Q1 2024 LiveOne Inc Earnings Call
Thank you for your patience this morning's call will begin shortly please stay on the launch.
[music].
Good morning, good afternoon, and welcome to the lowest point in Q1 fiscal 2024 financial results and business update webcast. My name is that nobody ever created for today, if you'd like to ask a question in the Q&A portion of today's call. You may do so by pressing star followed by one on your telephone keypad.
Now hand, the floats iron Sullivan to begins Aaron. Please go ahead when you're ready.
Thank you good morning, and welcome to <unk> business update and financial results Conference call for the company's first quarter ended June 32023.
Presenting on todays call is Rob <unk>, CEO and chairman of like one 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. Please.
These statements include but are not limited to statements regarding the future performance of the company.
<unk>.
And the 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.
Differ materially from these forward looking statements, including those described in its annual report on Form 10-K for the year ended March 31 two.
<unk> thousand 23, and subsequent SEC filings.
You'll 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.
We encourage you to periodically visit <unk> Investor relations website for important content.
The following discussion including responses to your questions contain time sensitive information and reflects management's view as of the date of this call.
August 10th 2023, and except as required by law. The company does not undertake any obligation to update or revise this information after the date of the call.
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 a replay will be available on its website and 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 this call or webcast in any form without.
The company's express written consent is strictly prohibited.
Now I would like to turn the call over to <unk> CEO , Rob <unk>.
Thank you Erin and good morning, and thank you all for joining this very special day for LIBOR.
Five years ago my team.
The fast growing digital audio market with the acquisition of Slacker radio.
At the time of acquisition it was a very distressed asset.
$20 million in revenues and over $10 billion in losses. It has spent over $180 million building yes.
Today.
To say that we just raised our guidance to $123 million to $130 million or revenues.
Audio side of it alone, we raised our guidance to $103 million to $110 million with the staggering $18 million to $21 million of EBITDA.
We promised the street when I started by the end of 2027, LIBOR Slacker radio would captured 10 million subscribers and over $1 billion in revenues by the end of 2027.
The opportunity is so big that Sam for this industry. According to Goldman Sachs was over one seven.
<unk> been building clean subscribe as well.
Today I could hopefully guide by the end of 2027, we expect not only to reach that $10 billion.
It's over 15 million subscribers.
We say this with confidence because LIBOR is growing over 800000 subscribers. So youre at a 50% increase and a walkthrough of over $3.
<unk> partnerships has never been greater.
Each of these potential partners have had $10 million to $2 5 billion addressable eyeballs.
At 15 million to $3 Walker will pass over $600 million in revenues.
AD revenues or increase in pricing, which LIBOR slackers had been only one in the industry have not raised prices and where they sit.
65% discount to all of our competitors today.
Slacker radio expects to begin trading in a reverse merger.
<unk> bye.
By the end of October .
Separately, we then acquired in the beginning of the call. We acquired podcast one also doing about $20 million of revenues.
Today, I can proudly announced kicked in our team.
$10 6 million for the quarter.
Run rate of $42 million.
When you add that together with the acquisition of the Katz media assets, which we've been announcing multiple part guests and the acquisition of fantasy Google.
Run rate will be well over $50 million.
First time ever we will talk about our guidance for 2027 for podcast as well and expect that to continue to grow at this rate the heat over $250 million in revenues.
The podcast industry has matured 400 million to over one 4 billion since COVID-19.
Industry expects you to grow now to $5 billion to $7 billion by 2027.
We've just moved up the ladder dramatically from number 13 to number 10 on contracts passing the likes of C. N N. We expect this year to be in the top chef.
We also excitingly, even though it's been delayed multiple clients expect to start trading.
On a major exchange under the symbol <unk> and the next two to four weeks.
With the largest pipeline of potential podcasts and it'll be 10 potential acquisition candidates. We will continue to rollout we expect to continue to grow at a 30% to 50% year over year, we have growth.
