NASDAQ:GAIA Gaia Q2 2023 Earnings Report $5.24 -0.10 (-1.87%) As of 02:04 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast Gaia EPS ResultsActual EPS-$0.08Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AGaia Revenue ResultsActual Revenue$19.84 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AGaia Announcement DetailsQuarterQ2 2023Date7/31/2023TimeN/AConference Call DateMonday, July 31, 2023Conference Call Time4:30PM ETUpcoming EarningsGaia's Q1 2025 earnings is scheduled for Monday, May 12, 2025, with a conference call scheduled at 4:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Gaia Q2 2023 Earnings Call TranscriptProvided by QuartrJuly 31, 2023 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia's Financial Results for the Q2 Ended June 30, 2023. Joining us today are GAIA's CEO, Jirka Rysavy and CFO, Ned Preston. Following some prepared remarks, we will open the call for your questions. Before we get started, however, I would like to take a minute to read the Safe Harbor language. March. Operator00:00:25The following constitutes the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The matters discussed today include forward looking statements that involve numerous assumptions, risks and uncertainties. These include, but are not limited to our ability to attract new members and retain existing members, our ability to compete effectively, including for customer engagement with for modes of entertainment, maintenance and expansion of device platforms for streaming fluctuation customer usage of our service fluctuations in quarterly operating results, service disruptions, production risks, general economic conditions, future losses, loss of key personnel, price changes, brand reputation, acquisitions, new initiatives we undertake, security and information systems, legal liability for website content, failure of third parties to provide adequate service, future Internet related taxes, our founders' control of us, litigation, consumer trends, the effect of government regulation and programs, the impact of public health threats including the coronavirus COVID-nineteen pandemic and our response to it and other risks and uncertainties detailed from time to time in our filings with the Securities and exchange commission, including our reports on Form 10 ks and Form 10 Q. GAIA assumes no obligation to publicly update or revise any forward looking statements. With that, I would now like to turn the call over to Gaia's CEO, Irdka Khorsavi. Operator00:01:54Please go ahead. Speaker 100:01:56Good afternoon, everyone, and I'm glad that we can report positive results. Revenue for the Q2 increased again sequentially to $19,800,000 from 19,600,000 But it's still down from the last quarter of $20,700,000 due to post COVID subscriber construction as experienced industry wide during 2022. Member count increased during the quarter by 8,000 to 774,500 is virtually all the growth coming from our direct subscribers. Our ARPU, which is showing steady growth, as it increased at from $7.95 in 20 19 to 8.40 in 2020 to 8.60 in 2021 and 8.75 in 2022. It now shall be further supplemented by the launches of Gaia Marketplace, which is now rolling to a select group of our members. Speaker 100:03:00The total operating expenses in the quarter were about $950,000 higher than in year above quarter, still including a tale of the contracts and related expenses incurred as a result of our 20% staff reduction that was completed during the Q1. While we still reported GAAP loss, the company has returned to net cash generation. Cash balance in June 30 was $10,900,000 And I would let Annette now speak more about the results. Speaker 200:03:33Thank you, Jirka. Revenues for the Q2 were $19,800,000 a slight sequential increase for the 2nd consecutive quarter, continuing the return to growth in our member base during the first half of twenty twenty three. Compared to a year ago quarter, revenues declined 4% due primarily to the hard compare against Q2 2022, which benefited from the COVID related subscriber growth in 2020 2021. In the quarter, we continue to invest in and release new content, particularly to support our language expansion efforts. As a result of these strategic growth investments, gross margins were 85.7% during the Q2 of 2023 and we expect them to remain at this level in the near term as we expand our language offerings and tactically support the growth of the business. Speaker 200:04:24Total member acquisition costs during the quarter were $8,200,000 or 41 percent of revenues compared to $7,200,000 in the year ago quarter. In the quarter, we benefited from our efforts to optimize customer acquisition costs over the past several quarters with per customer acquisition cost down 9% sequentially. In the 2nd quarter, we experienced growth in our direct member base, which is a continuation from the Q1. Additionally, we witnessed a return to growth