Q4 2023 LiveOne Inc Earnings Call

Speaker 1: The I.

Speaker 2: Good morning and welcome to the Live One Inc. fourth quarter fiscal 2023 Financial Results and Business Conference call.

Speaker 2: My name is Carla and I will be operating this call.

Speaker 2: During the presentation if you wish to register a question for the Q&A portion of your call, you can register this by pressing start followed by 1 on your telephone keypad.

Speaker 2: I will now hand over to your host, Aaron Sullivan, Interim CFO , to begin.

Speaker 2: Aaron Sullivan interim CFO to begin. Please go ahead.

Speaker 3: Thank you. Good morning and welcome to Live1's business update and financial results conference call for the company's fourth quarter ended March 31.

Speaker 3: 2023.

Speaker 3: Presenting on today's call are Rob Allen, CEO of

Speaker 3: and Chairman, Hit Gray, President of Podcast One, Bradley Conkle, Head of Slacker, John Semelhack, President of CPS, Josh Holbauer, Head of Music, and myself, Aaron Sullivan, Interim CFO . I would 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.

Speaker 3: 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 fractures which could cause the company's actual results to differ materially from these four

Speaker 3: The company encourages you to periodically visit it.

Speaker 3: to the Western Relations website for important content.

Speaker 3: The following discussion, including responses to your questions, contains time sensitive information and reflects management's view as of the date of this call, June 27, 2023. An acceptance is required by law. The company does not undertake any obligation to update or revise this information after the date of the call.

Speaker 3: I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and media via webcast and replay will be available on its website in the investor relations section shortly following the conclusion of the call. Additionally, it is the property of the company and any redistribution retransmission or rebroadcast of the caller the webcast in any form without the company.

Speaker 3: Express written consent is strictly prohibited.

Speaker 3: Now I would like to turn the call over to live one CEO Rob Allen

Speaker 4: Thank you Aaron and good morning everyone. I'd like to thank everyone for joining us today.

Speaker 4: After five years and a tremendous amount of hard work and many obstacles, including consolidation of eight acquisitions into our core business, proudly my team has delivered on a magnificent year and even a bigger start to this year.

Speaker 4: We are raising our guidance from fiscal 2024.

Speaker 4: Live1 early projections increased to $122 to $130 million in revenue with $12 to $16 million of adjusted EVA.

Speaker 4: And our audio division, which includes slacker and podcast one to 100 million to 110 and adjusted EVA down between 18 and 21 million with over $12 million of operating cash flow.

Speaker 4: As a creative first platform, we have built the flywheel that off the same piece of content, we can deliver so many different revenue streams.

Speaker 4: LiveXLive, Slacker, Podcast One, Pay Per View One, CPS, Splitmind, Drumify, Cast Media, and Fantasy Guru. All substantial creative platforms with big communities.

Speaker 4: The combination provides the most robust offering in music and pop culture at the lowest cost and the highest margins.

Speaker 4: Proving the security quality of our tech team are 45 patents combined with a unique original programming, Slack and radio was handpicked by Elon Musk and the Tesla team as the white label music service branded Tesla radio. Every Tesla car sold in North America comes with a paid membership to Live1.

Speaker 4: These memberships are paid directly by Tesla at an average of seven years. We proudly just extended for a 10 straight year.

Speaker 4: The combination of Tesla, Verizon, T-Mobile, Sprint made exciting B2B partnerships in an army of over 3000 artists, podcasters, social media stars engaging across the Live One platform and utilizing their social media to alert fans to listen, watch and engage on Live One.

Speaker 4: has driven our revenues and our membership at record pace.

Speaker 4: I indicate to the street last year that we'll pass 10 million members within five years and over a billion dollars in revenues.

Speaker 4: Exploding out of the gate this year, we have over 350,000 new paid members since January 1st, adding over 60,000 per month.

Speaker 4: We passed 3.1 million total members and 2.2 million paid members.

Speaker 4: expecting to pass 4 million total members this year and over 3 million paid an average of our approved $3. To better understand and appreciate these metrics Goldman Sachs just came out the report the industry growth will hit 1.7

Speaker 4: billion paying subscribers to music by 2027.

Speaker 4: Live1 would only need 1%, less than 1% of that expected total addressable market to reach our goal.

Speaker 4: In 2018, we acquired Slack or Radio, which at the time had 20 million in revenues, losing over 10 million a year and 400,000 total members.

Speaker 4: We've increased our membership eightfold in just five years. At this pace, 10 million members is an extremely achievable goal.

Speaker 4: LiveOne reported today 2023 fiscal results, revenues of $99 million and $10.9 million adjusted EBITDA. That is a $24.4 million improvement in adjusted EBITDA compared to 2022.

Speaker 4: One of the largest remaining podcast networks reported record revenues of 86.8 million and a record adjusted even thought 18.2 million an increase of 289% from 6.3 million last year.

