Q2 2021 Livexlive Media Inc Earnings Call
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Thank you.
Good afternoon, and welcome to life I like media business update and financial results conference call for the company.
The first quarter ended September Thirtyth Lucky 20.
Joining me on today's call are Rob Ellen the E L and chairman Jerry the old interim CFO, Jeremy <unk>, President and norm patches founder and executive Chairman of life by lives wholly owned subsidiary podcast one.
I would like to remind you that some of the statements made on today's call for forward looking and are based on current expectations forecasts and assumptions that involve various risks and uncertainties the.
These statements include but are not limited to statements regarding the future performance of the company, including.
Including the expected future financial results and future growth in the <unk>.
Yes.
Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the Companys filings with the FCC for information about factors, which could cause the company's actual results to differ materially from these forward looking statements, including those described.
In its annual report on form 10-K for the year ended March 31st talk to each one of things.
Quarterly report on form 10-Q, and the quarter ended September Thirtyth 2020.
On subsequent SEC filings.
You will find reconciliations of non-GAAP financial measures.
For the most comparable GAAP financial measures the stuff today in the company's earnings release, which is posted on its investor relations website at <unk>, our debt life by life Dot com.
And the company encourages you to periodically visit <unk> IR web site for important content.
The following discussion including responses to your questions.
Contains time sensitive information that reflects management's view as of the date of this call November 16th 2020 and.
Except as required by law for the company does not undertake any obligation to update or revise this information after the date of the school.
I'd like to highlight trend that's true that's the call is being recorded the company is making it available to investors and the media via webcast and a replay will be available on its website in the Investor Relations section shortly following the conclusion of the call.
Additionally, it is property of the company and any redistribution retransmission or rebroadcast of the call for the webcast in any form of without the company's express written consent is strictly prohibited now let me turn the call over to Rob Rob.
Thank you today of good afternoon, and thank you for joining us today for our second quarter fiscal 2022, 21 business update gift.
Difficult times bring out the best in people the.
The foundation of why buy lives has been built around the world class management team and the board to deliver the first count centric platform focused on should pretty much the way.
The next slide Koby, the has accelerated on business development maturation in Grand recognition by multiple years as livestream festivals and concerts.
We progressed from a complementary offering the primary means of delivering on watching and listening to wide digital festivals and performances.
We've de risked the business by diversifying our revenue streams with the recent launch of pay per view of the additional substantial advertising and sponsorship revenue component as a result of the acquisition of podcasts War and we recently announced letter of intent to acquire ecommerce merged company cost and personalize the station solutions.
The recorded approximately 19 million of revenues in 2000, my true that acquisition is expected to close on the end of calendar 2020, I'm pleased to report in the second quarter ended September 30, we recorded on our 10th consecutive quarter of record revenue along with the 148% increase in contribution margin.
Given the momentum we see in the nearly all of our business verticals. We are excited to raise our revenue guidance for the current fiscal year ended March 31st the between 63 and a half the 69 9.5 million.
We also had a meaningful improvement of our balance sheet shareholder equity increased by 20.3 million of working capital like 18.5 million.
The improvements on our balance sheet as a result of a number of transactions, including two common stock transactions at $4.14 extended payment terms, while the 12 months on 5.9 million of payables I mean entering into a $15 million senior secured convertible financing agreement for knowledge and 50 cents.
Over the last six months why by line of Livestream hundred mm three events, featuring 1500, plus on is generating content, which has been reviewed by over $95 million as compared to 22 events featuring 220 for orders and over 60 million last year.
I'm happy to report the one of more trophy why the bench properties Spring Awakening has expanded to include the spring the waking festival in Cancun, Mexico scheduled for late April 2021, we already have all the 1.3 million of ticket sales the let's say the only significant pent up demand for the return.
Non of live music of batch.
Today, the fly by lot of this growth and evolve to be the leading talent first plop, one focused on connecting artists with their Superfans building long term sustainable valuable franchises in audio music Podcasting box, you asked me, Oh, Gee and pay per view life.
Life screening of video on demand and our distribution reach continues to expand.
Why buy lives 24 hour linear OLTP screening channel now has the reach of over 300 million people on platforms like Amazon fire and Roku, Apple TV swings Zummo star and both Samsung Smart Tvs and Samsung TV blush.
We provide the platform partners to Simulcasts globally of course, all digital and social platforms with a fully integrated stack of cutting edge technology in house production distribution marketing of sponsorship.