among our largest third with the Q1. The growth in both our direct member base and third party member bases during the quarter is building our confidence that we are through the worst of the post COVID member unwinding. Speaker 200:05:08Selling and operating including marketing and member acquisition costs in the 2nd quarter were $8,900,000 or 45 percent of revenues, which is up slightly from the prior year period. This increase reflects the end of contracts and related expenses incurred as a result of the company's cost improvements that were completed during the Q1. Corporate G and A and corporate expense in the 2nd quarter were $1,500,000 or 8% of revenues, down 15% from the prior year period. We expect to realize most of the benefits of the cost reductions undertaken in the first quarter and the second half of twenty twenty three and anticipate the cost $7,000,000 or negative $0.08 per share compared to the net income of $100,000 in the year ago period. The decline was primarily driven by the reductions in revenues between periods. Speaker 200:06:08Adjusted EBITDA was $3,100,000 or 16% of revenues in the quarter and we generated free cash. Our deferred revenues for the 2nd quarter were $15,500,000 an increase $1,400,000 from the year ago period. We expect to continue to benefit from the inherent negative working capital cycle in our business model as we continue to grow our member base and revenues. In addition, we expect to be in a position to continue generating cash flows from operations in excess of the cash flows we reinvest back into our content library and production enhancements going forward. Due to our in house production capabilities and lack of contractual commitments tied to our content production. Speaker 200:06:52We have significant discretion in the amount and timing of our investments. This flexibility allows us to adjust our investment levels as needed to withstand a downturn a macroeconomic environment if necessary. Through the company's focus on accelerating growth and a return to positive operating margins, We have made tremendous progress over the past several quarters on numerous key areas of improvement for the business. With continued disciplined execution and the launch of Gaia Marketplace, we are well positioned to continue growing revenues and to remain cash flows positive going forward. With that, I will hand it back to Jirka for some closing remarks. Speaker 100:07:34Well, with the cost tail of our staff reduction now being gone, Our annualized gross profit for employee recently reached all time high of over 610,000. With the member growth in July running above the pace for the 2nd quarter, plus GAIA marketplace beginning to be rolled out to improve our ARPU and revenue, We can look for a stronger second half of the year. And with that, that concludes our remarks and I would like to open it for the question. Please, Maria. Operator, please. Operator00:08:17Thank you, sir. We will now be conducting a question and answer session. Season. Our first question comes from Mark Argento with Lake Street. Please proceed with your question. Speaker 300:08:51Hey, Yurka. Hey, Ned. Just wanted to drill down a little bit on the customer acquisition or subscriber acquisition cost. Are you seeing the cost to acquire in terms of going out by keywords or other types of online ad What trends are you seeing there? Do you think it's sustainable to be able to kind of cost effectively acquire at this point? Speaker 100:09:15Hi, Mark. Thanks. We generally will See right now the cost of acquisition is definitely improved from the last year when this the overall environment was much more negative still with the post COVID. So this year, We target generally about 39% to 41% of revenue. It depends on efficiencies. Speaker 100:09:41We were on higher end of it because the efficiencies start to be good. And I kind of hope that that will kind of continue as what it is. 2nd, with COVID gone also seasonality came back Q2 was historically our slowest quarter. So we were pleased with the actual results. And I think as we are kind of focusing on some of new initiatives. Speaker 100:10:06We talk about it now for a little bit for focusing on the members with higher retention just rather than just low cost. It's definitely the overall growth start to be helped by the improved retention. Does it answer your question? Speaker 300:10:26Yes. No, that's helpful. It sounds like Just shifting gears quickly, obviously nice to see you guys cash flow positive in the quarter. I mean, I think in your prepared remarks, did you say you anticipate that being good cash flow positive going forward? Is that what I'm hearing? Speaker 200:10:45Yes. Hey, Mark, it's Ned. Thanks for the question. That is correct. So Q2 was a big transition quarter for us in moving to that positive cash and we do anticipate forecast that continuing for the second half. Speaker 100:11:01Yes, the