Q2 2022 LiveOne Inc Earnings Call
Good afternoon, everyone and welcome to the live one incorporated fiscal 2020 to Q2 earnings conference call.
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At this time I'd like to turn the conference call over to Michael core Terry Chiefs.
Chief Financial Officer, Sir Please go ahead.
Thank you good afternoon, and welcome to life once business update and financial results conference call for the company's second quarter and six month period ended September 32021.
Presenting on today's call are Rob Allen CEO and chairman.
Dermot Mccormack, President and myself, Mike <unk>, Executive Vice President and Chief Financial Officer.
I'd like to remind you that some of the statements made on today's call are forward looking and are based on current expectations forecasts and assumptions that involve various risks and uncertainties. These.
These statements include but are not limited to statements regarding the future performance of the company, including expected future financial results and expected future growth in the business.
Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the company's filings with the SEC for information about factors, which could cause the company's actual results to differ materially from these forward looking statements, including those described.
In the company's annual report on Form 10-K for the year ended December Sorry March 31, 2021 quarterly report on Form 10-Q for the quarter ended June 30 June 31, and other SEC filings.
You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its investor Relations website at IR Dot live one dot com and the company encourages you to periodically visit its IR website for <unk>.
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The following discussion including responses to your questions contain time sensitive information and reflects management's view as of the date of this call October 28, 2021, and except as required by law. The company does not undertake any obligation to update or revise this information after the date of this call.
To highlight to investors that this call is being recorded the company is making it available to investors and media via webcast and a replay will be available on its website in the investors relations section. Shortly following the conclusion of the call. Additionally, it is property of the company and any redistribution retransmission.
Mission or rebroadcast of the call or the webcast in any form without the company's express written consent is strictly prohibited now let me turn the call over to live one CEO Rob <unk>.
Thank you, Mike and good afternoon, everyone and thank you for joining us today on our fiscal 2022 second quarter business update and financial results call. We plan to keep our prepared remarks somewhat brief in favor of leaving more time for any Q&A.
LIBOR team again has survived and thrived through the COVID-19 Delta variants.
Which necessitate that we push all of our planned live events into Q3 Q4, even without live events in Q2, <unk> delivered a record 67 billion in revenue for the first six months of fiscal 2022, an increase of 35.
Dollars.
142% compared to the same period a year ago.
Quite often we've spoken of unique flywheel business model.
Are associated and complementary businesses. They have the components create synergy just stick offering to consumers to listen watch and can engage and transact.
Let me repeat that word transact, we'd go deeper down the funnel without customers for further modernization to premium content and pay per view and live events.
Selling memberships packages, including merchandise N F piece and integrating consumer products it will have ownership position.
Everyone connects the model when fully optimized creates a unique opportunity to bridge and connect live events with digital offerings and with the return of live music. Our business model is poised to truly kick into high gear.
We have multiple subsidiaries multibillion dollar addressable marketing each music subscription live events live streaming OTT specialty merchandising and podcasts.
Yeah.
We are thrilled to see the return of live music events, and we expect to report record revenues for each of the next two quarters.
Although we had an unfortunate and challenging weather conditions, we held our first major live music festivals Spring Awakening Music Festival autumn Equinox, which is the Midwest largest all electronic music Festival in October 2nd and third in Chicago, and we sold 33000 tickets we signed.
25000 members.
We currently have booked a lineup of over 100 live concerts and festivals beat you up with 300 artists performing over the next six months.
As I touch on shortly going forward, while ticket purchases all pay per views all merchandise in any of our live music and pay per view events will receive a paid one year's paid membership that provides for discounts the future like in person and pay per view event discounted merchandise and in fts.
And the enormous amount of trading music and podcast content.
Our wholly owned subsidiary podcast one.
Continues to experience robust growth.
Tire podcasts team has done an outstanding job, both recruiting new entertain in podcast as well as aggressively pursuing advertising and sponsorship deals podcasts metrics continue to impress and grow.
