Q3 2024 Loop Media Inc Earnings Call

August 7, 2024

Speaker Change: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Loop Media's financial results of 2024 fiscal third quarter ended June 30, 2024.

Unknown Executive: to Discuss Loop Media's Financial Resort of 2024, fiscal third quarter, and the June 30, 2024.

Unknown Executive: Joining us today are Lou's interim CEO, Justice Kao, and the company's CFO, Mr. Neil Watanabe. By now, everyone should have access to the 2024 fiscal third quarter earnings press release, which the company issued earlier today at approximately 4:05 PM Eastern Time. The release is available in the Investor Relations section of REWP's website at www.loop.tv. In addition, this call will also be available for webcast replay on the company's website.

Speaker Change: Joining us today are Loop's interim CEO Justis Kao and the company's CFO , Mr. Neil Watanabe.

Speaker Change: By now, everyone should have access to the 2024 Fiscal Third Quarter Earnings Press release, which the company issued earlier today at approximately 4.05 p.m. Eastern Time.

The release is available in the investor relations section of Loop's website at www.loop.tv. In addition, this call will also be available for webcast replay on the company's website.

Unknown Executive: Following management remarks, there will not be a Q&A session. Certain comments made on this conference call and webcasts are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.

Operator: Following management remarks, there will not be a Q&A session. However, certain comments made on this conference call and webcasts are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions, that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subjected to other risks and uncertainties that are described from time to time and accompany filings with the SEC. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with FEC rules.

Unknown Executive: Management Remarks. There will not be a Q&A session.

Following Management remarks, there will not be a Q&A session.

Unknown Executive: Certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions, that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subjected to other risks and uncertainties that are described from time to time and accompany filings with the SEC. We did not place undue reliance on any forward-looking statements which are being made only as of the date of this call.

Neil Watanabe: Areas that contributed to efficiencies on the cost sides were one, further reductions and restructuring of our labor force to restructure our agreements with vendors and partners, and three, better operational efficiencies resulting from our ongoing review and restructuring of third party vendors and services with a view to eliminating 750,000 of ongoing yearly costs and expenses beginning the first quarter of fiscal year 25. As such, our growth has been flat in recent periods. With that, I will turn the call over to Neil to take you through our financial results.

Speaker Change: Certain comments made on this conference call and webcasts are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions, that could cause actual results to differ materially from those reflected in these forward-looking statements.

Unknown Executive: These forward-looking statements are also subjected to other risks and uncertainties that are described from time to time, and the company's violence will be as easy. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements.

Speaker Change: These forward-looking statements are also subjected to other risks and uncertainties that are described from time to time and accompanies filings with the SEC.

Speaker Change: Do not place undue reliance on any forward-looking statements which are being made only as of the date of this call.

Unknown Executive: Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statement. The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA, as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the FEC rules. You'll find reconciliation charts and other important information in the earnings press release on Form 8K, which is furnished to the FEC. I would now like to turn the call over to Mr. Justis Kao. Sure.

Speaker Change: Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements.

Unknown Executive: The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA, as supplemental measures of performance of our businesses. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the FEC rules.

Speaker Change: The company's presentation also includes certain non-GAAP financial measures, including adjusted EBITDA as supplemental measures of performance of our businesses.

Speaker Change: All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the FEC rules. You'll find reconciliation charts and other important information in the earnings press release in Form 8K furnished to the FEC.

Unknown Executive: You'll find the confirmation charts and other important information in the earnings for us to release in Form 8-K, furnished to the FEC.

Justice Kao: I would now like the time to call over to Mr. Justice Kale, sir. Thank you, and welcome everyone to our Q3 earnings call. I'm pleased to report that in the third quarter of our fiscal year, we have focused our attention on those areas of the business where we can look to increase revenues, leverage our fixed and variable expenses, and improve profitability. Notably, we've reduced our total operating expenses this quarter by an additional $1.6 million from last quarter. Areas that contributed to efficiencies on the cost side were one for the reductions and restructuring of our labor force, two, restructuring our agreements with vendors and partners, and three, federal operational efficiencies resulting from our ongoing review and restructuring the third party vendors and services with a view of eliminating $750,000 of ongoing yearly costs and expenses beginning the first quarter of fiscal year 25.

Speaker Change: I would now like to turn the call over to Mr. Justis Kao. Sure.