We have built the on equaled flywheel is positioned us at the forefront of what we believe is the paradigm shift the live streaming of one that will continue well after the cobiz.
New monetization features Florida, the pay per view virtual ticketing merchandise subscription digital touch worse shipping all of which create numerous revenue share opportunities for both live on live and the artists.
With all the recent war watching the pay per view, we've sold tens of thousands of tickets in over 120 countries, an exclusive produced and delivered wipes Lifestream people you concert by Grammy winner Pit Bull Modern Dromer festival, various rocker keep pops in changed much direction Wonho plus over 100 paper.
Total debt with lives from out there.
All of you on.
Operator, do provides an opportunity to introduce millions of new visitors to why buy lives, allowing us to grow our free registered users and build the robust data relationship with credit for holding customers at the top of our sales force.
We are fortunate to have amazing music industry partners live nation, the Iheart numerous record labels and publishers and of course, the hundreds of talented artists and make lot by lot of special or.
For the partnerships, including tick Tock, Youtube Facebook Twitch, Twitter Tencent dailymotion.
We have an exclusive partnership with Tesla for over eight years, whereby by lot of subscription is pre installed in every castle of course sold in America.
The why by wide average decreased 85, other automobiles and growing as well as the cross major carriers rise in sprint and T mobile.
Through our distribution partners of B to B deals around the globe. We now have 936000 paying subscribers with that I'm going to hand, it off to price in the company of my partner Dominic Mccormick.
Jeremy actually Rob Thank you Rob.
One of the real bright spots over the last few months is the enormous progress we have made on the spot for us.
We know the sponsorship deals with perhaps the Mcdonald's KFC like on the <unk> all the fitness simple mobile Corona portions of the poultry State farm. She waikele on my part of Lemonade and men Pos pure fresh from most of these new debt our new deals on the expect to see strong sponsorship is growth continue went for the perceived.
Future.
We continue to produce the live stream of proprietary weekly concert franchise music lives on the following the massive the success of music lives vigilant balance, which we call our digital co chair of the original festival broke all of streaming backwards with an audience larger on on a like for travel on Lollapalooza of that.
On a credible 50 million views on 100 incident on countries.
Oh, you views on FICC talking on an average of over 200000 on current users maybe the lives of bank true validated the value of live streaming media.
Is it lives on has received over 8 million livestream views streaming more on the 156 artists and weekly viewership continues to climb showing the growth and brand awareness and interest in this growing franchise and its one of the only music franchises that has consistently streamed live music every week.
During the call of it.
In early July we closed the acquisition of podcasts, one, which complements our music and video content of stack on.
Bob cost for the offering on the burst supplies are Robbie model by adding a significant advertising and sponsorship from Poland and alongside our existing subscription business. We also out of an experience advertising and sales team, which tripled the headcount of an overall cash [laughter].
What does today to give a business update on podcasts one there's no impact of found on exactly the chairman of our wholly on Division go ahead of them.
[laughter] Oh, thanks during much of it so it's great to be here and it's great to Oh pass the lungs very positive information.
We had a good quarter with positive EBITDA on August one and.
And are beginning to see the turnaround economically on the AD market like we're poised for a strong Q3 and.
And since the merger with why backs, we've added 12, new podcasts with the total social reach of over 287 billion.
We expanded our reach and programming.
With the launch of broadcast the part of the broadcast one network, which of course are.
Our video podcast Blue chip sponsors that committed to work shows on across our audio and video.
Up.
Ah offerings are [laughter] are very very strong and very well know the up on the pit Bull broadcast in park EPS continue to.
The surpass our expectations strong by end of support from advertisers like KFC at the state or Clorox talk space the net suite.
[noise] or to say the least encouraging this.
This was especially important as we build a true 360 degree offering.
With.
With pit Bull.
Including the pay per view broadcast podcast and social elements of the campaign.
Additionally, we.
Had successful launches of the Michael urban podcast.
Podcast with Dr., Steven Gunby, a leading health and wellness expert on a podcast featuring.
Massive influencers, Amanda Ceridian, Jacqueline Fernandez with the joint total reach of overall on the wouldn't the 32 million.
Followers across Instagram tick tock, you to Facebook and Twitter.
For the past quarter.
Oh, the Lady gang featuring killed the night, Jack and I can end up back the Tobin.
As a t. the huge milestone with over 100 million downloads, we just extended the deal with the Lady gang for another year.
And we could not be more excited for what's in store for.
For podcast one of the late again next year.
We also would like to share details of two key hires that we've recently made.
A lot of fast now so.