She had over 2.48 billion podcast out downloads in the trailing 12 months ending September 30th.
And its franchise of exclusive shows.
Grow to more than 235 with all over 50, new podcasts now producing over 300 podcast episodes per week.
We continue to grow our paid subscribers with our slacker radio streaming audio services now of a 1.25 million paid subscribers, we have a keen eye and expanding the reach of slacker, adding over 35000 subscribers and Bob.
As many of you may know.
So a nine year exclusive partnership with Tesla.
Next slide sleep Slacker radio subscription is pre installed this default radio every Tesla car sold in North America, and LIBOR is paid directly by testing for those subscriptions.
<unk> slide Slacker App is pre installed now 85, other automobiles as well as across major cell carriers, Verizon sprint and T mobile, which allows slacker subscribers, who listen in their cars as well as across their mobile devices.
We are seeing compelling growth opportunities for slacker by partnering with other automotive motive Oems as a default radio service, especially outside the U S as well as other white label Beta beat partnerships through Android automotive.
Since launching pay per view.
Pay per view, one a new subsidiary platform in May of 2020, we have generated over $26 million in pay per view related sales live pay per view.
Events as of October alone pay per view live events and ticket sold more than 25000, new subscribers in over 1 million live.
Livestream views.
How many apps coming off the outstanding success of social gloves pay per view events in June we look forward to Odeon producing our own next hybrid pop cultural franchise pay per view and the January 2022 quarter called self made chaos.
That will combine bacci exhibitions, featuring women and prominent social media Influencer E Sports Entertainment, all vie for about 1 million enterprises as well as our lineup of renowned music artists and bands.
Social gloves drove over 136000.
Pay per views 136000 members.
Of LIBOR.
As many of you hopefully know in September 2021.
We announced our intention to spin out our existing pay per view business as a separate public company and plan to distribute a portion of the new company's equity alive. One shareholders, we anticipate that spin out to take place before March 31 2022.
In our last call I spoke about the significant investment in commission LIBOR is making for original programming.
Contact embarking index.
I would now like to introduce crashing of LIBOR Dermot Mccormack to provide more details of those efforts.
Thank you, Rob and as Rob just stated life. One has made a major commitment to invest in and market its original content and programming.
Cause of her unique flywheel, we are not just creating shows we are developing unique IP and franchises that can be developed into everything from a documentary to a podcast to an event to a product, creating long term value for life, one and our shareholders.
Over the past two quarters, we have invested over $20 million in developing implementing and marketing our franchises, which drove boat revenues, new memberships and subscribers.
Over the past year, we have launched shows and events that we believe have the chance to become valuable franchise going forward, including South Tonight, a Lockdown awards Snobby music listening music lives on live my life presents and lives on.
Not to mention a number of podcasts that have the potential to develop into assets for TV film music and documentaries.
We continue to grow our immensely successful and first of its kind hybrid festival music lives, which is returning towards third and most ambitious installment. Yes. This November live from Miami based on smart and featuring a unique blend of virtual and physical performances integrated with a global three on three.
Basketball tournaments with over 30 countries participating.
I'd, rather live music franchises music lives on and live My life presents continued to expand recently crossing that 78th episode milestone and have proven to be big hits with our advertising partners.
The second edition of our lives one awards that breakout edition is scheduled for this December and we'll also push the boundaries of our unique and signature hybrid approach approach.
Last month, we also announced the acquisition of Gramophone in New York City based artist and brand development company, which specializes in representing aspiring artists and operating services and P or strategic marketing brand positioning graphic design and social media management. The company is known for its innovative.
They've worked discovering them breaking international acts like K pop sensations, Bts and monster acts as well as its unique approach to public relations and artist development.
The acquisition complements our existing online talent search platform South made and further.
Expands our flywheel business model by providing artists with an end to end solution to develop and amplify their brand to audiences across life, one platform and be honest.
