Q1 2025 Gaia Inc Earnings Call
Speaker Change: [music].
Good afternoon, welcome to Guy as first quarter 'twenty to 'twenty five earnings conference call. At this time, all participants are in a listen only mode.
Operator: Welcome to Gaia's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.
Operator: Joining us today from Gaia are Jirka Rysavy, Executive Chairman, James Colquhoun, CEO, and Ned Preston, CFO. After the speaker's presentation, there will be a question and answer session.
Speaker Change: Joining us today from Guy here are your Corpus Bobby Executive Chairman James Calhoun C.
Speaker Change: C E O and that Preston CFO.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Operator: Before we begin, Gaia's management team would like to remind everyone. that management's prepared remarks contain forward-looking statements. and management may make additional forward-looking statements in response to your questions, including not limited to statements. of Expectations. future events or future financial performance. These statements do not guarantee future performance. and therefore undue reliance should not be placed upon them. Although we believe these expectations are reasonable, Gaia management undertakes no obligation. to revise any statements to reflect changes that occur after this call. Actual events or results can differ materially.
Speaker Change: Before we begin guy his management team, we'd like to remind everyone.
Speaker Change: That managements prepared remarks contain forward looking statements.
Speaker Change: And management May make additional forward looking statements in response to.
Speaker Change: So your questions, including not limited to statements.
I've expectations.
Speaker Change: Future events or future financial performance.
Speaker Change: These statements do not guarantee future performance.
Speaker Change: And therefore undue reliance should not be placed upon them.
Speaker Change: Although we believe these expectations are reasonable guy and management undertakes no obligation.
Speaker Change: To revise any statements to reflect changes that occur after this call.
Speaker Change: Actual events or results can differ materially.
Operator: These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Gaia's latest annual report on Form 10-K filed with the SEC. All non-GAAP financial measures referenced in today's call are reconciled on the company's earnings press release to the most directly comparable GAAP measure.
Speaker Change: These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the risk factors section of Guy. His latest annual report on Form 10-K filed with the SEC.
Speaker Change: All non-GAAP financial measures referenced in today's call are reconciled on the Companys earnings press release to the most directly comparable GAAP measure.
Operator: This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, May 12, 2025.
Speaker Change: This call also contains time sensitive information that is accurate only as of the time and date of this broadcast may 12 to 2025.
Operator: Finally, I would like to remind everyone that this conference call is being a webcast and a recording will be made available for replay on Gaia's Investor Relations website at ir.gai.com.
Speaker Change: Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay on guy as Investor Relations website at IR Dot G. AI Dot Com I will now turn the call over to Guy. He is executive Chairman Jirga, Bobby. Thank you go ahead.
Operator: I will now turn the call over to Gaia's Executive Chairman, Jirka Rysavy. Thank you. Go ahead.
Jirka Rysavy: Good afternoon, everyone. During the first quarter, we continued to deliver on positive free cash flow and double-digit growth. The revenue increased 12% and gross profit 15%. Gross margin improved to 87.8%, up from 85.4%. and The Year Ago Quarter. For the remainder of the year, we expect the gross margin to be in a range of 86 to 87%. Earnings were in line with expectation. Our member growth, member count grew to 867,000. and we are now focusing on high lifetime value members. Our annualized gross profit per employee increased to over 800,000, up from 680,000 a year ago.
Speaker Change: Good afternoon, everyone.
Speaker Change: During the first quarter, we continued to deliver positive free cash flow and double digit gross revenue increased 12% and gross profit 15% grew.
Speaker Change: Gross margin improved to 87, 8% up from $85 four.
Speaker Change: For the year ago quarter.
Speaker Change: For the remainder of the year, we expect gross margin to be in a range of 86% to 87%.
Speaker Change: Earnings were in line with expectation.
Speaker Change: I will remember gross member count grew to 867000.
Speaker Change: And we are now focusing on our high lifetime value members.
Speaker Change: Our annual annualized gross profit per employee increased to over 800000 up from 680000 a year ago.
