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Earnings Call Analysis
Summary
Q1-2025
LiveOne experienced significant growth in Q1 Fiscal 2025, achieving record revenues of $31.9 million and $5.1 million in adjusted EBITDA from its audio division, Slacker Radio and PodcastOne. Projections for Fiscal 2025 include anticipated revenues of $130-$140 million and adjusted EBITDA of $20-$25 million. The company secured a $24 million partnership with a Fortune 250 streaming network and expanded its B2B team. Membership grew to 3.9 million, with 37 new podcasts added. The company announced a $12 million stock buyback and emphasized its undervaluation, confident in continued growth and global expansion opportunities.
Hello, and welcome to the LiveOne, Inc. Q1 Fiscal 2025 Financial Results and Business Update Webcast. My name is Elliot, and I will be coordinating your call today. [Operator Instructions] I would now like to hand over to Aaron Sullivan, CFO. Please go ahead.
Thank you. Good morning, and welcome to LiveOne's business update and financial results conference call for the company's first quarter ended June 30, 2024. Presenting on today's call with me is Rob Ellin, CEO and Chairman of LiveOne.
I would like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts and assumptions that involve various risks and uncertainties. These statements include, but are not limited to statements regarding the future performance of the company, including expected future financial results and expected future growth in the business. Actual results may differ materially from those on this call for a variety of reasons.
Please refer to the company's filings with the SEC for information about factors, which could cause the company's actual results to differ materially from these forward-looking statements, including those described in its annual report on Form 10-K for the year ended March 31 2024 and subsequent SEC filings. We find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its Investor Relations website.
The company encourages you to periodically visit Investor Relations website for important content. Following the discussion, including responses to your questions, contains time-sensitive information and reflects management's view as of the date of this call, August 13, 2024. And except required by law, the company does not undertake any obligation to update or revise this information after the date of the call.
I'd like to highlight to investors that the call is being recorded. The company is making it available to investors and media via webcast, and a replay will be available on its website in the Investor Relations section shortly following the conclusion of the call. Additionally, it is the property of the company and any redistribution, transmission, or rebroadcast of this call or the webcast in any form that the company has expressed, written consent is strictly prohibited.
Now I would like to turn the call over to
LiveOne's CEO, Rob Ellin.
Thank you, Aaron, and good morning, everyone, and thank you for joining us today. I'm thrilled to share the outstanding progress and success that LiveOne has achieved, driven by our unwavering commitment to a greater first model.
Our audio division comprising of Slacker radio and PodcastOne, we reached incredible milestones in Q1 of fiscal 2025, and we achieved a record-breaking $31.9 million in revenues and $5.1 million adjusted EBITDA, demonstrating the strength of our business strategy and execution.
Looking ahead, we project a phenomenal year 2025 for Audio division, which anticipated revenue of $130 million to $140 million and adjusted EBITDA ranging from $20 million to $25 million. Our solid foundation and exciting opportunity position us for continued growth. On the Brad Congos leadership, Slacker Radio has experienced remarkable growth, starting with our great partnership with Tesla, remain and continue to grow that partnership.
We added Bill Iteris almost 7 months ago, formally headed up a division of Microsoft doing over hundreds of millions of dollars of B2B deals. He has crafted a strategic road map for B2B partnerships, securing and signing 4 major additional deals with 63 potential partnerships in the pipeline. We're anticipating closing multiple partnerships with market cap companies ranging from $1 billion to $1 trillion before this year ends.
Based on a huge success, signing 5 major additional partnerships, including a $24 million partnership with one of the largest streaming networks of Fortune 250 company, which is adding about $2 million of revenues a month. We have expanded our B2B team from 1 to 6 professionals and now aggressively moving to hire ahead of each vertical. We fully expect to have a team of over 10 people leading the charge in our B2B area.
Our membership growth continues to grow steadily, increasing from $3.7 million to $3.9 million, we maintain cost-efficient marketing spending less than $1 million this year with very little breakage the lowest by far in the industry. PodcastOne, led by Kit Gray, is seeing a tremendous success, signing 37 new podcasts and in the last 12 months, bringing our total to 187 podcasts. We've sold a second major show to a streaming partner that is moving our podcast from podcasting to television and film.
