LiveOne Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
June 27, 2023

There are 11 speakers on the call.

Operator

Good morning, and welcome to the LiveOne Inc. 4th Quarter Fiscal 2023 Financial Results and Business Conference Call. My name is Carla, and I will be operating this call. During the presentation, if you wish to register a question for the Q and A portion of your call, I will now hand over to your host, Aaron Sullivan, Interim CFO to begin. Please go ahead.

Speaker 1

Thank you. Good morning, and welcome to LiveOne's Business update and financial results conference call for the company's Q4 ended March 31, 2023. Presenting on today's call are Rob Ellin, CEO and Chairman Pitt Gray, President of Podcast 1 Bradley Konkle, Head of Slacker John Semmelhack, President of CPS Josh Hulbauer, Head of Music and myself, Aaron Sullivan, Interim CFO. 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.

Speaker 1

Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the company's filings with the Call. 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 ks for the year ended March 31, 2022 and subsequent SEC filings. You'll find reconciliations of non GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, is posted on its Investor Relations website. The company encourages you to periodically visit its Investor Relations website for important content.

Speaker 1

The following discussion, including responses to your questions, contains time sensitive information and reflects management's view as of the date of this call, June 27, 2023. And except as 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 this 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, retransmission or rebroadcast of the call or the webcast in any form that Express written consent is strictly prohibited.

Speaker 1

Now I would like to turn the call over to LiveOne's CEO, Rob Ellin.

Speaker 2

Thank you, Aaron, and good morning, everyone. I'd like to thank everyone for joining us today. After 5 years and a tremendous amount of hard work Many obstacles, including consolidation of 8 acquisitions into our core business. Proudly, my team has delivered On a magnificent year and even a bigger start to this year. We are raising our guidance for fiscal 2024.

Speaker 2

LiveWorn early projections increased to $122,000,000 to $130,000,000 in revenue with $12,000,000 to $16,000,000 of adjusted EBITDA. And our audio division, which includes Slacker and Podcast 1 to $100,000,000 to $110,000,000 And adjusted EBITDA between $18,000,000 $21,000,000 with over $12,000,000 of operating cash flow. As a creative first platform, we have built a flywheel that off the same piece of content, we can deliver so many different revenue streams. LiveXLive, Slacker, PodcastOne, Pay Per View 1, CPS, SplitMind, Dromify, Cash Media and Fantasy Guru, All substantial creative platforms with big communities. The combination provides the most robust offering In music and pop culture at the lowest cost and the highest margins.

Speaker 2

Proving the security quality of our tech team, our 45 patents Combined with the unique original programming, Slacker Radio was handpicked by Elon Musk and the Tesla team as the white label music service branded Tesla Radio. Every Tesla car sold in North America comes with a paid membership to LiveOne. These memberships are paid directly by Tesla At an average of 7 years, we proudly just extended for a 10 straight year. The combination of Tesla, Verizon, T Mobile, Sprint made exciting B2B partnerships in an army of over 3,000 artists, podcasters, social media stars engaging across The Live 1 platform in utilizing their social media to alert fans to listen, watch and engage on Live 1 Has driven our revenues and our membership at record pace. I indicated to The Street last year that we'll pass 10,000,000 members within 5 years and over $1,000,000,000 in revenues.

Speaker 2

Exploding out of the gate this year, We have over 350,000 new paid members since January 1, adding over 60,000 per month. We passed 3,100,000 total members and 2,200,000 paid members. Expecting to pass 4,000,000 total members this year and over 3,000,000 paid and average ARPU of $3 To better understand and appreciate these metrics, Goldman Sachs just came out in the report that the industry growth will hit 1,700,000,000 paying subscribers To music by 2027. LiveOne would only need 1% less than 1% of that expectable total addressable market to reach our goal. In 2018, we acquired Slacker Radio, which at the time had $20,000,000 in revenues, losing over $10,000,000 a year And 400,000 total members.

Speaker 2

We've increased our membership eightfold in just 5 years. At this pace, 10,000,000 members is extremely achievable goal. LiveOne reported today 2023 fiscal results Revenues of $99,000,000 $10,900,000 adjusted EBITDA. That is a $24,400,000 improvement adjusted EBITDA compared to 2022. Our audio division comprised of award winning streaming music platform, Slacker Radio and Podcast 1, 1 of the largest remaining podcast networks reported record revenues of $86,800,000 And a record adjusted EBITDA of $18,200,000 an increase of 2 89 percent from $6,300,000 last year.

Speaker 2

With the strongest balance sheet in the history of the company, we can now focus our capital and ENGIE on both internal growth as well as external And utilize the balance sheet to buy back substantial amount of stock. We believe our stock remains undervalued and Such, we have undertaken 3 separate initiatives to unlock substantial shareholder value. 1st, On an ongoing share buyback, we repurchased 2,900,000 shares, leaving an additional $2,300,000 remaining to acquire additional shares. The second exciting initiative is the spin off of our PodcastOne business. We've just received Approval on our registration statement is declared effective by the SEC, and we increased our dividend to our shareholders from 12% to 19%.