James Colquhoun: And with that, I'll turn the call over to James. Thank you, Jirka. And good afternoon, everyone. Q1 was a solid start to the year. We saw continued momentum from 2024 carry forward with double-digit revenue growth and significant margin expansion. We're also seeing very strong progress in the strategic pillars we outlined during our capital raise in February. Following the $8 million offering, we've accelerated development of our generative AI product and the Gaia Community Platform. On the AI side, we're on track to launch Gaia's Conscious AI Companion on or before our next scheduled price increase in early 2026.
James Calhoun: And I wish that I will turn the call over to James Thank you Erica and good afternoon, everyone.
James Calhoun: Q1 was a solid start to the year. We saw continued momentum from 2024 carry forward with double digit revenue growth and significant margin expansion.
James Calhoun: We're also seeing very strong progress in the strategic pillars, we outlined during our capital raise in February following the $8 million offering we've accelerated development of that generally the AI product and the Guy had community platform.
James Calhoun: On the AI side, we're on track to launch Guy is conscious AI companion on or before our next scheduled price increase in early 2026.
James Colquhoun: Early internal testing has been exceptional, and a recent research from Harvard shows that discovering one's purpose is now the third most common use case for generative AI, and it's exactly the niche that Gaia is built to serve, and we believe the product market fit here could be profound. As we look to the future, Gaia is fully embracing an AI-first strategy, joining a growing number of companies like Duolingo, Google Matter, and Canva, that are re-architecting their businesses around generative AI. These companies are demonstrating how AI can streamline operations, reduce costs, and significantly boost productivity across functions.
James Calhoun: Internal testing has been exceptional and our recent research from Harvard shows that discovering one purpose is now the third most common use case for generative AI and it's exactly the niche that guy is built to serve and we believe the product market fit here could be profound.
James Calhoun: As we look to the future Guy is fully embracing an AI first strategy, joining a growing number of companies like Google.
James Calhoun: Google matter in Canada that are re architect their businesses around generally they I.
James Calhoun: These companies are demonstrating how AI can streamline operations reduce costs and significantly boost productivity across functions and for Gaia. This shift is not just about enhancing the user experience that this remains a key priority.
James Colquhoun: And for Gaia, this shift is not just about enhancing the user experience, that this remains a key priority. It's also about building a leaner, more agile organization that can scale intelligently. By integrating AI into our content management, localization, and member engagement workflows, we expect to increase speed to market, reduce manual overhead, and optimize how our teams operate. These efficiencies will allow us to reallocate resources to our areas of highest impact, such as community building, experiential offerings, and our conscious content development, whilst also delivering greater value to shareholders and members alike. In the coming quarters, you'll see us focus on optimizing marketing using AI, personalized content discovery with recommendations, and enhanced member support using intelligent systems. These investments are designed not only to support long-term ARPU growth, but also to expand gross profit per employee, making Gaia a more resilient, scalable business as we continue our mission to serve the global conscious community.
James Calhoun: It's also about building a leaner more agile organization that can scale intelligently.
James Calhoun: By integrating AI into our content management localization and member engagement workplace, we expect to increase speed to market reduce manual overhead and optimize how our teams operate.
James Calhoun: These efficiencies will allow us to reallocate resources to areas of highest impact such as community building experiential offerings and a conscious content development costs.
James Calhoun: Whilst also delivering greater value to shareholders and members alike.
James Calhoun: In the coming quarters, you'll see us focus on optimizing marketing using AI personalized content discovery with recommendations and enhanced member support using intelligence systems.
James Calhoun: These investments are designed not only to support long term <unk> growth, but also to expand gross profit per employee, making guy are more resilient and scalable business as we continue our mission to serve the global conscious community.
James Colquhoun: On the community front, we've made meaningful progress in building our infrastructure and preparing for international meetups and chapter-based engagement. Community is the final differentiator for Gaia and will set us apart from every other streaming service in the market and build the network effect around our content ecosystem. During Q1, Gaia marketplace revenue was lower compared to our expectations, which led to us missing revenue by approximately 1%. However, this did not affect our earnings or free cash flow. This was primarily due to a U.S. Level 3 travel advisory for Egypt issued in October 2024, and intrepid travel have reported a 30% decline in bookings, and tourist travel overall is hovering around just 45% of pre-conflict levels.
