your question contains time sensitive information and reflects management's view I just think of this call August 620, 20, and except as required by law. The company does not undertake any obligation to update our advisors information after the via this call.
I'd like to highlight to investors that the call is being recorded the company's making it available to investors and the via webcast. A replay will be available on its website any investor relations section. Shortly following the conclusion of the call. Additionally, it is the property as a company and any redistribution retransmission or rebroadcast of the call in any form without the company's express.
Written consent is strictly prohibited now let me turn the call over to Rob Rob.
Thank you Emily.
Good morning, Thanks for joining us today, we hope everyone continues to stay safe and healthy during these very challenging times.
Colby this had a meaningful impact on the entire life music industry, effectively eliminating wide music concerts and festivals like.
Why buy lives is uniquely position Bennett from the industries need to migrate to streaming live vigil festivals that performances in Q1 alone. We livestream 45, why music events with over 76 million live streams between wasn't a thousand of the biggest artists in the world.
Over the past four years, we focused on building our brand and building a trap.
Today, we have grown evolved to be the first.
When centric platform focused on Superfans, Adobe or long term sustainable valuable franchises in auto body, a music podcasting over the top pay per view and live streaming.
We give the artist the ability to simulcasts globally across all digital platforms with technology production distribution marketing and sponsorship.
We are positioned ourselves at the forefront to the paradigm shift driving sponsorship and ticketing sells for both digital and lives.
Leading the way, helping artist innovate and monetize content without full stack live streaming platform.
I'm happy to report our Q1 results were above consensus analyst estimates, we in the strongest positioned in the history of our company. We're just getting started.
Given the momentum we see ideally overboard business verticals, we're excited to raise our guidance from last years $38 million. This year guidance of 62, when it happened million to 68 point fives.
We are making tremendous progress by simultaneously driving revenue growth as well as path to profitability.
It's worth noting that a Q1 or adjusted operating income for the first time was positive 1.1 billion a substantial improvement compared to 3.3 in the 1 million 3.1 million loss last year.
We've also made enormous progress improving and strengthening our balance sheet in July we close.
To common stock financings at $4 in 14 cents that resulted in 17.5 million improvement to our shareholder equity as part of that financing.
Largest music labeled a world converted $10 million it accounts payable to common stock at the same time, we extended our music licensing agreement through 2021.
We've also just announced finalizing a 15 million dollar convertible debt with one of our largest institutional shareholders, which will allow us to eliminate all of the short term debt on the balance sheet.
And all and remove all the restrictions on our cash given the company flexibility are really starting to churn growth.
Similar to judicial media networks, we have multiple divisions, where companies to drive unique revenue streams, including production marketing distribution and our own original programs.
New monetization features for markets include pay per view virtual ticketing.
Merchandise subscription digital tours and tipping all of which create numerous revenue stream opportunities for led by lives.
With our recent launch two livestream pay per view.
We have sold tens of thousands of tickets and nearly 100 countries, we have the opportunity to bring in and connect with hundreds of thousands or millions of new visitors on a weekly basis to lie by lives.
And gaining payment from contact knowledge as well as information.
An interesting preferences. This information positions us to upsell cross sell other products in all countries like subscription merchandise pay per view podcasts and targeted advertising.
A flywheel will continue to spend as we convert pay per view sales into subscribers.
We have produced pay per view events in partnership with high profile stories like galleries Rockies, Zach Brown, Shaquille O'neal, and <unk> and Robin Koski, and we have all been coming pay per view events with international Superstar people.
Wrap storage test for entrepreneurs, Nellie Jeremiah and the global K. pop sensation.
Boy band much directs.
In fact.
All of the months direct VIP packages sold out in two minutes and our paper would you like stream of shacks Funhouse versus Glock Beach head over 9 million views, we expect to continuing announced significant additions to our pay per view lined up in near future [noise] <unk>.
To enhanced digital sales marketing promotions, we after the two separate cross marketing and distribution deals with zummo fight consumable TV expanding live by lives reach and content and extending beyond musical comedy sports another John.
Together with a growing list of over over the top OLTP partners. Our audience reach now extend since 200 million plus U.S. households building brand awareness and loyalty across multiple platforms that into digital advertising revenues.
We are fortunate to have terrific music industry partners like live nation, Iheart, all the labels and publishers and of course hundreds of talented artist to make why by life special.
We have an exclusive partnership with Tesla.
This is our eighth year were led by like subscription is pre installed in every Tesla car sold in America lie by why that was pre installed at 85 other automobiles as well across many major carriers, Verizon sprint and T mobile.
Through our distribution partnership and did you see around the globe, we've been able to grow our paid subscribers.
877000.
Why buy why that is now on Roku, Apple TV, Amazon fire and 40 million Samsung TV is a partnerships include tick tock Youtube Facebook Twitch, Twitter Tencent dailymotion across multiple platforms, including carriers automobiles over the top you have the ability to them.
