Gaia(GAIA) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited financials show Gaia, Inc. with increased assets and revenues, a narrowed net loss, and higher cash from financing activities Condensed Consolidated Balance Sheets Total assets increased to $147.0 million by June 30, 2025, driven by a rise in cash and equity from a stock offering Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $23,492 | $15,742 | | Total assets | $146,981 | $141,217 | | Total current liabilities | $43,437 | $41,834 | | Total liabilities | $48,390 | $47,204 | | Total equity | $98,591 | $94,013 | | Total liabilities and equity | $146,981 | $141,217 | - Cash and cash equivalents increased significantly to $13.9 million as of June 30, 2025, from $5.9 million at the end of 2024[9] Condensed Consolidated Statements of Operations Revenues grew 12.7% in Q2 and 12.3% in H1 2025, driven by member growth and ARPU, leading to improved gross margins Key Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $24,632 | $21,856 | $48,472 | $43,169 | | Gross profit | $21,347 | $18,471 | $42,252 | $36,651 | | Loss from operations | $(2,196) | $(1,993) | $(3,210) | $(2,847) | | Net loss attributable to common shareholders | $(1,801) | $(2,193) | $(2,815) | $(3,238) | | Diluted loss per share | $(0.07) | $(0.09) | $(0.11) | $(0.14) | Condensed Consolidated Statements of Changes in Equity Total equity increased to $98.6 million by June 30, 2025, primarily due to a $7.0 million common stock offering, despite net losses - In the first half of 2025, the company issued 1,600,000 shares of common stock in a public offering, raising net proceeds of approximately $7.0 million[13][32] - The accumulated deficit increased from $(90.4) million at the end of 2024 to $(93.2) million at June 30, 2025, due to net losses incurred during the period[13] Condensed Consolidated Statements of Cash Flows Net cash provided by operations was $3.6 million, with a $6.9 million boost from financing, leading to an $8.1 million increase in cash Summary of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,582 | $3,855 | | Net cash used in investing activities | $(2,434) | $(12,520) | | Net cash provided by financing activities | $6,916 | $6,358 | | Net change in cash and cash equivalents | $8,064 | $(2,307) | | Cash and cash equivalents, end of period | $13,924 | $5,459 | Notes to Condensed Consolidated Financial Statements Notes detail Gaia's global digital video subscription service, revenue policies, discontinuation of transactional courses, a $7.0 million stock offering, and its single reportable segment - The company operates a global digital video subscription service with over 10,000 titles, with 90% being exclusive content, organized into four primary channels[18][19] - On March 7, 2025, the Board voted to discontinue its stand-alone business unit selling transactional courses, now presented as discontinued operations[23] - In February 2025, the company sold 1,600,000 shares of Class A common stock, resulting in net proceeds of $7.0 million[32] - The company has one reportable segment, with the United States accounting for approximately 60% of revenue for the six months ended June 30, 2025[47][50] Management's Discussion and Analysis of Financial Condition and Results of Operations H1 2025 revenue grew 12.3% from member growth and ARPU, improving gross margin and strengthening liquidity via a $7.0 million stock offering Results of Operations Revenues grew 12.7% in Q2 and 12.3% in H1 2025, driven by member growth and ARPU, leading to improved gross margins Revenue and Gross Profit Comparison (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | Six Months 2025 | Six Months 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $24,632 | $21,856 | 12.7% | $48,472 | $43,169 | 12.3% | | Gross profit | $21,347 | $18,471 | 15.6% | $42,252 | $36,651 | 15.3% | | Gross profit margin | 86.7% | 84.5% | +2.2pp | 87.2% | 84.9% | +2.3pp | - The increase in revenues for both the three and six-month periods was primarily driven by an increase in member count and improvements in Average Revenue Per User (ARPU) due to price increases[66][71] - Selling and operating expenses increased by 11.4% in Q2 and 13.4% in H1 2025 compared to the prior year, primarily due to higher marketing expenses[69][73] Liquidity and Capital Resources Liquidity strengthened with a $13.9 million cash balance, supported by operating cash flow and a $7.0 million stock offering, with $10.0 million available credit - As of June 30, 2025, the company's cash balance was $13.9 million[78] - Budgeted content and capital expenditures for the remainder of 2025 are expected to be between $11.0 million and $13.0 million, to be funded with cash flows from operations[77] - In February 2025, the company raised net proceeds of $7.0 million from a Class A common stock offering[84] - The company has a revolving credit facility of up to $10.0 million with KeyBank, with no outstanding borrowings as of June 30, 2025[79] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Gaia, Inc. is exempt from providing market risk disclosures - The company is a smaller reporting company as defined in Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item[93] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[94] - No changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[95] PART II—OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the period - None[97] Risk Factors Risk Factors are incorporated by reference from the Annual Report on Form 10-K for the year ended December 31, 2024 - The company incorporates by reference the Risk Factors included in its Annual Report on Form 10-K for the year ended December 31, 2024, filed on March 10, 2025[98] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities - None[99] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[100] Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[101] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to SEC rules and the Sarbanes-Oxley Act, as well as Inline XBRL documents[103]