James Calhoun: On the community front, we've made meaningful progress in building out infrastructure and preparing for international meet ups and chapter base engagement.
James Calhoun: Community is the final differentiator for Gaiam and will set us apart from every other streaming service in the market and build the network effect around our content ecosystem.
James Calhoun: During Q1 Guy in marketplace revenue was lower compared to expectations.
James Calhoun: Which led to us missing revenue by approximately 1%. However, this did not affect our earnings or free cash flow.
James Calhoun: This was primarily due to a U S level III travel advisory for Egypt issued in October 2024.
Speaker Change: Intrepid travel have reported a 30% decline in bookings and tourists travel overall is hovering around just 45% of pre conflict levels.
James Colquhoun: Because we were heavily weighted on Egypt trips in the first half of the year this impacted our performance in that business line. We've since pivoted. In Q2, we launched a Peru-based tour that is already sold out. We have additional inventory coming online later this year. And while Q2 may remain softer than we had originally anticipated, on the marketplace side, we expect to perform in line with expectations for marketplace revenue in the back half of the year. Despite this, the core business continues to grow meaningfully as we scale towards our next milestones. With strong member retention and expanding Gaia Plus base and continued top line growth, we are well positioned for the year ahead.
Speaker Change: Because we were heavily weighted on Egypt trips in the first half of the year. This impacted outperformance in that business line.
Speaker Change: Yes.
Speaker Change: We've since pivoted in Q2, we launched the Peru based toward that is already sold out we have additionally inventory coming online later this year and while Q2 may remain softer than we had originally anticipated on the marketplace side, we expect to perform in line with expectation for marketplace revenue in the back half of the year.
Speaker Change: Despite this the core business continues to grow meaningfully as we scale towards our next milestones with strong member retention and expanding Guy plus base and continued topline growth we are well positioned for the year ahead.
James Colquhoun: During our recent board discussions, we explored a number of high-impact growth accelerators across both Gaia and Igniton. These include deeper content and technology licensing opportunities and expanded strategic partnerships.
Speaker Change: During our recent board discussions.
Speaker Change: We explored a number of high impact growth accelerators across both gaiam and ignorance on.
Speaker Change: These include deeper content and technology licensing opportunities and expanded strategic partnerships.
James Colquhoun: After careful reflection, I've decided to take on this mandate full-time in the role of Chief Business Development Officer. In order to fully pursue these growth opportunities, I'll be transitioning the CEO role to our President Kirsten Medvedich, effective at the end of Q2, and she will be on the next earnings call. Kirsten has been with Gaia for nine years, has an esteemed background in content with Sony Television, and has been instrumental in scaling operations and delivering consistent performance across the business. I have complete confidence in her ability to lead Gaia through its next phase.
Speaker Change: After careful reflection I've decided to take on this mandate fulltime and the role of Chief business Development Officer.
Speaker Change: In order to fully pursue these growth opportunities I'll be transitioning the CEO role to our president Kierston Medved itch effective at the end of Q2.
Speaker Change: And she will be on the next earnings call.
Justin: Justin has been with Gaiam for nine years has and his team's background and content with Sony television.
Justin: That has been instrumental in scaling operations and delivering consistent performance across the business I have complete confidence in her ability to lead <unk> through its next phase.
James Colquhoun: Additionally, given our audience is over 70% female, this leadership evolution is in alignment with our global growing community and mission. This change will allow me to dedicate my focus towards unlocking the next level of expansion across both businesses, and add the most meaningful value to the mission and organisation. I look forward to continuing to support the leadership team in my new capacity, and to helping realise the full potential of Gaia and Ignital.
Justin: Additionally, given our audience is over 70% female this leadership evolution is in alignment with our global growing community and mission.
