Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company,
reported financial results for the second quarter ended June 30,
2020.
Second Quarter 2020 Highlights vs. Same Year-Ago
Quarter
- 23% increase in revenues to $16.2 million.
- Generated $1.9 million in Adjusted EBITDA, an improvement of
$3.5 million.
- Generated $1.9 million in cash flow from operations, an
improvement of $4.4 million.
“The results for the second quarter represent 18 months of
disciplined execution to drive operating efficiencies across the
business while balancing growth initiatives and spend discipline,”
said Paul Tarell, Gaia’s CFO. “We have continued to benefit from
higher member growth due to the success of our exclusive content,
smart marketing spend and improved retention, which has allowed
Gaia to transition to positive earnings and free cash flows
starting in July.”
Second Quarter 2020 Financial Results
Revenues in the second quarter increased 23% to $16.2 million
from $13.2 million in the year-ago quarter. This was primarily due
to growth in paying members and an increase in average revenue per
member. Paying members increased to 663,400 as of June 30, 2020
with net member additions for the quarter of 58,300.
Gross profit in the second quarter increased 24% to $14.1
million compared to $11.4 million in the year-ago quarter. Gross
margin increased to 87.1% versus 86.4% in the year-ago quarter.
Total operating expenses in the second quarter increased 4% to
$16.3 million from $15.7 million in the year-ago quarter, primarily
due to $0.7 million in non-recurring share-based expense in the
second quarter of 2020 for earn out consideration related to the
strong performance of the acquisition Gaia completed in June 2019.
Excluding this one-time charge, operating expenses improved to
$15.6 million or 96% of revenues from $15.7 million or 119% of
revenues in the year ago quarter. Customer acquisition costs as a
percentage of revenue were 52% for the second quarter, an
improvement from 57% in the year-ago quarter.
Net loss in the second quarter improved significantly to $2.5
million, or $(0.13) per share, compared to a net loss of $4.5
million, or $(0.25) per share, in the year-ago quarter.
Adjusted EBITDA also improved to $1.9 million compared to $(1.6)
million in the year-ago quarter.
Gaia generated cash from operations of $3.9 million in the first
half of 2020 compared to cash used of $5.2 million in the
comparable year-ago period, an improvement of $9.1 million.
Gaia’s cash conversion cycle has continued to improve, with
overall cash used during the quarter of $1.6 million compared to a
use of $8.9 million in the year ago quarter (excluding incremental
proceeds from Gaia’s real estate refinancing).
As of June 30, 2020, Gaia had $8.5 million in cash. Gaia intends
to generate positive net income and free cash flow in the third
quarter.
Conference CallThe company will hold a
conference call today at 4:30 p.m. Eastern time to discuss its
second quarter 2020 results.
Date: Monday, August 3, 2020Time: 4:30 p.m. Eastern time (2:30
p.m. Mountain time)Toll-free dial-in number: (800)
239-9838International dial-in number: (323) 794-2551Conference ID:
3953218
Please call the conference telephone number five minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at (949)
574-3860.
The conference call will be broadcast live and available for
replay here and via ir.gaia.com. A telephonic replay of the
conference call will be available after 7:30 p.m. Eastern time on
the same day through August 17, 2020.
Toll-free replay number: (844) 512-2921International replay
number: (412) 317-6671Replay ID: 3953218
About Gaia
Gaia is a global video streaming service and community that
provides curated conscious media in four primary channels—Seeking
Truth, Transformation, Alternative Healing and Yoga—to its
subscribers in 185 countries with approximately 8,000 titles. Over
85% of its library is exclusive to Gaia, and approximately 80% of
the views are generated by content produced or owned by Gaia. For
more information about Gaia, visit www.gaia.com.
Forward-Looking Statements
This press release includes forward-looking statements relating
to matters that are not historical facts. Forward-looking
statements may be identified by the use of words such as “expect,”
“believe,” “will,” or comparable terminology or by discussions of
strategy. While Gaia believes its assumptions and expectations
underlying forward-looking statements are reasonable, there can be
no assurance that actual results will not be materially different.
