Q3 2025 LiveOne Inc Earnings Call & Business Update
Speaker Change: Ladies and gentlemen, thank you for standing by. Today's conference call will begin momentarily. Until that time, your lines will again be placed on music hold, and we thank you for your patience.
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Speaker Change: Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the company's filings with the SEC for information about factors, which could cause the company's actual results 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 subsequent SEC filings.
Speaker Change: Yeah.
Speaker Change: You'll find reconciliations of non-GAAP measures.
Speaker Change: To the most comparable GAAP financial measures discussed today in the company's earnings release, which has been posted on its investor Relations website.
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Speaker Change: The following discussion including responses to your questions contains time sensitive information and reflects management's view as of the date of this call.
Speaker Change: Every 14th 2025.
Speaker Change: Except as required by law the company does not undertake any obligation to update or revise this information after the date of the call.
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Rob Allen: Now I would like to turn the call over to <unk> CEO, Rob Allen.
Speaker Change: Thank you Aaron good morning, everyone.
Speaker Change: Thank you everyone for joining us this has been an extraordinarily challenging and exciting.
Speaker Change: Order for the company.
Speaker Change: Thanks to the unwavering dedication and relentless drive of the <unk>. We have achieved record revenues of 95 million in the first nine months and $29 million plus for the quarter underscoring our ability to navigate an extraordinary challenge and turn it into the biggest opportunity in the history of the company.
Speaker Change: Our audio business Slacker radio and podcast one I am pleased to report broke 90 million in revenues for the first time in the history of the company the copied by $14 1 million of adjusted EBITDA for the nine months.
This outstanding performance demonstrates our ability to pivot.
Speaker Change: Goodbye and thrive.
Speaker Change: We've made significant strides to diversify the business and diversify our partnerships.
Speaker Change: Especially in the <unk> partnerships with five deals signed in the last 90 days, adding over $44 million in revenues.
Speaker Change: Including $25 million and Fortune 500 immediately collaborate at $16 $5 million with Amazon.
Speaker Change: We expect to close at least two more partnerships by year end.
Speaker Change: Our pipeline is robust with over 70 <unk> partnerships in various stages of development with $1 billion two trillion dollar companies.
Speaker Change: Now for the challenge and the opportunity of a lifetime.
Speaker Change: Our partnership with Kessler changed dramatically from being a white label partner.
Speaker Change: And Tesla cars with a guaranteed $3 a month from Kessler as long as the customer that car owner signed up and paid 999 for connectivity.
Speaker Change: We have now renewed our contract for the 12th straight year with Tesla.
Speaker Change: Providing for the first time ever beachfront property with our logo with a brandy right in front of every single Tesla car.
Speaker Change: And the amazing part this is in perpetuity.
Speaker Change: With the help and support of Kessler and using AI marketing.
Speaker Change: And multiple strategies of the company has used over the years to come.
Speaker Change: All of the Colorado into true subscribers, both free and paid for the first time ever we will have data and information on each of our subscribers.
This is a multi billion dollar opportunity for anyone that's been an investor or a part of my companies over the years, we shoot for the Moon.
Speaker Change: This is now that unique moon shot you have that you're going to struggle and it takes some getting revenues for a period of time, but as you look at the future of this all you have to believe is that you can get over $3. A month. So you have this beachfront real estate and now the rents have been going up to 12 years, but we weren't able to raise our rents at all.
Speaker Change: These numbers have exceeded any expectations of management analysts and most of all Tesla themselves.
Speaker Change: This December we signed over a staggering 800000, plus new users that's 40% of the entire pool of the 2 million car 2 million tests the cars in North America.
Speaker Change: This collaboration has been nothing short of transformative. We believe the partnership provides a proof of concept that can help us with the success of signing those <unk> partners.
Speaker Change: <unk> partners with $10 billion to 1 billion plus eyeballs I've been talking about a flywheel for the last seven years and as you saw.
Speaker Change: C assign those massive <unk> deals.
Speaker Change: This proof now think about whether our Facebook and Amazon or Walmart.
Speaker Change: Microsoft a amex anymore with $10 million to 1 billion eyeballs. If you were at 40%, even if we can give or 1% to 2% of those users.
Speaker Change: We have a multibillion dollar opportunity.