Justis Kao: Thank you and welcome everyone to our Q3 earnings call. I'm pleased to report that in the third quarter of our fiscal year, we have focused our attention on those areas of the business where we can look to increase revenues, leverage our fixed and variable expenses, and improve profitability. Notably, we've reduced our total operating expenses this quarter by an additional $1.6 million from last quarter. Areas that contributed to efficiencies on the cost sides were one, further reductions and restructuring of our labor force to restructure our agreements with vendors and partners, and three, better operational efficiencies resulting from our ongoing review and restructuring of third party vendors and services with a view to eliminating 750,000 of ongoing yearly costs and expenses beginning the first quarter of fiscal year

Justis Kao: Additionally, we continue to work on cost-cutting measures to help streamline our operations with the goal of further reducing SG&A expenses to under $4 million and maintaining that level per quarter for the remainder of fiscal year 2024 and through fiscal year 2025.

Speaker Change: Notably, we've reduced our total operating expenses this quarter by an additional $1.6 million from last quarter.

Speaker Change: Areas that contributed to efficiencies on the cost side were one, further reductions and restructuring of our labor force.

Speaker Change: Two, restructuring our agreements with vendors and partners.

Speaker Change: And three-

Speaker Change: Better operational efficiencies resulting from our ongoing review and restructuring of third-party vendors and services with a view of eliminating 750,000 of ongoing yearly costs and expenses beginning the first quarter of fiscal year 25.

Justice Kao: Additionally, we continue to work on cost-cutting measures to help streamline our operations, with a goal of further reducing SG&A expenses to under $4 million and maintaining that level per quarter for the remainder of fiscal year 2024 and through fiscal year 2025. Our QAU footprint for the third quarter of fiscal 2024 was reduced from the prior periods as a result of natural attrition of loop players that were not immediately replaced as we continued to revamp our distribution strategy and investments surrounding new loop players. Previously, we transitioned to a more targeted distribution model, pivoting our focus to certain designated advertising markets and geographies, as well as more desirable out-of-home locations and venues, including convenience stores, restaurants, bars, and other retail establishments.

Speaker Change: Additionally, we continue to work on cost-cutting measures to help streamline our operations with the goal of further reducing SG&A expenses to under $4 million and maintaining that level per quarter for the remainder of fiscal year 2024 and through fiscal year 2025.

Justis Kao: Our QAU footprint for the third quarter of fiscal 2024 was reduced from the prior periods as a result of natural attrition of loop players that were not immediately replaced, as we continue to revamp our distribution strategy and investments surrounding new loop players. Previously, we transitioned to a more targeted distribution model, pivoting our focus to certain designated advertising markets and geographies, as well as more desirable out-of-home locations and venues, including convenience stores, restaurants, bars, and other retail establishments.

Speaker Change: Our QAU footprint for the third quarter of fiscal 2024 was reduced from the prior periods as a result of natural attrition of loop players that were not immediately replaced as we continue to revamp our distribution strategy and investments surrounding new loop players.

Speaker Change: Previously, we transitioned to a more targeted distribution model, pivoting our focus to certain designated advertising markets and geographies.

Speaker Change: As well as more desirable out-of-home locations and venues, including convenience stores, restaurants, bars, and other retail establishments.

Justice Kao: This more targeted distribution plan helped us to understand where we could actually achieve the greatest revenue opportunities in terms of geographies as well as venue types, and that those opportunities were not necessarily in the larger desirable advertising markets, but generally experienced great competition, resulting in slower distribution growth in those markets as compared to the potential for growth in smaller markets. As such, our growth has been flat in recent periods.

Justis Kao: This more targeted distribution plan helped us to understand where we could actually achieve the greatest revenue opportunities in terms of geographies as well as venue types, and that those opportunities were not necessarily in the larger desirable advertising markets, which generally experienced greater competition, resulting in slower distribution growth in those markets, as compared to the potential for growth in smaller markets. As such, our growth has been flat in recent periods.

Speaker Change: This more targeted distribution plan helped us to understand where we could actually achieve the greatest revenue opportunities in terms of geographies as well as venue types.

Speaker Change: and that those opportunities were not necessarily in the larger desirable advertising markets, but generally experienced greater competition, resulting in slower distribution growth in those markets as compared to the potential for growth in smaller markets.

Justice Kao: We believe this will change as we increase our distribution efforts with our extensive affiliate network beginning in the first quarter of fiscal 2024, with the goal of growing our QAU's quarter-on-quarter, providing a more robust distribution platform for our advertising partners going forward.

Justis Kao: We believe this will change as we increase our distribution efforts with our extensive affiliate network beginning in the first quarter of fiscal 2024, with the goal of growing our QAUs quarter on quarter, providing a more robust distribution platform for our advertising partners going forward. With that, I will turn the call over to Neil to take you through our financial results.

Speaker Change: As such, our growth has been flat in recent periods.