Speaker 2

LiveOne, the parent company, loan over 74% of Podcast 1. Independent valuations have come out between 200 $230,000,000 $275,000,000 which would value that division over $2.60 alone. The spin out will allow Podcast 1 to utilize its stock as currency for both acquisitions and capital formations. We've already announced 2 planned all stock acquisitions by PodcastOne. The first in a network called Cash Media, The 2nd fantasy guru, the combined acquisitions are expected to increase PodcastOne's revenues by 12,500,000 And over $2,000,000 of adjusted EBITDA.

Speaker 2

Podcast 1 was acquired very similar to Slacker 3 years ago with $20,000,000 in revenues And is now estimating that this quarter alone will be over $10,500,000 We've increased our guidance to $40,000,000 to 40 $5,000,000 this year before acquisitions. Our 3rd initiative is our proposed merger of Slacker Radio with Nasdaq listed stack, Ticker ROTC at a minimum of $160,000,000 valuation or another $2 a share. If you combine these two prices, it's over $5 a share. With that, I would say this is the most exciting time in the history of the company. We continue to grow and expect our biggest year ever.

Speaker 2

Now I'd like to hand it over to my President, Kit Gray, over at Podcast 1. Thank you, everyone.

Speaker 3

Good morning, everyone. Thank you for the time. I appreciate it and looking forward to Updating you on an action packed Q4 with PodcastOne. It was an exciting year For us and especially in that quarter with a lot of growth, we launched a bunch of new shows, we acquired some existing shows and We've started some new seasons of some already hit programs in the quarter. Those included A and E's I Survived 2nd season, Our smash new hit, I've Had It, which is a top 5 downloaded show in our network.

Speaker 3

When Reality Hits is a Vanderpump Special and the highlight of that so far is 375,000 downloads 2 weeks ago in one of their hit new episodes. We also launched a couple of other shows called On Brand and we are launching Salty with Katharine Lee in mid July. So those are all in production, as well as 2nd season of Bad, Bad Things, which was a hit scripted show With Barbara Schroeder crafting and telling that story. And we look forward to launching A scripted series called Barnum Town later on this year, which we're really excited about. So the network is growing in terms of content downloads And expanding.

Speaker 3

We also, a critical part of our business is finding our core shows to extensions and we had great success there, Not losing any programs and signing multi year extensions with the likes of the Lady Gang Network, Adam Carolla, Doctor. Drew, Korg Junkies, Jordan Harbinger Show, Caitlin Bristow and more. So it's put us in a great position to have a great year this year, Which is very exciting. Recently, one of our shows just won a Webby Award And that was with Kayla Lowery and her network of programs, but barely came in, Coffee combos and others Was recognized in the Webby Awards recently in New York City. So the programming slate has been really exciting and continues to grow.

Speaker 3

As we go into the New Year, we've got some fun things and some acquisitions. And as Rob noted, we are Working hard, acquiring assets of Cast Media, which is an exciting operation with some great personalities and great shows that We're looking forward to bringing on the network and expanding and growing together, as well as the Fantasy Guru Network, which is a little bit different for our model, but we're really excited about that as it's bringing in 24,000 subscribers That pay monthly fees to get their fantasy information. So we're really excited about that. And Looking at everything else, this is an exciting time for us just in the industry because what we're noticing is the podcast 10 World is very much coming to us. A lot of these bigger networks are scaling back.

Speaker 3

Some of their initial investments are ending And it's giving us great opportunities to continue to grow and we're really looking forward to that as we go into the next year. Thank you very much for your time today and We're excited about the future of the podcast 1. Thank you.

Speaker 2

Brad, jump in here.

Speaker 4

Yes. Thanks, Rob, and good morning to everyone. It's really an exciting time at Slacker Radio, it really is. To reiterate some of the metrics Rob shared, we've continued to have tremendous increases in our membership KPIs, Particularly as it relates to paid memberships where we've had record growth with 612,000 new members over the last Which is a 39% year over year increase. So like I said, it's an extremely exciting time And not just because of the record growth, but also because of how we're integrating with LiveOne's live wheel of products, how our road map is currently aligned And what we're strategically poised to do.

Speaker 4

For example, as part of one part of Live 1's audio division, Slacker's alignment with PodcastOne has never been stronger. We just launched over 60 additional PodcastOne podcasts through the LiveOne Slacker Radio app on Tesla. And we also aired our 1st podcast pay per view live stream with Adam Carolla and Friends. Staying on pay per view front for just a moment. Those of you that love combat sports and ice hockey will also be streaming Ice Wars 3 in July.

Speaker 4

So all that said, most important to our future success At Slacker Radio is our laser focus on strategic business to business partnerships to drive both paid memberships and ad supported revenue. As such, we recently announced a multiyear deal with OTT Studio in which many of Slackers We also recently announced a joint strategic partnership with Legible, an e book, audiobook, entertainment and media company, And we'll soon be bringing on a new Head of Business Development to leverage additional partnership opportunities across fitness, consumer electronics and telcos. So in summary, just really fantastic record growth, amazing collaboration with PodcastOne and across All of LiveOne's flywheel businesses and a very strong and exciting business to business partnership pipeline on the horizon. With that, back to you, Rob.