We now have over 250 podcasts on our network.
50.
Percent increase since acquiring the company.
Pre COVID-19 LIBOR, hence sponsors.
Today, we had passed over 700 sponsors on our network.
As we move from audio back into video.
Pay per view one.
It's been announcing.
Multiple different pay per view events across podcast is without an accrual or she pains music festivals and social media events, social gloves, we delivered over 28 million at 4 billion of EBIT during Covid.
A $60 billion market and growing.
Our tech team has delivered world class technology that is live streamed over 5 billion engagements and 350 million livestreams and 3000 artists.
We humbly project by 2027 over $100 million of revenues and our pay per view and live streaming business and it could easily be multiples of that number.
Based on our size of our audience.
Split mining drama fly our newest acquisition.
Publishing arm is revolutionizing the industry utilizing the best producers artists songwriters combined with AI to deliver the first of its kind royalty sharing platform.
With a tam of over $100 billion.
We guide to over $100 million in revenues by 2027.
Our merchandise business has struggled.
We acquired during Covid suffered because we didn't have any of our lives adventure of any bolt partnerships likely in AG, but we've just announced a very unique collaboration the first of many to come with Xiaomi and Russell bedding, who is the Babe Ruth of Napa Valley, one winemaker more 100.1.
Anywhere in your history to watch with the brand name birthday sacks, with Jeremy and we've run out of bottles are ready.
Sold out in the first week.
Now growing substantially with guiding that business, where we expect to add 10 to 20.
Celebrity brands this year too.
Over $100 million as well in 2027.
Together these five divisions easily surpassed $1 billion in revenues and over $150 million of EBITDA.
I want to thank everyone for their patience and staying with us and we couldn't be more excited about the company.
The spin outs it about to happen with podcast worn and slack radio.
And the opportunity of each of our five divisions to grow and mature with that I want to open it up to any questions that anyone has an award. Thank you again for attending.
As a reminder, if you'd like to ask a question today. Please press star followed by one on your telephone keypad now turn to the Q from the parent just two question. Please im sure Youll headsets fully put in a muted likely flip I wanted to ask a question today.
And our first question comes from Brian <unk> from Alliance Global Partners. Brian . Your line is that can you. Please go ahead.
Great. Thanks, so much and congratulations on this turnaround it's taken a while but you've done great work.
Can you touch on the pipeline.
Of hard casting in terms of M&A what are the ranges in terms of size as youre looking at what are the general valuations that you hope in your discipline to acquire companies at and then just speak to maybe the mix in cash and stock.
And retaining management.
How the plan will work.
Yeah, Great Great question, Brian I think you know me long enough now.
And.
At all of our acquisitions are in that one time revenue range.
They've historically been with stock we've done here is because our stock is down right. We have been acquiring it with the stock in podcast one so in podcast when we announced the valuation is well over two or $3 million when the stock is trading well below that so we utilize that currency in podcast wanted to acquire both fan.
She grew as well as the assets with Katz media.
We have over 10 acquisitions right now in the pipeline in.
And they're really exciting they go anywhere from sort of the size of $5 million up to $35 $40 million.
That range they may grow things here soon but this is a unique opportunity right now to acquire smaller podcast networks and add them into the fold and really our team is the best in the business kidney lines, who have proven that over and over again and we just see the excitement and energy.
You're seeing us announce on top of the acquisition, you're seeing us announce almost on a biweekly basis, another podcast with traffic and audience. It already exists moving over to our platform and I think you're going to see more and more of that so the pipeline for potential podcast and move over it's over 100 and acquisitions and over 10 right now.
So it couldnt be more exciting and this is a great time to roll up the space.
And if I remember correctly the.
The acquisitions of cash and payments grew have lower cpm's new opportunities to increase CPM.
When they're on boarded to your platform is that generally how when.
When you look at those 10 or so in your pipeline how it'll work they will have lower CPM. They come on to you an immediate.