Out of touch a concept multiple times multiple different ways.
On the fast growing sponsorship front, we have some security we have secured sponsorship deals with Samsung here two wholly Mike's towards lemonade Wicor, just announced a two year deal like sports with Corona sponsorship revenue has more than tripled in the past few quarters and we expect this to be a positive to.
Yes.
We continue to produce livestream or own concert franchises.
Music lives on following the massive success of music lives digital event, which we call our digital coach Hello.
Your original festival broke all of our screening records with an audience larger than any wide Coachella lollapalooza that.
An unbelievable 50 million views and 179 countries in 5 billion video views on tick tock.
An average of 200000 concurrent users.
The music lives event truly valued it validated the value of live stream.
Music lives on.
We've just hit our 14th episode a weekly multi drug genre streaming series has received over 6 million lives streams use with international artist Anita Mark Bassi Jeremiah sway Lee.
Weekly viewership continues to climb showing your growth in back brand awareness and interest and the growing franchise brand integrations have included artist partnerships product placement sponsored billboards verbal brand benches at the magic integrations with assessed most content.
In early July we proudly announced the acquisition I guess one.
Which complements our music and video contents that and Diversifies, our revenue model like Eddie large advertising component.
Alongside of our existing subscription business.
I guess, one added 27, and a half million revenues in calendar 2019, and by adding their experience sales team and advertising team we tripled.
The head count <unk>, our sales team.
With us today to give us an update on the integration and our move into podcasting and what we branded broadcast and we have Norman patents podcast ones, Chairman and founder and I kind of the radio business.
Welcome norm to the team and I hand, it off probably handed off here.
Thank you Rob good morning, everyone from Los Angeles [noise].
And you know.
Waiting for the Sun to come up, but it's a pleasure to be with you.
The question I often get asked.
You know, especially since we we announced our deal was why did you do it and [noise].
Let me just explain a couple of things when.
When after retiring from Westwood one.
The company ask me, if I would form a consultancy or a boutique or what have you to keep the talent that was closely attached to me at Westwood one.
To keep them at Westwood one of course, I agreed to do that and was largely successful during that period.
It was introduced to a mutual by mutual friend to kit Gray Young man, who is our.
President and Chief revenue Officer to this day.
Who is involved in the podcasting area I didn't know a lot about podcasting and the time, but by the time. We finished at that meeting I knew plenty about it and I thought. This is just Westwood one for the digital age without having to.
Push our programming for radio stations <unk>. This was a direct to consumer.
Oh, which which which was very very appealing.
Within.
Days.
We had formed podcast, one I didnt need anybody to fund and sort of finance it myself.
And when we started a the competitive marketplace was much different.
And that there really weren't to any.
Large scale competitors.
Following the game plan that we used it.
At Westwood, one quite successfully a you know 35 years before and right up to that point.
We wanted to create a 360 degree.
Platform that provided everything that we needed to produce podcasting.
Everything that we needed to create a network that would be available to other podcasts are to be a part of our network.
We wanted to have a wide variety of programming as a matter of fact every category that was in the then I tunes now ample podcasts.
So that we went into advertising agencies that I'd been going into for the previous 35 years.
We weren't just pitching a medium which in many ways sold itself, but we were also in a position to be able to provide an advertiser with any type of program in every category that was available. So we.
Set about doing that.
And.
That was the nature of the business there really wasn't a major competitor that was the 360 degree solution that can provide all of the things that were needed to advertisers and all of the things that were needed to pod casters.
Today, the situation is quite different in the last 18 months or so.
Larger companies have gotten into the space.
Primarily audio companies as a matter of fact, all the major.
Players our audio companies so in looking for ways to differentiate ourselves from the composition the competition, which is something that we always too.
The idea of hooking up with a live by lie to provide a video component.
To everything that we do that could provide cross marketing across multiple platforms.
And bring the video element much more into the on demand side of the business, while allowing us to stream [laughter] live events.
It was very very attractive.
I'm doing the deal Robin I had talked about doing something for some time.
But the timing was right a you know to do.
Something like this it was an all stock transaction.
We are all in and primarily because.
I want to see the business our side of the business grow.
And Ah simply selling the company to somebody else wasn't kinda wasn't going to accomplish that but getting back into.
Being a public.
Company offered us a much more flexibility in terms of they kind of types of deals that we could put together I was the chairman of a public company for over 30 years, So and I know the space [laughter] in terms of being able to actually.
Accomplished many of the things that we set out to do we're well well along that road.
We are already.
In in and are well, let me let me point this out.
The things that make us really look weve looked good to each other and the synergies that exist as we're all after the same a consumer the super consumer the Super listener the one who is.