So now the head of our marketing the audience development.
And the Alister wall for the new head of production the alone.
On is a veteran television marketing executive with over a decade at Nbcuniversal and she'll oversee all marketing initiatives for podcast, one and our numerous podcast.
Alastair joins us from Warner Brothers, where he served as director of production and prior to that.
Oh lets you have to you on the or dies commercial division, which working with some of the top directors.
And in the world on large scale advertising campaigns. He will oversee all aspects of production of <unk>.
These two key hires new exciting programs.
Our total.
Good for were to announce shortly on the overall podcasts interest free which this year is projected to.
Gross over a billion dollars in 2021.
The future looks bright.
Again, I want to mention that we had a good strong quarter with 5.1 million in revenue.
The 450.
[laughter] Allison and positive EBITDA.
Oh, that's our story on sticking to it.
Excellent that thanks.
Thanks, Norman Gerry handing it off the Jerry our interim CFO.
Joe you take all the please.
Thank you thank you Rob.
As I was the humans in saying, it's been a very exciting year for us and it's certainly a very exciting quarter.
As we've mentioned for the 10th year in a row, we are about to report record revenue of.
14.6 million adjusted operating losses basically of breakeven on 2000 losses Cross our operating the vision and record Cape the ice, including 29 live events over 75 million like views.
On the 1% net subscriber growth year over year.
On a consolidated basis, the revenue 14.6 million of 52% year over year 9.6 in this in Q2 of 2020 due in large parts of the growth in our lives of Dan sponsorship hate per view services and podcast one of the advertising year over year.
Well said quite a bit of small the crying out from programmatic advertising and subscription services year over year at September 32021 subscribers grew to 936000, which included certain subscriber net subscribers for the subject to contractual dispute.
I'm still a net increase of 161000 from the prior quarter. We ended Q2 2021, our goal to diversify our revenue we ended with the Q2 with 2021, the 53% of our revenue from subscription 39% from sponsorship <unk> advertising.
On licensing and 8% pay per view ticket sales significantly diversifying our revenue streams compared to the prior year when.
The 94% of our revenue was from subscription and 6% net advertising.
Our contribution margin grew over 148% year over year to 4.3 million compared to 1.1 of the prior year period improve.
The improvement was driven by the growth in sponsorship revenue. The addition of podcast one advertising coupled with the overall margin improvements the 29.3 per se in the second quarter as compared to 11.8% from the prior quarter.
Our adjusted operating loss was 1.4 million in Q2, 62% improvement from the A.O.L. losses of 3.7 button on the prior period the losses driven by our operations reduced losses was driven by our operations, which improved 1.9 million year over year with adjusted.
The most basically breakeven.
[laughter].
On our operating division again revenue of 14.6 million of 52, and a half percentage.
The the growth is basically from why the then sponsorship pay per view services on the addition of podcast on advertising in the quarter offset by a decline in programmatic advertising and the subscription revenue as I mentioned before.
During Q2, our operations on its five going to happen on sponsorships and advertising as compared to 600000 in the prior quarter Howard.
Our 20 Q2 2021 subscription revenue was 7.7 million as compared to 9 million in the second quarter of 2020.
This result, because of the decrease of the contractual dispute I mentioned before and as the result of that we are not recognizing revenue on the subscribers at this point.
I'm very confident that our conflict free will be resolved in our favor.
We will eventually the.
Able to collect that revenue.
Finally, we generated 1.1 million of ticket sales from the launch of of pay per view platform in May 20, Twond we.
We expect the number of events and the average revenue per day of course this platform to continue to grow throughout the remainder of 2021.
Hi distribution margin of 4.3 million increase over 148% from Q2.
As we discussed in the prior paragraph.
Oh in Q2, we spent 800000 to produce 29 lives of advances on an average cost of 28000 for a day an improvement of over 90% year over year in the prior year. We spent 2.1 million to produce eight advancing on an average of course of 262500, but you can see.
The a dramatic.
Decrease in that cost, which was the largest contributor to our margin improvement.
The adjusted net operating loss for the for again approaching breakeven as compared to an adjusted operating loss of 2.1 million from the prior quarter. The improvement 2 million was largely driven by improved contribution margin, which was offset by increased operating expenses from our acquired Pakedge business.
All right the corporate corporate the vision principally consists of general and administrative functions such as executor finance legal and other areas that support the entire company, including any public company driven initiatives supporting functions.
I'm getting the losses decreased largely due to lower personnel costs lowering cost and driven by one time co good cost reduction of citizens and the price for.