Speaker 2

Yes. I'm going to hand it off to Josh Halbero. Josh is running our Publishing and Music business And is brilliantly executing, including 2 acquisitions just completed with a big play in AI. So Josh, please take over from here.

Speaker 5

Thanks, Rob, and good morning, everyone. I want to talk about the fact that we just launched Version 2.0 of our Dermify platform, which we acquired about 6 months ago. It's a very, very important tool for creators

Speaker 1

In a

Speaker 5

$9,000,000,000 publishing industry. Since the acquisition, we've implemented different AI technologies It's helped creators put together songs ranging from artists like Drake to Chloe Bailey to NBA Youngboy, the list goes on. Most importantly to us internally being a creator first platform is we are scouring Everywhere we can to find these royalties that these creators are owed. They might seem like Small when you look at them individually, but they add up to large sums of potential revenue. We're proud to say that we're the premier platform Being drumified that is making sure that artists are retaining their rights when they're using a platform like this unlike any others.

Speaker 5

When we're looking at the publishing industry as a whole, all we've seen over the last 5 years is significant growth. And even if we have a small percentage of that, this can be $100,000,000 to $150,000,000 company, we believe, In the next 2 years. Thanks, Rob.

Speaker 2

Excellent. And with that, John, John at CPS, our merch business, which is really being positioned this year with substantial cost savings and really focused On owning our own products, John, take over from here, please.

Speaker 6

Thanks, Rob. Good morning, everyone. Custom Personalization Solutions, as you know, sell personalized gifts through the Internet and primarily through wholesalers. Overall, we're expecting our revenues to be flat for fiscal year 2023, 24, continued softness is expected for the mid market retail environment. Sales are expected to expand for a significant number of wholesalers that we do have Through improved Christmas programs that we've already locked in, some of these partners that we've locked in programs that are Expanded includes Walmart and Zales, Lilly and Vernon, Signals and Colony Brands.

Speaker 6

So we're doing quite a bit to Grow wherever we can. Offsetting that is from a negative standpoint is that several Wholesale clients in the past 12 months have gone bankrupt or were sold due to financial difficulties. So those programs will no longer Be in existence. So what we're trying to do is to expand where we can to offset these sales loss and Also to be adding new clients and we're doing some of that. JCPenney is expected to go live in Q2 and Chewy, Which is PetSmart is expecting to expand from a limited test program to a Q2 rollout.

Speaker 6

So There's some substantial growth potential for both of those clients. On the operational expense side that Rob alluded to, we're expected to improve By over $900,000 in the current fiscal year, we're reducing our Fixed costs by over $600,000 primarily through 2 means. 1 is the Office payroll consolidation and then we've done quite a bit in going back and renegotiating contracts, Especially our IT contracts wherever possible. So that's what led us to the $600,000 savings. Then on top of that, warehouse productivity is expected to improve by over $200,000 due to Better training programs and so on and also an improved scheduling system for the employees.

Speaker 6

So in total, we're looking at improvements primarily due to expense control And setting the table for when the environment, the mid market environment that we're currently in proves that we want to be ready to go. Thank you and back to Rob.

Speaker 2

Great. So in wrapping up, want to thank everyone for attending today and thanks for your patience. We will be continuing our buyback very shortly As we see a fantastic opportunity as our balance sheet has gotten stronger and stronger, The company is really the flywheel is now hit almost on every avenue. Our sponsorships have grown in 3 years from 7 sponsors. This year will be well over 600 before the acquisition of Cast Media, probably takes us over 700 sponsors.

Speaker 2

So our sponsorship, Our advertising, our subscription, we're all growing simultaneously and for the first time, we can really start to see the future of where we're going. And as you break that $100,000,000 mark, the team comes together in such a unique way and that you found the best of our team And really everybody is laser focused and I couldn't be more proud of this team. They are laser focused on bottom line. We have over $200,000,000 NOL I expect next year we're going to be able to enjoy that NOL as we start focusing on next level of earnings. So I want to thank everyone for attending And thank you for spending the time with us today and open it up for any questions.

Speaker 2

I'm sorry, Aaron, you got to go. Aaron is excellent.

Speaker 1

Thanks, Rob. I'll spend just a few minutes providing a very brief overview of our results for the full Year fiscal 2023 and Q4 ended March 30 1, 2023. Consolidated revenue for the 3 12 month period ended March 30 1, 2023 was €25,500,000 €99,600,000, respectively. Our audio division posted revenue for the 3 12 months of $22,900,000 $86,800,000 respectively. For the Q4 ended March 31, 2023, Revenue consists of 55% membership and 45% advertising sponsorship merchandising, particularly in events, compared to 50% membership and 50% advertising, sponsorship and ticketing events in the prior year period.