Justin: This change will allow me to dedicate my focus towards unlocking the next level of expansion across both businesses and at the most meaningful value to the mission and organization.
Justin: I look forward to continuing to support the leadership team in my new capacity and to helping them realize the full potential of guy and aigner tongue.
Ned Preston: Now, I'll pass over to Ned for the financials. Thank you, James. For Q1 2025, Gaia delivered revenue of $23.8 million, up $2.5 million, or 12% year-over-year. Gross profit increased 15% to $20.9 million, up from $18.2 million in Q1 of 2024. And our gross margin expanded to 87.8%, up from 85.4%. EPS improved 1 cent from Q1 last year to a net loss of negative 4 cents per share. Operating cash flow for the quarter was $1.3 million and free cash flow was $0.7 million. Our cash balance at quarter end was $13.1 million and our $10 million credit line remains fully available.
Ned: Now I'll pass over to Ned for the financials.
Ned: Thank you James for Q1, 2025, Guy had delivered revenue of $23 8 million up $2 5 million or 12% year over year.
Ned: Gross profit increased 15% to $20 9 million.
Ned: Up from $18 2 million in Q1 of 2024, and our gross margin expanded to 87, 8% up from 85, 4%.
Ned: EPS improved one cent from Q1 last year to a net loss of negative four cents per share.
Ned: Operating cash flow for the quarter was $1 3 million and free cash flow was <unk> $7 million.
Ned: Our cash balance at quarter end was $13 1 million and our 10 million credit line remains fully available and.
Ned Preston: In February, we also closed an underwritten offering of $8 million of common stock, raising approximately $7.0 million in net proceeds, which are now being allocated to AI development and Gaia community initiatives. We continue to manage costs carefully and maintain healthy margins while investing in the strategic areas that will create long-term value for our shareholders.
Ned: In February we also closed an underwritten offering of $8 million of common stock raising approximately 7.1 million in net proceeds which are now being allocated to AI development and Gaia community initiatives.
Ned: We continue to manage costs carefully and maintained healthy margins, while investing in the strategic areas that will create long term value for our shareholders with that well open the call for questions.
Operator: With that, we'll open the call for questions. At this time, we'll open the line for questions from the company's publishing analysts. The company requests that each participant limit their comments to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star key.
Ned: At this time well open the line for questions from the company's publishing analysts the company requests that each participant limit their comments to one question and one follow up if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two.
Ned: You remove yourself from the queue for participants using speaker equipment, it may be necessary to pick up your handset before pressing the sarkies.
Mark Argento: First question, Mark Argento with Lake Street, please go ahead. Hey Mark, are you out there?
Speaker Change: First question Mark Argento with Lake Street. Please go ahead.
Speaker Change: Hey, Marc are you out there.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Hey, Marc Henri.
James Sidoti: Let's go to James Sidoti with Sidoti and Company. Yes, hello, this is Alex on for James. Thanks for taking questions. Great. Thanks, Alex. Yeah, of course.
Speaker Change: Let's go to James Sidoti with Sidoti <unk> Company.
Speaker Change: Yes, Hello. This is Alex on for James Thanks for taking questions.
Speaker Change: Great. Thanks, Alex.
Speaker Change: Yes of course.
James Sidoti: First question, maybe we could just get a quick update on Igniton. So is the launch, you know, that kind of still tracking as expected?
Speaker Change: First question, maybe we could just get a quick update on ignorant on so is the launch of that kind of still tracking as expected.
James Colquhoun: I am going to introduce the brand in biohacking conference at the end of this month. and it would start to be available but we would launch it on you know to the market on after July Okay, great, thank you.
Speaker Change: Are we going to introduce the brand in about hiking conference in end of this month.
Speaker Change: And it would start to be available, but we would launch it on you know to do market on after July 4th.
Speaker Change: Okay, great. Thank you and then maybe just on the CEO transition.
James Colquhoun: And then maybe just on the CEO transition, did I hear right, you know, a transition at the end of Q2? Yes, that's correct. So end of Q2, Kirsten Medvedich will step into the CEO role. And as I mentioned, I'll be focusing on some of these high level licensing opportunities, which I think have enormous potential to expand Gaia's not only revenue, but also perception in the market.