Non-GAAP, excluding non cash stock based compensation amortization expense depreciation and certain non recurring operating expenses Q2, 2021 operating expenses increased 900000, or 17% of 5.7 million compared to 4.8 billion from the prior quarter increase.
This was largely due to the addition of podcast one during the quarter offset by lower direct marketing cost and product development of course, driven partly by increased organic traffic from digital <unk> of bank.
Oh, I think as Rob mentioned, we are considerably strengthened our balance sheet.
On the Q2 2021, with a 21 million cash of it and a half million from prior and cash of 12.4 million of than the prior year increases are largely driven by net cash proceeds from financing of 14, and a half million offset by net cash outflows from operations.
Of the importantly, again strengthened the balance sheet working capital increased by 18 million due to the financing previously mentioned.
And.
On the one additional item the thing we talked about the addition of custom personalized solutions and Robert you mentioned the increase in our guidance.
And that concludes my prepared remarks, no charter back the Rob.
Yeah, So the bag Bacchi gentleman and as you as you can see we've put together a world class team of experts who of each built the operating sold multibillion dollar businesses. We're really excited to continue to grow the team and you'll you'll see very shortly we'll be announcing on our new CFO.
For the company, but we're really excited about the team is really excited about the prospects going forward and so I would open it up the Q1 day and any questions. The App [noise].
Thank you we will now begin the question and answer session.
You ask the question you May Press Star then one on your Touchtone phone.
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To withdraw your question. Please press Star then too.
At this time, the called momentarily to assemble our Boston.
Our first question comes from Ron Josey of JMP Securities.
I had.
Hi, This is David for raw on for.
The first can you walk us through the components of your full year revenue guidance and what gives you confidence there.
The second on the E Commerce acquisition for C.P.S., how do you plan to integrate that with the life [laughter] and then on pay per view of how did pitfalls that on for farm and what.
What does the pipeline of future events look like for a pay per view and then finally on the advertising can you talk about the progress around the sales force integration, we're talking about for thank you.
A lot of a lot of questions one Oh yeah.
[laughter], which.
Let me try to let me try to answer for so so pit bull I'm Super exciting, we don't break down by revenues, but we did sell say we broke through $2 million of total pay per view revenues previously in the press release. So it's worked out extraordinarily well, but really what's worked out extraordinarily well is the entire flywheel not the least pit.
For the pay per view is on our podcasting using their on ambassador program driving subscribers right and he's the long term partner of the company and I think you get the she she more and more of that.
Oh I'm in terms of sponsorship as you can see by the list the sponsors almost on a weekly basis. We've been announcing another you know AAA sponsor from Pepsi to Corona and you're starting to see some of them be yelled repeating customers or with growing the multi year of customers and yeah I couldn't be more excited about you know the flow.
Acted like zone as well as as well as music lives on you know literally has the sponsor almost every single of that this is the first time you see on that and the acquisition of podcast one of the sales team. We got as part of the acquisition has been a tremendous help and that we now have an army of sales people now selling which is weve never been.
Able to talk about our team its been yeah. We hired our first sales got last December the Corona It right and now all of the sudden you're looking at the looking at a sales team that is 15 people, so really really exciting on that side.
Jerry you want on Jerry a different you will jump of the others.
But you know.
That's true witchcraft for the first question was about guidance and I think the you know what you've heard there is that we have growth.
Great we diversified our revenue streams, and the fact that or chicken sales for pay per view and the increase in our sponsorship and advertising and with the addition of Cts. The are quite confident that we can achieved the the guidance that we just gave.
Yeah, just give me a little color couple of couple of our major a pay per views, including pit bull were delayed until October and.
In November so pit Bull was Calypso Khalifa, a net leach from why a lot of once we announce are hitting in this quarter. So really exciting the direction of where that's going on in a really excited about you know where we see this quarter.
Hopefully that answered everything.
Your next question comes from the the thing with Roth Capital. Please go ahead.
Great. Thanks, so much.
First of the start of pay per view revenue growth. That's trending well ahead of where we had and I was hoping you could speak to maybe some of the ancillary revenue, particularly you know subscriber conversion and how that's maybe trended or trending from from the pay per view events and maybe just the over.
For all direct margins from pay per view now and I would think that those are the augment more upon the merchandising exhibition of that.
Correct.
Yeah. So so we don't we don't break as you know day, we don't break those down from what I can tell you is we've sold over 50000 tickets so very different than when you come on the fly do on 95 million viewers like coming for free and then Youve got to convert of right. So these are called me at the top of the funnel there immediately becoming subscribers for free but there are good for you.