There's a unique amount of money that will be coming in from those television shows over the next couple of years. Our publishing business, led by Josh Hallbauer, grew 300% and are 2 [ granies ]. We partnered with Carton Studios to produce and publish and distribute original program [indiscernible], the mega brand funded by -- funded with over $30 million.
Our celebrity brands division, led by [indiscernible] is set to introduce 10 to 12 celebrity brands over the next 12 months, including Birthday Sex, [indiscernible] and [indiscernible] with Kyle. We're expanding our stock buyback again to $12 million. We purchased over 4.4 million shares of stock and extinguish those, leaving us with an additional $6.3 million dedicated to the program. This move underscores our confidence in the company's future and a commitment to enhancing shareholder value.
In conclusion, we believe our stock remains extremely undervalued given our impressive growth and unlimited future prospects. We're confident in our direction and excited about what lies ahead. Thank you, everyone, for your support and belief in LiveOne.
I'm now going to hand it over to Aaron Sullivan to review the Q1 results.
Thanks, Rob. I'll spend just a minute providing a very brief overview of our results for the first quarter of fiscal 2025 ended June 30. Consolidated revenue for the 3-month period ended June 30 '24 was $33.1 million.
[indiscernible] posted record revenue for Q1 of $18.7 million and adjusted EBITDA of $5.4 million. PodcastOne posted record revenue of $13.2 million with an adjusted EBITDA loss of $300,000. For the first quarter of fiscal 2025, revenue consists of 56% membership and 44% advertising sponsorship merchandising and other compared to 54% membership and 46% advertising sponsorship and merchandise in the prior year period.
Consolidated adjusted EBITDA for Q1 fiscal '24 was $2.9 million. On a U.S. GAAP basis, Slide 1 posted a consolidated net loss of $1.7 million or $0.02 a share, diluted share in Q1 fiscal '25. As of June 30, 2024, total members, which include free members were approximately 3.9 million. Note that included in total numbers are certain members who are currently subject to a contractual dispute for which we are not currently recognizing revenue.
Rob, I'll turn it back to you.
Great. Aaron, and thank you for the great job you've done. Just to wrap it up, real focus right now is on those B2B partnerships. That first $24 million deal, the revenues are just kicking in. We're seeing the growth in our revenues. We're seeing our growth in our EBITDA. And we're seeing the opportunity that these B2B deals we could go on a hot streak year. And as we do, these are major companies, it's $1 billion to $1 trillion companies, major verticals across auto. Obviously, with cash flow expanding into other auto companies, carriers, carriers around the world, Merchandise businesses, retailers, hotels, airlines, there's so many opportunities right now, and the team has really put together a fabulous lineup, and that's why we're going to expand the team. We're going to grow the team for the first time in almost 4 years, and we're going to focus all that energy on those big $20 million-plus partnerships with major partners across those verticals.
So I want to thank everyone for joining and open it up for any questions.
[Operator Instructions]
Our first question comes from Brian Kinstlinger with AGP.
It's great to see the solid sequential growth in broadcast revenue. And you mentioned that the B2B partnership kicking in and beginning to have a material impact, sounds like about $2 million a quarter, I think you said. I'm curious how much more does that partnership have to go in terms of reaching the peak runrate?
Yes. So we don't give the exact numbers, Brian, on it, but this is -- it started in November and scales up. So I think you'll see that revenue growth in each quarter going forward. And yes, we couldn't be more excited about the partnership and the opportunity to get much bigger.
This is the beginning of putting our content across its large streaming platforms. And I think it's so critical that the cost of content has become so expensive it's $1.6 million an hour of content. And the beauty of our content is we have AAA content with the biggest social media stars in the world, right? It costs us under $3,000 an hour. So we have the opportunity to really grow that. And I see this is the first of many streaming partners and streaming networks. When you think about music choice on cable or satellite and how many channels were audio let alone video and you think about NPD country music channels and all -- there really is no thought leader in music anymore, and we have an opportunity to really be that thought leader across audio and video.
Great. And then as it relates I think, so correct me if I'm wrong, the $24 million B2B partnership you just mentioned and it was on podcast press release. That's the 1 that was pending on the last call and that's in addition to the other one that's ramping. Is that right? And if that is right, can you comment on details such as that $24 million over some period of time? And how long do you think before that begins to ramp?