Speaker Change: Right.
Speaker Change: In addition at the end of Q2.
Speaker Change: Yes, that's correct. So end of Q2, Kirsten methods will step into the CEO role and as I mentioned I'll be focusing on some of these high level licensing opportunities, which I think have enormous potential to expand guy is not only revenue, but also a perception in the market.
Jirka Rysavy: Okay, and so Jirka, you know, kind of still staying in a chairman role and any other changes kind of anticipated to the management and the board there? No, no, no board staying same as pretty much as is. Same is the management team. So it was just, you know, change we talked about for a while, it's something like, you know, have expand the kind of coverage what we do.
Speaker Change: Okay, and so jerky kind of still staying in a chairman role in and any other changes kind of anticipated to Madison and the board there.
Speaker Change: No no no board staying same as pretty much as is.
Speaker Change: Same is the management team.
Speaker Change: So it was just the change we talked about for a while it something like.
Speaker Change: You now have.
Speaker Change: Expend the kind of coverage where do we do.
Speaker Change: Hi.
Speaker Change: Yeah.
James Sidoti: Great, yeah, I appreciate the context and, you know, I'll jump back in queue. Thank you. Thanks, Alex.
Speaker Change: Great Yeah, and I appreciate the context and I'll jump back in queue. Thank you.
Speaker Change: Thanks, Alex.
Mark Argento: Next question, Mark Argento with Lake Street, please go ahead. Yeah, hey, sorry about that, guys. My apologies.
Mark Argento: Next question Mark Argento with Lake Street. Please go ahead.
Mark Argento: Yeah, Hey, sorry about that my apologies.
Mark Argento: I just wanted to drill down a little bit on AI. James, you kind of mentioned, you know, AI being a game changer potentially for you guys. Can you talk a little bit more?
Mark Argento: I just wanted to drill down a little bit on AI.
Mark Argento: <unk>.
Mark Argento: No.
Mark Argento: The game changing potential for you guys.
James Colquhoun: Is it going to be an app that you guys are going to launch? Maybe talk a little bit more on how you see AI specifically kind of rolling out. Sure. Thanks, Mark. With regards to AI and our product, we're seeing it as an expansion of our current product line. So our members will be able to interact with a generative AI within our current product, whether that's on the web or within the app. And so if you're a user and you're watching content in the future, imagine that you'll not only be able to then interact with the community online, with the technology features we're building out, but additionally, with the AI, you'll be able to query some of the content deeper from the platform and have a conversational connection with this generative model that will be training on our dataset and using that to give our members another interaction point with the brand and to help them stick on the platform longer and have a deeper interaction with our product.
Speaker Change: Talk a little bit more is it going to be an app that you guys are going to be launching or maybe talk a little bit more on how you see AI specifically.
Mark Argento: Awesome.
Mark Argento: Sure. Thanks, Mark with regards to AI and AR products, we're seeing it as an expansion of our counter product line. So our members will be able to interact with a generative AI within our current product whether that's on the web or within the App.
Mark Argento: And so if you're a user and you're watching content in.
Mark Argento: In the future imagine that you will not only be able to then interact with the community online with the technology features we're building out, but additionally, with the AI, you'll be able to query some of the content deeper from the.
Mark Argento: Platform and have a conversational.
Mark Argento: In connection with this generative model that will be training on our dataset and using that to give a man. There's another interaction point with the brand and to help them stay on the platform longer and have a deeper interaction with that product.
James Colquhoun: Great. And have you guys been using any or striking any deals with any of the large hyperscalers to use any of your content at this point? Not at this stage, Mark. I mean, it's something that, you know, we're talking about content licensing, we're talking about technology licensing for the Gaia and Igniton businesses. And, you know, as these discussions have evolved, it's something that I have a personal interest in exploring, and I think it could have a meaningful impact on the business. I think when we talk about content and technology licensing, there's a broad array of opportunities for us there.