Immediately or at least once you negotiate youll be able to generate higher revenue and just what they have.
Yes, I think its I think its combination of things because.
Because we are a full 360, <unk> podcast network and I'm going to hand this to kick in the second.
Broadly our team we do everything for those part guesses and we act as a community. So we utilized our other podcasts is a grow them.
But also the size of our sales force is just dramatically different than the small podcast network kept once you take over from there.
Yeah sure no it's.
Great question, Yes.
Yes, the ultimate the ultimate goal is to raise EPS, but it's a process right a lot of these shows that we're acquiring whether by acquisitions or even just one offs where shows are leaving other networks or new shows are starting the first phase of that processes too.
Get demand on their inventory start to sell out and unsold inventory give good packages to advertisers to invest test and work with these shows get comfortable with these shows.
Then that's where the CPM start to start to grow we have comfort with those advertisers to do things beyond just the spots and dots of what you would hear in our podcast to include exclusive.
Content.
Just around brands.
You'll interaction video all of these type of things and Thats, where youre going to see increase CPM.
The competitors out there that we go against every day are very much to Swanson dock.
The world and we're able to excel on that but it fell on all the other things that we just spoke spoke about so that's that's really one of the main growth factors. We get these shows on the network and we get them into our system and they start making more money than they ever have we do more together, we do more episodes and we really charge for it.
And then just to add to that just to add to that guys just to add to that.
Just recently started to move over right and sign some of the cash media podcast series right, who have struggled with the node muddy right the whole works.
Cast at two salespeople and just an example, without using names you're going to read a lot about this very shortly.
One of the first part yes, it came up which would be one of the largest traffic ship all of our podcast.
We did triple the revenues the first month.
And they did previously.
But that because you filled their inventory or because or because you had better advertising why did you do triple the revenue.
Both.
Yeah of course across the board across the board. We just we have so many advertisers who are already on our platform. We are able to go to them and use that great talent and use those numbers to expand the opportunity with them and grow our existing our existing advertisers and then programmatic as well kicked in.
Two more questions from me the first is.
Your numbers jumped up in the first quarter before the acquisitions I know you had some new content coming on.
You are speaking to M&A is there also a meaningful piece of.
Organically, creating new shows or M&A dominate the content.
The addition.
Addition of content sorry.
Curt do you want to take that.
Yeah Yeah.
I mean, what we're trying to do.
Is there are shows that are smaller that are on our network that.
We know we can't get to the next level and rather than kind of use our resources.
After.
912 months trailing of trying to get it to where it needs to be we then.
Turn out the bottom, 15%, 20% of the network and the same time, we're growing the network by adding bigger programs with more opportunities that will be top 10 top 20 shows on our network, which will drive real revenue right and then we get them into our system in and continue to grow beyond.
What what we'd ever thought.
So those are your those are your strategies right of growth so.
When you look at the network, you're always trying to.
Cleaned it up get more efficient and bring in bigger ones and go from there.
And I would tell you Brian to two aboard.
Two of our newest shows we just added.
Already in the top 10.
So are you seeing brand new shows that are really exciting really coming out of the box with very strong numbers.
And which shows are those.
We just acquired Brendan job in his network as three shows including the Golden hour fighter in the Kid and the branded shop. So we have some more news, which is a really big new show that that does not only really well in the audio.
Space, but also in the Youtube video space.
And those are those are just some of the new acquisitions that have hurdle that's occurred over the last two or three weeks.
In the meantime, we're launching new shows that a podcast one owned and operated shows.
And we are acquiring other shows from competing networks that are unhappy with their current situation and they are coming over.
For instance.
I've had it.
Two women out of Oklahoma when a.
A lawyer and won an interior decorator, they're hilarious. They were just on the today show.
Just this last week their show came over to US with 20000 downloads in episode and this is a bit of an anomaly, but it's a lot of hard work not only on our end, but there Ed.
That show is doing over 125000 downloads in episode.