Yes. Let's be a little bit capital in that. We're going to have a lot more details shortly on the next partnership and we'll provide that publicly in the very near future. And I think it won't just be one. As we stated earlier, we've now signed 4 additional major partnerships and we'll have some real clarity on that coming over the next couple of weeks.
But just to be clear, that is $24 million partnership because it just happens to be the same number. I want to be clear that's different than the [ $2 million ] 1 from November, right?
No, no. That's the same one. That started in November and is growing and it's scaling up.
Okay. And then can you speak maybe to the inventory fill rates of podcast. I guess I heard the question is on today's viewership or listeners starting on podcast where could. How much better could the inventory fill rates become as you win lots of these partnerships?
Aaron, do you want to take that?
Yes. I think we're seeing consistency in our kind of fill rates in terms of what we're able to sell through to partners. So we will try to optimize that. The quicker way to revenue, though, is just to increase the available inventory, right? And that's kind of what we're working towards.
Yes, I think I'll leave at that. Rob, if you have anything to add.
Yes. I'm not sure I followed the exact question. I think what you're articulating with these additional B2B deals is not just inventory, this is traffic and audience, right, as we spread our tentacles right, and spread it across Fortune [indiscernible] company, right, with a massive streaming network, we're getting more eyeballs on to ours, the more traffic, the more audience, the more advertising go get. And I think that answers it, Brian, but I'm not sure I understood for your question.
Yes, we'll take it off line. Perfect. And my last question is how aggressive are you advertising to increase your market share or growth in downloads in unique listeners?
[indiscernible] 1 more time? .
I guess I'm just curious, is the budget increasing? I mean how are you acquiring new listeners?
The budget is not yet to continue and [indiscernible] TikTok multiple times. And those opportunities to keep getting our content into new places where already the distribution and the traffic is built is really the key. And part of the beauty is because we own our own technology, right, and all those revenues come for us, right, the more traffic, the more audience, the more revenues we derive.
We now turn to Barry Stein with Hills Research.
On the $63 million pipeline, wondering if we can get a little more breakdown on that. Rob, you mentioned a number of different verticals. You're hiring senior managers for each of the verticals. How does that pipeline break down by vertical? And within that pipeline, how many of those have you tendered a contract to -- so you're far along in the process. Could you give us a little more visibility on that pipeline?
Yes. I mean I think -- I don't know if I can get much deeper than that from a legal standpoint. But what I can tell you this is, a, we absolutely will have additional auto companies this year, right? Number 2 is because our balance sheet and all the debt was converted at $2.10, right, our balance sheet is pretty pristine now and very chip that gives us the opportunity to expand globally, right?
So we have opportunities with carriers around the globe. I love the opportunity. Love, love, love and couldn't be more excited about where we're going with retail, right? The opportunity that you're watching Amazon, right, and Amazon has so much rich media everyone from BestBuy to Walmart to Costco, all came -- all the retailers we must have, right, that are competing in the digital world. Right? Must-have content. And you're seeing that happen and starting to see some of my thoughts come to fruition as you saw Walmart by Visio $2.3 billion. It always sold for $230 million only 3 years ago, right, when Charlie [indiscernible] bought it. Now they're paying $2.3 billion for it. That's the first, [ telltale ] sign they're going to compete head on with Amazon and they're going to create their own content like Amazon Prime. And I see the safety across all the retailers are really exciting. In terms of hotels and airlines and loyalty programs, really just massive opportunity for our company.
We're 1 of 10 DSPs in the world. We're the third fastest-growing. We've got this very unique content and proving more and more original content like the event we're doing tonight, right? You're going to have more and more original content from music, right, to podcasting, podcast turning to television shows that I think that more and more networks are going to need our content. And so I'm really excited about where that's going. And that 63 deals we're -- there's way more than that in the sort of pipeline. These are the ones that we think have really moved along that are in shape that have an opportunity to close in the next 12 months.
And then continuing on that, I believe you've said that there are 4 deals that are actually signed you can't discuss who they are. But as they go live, we'll see press releases with announcements on those. Any update on that process?