The fan of the artist or subject matter that we are presenting and now we can presented in a variety of ways.
That that that make us significantly different than anybody else in our and our category. We can present streaming we can present video on demand audio on demand. We can do our traditional podcast. We've now created a category called provide casts which is video on demand.
We've helped each other a measurably.
And putting tent pole talent from both of our companies into the assets that we already have a into our digital distribution assets.
We just did a deal with a with pit bull for a podcast that's gonna be very successful and that came about because of the deal that had already been put together with pit bull with life by lives.
We took Adam Kurilla.
Who is.
One of our stalwarts and who is the most downloaded podcast of all time.
A a well known fact as a matter of fact isn't that gets booked records for it.
But Adam.
Does lie podcast in front of.
Audiences are on on several occasions on the last two that he doesn't want in Houston and one in.
Well and another one or the we also the podcast.
Performance slightly by adding musical artist.
And streaming it.
On five by live.
Both of the programs. The other one was in Nashville by the way.
Look a little slow out here I have in the morning.
But both of those podcasts as Vod casts and as live streams in the case of the live streamed they both drew over 1 million.
Live streams per per per episode.
Without having any negative effect on Adams regularly scheduled audio podcasts, we're gonna be doing that with a whole lot of other artists were in the process of signing.
Artist that will give us the full suite of.
A distribution opportunities and we will be the only company in our space that is able to do that will be an audio and video company competing against nothing but auto companies.
And that's a.
Tremendous advantage going forward, which is something that we always look for I'm moving forward. There are so many things that I could talk about right now about why this deal made perfect sense and why we chose to do it as an all stock deal.
But my time is limited as is yours and I'll be available for questions at the end of the presentation.
But this was a deal that was screaming to be made and that's why we made it.
Rob back to you.
Excellent. Thank you know and I've been working extremely closely Goldman for that for several months now and I can only characterize them as an absolute perfect partner.
We are fortunate to have them as part of the senior management team.
Normally I share the same passion this which is no artist burst talents first platform.
That is focused on super fans and building franchises.
And what normal is already done with Adam Coolidge, he'll O'neill, and Mike Tyson and T I, Steve Austin Wrestling across all joggers, a pop culture.
Right. We can now expand upon and has normative articulated we can now expand to broadcast.
So as it relates you mentioned, we recently announced a content partnership with music icon people to produce and distribute a series of pay per view livestream concerts and original content.
As well as to launch pit Bulls first podcast broadcast show on podcast one.
Couple has a social media reach over 100 million polished and is an ideal candidates importantly.
When I recently interview on CNBC discuss our collaboration and I courage, everyone to if you have an opportunity to watch the replay.
In conclusion, I reiterate that why the alive in the strongest position Hes been a company and we are really just getting started the future is now bans brands and fans are coming together.
In a revolution to build an entirely new industry very similar to what you spend it 30 years ago, we're seeing telltale signs there all the above modernization jet engines are all kicking in simultaneously we have evolved as a major thought leader in music globally.
And our success in music has opened up the floodgates, all John or as a public UPOP public culture. In addition, the strength of our balance sheet gives us the opportunity with respect to additional acquisitions, I could add new or complementary verticals or as a bolt into existing but verticals I'd like now like.
A handed over to my CFO, Mike Symetra, who will review our Q1 the financial results. Thank you.
Great. Thank you Rob.
We ended fiscal Q1, 2021, with our strongest quarter to date.
Posting record revenue.
Record adjusted operating income across the core operations of our business.
In a record Kate.
Including 45 live events over 76 million life. He is a 20% let paid subscriber growth year over year.
My commentary will include year over year comparisons unless otherwise specified.
Turning to consolidated financials.
Q1, 2021 consolidated revenue was a record <unk> point 5 million up 11% due in large part to the growth in our lives that sponsorship.
Review services that are paid subscribers offset by declines that our programmatic advertising and my sister surfaces.
Subscribers grew 20% to a record 877004 net 144000 addition.
84% of our revenue came from subscription in the period and 16% from sponsorship <unk> advertising and licensing and paper due to its sales.
Q1, 2021 contribution margin grew over 450%.
2.8 billion a year over year improvement of 2.3 million, which was driven by the increase in revenue.
But overall gross margin improvements to 27.1% Q1 2021.
As compared to 5.1%.
Q1, 2021, adjusted operating results were near breakeven at 0.1 million dollar loss in Q1 2021.
A massive 98% improvement.
As Rob mentioned the shift towards breakeven at the operating level was driven by a music operations, which generated positive 1.1 billion adjusted operating income a substantial improvement compared to a negative 3.1 million in the prior year.
In addition management enacted certain onetime cost reduction initiatives in the period, including pay reduction saving approximately 1.1 million in Q1 2021.
Now I would like to discuss the Q1 financial performance across our music operations the corporate divisions.