Speaker 4: With the strongest balance sheet in the history of the company, we can now focus our capital and engine on both internal growth as well as external and utilize the balance sheet to buy back substantial amount of stock.

Speaker 4: We believe our stock remains undervalued and in such we have undertaken three separate initiatives to unlock substantial shareholder value. First on an ongoing share buyback we repurchase 2.9 million shares leaving an additional 2.3 million dollars.

Speaker 4: remaining to acquire of additional shares.

Speaker 4: The second exciting initiative is the spin-off of our podcast, One Business. We've just received approval on our registration statement as declared effective by the SEC, and we increased our dividend to our shareholders from 12% to 19%.

Speaker 4: 5-1 The Parent Company will own over 74% of Podcast 1. Independent valuations have come out between $230 and $275 million, which would value that division over $2.60 alone.

Speaker 4: The spinout will allow Podcast 1 to utilize its stock as currency for both acquisitions and capital formations.

Speaker 4: We have already announced two planned all stock acquisitions by Podcast One. The first is a network called Cast Media, the second fantasy guru. The combined acquisitions are expected to increase Podcast One's revenues by $12.5 million and over $2 million of adjusted EBITDA.

Speaker 4: Podcast one was acquired very similar to slacker three years ago with 20 million in revenues and is now estimating that this quarter alone will be over 10.5 million. We've increased our guidance to 40 to 45 million this year before acquisitions.

Speaker 4: Our third initiative is our proposed merger of Slack and Radio with Nasdaq ListenSpack.

Speaker 4: Ticker ROTC at a minimum of 160 million valuation or another $2 a share.

Speaker 4: If you combine these two prices, it's over $5 a share. With that, I would say this is the most exciting time in the history of the company. We continue to grow and expect our biggest year ever.

Speaker 4: Now I'd like to hand it over to my president Kit Gray over at podcast one. Thank you everyone

Speaker 5: Good morning, everyone. Thank you for the time. I appreciate it and looking forward to updating you on an action packed Q4 with podcast one. It was an exciting year for us and especially in that quarter with a lot of growth. Let's see...

Speaker 5: We launched a bunch of new shows, we acquired some existing shows, and we've started some new seasons of some already hit programs in the quarter. Those included A&E's I Survived, Second Season, our smash new hit I've Had It.

Speaker 5: which is a top five downloaded show in our network. When Reality Hits is a Vanderpump special. And the highlight of that so far is 375,000 downloads two weeks ago in one of their hit new episodes. We also launched a couple other shows called On Brand.

Speaker 5: And we are launching Salty with Kath and Lee in mid-July. So those are all in production. As well as a second season of Bad, Bad Things, which was a hit scripted show with Barbara Schurter, crafting and telling that story. And we look forward to launching.

Speaker 5: a scripted series called Barnum Town later on this year which we're really excited about. So the network is growing in terms of content downloads and expanding.

Speaker 5: We also, a critical part of our business is finding our core shows to extension and we had great success there, not losing any programs and finding multi-year extensions with the likes of the Lady Gang Network, Adam Carolla, Dr. Drew, Court Junkies, Jordan Harbinger on this show

Speaker 5: Kaitlyn Brastow and more. So it's put us in a great position to have a great year this year, which is very exciting. Recently, one of our shows just won a Webby Award, and that was with Kael Lowry and her network of programs, but barely came as...

Speaker 5: Coffee Tombows and others was recognized in the Webby Awards recently in New York City. So the program in Slate has been really exciting and continues to grow. As we go into the new year, we've got some fun things and some acquisitions. And as Rob noted, we are working hard acquiring assets of cast media, which is exciting.

Speaker 5: Operation with some great personalities and great shows that we're looking forward to bringing on the network and expanding and growing together, as well as the Fantasy Guru Network, which is a little bit different for our model, but we're really excited about that as it's bringing in 24,000 subscribers that pay monthly fees to get their fantasy introduction.

Speaker 5: So we're really excited about that and looking at everything else. This is an exciting time for us just in the industry because what we're noticing is the podcasting world is...

Speaker 5: It's very much coming to us. A lot of these bigger networks are scaling back. Some of their initial investments are ending and it's giving us great opportunities to continue to grow and we're really looking forward to that as we go into the next year. Thank you very much for your time today and we're excited about the future of the podcast one. Thank you.

Speaker 6: Brad, jump in here. Yeah, thanks, Rob, and good morning to everyone. It's really an exciting time at Slack. The radio really is.

Speaker 6: To reiterate some of the metrics Rob shared, we've continued to have tremendous increases in our membership KPIs, particularly as it relates to paid memberships where we've had record growth with

Speaker 6: 612,000 new members over the last year, which is a 39% year-over-year increase.

Speaker 6: So like I said, it's an extremely exciting time and not just because of the record growth, but also because of how we're integrating with LiveOne's flywheel of products, how our roadmap is currently aligned, and what we're strategically poised to do.

