LiveOne Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 13, 2024

There are 8 speakers on the call.

Operator

Hello and welcome to the LiveOne Incorporated Q1 Fiscal 2025 Financial Results and Business Update Webcast. My name is Elliot, and I'll be coordinating your call today. I would now like to hand over to Aaron Sullivan, CFO. 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 Q1 ended June 30, 2024. Presenting on today's call with me is Rob Ellin, CEO and Chairman of LiveOne. I would like to remind you that some of 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 SEC for information about factors which could cause the company's actual results to differ materially in these forward looking statements, including those described in its annual report on Form 10 ks for the year ended March 31, 2024 and subsequent SEC filings. We'll find reconciliations of non GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its Investor Relations website. The company encourages you to periodically visit the Investor Relations website for important content. The following discussion, including responses to your questions, contains time sensitive information and reflects management's view as of the date of this call, August 13, 2024.

Speaker 1

And as except required by law, the company does not undertake any obligation to update or revise this information after the date of the call. I'd like to highlight to investors that the call is being recorded. The company is making it available to investors and media via webcast and a replay will be available on its website in the Investor Relations section shortly following the conclusion of the call. Additionally, it is the property of the company and any redistribution, transmission or rebroadcast of this call or the webcast in any form that the company has expressed written consent is strictly prohibited. Now I would like to turn the call over to Livent's CEO, Rob Allen.

Speaker 2

Thank you, Aaron, and good morning, everyone, and thank you for joining us today. I'm thrilled to share the outstanding progress and success that LiveOne has achieved, driven by our unwavering commitment to a creator first model. Our audio division, comprising of Slacker Radio and Podcast 1, we reached incredible milestones in Q1 of fiscal 2025. We achieved a record breaking $31,900,000 in revenues $5,100,000 in adjusted EBITDA, demonstrating the strength of our business strategy and execution. Looking ahead, we project a phenomenal year, 2025 for Audio division, which anticipated revenue of $130,000,000 to $140,000,000 and adjusted EBIT ranging from $20,000,000 to $25,000,000 Our solid foundation and exciting opportunities position us for continued growth.

Speaker 2

Under Brad Konkle's leadership, Slacker Radio has experienced remarkable growth, starting with our great partnership with Tesla, remaining and continue to grow that partnership. We added Bill Whitters almost 7 months ago, formally headed up a division of Microsoft doing over 100 of 1,000,000 of dollars of B2B deals. He has crafted a strategic roadmap for B2B partnerships, securing and signing 4 major additional deals with 63 potential partnerships in the pipeline. We're anticipating closing multiple partnerships with market cap companies ranging from $1,000,000,000 to $1,000,000,000,000 before this year ends. Based on the huge success, signing 5 major additional partnerships, including a 24,000,000 dollars partnership with 1 of the largest streaming networks, a Fortune 250 company, which is adding about $2,000,000 of revenues a month.

Speaker 2

We've expanded our B2B team from 1 to 6 professionals and now aggressively moving to hire ahead of each vertical, we fully expect to have a team of over 10 people leading the charge in our B2B area. Our membership growth continues to grow steadily increasing from $3,700,000 to 3,900,000 dollars We maintain cost efficient marketing spending less than $1,000,000 this year with very little breakage, the lowest by far in the industry. Podcast 1, led by Kit Gray, is seeing tremendous success, signing 37 new podcasts and in the last 12 months, bringing our total to 187,000 187 podcasts. We've sold a second major show to a streaming partner that is moving our podcast from podcasting to television and film. There's a unique amount of money that will be coming in from those television shows over the next couple of years.

Speaker 2

Our publishing business, led by Josh Thalberg, grew 300% and earned 2 Grammys. We partnered with Cartoon Studios to produce and publish and distribute original programs for Winnie the Pooh, the mega brand funded with over $30,000,000 Our celebrity brands division led by Sarah D is set to introduce 10 to 12 celebrity brands over the next 12 months, including Birthday Snacks, Chardonnay with Jeremiah and Smiley Cough with Kyle. We're expanding our stock buyback again to $12,000,000 We purchased over 4,400,000 shares of stock and extinguished those, leaving us with additional 6,300,000 dollars dedicated to the program. This move underscores our confidence in the company's future and commitment to enhancing shareholder value. In conclusion, we believe our stock remains extremely undervalued given our impressive growth and unlimited future prospects.

Speaker 2

We're confident in our direction and excited about what lies ahead. Thank you everyone for your support and belief in LiveONE. I'm now going to hand it over to Aaron Sullivan to review the Q1 results.

Speaker 1

Thanks, Rob. I'll spend just a minute providing a very brief overview of our results for the Q1 of fiscal 2025 ended June 30. Consolidated revenue for 3 month period ended June 30, 2024 was $33,100,000 Slacker posted record revenue for Q1 of $18,700,000 and adjusted EBITDA of $5,400,000 Podcast 1 posted record revenue of 13.2 $1,000,000 with an adjusted EBITDA loss of $300,000 For the Q1 of fiscal 2025, revenue consists of 56% membership and 44% advertising, sponsorship, merchandising and other compared to 54% membership and 46% advertising, sponsorship and merchandise in the prior year period. Consolidated adjusted EBITDA for Q1 fiscal 2024 was 2,900,000 dollars On a U. S.