Speaker Change: Great and have you guys been using on your.
Speaker Change: Striking any deals with any of the large hyper scaler.
Speaker Change: Is there any of your content at this point.
Mark Argento: No not at this stage Mark I mean, it's something that.
Mark Argento: We're talking about content licensing, we're talking about technology licensing for the Guy and ignorance on businesses and you know as these discussions have evolved it's something that I have a personal interest in exploring and I think it could have a meaningful impact on the business.
Mark Argento: I think when we talk about content and technology licensing is a broad array of opportunities for us there. So I wouldn't target on one in particular, but this is something I'll be getting thinking my teeth into and looking to create a meaningful impact on the business not only in terms of revenue, but also in terms of our market cap and our attention in the marketplace.
James Colquhoun: I wouldn't target on one in particular, but this is something I'll be getting, sinking my teeth into, and looking to create a meaningful impact on the business, not only in terms of revenue, but also in terms of market cap and our attention in the marketplace.
Mark Argento: This last one for me, the community, it sounds like, again, that's an area of, you know, continued focus. Okay, where are you, you know, in terms of the platform today, in terms of, you know, new either content or programs or, and then, you know, where are you spending money?
Speaker Change: Got it and just a last one for me.
Munity it sounds like you did in that scenario.
Speaker Change: You know continued focus.
Speaker Change: Where are you now in terms of the platform today in terms of you know do either Todd Center programs are and then where are you spending money or what are you doing from a development perspective in terms of getting to where you want it to be.
James Colquhoun: What are you doing from a development perspective in terms of getting community to where you want it to be? Yeah, so we've obviously been starting on the development side in terms of securing technology partners, building out the team here internally in order to be able to execute on this. We anticipate having an alpha to test in the latter part of this year or even sooner, and aiming to launch it once we do a beta as soon as possible. As I'd mentioned previously in my earnings transcript here at the top of the call, that this is the key differentiator we have as a brand, and it's something that we're all hands on deck in terms of not only the technology build-out, but also how do we introduce this to the market and to our community.
Speaker Change: Yes. So we've we've obviously been starting on the development side in terms of securing technology partners are building out a team here internally in order to be able to execute on this.
Speaker Change: We anticipate having an alpha test you know are in the.
Speaker Change: In the latter part of this year or even sooner.
Speaker Change: And Amy to launch it once we do of betas as soon as possible.
Speaker Change:
Speaker Change: As I've mentioned previously in my earnings transcript here at the top of the call that this is the key differentiator, we have as a brand and it's something that we're you know we're all hands on deck in terms of.
Speaker Change: Not only the technology build out but also how do we introduced this to the market and to our community.
James Colquhoun: I expect that the current plan is to launch it end of the first quarter next year, but you know, it's plus minus few months.
Speaker Change: Yeah I expect the current plan is to launch at the end of the first quarter next year, but you know, it's plus or minus a few months.
James Colquhoun: And then last one, James, are you going to spend any time with investors still or how are you going to split your time now in your new role? So, as a shareholder myself, as you've probably seen from the filings, Mark, I'm in the same boat as many of our investors, and I want to see that the company continues to evolve not only in terms of execution on mission, but also in terms of scaling our market cap and our sort of... Visibility is a public company so I'll be supporting Kirsten and Ned as much as possible and looking forward to staying in touch with all of our investors and hopefully seeing you at your conference as well later this year.
Speaker Change: And then last one James are you are you going to spend any time with investors still or how are you going to split your time now in your new role.
<unk>.
Speaker Change: So I as a shareholder myself as you've probably seen from the filings Marc you know I I'm in the same boat as many of our investors and I want to see that the company continues to evolve not only in terms of execution of our mission, but also in terms of.
Speaker Change: Scaling out our market cap it out at all sort of.
Speaker Change: Visibility is a public company, so I'll be a supporting Kirsten.
Speaker Change: And that as much as possible and I'm looking forward to staying in touch with all of our investors and hopefully seeing you at your conference as well later this year.
Speaker Change: Yeah.
