Q2 2024 LiveOne Inc Earnings Call
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Hello, everyone and welcome to the lives One Inc, Q3 results and corporate update webcast and conference call.
My name is John and I'll be coordinating the call today.
You will have the opportunity to ask questions at the end of the presentation, if you'd like to register your question. Please press star followed by one on your telephone keypad.
Kind of it's wise, our Sullivan CFO to begin Aaron. Please go ahead.
Thank you good morning, and welcome to <unk> business update and financial results Conference call for the company's second quarter ended September 32023 does that thing on today's call with me today is Rob <unk>, CEO and chairman of <unk>.
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 and involve various risks and uncertainties. These statements include but are not limited to statements regarding the future performance of the company.
<unk> future financial results and we expect the future growth of the business.
Actual results may differ materially from those discussed in 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 its annual report on Form 10-K for the year ended March 31, 2023 and subsequent.
SEC filings.
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. The company encourages you periodically basis.
Mr 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 November 19 2023.
Second.
And as 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.
Making it available to investors and media via webcast and replay will be available on its website and the Investor Relations section. Shortly following the conclusion of the call. Additionally, it is the property at the company and then it.
Distribution transmission or rebroadcast of this call or the webcast in any form without the company's express written consent is strictly prohibited.
I would like to turn the call over to <unk> CEO, Rob <unk>.
Thank you Erin and good morning, everyone I'd like to thank everyone for joining us today.
Investor appetite and demand for Microcap stocks began to decline.
Softened almost two years ago.
We made major strategic decisions to protect our shareholders' capital taken aggressive cost cutting measures and solely.
Unpredictable growth units with the highest profit margins in an effort to strengthen our balance sheet drive profits and be a desirable place for investors when the market cycles change.
We have used almost all of our resources to expand our audio division consisting of Slacker radio and podcast one.
This is the largest divergence disconnect.
I've seen in 40 years in the public markets between large and micro caps growth at any cost is not the way right now.
Over the past two years.
Thrilled to announce.
We have done.
A remarkable job of delivering <unk>.
$32 million and consolidated cost savings.
And looking at another $3 million to $5 million over the next few months.
We purchased <unk>.
Three 5 million shares in the buyback and have left room to acquire another 5 million shares.
Our balance sheet is the best in company history with zero debt.
And over $28 million in short term assets.
On our audio business, when we acquired slacker and podcasts.
Combined company has produced about $40 million of revenues and $15 million annually.
And needed need a lot of work to clean up.
This morning, I'm proud to announce that our management teams have reported a combined audio business now delivering $52 6 million a record number and $10 3 million and EBITDA just for the first six months.
We raised our EBITDA and cash flow guidance on the audio business to 18 five node.
$18 5 million to $21 million of EBITDA.
But that combined.
After it has been a $35 million swing from the time that these acquisitions.
Yes.
Really to clearly articulate and simplify why our hockey stick growth is coming from these quick key two key revenue stream streams. One is subscription and two responses shifts our subscribers have grown eight times 400000 to over $3 3 million in the five year period.
Our sponsorship is growing two five times.
With over 700 Blue chip sponsors on our platform this year.
In September this year LIBOR completed the spin out a podcast one as a separately traded public company on December symbol P. O D C.
Management commitment to increase shareholder value.
You didn't give it in the 18% to our shareholders. The Spinout made podcast. The one the first Standalone podcast network to list and trade on a national exchange.
So far for the first time investors now have the opportunity to invest directly in the fast growing podcast business.
Trading between 60 and $100 million valuation since it started trading on NASDAQ.
<unk> owns 80%.
Leaving wide ones remaining four subsidiaries trading any nominal valuation.
Podcast.
Doubling the number of top creators on its platform in a three year period.
<unk> already this year.
At an average of about $350000 in revenues per podcast.
We increased revenues to $21 million to the six months in growing up from the $20 million when we acquired the business.
We currently have over 100 podcast in the pipeline. This is this is about seven Exxon normal pipelines and over 10 potential acquisitions.
Largest opportunity in the history of podcast one.
I encourage everyone to listen to the Shepherd podcast, one earnings and business update call at $1 30 eastern today.
Now to Slacker radio, we just extended our Tesla partnership for the 10th straight year.
Every Tesla cars sold in North America. It comes with a paid membership to LIBOR and these members are paid directly.
July one by Tesla.
Expanding our management team with a clear focus on <unk> partnerships, we identified by verticals.
And are now over 27 Blue Chip billion dollar plus companies in our pipeline.
This almost these combined efforts combined opportunities almost guarantee another huge growth year for next year.
In place before we'd even finished our nine months of this year.
Yeah.
I indicated last year, we'll pass over 10 million members within five years and over $1 billion in revenues over the past 12 months. We've added 600, a record 679000, new paid members at an average of over $3 <unk>.
And now past 3.3 million total members $2 4 million paid members.
We expect to pass over 4 million total members by the end of next year and over 3 million paid members.
To better understand these metrics Goldman Sachs issued a report that industry will hit $1 7 billion paying subscribers by 2027.
LIBOR would only need 1% of that addressable market to easily surpass that number.