improvement in the quarter between from the Q1 was about $1,300,000 in a positive direction. And so we kind of hope that with all the tail of the staff reduction being gone, that obviously that will Speaker 400:11:21improve. Speaker 300:11:22Great. It's good to hear. Just last one for me. In terms of the marketplace, could you just refresh us What should we look for there in terms of a rollout or how does that stage out over the next quarter or 2? Speaker 100:11:36Yes. So we just kind of right now rolling it to small amount of people. We're putting it from about 10 20,000. Our members, active members and see kind of their response. So we kind of know how to market because there's several way to display it, mostly on a screen of those people as we can target. Speaker 100:12:00And as we kind of looking a lot for like experience rather than products, our first product We attached to our ancient civilization series. We also have a conference what's called Predulubil civilization. So we go and have We're marketing a tour to Preludely Egypt, which is probably about 8000 to 10000 in Ranch. We kind of obviously jobbing it out, we keep about 30% of that. That's what we will be booked as get 10% discount that come from our side. Speaker 100:12:47So that's roughly how it goes. We're going to slowly increase the number of people and then it's We see it's running smooth. We had other experiences of potential some products. So it's something what I think as we go to end of the year, it should start really meaningfully improve our ARPU and hopefully So the revenue of course. Speaker 300:13:12That's super helpful. I appreciate it. I'll hop back in the queue. Thanks. Speaker 100:13:16Thank you. Operator00:13:20Our next question comes from Thierry Wolod with Water Tower Research. Please proceed with your question. Speaker 400:13:28Yes. Greetings, Jokar and Ned. Mark covered quite a few questions there. But I was curious, you had some good momentum you told us from the foreign language subscribers earlier this year. Is that continuing? Speaker 400:13:46Can you give us some color there? Speaker 100:13:51Yes, that's kind of started already like a couple of quarters and it's increasing. We did invest in the languages Over the last 2 years, as we were dealing with COVID, we didn't have so it was more challenging marketing environment and we didn't want to fight it. We've already reserved the cash last year. So we did spend it on getting ready for still a language offering, especially in the French and German, as the Spanish was existing before. So obviously, those are the languages we kind of going there. Speaker 100:14:25And anytime you go to new language, especially in Which especially in some European countries, we kind of ahead of the curve. There's not a really strong offering on those languages. So we so far see both acquisition cost And retention being better than in the U. S. So we're probably spending more kind of increasing. Speaker 100:14:59Our international membership, it's right now about 35% overall because our direct. So our 3rd parties like Amazon, YouTube, Comcast, they're all in English. So if I take our percentage of our direct, It's probably more on high 40s as a percentage. But either when, if you look at Netflix, they're about 2 thirds. So I over the next few years our international percentage will grow providing the trend what we feel right now will sustain. Speaker 400:15:35Great. Thank you. In terms of your, I guess, not just your U. S, but all your subscribers, your subscribers, your members. Do you have any color on consumption? Speaker 400:15:47Are you seeing more consumption of your content or no real differences there post the whole COVID situation? Speaker 100:15:58Well, I mean during the COVID, We had more viewing and more subscribers there. But after the post COVID wave, when those subscribers like everywhere left. So we kind of saw obviously we kind of saw a Increased post COVID, but I have to say that starting this year in the Q1, Which is kind of going to that people start to have a free time last year. I mean, they could Travel like they can do now. We actually see increases this year. Speaker 100:16:46Again, we used to see it before For COVID, when quite high, it was like it came down, but now as we see increases on the viewing again. Speaker 400:16:59Okay. Any update on do you have some Event Plus scheduled for the balance of the year? Can you give us Some updates there? Speaker 100:17:10Sure. We have about 2 weeks. We have our one of the main conferences, what we call ancient civilization, which is about 10, 11 speakers, which is kind of one of our key conferences. So that's coming, I think, 12th, 13th August with another one like a few weeks later. So we're going to you probably see our cadence and promotion of all events plus Will probably increase with the kind of we obviously have a little bit of disruption through