Turning to music operations.
As a reminder, our music operations consist of our audio and Internet radio services or with our livestream operations, including sales marketing and product development and to a lesser extent certain of general and administrative costs.
[noise] [noise] during Q1 2021 music to operations generated 1.4 million sponsorship advertising in license revenue.
From zero point Ninemillion.
The increase was driven by paid sponsorship in licensing which increased over 350%.
Offset by a 63% decline in programmatic advertising, resulting from an overall decline in advertising demand from the current covino team environment.
Description revenue was 8.9 million as compared to 8.6 million driven by the net increase ending paid subscribers.
Well the onset of the covino team, our subscriber growth and corresponding revenue you get to slow across both our direct to consumer beating heart.
We expect this trend to continue at least through the the remainder of the first half of fiscal 2021, which is reflected in our fiscal 2021 guidance.
Finally, we generated 0.2 million in ticket sales for the launch of our pay per view platform in May 2020.
We expect the number then an average revenue per pay per view that we'll continue to grow.
Q1, 2021 contribution margin of 2.8 million increase over 450% from a year ago.
Largely driven by the revenue growth or live events business.
Coupled with substantial reduction in the average cost to produce lives of it.
In Q1 2020 to 21, we spent approximately 1.4 million to produce 45 live event at an average cost of less than $30000 per lighter than after excluding certain nonrecurring production.
This was a significant improvement compared to 251000 per event in Q1 last year.
The improvement was largely driven by cost that then its efficiencies realized.
In the scale of our business, coupled with our transition to more profitable digital only can pay per view lighter that's in the current period.
Q1 music operations adjusted operating income was 1.1 million as compared to an adjusted operating loss of 3.1 that.
The improvement a 4.2 million it was largely driven by the increased contribution margin.
Coupled with lower marketing product and personnel related cost driven partly by one time over 19 cost reduction initiatives enacted in that period [noise].
Coupled with slightly higher capitalized internally developed software costs.
Turning to corporate.
After including corporate and public company overhead he went overhead to just from an operating loss was 1.2 million as compared to negative 1.5 million in the Q1 2020 <unk>.
The increase the decrease was largely due to lower personnel costs driven by one time over noting cost reduction initiatives.
Excluding non cash based compensation amortization expense depreciation and certain nonrecurring operating expenses.
Our consolidated operating expenses decreased 2 million or 40% to 3 million accumulate 2021, largely due to the 1.1 million onetime coded 19 cost reduction initiatives.
[music].
Turning to our balance sheet.
Our balance sheet was the strong is in the strongest position in our history.
We ended Q1 2022, it with cash restricted cash of 17.1 million up 4.7 million.
The increase was largely driven by net cash proceeds from operations of 4.5 million and financing of 1.0 million.
Offset by yes, <unk> net cash out those from investing activities of 0.8 love it.
The quarter to date that cash savings from operations was largely driven by working capital savings from active management of our payables during the period.
Now I would like to update you on a few additional items.
In July 2020, we executed on several key financing events, which substantially improved our net equity position by over 300% $40 million versus June Thirtyth 2020.
Positive changes in our liquidity from unrestricted cash but are a are incurred payables plus our current debt.
More specifically.
We provided notice to repay our senior secured debenture holders by August 30, Onest 2020 as of today, we'll approximately 8.9 million in principle and 6.5 million of restricted cash will be 40, <unk> released upon repayment.
We entered into a $15 million eight <unk> percent senior secured convertible financing arrangement with a significant existing institutional shareholder.
The agreement is four to your debt when its convertible $4.50 per share.
Upon closing we would also issue the older approximately 800000 shares unregistered common stock.
Completed a 17.5 million dollar common stock financing at $4 in 14 cents per share, including the conversion of 10 million of liabilities into equity by a major music partners for their balance sheet, bringing our ending cash over $20 million as of today.
Turning to financial guidance.
We are raising our full year fiscal revenue 2021 guidance, but updating our fiscal 2021 guidance as follows.
Revenue of 62.5 68.5 million an increase of one point my 5 million from prior 2021 guidance.
Annualized contribution margin of 30% to 35% of revenue improvement of over 100% year over year versus fiscal 2020.
Adjusted operating loss of two and a half the 5 million, representing a 70% improvement year over year at the midpoint.
System with Q1 2021, we are forecasting air combined music Operation Service segment.
Profitable in fiscal 2021.
It's only corporate overhead adjusted loss between four to 5 million.
Capital expenditures, which principally consist of internally capitalized labor costs in the range of three and a half the 5 million.
And it were expected to live stream over 100 music events.
An increase of 140% year over year.
That concludes our prepared remarks at this point I'd like to hand, it back to Rob.