Yes, it's coming. So again, those are all -- we said before year-end is coming. So the year is coming fast, right? And so you're going to see announcements on each 1 of those shortly. And with those, you'll see some details and highlights where they're going. And when you're talking about $1 billion to $1 trillion, multitrillion dollar partners, right, you got to be careful of what they're going to let you say and how much the detail they're going to give in it, right? But for us, as you can imagine, these are very meaningful, right? Every $20 million deal, if 4 more deals hit, right, and we had those 4 deals, even if they're half the size of the last one, that's going to put us in the $200 million range next year.
What I've told the Street is, our goal is to get to 10 million subscribers. 10 million subscribers will be doing $0.5 billion in revenues. And and $150 million in EBITDA. And that's the goal over the next couple of years.
And then I want to pick up on the word you've used a couple of times in the call, which is globally. In your script, you talked about serving carriers globally. And then a minute ago, in response to my question, you cited the balance sheet cleanup that will allow you to go global. So that's been a long-term aspiration of the company to get global streaming rights. And 1 of the things I believe that kicks in almost automatically is Tesla automatically. So is that what you're alluding to is that you're closer to getting music streaming rights on a global or at least European basis. And what would the implications of that be?
I'm hoping you'll see very shortly, and this is -- we've gone through some some tough times here. We had to survive COVID. We lost our entire live business. We were inches away from having all those licenses and moving overseas then, but it was unaffordable, right, post-COVID, we lost 30% of our revenues and a big part of the growth story of the company. We had to pivot it right and turn it. We've this team has just done a magical job of fighting through adversity in difficult times. And we've proven we're going to survive it. But not only we they survive, we're going to expand around the globe. And for anyone that knows me, my last 2 companies, including Digital Turbine was built off the backs of carriers, right, overseas.
We have tremendous relationships over there. So it's definitely in the forefront of positioning where the company is going. And absolutely, if you look at all the -- if you look at all the memberships, whether it's Netflix or Spotify, half of their revenues come in the U.S. and have come overseas, right? We have 25%, 28% of our traffic overseas. We're not driving any revenues from it. But it had to be affordable and how it makes sense. And now is the time where we're ready and way better position to be able to do that. And I think you'll start to see long-term deals with our partners, right, our existing partners, not only those 63 right there in the pipeline, but also our existing partners start to see for the first time long-term partnerships and expansion of where we can -- where our content can live.
Okay. That's great. And then my last question. You just alluded to my last question. You started to mention live events. And I know in the early history of the company, ore-COVID, that was the main event live events. I saw, and I thought it was interesting that you put a press release out, you're doing a live event in the Hamptons. And previously, what you've said is that you would not do live events unless they were profitable and you would need to get a sponsor to do that. So are we -- is the company dipping its toes back in the water on live events? And does that mean you found a way to do this more profitably?
Yes, absolutely. And the event we're doing tonight. We have great sponsors from [indiscernible], right. We're positioning ourselves again that we've proven [indiscernible] and Josh Alber, who runs our music has proven, we have Teddy Swims play at our studio in Double Hills, right? And next you know I have to see them on streaming platform, Guy becomes 1 of the biggest stars in the world, right? We had [indiscernible] before anyone heard of them.
So we're going back to our thesis that as a thought leader in music it is critical to be a thought leader, not just audio but video. And now that we have the resources, right, we obviously have the relationships with the talent as well to the industry. This is the time to really step on the gas. And you're going to watch up pretty spectacular tonight. You're going to see 12 artists perform of all genre in music. You're going to see 1 of the greatest PNS classical PNS play all the way up to the main squeeze. And in between, you're going to see some of the great R&B and hip-hop artists performing.
So it's going to be a really special night and our talent is getting closer to our company, as you can see by the celebrity deals, right, the celebrity partnerships. We don't only want to be able to derive revenues just by putting music up. We're starting to own products in conjunction with that talent. And I'm really proud of the team and what they've done. [indiscernible], who's joined us as Head of our celebrity brands brings a unique talent to the company, unique skill, driving massive revenues. She was at White Claw when they were doing $600,000 of revenues they should left when they were doing about $4 billion. We see a huge opportunity to be able to drive more and more revenues off of those relationships with podcasters as well as with social media stars, including artists.