The Gramophone acquisition builds out yet I noticed here in our creator services stack, but it was closer to artists and keeping live one on the leading edge of where the music and entertainment business is going.
To finish up I would like to add that due to the successful integration of our advertising and sales divisions. We are closing more seven figure plus advertising deals with major advertisers than at any other time in our history.
I would like to now hand, it over to our CFO micro Terry who will review our Q2 results.
Thanks, Jeremy let me spend a few minutes to provide a brief overview of our Q2 fiscal 'twenty. Two results. We ended Q2 with strong results with revenue growing 50% year over year to a record $21 9 million contribution margin increased 37% to $5 9 million.
And our adjusted operating loss was $2 1 billion with record Kpis, including a 34% net increase in paid subscribers year over year.
Moreover for the current six month period ended September 30th revenues increased 142% year over year to $60 7 million, while our contribution margin increased 93% to $13 7 million.
For Q2 fiscal 'twenty two results consolidated revenue was 21 nine up 50% year over year from $14 6 million in the prior year quarter due in large part to growth in advertising paid subscribers and our successful acquisition of Cps the growth in advertising as a result.
Current improvements in our podcast one operations compared to the prior year quarter that was negatively impacted by the COVID-19 pandemic.
We ended Q2 was 1.256 million paid subscribers a net increase of 320 as compared to 936 paid subscribers reported at September 32020.
Please note that included in the paid total paid subscribers or certain subscribers, which are subject to a contractual dispute for which we are not currently recognizing revenue.
Fiscal Q2, 'twenty to contribution margin increased 37% year over year to $5 9 million.
The year over year improvement was driven by the addition of CBS and the increase in paid subscribers.
Fiscal 'twenty two.
Adjusted operating loss was $2 1 million compared to $1 4 million in the prior year quarter. The consolidated adjusted operating loss is comprised of adjusted operating income from our operations segment of $1 2 million offset by adjusted operating losses from corporate a $3 2 million the increase in the adjusted Oi.
Operating loss was driven by additional costs to support the company's growth and M&A activities.
For the six months ended September 32021 revenue was a record $67 million up $142 million year over year as compared to $25 million in the prior year quarter. The increase in revenue was driven from all aspects of our flywheel continued growth in paid subscribers.
The additions of podcast, one which is driving our increase in advertising.
And Cps, which represents our merchandising revenue.
Along with the return of live events, which is driving pay per view ticketing and events and sponsorship revenues.
Contribution margin for the six month period ended September 30th was $13 7 million, an increase of 93% compared to the prior year period. The increase was driven by the increase in revenues previously outlined our contribution margin percentage for the quarter was negatively impacted by strategic investment and marketing campaign.
And to grow our listener base across the entire flywheel and our continued investment in our live event franchises, which we believe will yield attractive returns over the long run.
Adjusted operating loss for the six month period ended September 30th was $3 8 million compared to one four in the prior year period. The increase in adjusted operating losses as a result of the strategic investments into content and increased marketing to drive future revenue growth beyond the current year.
Turning to the balance sheet, we ended with cash of $16 7 million, including restricted cash of 260000.
Turning to financial guidance for the fiscal year 2022, we are reaffirming our revenue guidance of $115 million to $125 million and reducing our estimate for adjusted operating income from our operations segment, two between breakeven and $3 million as a result of the impacts are.
The COVID-19 Delta variant on live events inclement weather and our long term investments in original and exclusive content and franchises as well as continue our increased spend on marketing associated with driving new paid memberships.
And now let me hand, it back over to Rob.
This is a truly exciting time for LIBOR and we will soon be announcing a major development in our subscription and membership model no. One that we will believe will be compelling for fans and consumers next Thursday. After the close we'll be holding a press conference with.
With members of the press and we welcome existing shareholders and analysts to join join as well. This is a unique time for the company that we have now drilled and 170000.
Members at an average of over $60 per person.
