Q2 2025 LiveOne Inc Earnings Call
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Good morning, My name is Angela and I will be your conference operator today at this time I would like to welcome everyone to live one earnings call. At this time all participants are in listen only mode. Please be advised that this call is being recorded.
Speaker Change: Have the opportunity to ask questions. During the Q&A session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question Press Star. One again. Thank you I will now turn the conference over to our Sullivan you may begin.
Speaker Change: Thank you good morning, and welcome to live one business I think financial results conference call for the company's second quarter ended September 32024 does anything on today's call with me is Rob Allen CEO and chairman of LIBOR I would like to remind you that some of the statements made on today's call are forward looking and are based on <unk>.
Speaker Change: Current expectations forecasts and assumptions that involve various risks and uncertainties.
Speaker Change: These statements include but are not limited to statements regarding the future performance of the company, including expected future financial results and expected future growth in the business.
Speaker Change: Actual results may differ materially from those on the 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, 2024 and.
Speaker Change: <unk> SEC filings to 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.
Speaker Change: And we encourage you to periodically visit the Investor relations website for important content.
Speaker Change: Following discussion, including responses to your questions contain time sensitive information that reflects management's view as of the date of this call November seven 2024, and except as required by law. The company does not undertake any obligation to update or revise this information after today's call I'd like to highlight to investors that this call is being recorded.
Speaker Change: He is making it available to investors and media via webcast and replay will be available on its website and the Investor Relations section shortly following completion of the call.
Speaker Change: Additionally, it is the property of the company.
Speaker Change: Any distribution transmission or rebroadcast of this call or webcast in any form that can be expressed written consent is strictly prohibited.
Speaker Change: I'd like to turn the call over to <unk> CEO, Rob <unk>.
Rob Allen: Thank you Aaron good morning, everyone and thank you for joining US today. We appreciate your continued support.
Rob Allen: Again with a brief overview of our record breaking financial results followed by updates on recent developments and our vision for the future.
Speaker Change: Due to financial overview, we achieved record revenues in the history of the company for the first six months consolidated revenues of $65 7 million and adjusted EBITDA of $6 6 million.
Speaker Change: Q2 consolidated revenues our quarter was $32 6, million% to 14% increase our audio revenues delivered $31 7 million in the 18th 18% growth.
Speaker Change: Our adjusted EBITDA and just on your audio Division was $5 6 million.
Speaker Change: We closed the quarter with $11 million of cash above a $4 million from the previous quarter.
Speaker Change: Again earlier in the year, we converted all of our debt at $2 intentions.
Speaker Change: Now onto <unk>.
Speaker Change: Opportunity.
Speaker Change: Cashless.
Speaker Change: There's been a little mischief skewed and that we extended our contract through May of 2026, and the new terms. These new terms are now the seven different iteration of a 12 year partnership with Tesla.
Speaker Change: Exciting parties. This is everything that our management team is Ashford Kessler, which just to give us the opportunity.
Speaker Change: The market to our customers to expand to all devices.
Speaker Change: With that Tesla will be helping us and has started to already to market offering.
Speaker Change: Millions of cars existing out there in North America.
Speaker Change: We got prominent space on the home screen of Casselberry in perpetuity that beachfront property.
Speaker Change: Back to Sirius XM radio they spent billions of dollars getting to this point to have that ability to convert these customers.
Speaker Change: We now have direct access to testing customers for cross selling and up sell them from a $3 subscriber can only use it in the car right to a larger opposite opportunities of podcasts E books live streaming paid through pay per view.
Speaker Change: Castle will continue paying monthly fees on existing grandfathered course.
Speaker Change: What's exciting about this opportunity is we've never been able to be valued based per sub.
Speaker Change: Jobs in this space get valued between $200000 of shops.
Speaker Change: This is also open the flood gates the major opportunities with other automakers. We publicly said we are in deep discussions with eight of the major auto companies around the world.
Speaker Change: Humbly believe it feels like since the announcement.
Speaker Change: That people believed that we were on your exclusivity with Tesla, we have an opportunity.
Speaker Change: Now to really expand those partnerships with other auto companies.
Speaker Change: That will lead into the diversification of our business that we've been talking about for the last 12 months.
Speaker Change: We hired Bill will Trish who's our head of BD.
Speaker Change: We've now expanded that <unk> team.
Speaker Change: Having people.
Speaker Change: But one person hired a year ago with just over a year ago to now 11 people.
Speaker Change: We see eight verticals with huge opportunities to diversify and expand the business across automotive carriers hardware retail hospitality airlines and travel loyalty programs credit card companies, we announced one of those first major deals was a $24 million 2 million a month major streaming park.
Speaker Change: Then we announced checks now over 100 million users.
Speaker Change: Announced partnerships with ebay.
Speaker Change: Book Tick Tock, we're in active negotiations with dozens of fortune 500, and fortune 50 companies, including.
Speaker Change: Including those eight audio properties.
Speaker Change: We fully expect to announce at least two before year end and two before March 31, our fiscal year end.
Speaker Change: Now as you go into our podcast business.
Speaker Change: Really exciting quarter as well a podcast one success continues.
Speaker Change: We delivered we've gone from 20 million to a run rate of $50 million over the past four years, we have 100 podcast and our pipeline 10 times, our normal amount of history, we had a podcast networks in our M&A pipeline.
Speaker Change: 185, podcasts now, adding 50 more in the next 24 months.
Speaker Change: We are adding all machine new podcasts every two weeks.
Speaker Change: <unk> has also acquired 224000 additional podcast shares this quarter and over 550000 shares. This year, we will continue to buy back stock and podcast why don't we now own over 73% of the company.
Speaker Change: We are on our way to over $100 million over the next 24 months.
Speaker Change: Podcasts to TV and film adaptations I've talked about this a little bit on our conference calls before this is just starting to really really start to take off we now have a slate of over 10, podcasts and a potential to be TV and film adaptations.
Speaker Change: We have signed two of them to streaming partners, including Barnum town and vigilante and.
Speaker Change: And a third opportunity to a documentary and we see material opportunities to attorneys without any additional cost to the company and massive upside for the company.