Speaker 1

Consolidated adjusted EBITDA for the 3 12 months was $1,500,000 and a record $10,900,000 respectively. On a U. S. GAAP basis, Slide 1 posted a consolidated net loss of $4,800,000 or $0.06 per diluted share in Q4 fiscal 2023 and a net loss of $10,000,000 or $0.12 a share for the 12 months ended March 31, 'twenty three. Our Audio division's adjusted EBITDA for the 3 12 months It was $4,500,000 and a record $18,200,000 respectively.

Speaker 1

And as of June 26, we had approximately 2,200,000 paid members, a net increase of Call. 292 or 15 percent compared to December 31, 2022. Total members include 3 members for approximately $3,100,000 as of June 26, 2023. Note that included in the total members are certain members who are not currently subject Sorry, including the total members are certain members who are currently subject to a contractual dispute for which we are not currently recognizing revenue. Briefly turning to balance sheet, we ended Q4 with cash of $8,700,000 including restricted cash of $300,000 Rob, I'll turn it back to you.

Speaker 2

Yes. Thank you, everyone. I'll open it up for questions now. I would look forward to any thoughts you have.

Operator

When preparing for your question, please ensure your phone is unmuted locally. Our first question is from Brian Kinstlinger from Alliance Global Partners. Your line is now open. Please go ahead.

Speaker 7

Great. Thanks so much. I got a handful of questions. First, For your fiscal 2024 revenue guidance, does that include CAST and Fantasy Guru? And if so, What are the assumptions and the timing of the closing?

Speaker 7

And then can you close these acquisitions before the spin off? Or does this spin off have to happen for them to close?

Speaker 2

Yes. So off the bat, that does not include the acquisitions. We expect to close these very quickly And it does not affect the spin off when the spin off happens or not.

Speaker 7

Great. And then how do you determine the actual shares on Fantasy Group? There was A range. And then how should we think about any shares issued for Cast? Can you help with a range of valuation forecast?

Speaker 2

Yes, I mean, again, without giving going too far because we haven't publicly disclosed it, right, the Valuations of the company were valued at $200,000,000 plus, right? We're acquiring these companies extremely accretive, Very similar to the fashion that we've acquired, Slacker Radio and Podcast 1, and there'll be a lot more details to come shortly, Brian. But they're going to be very much in line with the type of deals that we did in that sort of one time revenue range Yes, for those companies. So these are going to be extremely clear for both revenues and EBITDA.

Speaker 7

But they're both for podcast 1 shares and not live 1 shares, is that right? Correct. Great. And then the $10,500,000 of Podcast 1 revenue that you've discussed or targeted for the Q1, Can you quantify how much was aided by the Adam Corolla pay per view event on June 4? And then separately, just generally maybe talk about The trends you're seeing in podcasting in terms of download growth versus potentially the pressure if at all on CPMs?

Speaker 2

Kit, you want to take that?

Speaker 3

Yes, sure. The Adam Corolla event Was successful, not a huge percentage of our total revenue of that 10.9 to be like a Significant number, but it was a successful, profitable endeavor that the fans really enjoyed and loved. We had Separate levels of engagement, whether you could just watch online and then there was meet and greets and merch, Which really just expands Adam's connection to his stand base. So a lot of positives out of that experience. See, the podcast in the industry continues to explode.

Speaker 3

Numbers of really what we're seeing are People that listen to podcasts are now I believe Edison Research came out with they're up to 10 hours a week, which is a tremendous amount of time. I think that has a lot to do with people going back to the offices and commuting a lot for work and meetings and they're just consuming more and more podcasts. So we have no fear on the growth of podcasts and downloads. CPMs absolutely are taking a bit of a hit. It's not we're seeing companies pull back a little bit and need some help to get more conversions, More sales.

Speaker 3

So we're working with those agencies and the clients direct to Get them through some of these harder times to come back to where we used to be. It's still significant on average. We're seeing 25 $35 CPMs for the most part. Some of our higher rated shows are still seeing tremendous CPMs. So We're really happy with where the advertising and the growth of the podcast consumption is right now.

Speaker 7

Great. Last question and 2 part for either Kit or Rob. Are you seeing more opportunity To run pay per view events to monetize your talent and or content? And then with the 2 podcast acquisitions you recently announced, Can you maybe talk about the playbook for continuing to acquire more content?

Speaker 2

Yes. So on the pay per view side, as you know, From the pay per view side, we pulled back tremendously last year. We're seeing telltale signs that the consumer is demanding this From music festivals, music events, podcasters, live events, there's a tremendous opportunity and we see that as one of our biggest growth engines coming in. I think we've announced 3 pay per view events in the last 3 weeks for the first time in probably 6 months. I think you're going to see that continue.

Speaker 2

In terms of acquisitions, not only will you see it on the podcast side, what I publicly said is the reason to do these spin offs, One is, as you can see, we have just this great management team in each of these subsidiaries, right? But on top of it, it gives us an opportunity to use that currency To roll up additional acquisitions. And we see in the podcast side, there's a tremendous opportunity to do that. Same thing on the Slacker side, right? We just announced with Byron Roth with Roth Capital 5, right, their 5th SPAC, which their 4th SPAC just had a tremendous success a couple of weeks ago, Going from 10 to 20.