Mark Argento: Great, appreciate it. I'll hop back in the queue.
Speaker Change: Great I appreciate it I'll hop back in the queue.
Operator: Once again, if you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: Once again, if he would like to ask a question. Please press star one on your telephone keypad.
George Kelly: Next question comes from George Kelly with Roth Capital Partners, please proceed. Hey everybody, thanks for taking my questions. Hi George. First... First, I was wondering if you could expand on something I think I heard in your prepared remarks. Just commentary around 2Q maybe being a little bit softer than you had hoped. Did I hear that right? And is it Marketplace or is there some other dynamic that has impacted your Q2 results? So, hi George. Yeah, that's correct. So when I was talking, as I mentioned in my prepared remarks, you know, Marketplace was a little softer in Q1 and that caused us, you know, it was about a 1% approximate.
Speaker Change: Next question comes from George Kelly with Roth Capital Partners. Please proceed.
George Kelly: Hey, everybody thanks for taking my questions.
Speaker Change: Hi, George first.
Speaker Change: Hey that.
Speaker Change: First I was wondering if you could expand on something I think I heard in your prepared remarks.
Speaker Change: Just commentary around <unk>, maybe being a little bit softer.
Speaker Change: And you had hoped did I hear that right and is it marketplace or is there some other dynamic.
Speaker Change: That has impacted your Q2 results.
George Kelly: So hi, George.
George Kelly: That's correct. So when I was talking as I mentioned in my prepared my remarks, you know marketplace was a little softer in Q1 and that cost us about a 1% approximate we anticipate something similar in Q2 for marketplace and.
James Colquhoun: You know, we anticipate, you know, something similar in Q2 from Marketplace and because of the way that we had extra inventory for Egypt at the first half of this year. But like I mentioned, we pivoted to adding more Peru inventory at the latter half of this year and we're holding on our sort of internal numbers for Marketplace for Q3 and Q4. This is a new business unit that we really only launched in August last year, as I know that you're aware. So, you know, predicting seasonality differences and obviously this was more of a conflict, regional conflict issue, caused some variance there.
George Kelly: Because of the way that we had extra inventory for Egypt at the first half of this year.
George Kelly: But like I mentioned, we pivoted to adding more Peru inventory at the latter half of this year and we're holding on our sort of internal numbers for marketplace for Q3 and Q4.
George Kelly: This is a new business unit that we really only launched in August last year and as I.
George Kelly: I know that you are aware predicting seasonality differences and obviously this was more of a conflict regional conflict issue caused some variance there, but like I mentioned, it's a very small topline variance and there'll be no impact.
James Colquhoun: But like I mentioned, it's a very top line variance and there will be no impact for Q1 in terms of EPS and free cash flow. Okay, so there's no kind of broadening. Your commentary on Q2 is really just about Marketplace. That's correct. The core business continues to perform in line with expectations and it's just marketplace variants for Q1 and Q2 of this year. Okay, understood.
George Kelly: For Q1 in terms of.
George Kelly: EPS and free cash flow.
George Kelly: Okay, So theres no kind of broadening.
George Kelly: Your commentary around Q2 is really just about marketplace.
George Kelly: That's correct. The core business continues to perform in line with expectations and it is just market place variance for Q1 and Q2 of this year.
George Kelly: And then, James, another question on the transition. I guess I'm curious that this licensing opportunity and then it sounds like maybe you're considering a different approach to the hyperscaler license opportunity. I guess, where do you see the most opportunity around licensing and will a lot of your time now be focused on IGNATAN as well?
Speaker Change: Okay understood and then James another question on the transition.
Speaker Change: I guess I'm curious that this licensing opportunity in and then it sounds like maybe you're considering a different approach to the hyperscale or license opportunity.
Speaker Change: I guess, where do you see the most opportunity around licensing and and well a lot of your time now be focused on seeing the time as well.