Speaker Change: We believe this will change as we increase our distribution efforts.

Speaker Change: with our extensive affiliate network beginning in the first quarter of fiscal 2024 with the goal of growing our QAUs quarter-on-quarter, providing a more robust distribution platform for our advertising partners going forward.

Justice Kao: With that, I will turn the call over to Neil to take you through our financial results. Neil?

Speaker Change: with that i will turn the call over to neil to take you through our financial results neal

Neil Watanabe: Thank you, Justice, and good afternoon, everyone. As we review our financial results, I want to remind everyone that all comparisons and variances commentary refer to the prior year's fiscal third quarter unless otherwise specified. Our revenue for the three months ended June 30th, 2024, was $4.4 million, a decrease of $1.3 million, or approximately 24 percent, from the $5.7 million for the three months ended June 30th, 2023. This decrease was primarily driven by a challenging ad market environment in the second and third quarter of fiscal 2024, due to one of the largest ad-demand participants changing their terms of business with ad publishers, including us, which resulted in the material negative impact on our ad-demand partner revenue.

Neil Watanabe: Thank you, Justis, and good afternoon, everyone. As we review our financial results, I wanted to remind everyone that all comparisons and variance commentary refer to the prior year's fiscal third quarter unless otherwise specified. Our revenue for the three months ended June 30, 2024 was $4.4 million, a decrease of $1.3 million, or approximately 24%, from the $5.7 million for the three months ended June 30, 2023. This decrease was primarily driven by a challenging ad market environment in the second and third quarters of fiscal 2024 due to one of the largest ad demand participants changing their terms of business with ad publishers, including us, which resulted in a material negative impact on our ad demand partner revenue.

Neil Watanabe: Thank you, Justis, and good afternoon, everyone. As we review our financial results, I wanted to remind everyone that all comparisons and variances commentary refer to the prior year's fiscal third quarter, unless otherwise specified.

Neal: Our revenue for the three months ended June 30th, 2024 was $4.4 million, a decrease of $1.3 million, or approximately 24%, from the $5.7 million for the three months ended June 30th, 2023. This decrease

Neil Watanabe: was primarily driven by a challenging ad market environment in the second and third quarters of fiscal 2024 due to one of the largest ad demand participants changing their terms of business with ad publishers, including us, which resulted in a material negative impact on our ad demand partner revenue. Adjusted EBITDA in the 2024 fiscal year third quarter was a 2.2 million loss compared to a loss of 3.7 million for the same period in fiscal 2023.

Neal: was primarily driven by a challenging ad market environment in the second and third quarter of fiscal 2024 due to one of the largest ad demand participants changing their terms of business with ad publishers, including us, which resulted in a material negative impact on our ad demand partner revenue.

Neil Watanabe: During the latter part of the second quarter and through the third quarter of fiscal year 2024, we worked with our demand partners and successfully integrated those changes and restored demand from those ad-demand participants. Although their new algorithms do not allow for the same historical frequency of ad-demand and ad pills, as a result, we do not expect to experience the same level of absolute revenue previously recognized by this ad-demand participant unless and until we significantly increase our distribution footprint, which we are working toward. Finally, our decrease in revenue for the three months ended June 30th, 2024, from the three months ended June 30th, 2023.

Neil Watanabe: During the latter part of the second quarter and through the third quarter of fiscal year 2024, we worked with our demand partners and successfully integrated those changes and restored demand from those ad demand participants, although their new algorithms do not allow for the same historical frequency of ad demand and ad bills. As a result, we do not expect to experience the same level of absolute revenue previously recognized by this ad demand participant unless and until we significantly increase our distribution footprint, which we are working toward.

Neal: During the latter part of the second quarter and through the third quarter of fiscal year 2024,

Neil Watanabe: We worked with our demand partners and successfully integrated those changes and restored demand from those ad demand participants. Although their new algorithms do not allow for the same historical frequency of ad demand and ad bills. As a result, we do not expect to experience the same level of absolute revenue previously recognized by this ad demand participant.

Neil Watanabe: Thank you.

Neil Watanabe: Finally, our decrease in revenue for the three months ended June 30, 2024 from the three months ended June 30, 2023 was also a result of a reduction in ad demand partners in the second quarter of fiscal year 2024 that view our loop network as a CTV platform on which CTV ad budgets can be sent as compared to the number of ad partners that viewed us as a CTV platform in the second quarter of fiscal year 20 CTV advertising budgets are generally significantly higher, and thus CTV ad demand is, in general, associated with higher fill rates in CPMs as compared to DOOH ad budgets and demand. As we increase the number of demand partners and continue to educate them as to our platform opportunities in providing advertising to a targeted customer base, we anticipate that this will increase our ad revenues over time.