Speaker 2

We see a great opportunity in Slack to utilize that currency as well. So while our stock is down, this is that unique opportunity For us to use that currency in these subsidiaries to be able to do that, to be able to grow. So fully expect acquisitions on the Slacker side as well.

Speaker 7

Okay. Thanks, guys.

Operator

Our next question comes from Sean McGowan from Roth MKM. Your line is now open. Please go ahead.

Speaker 8

Thank you. Good morning, guys. I also had a lot of couple of questions. I I don't know if Josh is still on the line, but I wanted to drill in a little bit more on that Drumify. How exactly does that get monetized?

Speaker 8

Then where is the relationship going forward? And did I hear you right that you think that alone could be $150,000,000 business?

Speaker 5

Yes, Josh is still here. So the way that the Drumify split works is with any creators that upload to the platform, They're splitting the back end rev share with fifty-fifty. So the publishing and the master that Gets negotiated post the song coming out on an independent or major label release is literally split in half. And on the front end, when the sounds are actually downloaded, the creators are getting paid as well, and that's a sixty-forty split. And when I say that it could be a $100,000,000 to $150,000,000 business, this is why.

Speaker 5

I've been in the business a long time. And this platform is quite literally changing how a song is created. It's taking the A and Rs out of the music business and allowing You can have a song that's almost completely finished. And with this platform, you can say, I love my song, but it's really missing A guitar sound from the 1992 Red Hot Chili Peppers album and then boom, it will pop out any sound that sounds somewhere similar To that sound that you're actually looking for. I think this is the future of the music publishing business.

Speaker 5

I think we're at early stages, but we got to version 2.0 a lot quicker than any of us plan to. And as soon as we start building in a Subscription model, I think the sky is the limit. And that's for Drumify 3.0 in the next 6 months.

Speaker 8

Okay, thanks. And is that included in the audio numbers for the company?

Speaker 2

No, there's very little today. There's very little in the projections today, Sean. And I can tell you that this is Josh's partner, Aidan, who started this, is a Yes. When I go back in my career, I remember when I bought atmosphere films, as you know, Sean, right? And when I hit the movie 300 You start getting mailbox money, meaning every month or every quarter you start getting money, it becomes so viral.

Speaker 2

And literally as we've launched 2.0, The phone is ringing off the hook on how many people are calling in that want to join our network now and the amount of songs that we have. And With Josh's background and his experience coming out of Roc Nation and his performance in creating and curating songs, Right. We just have this really unique opportunity. And Josh maybe shy on what that number could be over the next 5 years Of how big that division could be and we all know how big publishing has become and every day you add, it's almost a self fulfilling prophecy, right? As you add more subscribers in music, free and paid, more dollars come into publishing, right?

Speaker 2

It's just going to expand that business. So This is a really exciting subsidiary with very little cost to it. It's almost all upside.

Speaker 8

Thank you. Question for Aaron. There's been some shifts in the repayment of debt and Some changes there. Can you give us some sense of where the balance sheet stands today? What would you be expecting to pay in interest expenses Over the course of fiscal 2024.

Speaker 1

Hey, Sean. No, it's Rob. Maybe you want to take

Speaker 5

oh, you're back. Sorry.

Speaker 1

Yes, I'm back on. Thanks, Josh. So interest expense, Let me see. So we're going to have Cove. So the preferred so we converted preferred share.

Speaker 1

I'll just kind of walk through the kind of changes on the balance sheet very quickly. We converted preferred share or sorry, Preferred debt convertible debt to preferred shares. So that interest rate will pretty much be the same Going forward, so there's no real changes there in terms of interest expense. The big piece is that the podcast won. Bridge notes, well, we paid £3,000,000 back there, which is That's over 50% of the balance that is outstanding with 3rd party shareholders.

Speaker 1

So you're going to see over a 50% reduction in that interest expense kind of going forward. So that's probably the biggest change on the interest line.

Speaker 2

It doesn't And Sean just Correct, correct. There's only $2,000,000 left of that And we're happy that we've been able to buy back $3,000,000 of the $5,000,000 It's very likely we'll be able to buy back the rest of it. So we're happy to do that. We're really we're only almost debt free now. As you know, our friends over at No Street converted all their debt to equity.

Speaker 2

I converted all the mines. So $31,000,000 of debt was converted into equity at $2.10 And really, we're down to the only thing we have today is just a credit facility that is against our receivables and inventory. And With $28,000,000 almost $29,000,000 of short term assets and over $8,000,000 in cash when we closed, it's a very nominal line of 7,000,000

Speaker 8

Right. Okay. And then Rob, could you give us an update on your expected timing For finalizing the podcast spin off and then what's your ballpark timing on the Slacker transaction?