Credit card trashy locking the loading from day, one and then it's can you convert them into paid subscribers and I think you're going to see more and more of that kicking in as the merged business kicks in and we were already doing this right worthy, giving you a fully immersive experience, while you're watching an artist no different go to see Bruce Springsteen concert to want to buy a heck of the T. shirt, we give you the bill.
For the chat message and buy merchandise with the virtual for real merchandise for now we have the ability to actually on those merchant on specialty items in conjunction and empowers us and it gave us the artist another revenue stream in partnership with my by lot.
Got it Okay, and then and of the past <unk> with the.
Just kind of either an acquisition or your own path, maybe organically, where you would acquire a European or global license is there any update there.
Yeah, I would I would stay tuned you know if you read between the lines yeah, when our pharmacy of fold up there was a big bonus yeah forehand, if an acquisition closed of material size. So yeah were still in very much in acquisition mode. I'm really proud of my team. We did these acquisitions effectively at $4 or better just like the NAV.
Moving was done so we are doing with very little yellow dilution to our shareholders on our fully expected. The company is laser focused on expanding globally and as you can see by or artist sort of performing on our stages and the amount of pay per view that we're doing the audiences everywhere. It's everything from K pop right. We have we of buyers.
We have buyers of the bar a pay per view tickets for all of the globe. So really exciting and yes. The answer is we're laser focused on expanding the operations overseas.
Hi, Grant just a comment it's great that the rid of bifurcate for US you know podcasts and pay per view and everything on the castles the head and nice to hear the EBITDA positive I'll, let others get in on the action. Thank you.
Thanks, Nick.
Our next question comes from Elliot Wilbur with D.A. Davidson. Please go ahead.
Great. Thanks for asking about the Cps acquisition, I guess, how is that kind of fit into the strategy of the company and how is this kind of fact, the on the margin mix and any color on the timeline of profitability of that business and then secondly, just talk of the financial guidance curious.
On the change in guidance is including all of the contribution out of your Cps acquisition on Mike.
No that hasn't closed yet and all the about of course of overlap, but just any color there would be helpful. Thanks.
So on the first part of it again is in the flywheel. We've built this we built this that you can listen watch attend right engage and transact and the beauty of this is on the merge side of it and starting with the life side of already talked about righties is into the flywheel. They can buy ahead.
On the T. shirt light a member of the billion from it but im podcasting it gets even bigger because a lot of the revenues that come from sponsorship of the all should come come from direct marketing response marketing, so imagine owning those products and the only into the flywheel the ability to owner on products in conjunction with with the talent. So.
Really really energized and gives us an opportunity to really take on margins way higher again continued the loot as we built from day, one the commodity side of this business and move towards the ownership.
And the other part of your question, it's already profitable. So it will definitely be accretive from an EBITDA AOL standpoint.
Okay, Great and then I guess just following up is that <unk> is the integrated into the fiscal 2021 the guidance.
And then also is there an organic revenue number you can share for the quarter.
[noise] [noise]. So so in that we were not sharing what those numbers are today, what I would say what I would say the is a you know as Norman articulated like the podcast business sponsorship and advertising.
Right you know clearly was at almost a halt and we you know.
Have very <unk>.
Very smartly ran that business to a very successfully the door number so will the acquisition be extremely even this next acquisition right Xenapp slacker of very profitable you'd have a podcast one very profitable and you get out of the next acquisition very profitable. So we're not breaking down numbers right now, but we're really excited about where the revenue growth is.
Yeah as norm articulated yeah, I think we added something like guilt short of 50000, social media use amongst the the podcasting broadcast we announced so we fully expect that each of these each of the divisions of the company will will be yeah, we'll be growing this quarter.
Right for sure I have the strange concept, which probably comes from heavy on that.
A podcast one myself.
That you know being at the black because the good thing and.
No that that really hasn't I think that that's been embraced by.
By everybody at the like my life team and that's one of the reasons why we.
We like this marriage so much.
We're gonna grow and we're going to see audience growth and work on it and we're going to invest in the growth.
The most certainly but we always have our eye on the bottom line.
And I think I think for everyone. You know just to highlight the finished because I think we're going to be rushed off is this company is laser focused on bottom line.
We now can look at this business from a perspective of where every quarter up into the last quarter, we always talked about what our revenues were per event.
