United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q GAIA, INC. (Exact name of registrant as specified in its charter) COLORADO 84-1113527 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the trans ...

Gaia Disclosure This presentation includes forward-looking statements that involve numerous assumptions, risks and uncertainties. These include, but are not limited to, general business conditions, historical losses, competition, changing consumer preferences, subscriber costs and retention rates, acquisitions, and other risks and uncertainties. Actual results may differ materially from those expressed in these forward-looking statements due to such risks and uncertainties, including those factors detailed ...

Financial Data and Key Metrics Changes - Revenue for Q1 2022 increased by 15% to $21.8 million from $18.9 million [5] - EBITDA improved to $4.1 million from $3.5 million [6] - Net income from continuing operations was $0.2 million or $0.01 per share, down from $0.4 million or $0.02 per share in the prior year [7][18] - Gross margins slightly declined to 86.7% from 87.1% due to additional content amortization from the Yoga International acquisition [8] Business Line Data and Key Metrics Changes - Member count increased to 823,000, with average revenue per user (ARPU) rising to $8.85 per month [5][12] - Gross profit per employee improved to over $590,000 from $530,000 year-over-year [6] - Total member acquisition costs were $8.6 million, representing 39% of revenues, compared to $7.6 million or 40% in the previous year [14] Market Data and Key Metrics Changes - The direct member base, which accounts for over 80% of revenues, showed improved retention dynamics despite increased digital advertising costs impacting gross adds [9] - There was a net contraction in March on channels available via Amazon Prime Video, attributed to increased Amazon Prime pricing affecting all premium channels [11] Company Strategy and Development Direction - The company aims to focus on increasing average revenue per member through premium offerings and scaling marketing efforts to Spanish, French, and German audiences [13] - Cost rationalization plans were implemented in mid-April to align expenses with revenues, with a focus on reducing costs and increasing operational efficiency [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving a $100 million revenue run rate while maintaining profitability [19] - The company is focused on integrating Yoga International and stabilizing its revenue, with slight growth observed since acquisition [57] Other Important Information - Cash balance as of March 31, 2022, was $8.4 million, reflecting a reduction in payables [19] - The company does not anticipate significant cash tax liabilities for several years due to net operating loss positions [41] Q&A Session Summary Question: Advertising spend in the quarter - Advertising spend was $8.6 million or 39% of revenues for the quarter [24] Question: Trends in ad rates - Ad rates have been volatile, with some days performing well and others not, leading to a focus on email conversion marketing to control customer acquisition costs [26] Question: Subscriber retention trends - Retention remains strong for members with six months or more tenure, while newer monthly members face higher churn rates [28] Question: Cash flow and EBITDA conversion - EBITDA is expected to closely track cash flow from operations, with content investment pegged at 18% to 20% of revenue [40][42] Question: Yoga acquisition update - The acquisition has stabilized losses and started to show slight revenue growth, with a focus on integrating back-office systems [58] Question: International market strategy - The company is producing original content in German and has acquired libraries in Spanish and French to support international growth [60][62] Question: Share repurchase strategy - The company prioritizes revenue growth over share buybacks at this time [68]

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides the unaudited interim financial information for GAIA, INC., including financial statements, management's discussion, market risk disclosures, and controls and procedures [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited interim condensed consolidated financial statements for GAIA, INC. for the three months ended March 31, 2022 and 2021, including balance sheets, statements of operations, changes in shareholders' equity, and cash flows, along with accompanying notes detailing accounting policies, revenue recognition, equity, goodwill, debt, leases, earnings per share, income taxes, and contingencies - The unaudited interim condensed consolidated financial statements are prepared in accordance with GAAP, with certain information condensed or omitted as per SEC rules, including normal recurring adjustments and are not necessarily indicative of future financial results[9](index=9&type=chunk) - No material changes in significant accounting policies were reported compared to the Annual Report on Form 10-K for the year ended December 31, 2021[23](index=23&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of GAIA, INC.'s financial position, detailing assets, liabilities, and shareholders' equity as of March 31, 2022, and December 31, 2021 | (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash | $8,398 | $10,269 | | Total current assets | $13,210 | $14,983 | | Total assets | $132,785 | $133,676 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Total current liabilities | $28,511 | $29,809 | | Total liabilities | $41,944 | $43,461 | | Total shareholders' equity | $90,841 | $90,215 | | Total liabilities and shareholders' equity | $132,785 | $133,676 | - Total assets decreased slightly from **$133.7 million** at December 31, 2021, to **$132.8 million** at March 31, 2022, primarily due to a decrease in cash[11](index=11&type=chunk) - Total liabilities decreased from **$43.5 million** to **$41.9 million**, while total shareholders' equity increased from **$90.2 million** to **$90.8 million**[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines GAIA, INC.'s financial performance, including revenues, expenses, and net income for the three months ended March 31, 2022 and 2021 | (in thousands, except per share data) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenues, net | $21,831 | $18,896 | | Cost of revenues | $2,905 | $2,438 | | Gross profit | $18,926 | $16,458 | | Total operating expenses | $18,619 | $16,034 | | Income from operations | $307 | $424 | | Net income | $86 | $358 | | Basic earnings per share | $0.00 | $0.02 | | Diluted earnings per share | $0.00 | $0.02 | - Net revenues increased by **15.5% to $21.8 million** in Q1 2022 from **$18.9 million** in Q1 2021[13](index=13&type=chunk) - Net income decreased significantly from **$358 thousand** in Q1 2021 to **$86 thousand** in Q1 2022, partly due to a loss from discontinued operations of **$161 thousand** in Q1 2022[13](index=13&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section details the changes in GAIA, INC.'s shareholders' equity, including net income and stock issuances, for the period ending March 31, 2022 | (in thousands, except shares) | Balance at January 1, 2022 | Issuance of Gaia, Inc. common stock for RSU releases and share-based compensation | Net income | Balance at March 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | $90,215 | $540 | $86 | $90,841 | | Accumulated Deficit | $(72,103) | — | $86 | $(72,017) | | Additional Paid-in Capital | $162,316 | $540 | — | $162,856 | | Common Stock Shares | 20,461,337 | 313,823 | — | 20,775,160 | - Total shareholders' equity increased from **$90.2 million** at January 1, 2022, to **$90.8 million** at March 31, 2022, driven by net income and issuance of common stock for RSU releases and share-based compensation[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents GAIA, INC.'s cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2022 and 2021 | (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,003 | $5,188 | | Net cash used in investing activities | $(5,828) | $(4,774) | | Net cash provided by (used in) financing activities | $(46) | $26 | | Net change in cash | $(1,871) | $440 | | Cash at end of period | $8,398 | $13,045 | - Net cash provided by operating activities decreased by **$1.2 million** to **$4.0 million** in Q1 2022 compared to **$5.2 million** in Q1 2021[17](index=17&type=chunk)[63](index=63&type=chunk) - Net cash used in investing activities increased by **$1.1 million** to **$5.8 million** in Q1 2022, primarily due to deferred purchase consideration for the Yoga International acquisition[17](index=17&type=chunk)[64](index=64&type=chunk) - Cash balance at the end of Q1 2022 was **$8.4 million**, a decrease from **$10.3 million** at the beginning of the period[17](index=17&type=chunk) [Notes to Interim Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20interim%20condensed%20consolidated%20financial%20statements) This section provides detailed explanations and disclosures regarding the accounting policies and specific financial statement line items for GAIA, INC. [1. Organization, Nature of Operations, and Principles of Consolidation](index=8&type=section&id=1.%20Organization,%20Nature%20of%20Operations,%20and%20Principles%20of%20Consolidation) This note describes GAIA, INC.'s business model, content offerings, and the impact of the Yoga International acquisition and discontinued operations - Gaia, Inc. operates a global digital video subscription service and online community with over **10,000 titles**, **80% of which are exclusive**, curated into four primary channels: Yoga, Transformation, Alternative Healing, and Seeking Truth[20](index=20&type=chunk)[21](index=21&type=chunk) - The company completed the acquisition of Yoga International, Inc. on December 22, 2021, expanding its online platform for yoga practice and education[24](index=24&type=chunk) - Yoga International's one-time transactional course sales business is being discontinued in 2022, with content integrated into a premium membership tier, and is presented as discontinued operations[26](index=26&type=chunk) [2. Revenue Recognition](index=8&type=section&id=2.%20Revenue%20Recognition) This note explains GAIA, INC.'s policy for recognizing revenue, primarily from subscription fees, and the treatment of deferred revenue - Revenues primarily consist of subscription fees, recognized ratably over the subscription term, with deferred revenue representing unearned subscription fees[27](index=27&type=chunk) [3. Equity and Share-Based Compensation](index=8&type=section&id=3.%20Equity%20and%20Share-Based%20Compensation) This note details GAIA, INC.'s share-based compensation expenses for the three months ended March 31, 2022 and 2021 | (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Share-based compensation expense | $540 | $613 | - Share-based compensation expense decreased from **$613 thousand** in Q1 2021 to **$540 thousand** in Q1 2022[28](index=28&type=chunk) [4. Goodwill and Other Intangible Assets](index=9&type=section&id=4.%20Goodwill%20and%20Other%20Intangible%20Assets) This note provides information on GAIA, INC.'s goodwill and amortizable and unamortized intangible assets, including amortization expense - Goodwill remained unchanged at **$28.87 million** from December 31, 2021, to March 31, 2022[29](index=29&type=chunk) Amortizable and Unamortized Intangible Assets | (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Amortizable Intangible Assets | | | | Customer relationships | $2,000 | $2,000 | | Tradenames | $270 | $270 | | Accumulated amortization | $(154) | $(12) | | Total Amortizable Intangible Assets | $2,116 | $2,258 | | Unamortized Intangible Assets (Domain names) | $563 | $563 | - Amortization expense for intangible assets was **$142 thousand** for the first three months of 2022, with no expense in the prior year period[30](index=30&type=chunk) [5. Debt](index=9&type=section&id=5.%20Debt) This note outlines GAIA, INC.'s mortgage debt, including interest rate, maturity, and future principal payments - The company has a mortgage of **$13 million**, bearing **3.75% interest**, maturing December 28, 2025, secured by its corporate campus[31](index=31&type=chunk) Maturities on Long-Term Debt | (in thousands) | Maturities on long-term debt, net | | :--- | :--- | | 2022 (remaining) | $108 | | 2023 | $150 | | 2024 | $156 | | 2025 | $5,801 | | Total | $6,215 | [6. Leases](index=10&type=section&id=6.