Speaker 2

Yes. So on the podcast 1, as we've stated, the SEC has approved it, right? So we're officially a public company in that, Right. We're waiting on NASDAQ right now, what they've asked us for, and we publicly disclosed, which was not an unfair ask. I wish they had asked for it a lot earlier.

Speaker 2

But they asked for the audits to be given to them. So we'll provide the audits to them this week. As soon as they have those audits, there will be a conference call with NASDAQ and we're going to push full speed ahead. And I'm hoping to have this done certainly before the end of the summer. And if we're It will be in

Speaker 8

July. Okay. And then Slacker?

Speaker 2

Slacker, as you know, with SPACs and this is with Byron and the SPAC that they've done. It's going to take I think we announced the deal probably 5 weeks ago. It takes 3 to 4 months minimum, but it's well in the works. And obviously, we're moving We expect to have announcements around it in terms of the stage that it's at and hopefully have the merger agreement signed shortly. So I think it's moving at rapid pace, but it will take somewhere in the 3 to 4 month period.

Speaker 2

And as I articulated earlier, during that period, We will be using that currency and focused on that currency to be getting ready for that, to be looking at additional tuck in acquisitions into this exciting run. And Yes. As we stated in the audio numbers, they're just it's really a runaway train right now. The numbers are spectacular. So it's a great time for us And a great opportunity for us to continue to grow that.

Speaker 8

All right. Thanks a lot. Good luck.

Speaker 2

Thank you as always.

Operator

Our next question comes from Jon Hickman from Ladenburg. Please go ahead.

Speaker 9

Hi, Rob. I guess this question is for Aaron. I just want to check my math. From what you released today, it looks like Slacker is on track for if

Speaker 2

you

Speaker 9

take out or They're on track for about $90,000,000 in annual revenues just off of what the 4th quarter was. And Podcast 1 is on track for about $40,000,000 maybe more. So if you add those two numbers up, you get 130,000,000 And your guidance is $122,000,000 to $130,000,000 Is my math correct there?

Speaker 1

You're a little hot on the flacker side.

Speaker 9

22 times 4, 88.

Speaker 7

Is that

Speaker 1

correct? No. I think you're taking 22 I think you're typing bear with me a second. So 22 includes Slacker and the 22.9 I think you're referring to is the audio division that includes both Slacker and Podcast 1.

Speaker 9

Okay. Thank you. All my other questions were asked and answered. Thanks.

Speaker 2

Thanks, John, as always.

Operator

Our next question comes from Kevin Dede from H. C. Wainwright. Your line is now open.

Speaker 10

Hi, Rob.

Speaker 7

Hi, Chad. How are you doing, man?

Speaker 10

Good, good, good. Call. I'm curious about the international sphere that question usually comes up. And I'm wondering how your progress is going there.

Speaker 2

Excellent. Call. As you know, as part of this, as we've always articulated, part of this was all the payables that needed to be cleaned up Right from the original Slacker acquisition, which is really how we acquired the company, right? Now that that's cleaned up, we're not only in position with the record labels and publishers, Previously, we owed them a lot of money. Now we have advances with a lot of the record labels.

Speaker 2

So I think this is a unique time via acquisition, Right. Or internal growth for us to expand overseas. And when you think about these numbers, most subscription models are going to have 50% of their revenues in the U. S. And 50% globally.

Speaker 2

I think this is our year to really attack the global market and I see huge expansion opportunities. And Yes, very similar to when I did Digital Turbine, I always talked about as interest rates change, you're going to see carriers as well as distributors, Right. Change their models dramatically and really focusing on owning their own content and having a direct relationship with their consumers. And think this is that's the inflection point that you're starting to see in a massive way. You're seeing announcements all over the place.

Speaker 2

A real focus on having A direct dialogue between distributors, carriers, cable companies, satellite, social media companies and their consumers Right, with their own content. So it's an exciting time for us to expand overseas.

Speaker 10

You mentioned just in passing the opportunity for live events again. Can you kind of go through what you're Seeing there and what you're thinking about. And then and apologies for the ignorance in this question, but where It's going to fit in into which group? Would that go under audio and the spin with Podcast 1?

Speaker 2

Yes, it's a great question. So to start with just to be clear, we are not going back into the live business where we're producing our own shows Yes. And doing our own shows on our dime, right? So that we got a learning lesson. We went through obviously when we bought React in Chicago, Right.

Speaker 2

Even though there were substantial revenues, it cost us a ton of money. And we got a lot of bad luck, obviously, COVID and the variance of COVID and being shut down for 3 years. Well, I think as a team, we recognize we just we couldn't play in that field when 3 years is shut down to COVID. So we moved away from those Live events, but from the digital side of it, what's happening is the consumer is awakened during COVID, just like sports 40 years ago, That the consumer is demanding that you see Coachella and Rockin' Rio. When you hear these numbers, they're like Super Bowl numbers, 100,000,000 people watch Coachella this year.