Given the strength in the business. We believe our stock is extremely undervalued should we recently expanded our buyback program to $8 5 million, leaving almost $5 million of additional buying.
Now I'd like to hand, it off to Aaron Sullivan our CFO.
Thank you Eric.
Okay.
Thanks, Rob.
And just a few minutes, providing a very brief overview of our results for the second quarter of fiscal 2024.
As ended September 30th.
Consolidated revenue for the three months period ended September 32003, with $28 5 million Slacker posted record revenue for Q2 of $16 $4 million adjusted EBITDA of $5 million and podcast, one posted revenue of $10 5 million and adjusted EBITDA of 100.
In the second quarter of fiscal 'twenty four revenue consists of 58% membership and 42% sponsorship advertising merchandising and other compared to 64% membership and 46% advertising sponsorship and merchandize in the prior year period.
Consolidated adjusted EBITDA for Q2, FY 'twenty for $2 8 million.
On a U S GAAP basis, LIBOR posted a consolidated net loss of $6 five or seven cents per share for diluted sorry per diluted share.
Q2 fiscal 'twenty four.
As of September 32023, we had approximately $2 4 million paid members and that increase of 697, K or 38% compared to the prior year total members, which include free members grew approximately $3 3 million as of September 30.
Included in the total numbers of certain members to a 30 subjects with contractual dispute for which we are not going to be recognizing revenue.
Rob I will turn it back to you.
We may have lost Rob.
Or do you want to open it up for questions.
Sorry, guys I'm sorry, guys.
So just just to wrap it up before we go to Q&A balance sheet. The strongest it's ever been in the history of the company $28 million of short term assets zero that $15 million of debt was converted at $2 10, and another $8 million of debt was converted into podcast one stock at $3 well above.
Those markets record subscriber growth record listenership largest pipeline in the history of the company.
Record EBITDA record cash flows.
And a <unk>.
Largest pipeline of acquisitions.
In the hopper as well so with that I'd like to open it up to Q&A.
Thank you. Thank you everyone for joining.
Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad, if you'd like to draw. Your question. Please press star followed by two okay.
Parents you ask a question. Please ensure you're on muted locally as a reminder, that star followed by one on your telephone keypad now.
Our first question comes from Bryan Kipp, Linda of Alliance Global Partners. Brian. Your line is open. Please go ahead.
Eric This is Sheldon on for Brian Thanks for taking my questions.
Firstly could you share any updates on cast.
More specifically, how many podcast recast have you onboard it and how many more do you expect to onboard and over what timeframe.
Yeah. So great question. Thank you. So on cash we brought boarded they had about 27 podcasts leave onboarding around six or seven at this point it took a little longer than we expected because of the timing of the uplifting.
It took us almost five months longer than we expected, but we're seeing great Telltale signs will continue to add.
Cash and I think you should see you should see an additional update over the next few days with substantial podcasts added to the network.
Great. Thank you and then outside of cash could you talk about what the reasonable goals are for the numbers of titles you hope to onboard annually.
Yes. So this is going to be really special year in that we have onboard into 18 podcasts already this year, we have over 100 and our pipeline.
That we're bidding on today and these are existing almost all of them are existing podcast right that are moving from other networks that the doors are open that right now it has been for the last three years. This is Ben.
A sellers market for podcasts right now, it's a buyer's market for podcasts networks and so there's great opportunities in way better deals and economics for the networks than they were previously.
I see the floodgates opening that this should be the second half the year should be very similar to the first half of the year.
And I can see us, adding well over 30 podcasts this year.
And lastly can you touch on the lower revenue guidance range for fiscal 'twenty four.
How much is the result of the AD market versus the pace of Onboarding, new podcasts or any other factors that might be missing.
Yeah, Greg Good question. So so most of that is coming from the merchandise business.
Bob.
We have two things one it is.
Articulate in the call we made the determination to focus all of our energy on our audio business right in and buying back stock and cleaning up and strengthening the balance sheet. So our merchandize merchandize business. We are starting to cut we just took $2 million of cost out of we announced couple of weeks ago.
We're looking at cost and revenues that are not as profitable.
Some are a little bit of it is some of the cash ones that take a little bit sign on board, but most of it is coming on the merchandise side of the business.
Alrighty. Thanks, so much I'll hop back in the queue.
Thank you as a reminder, if you'd like to ask a question. Please dial star followed by one on your telephone keypad now.
Our next question comes from CRE, we load of quarter talent Research Gary Your line is open. Please proceed.
Yes, good morning, Rob a couple of questions. You mentioned five verticals can you give us a sense for what day off.
New potential partners.
Yes, and these are just the beginning right.
It's going to be way more verticals. So yes for anyone that knows my background and knows what I built with digital turbine right youre going to have carriers, which we've already been a partner with Verizon T mobile right and have been partners with many others. So carriers additional auto companies like Tesla.
Additional.
Additional.
Merchandise companies, alright, and being careful in giving names because as we said on the last call. This pipeline is very meaningful it's over 27 companies in that pipeline and we expect to announce some of those shortly so retailers anyone that is competing with Amazon is going to need that.