%20Leases) This note details GAIA, INC.'s operating lease for its corporate campus, including lease terms, right-of-use assets, and lease liabilities - The company leases its corporate campus under a master lease extending through September 30, 2030, with two five-year extensions[33](index=33&type=chunk) Lease Assets and Liabilities | (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Right-of-use lease asset, net | $7,679 | $7,871 | | Operating lease liability (current) | $725 | $718 | | Long-term lease liability | $7,050 | $7,234 | | Total Operating lease liability | $7,775 | $7,952 | - Cash paid for operating lease liabilities was **$250 thousand** for both Q1 2022 and Q1 2021[34](index=34&type=chunk) [7. Earnings Per Share](index=11&type=section&id=7.%20Earnings%20Per%20Share) This note provides the calculation of basic and diluted earnings per share for GAIA, INC., including weighted-average shares outstanding Weighted-Average Shares Outstanding | (in thousands, except per share data) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Weighted-average common stock outstanding | 20,465 | 19,201 | | Common stock equivalents | 351 | 523 | | Weighted-average number of shares (Diluted) | 20,816 | 19,724 | - Employee stock options and RSUs totaling **228 thousand shares** in Q1 2022 (**30 thousand** in Q1 2021) were excluded from diluted EPS calculation as their inclusion would be anti-dilutive[37](index=37&type=chunk) [8. Income Taxes](index=11&type=section&id=8.%20Income%20Taxes) This note discusses GAIA, INC.'s income tax position, including valuation allowances on deferred tax assets and net operating loss carryforwards - The company has a full valuation allowance on its deferred tax assets due to historical operating losses and plans for revenue growth and content library investment[38](index=38&type=chunk) - As of March 31, 2022, net operating loss carryforwards were **$76.8 million** for federal and **$20.7 million** for state[38](index=38&type=chunk) [9. Contingencies](index=11&type=section&id=9.%20Contingencies) This note addresses management's assessment of potential losses from legal proceedings and their expected impact on GAIA, INC.'s financial statements - Management believes that any probable and estimable losses from legal proceedings would not have a material adverse effect on the company's financial condition, results of operations, or cash flows[39](index=39&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on GAIA's financial condition and operational results for the three months ended March 31, 2022, compared to the prior year. It covers an overview of the business, detailed results of operations, seasonality, liquidity, and capital resources, highlighting key drivers of revenue and expense changes, and the impact of the Yoga International acquisition - Gaia operates a global digital video subscription service with over **10,000 exclusive titles**, focusing on yoga, transformation, alternative healing, seeking truth, and conscious films[43](index=43&type=chunk)[45](index=45&type=chunk) - The acquisition of Yoga International in December 2021 enhanced Gaia's standalone yoga offering and is a key part of its strategy to grow its subscription business domestically and internationally[44](index=44&type=chunk)[46](index=46&type=chunk) - Net income from continuing operations decreased by **$0.2 million** in Q1 2022 compared to Q1 2021, primarily due to ongoing integration activities related to the Yoga International acquisition[49](index=49&type=chunk) [Overview and Outlook](index=12&type=section&id=Overview%20and%20Outlook) This section outlines GAIA, INC.'s strategic priorities, including content expansion, user experience enhancement, and challenges in online advertising effectiveness - Gaia's core strategy is to expand its unique and exclusive content library, enhance its user interface, extend streaming services to new devices, and build a conscious community[46](index=46&type=chunk) - The cost of online advertising efforts has increased since August 2020, exacerbated by privacy regulations in summer 2021, reducing the number of new members acquired per marketing spend[48](index=48&type=chunk) [Results of Operations](index=13&type=section&id=Results%20of%20Operations) This section analyzes GAIA, INC.'s financial performance, detailing changes in revenues, cost of revenues, gross profit, and operating expenses for the three months ended March 31, 2022 | (in thousands, except per share data) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $21,831 | $18,896 | $2,935 | 15.5% | | Cost of revenues | $2,905 | $2,438 | $467 | 19.2% | | Gross profit margin | 86.7% | 87.1% | -0.4% | -0.5% | | Selling and operating expenses | $16,785 | $14,538 | $2,247 | 15.5% | | Corporate, general and administration | $1,785 | $1,496 | $289 | 19.3% | | Acquisition costs | $49 | $0 | $49 | N/A | | Total operating expenses | $18,619 | $16,034 | $2,585 | 16.1% | | Income from operations | $307 | $424 | $(117) | -27.6% | | Net income | $86 | $358 | $(272) | -76.0% | - Revenue growth of **15.3%** was driven by an increase in both members and average monthly revenue per member[52](index=52&type=chunk) - Gross profit margin decreased slightly to **86.7%** from **87.1%** due to increased amortization of content library, including new native language content and content from the Yoga International acquisition[53](index=53&type=chunk)[54](index=54&type=chunk) - Selling and operating expenses increased by **15.9%** due to higher personnel-related and technology operating costs, and incremental expenses from the Yoga International acquisition, remaining flat at **76.9% of net revenues**[55](index=55&type=chunk) - Corporate, general and administration expenses increased by **20.0%** due to increased personnel costs and Yoga International acquisition expenses, rising to **8.2% of net revenues**[56](index=56&type=chunk) [Seasonality](index=14&type=section&id=Seasonality) This section discusses the historical and expected seasonal patterns in GAIA, INC.'s member growth and acquisition spending - Historically, member growth is strongest in Q4 and Q1 (October-February) and slowest in May-August, influencing member acquisition spending but not net revenue seasonality[57](index=57&type=chunk) - The COVID-19 pandemic shifted historical patterns, but as international expansion continues, more predictable regional seasonality trends are expected[57](index=57&type=chunk) [Liquidity and Capital Resources](index=14&type=section&id=Liquidity%20and%20Capital%20Resources) This section details GAIA, INC.'s capital requirements, funding sources, and management's assessment of its ability to meet short-term and long-term operational needs - Capital needs include working capital, capital expenditures for content acquisition and