Speaker Change: As we move forward, we're pivoting our business model, leveraging our partnerships and delivering our music platform <unk> large user bases and <unk> deals.
Speaker Change: In addition to our continued growth I'm pleased to reiterate that LIBOR and as committed $12 million stock buyback program. We currently have $6 $2 million remaining on that buy back program and a comp and shows the confidence we will continue to buy and show our confidence in the future of our <unk>.
Speaker Change: And provide.
Speaker Change: Why that that group of concept that the company and the management are backing and believers in our company.
Speaker Change: We are committed to continue our growth both in terms of revenue and market presence.
Speaker Change: Our cash position increased by $4 million to almost $11 million after paying off $3 million to east West Bank.
Speaker Change: And acquiring 900000 shares of our subsidiary podcast one.
I couldnt be more excited about where podcasts in selling.
Speaker Change: The presidency was one with the help of podcasts they fall.
Speaker Change: <unk> just bought Red podcast network for over 15 times revenues Conan O'brien network sulfur over 15 times revenues to Cirrus Youre seeing.
Speaker Change: Deals that Kelsey brothers selling for $150 million Smart list for 125, we have one of the biggest networks and podcast. It I'm excited to share that podcast. One subsidiary has achieved record revenues and traffic for the quarter, we've expanded our network to become the eighth largest in the industry.
Speaker Change: Have secured a major partnership with Amazon a three year deal worth 16, $5 million and have just guided to $51 million in revenues and for the first time positive EBITDA for the year.
Speaker Change: Positive EBITDA.
Speaker Change: Fourth quarter has to be substantial EBITDA and we fully expect that that number.
Speaker Change: It's going to continue going forward for the year.
Speaker Change: These achievements demonstrate our commitment to delivering high quality content innovative solutions to our audience advertising partners. We're excited about the future of LIBOR and podcast, one and we look forward to continued growth.
Speaker Change: To further accelerated growth, we are working with multiple bankers, including JP Morgan to explore all M&A opportunities that can enhance our business and unlock additional values. The steps of lives our strategic goals of expanding our market presence and strengthening our office.
Speaker Change: I want to thank our employees our partners our shareholders for our continued.
Speaker Change: Boston and support.
Speaker Change: Look forward to the following quarter.
Speaker Change: Thank you, everyone and I'll open it up to Q&A.
Speaker Change: And thank you we will now begin the question and answer session if.
Speaker Change: 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 and joined the queue.
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Speaker Change: Again, it is star one if you would like to ask a question.
Speaker Change: And your first question comes from the line of Brian <unk> with Alliance Global Partners. Your line is open.
Speaker Change: Great. Thanks, so much.
Speaker Change: So on your website you offer slacker radio for $3 33 per month today I look at $39 99 for the year.
Speaker Change: <unk>.
Speaker Change: Yes, we think about going forward it's the.
Speaker Change: Most.
Speaker Change: It's the question I get most of them ambassadors they wanted to try to understand what the <unk> looks like going forward.
Speaker Change: Yes, I think it's I think it's a great question and I think that dynamic is challenging to answer exactly but.
Speaker Change: But we did say recently, we will be raising our prices.
Speaker Change: Has this changed with Tesla is happy what we found is as we've had a lot of people want to buy a year long subscription.
Speaker Change: Which is exceptional for US. We found is is that pricing elasticity. There is an opportunity to raise prices substantially.
Speaker Change: As Youre aware and have seen with Spotify, they've raised their prices substantially they just announced another price increase.
Speaker Change: So I think this is the opportunity now that the company is collecting real data actually has an understanding of not just having a pin number of a car, but actually have a yes, Brian hazelton layer and Rob Allen in the names and data and E mails and credit cards and so on this would be the time that really get to find out how far we can expand those but.
Speaker Change: If you look at the industry, where the top 10 in the industry.
With the lowest by far in terms of pricing I think is a huge opportunity to increase our prices over the next 12 months.
Speaker Change: Okay.
Speaker Change: If I were to buy a parcel of today do.
Speaker Change: Do I get free service to attract me for some period of time I'm. Just curious how is the new Tesla plays out now.
Yes. So great question, you had the opportunity right and remember this is all just happened as of December 4th on December 4th we renewed our contract.
Speaker Change: Dynamically right that contract from the guarantee $3 and model right now we have the opportunity to upsell that customer with the help of Tesla Guy you have the opportunity of getting subscription right that is monthly or for a year.