COVID, so we're picking up or we kind of before. Speaker 100:17:52So I think it's a we didn't focus on it till beginning of this year, but I think the 2nd part of the year, It will be focused on it and I think with Gaia Marketplace getting launched we also have a better way how to promote it. Speaker 400:18:11Okay, great. Well, thanks. I appreciate the update. Speaker 100:18:16Thank you. Operator00:18:18Our next question comes from Mark Argento, Blake Street. Please proceed with your question. Speaker 300:18:25Hey, guys. Just a quick follow-up. So kind of just going everything down, maybe just an update on at 5000, 10000 feet, kind of the strategy for the company here. Now that looks like you're able to cost effectively acquire subs again, You're going to lean into growth a little more aggressively, maybe just maybe a little higher level, Jirka, how you see the world right now and kind of where you guys are after the high and the low of the COVID and then the post COVID overhang, it seems like maybe we're kind of normalizing a little. Given the kind of the environment we're in and what you're seeing, what's the higher level strategy at this point? Speaker 300:19:03Thanks. Speaker 100:19:05Well, it's just like from the like beat in the SACL level. It's I actually could see from my point that because now we kind of the new team as we have couple of new additions, It's kind of side of click and it's really good team as a chemistry wide. So I'm very pleased with that. And Obviously, with the growth and increasing ARPU, it's I feel pretty good about where we're heading. So I think you can expect The company acceleration and producing positive cash flow. Speaker 100:19:42And I think the question cash flow versus growth. I think we want to really start to increase the growth, but at staying in positive cash flow. So basically we want to stay in positive cash flow and we generate more dollars, we put it back in the growth, but we do not go negative free cash flow. So I think that's pretty much where it is. It's pretty simple right now. Speaker 100:20:08Grow as fast as we can without going negative in the cash flow. And the cost per employee which is the gross profit for employee which is $610,000 which is you start to be up there. And as long as we can keep it on these levels, I think that the cash flow and Profitability would kind of come from there as well. But I think it's grow as fast as we can without and while Speaker 200:20:44It's a big reason why I came to Gaia, just because of that leverage. I'm just very impressed with a company that runs with around 110, 120 full time employees driving over $8,000,000 of revenue. But the efficiencies that I've seen and the ability to pull the levers when needed around increased marketing spend for the right reasons, It really is impressive. So as I said in my commentary earlier, the continued execution against the existing plan Is very much what I look forward to here, but we just really look forward to the upside leverage of that model. Speaker 100:21:24And also to mention, as Ted talked about leverage, our as Ted mentioned, our gross margin came 90 basis points or something down. It's actually was purely because we keep growing, putting new content and with the revenue slowdown last year, It changed the ratio compared revenue, but if you look at what we call net, we have Basically aligned what you call a cash contribution. It's basically cash margin that how much what it will cost to have a new customer. That's kind of the same number, but less amortization. That actually increased from 90 3% to 94% of revenue. Speaker 100:22:09So from the cash point, how margins actually expanding is where we're talking Speaker 400:22:15free cash flow. Speaker 300:22:17Very helpful. Good luck the rest of the way this year guys. Thanks. Speaker 200:22:22Thanks Mark. Operator00:22:25There are no further questions at this time. I would now like to turn the floor back over to Jirka Rousavy for closing comments. Speaker 100:22:33Well, thank you everyone for joining and we look forward to speaking with you while we report our Q3, Which should be in early November. Thank you very much. Operator00:22:45Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGaia Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Gaia Earnings HeadlinesCult Gaia Just Launched Their Debut Bridal Collection. These Are The Pieces That Blew Us AwayMay 2, 2025 | latimes.comSunraycer, Meta Have Deal for Two Texas Solar ProjectsMay 2, 2025 | powermag.comShocking AI play that’s beats Nvidia by a country mileYou’ve seen the headlines about Nvidia. Now Tim Sykes is sounding the alarm — because what CEO Jensen Huang is about to announce could change the AI market once again. Experts already predict the total addressable market could climb past $20 trillion. But Sykes believes most investors have missed what’s coming next. 