Gaia, Inc. (NASDAQ:GAIA) Q1 2024 Earnings Call Transcript May 6, 2024
Gaia, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon and welcome to Gaia’s First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Joining us today from Gaia are Jirka Rysavy, Executive Chairman; James Colquhoun, CEO; and Ned Preston, CFO. After the speakers’ presentation, there will be a question-and-answer session. Before we begin, Gaia’s management team would like to remind everyone that management’s prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions, including, but not limited to, statements of expectations, future events, or future financial performance. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them.
Although we believe these expectations are reasonable, Gaia’s management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company’s management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Gaia’s latest annual report on Form 10-K filed with SEC. All non-GAAP financial measures referenced in today’s call are reconciled in the company’s earnings press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, May 6th, 2024.
Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay on Gaia’s Investor Relations website at ir.gaia.com. I will now turn the call over to Gaia’s Executive Chairman, Jirka Rysavy. Please go ahead.
Jirka Rysavy: Good afternoon everyone. We continue to build on our increasing momentum and our revenue for first quarter grew 11% to $21.7 million, which is a good step towards our increasing revenue growth target for the year. The member count during the first quarter grew to 839,000 from 766,000, adding sequentially additional 33,000 net members, which is one of the highest net member growth for the quarter. The annualized gross profit for employee in the first quarter grew to $680,000 from $610,000 in the first quarter of last year. Free cash flow improved $1.6 million to $1 million from the loss of $0.6 million in first quarter 2023 and this is on top of $8.4 million improvement we delivered last year. And James will now speak more about advances of business. Go ahead.
James Colquhoun: Thank you, Jirka and good afternoon everyone. We have continued our trend of executing on cash flow positive growth with improvements in marketing efficiency. At Gaia, we believe in the power of education and transformational media to change the world. And to do that, we provide specialized content to a growing yet underserved member base. Our content covers a collection of niches, we defined as conscious media with categories ranging from transformation spiritual growth, ancient history and metaphysis, the yoga and meditation and healing, and alternative therapies, helping guide our members on their conscious life journey. In March, we held our premier transformation event Immersion live at our headquarters in Boulder, Colorado to a sold-out in-person audience.
During the two-day event, we achieved 52,000 unique live stream attendees, the highest number in the history of the company. Additionally, we announced the rebrand of our premium membership tier from Advance+ to Gaia+ and achieved the highest one-month increase in new sign-ups since the launch of our premium tier in October 2019. This represents a move towards deepening our connection with our member base, offering a richer transformative experience with Immersive Workshops and events available live and on-demand, and solidifying our focus on supporting the conscious life cycle of our members, while driving incremental increases in ARPU on an annualized basis. This focus on our premiums here and our direct-to-paid annual membership marketing campaigns resulted in a $2 million increase in deferred revenue compared to Q4 of 2023.
During the first quarter, we also continued the implementation of our rollout of AI inside the Gaia product experience, launching an AI-powered recommendation engine. This engine is trained on our exclusive categorical metadata and transcripts and this recommendation engine helps our members find content, specific to their own content journey, based on their viewing history and habits. Looking forward, our focus continues to be on driving cash flow positive growth, leveraging AI to help improve the product experience for our members, and solidifying our brand as the key player in the conscious media and transformational space, while still delivering increases in ARPU as we focus further on the rollout and scaling of our premium tier and Marketplace initiatives.
I’ll now pass it over to Ned to share more on the financials.
Ned Preston: Thank you, James. Turning now to our financial results for the first quarter ended March 31st, 2024. Revenues for the first quarter grew $2.1 million or 11% to $21.7 million from $19.6 million in the prior year ago period. This also marked our third sequential period of year-over-year top line growth. Member count increased 10% to 839,000 as of March 31st, 2024, up from 806,000 members as of December 31st, 2023. The sequential growth represented more than 2 times what we saw in Q4 of 2023. Gross profit in the first quarter increased to $18.5 million, up from $16.9 million in the year ago quarter. Net loss improved to negative $1 million or negative $0.05 per share from $1.3 million or negative $0.06 per share in the year ago quarter.
Operating cash flows for the first quarter were at $5.9 million, which was a $5.2 million improvement from the year ago quarter and comes on the heels of closing 2023 with a full year increase of $4.2 million. Free cash flow improved to $1 million from a loss of $0.6 million in the year ago period, representing a $1.6 million improvement and comes after the company generated $8.4 million in full year free cash flow improvement during 2023, which represents $10 million improvement over the past five quarters. The first quarter of 2024 was our fourth consecutive quarter of positive free cash flow. As of March 31st, 2024, our cash balance was $8.6 million with an unused $10 million line of credit. We recently announced pricing updates for new members in our euro and Great British pound markets.
By the end of our second quarter, we plan to implement similar pricing adjustments for new members in our remaining markets. That completes my summary. I’d now like to turn the call back over to Jirka for his closing comments.
Jirka Rysavy: Yes. So, for the summary, we kind of expect increasing annual revenue growth, this continued growth of ARPU, increasing gross profit per employee, and obviously, continued generation of positive free cash flow. And this is for our remarks — prepared remarks. So, I’d like to open the call for the questions. Operator, please.
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