The company now can be looked at revenues per hour and show, it's really getting exciting that coming into the fly with so many different revenue streams come from the same content right and we've added so many franchises as part of the acquisition with podcast, one and the building of music lives of music lives on and you guys. Hopefully, we'll have an opportunity to watch award show.
It should be launched December on the middle of December of we've already had over a million 1.1, 0.2 1.3 million votes on that already and if you don't know Dermot and Gary Gary English, who is our head of production was executive producer the be amazed, which is still the most profitable piece of of MTV have now launched the.
First ever Digital award show think of it like the U.S. piece of the award shows and so we're excited about the sponsorship around it we're excited about the traffic around it we're excited about where weighted the rest of this year of dogs.
[noise] [noise]. Our next question comes from Jon Hickman with lot of Baird. Please go ahead.
[noise] [noise].
I don't know who wants to answer this question, but.
How was the Kobe to affect you.
Your advertising on the Frackers side and on the part that's one.
[noise] well I'll jump in on the podcast one side, it's certainly had the effect.
What's interesting everybody's talking about how.
Cast an audio listening actually went up during cold and that's very very true.
That's the good thing of more audience of more audience to sell.
But there were certain categories, particularly sports.
Which were negatively affected.
Because there weren't any sports.
Live sports, taking place and of course without watch sports, taking place sports commentary and talk about what's going on on sports on.
All of that kind of stuff was very negatively affected.
The advertisers held back, but we're seeing you.
You know, we're seeing them come back.
Nobody's going to stop the advertising, but.
But they need to make sure that they get there.
Supply chains back in line and that there are products that are kind of deliver advertisers for products that they actually have to sell.
We're very encouraged.
But what we see in terms of.
Returning advertisers [laughter].
But the say it didn't have an effect on us.
When this thing came out of the Blue.
It would be disingenuous of course, the did but then.
Oh, Oh, we're pretty good of what we do.
And the you know we realize when you're in the digital media.
Keyword is being able to pivot to be able to deal with any kind of a situation.
That you wind up in and the I think we've done that very successfully.
Yeah, I'll touch on that as well I think on the line by line of sight.
The benefit of the some color, but you know at the beginning of the of Covance.
We've had the Congress of the physical of that's possible for because we were of the Premier company that was sort of a digital experiences the pivot for us was pretty straight forward and actually like Robert said earlier we.
We had Gulf franchise Mattered report cash you know week.
Weekly basis on a day he couldn't from on the shot in the arm on advertising that we can share that.
The c. pins on the well so how does that drive with for the comment about programmatic.
The timing.
The programmatic is is the piece of our direct selling on the business. The really took off so what do we you know what are we felt a custom content cost them sponsorship program on it.
You know the one type of business, we excel on all forms, but particularly our direct business, we got a shot in the off.
Because of our content of makers I, I heart and programmatic.
Okay amount of can be commodity the when we put out into the world, particularly when all of my music, that's kind of shutdown of the very unique offering I'm looking for today.
Okay, and then could you elaborate a little bit on the contractual thing subscriber.
Oh sure so.
In the <unk> and the cost of our relationship under this contract we have had some.
Differences of view on the definition of certain of the terms of the <unk> in reality, we actually have been true. This is the second time, we've been through it and the first time, we were able to resolve it very favorably.
We are in the process of not only dealing with the kind of contractual dispute for written the process of trying to negotiate the longer and worldwide.
Version of this contract and we believe that somewhere in the that we will come to a resolution on.
We are very confident in our position or we have a great relationship with Tesla.
We had hoped to get it done.
Faster, but negotiations take a while as you know.
Unfortunately, there are some of the accounting rules that my former colleagues in the public accounting World tightened up in terms of revenue recognition. So we are following that very conservative the conclusion. During this dispute that we will not recognize those revenues, but as I said, we are 100% confident.
Position and our relationship with Tesla and we're looking for a longer and even more profitable relationship with them and believe it will get worked out.
Can you quantify how much of a copy of this quarter looks like the ones more than a million dollars yeah.
Yep that's.
That's accurate it was more than a million dollars and kept the see it in our 10-Q and a.
Absolutely.
So if you get it back to you have to recognize as the game for as revenue.
[noise], Oh, I'm, sorry, I'm, sorry, say it again so.
So if this works out favorably for life on alive.
And in the future you recognize those blocks of revenues as the gain on.
Sure.
Uh huh.
How does that accounting work you of most likely will recognize it as non you know is.
Especially for revenue.
Okay.
After the holidays of because it will be a number of buttons.
It will show up in revenue.