Speaker 6: For example, as part of one part of Live1's audio division, Slacker's alignment with Podcast 1 has never been stronger. We just launched over 60 additional Podcast 1 podcasts through the Live1 Slacker radio app on Tesla. And we also aired our first podcast pay-per-view livestream with Adam Carolla and friends.

Speaker 6: I'm staying on pay-per-view front for just a moment. Those of you that love combat sports and ice hockey will also be streaming Ice Wars 3 in July . So, all that said, most important to our future success at Slacker Radio is our laser focus on strategic business-to-business partnerships.

Speaker 6: on pay-per-view front for just a moment. Those of you that love combat sports and ice hockey will also be streaming Ice Wars 3 in July . So all that said, you know, most important to our future success at Slacker Radio is our laser focus on strategic business-to-business partnerships to drive both paid membership and

Speaker 6: at supported revenue.

Speaker 6: As such, we recently announced a multiyear deal with OTT Studio in which many of Slacker's expertly curated stations will be playable in OTT Studio's soon-to-launch Music Max application on Roku, Fire TV, and Vizio. We also recently announced a joint strategic partnership with OTT Studio in which many of Slacker's expertly curated stations will be playable in OTT Studio's soon-to-launch Music Max application on Roku, Fire TV, and Vizio. We also announced a joint strategic partnership with OTT Studio in which many of Slacker's expertly curated stations will be playable in OTT Studio's soon-to-launch Music Max application on Roku, Fire TV, and Vizio.

Speaker 6: and e-book, audiobook, entertainment, and media company, and will soon be bringing on a new head of business development to leverage additional partnership opportunities across business, consumer electronics, and telcos.

Speaker 6: entertainment and media company and will soon be bringing on a new head of business development to leverage additional partnership opportunities across fitness consumer electronics and telcos.

Speaker 6: In summary, just really fantastic record growth, amazing collaboration with Podcast One and across all of Live1's flywheel businesses, and a very strong and exciting business-to-business partnership pipeline on the horizon.

Speaker 4: With that, back to you, Rob. Yeah, I'm going to hand it off to Josh Halberer. Josh is running our publishing and music business and is brilliantly executing, including two acquisitions just completed with a big play in AI. So Josh, please take over from here.

Speaker 6: Thanks, Robin. Good morning, everyone. I want to talk about the fact that we just launched version 2.0 of our Dremify platform, which we acquired about six months ago.

Speaker 6: It's a very, very important tool for creators in a $9 billion publishing industry.

Speaker 4: Since the acquisition, we've implemented different AI technologies that have helped creators put together songs ranging from artists like Drake, to Chloe Bailey, to NBA Youngboy, the list goes on. Most importantly to us internally, being a creator first platform.

Speaker 6: is we are scouring everywhere we can to find these royalties that these creators are owed.

Speaker 4: They might seem like small when you look at them individually, but they add up to large at sums of potential revenue.

Speaker 6: We're proud to say that we're the premier platform being drumified that is making sure that artists are retaining their rights when they're using a platform like this unlike any others.

Speaker 4: When we're looking at the publishing industry as a whole, all we've seen over the last five years is...

Speaker 4: if it can grow. And even if we have a small percentage of that, this can be a hundred to a hundred and fifty million dollar company we believe in the next two years.

Speaker 7: Thanks, Ron.

Speaker 4: Excellent. With that, John at CPS, our merch business, which is really being positioned this year with substantial cost savings and really focused on owning our own products. John , take over from here please.

Speaker 8: Thanks, Rob. Good morning, everyone.

Speaker 8: Custom personalization solutions that, you know, sell personalized gifts through the Internet and primarily through wholesalers. Overall, we're expecting our revenues to be flat for fiscal year 2023-24. Continued softness is expected for the mid-market retail environment.

Speaker 8: Offsetting that is from a negative standpoint is that several wholesale clients in the past 12 months have gone bankrupt over sold due to financial difficulties, so those programs will no longer be in existence. So what we're trying to do is to expand where we can to offset the sales loss and also to be adding new clients. And we're doing some of that. JC Cainey has expected to go live in Q2 in QE, which is Pet Smart is expecting to expand from a limited test program to a Q2 rollout. So there's some substantial growth potential for both of those clients.

Speaker 8: On the operational expense side that Rob alluded to, we're expected to improve by over $900,000 in the current fiscal year. We're reducing our fixed costs by over $600,000 primarily through two means. One is the office payroll consolidation.

Speaker 8: And then we've done quite a bit in going back and renegotiating contracts, especially our IT contracts, wherever possible. So that's what led us to the $600,000 savings. And then on top of that, warehouse productivity is expected to improve by over $200,000 due to personalization capability improve.

Speaker 8: we're looking at improvements primarily due to expense control and setting the table for when the environment, the mid-market environment that we're in, that we're currently in, proves that we want to be ready to go.