And we will crack seven figures and in revenue.
We're talking to them about launching another episode.
They will have three episodes a week on one on a Saturday.
So those that's the strategy right define these people that that fit into our mall and fit into our system.
And we can grow their revenues from.
Low six figures to seven figures.
Even even even potentially even even more right. So.
That's really the strategy.
Okay.
Great.
Brian what are the other great thing Thats happening in this space is because it's not nearly as competitive where everyone's willing to pay these crazy Mg is a crazy prices, we're negotiating way better deals than we would have a negotiated before.
The team as I've always described it have always played money ball, but now playing moneyball youre going to see a lot more 60 40 deals at 50 50 deals than you did previously yes, we've always stayed away from those 80 20 deals.
And it's proven to be the right methodology.
Really understood what the right deals work.
Okay Lastly.
The cast and fantasy Guru acquisitions, just closing them depend on podcast one going.
Trading on its own.
Or is there any obstacle in closing those acquisitions.
No. It's already it's already happening right. So cash media, we're buying certain assets of their as we've already announced a.
A couple of shows.
Fully expect you're going to see us announce a massive shows any minute now with fantasy Guru I expect it to close in the next 30 days right. It's exciting time to close it because you go right into football season.
And we're really excited about this they've never done any advertising and sponsorship and it obviously crosses over radio as well as part casting so we see a really exciting opportunity to expand that business dramatically and utilized our creators in our podcast dues to drive more subscribers.
Okay. Thanks for taking all my questions.
Thanks, Ron.
The next question comes from Jon Hickman from Ladenburg. Your line is open. Please go ahead.
Hey, Rob can you elaborate on.
You said two to four weeks before broadcast starts trading on a national exchange.
Can you elaborate on why you think it's going to be that soon after all the delays.
Yes, I can't I can't say too much but what we said in the press release is that after being approved by the SEC NASDAQ asked us for our audited statements right, which was which is not an unreasonable ask it was just it was eight months into the process.
You know we've delivered those audit is right those are filed publicly.
And so thats all completed and so I'm very very confident that we will trade on a major exchange shortly.
It'll probably be up to us as to what day, we choose to trade and make sure that we do the right Road show in advance.
Get out to the street in advance and this has obviously taken a little bit longer than we expected and like everything none of these are easy.
First time ever done that you've done uplifting and a partial dividend at the same time and whats happened is its turned out to be a blessing in disguise, we increased the dividend dramatically.
We pulled in two acquisitions and we're not.
Not done so.
So it was a really exciting time for the company and really exciting pilot guests one we got to showcase the numbers for this quarter.
Casing at $10 $6 million number that's a big jump from where we were so I'm really proud of the team and I'm really proud of where this is going and I'm really excited about these acquisitions.
Pete just mentioned Brendan is already on our network. It will be one of the top three traffic did guys on our network and brings more and more male sports related right. We are a match of female network.
We just got to keep growing and we see telltale signs. It's just the right time, the right place for us to go public.
One last question the you raised guidance.
<unk>.
But the <unk> media in the Guru.
<unk> and <unk>.
Revenues arent in the new guidance until because they haven't closed yet right.
Correct.
Okay. Thanks.
The next question comes from Joseph <unk> from Joseph Sterne Capital.
Please go ahead.
Hey, Rob how is it going.
Graduations on a job well done to you and your team hats off to you guys.
My question was already answered by previous.
Investor So you could take the next call. Thank you.
Great. Thank you thanks for joining.
Just a reminder, that staff slipped by one on the telephone keypad to enter the queue.
And the next question comes from Sean Mcgowan from Roth and Cam.
Please go ahead.
Thank you good morning, guys.
Let me start with a couple of housekeeping things the change in the terms of the podcast spinoff.
Dividend that was already announced right.
That change was already out there the 19% yeah.
Correct, correct that was actually a sugar going public the public filings that was already in the public filings as we provide the FCC's approval.
Okay.
On the valuation.