Neil Watanabe: We're also a result of reduction in ad-demand partners in the second quarter of fiscal year 2024, that view our loop network as a CTV platform on which CTV ad budgets can be sent, as compared to the number of ad partners that view this as a CTV platform in the second quarter of fiscal year 2023. CTV advertising budgets are generally significantly higher, and thus CTV add demand in general is associated with higher flow rates in CPMs as compared to DOH add budgets and demand. As we increase the number of demand partners and continue to educate them as to our platform opportunities and providing advertising to a targeted customer base, we anticipate that this will increase our ad revenues over time.

Neal: we're also a result of reduction in adomand ad men partners in the second quarter of fiscal year two thousand and twenty-four

Neil Watanabe: that view our Loop Network as a CTV platform on which CTV ad budgets can be sent, as compared to the number of ad partners that viewed us as a CTV platform in the second quarter of fiscal year 2023.

Speaker Change: CTV advertising budgets are generally significantly higher and thus CTV ad demand in general is associated with higher flow rates and CPMs as compared to DOOH ad budgets and demand.

Neil Watanabe: As we increase the number of demand partners and continue to educate them as to our platform opportunities in providing advertising to a targeted customer base, we anticipate that this will increase our ad revenues over time.

Neil Watanabe: Our gross profit margin for the three month standard June 30, 2024 was 910,000, a decrease of 913,000 or 50% from 128 million for the three month standard June 30, 2023. Our gross profit margin as a percentage of total revenue for the three-month standard June 30, 2024, was approximately 20.9%, as compared to 31.8% for the three-month standard June 30, 2023. The percentage decrease was primarily driven by due-trish revenue. Based on our decrease in revenues, certain of our content license agreements provide for fees you paid on less advantageous non-revenue metric. These fees become an added component of cost of goods sold and reduce gross profit margins, which negatively affect our gross margin percentage.

Neil Watanabe: Our gross profit margin for the three months ended June 30, 2024 was $910,000, a decrease of $913,000, or 50% from $1.8 million for the three months ended June 30, 2023. Our gross profit margin as a percentage of total revenue for the three months ended June 30, 2024 was approximately 20.9% as compared to 31.8% for the three months ended June 30, 2023. The percentage decrease was primarily driven by D3's revenue. Based on our decrease in revenues, certain of our content license agreements provide for fees you pay on less advantageous non-revenue metrics.

Speaker Change: our gross profit margin for the three months underer june thirtieth two yandtwenty four was nine hundred ten thousand a decrease of nine hundred and thirteen thousand or fifty percent from one and twentyeight million for the three month ended june thirtie th twothousandyandtwenty three

Neil Watanabe: our gross profit margin as a percentage of total revenue for the three months ended june thirtieth two thousand andtwenty four was approximately twenty point nine percent as compared to thirty one twenty eight percent for the three months center junethirtieth two thousand andtwenty three the percentage decrease was primarily driven by j through revenue

Neil Watanabe: Based on our decrease in revenues, certain of our content license agreements provide for fees to be paid on less advantageous non-revenue metric.

Neil Watanabe: These fees become an added component of the cost of goods sold and reduce gross profit margins, which negatively affect our gross margin percentage. In addition, our fixed fee content license agreements may reduce our gross profit margins as the fixed fees paid are at a greater percentage of lower revenues than they would be on higher revenues.

Neil Watanabe: These fees become an added component of cost of goods sold and reduced gross profit margins.

Neil Watanabe: In addition, our fixed fee content license agreements may reduce our gross profit margins, as the fixed fees paid are at greater percentage of lower revenues than they would be on higher revenues.

Neil Watanabe: in which negativelyef ac or gross margin percentage in addition our fixed fee content license agreements may reduce our gross profit margins as the fixed fees paid are a greater percentage of lower revenues and they would be on higher revenues

Neil Watanabe: Our sales general and administrative expenses for the three months ended June 30, 2024, were 4.1 million, a decrease of 2.2 million or 35% from the 6.3 million for the three months ended June 30, 2023. The decrease in sales general and administrative expenses was primarily due to the further reduction in headcount, marking costs, and professional administrative fees. As a result of the cost coming measures that we have undertaken in fiscal year 2024, we have realized a quarter-on-quarter reduction in our S-GNA expenses of 1.6 million or 28% from 5.7 million in the second quarter ended March 31, 2024, to 4.1 million in the third quarter ended June 30, 2024.