Speaker Change: Yeah.
Speaker Change: Next our celebrity brands, we've just announced with Super Duper Pyle, our second celebrity band called Smile Smiley.
Speaker Change: We see it again seven to 10 of these celebrity brands a year for the next five years.
Speaker Change: With potential of $10 million to $1 billion of upside with very little cost to the company as we utilize our partners and social media artists.
Speaker Change: Actors producers.
Speaker Change: Casters.
Speaker Change: Social media stars to drive these brands across their social media.
Speaker Change: Our publishing business grew over 300%.
Speaker Change: Tonight, we are launching our live streaming pay per view event for Super Duper piles album of which we own 50% of the publisher.
Speaker Change: Alright, livestream pay per view has had over 5 billion engagements in the last four years.
Speaker Change: With that we continue to buy back stock we have now bought back almost four 5 million shares of stock.
Speaker Change: We have we have increased the buyback to $12 million and we will continue to buyback at these levels.
Speaker Change: Proud of my team.
Speaker Change: I'm proud of what they've been able to accomplish we've gone through tougher times in this including the Covid hit we lost all live streaming business and it came out of it stronger than ever when you think back when Covid hit we were at 38 million of revenues lost a third of our revenues all of our live business all of our live streaming and we came out of it and now we did 65.
Speaker Change: For the six months.
Speaker Change: Looking forward looking forward to any questions from everyone and I'm going to hand, it off to my CFO Aaron Sullivan. Thank you very much.
Aaron Sullivan: Thanks, Rod I'll spend just a few minutes, providing a very brief overview of results for the second quarter of fiscal 2025 ended September 30.
Aaron Sullivan: It's all related revenue for the three months period ended September 30, 24 was $32 6 million an increase of 14% over the prior year period Black opposed to record revenue Q2 of <unk> 19 from $5 million of podcast alone posted revenue of $12 2 million consolidated revenue for the six month period ended September 32 pools of record.
Aaron Sullivan: $65 7 million, an increase of 17% over the prior year period.
Aaron Sullivan: For the second quarter of fiscal 'twenty five revenue consists of 60% membership, 40% advertising sponsorship merchandize, another compared to 58% membership and 42% advertising sponsorship and merchandise and other in the prior year period.
Aaron Sullivan: Holiday to the adjusted EBITDA for the three and six months.
Aaron Sullivan: Ended September 32024, with $2 9 million to $5 8 million, respectively on U S. GAAP basis, <unk> posted a consolidated net loss of $2 7 million or <unk>.
Aaron Sullivan: Per diluted share in Q2 fiscal 'twenty five.
Aaron Sullivan: As of September 32024, total members, which you to free members were approximately 4 million note that included in the total members are certain members who are currently subject to a contractual dispute, which we are not currently recognizing revenue.
Speaker Change: I'll turn it back to you.
Speaker Change: Yeah, so I'm going to two questions.
Speaker Change: So I look forward to any any questions and then I'll close it out at the end.
Speaker Change: You very much.
Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand enjoying the queue. If you would like to withdraw your question.
Speaker Change: Thus far one again, thank you and your first question comes from the line of Brian Ken's Arena.
Speaker Change: This alliance Global partners. Your line is now open.
Speaker Change: Thanks, So much great results in the quarter got a laundry list of questions that some investors have asked me.
Speaker Change: First question I have is how many paid subscribers do you have that are either going to be grandfathered in or that are not related to Tesla.
Speaker Change: Yeah, we can't give that number Brian as I've told you before.
Speaker Change: Yes.
Speaker Change: Percentage of the total number of subscribers out there, but it's not a number that neither kessler asked where are able to provide publicly.
Speaker Change: And then what percentage of your Tesla users listen to your digital radio for more than 10 minutes, a day or whatever timeframe. You think is statistically significant.
Speaker Change: Yeah, I think so.
Speaker Change: Just to give you just to give you a highlight film and really exciting even with this change in cash flow is made as.
Speaker Change: As an example, this week 285000 people use our service.
Speaker Change: For this month, it's well over 1 billion people have used the service. So it's really exciting to see any usage right. The consumers using an average of about 20 minutes, which is which is extremely high for the industry.
Speaker Change: Okay.
Speaker Change: I know the plan doesn't change until December 1st but have there have you seen any conversions. Yet you said Tesla is already reaching out or is it too early and no one would really sign up until after December 1st.
Speaker Change: No we're already seeing some nice sign ups were really excited about it and we're going to be talking about that I would say somewhere in the middle of December to the end of December we'll probably hold a conference call on it but really exciting even though theres still giving it away for free with Sunny a lot of subscribers right now and and signing him. He is with Kessler has done.
Speaker Change: They have moved they have sent out a message right, which shows the orange button that was previously there just finally, giving us that LIBOR and branding in the car.
Speaker Change: Think about what Sirius and XM paid right to get that Prime real estate almost every car I've seen right now.
Speaker Change: I take a lot of them have been a lot of ubers I was in New York All last week every Tesla call you see I also own five Gaslog cars right have now changed that Orange button has now that bottom.
Speaker Change: Number one spot in the real estate on Tesla Youre going to see that LIBOR, but now.
Speaker Change: It takes a little education right people have to figure out what it is right and they click on it and they immediately can hit that barcode and they can choose to convert.
Speaker Change: But it's a little tricky because you can also listen for free. So you still have another month for that but we're really excited about the number of conversions. It's exciting it's energized I think we expected almost non and we're signing a lot every day.
Speaker Change: Last question related to Tesla and I have a few others.
Speaker Change: When someone buys a new car in North America Post December <unk>.
Speaker Change: They get.
Speaker Change: <unk> or two free like you do with other cars with serious or will there not be a free subscription.
Speaker Change: I can't answer that yet right. This is the first time that the company has had the opportunity.
Speaker Change: Talk to those consumers youre going to see a lot of different things that we never could do before right, including advertising right. These are things that we didn't have the capability of doing before right. We were we were strictly paid for by Kasler right. It was an amazing partnership right and that was in terms of it right no advertising.
Speaker Change: So on now we will have the ability to.