Okay. Thanks, Mike before we open its questions I like to congratulate our president Dominic Mccormick or you can hear a lot more from on our next conference call. The recently was named to pull Sars impacts 50 power list for 2020 in the mixtures category of executives, we take a concept.
Vision and turned to a brilliant chiller then.
It was recognized for producing by their lives history, making Livestream Festival music lives graduations dermis reward well deserved and we look forward here a lot more from you on on upcoming calls.
I'm Gonna open this up now they operate can open it up now for questions will be terrific.
At this time I'd like to remind everyone in order to ask a question. Please press star followed by the number one on your telephone keypad and we'll pause for a moment well, we compile the Q and a roster.
Your first question comes from the line of David Bain with Roth Capital Go ahead. Please your line is open.
Great. Thank you, maybe Mike maybe I can start with a understanding the balance sheet just unclear the $50 million convert proceeds they no longer out to go towards an acquisition. It looks like so that that we'll talk about the current and what the other transactions can we assume that the payable bucket.
Be close to cut in half by the time you report the September quarter before including any other additional relief from major music partner similar to the $10 million transaction that way to look at it.
Yeah, I Luna, you're absolutely right on the framework, so as far as the payables.
Yeah, you can assume I think half is probably a good proxy.
Okay Fantastic and then now that podcasts, one is folded and have the front end loaded cost synergies the gun and can those get us to EBITDA breakeven in the relative near term they put differently. The higher end of your operating loss range contemplate a december or March breakeven.
And then if you can discuss maybe to the mix of subscription versus advertising you expect as you near that level.
Sure.
So.
Yes, we are starting to realize day one synergies.
As far as profitability I mean, we've always indicated that podcasts was incredibly accretive to our business.
And just to note in Q1, you know that was all organic they've been terms is even showing our core music operations sort of getting to profitability. So we expect that trend to continue.
As far as the mix a you know we said you know anywhere from.
The key personnel to 65% of our revenue will come from subscription.
And the remainder will come from the other including advertising.
Okay, Great I don't want an odd to call there's lot of fun stuff to talk about I know I. Thank you.
Great. Thanks, Dave.
Our next question comes from the line of Jon Hickman with Ladenburg Go ahead. Please your line is open.
[laughter] good morning, everyone, who could you talk a little bit more about.
How.
The.
Yes.
Like how you're generating sponsorship.
Sponsorship revenues in particular.
As it is that I mean, you have three or four dedicated sales guys.
But.
If you like elaborate on that process.
Now that were.
Yes, John John I'm, I'm going to handle Derman I'll, just give you were no longer three or four sales guys right part of the beauty of the acquisition right in bringing enormity of steam in as we were now close to the Grove 15 people in sales and with that Dermot wondering why don't you take this and talk about you know some of the somebody.
The opportunities you see into Corona, a announce when we just made.
Sure Yeah. Thank you. Good question. So there's really a bunch of neighbors that would be on what you're trying to see now is really you know fruit I'm just trying to use that we put in place in previous quarters understands you the true.
But first because really designed to two do you know we aren't Jason there.
Huh.
Just had themselves and we added more staff into the next in different regions. So we're seeing fruit.
Hi, I'm not in in the Cobrand period, you're going to remember that my music has shut down there's a ton of money that goes into live music in physical environments.
Well, we're starting to benefit from that as we start to produce original programming like music lives on line zone.
Fitting our partnerships.
Hi, I heart recalling Sal.
We Ah.
No.
We on spring awakening, which the physical Pascagoula, we want to lead and combining physical and digital fastenals, which shoot opportunity when physical returns we signed them on how you deal with Parana beer to support digital.
Beginning this year patents physical next sooner.
And then we continue to push on our distribution as we previously announced.
Zoom, along with many more humming.
Audience is continue to grow Ah so audience grounds.
Opportunity, adding headcount and great original.
Driving our assets and Ah Hey, you, it's also opportunity or advertising sounds I push more of these great names like people into the market, we have redefine their relationships with you because it's easier. So we can bring that.
Next proximity to the artisan and their fans to an advertiser and very different kind of so just to recap we're seeing that portion because we.
Africans, we wouldn't go Betsy continued to see it also there's tons of synergies would actually don't seem to be combined on past create.
New original and talk about advertising opportunities are and great names I kind of grown and video chronic so I kind of great things happening in advertising starting to see her fruit of that.
[noise], Rob can I add something.
Yeah, absolutely sure one of the things that I think it's important to understand is.
The podcast one network.
In the last 12 months was downloaded about 2 billion times thats tens of millions of listeners.
Just as advertisers use that to reach consumers.
We also use that.
To reach podcast listeners.
[noise] the ability to be able to promote.
What's going on both at lie back sand part at least by live and podcast one is enormous our ability to be able to drive consumers to the events that are taking place is second to none.
That can translate and we expect that will end trend that it will translate.