Neil Watanabe: Our sales, general, and administrative expenses for the three months ended June 30, 2024 were $4.1 million, a decrease of $2.2 million, or 35%, from the $6.3 million for the three months ended June 30, 2023. The decrease in sales, general, and administrative expenses was primarily due to a further reduction in headcount, marketing costs, and professional and administrative fees. As a result of the cost-cutting measures that we have undertaken in fiscal year 2024, we have realized a quarter-on-quarter reduction in our SG&A expenses of 1.6 million, or 28%, from 5.7 million in the second quarter ended March 31st, 2024, to 4.1 million in the third quarter ended June 30th, 2024. We do not expect to achieve similar reductions in future periods and are focused on sustaining proportionately low SG&A costs going forward.

Neil Watanabe: Our sales, general, and administrative expenses for the three months ended June 30, 2024, were $4.1 million, a decrease of $2.2 million, or 35%, from the $6.3 million for the three months ended June 30, 2023.

Neil Watanabe: The decrease in sales, general, and administrative expenses was primarily due to the further reduction in headcount, marketing costs, and professional and administrator fees.

Neil Watanabe: As a result of the cost-cutting measures that we have undertaken in fiscal year 2024, we have realized a quarter-on-quarter reduction in our SG&A expenses of $1.6 million, or 28%, from $5.7 million in the second quarter ended March 31, 2024, to $4.1 million in the third quarter ended June 30, 2024.

Neil Watanabe: We do not expect to achieve similar reductions in future periods and are focused on sustaining proportionately low S-GNA costs going forward. Through our continuing cost-tening initiatives, we aim to maintain our S-GNA expenses, excluding stock compensation and depreciation, at a $4 million level for the remainder of 2024 and into 2025.

Neil Watanabe: We do not expect to achieve similar reductions in future periods and are focused on sustaining proportionately low SG&A costs going forward.

Neil Watanabe: Through our continuing cost-cutting initiatives, we aim to maintain our SG&A expenses, excluding stock compensation and depreciation, at a $4 million level for the remainder of 2024 and into 2025. The net loss in the 2024 fiscal third quarter was $5.5 million, or a loss of $0.07 per share, compared to a net loss of $7.9 million, or a loss of $0.14 per share, for the same period in Adjusted EBITDA in the 2024 fiscal year third quarter was a 2.2 million loss compared to a loss of 3.7 million for the same period in fiscal 2023.

Neil Watanabe: Net loss in the 2024 fiscal third quarter was a loss of 5.5 million or a loss of 7 cents per share compared to a loss of 7.9 million or a loss of 14 cents per share for the same period in fiscal 2023. Adjusted EBITDA in the 2024 fiscal third quarter was a 2.2 million loss compared to a loss of 3.7 million for the same period in fiscal 2023. We have improved our adjusted EBITDA year over year for Q3 over the prior year quarter as well as over the prior quarter two. Based on our current cost structure, we have reduced our cash firm from operation significantly and reduced the level of revenue that is required to become flat or breakeven.

Neil Watanabe: Net loss in the 2024 fiscal third quarter was a loss of $5.5 million, or a loss of $0.07 per share, compared to a net loss of $7.9 million, or a loss of $0.14 per share for the same period in fiscal 2023.

Neil Watanabe: Adjusted EBITDA in the 2024 fiscal year third quarter was 2.2 million loss compared to a loss of 3.7 million for the same period in fiscal 2023.

Neil Watanabe: We have improved our adjusted EBITDA year over year for Q3 over the prior year quarter, as well as over the prior two quarters. Based on our current cost structure, we have reduced our cash burn from operations significantly and reduced the level of revenue that is required to become flat or break even. Turning to our balance sheet, cash and cash equivalents were $1.5 million on June 30, 2024 compared to $2.2 million on March 31, 2024.

Neil Watanabe: We have improved our adjusted EBITDA year-over-year for Q3 over the prior year quarter as well as over the prior quarter, too. Based on our current cost structure, we have reduced our cash burn from operations significantly and reduced the level of revenue that is required to become flat or break-even.

Unknown Executive: 2014.

Neil Watanabe: 2012 balance sheet, cash and cash equivalence were 1.5 million on June 30th, 2024, compared to 2.2 million on March 31st, 2024. As of June 30th, 2024, we had a total net that of 6.2 million compared to 6 million as of March 31st, 2024. As of June 30th, 2024, we had approximately 81,000 active loop players and partner screens across the loop platform, which includes 30,486 QAUs across our ONO platform. Versus 34,898 QAUs for the prior year quarter and 32,685 QAUs at the end of our last quarter ended in March 31st, 2024. This represents a decrease of 13% over the third quarter of fiscal 2023 and a June QAUs of 7% from our second quarter of fiscal 2024.