Speaker Change: To be able to really stretch scratch, our arms and really be go out there and to be able to do the different marketing and different different price ranges right. As you can already see if you've kept that cole Bryan we already offer a $3 99, a $34 99 per year right and then 90 998 for the year, so huge discounts to everybody else in conjunct with Tesla.
Speaker Change: So it's really exciting to see us have that ability and be able to stretch our muscles and be able to showcase that and really be able to start to sign these subscribers ads.
Speaker Change: The individual as a customer of the company and being able to upsell them to podcast and to pay per viewed live streaming to all the different verticals E books that we have this is the first time, we've had that opportunity to do it.
Speaker Change: Great switching gears.
Speaker Change: Are you already integrated into <unk> now and if you are has there been a meaningful impact yet to the subscriber base in the first four months.
Speaker Change: Yes, it's really just beginning.
Speaker Change: It's an exciting partnership but we've just started to start the trials right. They have over 100 million users. This is a lack of boost mobile for anyone that doesn't know as a low end provider of music.
Speaker Change: Phone service right. So there are a perfect fit for us we will.
Speaker Change: We're going to see how that turns out and I think both parties are really excited and energized by the partnership but we're in the very beginning phases.
Speaker Change: Great and then on podcast did.
Speaker Change: Did you disclose.
Speaker Change: In the last few quarters, how many titles you added in the second quarter. How many you onboard and then what's the expectation for the second half of the fiscal year.
Speaker Change: No. That's a great. That's a great question and I don't think we put the number and if you had that we should have.
Speaker Change: The total for the year.
Speaker Change: It's really a staggering number I think we've added now yes for the 12 months I think we just announced our 49 new podcasts yeah.
Speaker Change: We're adding almost one every two weeks right now and Brian These podcast with real traffic and real revenues. So the podcast industry is heating up as you can see the elections like this there is an argument Elon musk just came out today and said Trump won the election also podcasts yeah for anyone that follows. This podcast is just exploding.
Speaker Change: Chart, you see that second wave you show, a 28 billion acquisitions, you're starting to see that second wave kicking in right now. The Kelsey has just signed for 120 million with Amazon Smart list just moved up just curious for $150 million, Joe Rogan, just signed for $250 million right and it's kind of the haves and have nots right now in podcasting.
Speaker Change: Smaller podcasts are all coming available. This is our sweet spot those 50000 to 250000, maybe even 500000 downloads of true podcast there's.
Speaker Change: Really need a home and we're really the best place from the comments. The only place you can come for a full 360 experience and as I said as I said, we have over 100 podcast and our pipeline the largest by connection history. We had eight podcast acquisition acquisition mergers in discussions right now and we are.
Speaker Change: Just to add it's Steve leaned into our team is just you know just just a great addition to the team Steve steep yield Premia radio from $30 million public company to $1 billion public company and is really one of the experts in radio and with loss of norm.
Speaker Change: It really is a great addition to the team and I think he is going to be usually helpful and like I said before I fully see us now growing from $50 million to $100 million over the next 24 months.
Speaker Change: My last question. Thank you is I know Rob you got your team Super motivated and there is very few people more motivated than you, but even your guidance.
Speaker Change: Suggest youre going to shrink before you recover based on your execution and conversion of Tesla subscribers. So I just wanted to understand how management is thinking about overhead in the short term.
Speaker Change: And if there should be if you expect any changes until you see how things play out.
Speaker Change: But we're not we're not going to make any changes yet right. Because we're so excited about the opportunity right. When you get that beachfront property, we were going to give up some revenues right in the beginning right. You now convert these subscribers, which we have the opportunity in perpetuity, but it's really going to showcase that first 90 to 180 days right right.
Speaker Change: As we get into the middle of the fourth quarter, we will have some real decisions to make on that remember you got to remember in this business almost 70% of those revenues go to the music industry right. So you buy.
Speaker Change: Good news Bad news you automatically cut 70% of your costs right. If you don't sign those subscribers right. So now you're just looking at 30% of that right. So it's an easy fix and as you know we cut from 350 people when Covid hit we were at 100 and I don't know 120.
Speaker Change: <unk>, yes at some point, we're probably at a 130 right now we'll do what's needed to be done and we will do which we've proven over and I'll begin that this team is resilient and then added maneuver in tough times, and we will come out of this stronger than ever but we're not going to make any moves on it right now, especially with us seeing subscribers signing up every day right now the use.
Speaker Change: <unk> not going down it's kind of amazing that our usage has not gone down when issued the.
Speaker Change: The conversion is tricky right now right Youre seeing in your car right Youll see a picture right of that beautiful Green button that my son happened to create that logo. So I'm very proud of it but that logo right. We finally have that prime real estate you've seen in every single car now you click on it you get that code, but you can still listen to freight so we're really not going to have.
Speaker Change: A full clear picture right.
Speaker Change: The middle of December to Middle of January how those conversions are going but we couldn't be more excited about what's happened so far.
Speaker Change: Great. Good luck, Rob to you and your team.
Speaker Change: Thanks, Brian I appreciate it.
Speaker Change: Your next question comes from the line of Barry Sine with light field. Your line is now open.
Speaker Change: Hey, good morning, guys.
Speaker Change: Just a follow up question on Tesla.
Speaker Change: Do you have access to them.
Speaker Change: Their subscriber base is it only through the car or do you separately have access that you can market to them.
Speaker Change: Yes, we got we got to be careful again, we're under strict NDA as with Tesla what I can tell you is that they had been extraordinarily cooperative we've worked in collaboration to put the marketing package together as best as we can as you know when you're reaching out to millions of people you have to be careful what marketing you do and don't but for anybody that <unk>.
Speaker Change: It right you see this beautiful picture that Tesla has sent out across the car as well as an E mails to in multiple and it goes out multiple times every time, there's an upgrade youll continue to see that Youll see I'd say like the live streaming music has now moved from this orange button within arrow going too alive one logo.
Speaker Change: Number two is yes.
Speaker Change: Yes, I should have shared this unexpected but yes I will do that is when you look in the car. It is so exciting Barry to see this you own that beachfront property.
Speaker Change: We lost some of our tenants for a minute right now the question can you fill that beachfront property and we can fill that beachfront property, that's going to be a moon shot and as you know.