Cable and satellite operators as.
As well as his personal gym equipment anything from from the telecoms.
<unk> to gym equipment.
It's going to be way more verticals that youre going to hear us talking about very shortly we just hired a whole <unk> and you'll be seeing us expanding that <unk> dramatically throughout the next few months.
That's great you mentioned 675000 increase in paid numbers do you have a way to it.
Is it new new partners that you brought in or is it existing members existing partners at all without growing the members.
Good.
On the platform.
All the above right.
We have a we have a spectacular relationship with Tesla right that is continuing to grow and now has been extended for its 10th year.
We're going to continue to grow our partnerships utilizing.
All of our podcast creators all of our social media creators all of our talent creators as well as upbeat of deep partnerships, and we're really special and where we separate ourselves from the rest of the crowd is threefold number one in pricing we're by far the lowest in the industry right, where we're a third of the price of most of our <unk>.
Patterns number two in service and that we can be nimble and have the ability to do things that we do for our customers that others can't do and number three is white labeling.
To provide a white label solution and be able to call a Tesla radio while Verizon radio or.
For that matter in almost any any one of our partners that is 10 million to.
Two.
Two 1 billion users.
Users have the ability to white label and utilize that solution, which there really is no one else in the industry has the capability of doing based on their size.
Great maybe just wanted to ask questions.
You mentioned, 58% of the revenue from membership and 42% from sponsorship.
<unk>.
Do you see that trending higher.
Membership as time goes or you think thats a good balance.
How should we think about that.
What's nice to see is we got two horses in the race now running fast right.
So the podcast business has grown dramatically from $34 million.
Gave guidance of $47 million to $52 million right on a run rate right and the same thing on the slacker side of it on the audio side of it we've grown from 'twenty into each of these businesses started at $20 million, we're requiring them slack or is which we've owned for two years.
No longer is now doing this year will be $65 million right and the same thing on podcast who's doing $20 million is both losing a lot of money and are profitable right now EBITDA sizable EBITDA coming out of it and on the podcast side as you grow from $20 million, you're seeing some real sizable growth.
I see I see the two horse ratio, where theyre going to be pretty neck and neck over the next three years.
Great Hey, thanks for the thanks for the answers and.
Nice quarter I appreciate your comments on the Microcap sector, and how kind of unprecedented that.
Situation, but.
We're pretty better times ahead, thanks again.
Thank you I appreciate you joining.
Thank you as a reminder, if you wish to submit a question. Please dial star followed by one on your telephone keypad.
Our next question comes from Jon Hickman of Ladenburg Thalmann. John Your line is open. Please proceed.
Rob just one quick question will you elaborate on your comment that the.
Current quarter the December quarter is going to be record does.
Does that mean, the best quarter, you've had in corporate history.
Or the best third quarter, you've ever had.
Yes.
It'll be the best quarter in the history of the company.
And.
As you can see by a lot of the metrics that we've already announced right. We've already given telltale signs of where the growth is and what the.
What the growth is we're growing about 60000 subscribers a month right. We're announcing almost a new podcast every two weeks. So it's really economy now the model is to come really easy as you know John every new podcast or we're adding 350 to $500000 of revenues. So you see those announcements you can easily figure those out by Sky.
Somewhere in that 10% to 15% net margins to those right Provincetown same thing in subscribers right every subscriber that we're adding right every paid subscribers already adding we're adding in the between three to $3 $5 <unk> right with about 30% margins. So if we can continue to do that we continue to add those.
This quarter, you're just going to be it's going to be a very very special quarter coming coming up and that's the reason, we again raised our EBITDA guidance, even though even though our revenues wont hit.
Hit the numbers, we would like to because the IPO took longer than we expected or the uplifting took longer than we expected.
I see telltale signs that the cast media as well as well as the pipeline of podcasts. It kicked me and fast right now.
So with the lower revenue guidance and the higher EBITDA.
Is that.
Is that difference coming out of the expense control.
Better margins.
<unk>.
Yes.
We're being very cautious right. We just took another $2 million of cost out of the business and being very cautious on what pieces of business we do.
Any risk business, we're not doing any of those live shows unless we're getting paid on them as you and I have talked about before.
And we're starting to see Telltale signs I'm going to start to get paid a lot of money and in in.
And next year.
For us to produce those shows with margins very much like social gloves, but we're not going to do any of them unless there is money upfront.
There is money upfront with a guaranteed profit on them, we will get a focus our energy on the core businesses that are working right now on delivering revenues and we're going to use our capital to continue to strengthen the balance sheet and continue to buy back stock right. If our stock is trading at almost a nominal valuation right now, we're just going to keep buying back stock right now.
Okay. Thank you.
Yeah.
Okay.
Thank you as a final reminder, if you'd like to ask a question. Please dial star followed by one on your telephone keypad.
At this stage, we have no further questions. So I'll hand back over to Rob Allen for any closing remarks.
And I just wanted to thank everyone and thank you for joining appreciate it and we look forward to next.
Our next quarters numbers, please join the podcast call it.
And a few in.
The short period.
Everyone.
Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.
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