Risks and uncertainties that could cause materially different
results include, among others, operating losses, general economic
conditions, competition, changing consumer preferences,
acquisitions, new initiatives we undertake, costs of acquiring new
subscribers, subscriber retention rates, and other risks and
uncertainties included in Gaia’s filings with the Securities and
Exchange Commission. Gaia assumes no duty to update any
forward-looking statements.
Contacts
Paul TarellGaia, Inc.(303) 222-3330Paul.Tarell@gaia.com
Cody SlachGateway Investor Relations(949)
574-3860GAIA@gatewayir.com
GAIA, INC.Condensed Consolidated
Statements of Operations
|
|
For the Three Months Ended
June 30, |
|
|
For the Six Months Ended
June 30, |
|
(in thousands, except per share data) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenues, net |
|
$ |
16,153 |
|
|
$ |
13,164 |
|
|
$ |
30,664 |
|
|
$ |
25,631 |
|
Cost of revenues |
|
|
2,083 |
|
|
|
1,785 |
|
|
|
3,984 |
|
|
|
3,385 |
|
Gross profit |
|
|
14,070 |
|
|
|
11,379 |
|
|
|
26,680 |
|
|
|
22,246 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and operating |
|
|
14,417 |
|
|
|
14,173 |
|
|
|
28,875 |
|
|
|
29,895 |
|
Corporate, general and administration |
|
|
1,873 |
|
|
|
1,493 |
|
|
|
3,290 |
|
|
|
3,086 |
|
Total operating expenses |
|
|
16,290 |
|
|
|
15,666 |
|
|
|
32,165 |
|
|
|
32,981 |
|
Loss from operations |
|
|
(2,220 |
) |
|
|
(4,287 |
) |
|
|
(5,485 |
) |
|
|
(10,735 |
) |
Interest and other income
(expense), net |
|
|
(305 |
) |
|
|
(196 |
) |
|
|
(551 |
) |
|
|
(159 |
) |
Loss before income taxes |
|
|
(2,525 |
) |
|
|
(4,483 |
) |
|
|
(6,036 |
) |
|
|
(10,894 |
) |
Income tax expense |
|
|
— |
|
|
|
42 |
|
|
|
69 |
|
|
|
42 |
|
Loss from continuing
operations |
|
|
(2,525 |
) |
|
|
(4,525 |
) |
|
|
(6,105 |
) |
|
|
(10,936 |
) |
Loss from discontinued
operations |
|
|
— |
|
|
|
57 |
|
|
|
— |
|
|
|
(258 |
) |
Net loss |
|
$ |
(2,525 |
) |
|
$ |
(4,468 |
) |
|
$ |
(6,105 |
) |
|
$ |
(11,194 |
) |
Loss per share-basic and
diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.13 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.61 |
) |
Discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
- |
|
|
|
(0.01 |
) |
Basic and diluted net loss per share |
|
$ |
(0.13 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.62 |
) |
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
18,837 |
|
|
|
17,944 |
|
|
|
18,660 |
|
|
|
17,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
1,896 |
|
|
$ |
(1,574 |
) |
|
$ |
2,065 |
|
|
$ |
(5,523 |
) |
* See definition and reconciliation on following page.