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The company has a digital content library with various titles in Spanish, German, and French languages available to its subscribers on internet connected devices. Its network includes Yoga channel, which provides access to streaming yoga, Eastern arts, and other movement based classes; Transformation channel that offers content in the areas of spiritual growth, personal development, and expanded consciousness; Alternative Healing channel, which features content focused on food and nutrition, holistic healing, alternative and integrative medicines, and longevity; and Seeking Truth channel that provides access to interviews and presentations in the ancient wisdom and metaphysics genre. The company was formerly known as Gaiam, Inc. and changed its name to Gaia, Inc. in July 2016. Gaia, Inc. was incorporated in 1988 and is headquartered in Louisville, Colorado.View Gaia ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Palantir Stock Drops Despite Stellar Earnings: What's Next?Is Eli Lilly a Buy After Weak Earnings and CVS-Novo Partnership?Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2 Upcoming Earnings ARM (5/7/2025)AppLovin (5/7/2025)Fortinet (5/7/2025)MercadoLibre (5/7/2025)Cencora (5/7/2025)Carvana (5/7/2025)Walt Disney (5/7/2025)Emerson Electric (5/7/2025)Johnson Controls International (5/7/2025)Lloyds Banking Group (5/7/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia's Financial Results for the Q2 Ended June 30, 2023. Joining us today are GAIA's CEO, Jirka Rysavy and CFO, Ned Preston. Following some prepared remarks, we will open the call for your questions. Before we get started, however, I would like to take a minute to read the Safe Harbor language. March. Operator00:00:25The following constitutes the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The matters discussed today include forward looking statements that involve numerous assumptions, risks and uncertainties. These include, but are not limited to our ability to attract new members and retain existing members, our ability to compete effectively, including for customer engagement with for modes of entertainment, maintenance and expansion of device platforms for streaming fluctuation customer usage of our service fluctuations in quarterly operating results, service disruptions, production risks, general economic conditions, future losses, loss of key personnel, price changes, brand reputation, acquisitions, new initiatives we undertake, security and information systems, legal liability for website content, failure of third parties to provide adequate service, future Internet related taxes, our founders' control of us, litigation, consumer trends, the effect of government regulation and programs, the impact of public health threats including the coronavirus COVID-nineteen pandemic and our response to it and other risks and uncertainties detailed from time to time in our filings with the Securities and exchange commission, including our reports on Form 10 ks and Form 10 Q. GAIA assumes no obligation to publicly update or revise any forward looking statements. With that, I would now like to turn the call over to Gaia's CEO, Irdka Khorsavi. Operator00:01:54Please go ahead. Speaker 100:01:56Good afternoon, everyone, and I'm glad that we can report positive results. Revenue for the Q2 increased again sequentially to $19,800,000 from 19,600,000 But it's still down from the last quarter of $20,700,000 due to post COVID subscriber construction as experienced industry wide during 2022. Member count increased during the quarter by 8,000 to 774,500 is virtually all the growth coming from our direct subscribers. Our ARPU, which is showing steady growth, as it increased at from $7.95 in 20 19 to 8.40 in 2020 to 8.60 in 2021 and 8.75 in 2022. It now shall be further supplemented by the launches of Gaia Marketplace, which is now rolling to a select group of our members. Speaker 100:03:00The total operating expenses in the quarter were about $950,000 higher than in year above quarter, still including a tale of the contracts and related expenses incurred as a result of our 20% staff reduction that was completed during the Q1. While we still reported GAAP loss, the company has returned to net cash generation. Cash balance in June 30 was $10,900,000 And I would let Annette now speak more about the results. Speaker 200:03:33Thank you, Jirka. Revenues for the Q2 were $19,800,000 a slight sequential increase for the 2nd consecutive quarter, continuing the return to growth in our member base during the first half of twenty twenty three. Compared to a year ago quarter, revenues declined 4% due primarily to the hard compare against Q2 2022, which benefited from the COVID related subscriber growth in 2020 2021. In the quarter, we continue to invest in and release new content, particularly to support our language expansion efforts. As a result of these strategic growth