Gaia(US:GAIA)2022-05-02 22:41Financial 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]