Well first of all on the trading so there's not anything material yet to be done that you need to do it's just a question of when it actually goes effective is that the right way to read what you're saying.
Yes, I think it's I think it's more than that I mean were effective already right. So effectively you are a public company says to prove it we've just been waiting for an exchange right to be ready for that trading.
<unk>.
Very very helpful that we are we are on more on the <unk>.
<unk>, we're in the five year outlined we've made and beyond the two you online as of today.
I meant that there's nothing material that you have to deliver like it.
Kind of as the ball's in their court, if I can make some metaphor.
Yes right.
That's fair, it's not like they're waiting on you to do something it's you've done everything you got to do right.
Correct correct.
One of the things, we should make clear and we've made this before but I should make clear the call Sean yes.
Just to give you round numbers for anyone who owns a 100000 shares of LIBOR.
<unk> received 40 about 4800 shares of podcast one.
Between eight and $12. So if you take the low end of that range at $8.
It's a very sizable dividend.
And that's only going to be shareholders of record you own. It at the time that we're actually up and listed in the next couple of weeks.
Yes.
Now on the valuation that you.
You referenced a couple of times.
We've done the third party valuation change.
Changes in the industry over the last half year, or so I guess, the flip side of you being able to get content.
More favorable appeals as maybe the mood around the categories a little different so can you talk a little bit about your confidence in the prior.
Valuations that were done.
Yes, I mean, I would say the confidence is even higher I mean, Sirius radio board of podcast move towards doing $10 million in revenues for $150 million of cash only six months ago right.
And if anything Spotify and serious as stocks have gone up substantially Spotify came back down a little bit, but they're up very very substantially from when that valuation was done. So if anything the valuations have gone higher in this space.
We're pretty excited we're pretty excited about it.
I think the opportunity of acquiring small ones is that Spotify and Apple and serious.
I heart Theyre not going to buy these little words anymore. They just too small for them they've gobbled up a tremendous amount there.
Big market shares in these and I think it's an exciting time for us to be able to roll the small ones up because there really is no home for them anymore and as you know you've got you've got Odyssey and Westwood, Yes, there's a lot of debt out there amongst the radio companies that had built podcast networks I think is a huge opportunity to consolidate this space.
And really grow it did for US I think we're the only game in town can buy the small ones and do the things that kicked his team.
Okay makes sense.
Circling around to split mind could you just give us a little bit more color on this.
Madden deal.
This could be an example, right of things that could happen how does this work economically.
Okay, great, so I'm going to hand that to Josh.
I Love I Love the asset because you would not have been Sean you and I've been in the trenches of the game business and watch how much money is generated.
Rob music inside of these games My kids play Madden literally nonstop.
It's really exciting so Josh you want to jump in and talk about where that's going not just for games, but film television right overall with the publishing side of our business scale.
Yes, thanks, Rob.
In General publishing revenue comes from seeing some licenses and I think that.
As we've gotten involved in this asset we're really already showing how much value. We can add on making revenue from from that side of the business.
Matt and is the most prized.
Video game in the U S. I think it actually has the highest selling video game in the U S.
At least the highest selling sports game.
Track one.
The title track, where the one that's on every commercial.
The internet commercials.
Nationwide commercials I think that.
That mixed with.
<unk>.
During the music for the new Gerard Butler film Kandahar that just came out.
And you're doing the music for the Emmys last year, we're on track to release.
New to grow the publishing business more on the thinking licensing side of the business. We're always focused on creating hit songs. That's a given that's a that's our that's our daily life.
Actual music creation, but.
Can't discount how much money, you can really be making from the zinc and licensing side and as we grow we will continue to have more assets to be able to put inside of making money on that side of the business.
Thanks, and I think this is such a high profile kind of almost like a first real public test case on this model. So can you without getting into specifics of dollars or even in the percentages, but just kind of conceptually how does this work.