Speaker Change: Or do you have the opportunity now as of.
Speaker Change: <unk> 30 days ago to be able to turn that service back on right. You look in your car every single Tesla car and the left hand side, you'll see our logo for the first time ever you click on that button and if you're choosing you could either choose AD supported.
Speaker Change: Subscription with no ads.
Speaker Change: So I get that I am curious if for example, I buy my car I am pretty serious pretty serious radio for a month and then it goes away, but I do.
Speaker Change: Do I get is it going to start playing day, one and then turn it and then you have to have so much time to select AD supported or buy.
Speaker Change: That's what I am curious.
Speaker Change: Yes, great. Great question, we have we have not yet as of 30 days ago, We launched the free AD supported and two our shock and excitement as we said yesterday, we have signed over 450000 free AD supported subscribers and what we decided to do that is is that.
Speaker Change: We've had such success with 12 years with Tesla and the usage right. The time people spend right. We don't want to take the risk that they switched and didn't sign up for subscription because it's a little it's a little clunky to little complicated right you have to do it you have to hit a barcode right you've got to sign up you got it you got to put your information and you can put a credit card in all this gave them an easy way.
Speaker Change: That we get them back into the funnel when we get those consumers back in the funnel, we give them and when you turn on the music Youll get your five favorite songs, you've listened to whether you've been subscribed for Europe for 12 years right, you'll get your <unk> and then our Djs Djs will invite you to a special offer to sign up a subscription.
Speaker Change: I can't answer yet we're learning every day and figuring out daily what that next offering is going to be.
Speaker Change: And some will be free for all forever. Some will be discounted offers and we will come up with strategies.
Speaker Change: And and what works the best right and we're learning on the job here, but I mean, the fact that we sign this many subscribers is just so substantial.
Speaker Change: Rarely ever seen a model, where you can find 40% of the total allocated pool of cars, we signed $802 million and even more amazing part is they're using it for an average of like 36 minutes three times of that buy it shows proof of how much people love our service right how loyal they are to our service.
Speaker Change: And and I think that's going to continue and it'll be a telltale sign that I can't imagine, we're not going to live a way more than $3 a month right.
Speaker Change: It's AD supported or its subscriber standing alike.
Speaker Change: Okay last question I've got.
Speaker Change: Related to podcast, one you've added a number of new shows and new talent, we've talked about this for quarters.
Speaker Change: Costs are going up twice as fast as revenue over the last 12 months to 18 months I would have expected eventually the gross margin would stabilize and start to increase.
As always I'll be 69 months ago start to drive revenue to offset that new content, maybe talk about what's delaying the revenue streams and given these dynamics.
Speaker Change: Anything at all change on your Onboarding strike strategy.
Speaker Change: No not at all I mean, what you have right now is when you sign these deals there's some upfront money right the industry right with you like it or not advertisers pay a 90 to 120 days. It takes time to onboard them and some of these you are writing checks upfront and if people aren't even moving over to a network for four or five months because they're under contract.
Speaker Change: With who were there before it's also a challenging environment right you got to be aggressive right now and you got to get people into the funnel and sign them right and what's your Sytem right Youre going to start to see all those brand new revenue streams that you and I have Brian <unk> been talking about that eventually change those margins dynamically.
Speaker Change: So right now when you look at audio boom public company you can see worse, there margins are even lower than us right. So it's right now it's a land grab.
Speaker Change: And you've got to grab those great challenge, Greg grab as many of them as you can that you believe fit into the dynamic CBS network.
Speaker Change: And that will change them just to follow up.
Speaker Change: How do you think about that how do you think the time when it takes to start to see the trend reversed I mean, new senior margins get cut significantly when do we get back to 10% over a year out are we 18 months do you think it maybe talk about that I think it I think it is happening right now I've been talking about for the last two quarters.
Brian you and I have watched in so many industries right you have the first wave right you watch $17 billion of acquisition and some of the wildest steels Wandrey was across the street from you sell for $350 million right. They were doing the same revenues were doing today.
Speaker Change: I'm sorry that was they were doing the same range that we would do when I bought the company. So they sold for like 30 times revenues you watched Amazon Apple.
