Gaia(US:GAIA)2023-05-02 00:29Financial Data and Key Metrics Changes - Revenues for the first quarter were $19.6 million, reflecting a slight sequential increase for the first time in the past 12 months, but a decline of 10% compared to the same quarter last year [7] - The company reported a net loss of $1.1 million or $0.05 per share during the first quarter of 2023, compared to net income of $0.1 million in the year-ago period [8] - Adjusted EBITDA was $3.2 million in the quarter, down from $4.8 million in the year-ago quarter [8] - Gross margins were 85.9% during the first quarter of 2023, expected to remain at this level for the near term [7] Business Line Data and Key Metrics Changes - Total member acquisition costs during the quarter were $7.9 million, or 40.7% of revenues, down from $8.6 million in the year-ago quarter [27] - The cost per member acquisition decreased by 13% during the first quarter compared to the fourth quarter [6] - The viewing time per member started to grow again after declining since the end of COVID lockdowns [6] Market Data and Key Metrics Changes - The company added 7,500 members during the first quarter, ending with 7,666 members on March 31, 2023 [25] - The member losses hit an all-time low in April, benefiting from marketing campaigns focused on higher retention [25] Company Strategy and Development Direction - The company is on track to launch the Gaia Marketplace, aimed at increasing average revenue per user (ARPU) with minimal additional marketing expenses [10] - The company has implemented significant cost reduction measures, including a 20% reduction in headcount, returning to pre-COVID levels of operating efficiency [6][8] - The company plans to adjust content spending based on growth in foreign language markets and overall economic conditions [20][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the company is through the worst of the post-COVID unwinding, with a return to growth in both direct and third-party member bases [27] - The company expects to generate cash flows from operations in excess of cash flows reinvested back into content and product enhancements [28] - Management is monitoring the macroeconomic environment before making any pricing decisions [13] Other Important Information - The cash balance on March 31 was $10.8 million, with expectations for good cash flow generation for the remainder of the year [10] - The company has eliminated over $5 million of annualized spending, including approximately 36 headcounts mostly contractors [6] Q&A Session Summary Question: Can you walk us through the deferred revenue increase and the mix of month-to-month versus prepaid subscribers? - Management explained that the shift from indirect to direct members allows for negative working capital benefits, with a 50:50 mix of monthly and annual plans among existing members [12] Question: Have there been any recent price increases? - Management stated that no price increases have been made recently, as they are observing industry trends and consumer preferences [13] Question: What improvements have been seen in customer acquisition and retention? - Management noted a focus on retention rather than just acquisition costs, with better retention rates leading to lower member losses [14][15] Question: What is the expectation for content spending? - Management indicated that content spending will be evaluated based on growth in foreign language markets, with flexibility to adjust investment levels as needed [20] Question: Were severance costs incurred in the quarter or spread over time? - Management clarified that severance costs are spread over time due to contractual obligations with contractors [23][40]