Speaker 8: and improvements primarily due to expense control and setting the table for when the environment, the mid-market environment that we're in, that we're currently in, proves that we want to be ready to go. Thank you and back to Rob.

Speaker 4: Great. So in wrapping up, I want to thank everyone for attending today and thanks for your patience. We will be continuing our buyback very shortly. As we see a fantastic opportunity as our balance sheet has gotten stronger and stronger. The company is really the flywheel is now hit.

Speaker 4: almost on every avenue it our sponsorships have grown in three years from seven sponsors to this year will be well over 600 before the acquisition of cast media probably takes us over 700 sponsors so our sponsorship our advertising our subscription

Speaker 4: We're all growing simultaneously and for the first time we can really start to start to see the future where we're going And as you break that hundred million dollar mark the team comes together in such a unique way and that you found you found the best of our team and Really everybody is laser focused and I couldn't be more proud of this team

Speaker 4: They're laser focused on bottom line. We have over $200 million NOL. And I expect next year we're gonna be able to enjoy that NOL as we start focusing on next level of earnings. So I wanna thank everyone for attending and thank you for spending the time with us today and open it up for any questions.

Speaker 4: I'm sorry, Aaron, you got to go. Aaron's next.

Speaker 3: Thanks, Rob. I'll spend just a few minutes providing a very brief overview of the results for the full year fiscal 23 and the fourth quarter ended March 3123.

Speaker 3: Consolidated revenue for the three and 12 month period ended March 31 23 with 25.5 million and 99.6 million respectively. Our audio division posted revenue for the three and 12 months of 22.9 million and 86.8 million respectively for the fourth quarter and March 31 23 revenue.

Speaker 3: consists of 55% membership and 45% advertising, sponsorship, merchandising and taking an event compared to 50% membership and 50% advertising, sponsorship and taking an event in the prior year period. Consolidated adjusted EBITDA for the three and 12 months was 1.5 million and a record 10.9 million respectively.

Speaker 3: On a US GAAP basis, Slide 1 posted a consolidated net loss of $4.8 million or $6.2 million.

Speaker 3: cents per diluted share in Q4, fiscal 23, and a net loss of 10 million or 12 cents a share for the 12 months ended March 31, 23.

Speaker 3: Our audio division adjusted even after the three and twelve months was 4.5 and record 18.2 million respectively. And as of June 26 we had approximately 2.2 million paid members and that increase of 292 or 15% compared to December 31 and 22. Local members include freemen,

Speaker 3: Total members include three members or approximately 3.1 million as of June 26 23 Note that included in the total members are certain members who are not currently subject Sorry including the total members are certain members

Speaker 3: who are currently subject to a contractual dispute for which we are not currently recognizing revenue.

Speaker 3: Briefly turning to the balance sheet, we ended Q4 with cash of $8.7 million, including restricted cash of $300,000. Rob, I'll turn it back to you.

Speaker 4: Yeah, thank you, Belinda. I'll open it up for questions now. Anyone look forward to any thoughts you have.

Speaker 2: If you would like to ask a question please press start followed by one on your telephone keypad. When preparing for your question please ensure your phone is unmuted locally.

Speaker 2: Our first question is from Brian Kingslinger from Alliance Global Partners. Your line is now open, please go ahead.

Speaker 6: I've got a handful of questions. First, for your fiscal 24 revenue guidance, does that include CAST and Fantasy Guru and if so, what are the assumptions on the timing of the fiscal 24 revenue guidance?

Speaker 4: the closing and then can you close these acquisitions before the spinoff or does this spinoff have to happen for them to close? Yes, so off the bat that does not include the acquisitions. We expect to close these very very quickly.

Speaker 4: and it does not affect the spinoff when the spinoff happens or not.

Speaker 6: Great, and then how do you determine the actual shares?

Speaker 9: As she grew right. There was A. there was a.

Speaker 9: range and then how should we think about any shares issued for CAAS? Can you help with a range of valuation for CAAS?

Speaker 4: Yeah, I mean, again, without going too far, because we haven't publicly disclosed it, right? The valuations in the company were valued at $200 million plus, right? We're acquiring these companies extremely accretive, very similar to the fashion that we've acquired Slack Radio and Podcast One, and there'll be a lot more details to come shortly, Brian , but they're going to be very much in line with.

Speaker 4: the type of deals that we did and that, you know, sort of one times revenue range, um, you know, for those companies. So these are going to be the revenues and even up.

Speaker 9: But they're both for podcast one shares and not live one shares. Is that right?

Speaker 9: one shares and not live one shares, is that right? Correct.

Speaker 9: The $10.5 million of Podcast 1 revenue that you've discussed or targeted for the first quarter, can you quantify how much was aided by the Adam Carolla pay-per-view event on June 4th? And then separately, how much was aided by the Adam Carolla pay-per-view event on June 4th?

Speaker 9: generally maybe talk about the trends you're seeing in podcasting in terms of download growth versus potentially the pressure if at all on CPMs.

