Gaia(US:GAIA)2019-03-04 21:31Revenue Growth - Streaming revenues increased by $15.8 million, or 60.3%, to $42.0 million in 2018 from $26.2 million in 2017, driven by a 51% growth in the number of paying subscribers[128] - Total net revenue rose by $15.5 million, or 54.8%, to $43.8 million in 2018 compared to $28.3 million in 2017[128] - The company’s total net revenues for 2018 were composed of 95.8% from streaming and 4.2% from DVD subscription and other revenues[127] - Streaming revenue rose by $15.8 million, or 60.3%, to $42.0 million in 2018 from $26.2 million in 2017, driven by a 51% growth in paying subscribers[128] Expenses and Losses - Selling and operating expenses increased by $24.3 million, or 55.2%, to $68.3 million in 2018, primarily due to increased marketing spending and personnel costs[130] - Net loss for 2018 was $33.8 million, or $1.96 per share, compared to a net loss of $23.3 million, or $1.54 per share, in 2017[132] - Loss from operations widened to $36.092 million in 2018, compared to a loss of $25.141 million in 2017[127] - Selling and operating expenses grew by $24.3 million, or 55.2%, to $68.3 million in 2018, remaining steady at 155.8% of net revenue[130] Cost Management - Gross margin improved to 87.0% in 2018 from 86.1% in 2017, reflecting disciplined content investment and fixed streaming costs[127] - Cost of revenues increased by $1.8 million, or 46.2%, to $5.7 million in 2018, with streaming costs rising to $5.4 million, a 50.0% increase[129] - The cost of streaming as a percentage of streaming revenue decreased to 12.9% in 2018 from 13.7% in 2017, indicating improved cost efficiency[129] Cash Flow and Financing - Cash flow used in operating activities increased by $0.6 million in 2018 compared to 2017, primarily due to increased marketing investments[157] - Cash flow used in investing activities rose by $5.8 million in 2018, attributed to investments in the media library and product enhancements[158] - Financing activities generated $37.430 million in 2018, a significant increase of $24.9 million from 2017, mainly due to the public offering of Class A common stock[159] - The company completed a public offering of 2,683,333 shares at a price of $15.00 per share, generating net proceeds of approximately $37.1 million[151] - Cash balance as of December 31, 2018, was $30.0 million, with estimated capital expenditures for 2019 projected between $12 million and $18 million[150] Tax and Regulatory - The effective tax rate decreased to 22.5% in 2018, down from 35.5% in 2017, due to federal tax rate reductions[146] - The effective tax rate decreased by 13% to 22.5% due to federal tax rate reductions beginning in 2018[146] Strategic Plans - The company aims to expand its subscription business both domestically and internationally by enhancing its content library and user interface[124] - The company plans to continue expanding its unique content library and enhancing its user interface to grow its subscriber base domestically and internationally[124] - The company plans to continue pursuing opportunities for market expansion and acquisitions[153] Content Library - The company’s unique content library includes approximately 8,000 titles, with over 85% available exclusively on its platform[120] Subscriber Growth - The subscriber base growth is influenced by seasonal variations, with the highest growth typically occurring in the fourth and first quarters[135]