investments, gross margins were 85.7% during the Q2 of 2023 and we expect them to remain at this level in the near term as we expand our language offerings and tactically support the growth of the business. Speaker 200:04:24Total member acquisition costs during the quarter were $8,200,000 or 41 percent of revenues compared to $7,200,000 in the year ago quarter. In the quarter, we benefited from our efforts to optimize customer acquisition costs over the past several quarters with per customer acquisition cost down 9% sequentially. In the 2nd quarter, we experienced growth in our direct member base, which is a continuation from the Q1. Additionally, we witnessed a return to growth among our largest third with the Q1. The growth in both our direct member base and third party member bases during the quarter is building our confidence that we are through the worst of the post COVID member unwinding. Speaker 200:05:08Selling and operating including marketing and member acquisition costs in the 2nd quarter were $8,900,000 or 45 percent of revenues, which is up slightly from the prior year period. This increase reflects the end of contracts and related expenses incurred as a result of the company's cost improvements that were completed during the Q1. Corporate G and A and corporate expense in the 2nd quarter were $1,500,000 or 8% of revenues, down 15% from the prior year period. We expect to realize most of the benefits of the cost reductions undertaken in the first quarter and the second half of twenty twenty three and anticipate the cost $7,000,000 or negative $0.08 per share compared to the net income of $100,000 in the year ago period. The decline was primarily driven by the reductions in revenues between periods. Speaker 200:06:08Adjusted EBITDA was $3,100,000 or 16% of revenues in the quarter and we generated free cash. Our deferred revenues for the 2nd quarter were $15,500,000 an increase $1,400,000 from the year ago period. We expect to continue to benefit from the inherent negative working capital cycle in our business model as we continue to grow our member base and revenues. In addition, we expect to be in a position to continue generating cash flows from operations in excess of the cash flows we reinvest back into our content library and production enhancements going forward. Due to our in house production capabilities and lack of contractual commitments tied to our content production. Speaker 200:06:52We have significant discretion in the amount and timing of our investments. This flexibility allows us to adjust our investment levels as needed to withstand a downturn a macroeconomic environment if necessary. Through the company's focus on accelerating growth and a return to positive operating margins, We have made tremendous progress over the past several quarters on numerous key areas of improvement for the business. With continued disciplined execution and the launch of Gaia Marketplace, we are well positioned to continue growing revenues and to remain cash flows positive going forward. With that, I will hand it back to Jirka for some closing remarks. Speaker 100:07:34Well, with the cost tail of our staff reduction now being gone, Our annualized gross profit for employee recently reached all time high of over 610,000. With the member growth in July running above the pace for the 2nd quarter, plus GAIA marketplace beginning to be rolled out to improve our ARPU and revenue, We can look for a stronger second half of the year. And with that, that concludes our remarks and I would like to open it for the question. Please, Maria. Operator, please. Operator00:08:17Thank you, sir. We will now be conducting a question and answer session. Season. Our first question comes from Mark Argento with Lake Street. Please proceed with your question. Speaker 300:08:51Hey, Yurka. Hey, Ned. Just wanted to drill down a little bit on the customer acquisition or subscriber acquisition cost. Are you seeing the cost to acquire in terms of going out by keywords or other types of online ad What trends are you seeing there? Do you think it's sustainable to be able to kind of cost effectively acquire at this point? Speaker 100:09:15Hi, Mark. Thanks. We generally will See right now the cost of acquisition is definitely improved from the last year when this the overall environment was much more negative still with the post COVID. So this year, We target generally about 39% to 41% of revenue. It depends on efficiencies. Speaker 100:09:41We were on higher end of it because the efficiencies start to be good. And I kind of hope that that will kind of continue as what it is. 2nd, with COVID gone also seasonality came back Q2 was historically our slowest quarter. So we were pleased with the actual results. And I think as we are kind of focusing on some of new initiatives. Speaker 100:10:06We talk about it now for a little bit for focusing on the members with higher retention