Speaker 5: Kit, you want to take that? Yeah, sure. The Adam Carolla event was successful. Not a huge percentage of our total revenue of that 10.9 to be a significant number.

Speaker 5: But it was a successful, profitable endeavor that his fans really enjoyed and loved. We had separate levels of engagement, whether you could just watch online. And then there was meet and greets and merch, which really just expands Adam's connection to his fan base. So a lot of positive things out of that experience.

Speaker 5: The podcast and industry continues to explode. Numbers of, you know, really what we're seeing are people that listen to podcasts are now, I believe Edison Research came out with their, they're up to 10 hours a week, which is a tremendous amount of time. I think that has a lot to do with people going back to the offices and commuting a lot for work and meetings, and they're just consuming more and more podcasts. So we have no fear on the.

Speaker 5: growth of podcasts and downloads. CPMs absolutely are taking a bit of a hit. It's not, you know, we're seeing companies pull back a little bit and need some help to get more conversions, more sales. So we're working with those agencies and the clients.

Speaker 5: you know, tremendous CPM. So we're really happy with where the advertising and the growth of the podcast consumption is right now.

Speaker 9: Great. Last question, two part for either Kit or Rob.

Speaker 9: Are you seeing more opportunity to run pay-per-view events to monetize your talent and or content? And then with the two podcast acquisitions you recently announced, can you maybe talk about the playbook for continuing to acquire more content?

Speaker 4: Yeah, so from the pay-per-view side, as you know, from the pay-per-view side, we pulled back tremendously last year. We're seeing telltale signs that the consumer is demanding this from music festivals, music events, podcasters, live events. There's a tremendous opportunity, and we see that as one of our biggest growth engines coming in.

Speaker 4: I think we've announced three pay-per-view events in the last three weeks for the first time in probably six months And I think you're gonna see that continue In terms of acquisitions not only do you see it on the podcast side? What I publicly said is the reason to do these spin-offs One is as you can see we have just this great management team in each of these subsidiaries, right? But on top of it, it gives us an opportunity to use that currency

Speaker 4: to roll up additional acquisitions. And we see in the podcast side, there's a tremendous opportunity to do that. Same thing on the slacker side, right? We just announced with Byron Roth and with Roth Capital Five, right? Their fifth SPAC, which, you know, their fourth SPAC just had a tremendous success a couple of weeks ago, going from 10 to 20.

Speaker 4: We see a great opportunity in Slack to utilize that currency as well. So while our stock is down, this is that unique opportunity for us to use that currency in these subsidiaries to be able to do that, be able to grow. So fully expect acquisitions on the slacker side as well.

Speaker 4: opportunity in Slack to utilize that currency as well. So while our stock is down, this is that unique opportunity for us to use that currency in these subsidiaries to be able to do that, be able to grow. So fully expect acquisitions on the Slacker side as well. Okay, thanks guys.

Speaker 2: Our next question comes from Sean McGowan from Roth MKM. Your line is now open, please go ahead. Thank you. Morning, guys. I also have a lot of a couple of questions.

Speaker 8: I don't know if Josh is still on the line, but I wanted to drill in a little bit more on that drumify. How exactly does that get monetized, and where is the relationship going forward? And did I hear you right that you think that alone should be $150 million business?

Speaker 7: Yeah, Josh is still here. So the way that the drumify split works is with any creator that uploads to the platform.

Speaker 7: They're splitting the backend rev share with us 50-50. So the publishing and the master that

Speaker 7: gets negotiated, posts the song coming out on an independent or major label release, it's literally split in half. And on the front end, when the sounds are actually downloaded, the creators are getting paid as well, and that's a 60-40 split. And when I say that it could be a hundred to a hundred and fifty million dollar business, this is why. I've been in the business a long time.

Speaker 7: And this platform is quite literally changing how a song is created. It's taking the A&Rs out of the music business and allowing people to share sounds and put together songs in a completely different way. I'll give you an example of something that I always tell people that really just blows my mind.

Speaker 7: You can have a song that's almost completely finished and with this platform you can say I love my song but it's really missing

Speaker 7: guitar sound from the 1992 Red Hot Chili Peppers album and then boom it'll pop out any sound that sounds somewhere similar.

Speaker 7: to that sound that you're actually looking for. I think this is the future of the music publishing business. I think we're at early stages, but we got to version 2.0 a lot quicker than any of us planned to, and as soon as we start building in a subscription model, I think the sky's the limit.

Speaker 4: And that's for Drumify 3.0 in the next six months. Okay, thanks. And is that included in the audio numbers for the company? No, there's very little today. There's very little in the projections today, Sean. And I can tell you that this is Josh's partner.

Speaker 4: Aiden who started this is a 26 year old young man who is really just so impressive and is really changing the industry in such a unique way. When I go back in my career and remember when I bought atmosphere films as you know, when I hit the movie 300 and you start getting mailbox money meaning every month or every quarter you start getting money.