development, digital platform development, marketing, and potential business acquisitions[58](index=58&type=chunk) - Budgeted content and capital expenditures for the remainder of 2022 are **$10 million to $15 million**, to be funded by cash flows from operations, primarily for expanding content library and digital platforms[59](index=59&type=chunk) - The company generated **$4 million** in cash flows from operations during Q1 2022 and expects to continue generating positive cash flows[59](index=59&type=chunk) - Management believes current cash, expected operational cash flows, and potential capital raising capabilities will be sufficient for short-term and long-term operations[61](index=61&type=chunk) [Cash Flows](index=15&type=section&id=Cash%20Flows) This section analyzes GAIA, INC.'s cash flow activities, highlighting changes in operating and investing cash flows for the three months ended March 31, 2022 | (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities - continuing operations | $4,164 | $5,188 | | Net cash used in operating activities - discontinued operations | $(161) | — | | Net cash provided by operating activities | $4,003 | $5,188 | | Net cash used in investing activities | $(5,828) | $(4,774) | | Net cash provided by (used in) financing activities | $(46) | $26 | | Net change in cash | $(1,871) | $440 | - Cash flows from operations decreased by **$1.2 million** in Q1 2022, primarily due to timing of working capital changes, specifically accounts payable and deferred revenues[63](index=63&type=chunk) - Investing activities used **$1.1 million** more cash in Q1 2022, mainly due to deferred purchase consideration for the Yoga International acquisition[64](index=64&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=15&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, GAIA, INC. is not required to provide quantitative and qualitative disclosures about market risk - GAIA, INC. is a smaller reporting company and is not required to provide disclosures about market risk[65](index=65&type=chunk) [Item 4. Controls and Procedures](index=15&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of GAIA's disclosure controls and procedures as of March 31, 2022, concluding they were effective. No material changes in internal control over financial reporting occurred during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2022[66](index=66&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022[67](index=67&type=chunk) [PART II—OTHER INFORMATION](index=16&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section includes additional information not covered in the financial statements, such as legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits [Item 1. Legal Proceedings.](index=16&type=section&id=Item%201.%20Legal%20Proceedings.) GAIA, INC. reported no legal proceedings for the period - No legal proceedings were reported[70](index=70&type=chunk) [Item 1A. Risk Factors.](index=16&type=section&id=Item%201A.%20Risk%20Factors.) As a smaller reporting company, GAIA, INC. is not required to provide risk factor disclosures under this item - GAIA, INC. is a smaller reporting company and is not required to provide risk factor information[71](index=71&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=16&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) GAIA, INC. reported no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds were reported[72](index=72&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=16&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) GAIA, INC. reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[73](index=73&type=chunk) [Item 4. Mine Safety Disclosures.](index=16&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) Mine safety disclosures are not applicable to GAIA, INC.'s operations - Mine safety disclosures are not applicable[74](index=74&type=chunk) [Item 5. Other Information.](index=16&type=section&id=Item%205.%20Other%20Information.) GAIA, INC. reported no other information for the period - No other information was reported[75](index=75&type=chunk) [Item 6. Exhibits](index=17&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and various Inline XBRL documents - Exhibits include certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[77](index=77&type=chunk) [SIGNATURES](index=18&type=section&id=SIGNATURES) This section confirms the official signing of the report by GAIA, INC.'s Chief Executive Officer and Chief Financial Officer - The report was signed by Jirka Rysavy, Chief Executive Officer, and Paul Tarell, Chief Financial Officer, on May 2, 2022[80](index=80&type=chunk)

Gaia, Inc. (NASDAQ:GAIA) Q4 2021 Earnings Conference Call February 28, 2022 4:30 PM ET Company Representatives Jirka Rysavy - Chief Executive Officer Paul Tarell - Chief Financial Officer Conference Call Participants Mark Argento - Lake Street Eric Wold - B Riley Securities Steven Frankel - Colliers Operator Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia Incorporated, Financial Results for the Fourth Quarter and Full Year Ended December 31, 2021. Joinin ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) Gaia operates a global digital video subscription service with over 10,000 exclusive titles across four primary channels, focusing on in-house content and strategic acquisitions for growth - Gaia operates a global digital video subscription service with over **10,000 titles**, **80% of which are exclusive**, across four primary channels: Yoga, Transformation, Alternative Healing, and Seeking Truth[11](index=11&type=chunk)[12](index=12&type=chunk) - In December 2021, Gaia acquired Yoga International, adding over **4,000 hours of unique yoga content** and expanding its standalone yoga offering[13](index=13&type=chunk)[25](index=25&type=chunk) - Key competitive strengths include exclusive and proprietary content (**75% of viewership from in-house production**), worldwide distribution rights, and a unique member base, positioning Gaia as a complementary service to larger entertainment-driven streaming providers[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - Growth drivers include continuous investment in streaming content, service improvements, leveraging the overall adoption of internet TV, international market expansion (**37% of members are outside the U.S.