Into more subscription revenue more pay per view revenue as well as more consumption across both platforms that can then be redirected towards advertisers so at some.
You know, it's it's just a.
He getting getting that rolling and we've started that rolling.
It's going to have a tremendous effect on.
The ability to.
Reach those super consumers, the ones, who will subscribe and the ones, who will listen the benefit of our advertisers.
Okay, Maxim and Mike.
If you could just elaborate.
On the pay per view side, when you sell it ticket.
Do you have to wait for the event to recognize that revenue.
Yeah, Yeah. So.
In terms of fulfilling our obligation.
Any pre sale events will get hung up on our balance sheet is deferred revenue takes that we quote to cash.
Okay. Thank you.
[noise] and again as a reminder, if you'd like to ask a question. Please press star followed by the number one or on your telephone keypad. Our next question comes from the line of Ron Josey with JMP go ahead. Please your line is open.
Great. Thanks for taking the question just two please Norman you mentioned timing was right to do the acquisition and appreciate the commentary on on the downloads and ended the reach on listeners, but can you just talk about the agenda podcast market in general and and frankly, how you view why why you chose to work with lie that's going forward and then a question we.
Good afternoon podcasts are just how do you keep count on the platform. So in any insight there would be helpful. And then Robin like you know the we've just talked a little bit about advertising, but with the revenue shift the revenue mix shifting pretty dramatically in the corner in the quarter towards advertising can you just talk here what be increase in sponsorship in demand and then.
Mike you cut out a little bit when I was listening just on expectations for advertising going forward. Thanks, guys. Appreciate it.
Since the original question was directed to me I'll start out with what's going on and podcasting I mean podcasting, it's a very hot space right now and hasn't even hit its inflection point, what I mean by inflection point.
As an advertising medium.
Once podcasting becomes a separate line on an advertisers annual budget, that's one that will hit its inflection point.
Now it has.
Become with some advertisers, but not with all advertisers and not wasn't most advertisers were still going in and trying to take money away from other audio mediums <unk>.
But once that hit and I've seen it before I saw it network radio.
Once network in syndicated radio became a line item on advertisers budgets.
Which it did the end remains today the size of the business tripled.
Bids predicted that next year.
Podcasting revenue.
I will crack a billion dollars. So if you think that.
Before hitting that inflection point, we're looking at up business that could hit a billion dollars in gross revenue.
Then I think what's your what are you know the future remains extremely bright in terms of.
Of the growth potential which is the reason.
Why you see companies like.
Spot of five <unk> and the satellite networks and some of the major radio companies moving into the space.
With a lot of energy primarily because.
A lot of their core businesses have have flattened and in some cases have shown some decreases so moving into the digital area makes all the sense in the world because it's a great story and [laughter], a with the potential for increased revenue and podcasting and in digital audio on dumb.
And that's a story that needs to be told by those companies, we recognize that from the very very beginning.
That this was gonna be a space that was going to be rapidly growing.
You know I know rapidly growing space you know from 35 years, if the chairman and CEO of Westwood one.
And yeah, when when the the reason that.
This deal made so much sense to me was.
The.
The growth that's going to come in the business is also going to be driven by innovation and the innovation that we're talking about is taking what is obviously.
Significant theme on the revenue on the on the audio side and packaging it with the ability to be able to.
Live stream our content.
Create video on demand Vod Cafs orb podcasts, if you will which can create longer life for the product.
That may be streamed live event.
And doing this.
Now I'll puts us in a unique position and creates a competitive advantage because we can now go into advertisers and talk to them about 360 multi platform up offerings like video video on demand.
Life events podcast, both audio and video.
Using social media as well and a way to.
Expand our offerings to podcasts and talent pick your last question was how do we retain talent.
Well our talent our deals are mostly partnerships.
So our interests and the interests of our partners is very much the same.
We have a track record of [laughter] bring against some really good talent to in a lot of key areas now they in some cases, they maybe people you've never heard of okay.
Because especially in our female area, we have a lot of Influencers from places like Bachelor Nation Real Housewives places like that where they have huge social followings and can attract super listeners to a great degree.
And our influencers and their own rights.
We find them, we find them early or less interested in going out and finding.
You know the personality with huge TV Q that will demand in some cases.
Millions of dollars' worth of guarantees.
We can play in that game, if we desire to do so but we've had much more success.
Fine to them early building them out and making them partners and our operation.
So that our interests are all the same.
Yeah, and I think you know enormous you know might have just jump there for a minute you know very exciting things about adding people to the lineup is easy crosses over all five of the different.
Subsidiaries of our company right from audio.
Live streaming to over the top to podcast and the pay per view and that's really unique model that each one of those says moon shot of their own lighten. The Tam on them is the biggest if anything I've ever been involved in we've combined into gas gathered to give you the opportunity costs, both and would skill set to these two teams.