Speaker 4: in creating and curating songs, right? We just have this really unique opportunity and Josh may be shy on what that number could be over the next five years of how big that division could be. And we all know how big publishing has become. And every day you add, it's almost a self-fulfilling prophecy, right? As you add more subscribers and music.

Speaker 4: Free and paid more dollars come into publishing right it just can expand that business, so there's a there's a really exciting Obsidier with very little cost it's almost all upside

Speaker 8: Thank you. Question for Aaron. There's been some shifts in the repayment of debt and some changes there. Can you give us some sense of where the balance sheet stands today? What would you be expecting to pay in interest expenses over the course of fiscal 24?

Hey Sean, you know I have Rob, do you want to take? Oh, you're back. There's nothing secret about the

Hey Sean, you know I have Rob, David, you want to take? Oh, you're back. Yeah, I'm back on. Thanks Josh.

So interest expense. Let me see. So we're going to have. So the preferred, so we convert preferred share, I'll just kind of walk through the kind of changes on the balance sheet very quickly. We convert a preferred share. Sorry.

million back there.

there, which is, you know, the

substantial you know that's over 50% of the balance that is outstanding with

third-party shareholders. So you're going to see over a 50% reduction in that interest expense kind of going forward.

So that's probably the biggest change on the interest line.

But Doug, you've done- And Sean just- Correct, correct. There's only $2 million left of that. And we're happy that we've been able to buy back $3 million of the $5 million. It's very likely we'll be able to buy back the rest of it.

So, you know, we're happy to do that. We really, we're only almost debt free now. As you know, our friends over at NoStreet converted all their debt to equity. I converted all of mine, so $31 million of debt was converted into equity at $2.10. And really we're down to, the only thing we have today is just a credit facility that is against our receivables and inventory.

with $28 million, almost $29 million in short term assets, and over $8 million in cash when we closed, you know, it's a very nominal line of 7 million. Right. Okay. And then Rob, could you give us an update on your expected timing for, you know, finalizing the podcast spinoff, and then what's your ballpark timing on the slacker transaction?

Yeah, so on the podcast one as we stated the SEC has approved it, right? So we're officially a public company in that, right? We're waiting on NASDAQ right now what they've asked us for and we publicly disclosed which is not an unfair ask. I wish they had asked for it a lot earlier, but they asked for the audits to be given to them. So we'll provide the audits to them this week.

As soon as they have those audits, there'll be a conference call with NASDAQ and we're going to push full speed ahead. And I'm hoping to have this done, you know, certainly before the end of the summer. And if we're lucky, it'll be in July . Okay. And then factor. Okay, thank you.

Slacker, you know, Slacker is, you know, with SPACs and, you know, this is this with Byron and the SPAC that they've done. It's going to take, you know, I think we announced the deal probably five weeks ago. It takes three to four months minimum, but it's well in the works. And obviously we're moving forward and expect to have announcements around it, you know, in terms of, you know, the stage that it's at.

hopefully have the merger agreement signed shortly. So I think it's moving at rapid pace, but it will take somewhere in the three to four month period. And as I articulated earlier during that period, we will be using that currency and focused on that currency to be getting ready for that to be looking at additional tuck in acquisitions into this exciting run. And yeah, as we stated in the audio numbers, they're just

It's really a runaway train right now. The numbers are spectacular. So it's a great time for us and a great opportunity for us to continue to grow that. All right, thanks a lot. Good luck.

runaway train right now the numbers are spectacular so it's a great time for us and a great opportunity for us to continue to grow that. All right thanks a lot good luck. Thank you as always.

Our next question comes from John Hickman from Langbird.

Our next question comes from John Hickman from Langbird. Please go ahead.

Please go ahead.

Hi, Rob. I guess this question is for Aaron. I just want to check my math. From what you released today, it looks like Slack is on track for...

if you You know take out the herb

They're on track for about $90 million in annual revenues just off of what

about 90 million dollars in revenue just off of what the fourth quarter was.

Podcast one is on track for about 40 million, maybe more. If you add those two numbers up you get 130 million.

And your guidance is for 122 to 130 million.

and your guidance is for 122 to 130 million. Is my math correct there?

You're a little hot on the flacker side. 22 times 4, 88. Is that correct? No. I think you're taking 22.

Okay.

I think you're typing.

Bear with me a second. So 22 includes Blacker and the 22.9, I think you're referring to as the audio division, that includes both Blacker and Podcast One.

Oh, okay. Thank you. All my other questions were asked and answered. Thanks. Thanks, John , as always. As a reminder, if you would like to ask a question, please press start followed by one on your telephone keypad.

Our next question comes from Kevin Deed from HC Wainwright. Your line is now open.

Thanks for taking my question. I'm curious about the international sphere that that question usually comes up.

and I'm wondering how your progress is going there.