**), and premium membership offerings like Events+ and GaiaSphere[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - Gaia operates in a single reporting segment, with revenues primarily derived from subscription fees, differentiating itself through exclusive niche content despite intense competition[40](index=40&type=chunk)[42](index=42&type=chunk) - Member growth historically shows seasonal variations, with the greatest growth in Q4 and Q1 (October-February) and slowest during May-August, though the global pandemic shifted this pattern in the past two years[43](index=43&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) Gaia faces significant risks including the ongoing COVID-19 impact, member attraction and retention challenges, intense competition, growth management, content liabilities, data security, and international operational complexities - The COVID-19 pandemic continues to pose risks, including volatility, uncertainty, economic disruption, and potential impacts on consumer demand, ability to pay, and employee operations[51](index=51&type=chunk)[53](index=53&type=chunk) - Failure to attract and retain members, intense competition in the streaming market, and the inability to manage growth (especially international expansion) could adversely affect the business and future profitability[54](index=54&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - Risks associated with content include potential liability for defamation, copyright infringement, misinformation, and unforeseen production costs; problematic content could also damage reputation and lead to partner refusal[66](index=66&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - Data loss, security breaches, and cyber-attacks on network or information systems (including those of third parties) could lead to service degradation, unauthorized data disclosure, theft of intellectual property, and significant financial and reputational harm[81](index=81&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - Reliance on third-party partners for content streaming, potential changes in network operator policies (e.g., usage-based pricing, internet neutrality), and evolving privacy laws and regulations pose operational and financial risks[75](index=75&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - Intellectual property risks include inadequate protection of trademarks and proprietary rights, potential infringement claims, and piracy of video content, which could diminish brand value and reduce revenues[93](index=93&type=chunk)[95](index=95&type=chunk)[98](index=98&type=chunk) - International operations face additional risks such as adapting content for cultural differences, managing foreign operations, compliance with U.S. and local laws, adverse tax consequences, currency exchange rate fluctuations, and differing payment systems[103](index=103&type=chunk) - Jirka Rysavy, the founder, chairman, and CEO, holds approximately **79% of voting stock**, giving him substantial control over shareholder-approved matters and preventing a change of control without his consent[108](index=108&type=chunk) [Unresolved Staff Comments](index=18&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments applicable to the registrant - Not Applicable[113](index=113&type=chunk) [Properties](index=18&type=section&id=Item%202.%20Properties) Gaia's principal properties include headquarters and production studios in Louisville, CO, and Honesdale, PA, with the Colorado campus partially owned and subject to a master lease Principal Physical Properties (as of December 31, 2021) | Location | Size (sq. ft.) | Use | Ownership Status | | :------------- | :------------- | :-------------- | :--------------------- | | Louisville, CO | 138,502 | Headquarters | Partially Owned/Leased | | Louisville, CO | 11,760 | Production Studio | Owned | | Honesdale, PA | 3,800 | Production Studio | Leased | - On September 9, 2020, Gaia's subsidiary sold a **50% undivided interest** in a portion of its Colorado campus, retaining **50% ownership** and full ownership of studio facilities, and subsequently leased the property under a master lease until September 30, 2030[116](index=116&type=chunk) - The Colorado facility is subject to a **$13.0 million mortgage** with Great Western Bank[116](index=116&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) Management believes current legal proceedings will not materially adversely affect Gaia's financial condition, results of operations, or cash flows - Management believes that current legal proceedings will not have a material adverse effect on financial condition, results of operations, or cash flows[117](index=117&type=chunk) [Mine Safety Disclosures](index=19&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Gaia, Inc - Not applicable[118](index=118&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=19&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Gaia's Class A common stock trades on NASDAQ, with no dividends paid in 2021 or 2020, and details provided on equity compensation plans - Gaia's Class A common stock is listed on the NASDAQ Global Market under the symbol "GAIA"[119](index=119&type=chunk) - As of February 22, 2022, there were **3,271 shareholders of record** for Class A common stock and one for Class B common stock[119](index=119&type=chunk) - No dividends were declared or paid during the twelve months ended December 31, 2021 and 2020[121](index=121&type=chunk) Equity Compensation Plan Information (as of December 31, 2021) | Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price, per share, of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | | :------------------------------------------- | :---------------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 1,227,838 | $8.18 | 1,543,985 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 1,227,838 | $8.18 | 1,543,985 | [Reserved](index=19&type=section&id=Item%206.