Neil Watanabe: Turning to our balance sheet, cash and cash equivalents were $1.5 million on June 30, 2024, compared to $2.2 million on March 31, 2024. As of June 30, 2024, we had a total net debt of $6.2 million, compared to $6 million as of March 31, 2024.

Neil Watanabe: As of June 30, 2024, we had a total net debt of $6.2 million compared to $6 million as of March 31, 2024. As of June 30, 2024, we had approximately 81,000 active loop players and partner screens across the loop platform, which includes 30,486 QAUs across our O and O platform versus 34,898 QAUs for the prior year quarter and 32,685 QAUs at the end of our last quarter ended March 31, 2024.

Neil Watanabe: As of June 30, 2024, we had approximately 81,000 active loop players and partner screens across the loop platform, which includes 30,486 QAUs across our O&O platform.

Neil Watanabe: versus 34,898 QAUs for the prior year quarter and 32,685 QAUs at the end of our last quarter ended in March 31st, 2024.

Neil Watanabe: This represents a decrease of 13% over the third quarter of fiscal 2023 and a decrease of 7% from our second quarter of fiscal 2024. At the end of our third quarter of fiscal 2024, we had approximately 51,000 partner screens across our partner platforms, an increase of approximately 14,000 partner screens, or 38% over the third quarter of fiscal 2023, and an increase of approximately 1,000 partner screens, or approximately 2% over our last quarter ended on March 31st, 2024.

Neil Watanabe: This represents a decrease of 13% over the third quarter of fiscal 2023 and a decrease of 7% from our second quarter of fiscal 2024.

Neil Watanabe: At the end of our third quarter of fiscal 2024, we had approximately 51,000 partner screens across our partner platforms and an increase of approximately 14,000 partner screens or 38% over the third quarter of fiscal 2023, and an increase of approximately 1,000 partner screens or approximately 2% over our last quarter ended in March 31st, 2024.

Speaker Change: at the end of our third quarter of fiscal two thousand and twenty four we had approximately fifty one thousand partner screens across our partner platforms and increase approximately fourteen thousand partner screens or thirty eeight percent over the third quarter of fiscal two thousand and twenty three

Neil Watanabe: and an increase of approximately 1,000 partner screens or approximately 2% over our last quarter ended in March 31st, 2024.

Operator: I'd like to thank everybody for listening today. We look forward to providing further updates on our next conference call. This concludes our prepared remarks. Operator, back to you.

Neil Watanabe: I'd like to thank everybody for listening today. We look forward to providing further updates on our next conference call.

Neil Watanabe: I'd like to thank everybody for listening today. We look forward to providing further updates on our next conference call. This concludes our prepared remarks. Operator, back to you.

Unknown Executive: This concludes our prepared remarks.

Unknown Executive: Operator, back to you. Thank you.

Unknown Executive: As indicated at the beginning of the call, there will be no questions following the management's remarks.

Operator: is indicated at the beginning of the call. There will be no questions following management's remarks. Now, I'm going to ask Justis Kao for closing remarks.

Speaker Change: thank you is indicated at the beginning of the call there will be no questions following management's remarks that's justice k for closing remarks

Justice Kao: That's just this care for closing remarks. Thank you.

Justice Kao: We are pleased to announce that Lutinedia will immediately be able to offer a subscription that includes 40 live channels just in time for the 2024-25 support season, including the NFL Red Zone and the NFL Network. With the NFL season about to start, it's the perfect time to launch this subscription opportunity for venues. In addition to all of our other fantastic content available to fit specific themes of our venue partners. With these and the other distribution initiatives in process, we believe that we will achieve sustainable revenue growth in the coming quarters.

Justis Kao: We are pleased to announce that Loop Media will immediately be able to offer a subscription that includes 40 live channels just in time for the 2024-25 season, including the NFL Red Zone and the NFL Network. With the NFL season about to start, it's the perfect time to launch this subscription opportunity for venues in addition to all of our other fantastic content available to fit specific themes of our venue partners, with these and other distribution initiatives and processes. We believe that we will achieve sustainable revenue growth in the coming years.

Speaker Change: Thank you. We are pleased to announce that Loop Media will immediately be able to offer a subscription that includes 40 live channels just in time for the 2024-25 sports season, including the NFL Red Zone and the NFL Network.

Speaker Change: with the nfll season about to start it's the pertrit time to launch a subscription opportunity for venues in addition to all of our other fantastic content available to fit specific ims of our venue partners

Jon Niermann: We believe that we will achieve sustainable revenue growth in the coming quarters. I would like to thank everyone for joining the call today. We are excited about where the business is heading and look forward to providing further updates on our next call.