Speaker Change: Whether it's yourself it was Brian Nobody has really been able to give us a per subscriber right number here right look at Spotify is trading at $400 Reits trading at these crazy sub numbers, we have such an opportunity right now that if we can convert 25% of these of our shops right Guy and that doesn't count new cars coming in so we'll be in the car.
Speaker Change: In perpetuity, if we can convert those right youre going to start talking about $200 to $1000 or sub new spacing youre going to give us the ability to be able to upsell those and grow from $3. Two a much higher number and I fully expect that number's going to grow from three to at least five and could be as high as seven or test.
Speaker Change: And.
Speaker Change: Just to help us think about how to get at that number of subscribers I believe in the past you've.
Speaker Change: Released the number of Tesla subscribers within your base I don't know if the events are recently and then also we have to look back at pre 2018.
Speaker Change: You were giving either in back then you were giving out subscriber numbers. So presumably those were mainly tasked with those would stay on if I understand correctly and then the delta.
Speaker Change: Between what you've announced as customers in 2018 numbers.
Speaker Change: Would be the jump ball that youre going after with marketing and we're hoping I don't know 25% penetration of $5. A month is that is that the right minus of the numbers are right, but is that the right way to think about it.
Speaker Change: I think it's I think that's a good thought.
Speaker Change: Alright, I think Thats a good thought Brian again, we can't give the exact numbers that are grandfathered, but we fully expect a lot of them.
Speaker Change: And we fully expect to convert a lot.
Speaker Change: And again, we're cautious right in this right. This has some risk in it.
Speaker Change: We have some risk in losing some revenues and EBITDA in the beginning but you have an opportunity to grow massively and really be valued properly and valued against your peers afterwards in a much more unique way.
Speaker Change: And Rob on the broader pipeline you did an update over the summer and I think if I recall correctly there was about 60.
Speaker Change: Substantial costs in that pipeline wondering if you could help us on an update there. Obviously, we've won you've announced that you want to do a major customers you said by the end of the year two more by the <unk>.
Speaker Change: First quarter by the March quarter I think.
Speaker Change: Two more do we do it.
Speaker Change: They'll have 60 total opportunities has that grown you have certainly grown the size of the team that's going after that that base, but what does that pipeline look like now in your.
Speaker Change: ERP system.
Speaker Change: Yeah. So we didn't increase that number yet, but I fully expect that as we do an update call.
Speaker Change: The middle of December to Middle of January will give me talking about that number growing I wouldn't be hiring as you know Barry I was cutting substantially right and some of that was going to happen anyway, because it was consolidation and some of it was because of Covid and some just because we closed our life business and the merchant business right, but the reality is is I won't be growing at 211 people if those.
Speaker Change: Deals aren't moving fast and we don't feel that confident that we're going to be announcing sizable deals and I.
Speaker Change: I don't know why people discount it but the first deal we announced right that not only did it have been right, which was $24 million, but you see it in the revenues right. It it actually not only happen, but its working right that deal may get bigger right. So we couldn't be more excited about this you don't need to Neal to land too many $24 million deals to change the history of this company.
Speaker Change: Right and as you know Barry you know me a long time and yes people that know me whether it was I want a digital turbine at Majesco I built so many of these companies off the backs of BTB deals, we never really had the opportunity to do it because we had we had a messy balance sheet right. We had albeit we lost our life business some of the acquisitions, we data which.
Speaker Change: Unfortunately in merch on the merch side of it never really panned out because of that because of Covid. We had it we had a pivot right. We've added pivot over and over again now we don't have to pivot right now we've got to focus our energy on those <unk> deals and landing those <unk> deals and I would say, it's way higher than 65.
Speaker Change: I can't give you an exact number yet, but I think we'll be talking about it a lot and I think you're going to see more streaming partners you can see more auto partners, you're going to see a retail partner right I stayed in the last call I expect to hire ahead of BTB for retail.
Speaker Change: See a massive opportunity there right everybody in that space has to compete with Amazon right. You see Walmart just did a massive deal. They bought vizio $2 3 billion I see telltale signs that can be that music subscription should be synonymous with every one of those retailers and if you want to keep your customers in the funnel when we get them to buy more things it shortly.
Speaker Change: Working amazingly well for Amazon, if they're going to compete with Amazon and they're going to have to do more of it and they're going to have to do it fast.
Speaker Change: We see that next big vertical for us, but again, just going back on the auto side of it is kind of amazing what's happened and yes, Aaron I just talked about this yesterday, so like all of a sudden it almost feels like people felt we were in exclusivity with Tesla when it wasn't the case they were exclusive Austin paying us, but it seems like the floodgates may be opening up.
Speaker Change: Big opportunities with other auto companies now that we've been talking to but the dialogue has gotten way more serious since the announcement.
Speaker Change: And one thing you haven't talked about on this call that I believe you've said in the past as an opportunity is the upsell all flash cross sell opportunity so whether it's with the test customers.
Speaker Change: Or others, where you may have the customer relationship information you've talked about the celebrity brands line.
Speaker Change: Will you have an opportunity to cross sell let's say somebody from Tesla size up.
Alex: For a subscription can you say you then cross sell them some of these celebrity brands products or others, they're a lot more Alex.
Speaker Change: Absolutely.
Speaker Change: All of this opportunity to open up advertising right is game changing for US we've never been able to talk to our customers before right.
Speaker Change: Beautiful deal there were a great partner right they were paying us $3 a month right, but we couldnt talk to those customers right. We just had we got we got a customer we get paid and we're able to deliver the music to them, which was great. Now we can start to start to do a lot of that and you'll see a lot of Telltale signs Tonight Tonight, We're doing this amazing event Tonight.
Speaker Change: We're kind of crossover this will crossover multiple parts of our business.
Speaker Change: Launching Super Duper, Kyle's new album Zebra at over 1 billion streams will launching it literally at a place called Harry's which is around the corner from my house and exit the troubadour right. They gave us the entire placed in to do it with live streaming it will launching is coffee Tonight.
Speaker Change: Do we own as well as we own 50% of that song.