Speaker 2

Our dynamics on that are moving more and more towards pay per view or a sponsored event that already paid for it. So you've seen us do a giant event with eBay Where they're paying for all that upfront. You've seen us the T Pain's festival, he paid for it upfront. So each of these events that you're seeing now are paid for versus Us buying those rights. And you're not going to see us go back into the market with our own live events.

Speaker 2

We're going to be partnering with the Live Nations and the AEGs and the Parts of the world and I think the opportunity is just going to be massive. And I think you're going to see this year the first ever pay per view event. If you think that we had 5 years in a row We're 90,000,000 people are now watching Rock in Rio. If you can just get 1% of that audience to pay a pay per view ticket At $0.10 on the dollar on what they pay for the live event, you could have 1,000,000,000 of dollars of revenues over the next couple of years. And We see it as one of our giant growth engines with almost no risk to us anymore.

Speaker 2

You see each of the announcements that we make. We announced Hockey Wars. We're getting paid for that upfront, right? We got margin in it and then we have the upside of all the additional revenues From it that can drive it, including pay per view, merchandise, NFTs, etcetera across the board and obviously the pay per view.

Speaker 10

Then how do you cultivate these relationships with Live Nation and AG And building a pay per view audience or a pay per view opportunity against something that they might want to do internally?

Speaker 2

It's a great question. And what I would tell you is that Brad and the tech team have brilliantly On top of the 45 patents we have in the history of 20 years in building Slacker Radio and being one of the 10 platforms in the world that's really left, Right. In this market that's tens of 1,000,000,000 of dollars. There's only 10 of us left in the world that are able to do it. Brad and the team have brilliantly built pay per view, Digital meet and greets, NFTs, we partnered with Polygon and we really positioned ourselves as the thought leader in it.

Speaker 2

And I don't think anybody's ever streamed Quality that we have to really to perfection from everywhere from Brazil to China to Japan to So you get Budapest to Jazz Machu in Switzerland. And now it's just moving the next move to that is, is who's really going to be able to deliver that production At that level, who's going to be able to deliver the pay per view and make sure that it works and lasts? And I think we're the only ones in the world that can do it at that level.

Speaker 10

Okay. Last question is just for clarity sake because I think things are a little scrambled up in my head Rob and I apologize. But You in addressing Brian's question early on, you thought that most valuations in the podcast space were coming in about 1x rev. So I'd just like to understand how you're looking at those valuations versus your Perception that LiveOne is itself is and its trading Is overly discounted. How are these acquisitions going to become accretive Based on sort of based on your perception

Speaker 2

Yes. Kevin, I think you heard wrong. The valuations for podcast businesses, right, have been literally have been 5 times to 30 times revenues. So the last deal that was done, Sirius Radio just bought a podcast network 7 months ago and was doing $10,000,000 in revenues. It's not even on the charts of top podcast networks and it's sold for $150,000,000 in cash.

Speaker 2

And if you look at just about every deal in the space because the industry Growing so fast. It's grown from $400,000,000 pre COVID to $1,600,000,000 this year, right? And it's going to $7,000,000,000 to $10,000,000,000 over the next 5 to 7 years, right? There's going to be this unique opportunity right now that we can roll up some of these smaller podcast networks That really is not a home to go to right now. They need the sophistication, the talent that Kit and his team have And the Hague holding process and the relationship with the creators, so it's really unique, but it's not a one times revenues.

Speaker 2

It's really, really Cove? 5 to 30 times revenues for these businesses.

Speaker 10

Okay. But I guess I apologize, Rob. But I guess The ones that you're targeting are discounted because they don't have that sophisticated back end and access. And maybe that's where I heard the one time revenue number that you threw out?

Speaker 2

These are businesses that don't have any technology, right? They have some creators on the platform, Some amazing creators on the platform, but they don't have it. The second thing that's happened is the markets collapse, right? There is no venture capital money or private equity money Going into these because they're too small, right, for the focus for people to focus on it, right? And so like all industries, when it has that run up, You're going to have this little break that is going to be anywhere from 9 months to 2 years.

Speaker 2

And it's just a fantastic opportunity. The pipeline of acquisitions as well as the pipeline of just, creators who are going to leave The bigger platforms because they're just not meaningful enough to them where they're so meaningful to us, right? And because we're a Hands on white glove relationship with our creators. It's just a very unique opportunity right now. We have over 100 In the pipeline right now, over 100 to loan, yet acquiring businesses to acquire podcasts and becoming free agents.

Speaker 10

Can you talk a little bit about how the integration between PodcastOne and Slacker has Reflected on your membership growth?

Speaker 2

Yes. I mean, just to start with, just think about, I apologize. We're always going to talk about this amazing relationship with Tesla that's now going on 10 years. But for the first time ever, we now have over 100 podcasts Inside of Tesla cars, right? So it's a whole new revenue stream that comes through, right?

Speaker 2

Our combination across it, right, when we did Adam Corolla's first show, We surprised him and put, I think it was 2 or 3 of his favorite artists on to his live show and we had over a 1000000 people live. So the combination of music and pop culture and combining across podcasting and music is obviously very powerful. And both keeping your subscribers as well as growing your subscribers. And we're really in the infancy stage of that, right? It took time to consolidate.