just rather than just low cost. It's definitely the overall growth start to be helped by the improved retention. Does it answer your question? Speaker 300:10:26Yes. No, that's helpful. It sounds like Just shifting gears quickly, obviously nice to see you guys cash flow positive in the quarter. I mean, I think in your prepared remarks, did you say you anticipate that being good cash flow positive going forward? Is that what I'm hearing? Speaker 200:10:45Yes. Hey, Mark, it's Ned. Thanks for the question. That is correct. So Q2 was a big transition quarter for us in moving to that positive cash and we do anticipate forecast that continuing for the second half. Speaker 100:11:01Yes, the improvement in the quarter between from the Q1 was about $1,300,000 in a positive direction. And so we kind of hope that with all the tail of the staff reduction being gone, that obviously that will Speaker 400:11:21improve. Speaker 300:11:22Great. It's good to hear. Just last one for me. In terms of the marketplace, could you just refresh us What should we look for there in terms of a rollout or how does that stage out over the next quarter or 2? Speaker 100:11:36Yes. So we just kind of right now rolling it to small amount of people. We're putting it from about 10 20,000. Our members, active members and see kind of their response. So we kind of know how to market because there's several way to display it, mostly on a screen of those people as we can target. Speaker 100:12:00And as we kind of looking a lot for like experience rather than products, our first product We attached to our ancient civilization series. We also have a conference what's called Predulubil civilization. So we go and have We're marketing a tour to Preludely Egypt, which is probably about 8000 to 10000 in Ranch. We kind of obviously jobbing it out, we keep about 30% of that. That's what we will be booked as get 10% discount that come from our side. Speaker 100:12:47So that's roughly how it goes. We're going to slowly increase the number of people and then it's We see it's running smooth. We had other experiences of potential some products. So it's something what I think as we go to end of the year, it should start really meaningfully improve our ARPU and hopefully So the revenue of course. Speaker 300:13:12That's super helpful. I appreciate it. I'll hop back in the queue. Thanks. Speaker 100:13:16Thank you. Operator00:13:20Our next question comes from Thierry Wolod with Water Tower Research. Please proceed with your question. Speaker 400:13:28Yes. Greetings, Jokar and Ned. Mark covered quite a few questions there. But I was curious, you had some good momentum you told us from the foreign language subscribers earlier this year. Is that continuing? Speaker 400:13:46Can you give us some color there? Speaker 100:13:51Yes, that's kind of started already like a couple of quarters and it's increasing. We did invest in the languages Over the last 2 years, as we were dealing with COVID, we didn't have so it was more challenging marketing environment and we didn't want to fight it. We've already reserved the cash last year. So we did spend it on getting ready for still a language offering, especially in the French and German, as the Spanish was existing before. So obviously, those are the languages we kind of going there. Speaker 100:14:25And anytime you go to new language, especially in Which especially in some European countries, we kind of ahead of the curve. There's not a really strong offering on those languages. So we so far see both acquisition cost And retention being better than in the U. S. So we're probably spending more kind of increasing. Speaker 100:14:59Our international membership, it's right now about 35% overall because our direct. So our 3rd parties like Amazon, YouTube, Comcast, they're all in English. So if I take our percentage of our direct, It's probably more on high 40s as a percentage. But either when, if you look at Netflix, they're about 2 thirds. So I over the next few years our international percentage will grow providing the trend what we feel right now will sustain. Speaker 400:15:35Great. Thank you. In terms of your, I guess, not just your U. S, but all your subscribers, your subscribers, your members. Do you have any color on consumption? Speaker 400:15:47Are you seeing more consumption of your content or no real differences there post the whole COVID situation? Speaker 100:15:58Well, I mean during the COVID, We had more viewing and more subscribers there. But after the post COVID wave, when those subscribers like everywhere left. So we kind of saw obviously we kind of saw a Increased post COVID, but I have to say that starting this year in the Q1, Which is kind of going to that people start to have a free time last year. I mean, they could Travel like they can do now. We actually see increases this year. Speaker 100:16:46Again, we used to see it before For COVID, when