GAIA, INC.Summary of Cash
Flows
|
|
For the Three Months Ended
June 30, |
|
|
For the Six Months Ended
June 30, |
|
(in thousands) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities - continuing operations |
|
$ |
1,858 |
|
|
$ |
(2,557 |
) |
|
$ |
3,864 |
|
|
$ |
(5,317 |
) |
Operating activities - discontinued operations |
|
|
— |
|
|
|
57 |
|
|
|
— |
|
|
|
76 |
|
Operating activities |
|
|
1,858 |
|
|
|
(2,500 |
) |
|
|
3,864 |
|
|
|
(5,241 |
) |
Investing activities |
|
|
(3,480 |
) |
|
|
(6,414 |
) |
|
|
(7,081 |
) |
|
|
(11,338 |
) |
Financing activities |
|
|
61 |
|
|
|
4,092 |
|
|
|
181 |
|
|
|
4,092 |
|
Net change in cash |
|
$ |
(1,561 |
) |
|
$ |
(4,822 |
) |
|
$ |
(3,036 |
) |
|
$ |
(12,487 |
) |
Reconciliation of Loss from Continuing Operations to
EBITDA and Adjusted EBITDA
|
|
For the Three Months Ended
June 30, |
|
|
For the Six Months Ended
June 30, |
|
(in thousands) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Net loss |
|
$ |
(2,525 |
) |
|
$ |
(4,468 |
) |
|
$ |
(6,105 |
) |
|
$ |
(11,194 |
) |
Interest expense, net |
|
|
305 |
|
|
|
196 |
|
|
|
551 |
|
|
|
159 |
|
Provision for income taxes |
|
|
— |
|
|
|
42 |
|
|
|
69 |
|
|
|
42 |
|
Depreciation and amortization expense |
|
|
3,053 |
|
|
|
2,141 |
|
|
|
6,022 |
|
|
|
4,361 |
|
EBITDA |
|
|
833 |
|
|
|
(2,089 |
) |
|
|
537 |
|
|
|
(6,632 |
) |
Share-based compensation expense |
|
|
1,063 |
|
|
|
515 |
|
|
|
1,528 |
|
|
|
1,109 |
|
Adjusted EBITDA |
|
$ |
1,896 |
|
|
$ |
(1,574 |
) |
|
$ |
2,065 |
|
|
$ |
(5,523 |
) |
EBITDA represents net loss before interest expense, provision
for income taxes, depreciation and amortization. Adjusted EBITDA is
defined as EBITDA further adjusted to remove share-based
compensation expense. EBITDA and Adjusted EBITDA do not represent
net income, as that term is defined under GAAP, and should not be
considered as an alternative to net income (loss) as an indicator
of our operating performance.
Additionally, EBITDA and Adjusted EBITDA are not intended to be
measures of free cash flow available for management or
discretionary use as such measures do not consider certain cash
requirements such as capital expenditures, tax payments and debt
service requirements. EBITDA and Adjusted EBITDA as presented
herein are not necessarily comparable to similarly titled
measures.
GAIA, INC.Condensed Consolidated
Balance Sheets
|
|
June 30, |
|
|
December 31, |
|
(in thousands, except share and per share
data) |
|
2020 |
|
|
2019 |
|
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
8,458 |
|
|
$ |
11,494 |
|
Accounts receivable |
|
|
2,617 |
|
|
|
2,310 |
|
Prepaid expenses and other current assets |
|
|
1,767 |
|
|
|
2,443 |
|
Total current assets |
|
|
12,842 |
|
|
|
16,247 |
|
Building and land, net |
|
|
22,351 |
|
|
|
22,681 |
|
Media library, software and
equipment, net |
|
|
38,580 |
|
|
|
36,921 |
|
Goodwill |
|
|
17,289 |
|
|
|
17,289 |
|
Investments and other assets |
|
|
13,117 |
|
|
|
13,034 |
|
Total assets |
|
$ |
104,179 |
|
|
$ |
106,172 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable, accrued and other liabilities |
|
$ |
8,099 |
|
|
$ |
10,594 |
|
Deferred revenue |
|
|
12,320 |
|
|
|
8,025 |
|
Total current liabilities |
|
|
20,419 |
|
|
|
18,619 |
|
Long-term debt |
|
|
16,751 |
|
|
|
18,433 |
|
Deferred taxes |
|
|
276 |
|
|
|
206 |
|
Total liabilities |
|
|
37,446 |
|
|
|
37,258 |
|
Total equity |
|
|
66,733 |
|
|
|
68,914 |
|
Total liabilities and equity |
|
$ |
104,179 |
|
|
$ |
106,172 |
|
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