We can cross promote and sell it keep making more money off in the same content.
So really unique GAAP or opportunity and I think you know pit Bull is just beginning of music you know artist fans, who will join or platform.
Right because we're the only artist century platform that is fully focused on the artist first.
Alright, and focus on this Japan, and giving them an opportunity to participate in everything from a piece of the subscription lie to appease piece of the sponsorship that piece to a piece of the ownership of the of their business and in doing that you get a long term relationship versus a short term just like we do we pit bull and we did with knives, and we get rid Nellie and we'd ever Jeremy.
Okay, and you can see more and more of those those parties Spurs deals and if you look at the social media numbers globally artist and the biggest social media stars in the World like 75, the top 100 or artists and bands 750 of the top thousand artists and bands and so we want to we want to have few those really share.
At the same passion around unification as well as building franchises and with Norman joining and the franchise as he has we have multiple different franchise is now within that within our business from lives zone or sports Center music or Tech noise News that news program. That's the mission for 25 years and music.
The music lives right, which Dermot helped to build a platform that is literally it's the biggest facile probably ever done in history right all done digitally to Shaquille O'neal anti inadequate roll. It. So we're going to keep building franchises and we're going to keep treating the artists like this can be it and where do we you'll be hearing every every time you hear from.
This company is artist first Cowen first.
That's great. Thank you and then Mike anything on advertising Super helpful. Norman <unk>. Thank you you bet.
Yeah, I think I could take the next to.
So so listen I mean, we.
Aren't seeing anything but huge demand for everything that we're doing as far as sponsorship.
So going forward.
We don't expect there to be anything, but positive space or in relation to that.
As far as expectation of sort of consolidated advertising I had mentioned it.
Oh, probably 40% upwards of 40% of our revenue <unk> by the end of the year.
So we'll be some form of advertising sponsorship.
Licensing and or pay per view ticking.
Okay, then ask your questions or yeah.
Yeah, Yeah, I think I'm good thank you.
Great.
Your next question comes from the line of Barry Sine was Spartan capital go ahead. Please your line is open.
Hey, good morning, I want a follow up and also asked the question around advertising. So other podcast one transaction closed July one I didn't know that's a huge increase in the size of the sales wars.
What's the process on whats the timeline for us to start to see results from a unified sales wars I'm, assuming March quarter, and Mike you know just talked about the implications in terms of AD revenue for our guidance and then on a ancillary note.
The impact of political advertising in this presidential election year do you expect that to be a significant I know, there's going to be a lot of AD spend and a lot on digital and a lot targeting.
Younger audience, but do you expect that to be a material driver of your advertising results.
This fiscal year. Thank you.
Should I take us we got that.
Oh.
Yeah go ahead yep.
Okay.
Oh hamlet [noise].
In terms of political Oh, we are seeing some political advertising, but it's also having you know this is [laughter]. This is a very strange here okay.
With the vision is that we're seeing and.
The passions of the general political situation.
There are more advertisers, who don't want to be around political programs. Then there are advertisers who are taking you know who are gonna be adding to the.
You know to the revenue.
[laughter] of Ah of programs that will reach audiences that politicos are interested in we will certainly see some.
Advertising revenue coming coming our way from politicos, we've already seen it.
But.
Yeah with coal good and with.
And with address the number of advertisers who want to stay away from controversy all programming, especially on the talk side of the business. It's hard to predict that we're going to see a huge bump from political advertising.
I keep hearing about all the money that's going to be spent.
And and and and I think.
It will but it hasn't really you know to any great degree happened yet.
The revamping of of certain political campaigns in the directions that they're taking.
Its certainly it's certainly evident.
The the over all.
The may out and you.
You know, we're all looking for this covert thing [laughter], though to become a thing of the past in that looks like it's gonna be something that we're gonna have to live with with some time for some time, we're still getting plenty of request for proposals.
But we're also seeing.
Advertisers, who supply chains are being interrupted for you know aren't able to market their products and the same way so.
Initially a the projection for team for this year for calendar year 2020 was to break the billion dollar barrier.
If we're going to miss it as an industry.
Projection is to break the billion dollar barrier.
Next year.
We think that.
We're saying a lot of a request for proposals for fourth quarter and Ah and there's of course in fourth quarter, a calendar year, we're gonna be selling.
The.
2021, and the calendar year upfront.
So we'll see a surge at that time and get them.
A much better handle on what it's going to look like overall.
But the growth of the medium seems to be powering through the negative side of what's Oh, you know what is the result of Covidien and what as result of politicos that are unlike any political so I've ever seen in my career.
And then Enorme if you could talk about the process of integrating the sales team and you bring over a much larger sales the than lot by life had and your salespeople impression on the not the podcast inventory, but the legacy.
Slide by live.