This is uniquely positioning our subscription and membership to where the business is heading going forward as the opening of live events, where now we're now prepared are now in position to really press, the envelope and really hit that flywheel well Ronnie.
We are reiterating our 2 million share buyback.
We're excited that we had announced previously that we have got a credit line for the banks right, which we hope to increase in the near future I at very low interest rates and really position the company that we will pass one three.
3 million subscribers.
70000 members and each of the subsidiaries are all our businesses are now growing substantially. This is an exciting time for the company and I want to thank everyone for joining and we look forward to any Q&A up.
For today's call. Thank you.
Ladies and gentlemen at this time well begin the question and answer session.
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And our first question today comes from Brian Pitz Linger from Alliance Global Partners. Please go ahead with your question.
Hi, great, Thanks, and great results.
Can you talk about you gave us the numbers on spring Awakening can you maybe speak to average ticket price sponsorship revenue maybe.
Maybe the other parts of the platform as well and how you monetize this.
That you own.
Yeah. So so we can't go into too much detail as you know, but what I can tell you is the average ticket price is in the range of $100 a ticket right.
Each one of those ticket buyers becomes a member of live by live and will now be offered opportunities to buy tickets to our next events as well as to our pay per views as well as to N. F. P is merchandise so exciting time for the company to truly prove that flywheel sponsorship is the highest we've ever had.
And we've just passed over 100 sponsors for the company and you know as you know Brian as we'd go back we had we had one sponsored two years ago before Covid. We now have over 100 sponsors in this company.
And just to be clear when they become a member are you paying for a paid subscription for them for a year or is that different than a member.
Well, we're gonna get into next Thursday, we'll be holding a special conference call for the press right as well as for the music industry that you'll get a little more color on that like with your purchase you automatically becoming a subscriber whether it's one month three months or a year, you'll you'll hear a lot more of that but you promised subscriber, which obviously drives more advertising.
Alright, and then we'll obviously be bring them in at the top of the funnel, which the objective is to convert them into long term paying subscribers and members got it.
And to be clear, whereas the first quarter, social gloves, you didn't own.
The event and so your margins were pretty thin you own. This event you also own self made which I think is happening still in this quarter and so the margin profile of those two events should be substantially better than the event of social gloves is that an accurate statement.
Yeah, no yeah. So she loves it was extremely profitable.
And we'll we'll have way more clarity on that very shortly.
When you look at when you look at these events right when you own them right, we get to test our franchises and bring our franchise to life and control the environment in it. So we're building out those franchises substantially.
So we will have a lot more clarity on that but I you know, Brian it's really exciting to watch these franchise come together and as you know all of my businesses had built over the years have been built off of franchises, including we did that movie 300. These franchises have enormous upside value to them and when we own them, we get to trigger and test them in a much.
More unique way.
Okay, Lastly, and then I'll get back in the queue.
Can you talk about podcast, one and you're adding a lot of new content.
Demand for.
Advertising your brands seems to be strengthening maybe talk about how that business is performing in this improving environment.
Yeah Kit Gray has just done a spectacular job.
Taking podcasts one was as you know we acquired you know right in the heart of Covid on the advertising was dramatically off at the time right. He's done an amazing job of really turning that business now and we've added I think I think it's not like 43, new podcasts and you're starting to see podcasts that are moving over with substantial.
Traffic if you watch the news last week and a half we've announced two of them with over 50 million views already on them. So people are recognizing the brand and the 10 year history of it and understand that we give them a full 360 play not only do we do we help them to production, we deliver revenues for them on the sales side marketing <unk>.
<unk> and overall performance for them. So I couldn't be more excited about where podcast one is going and what Kent and the team have done with that franchise.
Okay. Thank you.
Once again, if you would like to ask a question. Please press star and then one.
Draw your questions you May press star two.
Again that is star and then one to ask a question.
Yeah.
We do have a follow up question from Brian singer from Alliance Global Partners. Please go ahead with your follow up.