Speaker Change: So you're seeing that pollination, we've talked about Barry where we are from the same piece of St. Pete same celebrity Cp's content, we get multiple revenue streams with no additional cost us.
Speaker Change: Okay.
Speaker Change: Do you own the first half of the song or the second half of the song.
Speaker Change: Nevertheless.
Speaker Change: On the eight companies.
Speaker Change: And the eight verticals that you've talked about can.
Speaker Change: Can you talk about which one or two are the most promising where you're seeing the most traction and what are the customers telling you where you are getting further down the process.
Speaker Change: Yes, I mean, I think you're going to hear a lot of this I mean, obviously the live streaming partner they do $2 million a month, placing our content inside of other streaming partners right is a telltale sign you're watching all the streaming partners struggled tremendously right. The cost of content is skyrocket minimum wage has gone up <unk>.
Speaker Change: <unk> cost of production has gone up tremendously competition is fierce right Netflix is eating everybody's launched and it's causing a million six an hour for content.
Speaker Change: Well, we got this great luxury that audio content like podcasts.
Speaker Change: Podcast content pay per view content music content is way cheaper right. So we have 3000 hours of programming 3000 artists right, who have performed on our platform everyone from just an EBIT Bruce Springsteen the rolling stones that we own that video right. We all need to be used in the backstage and the green rooms right. Some of the biggest stars in the <unk>.
Speaker Change: World All that MTV like content has unique value with our podcast and you're just watching it again just to highlight the presidential election, you just watch the numbers that Trump deliberate on Joe Rogan and tough to call Shannon.
Speaker Change: Across the board every politician in there and it's like it's just magical what's happening in the podcasting I'd be calling for this REIT COVID-19 podcasts and grew from $400 billion to $2 billion. It's on its way to 25 billion and it's not just flush of podcast is.
Speaker Change: Now every TV post every radio hostess, becoming a podcast there.
Speaker Change: It's a better medium and it's starting to reach globally as well so we see big opportunities there and you're going to start to see those celebrity brands from our podcast is right. Our podcast is just think about this right 50% of the revenues come from direct response selling everything from insurance right that are held to viagra right well. This is.
Speaker Change: Superstar is talking to us Super fans, they've got Max should influence over it I fully expect to see multiple podcast averts of Ars launching their own products over the next 24 months.
Speaker Change: And I can't wait for the volume down movie. Thank you very much. That's my question is Rob.
Speaker Change: Great well, just just to hit on that Barry because I think it's important.
Speaker Change: Say this very humbly to everyone.
Speaker Change: 148% of atmosphere films, that's the first thing I did when I moved to Los Angeles, right I invested less than $3 million into that company right. We had a slate of 100 potential films.
Speaker Change: We're books scripts and stories.
Speaker Change: These are podcasts Ruben audiences.
Speaker Change: Ruben track record and we already know the demographics and now when Youre walking extremely partners Youre walking in the missile on our last conference call I promised everybody that we're going to sell varnum count in a bidding war.
Speaker Change: And within six weeks, there was a bidding war on it and we'll talk about it a lot more and we will talk about our partner in the middle of January we will start talking about it but the biggest producers. The biggest writers right had been hired on that and millions of dollars are being spent between vigilante and born in the town of both being spent for those to be green lit knock on wood, if they get greenlit.
Speaker Change: Yes, those can be those can be game changers for the company right and I say this humbly when I did atmosphere I own the predominantly on 5% of the royalties from a movie called 305% of the royalties are movie club's Spiderwick chronicles and those movies did $1 3 billion.
Speaker Change: You can own a TV show you can own multiple wed have to we have one documentary and we have seven or eight more in the pipeline now that we're going out with there is another great opportunity. So I hope you all get to listen to.
Speaker Change: If you really just sad story and an interesting story, but its 10th Allen who is very famous for going around the world stopping sex trafficking and that it turned out that.
Speaker Change: Yes.
Speaker Change: The story goes and I'll be careful with my words, because I want you to get an opportunity to listen who as you listen to it they made a huge movie about the guy see IAG and all the great things he did and it turned out he may be on the other side of the traction if you have an opportunity to listen to what.
Speaker Change: Positive. This one is going to be sold again to one of the streaming networks.
Speaker Change: Alright. Your next question comes from the line of Jon Hickman with Ladenburg. Your line is now open.
Speaker Change: Hey.
Speaker Change: I have a question for Aaron.
Speaker Change: Can you hear me okay.
Speaker Change: Hello.
Speaker Change: Okay.
Speaker Change: The G&A expense was up quite a bit this quarter.
Speaker Change: Is there something in there that is different.
Speaker Change: There's a little bit more stock based compensation running through our <unk>.
Speaker Change: Comparing it to sequentially or year over year.
Speaker Change: Sequentially.
Speaker Change: Yes, there's a little bit more stock based comp in there and there is a little bit more.
Speaker Change: Audit fees.
Speaker Change: And Thats, just the timing of when the work for the <unk>.
Speaker Change: We had some reviews and.
Speaker Change: And audit spillover.
Speaker Change: From the prior period, but that kind of normalizes itself out over the year.
Speaker Change: Okay.
Speaker Change: And then.
Speaker Change: My other questions have been answered I just wanted to.
Speaker Change: Maybe ask a little bit about the other <unk> opportunities.
Speaker Change: And it seems to me like if you could.
Speaker Change: Sign one or two more like the us.
Speaker Change: The first streaming one you have.
Speaker Change: Your issues with Tesla would kind of disappear is that not the case.
Speaker Change: Yes, I think that's if we can we can signs.
Speaker Change: Org.
Speaker Change: I mean, the answer to that is we don't think.
Speaker Change: Hey, Hey, we're excited about the Tesla opportunity.
Speaker Change: Super excited about it right. This is mass optionality for US right number two is in terms of the <unk> deals.
Speaker Change: Where is that where we have signed and we're going to expand those deals and we're going to have more deals like that deal and its coming its coming very shortly so I don't look at it Mr replacement I look as an enhancement.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Sean May go on with Roth Capital Partners. Your line is now open.
Speaker Change: Thank you.
Speaker Change: Pivot for a second back to something you mentioned earlier.