Okay. Thank you that's it for me.
[noise] on next question comes from Barry Sine with Spartan Capitol Securities. Please go ahead.
Hey, I'm just to.
Clarify on that last point the dispute is a portion of a Tesla revenue not the full revenue and then my question right. Okay that my question is.
Obviously, the advertising is key and podcast one brought in the huge increase in.
On the sales force question regarding integration, how well are the podcast one the the new salespeople you bought in doing in terms of selling the existing lie by live on advertising inventory are the integrating well.
Yes, the answer to the first let me answer the first part number on hand to determine just to go back to the Tesla number.
If you remember the last quarter right. We took down a 700000 dollar number for one month right because they had paid through may. So you can look of this number is about 2.1 million guy. So if you if the annual yeah. If you took that over over a quarter Guy So think about that in terms.
For what that could have on revenues going forward and during the once you're jumping on the advertisers on.
Yeah. It's the it's you know what bunch of us on on the call I've been involved in how many acquisitions of mergers over the years on this to me is you know a amazing because of the cost the advertising and remember.
On each side of the company of some complementary for you know.
Oh, that's the the successes for its almost like the thing.
We were able to kind of partner on pit Bull and there are multiple platform deal out of the gate [noise].
Across the board, we have we have multiple deals going on we're selling together the.
Certain relationships with agencies and brands of the PUC I want to have the study.
Since the all we have on its simple complementary maybe one of the most complementary or sell a margin that I've seen and I were regardless the in results on when we're going to continue the cereal.
[laughter] look one of the reason for why did the steel in the first place was because get created a great opportunity to be on the podcast business and have something that no. Other podcast or has it probably comes as the price. The no one to know that there are bigger companies.
That are now on the podcasting business, but they're all primarily.
From the audio business, whether its iheart media.
For in the <unk>.
You know on the platform side of the business as you know companies like Spotify.
What we wanted to do went on what I think we're doing successfully that our sales department our.
Our sales Department is working together are doing successfully.
Does have something to offer.
That nobody else has to offer and get the <unk> Oh.
Oh, a premium position in.
In that area.
Our sales people are talking to each other daily there are you know passing information back and forth. It's also one of the things that's driving.
On the podcasting side.
We're going to be doing a lot more things that are music focused.
You know at Westwood one.
We were on music focused company. So it's nice to be back in the music business in a much bigger way.
But.
What's the need to keep your sales department excited and on the cutting edge are doing exciting cutting edge things and that's exactly what we're what we're doing.
You know of being owned by a lot, but life and helping everybody out working on all of the assets that we have for the benefit of advertisers from consumers and of course for artists first.
Hey, just on that point, the lead time for advertising and subscription sales I believe is pretty long. So this quarter I believe does not represent the full potential in kind of the best is yet to come in terms of what the sales force can do correct.
That's a fair statement.
Thank you.
[noise] [noise]. Our next question comes from Bob Brian.
Blender with the line [laughter]. Please go ahead.
Great. Thank you.
You finally, the 2019 revenue trends for Cps the.
That's quite dated giving a free dates kobin can you give us more recent revenue trends or some kind of information that helps a ice model of revenue contribution going forward [noise].
Yeah, the way I would look at the so we publicly stated that they are going to do 20 million plus this year.
And I would think this very much like podcast one yeah. We said, it's going to be accretive to the balance sheet. We said, it's going to be accretive to EBITDA. So I'd be thinking it very very similarly to a to the success of the acquisition of podcast, one and very similar to the success of slack on how profitable that is today. The this is going to.
The accretive in every way for the company immediately.
Great and then.
The is it sort of thought to offering paid subscribers discounts to pay per view of events, you know and that's adding more consumers maybe at higher prices to the recurring model.
Absolutely, absolutely and you'll you'll see some of that crossover and you'll see some of that that material relationship, including seeing and podcasting you may see subscription coming we're certainly going to use the inventory of podcast to drive subscribers right and Adam Corolla has a very unique you know base of Shaquille O'neal T.I. right yeah.
Many of many of our podcast is can bring in subscribers as well and as you see what's happening in the industry right that crossover is coming which is yeah. We're laser focused this is a big percentage of our business versus spot of by who's paying $350 million for the same amount of revenue for $40 million companies right there, they're putting in the to the flight.
We own the using it for two things the using it to keep subscribers from leaving the right as well as to bring in new subscribers of the beauty for US is it's very material and the materiality of turning that the subscribers writing them stay in the long term on the platform is because again you are diluting the commodity part of the audio business that we all share.