%20Reserved) This item is reserved and not applicable - This item is reserved[124](index=124&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Gaia's financial performance, highlighting **$3.7 million net income** in 2021, **19.2% revenue growth**, improved operating efficiency, and **$20.9 million cash flow from operations**, alongside strategic content investments and COVID-19 impacts - Gaia operates a global digital video subscription service with over **10,000 exclusive titles**, focusing on yoga, transformation, alternative healing, and seeking truth, targeting an underserved member base[127](index=127&type=chunk)[129](index=129&type=chunk) - The core strategy is to grow domestically and internationally by expanding content, enhancing user interface, extending service to new devices, and building a conscious community[130](index=130&type=chunk) - The COVID-19 pandemic initially boosted demand but later led to increased online advertising costs and reduced new member acquisition efficiency in 2021[133](index=133&type=chunk) Consolidated Results of Operations (in thousands, except per share data) | Metric | 2021 | 2020 | | :----------------------------------- | :-------- | :-------- | | Revenues, net | $79,573 | $66,827 | | Cost of revenues | $10,526 | $8,651 | | Gross profit margin | 86.8% | 87.1% | | Selling and operating expenses | $60,577 | $56,937 | | Corporate, general and administration | $6,125 | $5,867 | | Acquisition costs | $360 | — | | Income (loss) from operations | $1,985 | $(4,628) | | Interest and other income (expense), net | $(265) | $5,327 | | Income before income taxes | $1,720 | $699 | | Provision for (benefit from) income taxes | $(2,011) | $180 | | Net income | $3,731 | $519 | | Basic EPS | $0.19 | $0.03 | | Diluted EPS | $0.19 | $0.03 | - Revenues increased by **$12.8 million (19.2%)** in 2021, primarily due to an increase in average members and higher average monthly revenue per member from the Events+ premium offering[136](index=136&type=chunk)[137](index=137&type=chunk) - Cost of revenues increased by **$1.8 million (20.7%)** in 2021, with a slight gross profit margin decline (**86.8% from 87.1%**) due to increased content amortization from original and native language content investments[138](index=138&type=chunk) - Selling and operating expenses increased by **$3.7 million (6.5%)** but decreased significantly as a percentage of revenues (**76.1% from 85.2%**) due to increased revenues and personnel costs for international growth[139](index=139&type=chunk) - Net income for 2021 was **$3.7 million**, compared to **$0.5 million** in 2020, benefiting from a partial valuation allowance release related to deferred tax liabilities from the Yoga International acquisition[59](index=59&type=chunk)[135](index=135&type=chunk)[142](index=142&type=chunk) - Cash flows from operations improved by **$9.2 million** in 2021, reaching **$20.9 million**, which funded **$17.3 million** in content library and technology platform investments[162](index=162&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - The company expects to continue generating positive cash flows from operations in 2022 and plans to invest approximately **20% of consolidated revenues** annually into its content library and technology platform[162](index=162&type=chunk)[163](index=163&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Gaia is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Gaia is not required to provide quantitative and qualitative disclosures about market risk[171](index=171&type=chunk) [Financial Statements and Supplementary Data](index=25&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Gaia's audited consolidated financial statements for 2021 and 2020, detailing **$3.7 million net income** in 2021, **$133.7 million total assets**, key accounting policies, and the impact of the Yoga International acquisition - The consolidated financial statements include the balance sheets, statements of operations, changes in shareholders' equity, and cash flows for the years ended December 31, 2021 and 2020[173](index=173&type=chunk) Consolidated Balance Sheets (in thousands) | ASSETS | 2021 | 2020 | | :----------------------------------- | :---------- | :---------- | | Current assets: | | | | Cash | $10,269 | $12,605 | | Accounts receivable | $2,728 | $2,024 | | Prepaid expenses and other current assets | $1,986 | $1,746 | | Total current assets | $14,983 | $16,375 | | Media library, software and equipment, net | $50,558 | $39,231 | | Right-of-use lease asset, net | $7,871 | $8,622 | | Real estate, investment and other assets, net | $31,394 | $28,500 | | Goodwill | $28,870 | $17,289 | | Total assets | $133,676 | $110,017 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Current liabilities: | | | | Accounts payable, accrued and other liabilities | $14,962 | $8,947 | | Deferred revenue | $14,847 | $12,376 | | Total current liabilities | $29,809 | $21,323 | | Long-term mortgage, net | $6,109 | $6,250 | | Long-term lease liability | $7,234 | $7,952 | | Deferred taxes | $309 | $257 | | Total liabilities | $43,461 | $35,782 | | Total shareholders' equity | $90,215 | $74,235 | | Total liabilities and shareholders' equity | $133,676 | $110,017 | Consolidated Statements of Operations (in thousands, except per share data) | Metric | 2021 | 2020 | | :----------------------------------- | :-------- | :-------- | | Revenues, net | $79,573 | $66,827 | | Cost of revenues | $10,526 | $8,651 | | Gross profit | $69,047 | $58,176 | | Total operating expenses | $67,062 | $62,804 | | Income (loss) from operations | $1,985 | $(4,628) | | Interest and other income (expense), net | $(265) | $5,327 | | Income before income taxes | $1,720 | $699 | | Provision for (benefit from) income taxes | $(2,011) | $180 | | Net income | $3,731 | $519 | | Basic EPS | $0.19 | $0.03 | | Diluted EPS | $0.19 | $0.03 | Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 2021 | 2020 | | :----------------------------------- | :---------- | :---------- | | Net cash provided by operating activities | $20,867 | $11,650 | | Net cash used in investing activities | $(23,858) | $(176) | | Net cash provided by (used in) financing activities | $655 | $(10,363) | | Net increase (decrease) in cash | $(2,336) | $1,111 | | Cash at beginning of year | $12,605 | $11,494 | | Cash at end of year | $10,269 | $12,605 | - The acquisition of Yoga International on December 22, 2021, for **$17.2 million** (cash and Class A common stock) expanded Gaia's content library by **4,000 hours** and added a standalone yoga subscription service, resulting in **$11.6 million in goodwill**[239](index=239&type=chunk)[240](index=240&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) Identifiable Intangible Assets Acquired from Yoga International (in thousands) | Asset Class | Total (in thousands) | Estimated Life (months) | | :------------------ | :------------------- | :---------------------- | | Customer relationships | $2,000 | 48 | | Content library | $6,970 | 90 | | Tradenames | $270 | 48 | | Total | $9,240 | | - Media library, software, and