Jon Niermann: With these and the other distribution initiatives in process, we believe that we will achieve sustainable revenue growth in the coming quarters. I would like to thank everyone for joining the call today. We are excited about where the business is heading and look forward to providing further updates on our next call.

Justice Kao: I would like to thank everyone for joining the call today. We are excited about where the business is heading and look forward to providing further updates on our next call.

Unknown Executive: Ladies and gentlemen, that includes today's call. Thank you for joining Human Out This Connect.

Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

Unknown Executive: to Discuss Loop Media's Financial Resort of 2024, Fiscal Third Quarter, and the June 30, 2024.

Unknown Executive: Joining us today are Lou's interim CEO, Justice Kao, and the company's CFO, Mr. Neil Watanabe. By now, everyone should have access to the 2024 Fiscal Third Quarter earnings press release, which the company issued earlier today at approximately 4.05 PM Eastern time. The release is available in the investor relations section of REWP's website at www.loop.tv. In addition, this call will also be available for webcast replay on the company's website.

Unknown Executive: Following management remarks, there will not be a Q&A session. Certain comments made on this conference call and webcasts are considered forward-looking statements under the Private Patrioties' Litigation Reform Act of 1995. These forward-looking statements are subject to certain unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subjected to other risks and uncertainties that are described from time to time, and the company's violence will be as easy.

Unknown Executive: Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. The company's presentation also includes certain non-gap financial measures, including adjusted EBITDA, as supplemental measures of performance of our businesses. All non-gap measures have been reconciled to the most directly comparable gap measures in accordance with the FEC rules.

Unknown Executive: You'll find the confirmation charts and other important information in the earnings for us to release in Form 8K, furnished to the FEC.

Justice Kao: Areas that contributed to efficiencies on the cost side were one for the reductions and restructuring of our labor force, two, restructuring our agreements with vendors and partners, and three, federal operational efficiencies resulting from our ongoing review and restructuring the third party vendors and services with a view of eliminating $750,000 of ongoing yearly costs and expenses beginning the first quarter of fiscal year 25. Additionally, we continue to work on cost cutting measures to help streamline our operations with a goal of further reducing SGNA expenses to under $4 million and maintaining that level per quarter for the remainder of fiscal year 2024 and through fiscal year 2025.

Justice Kao: Our QAU footprint for the third quarter of fiscal 2024 was reduced from the prior periods as a result of natural attrition of loop players that were not immediately replaced as we continued to revamp our distribution strategy and investments surrounding new loop players. Previously, we transitioned to a more targeted distribution model pivoting our focus to certain designated advertising markets and geographies, as well as more desirable out-of-home locations and venues, including convenience stores, restaurants, bars, and other retail establishments.

Justice Kao: This more targeted distribution plan helped us to understand where we could actually achieve the greatest revenue opportunities in terms of geographies as well as venue types and that those opportunities were not necessarily in the larger desirable advertising markets, but generally experienced great competition resulting in slower distribution growth in those markets as compared to the potential for growth in smaller markets. As such, our growth has been flat in recent periods.

Neil Watanabe: With that, I will turn the call over to Neil to take you through our financial results. Neil? Thank you, Justice, and good afternoon, everyone.

Neil Watanabe: As we review our financial results, I want to remind everyone that all comparisons and variances commentary refer to the prior year's fiscal third quarter unless otherwise specified. Our revenue for the three months ended June 30th, 2024, with $4.4 million, a decrease of $1.3 million, or approximately 24 percent, from the $5.7 million for the three months ended June 30th, 2023. This decrease was primarily driven by a challenging ad market environment in the second and third quarter of fiscal 2024, due to one of the largest ad-demand participants changing their terms of business with ad publishers, including us, which resulted in the material negative impact on our ad-demand partner revenue.

Neil Watanabe: During the latter part of the second quarter and through the third quarter of fiscal year 2024, we worked with our demand partners and successfully integrated those changes and restored demand from those ad-demand participants. Although their new algorithms do not allow for the same historical frequency of ad-demand and ad pills, as a result, we do not expect experience the same level of absolute revenue previously recognized by this ad-demand participant unless and until we significantly increase our distribution footprint, which we are working toward.

Neil Watanabe: Finally, our decrease in revenue for the three months ended June 30th, 2024, from the three months ended June 30th, 2023. We're also a result of reduction in ad-demand partners in the second quarter of fiscal year 2024, that view our loop network as a CTV platform on which CTV ad budgets can be sent, as compared to the number of ad partners that view this as a CTV platform in the second quarter of fiscal year 2023.