We now turn to Sean McGowan with ROTH Capital Partners.
I apologize if these questions have been asked but I got dropped from the call a couple of times. First, Aaron, on cost of sales seems to be a little higher than we had expected, particularly at PodcastOne, can you talk about what's driving that?
Yes. Yes. So our content acquisition costs have been a little bit higher than we anticipated. That's kind of the upfront cost to signing some of these deals and new podcasts. Going forward, we expect it to level out over the next couple of quarters about where we're at today and then start to improve from there.
And tying that -- a question for Rob then, is this a surprising to you? I thought we were in an environment where it was actually going to be easier to pick up shows that were either getting dropped or not getting renewed in the same terms from other networks. Is that proving not to be the case or less of the case than you had expected?
No, it's actually really exciting. I mean we're just signing so many podcasts. We're announcing 1 almost every week, and there's a cost to it, right? The way that it works, Sean, in podcasting. You and I have talked about this a little bit is you signed the podcast, right? You pay them some money, right? They -- even if they start doing the podcaster next morning, you're paying them for the next 3 months, and you're not collecting back your money for 3 to 4 months.
So there's a window of time. So I would say Aaron hit it right in the nose, but it's really exciting how many podcasts we're signing and they're adding about $350,000 to $500,000 on average per revenue. Every single 1 of these podcasts as a joint. So there's going to be a little cost to it in the beginning, but can't really -- can't be better than growing the revenues right now and doing that. And we'll achieve -- we'll get that in the back end. We'll get those back in the back end when we start to get paid by the advertisers.
So it's not so much that you have to pay more per podcast to get them. It's just that you're signing more than you had expected to. So that's why the cost is higher.
Yes. And there's been really exciting. There's been some really exciting signings as well that there's a little bit of money. It's got to go out the door day 1.
Got it. And then in terms of -- you talked a lot about these deals that you're in process with and signing and lining up more partners. So is your strategy then to only update or improve or increase the revenue guidance once the deals are signed because I would have thought that if you're signing new deals and you've closed on them some others, maybe increase the revenue guidance. Is it -- are you just going to wait until or nail down?
Well, I think the guidance is a good number right now, and we're going to as we announced in XP2 deals, right? Again, the bigger our distribution is, the bigger our audiences, right, the more revenues we're going to drive. So I'd be surprised if we don't raise those guidance again at the end of next quarter. But let's look carefully. This is great growth. spectacular growth for PodcastOne. Let's let's look at that number again at the end of this quarter and really make sure that we're going to beat the number, right? This is a tough market out there, as you know. We want to make sure we beat the numbers.
We now turn to John Levies with Levies Financial.
Congratulations on a strong quarter and sorry for the technical problems on the conference call with [indiscernible] there were some issues. But anyway, excellent presentation, a quick question for you. So at 1 time, the company disclosed its relationship with JPMorgan to represent them in strategic dialogue -- any comments you want to make and what your plans are there and how it's progressing?
I mean we've always been an acquisition vehicle, and we've been hampered over the last couple of years from doing that with all different difficulties that have been out there. This is certainly a time that both offense have been defensively we are continuing to aggressively explore and are extremely excited about the opportunities that are out there. right? And as we keep moving up the ladder, we're #11 in the world in podcasting. We're #1 audio, right? We're certainly a candidate and so it could come aggressively try to buy us, but we're also looking at some great assets that media assets have been decimated and probably even more on the public side than the private.p
There's some great assets out there that we will aggressively look at. If we could find another Slacker, we can find another PodcastOne, we bought both of those companies doing $20 million of revenues, right? Slacker is now on a run rate to do $85 million, right? We bought PodcastOne doing $20 million. It's now on a run rate to do over $50 million. If we can find another great asset that is accretive to us and fits in with with the team and the skills that we have, we are absolutely aggressively looking on both sides, both the offense and centrally and the entire JP Mortgage team is coming in for the event finite.
So we're deep in the trenches with them on a regular basis on all the excitement and energy around both sides, both offensively and defense.