Speaker Change: You watch Amazon Apple series, Spotify IHOP by everybody out there right and then there was left with little networks. The smaller networks are out there right and the radio companies, who are obviously struggling terribly with their own issue right and now you're starting to see that second round of acquisitions, you see Conan O'brien Chopper 15 times revenues 15 times.
Speaker Change: And then you see red cell for around the same right youre starting to see where some of this desperation summit's perspiration summer. It's just reality of how big podcast in the comp.
Speaker Change: Right.
Speaker Change: Trump has said one the election of podcasting. He just announced ahead of media for podcasts right that.
Speaker Change: The world is changing there and what Rupert Murdoch amazingly.
Speaker Change: Probably added some desperation as well realize yesterday. He has got to go back and buy podcasts, because he's losing list out all the challenge moving away from radio and TV shows the big guys start to roll those back up.
Speaker Change: Right.
Speaker Change: We sit in the world, but we sit in the world of under $5 million podcasts right, maybe we will get to a $10 million and we saw that Microcap land at the best podcast is where true podcast theirs.
Speaker Change: The model is going to change again dynamically as these acquisitions happen to roll up will happen and then the pricing will come back in a way better form in the next six to nine months.
Speaker Change: Great. Thanks, so much Rob.
Brian Hazelton: Thanks, Brian.
Speaker Change: Excuse me. Your next question comes from the line of Sean Mcgowan with Roth Capital Partners. Your line is open.
Speaker Change: Good morning, Rob Good morning, Aaron how are you.
Speaker Change: It's showing how are you doing.
Good good.
Speaker Change: So a couple of questions back on the on the Tesla situation. So with the AD supported subscribers are you yet monetizing any of that advertising.
Speaker Change: Are you up and running with that.
Speaker Change: We are just touching this all just happen right. Okay December 4th we launched the paid service.
Speaker Change: Shocking all we saw an amazing amount of subscribers right. We then said we got to take a little bit of riskier, which will definitely.
But some of the paid subscribers because if we can get a three day. One you may not shop with US we knew would take a little bit of risk in it.
Speaker Change: Couldn't believe in my Wildest dreams, Shaun that we would sign.
Speaker Change: 450000 would be adding still today, we still are adding like five to 8000, a day of AD supported subscribers.
Speaker Change: We signed this partnership with <unk>, the biggest programmatic advertising company right in the World right. We signed the deal I think we announced that 30 days ago with just in the beginning of an advertising takes 90 to 120 days minimum to really kick in but if you listen today. If you have a tesla car, you'll start to see ads hitting guidance theres still some.
Speaker Change: Technology things that are just coming into play right and I'm, hoping that Tesla is going to re launch and re alert right. When they upgrade the software. The next time, they're going to tell all of these far one is again that they have an opportunity right for paid and free as they as they do that right, we will be building more and more of that traffic and all.
Speaker Change: <unk> understanding of that traffic and audience and usage to be able to lock in those advertisers and I fully expect in six to nine months I can't imagine, we're not going to be $3. A month on the AD supported and I can't imagine, we won't be way higher than $3 a month on the on the paid side and then Spotify just came out and they were asked they were asked.
Speaker Change: Just recently <unk>.
Speaker Change: Why do they have an AD supported.
Speaker Change: And their answer was because 60% of those within a 24 month period convert to long term subscribers.
Speaker Change: I'm not expecting 60%, but if we could add 22030% of them convert to long term subscribers right. We will get to be building back that base strongly right. We'll get the building back that guaranteed revenues and then our advertising is really going to start to take off and hopefully explodes into going into the.
Speaker Change: Second third fourth quarter of this year.
Speaker Change: Okay.
Speaker Change: Not what I was kind of getting out with the question is might sound a little surprising is why isn't the gross margin actually is lower because arent you paying the record labels for the music listeners listening to not really getting revenue for it.
Speaker Change: How long is cost recorded where and why isn't actually more out of whack.
Speaker Change: I mean <unk>.
Speaker Change: Asked me, you're not you're not even seeing that yet right that you started with 30 days into that.
Speaker Change: So yes. There is there is some element right everyday you add another AD supported until you drive those revenues, you're absolutely going to have some costs right. It's not a giant cost, but you can have some cost before that advertising comes in pays for it.
Speaker Change: But youre not really seeing that yet.
Speaker Change: Okay.
Speaker Change: You wouldn't expect to see that margin pressure in that interim period.