John I think you're going to see our margins keep continue to get better and better on the best of the industry and I didn't get to see the flywheel of how these cross over and seen pit Bull was this magical the C that you can drive pay per view right and immediately right because like streaming it's still on the first day.
[noise] podcast the isn't that the third inning I need of the second inning, right and whats happening is always the advertisers who have that much confident you can get a quick sales for podcasting now buying into both because they want a piece of piece of all of it and as you saw with Pepsi deal I couldn't be any better than the have them pay for pay at the of participant in all of it.
Great last question I got the last quarter, you guys talked about $1 million in advertising and sponsorship for the legacy business is there a like for like number for this quarter.
[noise] [noise] <unk>.
Yeah well.
[noise] that you have to go back to the first question I think if you look at the difference between advertising and sponsorship in the first quarter and the second quarter I don't have it open in front of me that difference basically.
Well, you can't really do it that way.
I mean, you've announced a bunch of partnership <unk> did you grow from the million dollars or you know is it yes. So I would say the of this way. The there's growth resulted from the acquisition and I think there is growth that came from additional advertising and sponsorship sales came around our pay.
For review of day.
And all of the live streaming is done I think is the <unk>.
The dramatic increase.
Just to add to that too. Many of these relationships are not single sober licenses or there are over a bunch of series of shows like the season interest to understand so the revenue will go over several quarters and in many of these relationships.
Yeah.
And just to highlight again as you look at the next quarter and obviously I can't give you too much detail, but we announced pit bull what's going to happen in September the got pushed through October we announced with the Khalifa on multiple is the other ones. The all got pushed to October November December [noise] side.
So I think I dig into the C. GAAP sponsorship as well is a pay per view you gonna see way more events why does this matures and we're in the infancy stage of pay per view, but it couldn't be more exciting and the most important part of pay per view is not only just the paper you event is that you're getting a credit card. So that the the consumer that's coming in that Super for.
Dan that's coming in which we're focused on is coming at the top of the funnel.
And I think you're going to see more and more you know a a higher and higher percentage percentage of of all of those converted the subscription I think we stayed in the last call the the 6% or 8% converted the subscription.
And Rob just to add to that.
One of the when when the flywheel really works, we got pay per view, we gotta sponsored <unk> to work with us on the pay per view, we got conversion to subscribers and the got Mark sales and all sorts of different bundling opportunities. So whenever I will really work.
Like it does with pit bull on many of the events were doing we hit all of our revenue goals. So just know that advertising is a big part of the pay per view on opportunity too because we have such a great exclusive relationship with the artist.
Alright, thanks, guys.
This concludes our question and answers the question I would like to turn the conference back a bit of Robin on for any closing remarks.
And just the final remarks is I want to thank my team.
And back to shareholders for staying with us during this difficult time, a lot of you squish completely shut down our tent pole events of rock in Rio in DTC. The not happened this year, none of our live events happen from react.
We're really excited we mention today that we launched spring awaking can't Kuhn or trophy property in the line of business right. So we normally do 30 to 40 live music events net year, you're a month the end plus spring Awakening, which was 15 $16 million of revenues were really excited to see the thirst and the energy.
When cobot is done.
It will be one day right lot of music is going to come back and my team humbly believes it's going to be like the roaring twenties really get the come back and we're the only company in the world the disposition right today to not only proved that the live streaming is the next generation she music video and he's driving audio sales right, but it also is going to drive ticket sales.
And it's going to be just like sports 30 years ago. It was the fear factor when the yes be on came along the people when the 10 live events right what happened more teams more players more money in billions and billions and billions of dollars and I feel the same way about music I think that you know, it's very sad what's happening to the community My team is thoughtfully par.
Oh, you do with Hyundai and portion the put live events inside of theaters that were literally going bankrupt I mean the.
The sponsors gave of the get real money to help that and yeah. We put artists to work. So we're really proud of what we're doing I'm really proud of what we're building here and I think when cobot is over with the only company of the world that is truly position to do both I rock in Rio will sell subscription will sell digital tickets EDI. She will sell did you.
We'll take it and the world will grow with that and what position that we have the entire flywheel from production right. All the way the sales and everything in between the disposition would some of the top executives in the world who are built again multibillion dollar businesses and been able to both build an exit them. So yes, great team, we have great partnerships.
We have we survive this and we're going to grow bigger and bigger.
So I want to thank everyone for spending the time today.
The really appreciate and I appreciate your support and look forward to talking at the on the next quarter.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.