Speaker 2

This was hard With COVID, right, we've just gotten these teams together. And I couldn't be happier. The relationship between Brad and Kit is so powerful. The relationship between our tech teams and our media It's come together and I think this is that year that we really have an opportunity to not to cover off the ball and continue to grow at the rapid and record breaking paces Both sponsors as well as membership.

Speaker 10

Do you expect to continue that trend of integrating podcast Content in the Slacker?

Speaker 2

Absolutely. Within Slacker? Absolutely. Yes, absolutely. I mean, just again, we're a creative first platform, right?

Speaker 2

The more original program we put on, Right. The stronger our offering is and as I articulated on the call, we're the lowest cost provider. So we're 1 third of the price of our competitors. In some cases, we're onetenth of the price, as you know, with Sirius Radio. So we're an average of under $3.5 a month.

Speaker 2

And the reason we can do that is because we have so much original programming. The more original program we come on, the better margins we're going to have. The more revenue streams that we can drive from the Same piece of content, right, the more money we can make. When we see an Adam Corolla and we go from, right, he's You saw this radio guy, radio to podcasting to pay per view, right? Now add into that, add merchandising.

Speaker 2

And we're about to launch multiple different products that are in conjunction and ownership with our talent With very little risk to the company and huge massive upside, I mean, as you watch everyone from Kim Kardashian to George Clooney to McGregor I've all built these business Rhianna, I've all built these business with $1,000,000,000 plus numbers on them, right? And they built them off the backs of their social media. And don't think that trend is ever changing ever again. As you see it, these superstar talents, these creators have over 100,000,000 followers. They could have the same amount of people watching content on a daily basis that the Super Bowl has one day a year.

Speaker 2

So we're going to continue to do that and you're going to see Cove? A big push for that additional revenue stream coming from those same creators across audio, podcasting, social media and our overall platform. Everything you're watching us do is build communities and those communities just keep getting bigger and bigger. And what Kit and the team have done so brilliantly is They crossover between that community, right? And now you have T Pain doing a podcast, right?

Speaker 2

So you have a music artist doing it. We did the same thing with Pitbull. You're going to see more and more of that, more of the crossover in pop culture that gets more and more exciting every day.

Speaker 10

Thanks very much, Rob, for entertaining all the questions. I really appreciate it.

Speaker 2

Thanks, Kevin. Appreciate you.

Operator

We have no further questions registered. I will now hand back to Rob Ellin for final remarks.

Speaker 2

I just want to thank everyone again for being here with us today. As you can see, this is the most exciting time in the history of the company. We really put together a massive community Across audio, video, pay per view, social media, it's going to continue to grow. And I think this is the most exciting time in the history of this company. And For any of you that have been investors with me before in our companies, I truly, as I've articulated before, this is the first time ever That not only is this do we have a company that could be a unicorn, we have multiple companies within LiveOne That each one of them have the opportunity of being a unicorn.

Speaker 2

And I think you're going to see more and more of that. And just seeing the likes of bankers and outside parties Cove. Valuing our podcast business over $200,000,000 Value our Slacker business, right, at $160,000,000 and it's grown so fast Even since that valuation, it could be higher than that. As you put those pieces together, just those two divisions alone, just the audio division could be worth $5 a year. As you think about our publishing, as Josh articulated, you think about our merchandising, owning our own products, right, and you look across our pay per view, We've got 5 potential unicorns within one company.

Speaker 2

I'm looking forward to Podcast 1 starting to trade on its own. I'm looking forward to Slacker Radio being able to trade on its own and I appreciate everybody for spending the time with us and being patient with us and we're going to continue to grow and We're going to continue to work really, really hard to deliver for our shareholders. So I want to thank

Powered by Quartr

Key Takeaways

  • Raised FY 2024 guidance: LiveOne now expects revenue of $122 million–$130 million and adjusted EBITDA of $12 million–$16 million, with its audio division targeting $100 million–$110 million in revenue and $18 million–$21 million EBITDA.
  • Membership momentum: The company added over 350,000 paid members since January 1, surpassing 3.1 million total and 2.2 million paid subscribers, at an average ARPU of $3 and net adds of ~60,000 paid members per month.
  • Record FY 2023 results: LiveOne delivered $99.6 million in revenue and a record $10.9 million adjusted EBITDA, while the audio division grew revenues to $86.8 million and EBITDA by 189% year-over-year to $18.2 million.
  • Strategic capital actions: The company repurchased 2.9 million shares, raised its dividend to 19%, and filed to spin off PodcastOne—valued at $230 million–$275 million—into an independent public company.
  • Growth via acquisitions and innovation: PodcastOne’s planned all-stock deals for Cash Media and Fantasy Guru are expected to add $12.5 million in revenue and $2 million in EBITDA, while the AI-powered Dromify platform is poised to scale publishing royalties.
AI Generated. May Contain Errors.
Earnings Conference Call
LiveOne Q4 2023
00:00 / 00:00