Speaker Change: I was bracing myself for actually a worse gross margin performance in <unk>.
Speaker Change: Locker, because you are paying out the record companies, but not getting the revenue yet for these new subscribers.
Speaker Change: Or you're just not putting very much to the record levels at this time.
Speaker Change: No it's not that I remember the AD supported the AD supported only launched 30 days ago.
Speaker Change: So you only have 30 days of it right. So in the quarter alright, yes, so you're not really you're not really getting that last quarter.
Speaker Change: Okay.
Speaker Change: Last question is how close are we to seeing revenue from sources other than slack around podcast.
Speaker Change: You've talked a lot about that and I know you made a lot of progress. So press releases for you, but how closer we would that be needle moving.
Speaker Change: I don't know about needle moving but exciting right publishing our publishing business grew another 100% or so right. We just got a number one song, which says or that will be a big payday for us.
Speaker Change: You don't have to get the giant revenues have huge value right and publishing they sell for as you know.
Speaker Change: Better than anybody else you guys can you guys.
Speaker Change: One, Florida Renaissance right. These are these are.
Speaker Change: 12 to 25 times EBITDA numbers.
Speaker Change: See really exciting stuff happening with our publishing business is split mining drama Fi our products business. We just launched that coffee coffee is a couple of days ago, we sold out in the first day.
Speaker Change: I would say this is our year to have some transformative moves do I think it's going to be dynamic. So you could take our revenues.
Speaker Change: Is it going to take it up $10 million $20 million no, but is it going to be on a trajectory right. When you have those kind of abilities over the next two to three years absolutely.
Speaker Change: Okay. Thank you and then and then then on our TV side, Yes, we didn't talk about this on the call, but we sold our second show we sold Varnum count to two a major streaming platform. So thats three that are sold now on those three that are sold and if you really hit those TV show.
Speaker Change: Just going back my career, either movie 300, Spiderwood chronic chronicles right and just the royalty fees on those with tens and tens of millions of dollars just pure profit with no risk right. We have no risk in these deals.
Speaker Change: It is TV shows are going to be extraordinary.
Speaker Change: Bottom line increases for us.
Speaker Change: I can't wait to see volume.
Speaker Change: Okay very good.
Speaker Change: Alright, Thanks, Amit.
Speaker Change: Two.
Speaker Change: Yes.
Speaker Change: And as a reminder, it is star one if you would like to ask a question.
And with no further questions at this time I will turn the call back to Mr. Robert Allen for closing remarks.
Speaker Change: So thank you everyone and thank you for joining again.
Speaker Change: This is a transformative time for the company.
Speaker Change: Complicated time, but exciting time.
Speaker Change: As I've said, probably a few times on this call I mean I never in my Wildest Dreams, Aaron never in his wildest dreams no one in our management team all of our Slacker radio guys have been doing this for the better part some of them been here as much as two decades I made at the company and have seen some amazing <unk> partnerships, but nobody's ever seen a 40% conversion.
Speaker Change: This is a telltale sign of how much our product is like right. There is a reason that we've been award winning we're going to struggle a little bit we're going to fight through this we survive COVID-19 loss all of our live business came out bigger and stronger than ever we're going to do the same thing here and I can confidently tell you that if you're looking at 12 months. This is the first time the company has had.
Speaker Change: Opportunity to be a multibillion dollar company over the next two to three years and these <unk> deals we have seven of them in the pipeline.
Speaker Change: We're landing them, they're starting to come in we've announced five of them so far.
Speaker Change: You keep <unk> deals.
Speaker Change: Every one of my companies from digital turbine to Majesco two terrific every one of them was built on the backs of <unk> deals and I'd say this totally humbly.
Speaker Change: Never had a stock didn't go to $25 or better a few have gone to a $100 or better.
Speaker Change: We never know when they really take off when lightning strikes, but this is a different market out there.
Speaker Change: Different world out there and we got a lot of work to do but I can tell you confidently. This is the first time that I see.
Speaker Change: A multibillion dollar company over the next 24 to 36 months, if we stay focused we keep executing we fight through the difficult times and I just want to thank everyone for joining and thanks for staying with US and we'll continue to fight here and Youll see us in the market buying back stock very shortly thank.
Speaker Change: Thank you.
Speaker Change: And ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.
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