Excellent. So, you know, as you know, as part of this, as we've always articulated, part of this was all the payables that needed to be cleaned up right from the original slacker acquisition, which is really how we acquired the company, right? Now that that's cleaned up, we're not only in position with the record labels and publishers, where previously we owed them a lot of money. Now we have advances with a lot of the record labels. So I think this is unique.

digital turbine I always talked about as interest rates change you're going to see you know carriers as well as distributors right change their models dramatically and really focusing on owning their own content and having a direct relationship with their consumers and I think this is that you know that's the inflection point that you're starting to see in it.

a massive way you're seeing announcements all over the place. A real focus on having a direct dialogue between distributors, carriers, cable companies, satellites, social media companies, and their consumers, right, with their own content. So it's an exciting time for us to expand overseas. You mentioned just in passing

The Spin with Podcast One? Yeah, it's a great question. So to start with, just to be clear, we are not going back into the live business where we're producing our own shows and doing our own shows on our dime. Right? So that we got our learning lesson, we went through.

you know obviously when we bought React in Chicago right even though there was substantial revenues it cost us a ton of money and we got a lot of bad luck obviously COVID and the variants of COVID and being shut down for three years but I think as a team we recognized you know we just we we couldn't we couldn't play in that field you know when three years is shut down to COVID so we moved away from those

But from the digital side of it, what's happening is the consumers awakened during COVID just like sports 40 years ago. That the consumers demanding that you see Coachella and Rock and Rio. When you hear these numbers, they're like Super Bowl numbers. 100 million people watch Coachella this year. Our dynamics on that are moving more and more to its pay per view. Thelarge spend. Let's have that intel ring called.

or sponsored event that already paid for it. So you've seen us do a giant event with eBay, where they're paying for all of it up front. You've seen us do T-Pain's festival, where he paid for it up front. So each of these events that you're seeing now are paid for versus us buying those rights. And you're not gonna see us go back into the market with our own live events. We're gonna be partnering with the Live Nations and the AGs and the high parts of the world.

I think you're going to see this year the first ever pay-per-view event. If you think that, you know, we had five years in a row where 90 million people in that watching Rockin Rio. If you can just get 1% of that audience to pay a pay-per-view ticket at 10 cents on the dollar on what they pay for the live event. You could have billions of dollars of revenues over the next couple years and we see it as we see it as one of our giant growth engines with almost no risk to us anymore.

Yeah, and you know, you just you see each of the announcements that we make we announce hockey wars We're getting paid for that up front, right? We got marching in it and then we have the upside of all the additional revenues from it that can drive it including pay-per-view merchandise NFTs Etc across the board and obviously the pay-per-view Then then how how do you cultivate this?

these relationships with Live Nation and AG and building a pay-per-view audience or a pay-per-view opportunity against something that they might want to do internally.

It's a great question and what I would tell you is that Brad and the tech team have brilliantly, on top of the 45 patents we have in the history of 20 years in building Slack and radio and being one of the 10 platforms in the world that's really left, right, in this market that's tens of billions of dollars.

There's only 10 of us left in the world that are able to do it. Brad and the team have brilliantly built the pay-per-view, digital meet and greets, NFTs. We partnered with Polygon and we really positioned ourselves as the fault leader in it. And I don't think anybody's ever streamed with the quality that we have to really to perfection from everywhere from Brazil to China to Japan to to Seagate Budapest to Jazz Matru in Switzerland and now it's just moving next.

move to that is who's really going to be able to deliver that production at that level, who's going to be able to deliver the pay-per-view and make sure that it works and lasts, and I think we're the only ones in the world that can do it at that level.

Okay, last question is just for clarity's sake because I think things are a little scrambled up in my head, Rob, and I apologize. But you, in addressing Brian's question early on, you thought that most valuations in the podcast space were coming in about one time to rev. So I just like to understand how you're looking at those valuations versus your

perception that you know Live1 as itself is and its trading is is overly discounted how are these acquisitions going to become accretive

based on your perception. Yeah, Kevin, I think you heard wrong. The valuations for podcast businesses, right, have been, literally have been five to 30 times revenues. So the last deal that was done, Scurris Radio just bought a podcast network seven months ago.

And we're still with $10 million in revenues. It's not even on the charts of top podcast networks. And it sold for $150 million in cash. And if you look at just about every deal in the space, because the industry is growing so fast, it's grown from $400 million pre-COVID to $1.6 billion this year, right? And it's going to $7 to $10 billion over the next five years.

seven years, right, there's going to be this unique opportunity right now that, you know, that we can roll up some of these smaller podcast networks that really there's not a home to go to right now. They need the sophistication, the talent that Kit and his team have, and the hand-holding process and the relationship with the creators.