quite high, it was like it came down, but now as we see increases on the viewing again. Speaker 400:16:59Okay. Any update on do you have some Event Plus scheduled for the balance of the year? Can you give us Some updates there? Speaker 100:17:10Sure. We have about 2 weeks. We have our one of the main conferences, what we call ancient civilization, which is about 10, 11 speakers, which is kind of one of our key conferences. So that's coming, I think, 12th, 13th August with another one like a few weeks later. So we're going to you probably see our cadence and promotion of all events plus Will probably increase with the kind of we obviously have a little bit of disruption through COVID, so we're picking up or we kind of before. Speaker 100:17:52So I think it's a we didn't focus on it till beginning of this year, but I think the 2nd part of the year, It will be focused on it and I think with Gaia Marketplace getting launched we also have a better way how to promote it. Speaker 400:18:11Okay, great. Well, thanks. I appreciate the update. Speaker 100:18:16Thank you. Operator00:18:18Our next question comes from Mark Argento, Blake Street. Please proceed with your question. Speaker 300:18:25Hey, guys. Just a quick follow-up. So kind of just going everything down, maybe just an update on at 5000, 10000 feet, kind of the strategy for the company here. Now that looks like you're able to cost effectively acquire subs again, You're going to lean into growth a little more aggressively, maybe just maybe a little higher level, Jirka, how you see the world right now and kind of where you guys are after the high and the low of the COVID and then the post COVID overhang, it seems like maybe we're kind of normalizing a little. Given the kind of the environment we're in and what you're seeing, what's the higher level strategy at this point? Speaker 300:19:03Thanks. Speaker 100:19:05Well, it's just like from the like beat in the SACL level. It's I actually could see from my point that because now we kind of the new team as we have couple of new additions, It's kind of side of click and it's really good team as a chemistry wide. So I'm very pleased with that. And Obviously, with the growth and increasing ARPU, it's I feel pretty good about where we're heading. So I think you can expect The company acceleration and producing positive cash flow. Speaker 100:19:42And I think the question cash flow versus growth. I think we want to really start to increase the growth, but at staying in positive cash flow. So basically we want to stay in positive cash flow and we generate more dollars, we put it back in the growth, but we do not go negative free cash flow. So I think that's pretty much where it is. It's pretty simple right now. Speaker 100:20:08Grow as fast as we can without going negative in the cash flow. And the cost per employee which is the gross profit for employee which is $610,000 which is you start to be up there. And as long as we can keep it on these levels, I think that the cash flow and Profitability would kind of come from there as well. But I think it's grow as fast as we can without and while Speaker 200:20:44It's a big reason why I came to Gaia, just because of that leverage. I'm just very impressed with a company that runs with around 110, 120 full time employees driving over $8,000,000 of revenue. But the efficiencies that I've seen and the ability to pull the levers when needed around increased marketing spend for the right reasons, It really is impressive. So as I said in my commentary earlier, the continued execution against the existing plan Is very much what I look forward to here, but we just really look forward to the upside leverage of that model. Speaker 100:21:24And also to mention, as Ted talked about leverage, our as Ted mentioned, our gross margin came 90 basis points or something down. It's actually was purely because we keep growing, putting new content and with the revenue slowdown last year, It changed the ratio compared revenue, but if you look at what we call net, we have Basically aligned what you call a cash contribution. It's basically cash margin that how much what it will cost to have a new customer. That's kind of the same number, but less amortization. That actually increased from 90 3% to 94% of revenue. Speaker 100:22:09So from the cash point, how margins actually expanding is where we're talking Speaker 400:22:15free cash flow. Speaker 300:22:17Very helpful. Good luck the rest of the way this year guys. Thanks. Speaker 200:22:22Thanks Mark. Operator00:22:25There are no further questions at this time. I would now like to turn the floor back over to Jirka Rousavy for closing comments. Speaker 100:22:33Well, thank you everyone for joining and we look forward to speaking with you while we report our Q3, Which should be in early November. Thank you very much. Operator00:22:45Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by