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Gaia(GAIA) - 2024 Q1 - Quarterly Report
GaiaGaia(US:GAIA)2024-05-06 20:05

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Q1 2024 unaudited financials report revenue growth to $21.7 million, a reduced net loss, and positive operating cash flow Condensed Consolidated Balance Sheets Total assets increased to $133.8 million, liabilities rose to $47.7 million, and equity slightly decreased as of March 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,599 | $7,766 | | Total current assets | $21,460 | $16,083 | | Media library, net | $39,296 | $40,125 | | Total assets | $133,842 | $130,273 | | Total current liabilities | $35,868 | $31,433 | | Total liabilities | $47,684 | $43,493 | | Total equity | $86,158 | $86,780 | Condensed Consolidated Statements of Operations Q1 2024 revenues grew 10.4% to $21.7 million, gross margin slightly dipped, and net loss improved to $1.0 million Q1 2024 vs Q1 2023 Statement of Operations (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues, net | $21,693 | $19,647 | | Gross profit | $18,525 | $16,874 | | Loss from operations | $(863) | $(1,022) | | Net loss attributable to common shareholders | $(1,045) | $(1,306) | | Diluted loss per share | $(0.05) | $(0.06) | Condensed Consolidated Statements of Cash Flows Net cash from operations significantly increased to $5.9 million in Q1 2024, driven by lower net loss and working capital changes Q1 2024 vs Q1 2023 Cash Flows (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,936 | $686 | | Net cash used in investing activities | $(1,073) | $(1,418) | | Net cash (used in) provided by financing activities | $(30) | $18 | | Net change in cash, cash equivalents and restricted cash | $4,833 | $(714) | Notes to Interim Condensed Consolidated Financial Statements Notes cover operations, revenue recognition, debt, geographic revenue, and a $10.8 million subsidiary equity financing - Gaia operates a global digital video subscription service with over 10,000 titles, focusing on channels like Yoga, Transformation, Alternative Healing, and Seeking Truth, with 88% of content exclusive1718 - The company has a $13.0 million mortgage maturing in 2025 and a $10.0 million revolving credit facility with KeyBank maturing in 2025, with no outstanding borrowings as of March 31, 2024293031 Revenue by Geography (in thousands) | Region | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | United States | $12,146 | $11,715 | | International | $9,547 | $7,932 | | Total | $21,693 | $19,647 | - In April 2024, a majority-owned subsidiary raised approximately $10.8 million in equity financing, including a $4.0 million investment from Gaia, to acquire a technology license45 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2024 revenue growth to member count, notes slight gross margin dip, and confirms sufficient liquidity for planned capital expenditures Results of Operations Q1 2024 revenues increased 10.7% due to member growth, gross margin slightly decreased, and operating expenses rose while G&A declined - Revenues increased 10.7% to $21.7 million in Q1 2024, primarily driven by an increase in member count54 - Gross profit margin decreased slightly to 85.4% in Q1 2024 from 85.9% in Q1 2023, mainly due to increased content amortization from investment in original content55 - Selling and operating expenses increased by 10.6% to $17.8 million, driven by higher people-related and marketing expenses56 - Corporate, general and administration expenses decreased by 11.1% to $1.6 million, primarily due to lower salary and payroll-related expenses58 Liquidity and Capital Resources The company plans $10.0-$12.0 million in 2024 capital expenditures, funded by operating cash flow, and maintains sufficient liquidity with existing cash and credit - Budgeted content and capital expenditures for the rest of 2024 are expected to be between $10.0 million and $12.0 million, funded by cash flows from operations61 - The company generated $5.9 million in cash from operations in Q1 2024 and had a cash balance of $8.6 million as of March 31, 202461 - Management believes current cash, expected operating cash flows, and a $10 million revolving line of credit will be sufficient to fund operations on both a short-term and long-term basis65 Cash Flows Q1 2024 operating cash flow significantly increased by $5.3 million due to earnings and working capital, while investing cash outflow decreased Cash Flow Summary (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Operating activities | $5,936 | $686 | | Investing activities | $(1,073) | $(1,418) | | Financing activities | $(30) | $18 | - The $5.3 million increase in cash from operations was primarily driven by changes in earnings and timing of working capital, particularly accrued liabilities and deferred revenues66 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Gaia, Inc. is exempt from providing quantitative and qualitative 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 information under this item68 Item 4. Controls and Procedures Disclosure controls were ineffective as of March 31, 2024, due to material weaknesses in technical accounting and financial close processes, with remediation ongoing - Management concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to previously identified material weaknesses in internal control over financial reporting69 - The material weaknesses identified as of December 31, 2023, were: (1) lack of appropriate technical accounting and financial reporting capabilities for complex transactions, and (2) an inadequate financial close and reporting process7071 - Ongoing remediation efforts include implementing additional procedures in the financial close process, enhancing system capabilities, improving reconciliation and review controls, and enhancing access to accounting training and expertise7273 PART II—OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings during the period - None78 Item 1A. Risk Factors The company incorporates by reference the Risk Factors from its Annual Report on Form 10-K for the year ended December 31, 2023 - The company incorporates by reference the Risk Factors included in its Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 29, 202479 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None80 Item 6. Exhibits The report lists filed exhibits, including CEO and CFO certifications and Inline XBRL documents - Exhibits filed with the report include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL data files (101 series)84