equipment increased to **$50.6 million** in 2021 from **$39.2 million** in 2020, with amortization expense of **$6.5 million** in 2021[238](index=238&type=chunk) - Goodwill increased to **$28.9 million** in 2021 from **$17.3 million** in 2020, primarily due to the Yoga International acquisition[254](index=254&type=chunk) - As of December 31, 2021, there was **$5.2 million** of unrecognized cost related to non-vested share-based compensation, expected to be recognized over a weighted-average period of **3.63 years**[276](index=276&type=chunk) - A valuation allowance of **$15.3 million** was established against deferred tax assets in 2021 due to cumulative losses over a three-year period[279](index=279&type=chunk) Geographical Revenue Data (in thousands) | Region | 2021 (in thousands) | 2020 (in thousands) | | :------------ | :------------------ | :------------------ | | United States | $44,283 | $40,687 | | International | $35,290 | $26,140 | | Total | $79,573 | $66,827 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=51&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - None[285](index=285&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that Gaia's disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with no material changes during the year - Management concluded that disclosure controls and procedures were effective as of December 31, 2021[286](index=286&type=chunk) - No material changes in internal control over financial reporting occurred during the year ended December 31, 2021[288](index=288&type=chunk) - Management assessed and concluded that internal control over financial reporting was effective as of December 31, 2021[290](index=290&type=chunk) [Other Information](index=51&type=section&id=Item%209B.%20Other%20Information) This item states that there is no other information to report - None[291](index=291&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=51&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Gaia, Inc - Not applicable[292](index=292&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=52&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance, including the Code of Ethics, is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement[294](index=294&type=chunk) - Gaia has adopted a Code of Ethics applicable to all employees, including executive officers, which is available on its corporate website[295](index=295&type=chunk) [Executive Compensation](index=52&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement - Information on executive compensation is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement[296](index=296&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=52&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of certain beneficial owners and management is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement, with equity compensation details in Part II, Item 5 - Information on security ownership and related stockholder matters is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement[297](index=297&type=chunk) - Equity compensation plan information is detailed in Part II, Item 5 of this report[298](index=298&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=52&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement[299](index=299&type=chunk) [Principal Accountant Fees and Services](index=52&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2022 Annual Meeting of Shareholders Proxy Statement[300](index=300&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=52&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and a comprehensive array of exhibits, including various agreements and corporate documents, many incorporated by reference - This item lists the consolidated financial statements and a comprehensive list of exhibits filed as part of the Form 10-K report[301](index=301&type=chunk) - Exhibits include the Merger Agreement for Yoga International acquisition, corporate articles and bylaws, stock certificates, descriptions of securities, long-term incentive plans, employee stock purchase plans, lease agreements, and loan agreements[302](index=302&type=chunk)[303](index=303&type=chunk) SIGNATURES [SIGNATURES](index=55&type=section&id=SIGNATURES) The report is duly signed by Gaia, Inc.'s Chief Executive Officer, Chief Financial Officer, and other directors as of February 28, 2022 - The report is signed by Jirka Rysavy (CEO and Director) and Paul Tarell (CFO) along with other directors, dated February 28, 2022[307](index=307&type=chunk)[308](index=308&type=chunk)

Financial Data and Key Metrics Changes - Revenues increased by 22% year-to-date, with Q3 revenues reaching $20.4 million and gross margin steady at 87.1% [5] - The company ended the quarter with 790,500 paying members, reflecting solid performance despite the pandemic's impact last year [5] - Total member acquisition costs were $7.8 million, representing 39% of revenues [5] - EBITDA improved to $4 million or 20% of revenues in Q3, up from $3.4 million or 19% in the same quarter last year [6] - Net income for Q3 was $0.6 million or $0.03 per share, compared to $0.2 million or $0.01 per share in the prior year [7] - Cash flow from operations increased to $5.1 million during the quarter, marking the eighth consecutive quarter of positive cash flows [7] Business Line Data and Key Metrics Changes - Selling and operating expenses, excluding marketing and member acquisition costs, were $7.7 million or 38% of revenues [6] - Corporate G&A expenses were $1.5 million, or 7% of revenues [6] - The company has improved total operating expenses to 84% of revenues year-to-date, down from 98% in the prior year [6] Market Data and Key Metrics Changes - The digital advertising market remains crowded and competitive, with elevated CPA levels compared to the initial COVID period but still favorable compared to historical trends [5] - Over 80% of monthly viewership is on original programming, indicating strong engagement with proprietary content [9] Company Strategy and Development Direction - The company is focused on reducing dependency on paid media for member growth, emphasizing the scaling of the ambassador program globally [5] - There is a strategic shift towards producing original content in-house, which is more economically favorable and allows for targeted content production [22] - The company is exploring opportunities in non-English languages, particularly French and German, to expand