Sounds great. The Slacker acquisition looks to be brilliant and with the job that Brad has been doing. And any quick comment on that? You mentioned $63 million B2B contracts in a pipeline. But actually, now you're saying that, that's really the core opportunities and there's vastly more than that in a pipeline. That's an interesting comment. And what's the intellectual property there? How many patents do you have? And what -- how that differentiates from the rest seems to be really taking off that business. It's a unique model, et cetera.
Yes. Well, we have over 40 patents I think from a patent standpoint, we're 1 of the thought leaders in the space. I think from the standpoint of our IP, this is the first time we're starting to showcase how valuable IP could be. Just think about taking a podcast, right? And -- and I said Bottom town would be a bidding war right. We just sold the rights to it, and we'll talk about who the partner is very shortly, right? And in taking a podcast that cost us almost no money, right?
Literally limited money and now selling it to television very serious money. My background previously and my team's background. We've made a lot of movies. We've made a lot of television shows. The cost is 0 to us going forward. So when you own that IP, you get a second window of money that could be staggering, right? And I said we're going to sell 1 a year for the next couple of years. Now we've sold 2 this year. We could sell to a year, it could be tens of millions of dollars in profits let alone revenues, but profits that come to the company over the next few years with no additional cost to us. And just to give you an idea on both [indiscernible] and Bottom town, the streaming partners are going to be in -- by the time we turn to corner Vigilant, they've already spent well over $1 million on Bottom town will be well over $1 million shortly that studios are spending money on. And because we have a proven -- not only do we have proven IP, but on top of having IP, we have proof that there's an audience. When we go into those negotiations, we go with a very different bullet then you go in when you're just going in, you got a book or a script or a great story, I see really, really super opportunities and excitement around that. And -- if anyone who doesn't know, I own atmosphere films previously and was fortune enough to have the movie 300 Spidey Chronicles. And when the studios are paying to these things, you never know how they can go and 300 ended up doing $1.1 billion in revenues. So we're really energized about owning our own IP and kind of this team's skill is owning our own IP.
We now turn to Sakamoto, a private investor.
Congratulations on your remarkable results. And most of my questions have already been answered, but I still have some questions first of all is I noticed that general and administrative costs quite increased. And could you explain it how could expect this goes?
[indiscernible]
I'll take that one. Yes. I think the question was our G&A expenses have increased -- so yes, there are 2 drivers to that. One is additional stock-based compensation. We've had some executive contracts that have some stock-based comp in them, and that's kind of across the business units? And then specifically, as it relates to PodcastOne, and this is kind of included in the consolidated results as well, there's additional G&A just as it's a separate public entity, so you've got additional legal accounting and just general public company expenses. And that's really what's driving the increase in G&A.
So there's no extra costs recorded there.
Sorry, I didn't quite catch that. Can you repeat that?
For some extraordinary costs were included in G&A costs?
I think if we can really -- Yes, I think it's really hard to hear you. But I think just to answer you, Aaron and our finance team have done a brilliant job in that we're filing 2 audited financials right, there's additional costs there, both legal and accounting for both the public companies, LiveOne and PodcastOne. And then we also explored the opportunity of doing a Slacker with Slacker radio right? And so there's also additional costs of doing the audits on Slacker. So stay tuned on that. There will be some excitement and energy around that as well. But there is additional both legal and accounting costs of this.
Okay. And 1 more question. Is that revenue from Allison maybe in some [indiscernible] explored by seasonal pack any seasonal factor in our division ever.
You try that 1 more time? I really apologize. I think the question.
Is there seasonal pressure across the business units and seasonal factors?
We have some as. We got a...
Go ahead, Rob. All right. So I'll take it.
In our merchandise business and in podcast, our Q3, which is fiscal Q3 or calendar Q4, that's our largest quarter. But other than that, our subscription business, no seasonality there. And that kind of even think out a little bit.
[Operator Instructions] We have no further questions. I'll now hand back to Robert Ellin for any final remarks.
Yes, I think we covered a lot today. I think we covered a lot in the earnings and how spectacular the numbers were. I want to thank everyone for joining and thank getting for the support. And we look forward to updating everyone very shortly on some major B2B partnerships and those 4 that we have already signed, will be announced shortly, and there will be more to come.
So thank you, everyone, and I appreciate it, and we look forward to the next call.
Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.