So it's really unique, but it's not a one-time revenue. It's really, really been five to 30 times revenues for these businesses. Okay, but I guess, I apologize, Rob, but I guess the ones that you're targeting are discounted because they don't have that sophisticated backend in access, and maybe that's where I heard the one-time revenue number that you...

to focus on it, right? And so like all industries when it has that run-up you're going to have this little break that's going to be anywhere from nine months to two years. It's just a fantastic opportunity. The pipeline of acquisitions as well as the pipeline of just...

creators who are going to leave the bigger platforms because they're just not meaningful enough to them where they're so meaningful to us, right? And because we're a hands-on white glove relationship with our creators, it's just a very unique opportunity right now. We have over 100 pipes in the pipeline right now, over 100 pots.

It's a loan yet acquiring businesses to acquire podcasts and becoming free agents Can you talk a little bit about how The integration between podcast one and slacker has reflected on your membership growth

Yeah, I mean, you know, just to start with, just think about, you know, when, you know, I apologize, we're always going to talk about this amazing relationship with Tesla that's now going on 10 years. But for the first time ever, we now have over 100 podcasts inside of Tesla cars, right? So it's a whole new revenue stream that comes through, right? Our combination across it, right? We did Adam Carolla's first show.

We surprised him and put, I think it was two or three of his favorite artists onto his live show. And we had over a million people like him. So the combination of music and pop culture and combining it across podcasting and music is obviously very powerful and both keeping your subscribers as well as growing your subscribers.

And we're really in the infancy stage of that, right? It took time to consolidate this, it was hard with COVID, right? We've just got these teams together and I couldn't be happier. The relationship between Brad and Kit is so powerful. The relationship between our tech teams and our media has come together. And I think this is that year that we really have an opportunity to knock the cover off the ball. There is something from last year who

continue to grow at the rapid and record-breaking paces of both sponsorship as well as membership. Do you expect to continue that trend of integrating podcast content into Slacker? Oh absolutely, absolutely.

Yeah, absolutely. I mean, you know, just, you know, again, we're a creative first platform, right? The more original program we put on, right, the stronger our offering is. And, you know, as I articulated on the call, we're the lowest cost provider. So we're one third of the price of our competitors.

In some cases we're one tenth of the price as you know with Sirius Radio. So we're an average of under three and a half dollars a month. And the reason we can do that is because we have so much original programming. The more original programming we come on, the better margins we're going to have. The more revenue streams that we can drive from the same piece of content, right, the more money we can make.

When we see an Adam Carolla and we go from, right, he started as a radio guy, radio to podcasting to pay per view, right? Now we add into that, add merchandising. And we're about to launch multiple different products that are in conjunction and ownership with our talent, with very little risk to the company and huge, massive upside.

You watch everyone from Kim Kardashian to George Clooney to McGregor have all built these business. Rihanna have all built these business with a billion dollar plus numbers on them, right? And they built them off the backs of their social media. And I don't think that trend is ever changing ever again. As you see it, you have these superstar talents, these creators have over a hundred million followers. You can have the same amount of people watching content on a daily basis.

that the Super Bowl has one day a year. So we're going to continue to do that and you're going to see you know a big push for that additional revenue stream coming from those same creators across audio, podcasting, social media, and our overall platform. So everything you're watching us do is build communities.

and those communities just keep getting bigger and bigger. And what Kit and the team have done so brilliantly is, they cross over between that community, right, and now you have T-Pain doing a podcast, right? So you have a music artist doing it. We did the same thing with Pitbull. You're gonna see more and more of that, more of the crossover in pop culture that gets more and more exciting every day. Thanks very much, Rob, for entertaining all the questions. I really appreciate it.

communities just keep getting bigger and bigger. And what Kit and the team have done so brilliantly is, they cross over between that community, right? And now you have T-Pain doing a podcast, right? So you have a music artist doing it. We did the same thing with Pitbull. You're gonna see more and more of that, more of the crossover in pop culture that gets more and more exciting every day. Thanks very much, Rob, for entertaining all the questions. I really appreciate it. Thanks, Kevin. Appreciate you.

We have no further questions registered. I will now hand back to Rob Ellen for final remarks. I just want to thank everyone again for being here with us today. As you can see, this is the most exciting time in the history of the company. We really put together a massive community.

across audio, video, pay per view, social media. It's going to continue to grow. And I think this is the most exciting time in the history of this company. And for any of you that have been investors with me before in our companies, I truly, as I've articulated before, this is the first time ever that not only do we have a company that could be a unicorn.

We have multiple companies within LiveOne that each one of them have the opportunity to be a unicorn I think you're going to see more and more of that Just seeing the likes of bankers and outside parties Valuing our podcast business over 200 million Valuing our slacker business at 160 million and it's grown so much

and you look across our pay-per-view, we've got five potential unicorns within one company. I'm looking forward to podcast one starting to trade on its own. I'm looking forward to Slack and radio being able to trade on its own and I appreciate everybody for spending the time with us and being patient with us and we're gonna continue to grow and we're gonna continue to work really, really hard to deliver for our shareholders.

So I want to thank everyone. This concludes today's call. Thank you for joining. You may now disconnect your lines.