Neil Watanabe: CTV advertising budgets are generally significantly higher and thus CTV Add Demand in general is associated with higher flow rates in CPMs as compared to DOH add budgets and demand. As we increase the number of demand partners and continue to educate them as to our platform opportunities and providing advertising to a targeted customer base, we anticipate that this will increase our add revenues over time. Our gross profit margin for the three month standard June 30, 2024 was 910,000, a decrease of 913,000 or 50% from 128 million for the three month standard June 30, 2023.

Neil Watanabe: Our gross profit margin as a percentage of total revenue for the three month standard June 30, 2024 was approximately 20.9%, as compared to 31.8% for the three month standard June 30, 2023. The percentage decrease was primarily driven by due-trish revenue. Based on our decrease in revenues, certain of our content license agreements provide for fees you paid on less advantageous non-revenue metric. These fees become an added component of cost of goods sold and reduced gross profit margins which negatively affect our gross margin percentage.

Neil Watanabe: In addition, our fixed fee content license agreements may reduce our gross profit margins as the fixed fees paid are at greater percentage of lower revenues than they would be on higher revenues. Our sales general and administrative expenses for the three months ended June 30, 2024 were 4.1 million, a decrease of 2.2 million or 35% from the 6.3 million for the three months ended June 30, 2023. The decrease in sales general and administrative expenses was primarily due to the further reduction in headcount, marking costs and professional administrative fees.

Neil Watanabe: As a result of the cost coming measures that we have undertaken in fiscal year 2024, we have realized a quarter on quarter reduction in our S-GNA expenses of 1.6 million or 28% from 5.7 million in the second quarter ended March 31, 2024 to 4.1 million in the third quarter ended June 30, 2024. We do not expect to achieve similar reductions in future periods and are focused on sustaining proportionately low S-GNA costs going forward.

Neil Watanabe: Through our continuing cost-tening initiatives, we aim to maintain our S-GNA expenses, excluding stock compensation and depreciation at a $4 million level for the remainder of 2024 and into 2025. Net loss in the 2024 fiscal third quarter was a loss of 5.5 million or a loss of 7 cents per share compared to on that loss of 7.9 million or a loss of 14 cents per share for the same period in fiscal 2023.

Neil Watanabe: Adjusted EBITDA in the 2024 fiscal third quarter was 2.2 million loss compared to a loss of 3.7 million for the same period in fiscal 2023. We have improved our adjusted EBITDA year over year for Q3 over the prior year quarter as well as over the prior quarter two. Based on our current cost structure, we have reduced our cash firm from operation significantly and reduced the level of revenue that is required to become flat or breakeed.

Neil Watanabe: 2014. 2012 balance sheet, cash and cash equivalence were 1.5 million on June 30th, 2024, compared to 2.2 million on March 31st, 2024. As of June 30th, 2024, we had a total net that of 6.2 million compared to 6 million as of March 31st, 2024. As of June 30th, 2024, we had approximately 81,000 active loop players and partner screens across the loop platform, which includes 30,486 QAUs across our ONO platform. Versus 34,898 QAUs for the prior year quarter and 32,685 QAUs at the end of our last quarter ended in March 31st, 2024.

Neil Watanabe: This represents a decrease of 13% over the third quarter of fiscal 2023 and a June QAUs of 7% from our second quarter of fiscal 2024. At the end of our third quarter of fiscal 2024, we had approximately 51,000 partner screens across our partner platforms and increased of approximately 14,000 partner screens or 38% over the third quarter of fiscal 2023 and an increase of approximately 1,000 partner screens or approximately 2% over our last quarter ended in March 31st, 2024. I'd like to thank everybody for listening today. We look forward to providing further updates on our next conference call. This concludes our prepared remarks.

Unknown Executive: Operator, back to you. Thank you.

Unknown Executive: As indicated at the beginning of the call, there will be no questions following the management's remarks. That's just this care for closing remarks. Thank you.

Unknown Executive: We are pleased to announce that Lutinedia will immediately be able to offer a subscription that includes 40 live channels just in time for the 2024-25 support season, including the NFL Red Zone and the NFL Network. With the NFL season about to start, it's the perfect time to launch this subscription opportunity for venues. In addition to all of our other fantastic content available to fit specific themes of our venue partners.

Unknown Executive: With these and the other distribution initiatives in process, we believe that we will achieve sustainable revenue growth in the coming quarters. I would like to thank everyone for joining the call today. We are excited about where the business is heading and look forward to providing further updates on our next call. Ladies and gentlemen, that includes today's call.

Unknown Executive: Thank you for joining Human Out This Connect.

Q3 2024 Loop Media Inc Earnings Call

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