Speaker Change: Podcast World.
Speaker Change: It seemed like there was a period there where it was red Hot and then some of the big players are backing away from that created an opportunity for you guys can pick up some shows.
Speaker Change: Are you seeing that kind of space heating back up and is that affecting kind of the <unk>.
Speaker Change: Tenor or the tone of the negotiations that you're having with some of these shows are deals are hot deals coming back and are there other cost get any shows rising.
Speaker Change: Yes.
Speaker Change: An interesting thing, it's kind of the haves and have nots right. The big shows you can't compete on buy even if you had a pool of money you're right. These deals to Calces smart less I mean, they are really just they're multiple multiple 510 10 times revenues right youre not going to compete in those but the smaller deals there.
Speaker Change: Very few of US left there's very few competition that can really compete in it there's a little bit of VC money that came in so there's a couple of deals done but I can tell you today, we just signed another $1 billion podcast.
Speaker Change: Just got signed will be announced next week.
Speaker Change: Sure.
Speaker Change: We're signing them pretty fast and we're in the trenches right now we just bid on $12 million of podcasts deals in the last 10 days.
Speaker Change: There's a lot of opportunities for the small to mid size podcasts, there's not opportunities for the big ones, the big ones Youre not getting closer.
Speaker Change: Okay.
Speaker Change: On the big ones is not indicative of the cost of getting the small ones growing up.
Speaker Change: There's a little bit of competition, you see but it's interesting.
Speaker Change: I think I've told this before Sean.
Speaker Change: We were just in active negotiation, we just announced an extension.
Speaker Change: Tension with Adam Carolla, We just announced now arch then with Lady Yang So all of our biggest podcast that would be just in that same freight we never lose them and now with humbly is happening is we're starting to get a lot of the other a youre getting some spotify Apple.
Speaker Change: Amazon Youre getting a lot of podcast from them that are just too small for them to manage right.
Speaker Change: They are still distributing them theyre distributing for US right. They are falling into our lap right then you're getting then youre getting.
Speaker Change: The opportunity that some of the midsize ones that wouldn't really werent available for a while we're starting to see opportunities there were some other bidders in it.
Speaker Change: But we're seeing a real opportunity to grab some of those and knock on wood I mean, if we could grab.
Speaker Change: Half of this $12 million, we just got 1 million of it if we get half of it which is what I think we're going to get it going to be.
Speaker Change: Big jump giant jump for us over the next couple of quarters.
Speaker Change: Okay. Thanks.
Speaker Change: Turning for a minute to the celebrity brands. Some of these categories you've been talking about a while.
Speaker Change: <unk> got a lot more that you've announced and the new ones that youre talking about.
Speaker Change: What do we really start to see some kind of needle moving revenue wise.
Speaker Change: Slides are beyond those thresholds or that.
Speaker Change: Well, let's let's cross our fingers, we just got distribution for our wine with Jeremy.
Speaker Change: We just got into the state of California, Georgia, We're about to get Pennsylvania, We got 600 cases in the first week.
Speaker Change: Alright.
Speaker Change: <unk> number, but but once you start to get those you get 600 cases, they sell the next order.
Speaker Change: <unk> and thousands of cases.
Speaker Change: So we see we see a real opportunity there.
Speaker Change: We see.
Speaker Change: You don't have to get to in that business as you know Sean right. When we built <unk> and entourage it only got to $20 million of revenues and sold for $250 million. If the trajectory is there.
Speaker Change: Youre going to get a lot of money and youre going to need to be able to raise money at a substantial valuation into those right and part of the beauty of this is there's no real cost to us.
Speaker Change: We're getting ready to launch our second line.
Speaker Change: Which is our purple rose we're really excited about this we haven't announced the celebrity talent, but that will be a massive huge talent that surround this and then we get this double whammy with Super-duper Kyle right, we get multiple pronged.
Speaker Change: We haven't announced yet, but he's going to do a podcast to like he's like the good guy wrapper. He's done over 1 billion streams right and he's got an album coming out that we produce so our producers on split mining drama <unk> produce it. So we don't have the music diet, we will launching a live stream with them right, which is going to happen Tonight, and then we will launching the <unk>.
Speaker Change: As part of that and so you're going to get three pieces of the pie on that and you're going to get some of the biggest talent in the world, including Amazon pack, who invited us to hold the event. It is his venue Tonight and.
Speaker Change: He has done this first before I am hoping you shows up so I was wondering one of the biggest stars in the world.
Speaker Change: So really exciting to see that.
Speaker Change: I think youre going to see us have eight to 10 celebrity brands.
Speaker Change: We may even have some brands that come in to us that are already brands that are out there doing real revenues that may come into the fold that need are.
Speaker Change: Skills, and yes, we haven't announced fully some people know, but hard showered the bulb, who is consulting for us, but we havent brought her in full time, yet right, but that may happen. Soon she ran all the marketing for whitewashed from 600000 to the current $8 billion and then subsequent to that you launched Kevin Hart's Tequila, which sold more tequila.
Speaker Change: <unk> in the first year.
Speaker Change: So we've got a world class team here.
Speaker Change: Between Josh on the music side of it and talent side of it right and our talent team a podcast one.
Speaker Change: Love Celebrity brands with podcast, there's the fact that direct response work, so well Youll know how those products do so quickly and so fast out of the chute.
Speaker Change: We're signing the band of pumps.
Speaker Change: <unk> expanded that lineup as Youll see next week dramatically drive all the housewives and so there's so many opportunities you have products that can really work work from cosmetics too.
Speaker Change: Multiple different brands expanding way beyond coffee and alcohol.
Speaker Change: Okay.
Speaker Change: With the economics on the music business, which can be pretty opaque, sometimes when you say you're on half the songs you even get half the economics.
Speaker Change: And down on.
Speaker Change: On that as well.
Speaker Change: We don't have we don't have the publishing.
Speaker Change: Right. So in only half the publishing if if it did like ice by good what would cause selling did last time, we make.
Speaker Change: Tens of millions of dollars of it.
Speaker Change: I can't tell you, it's going to do that but even if it made us hundreds of thousands. This is all brand new money brand new revenue streams coming in are.