Product in Missouri, and your ability to increased monetization of that inventory Oh, yeah, well, we're already moving on that I mean, we got started out on that you know a even before the deal officially close to because you know it was you know if we hadn't closed the deal it would still we'd still be do when these deals because it makes so much so much.
Yes.
Our our team is very pumped up about the opportunity.
To sell things.
At our competitors don't have and.
The integration has already started you know with programming that has been added to each each lineup for instance, there's a number of.
I'd cast that were that that are available through a life I lives that are now on the podcast one platform and vice versa. We're migrating.
The podcast one I'd cast over to the live by life platform. That's gonna resulted in increased audience and every time I tell my sales department about something that we're going to do and I ask them about their opinion of it. The first thing they say as if it's got audience, we can sell it okay [noise].
And and that's what it boils down to the ability to generate significant audience.
To be able to go out and generate premium rates because there's so many advantages to podcasting. So many advantages to taking advantage of.
Audiences that are totally committed.
To the kind of programming that you see it live by life in that you see at podcast one for instance.
The average time spent listening to a podcast according to Apple is 48.3 minutes.
It's interesting since a number [laughter] since a lot of podcast don't even run that long what it does mean is.
Regardless of the length of the podcast.
Our consumers are listening to it from start to finish you know over 90% of our consumers listen to it from start to finish and that's because they may not do it in one setting, but there's a pause button there.
So consequently host red commercials to an audience is committed to listening to the program and its entirety is very very valuable to advertisers.
When somebody like.
Especially.
On on on the women's side of programming.
When somebody like a Caitlin Bristow reads, the commercial and recent with enthusiasm or it's a product that they actually use.
That's hugely valuable to the advertiser in the same way that we are artist first.
You know if artists are number one then advertisers are number one a okay. So we have to supply the kinds of things that will allow us.
To take good care of both of our programming constituencies and our support constituencies.
And.
Podcasting has proven.
In its and its gross.
To a to be of great value not only to major brands, who have really only discovered podcasting in the last maybe three or four years, but also to direct response advertisers the ones who say.
You know they get this product.
No.
Go to this website news the Proto pro promo code, Adam or call. This 800 number.
Get works advertisers know it works so the more.
Personalities.
That we can get committed to doing what we're doing we're having very very good success doing that.
The more intriguing and the more salable this becomes the advertisers. It's it's it's a growth curve that is not going to go down it's going to continue to go up.
In spite of the kinds of things that we're saying right now, which nobody has ever seen before in the environment.
And lastly, just the timing on how long will it take you to fully impact reported a advertising results I know, there's a long lead time, our fees and so on I'm, assuming that we won't really see the full impact of the integrated sales team until perhaps the March quarter is that fair.
<unk> it [laughter].
You know I'm I'm hesitant to talk about forward looking you know <unk> when that was a private company I could talk about a whole lot of things now as a public company you know <unk> I don't like to look at forward looking things with with that kind of specificity, but I will say this.
It's already having an effect.
We're already cross marketing across multiple platforms once we can.
Get a few things like or the ability to start taking using more and more music programming in pure podcasting rights now, which is mostly spoken word then you're going to see the think sky rocket.
It's hard to make a [noise].
From a projection in the environment that we're in right now because even if we do take off there are other things that could you potentially have an effect.
No I'm not because you're not cut you off the battery, but let's do this on the call. Afterwards, just to wrap up guys. I'm again. This is an inflection point the company by we see telltale signs that the integration to the two businesses our offices around the corner from each other Norman and I speak six seven times a day [laughter] Jeremy.
Them in and I between Germany, norm and I, we all see on every level best right. You think about pay per view I'm going to get caught off in the minutes you think about pay per view and signed tens of thousands of tickets think about who's coming into the ecosystem and who's coming into the funnel, we're now bringing pain credit card buyers to music like.
Into the ecosystem right, who crossover between all the businesses and when you think about pit bull you're going to hit on every aspect of it he's going to come with some of these own advertisers at home with him as you guys probably no. He's got you know many brands sit back him. So all these giving the capabilities to talent to be able to cross recall.
Losses, Normanton I've already had Shaquille O'neal moved from podcasting to do a live event you drove 9 million people. So we're very confident that and integration of the sales team to finance team. The acquisition team right is really all kick into high gear here and we fully expect that you'll you'll be seeing more and more.
More of these substantial announcements coming over the next couple of weeks.
With that guys. It took him I'm being told to wrap up so I don't think we have anytime promoting more questions, but I think initiative and the most of you shortly.
We have what do you have time for one more question.
Hello.
Not showing any further questions in queue at this time.
[laughter]. So so thank you. Thank you everyone.
You ever for spending your time this morning, and we look forward to the follow ups.
And with that ladies and gentlemen, this does conclude today's conference call. Thank you for your participation you may now disconnect.
[noise] [noise].