Well sure I tried to see D C. The phone, but can you go into gramophone, a little bit and maybe talk about.
The revenue and EBITDA and trailing 12 months and then as being part of your flywheel you discussed how you can build upon those results.
Yeah. So we haven't we haven't disclosed the revenue on it. This is not a gigantic acquisition. It is a gigantic chess moves up right you shy, who is the president and founder of this.
Has it runs a management company over at Maverick. He has had a history of breaking unique cowen including Bts the biggest band on Earth today, as well as monster acts and many others why it has a huge footprint into the K pop market as you continue to watch our pay per view events, our pay per view or that you are really growing.
Fast and partly the revenues as well as the bottom line. It is really exciting to watch what's happening in each shot brings a.
Brings together as he joins our team continues to hit exactly in the heart of our we are a talent first platform focused on those super fans. These are the ultimate Super fans that are our foods are going up our op, who went from $2 80 last year to $3 41, this year right on a subscription and as.
Suddenly membership membership is over $60.
Great and then it hurts ordered a 100000 cashless I take it obviously you noted that senior results right now.
And youre, having several events that are increasing the members that hopefully are going to be converted into <unk>.
Paid subscribers.
As you look out.
You know longer term, maybe a year out or so.
Where do you think they said the paid subscriber base can get to it.
The flywheel is starting to build.
Well I think it's the first of many corporate contracts that Tesla is going to get right.
That 100000 is really exciting and we're just starting we're just starting to see that momentum kick in as a vaccine will get a pass 1.3 million monthly subscribers any minute now right and both on membership and our subscription why you're going to continue to grow at a fast pace now so as you watch that yeah, well, we've talked about a five year model of getting to 10.
Subscribers, right, where we're more confident than ever that we're going to be able to achieve those goals and.
As you look out this year, we talked about 30000 subscribers per month that we're talking about 35 plus thousand subscribers. We may we may have to raise that number substantially as we start to see that 100000 come in but I'm starting to see taxis ubers.
Corporate fleets right.
We're excited about expanding our relationships with the record labels globally.
And hopefully the same thing with Tesla globally and this is this is a unique time to be in this space and we've built now technology that allows us to be able to do this and white label for any car company right around the globe to be able to do that and.
Our team has really done a magnificent job of growing from 40 cars to now all the 85 cars will be over 100 very shortly.
Great. Thank you.
And ladies and gentlemen, with that we're going to end today's question and answer session I'd like to turn the floor back over to Rob Allen for any closing remarks.
Yeah, just to finalize I want to thank everyone for joining in.
In fact, my team for fighting through another round of Covid.
It's pretty amazing that we hit the $60 million revenue number as everyone knows we only did $65 million million last year, right, which was up from 38. So this is this is growth of almost 100% now like two years in a row.
We have reiterated our guidance between $115 million to $125 million in the corporate Barrington hit we would've had to raise the guidance again substantially.
We see telltale signs that.
The variance is still here, but light is opening up our flywheel opens up dramatically and we look forward to the next two quarters again with record revenues and record growth in that it's a really exciting time for us and I want to thank everyone for their patience.
In fact, my team for really surviving a unique time in the market. We've gone through we lost all of our life business. We lost all our life partners, we lost them again to this quarter, but I see everything coming back right now and it's starting to move fast and I think I've talked about in the last quarter that the.
Telltale signs here are they just going to be the roaring twenty's that are coming if we can continue we have over 100 live events coming for the rest of the year.
We have our tentpole events coming our next social gloves coming every single time, the consumer buys a ticket buys merchandise chips.
Hips biasing in F T. They're now going to become a member of line by line, but I look forward to exposing way more of that in our conference call next Thursday.
Yeah.
Thank you everyone and I appreciate your time.
Ladies and gentlemen, with that we'll conclude today's conference call. When you. Thank you for attending you may now disconnect your lines.
Okay.