James Colquhoun: Yeah, George, how we look at it is that, you know, in particular after this previous board meeting, there was a lot of discussions around licensing opportunities on the media side for Gaia and then on the technology side for Igniton. I think one thing we've been clear on with regards to Igniton is that although we have, you know, supplements as our first product line, this is first and foremost a quantum technology company. And by having some focus on licensing that technology will help to, you know, expand the aperture of that business's potential. And so that's something that I'm very interested in being involved with.
Speaker Change: Yeah, George how we look at it is that you know in particular after this previous board meeting there was a lot of discussions around licensing opportunities on the media side for Guy and then on the technology side for Ignatz on I think one thing we've been clear on with regards to ignore telling is that.
Speaker Change: Although we have supplemented that first product line. This is first and foremost our quantum technology company.
Speaker Change: And by having some focus on licensing that technology.
Speaker Change: Will help to expand the aperture of that businesses potential and so that's something that I'm very interested in being involved with.
James Colquhoun: On the media side in terms of Gaia, there are some opportunities like you mentioned that have been discussed and there's also alternate media licensing opportunities that we're exploring. You know, these require a reasonably dedicated approach and it's something that I have a deep interest in and I think could have an enormous value to the organization. And given Kirsten's proximity to my role and capacity to be able to support the organization by taking that in a short-term basis at the end of Q2, it gives me the... the freedom to be able to focus fully on these opportunities and bring them to fruition.
Speaker Change: On the media side in terms of Gaia, they're awesome opportunities like you mentioned that are that have been discussed and Theres also alternate media licensing opportunities that we're exploring these require a reasonably dedicated approach and it's something that I have a deep interest in it I think could have an enormous value to the organization.
Speaker Change: Given kierston proximity to my role and our capacity to be able to to support the organization by taking that and in a in a short term basis at the end of Q2. It gives it gives me the.
Speaker Change: They're just the freedom to be able to focus fully on these opportunities and bring them to fruition.
George Kelly: Okay, okay, that's helpful.
Speaker Change: Okay. Okay. That's helpful. And then maybe just one more quick one.
George Kelly: And then maybe just one more quick one. The business that you discontinued in the quarter, can you remind me just on the accounting treatment, is that revenue excluded for the whole quarter? And then the second part of the question is, how much revenue did that business contribute to 4G?
Speaker Change: The business that you discontinued in the quarter.
Speaker Change: What is that can you remind me just on the accounting treatment is that X is that revenue excluded for the whole quarter and then the second part of the question is how much revenue did that business contribute to <unk>.
Ned Preston: Yeah, hey, George, it's Ned. So that represented $1.2 million of revenue last year, and that has been removed. You'll see on our 10-Q a line, discontinued business from here. And so I can help you get to the apples to apples, but it was 1.2 from last year. And you'll see a line in our 10-Q that outlines that removal here in understood.
Speaker Change: Yeah, Hey, George it's Ned.
Speaker Change: That represented $1 $2 million of revenue last year and that has been removed you'll see on our 10-Q alliance discontinued business.
Speaker Change: From here and so I can help you get to the apples to apples, but it was one two from last year and you'll see a line in our 10-Q that outlines that removes here in Q1.
George Kelly: Okay, thank you. Thanks, George.
Speaker Change: Understood. Okay. Thank you you.
George Kelly: You bet. Thanks George.
Operator: At this time, this concludes our question and answer session.
Speaker Change: At this time. This concludes our question and answer session I'd now like to turn the call back over to Mr. Rysavy for his closing remarks.
Jirka Rysavy: I'd now like to turn the call back over to Mr. Jirka Rysavy for his closing remarks. Well, thank you everyone for joining. And we look forward to speaking with you and we'll record our second Q&A in early August. Thank you.
Speaker Change: Well. Thank you everyone for joining and we look forward to speaking with you and we will report I was speaking to you in early August.
Speaker Change: Thank you.
Operator: Thank you for joining us today for Gaia's First Quarter 2025 Earnings Conference Call.
Speaker Change: Thank you for joining us today for guys first quarter 2025 earnings Conference call. You May now disconnect your lines.
Operator: You may now disconnect your line.
Speaker Change: Yeah.
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