Speaker Change: Our publishing business was up 300% right, it's you're starting to really grow we've just announced a partnership with I'm surprised the street didn't read into by announcing AI partnership that that secret Intel Intel is obviously competing with the video. It's yes. It was the biggest chip maker in the world they've got to come back somehow in there.
Speaker Change: Entering the AI world in a positive way and so they are building and spending all the money on it to build out an entire platform for us for BT sounds across drama Phi.
Speaker Change: Between drama Flying split mine in publishing as you know.
Speaker Change: It all too well from Renaissance right.
Speaker Change: Publishing sales with 16% to 25 times EBITDA right. We have we have an opportunity here, we don't have to get that big tap a division that's worth a lot of money. So yet you got massive optionality in our publishing and Joshua Baer, who ran.
Speaker Change: Provision rock Nations Chad multiple number one songs we get another another number one song we just hit it with Brett <unk> and.
Speaker Change: Whiz-kid.
Speaker Change: Number one African chong ever to come come to the market.
Speaker Change: Already done I think 13 million streams.
Speaker Change: Radio one of those songs could be millions to tens of millions of dollars of cash flow of the company. So keep your fingers crossed and again these arent guaranteed but there's a lot of optionality. When you start to see those kind of numbers and the amount we have we own a piece of a thousand songs right now and growing.
Speaker Change: Okay. Thanks for that clarity couple of questions for Aaron Aaron circling back to question.
Speaker Change: Question on G&A.
Speaker Change: Are you, suggesting that the G&A level that we see in the September quarter.
Speaker Change: Sure.
Speaker Change: The reasons for that to be higher than what we should expect them.
Speaker Change: In December in subsequent quarters because of.
Speaker Change: The timing of some of those costs.
Speaker Change: Yes, exactly so I would expect G&A to the dropdown back to kind of historical levels.
Speaker Change: Okay.
Speaker Change: Permanently.
Speaker Change: The final thing.
Speaker Change: Thank you.
Speaker Change: And when will the 10-Q be filed.
Speaker Change: 10-Q will be filed.
Speaker Change: I'll say early next week.
Speaker Change: So alright.
Speaker Change: So maybe one or two days before the deadline.
Speaker Change: Okay Alright.
Speaker Change: Thanks, and I'll, just close my questions or comment Rob I Echo what you said about that.
Speaker Change: Opportunist podcast, that's in valor Julien actually some of the more recent partners I felt were a little weak frankly in that theory, but this was outstanding.
Speaker Change: Add to the team.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of John <unk>.
Speaker Change: <unk> financial your line is now open.
Speaker Change: Hey, Rob.
Speaker Change: Rob what or what.
Speaker Change: Raising story.
Speaker Change: Markets overreacted to the change in the Tesla <unk>.
Speaker Change: Evolving of the Tesla relationship.
Speaker Change: And then down to a 0.71 cap to sales.
Speaker Change: Peer group that's around three three to one.
Speaker Change: So under priced I would argue anyway.
Speaker Change: Although it's showing some.
Speaker Change: Turning here.
Speaker Change: Really amazing it's gotten as low.
Speaker Change: Any comments you can make.
Speaker Change: About two things one is the.
Speaker Change: As you are consolidating a fragmented space with the smaller podcast theirs, what kind of.
Speaker Change: Benefits by consolidating and Youre getting some SG&A overlap.
Speaker Change: <unk> churn or are you getting what kind of.
Speaker Change: Benefits are you seeing from that.
Speaker Change: Consolidating.
Speaker Change: Following the full question, Eric by asset, but most of the consolidate which we've already done.
Speaker Change: That's something that's happening now John that happened.
Speaker Change: In previous previous quarters, but what I can tell you in <unk>.
Speaker Change: And I think where you are heading for us is that trading at 70% of revenues, where the industry is trading at three <unk>.
Speaker Change: And a half at this point and I think it is three four times revenues right.
Speaker Change: Yes, we've been humbled again, our stock has had multiple life to it.
Speaker Change: It's dropped to these levels and we've gone through tough cycles, both business. So on we're a public venture capital company right.
Speaker Change: I've been through this whether it was digital turbine with the XI warm weathers, Jessica Weathers THQ for my entire career I've gone through cycles, where stocks go up and go down and they almost look like a heart attack right and Fortunately some people made fortunes in the stock and they get an opportunity to do it again we're.
Speaker Change: We're going to go through a little bit of a difficult time to fight through when the revenues kick in for test learn when those subscribers convert but at the same time when you look at the Optionality of this and you think about how much upside is you got to think about all of it right. We have 46 patents. We have one of 10 when the number 10 largest music subscription platform.
Speaker Change: The world water winning right.
Speaker Change: There's multiple parties you may have to bias as well in this right. So there's big opportunities there, but you also have a $220 million NOL.
Speaker Change: And you are looking at a hard cash network. That's number of 11 or 12 in the World now you go into a publishing and our celebrity branch brands right in a live streaming your five verticals here that could have a $1 billion to a $100 billion of upside and when I say that I don't say cavalierly right. Spotify, just came out and said they're going to be one.
Speaker Change: <unk> subscribers to music right by 2027, and Goldman Sachs, and there's going to be $1 7 billion paying subscribes level free surprise would be like 5 billion can you just need to get to 10 million subscribers right, which we're going to get to like.
Speaker Change: One big <unk> deals can take you that tomorrow.
Speaker Change: Kessler conversions happened as well as we think right now.
Speaker Change: It can be taken quickly as well and so we have massive opportunity here massive optionality to trade down to these levels. There's only two things. We can do we can get into the <unk> fight we did it during COVID-19 stock dropped 60.
Speaker Change: Six months later it went back to seven five we went to do the same thing in 2021, we've had almost every two years. We've had this cycle, there's been a really tough microcap market for everybody.
Speaker Change: But no excuses what are we doing we're buying back stock we bought back four 5 million shares of LIBOR and averaged 173, obviously, we're going to buy a lot more a lot more back here right same thing in podcast, one we spun it out right.