its market reach [22] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in member retention, with churn rates stable or moderately improved [19] - The company is optimistic about the upcoming holiday season, potentially benefiting from supply chain issues affecting physical goods [24] - There is a focus on promoting memberships as unique gift ideas, leveraging the ambassador program for referrals [25] Other Important Information - The company has increased its content investment while also raising its cash balance to $14.4 million [8] - Successful live events at GaiaSphere were held in September and October, promoting premium subscriptions [9] Q&A Session Summary Question: Adaptation to the competitive digital ad market - Management is not cutting back on spending but is being opportunistic, focusing on improving conversion rates and building the ambassador program [13] Question: Methodologies for improving event-driven conversions - The company is investing in infrastructure for targeted merchandising to enhance relevance between ads and site content [14] Question: Early success metrics of the ambassador program - There is a bias towards annual and Events Plus subscriptions, focusing on building a revenue base [17] Question: Subscriber economics and retention - Retention is improving as a percentage, with stable absolute numbers of lost members [19] Question: Seasonality in acquiring annual contracts - The company is exploring ways to influence the mix of annual versus monthly subscriptions through bonus materials [20] Question: Content production mix and trends - The company aims to bias towards original productions for cost-effectiveness while using licensing for market testing [22] Question: Opportunities for selling memberships as gifts - Management sees potential in promoting memberships as unique gifts, especially during the holiday season [24] Question: Engaging current members to refer others - The ambassador program encourages referrals, although a formalized plan has not yet been established [25]

United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COLORADO 84-1113527 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 833 WEST SOUTH BOULDER ROAD, LOUISVILLE, ...

Financial Data and Key Metrics Changes - Revenues for the second quarter increased 20% to $19.4 million with 770,000 members [4][7] - Gross margin remained steady at 87.1% [4][7] - Net income improved by $3.1 million to $600,000 or $0.03 per share from a net loss of $2.5 million or $0.13 loss [5][13] - EBITDA improved to $3.9 million, representing 20% of revenue, compared to $800,000 or 5% of revenue in the same quarter last year [5][12] - Cash flow from operations increased to $4.3 million, an improvement of $2.4 million from the second quarter of 2020 [14] Business Line Data and Key Metrics Changes - Total member acquisition costs during the quarter were $7.7 million, or 40% of revenues, improved from 52% of revenues in the year-ago quarter [7] - Selling and operating expenses, excluding marketing and member acquisition costs, were $7 million or 36% of revenues, improved from 37% of revenues in the year-ago quarter [11] - Monthly ARPU for the premium offering is $25 compared to the current blended monthly ARPU of $8.50 [17] Market Data and Key Metrics Changes - The digital advertising market remained competitive, causing an increase in customer acquisition costs to $74 [8] - The company experienced a net growth of 20,000 members during the quarter, benefiting from a renewal rate of over 60% for annual members added during the previous year's lockdowns [9][10] Company Strategy and Development Direction - The company plans to focus on growing the premium membership tier and utilize live events and the Ambassador program to promote the premium offering [16] - The strategy includes reducing dependence on paid media for member growth while increasing profitability through higher premium subscriptions [26][35] - The company aims to refocus on growth in 2022 while maintaining EBITDA margin growth [25][26] Management's Comments on Operating Environment and Future Outlook - Management noted that the reopening of the economy has led to increased competition in the digital advertising space, but they are adapting by focusing on first-party data for audience targeting [31][33] - The company sees opportunities for growth in international markets, particularly in Spanish-speaking regions, as they build their Ambassador program [48][49] - Management expressed confidence in their content production capabilities, stating that they do not face external cost pressures in content creation [50] Other Important Information - The company has increased its content investment while also increasing its cash balance to $13.7 million [15] - Live events have resumed, with successful events planned from August to November [16] Q&A Session Summary Question: Can you discuss the incremental content for the premium offering and updates on the Ambassador program? - The premium offering includes access to live events and workshops, with a focus on converting existing members to higher price points [20][22][23] Question: What are the thoughts on EBITDA margins and potential growth acceleration? - Management indicated a desire to refocus on growth while maintaining EBITDA margins, with a significant contribution from premium subscriptions [25][26] Question: How has the company adapted its marketing spend in response to the competitive landscape? - The company has shifted focus from paid social media to more effective channels like YouTube and paid search, reducing marketing as a percentage of revenue from 52% to 40% [35][36] Question: What is the renewal rate for the lockdown cohort of subscribers? - The 60% renewal rate applies to annual plan subscribers, with similar behavior observed in monthly members [38][39] Question: How critical is international growth to the company's overall strategy? - While not critical, international growth is seen as a valuable lever, particularly in Spanish-speaking markets [48] Question: Have content production costs increased due to inflation? - The company has not experienced increased costs in content production, as most content is produced in-house [50]

United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-27517 GAIA, INC. (Exact name of registrant as specified in its charter) COLORADO 84-1113527 (State or other jurisdiction of incorporation ...