What's the basis of the revenue that you get from that and is it a flat rate as the number of times. The game is played as did the number of times the music actually place whats the basis of the revenue.
It's all encompassing.
There is a significant.
<unk> side flat fee. When you initially sign up for that and if you look at all the other artists that are involved in that Madden project.
Theyre not artist that do more fees.
Really its the most coveted placement in the video game space in my opinion.
Yes.
Okay. Thank you a couple of other questions. So is the Roberts.
This is a trading.
A little bit more color on the slacker.
Trading like is that a little sooner than you thought Hudson assuming that it actually happens then or is that what you guys had in mind.
Yes, I mean, I think I think you're going to get a lot of clarity in the next two weeks right. We signed the merger agreement a couple of weeks ago.
I have to be with with Bahrain and the Hamptons right now is with them yesterday and just finalizing so we're ready to go we have to.
Our audit check to be filed right to slacker there'll be the first time, we're filing which will be really exciting right people, who didn't get to see the numbers I've been I've been in the audio music business for a long time I <unk> previously and as you know Shawn had an amazing run with the stock and it will happen no one could ever make money.
We make a ton of money right. This is this is great Dean cash and obviously, having the Tesla partnership has.
Being our 10th year in business with them its test lapping a spectacular year is all exciting.
And then obviously just an amazing partnership right that's going to that's going to continue to grow our <unk> deals our pipeline of <unk> Youll, probably see on Linkedin out there were out there aggressively even though we cut yes, we consolidated 150 people and staffing to $31 million of cost out we're hiring <unk> people revenue.
New salespeople revenues people because right now the flywheel.
Bloated, so we're going to be hiring nonstop, we're seeing telltale signs that I said I'm going to blow through the 10 million subscribers now before 2027, and we see telltale signs of any one of those one more automobile company wanted to national carrier right. It comes along when social media company. All of these guys have been <unk>.
Barclays over the years as you know I built digital turbine off the backs of carriers. There's no reason that we can't pick up the carrier and really partner with them and give them content and give them. The full 360 play and the fact that with the lowest price and the fact that we are the fact that we are willing to white label like we do with Tesla with you only went to the world that can do.
That is only 15 companies in this space, it's growing to one 7 billion paying subscribers and probably three quarters of the world will have a music subscription.
I think we're going to take a chunk of that space and I think youre going to see.
Another car company Youre going to see international right, you're going to see them all coming this year and finally, we've got the balance sheet in shape and the flywheel is kicking in so fast that there is no reason that we cant landing huge <unk> partnership very shortly.
Okay. Thanks.
Last quick question maybe for Aaron.
When do you expect the 10-Q to be filed.
Hey, Sean S and we expect Monday, 14th Monday, Okay. Thank you.
Yes, Sean John just before you jump just one more thing I forgot to add to it one of the things that I said to the street is when we announced the deal right to merge into this back I wouldn't do that deal and less just like podcast one.
We had other roll up acquisition opportunities that could fit in there.
So that may give us expansive growth in again.
At Super accretive acquisition value valuations and Theres some great assets right now that are coming available. So you may see that coming as well.
Okay. Thanks, Thanks, Rob.
Once upon a reminder, that star Philip I wanted to know telephone keypad to the Q today.
Okay.
We have no further questions. So I'll hand, the call back to the management team for any concluding remarks.
I want to thank everyone for.
For the patients.
Being our partners in this right.
We couldnt be more excited about the company and as I said on the call.
I fully expect by 2027, when we will be $1 billion plus company.
It's just math right. When you look at these numbers and you look at the trajectory and the growth that we're growing right now we're going to grow over 800000 subscribers. This year.
Over 50% year over year, our podcast business is doing very similar our sponsors have grown from seven sponsors pre COVID-19 to over 700.
It couldn't be more proud of this team.
I think we.
Have this now we have this perfect direction to really to really be able to run the table and so I just want to thank everyone for attending and continue to support the company.
This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
[music].
Okay.
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Yes.
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Yeah.