Speaker Change: We converted all of our debt. So there's no debt all that converted to $2 10 in podcast older converted $3 right. So those are out of the way. So we got the major missiles out of the way now we got massive upside and previously we went through the cycles. We have a lot of debt, but we don't have that anymore. So Aaron I excited.
Speaker Change: The team is the team is excited.
Speaker Change: We will put our money, where our mouth is youll see that myself as well I bought back a bunch of podcast one when the window is open we will do the same thing here and I couldn't be more excited of where this is going.
Speaker Change: I look forward to the updates in giving you guys updates on the <unk> as well as the conversions of Tesla as well as the celebrity branch so all.
Speaker Change: All of those all those massive optionality, we got work to do.
Speaker Change: I've always said, we're going to win on hard work will get out work any of our competitors, we're going to stay in the game and we will get a tough it out when we go through tough times, we just we get stronger and we get a little angry right.
Speaker Change: I can tell you my team was literally working through the night on a <unk> deal until four o'clock in the morning. This morning right.
Speaker Change: It's not easy it's not just the signing of the deal it's actually the launching of these deals right and I couldn't be more proud of Brad in the tech team and kit and a podcast team and Josh News excited abated, Sarah on the celebrity side of it.
Speaker Change: Right and what they do that first <unk> deal $24 million, we proven not only did we sign it because it's great to signing but they actually work.
Speaker Change: And yes, im hoping that deals can expand this year, maybe that deal goes through 30 or 40 or $50 million.
Rob Allen: Well given your track record Rob some of your big success stories in the past.
Rob Allen: And given the 46 patents.
Speaker Change: Five verticals and it's amazing this is priced out here it's really.
Speaker Change: It seems strange.
Speaker Change: Yeah.
Speaker Change: Can't believe it I make the JP Morgan relationship people are asking me if you could give a little more definition too.
Speaker Change: What's happening there and what your thoughts your plans are as well as some of the <unk> people want to know can you give a little more color on the babies that are signed.
Speaker Change: And those in the pipeline some detail.
Speaker Change: Yes, I don't think I can give you anything more than I've, given today I've been pretty clear on it but on the on the banking side of it I did just I just I just flew out to Dallas.
Speaker Change: <unk> met with Craig Rosoff ahead of media.
Speaker Change: It's been an amazing part.
Speaker Change: Stuck with us in good times and bad.
Speaker Change: And it keeps battling through in.
Speaker Change: Obviously, when you're one of 10 DSP in the World right and you look through the others are right you got I've already called 6 billion and then next level up is serious a 25 billion and then it goes to Spotify. It I think there's $70 billion 80 billion. Today goes up every day right and then you go to Amazon Apple Google.
Speaker Change: Alright.
Speaker Change: There really is nobody else.
Speaker Change: We're the only ones truly they can white label, we're the only ones that can be a partner and so I think Facebook is museum as Michigan Music service, Microsoft as Michigan Music service.
Speaker Change: Posco is missing a music service Walmart, Michigan music service.
Speaker Change: Many others out there right that we can point to that could use our own music subscription, including Twitter by Twitters lawsuit with record labels for hundreds of millions of dollars already right and as you know all of these platforms all the social platforms eventually settle with the record labels because you can't beat them.
Speaker Change: It means you cannot music and I don't see any platform that has content not having music on it. So there's a lot of op opportunity here a lot of Optionality will consider you to to explore different things that are accretive to our shareholders.
Speaker Change: We will continue to buy back stock as I said.
Speaker Change: I will personally be buying stock as I said.
Speaker Change: And it's a very tough market. This media market has collapsed the microcap market.
Speaker Change: I've been outspoken about this because it's the first time my career I've ever seen it where to get onto the Russell 2000. This year to get on last year was $156 million the.
Speaker Change: The Russell is up 20%.
Speaker Change: You would think the lowest end to get on this year. If it was $1 56 to be $190 million. It's crazy to get on this year was $131 million. So we proudly got back on the Russell, which it didn't help us regardless of the Russell and then you hit the algorithms and the algorithm is so powerful and they have so much money. They can quickly knock you down because they know that youre going.
Speaker Change: Have when the when the rebalance happens every quarter. They can knock you down in those rebalancing, maybe we're starting to see that come the other way now right. So they killed us in the last quarter.
Speaker Change: We had 12 million shares of buying on the when we get onto the Russell right. Then you had all the selling come in in the rebalanced because we were down maybe we'll start to see that now and you could get millions of millions of shares in <unk> and I'm, a big fan of shorts have been telling them on this for years digital turbine, where they never run through a $100.
Speaker Change: In a million years never worth $12 billion, right and but it ran there because issuance got clobbered and you're starting to see that happen.
Speaker Change: You may say they have now.
Speaker Change: We get one little short run here in stock it ever run back into a big range and we've never really had the opportunity to really get sizable acquisitions on which you guys know I've done my whole career right because we've never had a currency that's really been in a position to do it I've always told everyone. It takes me seven to 10 years I'm in my <unk> year.
Speaker Change: So I mean, my seventh year I turned 60 in March I'm, not going anywhere. So the only thing I want to do on love going to work everyday Love My team I Love, what we built here, we got obstacles, we got to fight through and I fully expect that this will be the biggest this will be the biggest company I built in my career and the team that I have.
Speaker Change: As the best in the World.
Speaker Change: You look at our board and our management team they built over $100 billion worth of media and tech teams and Nobody's walked away, they're just gets stronger.
Speaker Change: Brilliant presentation, Rob. Thank you so much.
Jeff: Thanks, Jeff.
Speaker Change: Okay any other questions because I know, we're getting pretty in pretty late here now.
Speaker Change: As there are no further questions I will now hand, the conference back over to Robert <unk> CEO for closing remarks.
Robert: Yes, I think you guys have heard my voice enough.
Speaker Change: I'm Super excited I'm Super energized Super focused my team is super focused.
Speaker Change: We're going to be here for a long time, and we're going to build an amazing because this year and continue to grow this and I just want to thank everyone for their support in good times and bad times, and we're going to fight through this one again.
Speaker Change: You very much.
Speaker Change: That concludes today's conference call. Thank you all for joining you may now disconnect.
Speaker Change: [music].
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