Speaker 1

GAAP basis, Slide 1 posted consolidated net loss of $1,700,000 or $0.02 a share diluted share in Q1 fiscal 2025. As of June 30, 2024, total members, which include free members, were approximately 3,900,000. Note that included in total members are certain members who are currently subject to a contractual dispute for which we are not currently recognizing revenue. Rob, I'll turn it back to you.

Speaker 2

Great, Aaron, and thank you for the great job you've done. Just to wrap it up, real focus right now is on those B2B partnerships. That first $24,000,000 deal, the revenues are just kicking in. We're seeing the growth in our revenues. We're seeing our growth in our EBITDA, And we're seeing the opportunity that these B2B deals that we could go on a hot streak here.

Speaker 2

And as we do, these are major companies, there's a $1,000,000,000 to $1,000,000,000,000 companies, major verticals across auto, obviously, with Tesla expanding into other auto companies, carriers, carriers around the world, merchandise businesses, retailers, hotels, airlines. There's so many opportunities right now and the team has really put together a fabulous lineup and that's why we're going to expand the team, we're going to grow the team for the first time in almost 4 years and we're going to focus all that energy on those big $20,000,000 plus partnerships with major partners across those verticals. So I want to thank everyone for joining and open it up for any questions.

Speaker 1

Thank

Operator

Our first question comes from Brian Kinstlinger with AGP. Your line is open. Please go ahead.

Speaker 3

Great. Thanks for taking my questions. It's great to see the solid sequential growth in podcast revenue. And you mentioned that the B2B partnership kicking in and beginning to have a material impact count of about $2,000,000 a quarter, I think you said. I'm curious how much more does that partnership have to go in terms of reaching the peak run rate?

Speaker 2

Yes. So we don't give you the exact numbers, Brian, on it, but this is it started in November and scales up. So I think you'll see that revenue growth in each quarter going forward. And yes, we couldn't be more excited about the partnership and the opportunity to get much bigger, right? This is the beginning of putting our content across large streaming platforms.

Speaker 2

And I think it's so critical that the cost of content has become so expensive that it's almost $1,600,000 an hour of content. And the beauty of our content is we have AAA content with the biggest social media stars in the world, right? It costs us under $3,000 an hour. So we have the opportunity to really grow that. And I see this as the first of many streaming partners and streaming networks.

Speaker 2

When you think about music choice on cable or satellite and how many channels were audio, let alone video, and you think about MTV and country music channels and all, there really is no thought leader in music anymore, and we have an opportunity to really be that thought leader across audio and video.

Speaker 3

Great. And then as it relates, I think, so correct me if I'm wrong, the $25,000,000 B2B partnership you just mentioned and it was on podcast press release, that's the one that was pending on the last call and that's in addition to the other one that's ramping. Is that right? And if that is right, can you comment on details such as is that $24,000,000 over some period of time? And how long do you think before that begins to ramp?

Speaker 2

Yes, let's be a little bit careful on that. We're going to have a lot more details shortly on the next partnership, and we'll provide that publicly in the very near future. And I think it won't just be 1. As we stated earlier, we've now signed 4 additional major partnerships and we'll have some real clarity on that coming over the next couple of

Speaker 3

But just to be clear, that is $24,000,000 partnership, because it just happened to be the same number. I want to be clear, that's different than the $24,000,000 one from November, right?

Speaker 2

No, no, that's the same one. That started in November, it is growing and it's scaling up.

Speaker 3

Okay. And then can you speak maybe to the inventory fill rates of podcast? I guess, the part of the question is, on today's viewership or listeners, sorry, on podcast, where could how much better could the inventory fill rates become as you win lots of these partnerships?

Speaker 2

Aaron, do you want to take that?

Speaker 1

Yes. I think we're seeing consistency in our kind of fill rates in terms of what we're able to sell through to partners. So we will try to optimize that. The quicker way to revenue though is just to increase the available inventory, right? And that's kind of what we're working towards.

Speaker 1

Yes, I think I'll leave it at that. Rob, do you have anything to add?

Speaker 2

Yes. I'm not sure I followed the exact question. I think what you're articulating with these additional B2B deals is not just inventory, this is traffic and audience, right? As we spread our tentacles, right, and spread it off across a Fortune 250 company, right, with a massive streaming network, we're getting more eyeballs onto ours. The more traffic, the more audience, the more advertising we get.

Speaker 2

And I think that answers it, Brian, but I'm not sure I understood fully your question.

Speaker 3

Yes. No, yes. We'll take it offline. Perfect. Only my last question is, how aggressive are you advertising to increase your market share or growth in downloads and unique listeners?

Speaker 2

How aggressive, say that one more time?

Speaker 3

I guess, I'm just curious, is the budget increasing? I mean, how are you acquiring new listeners?

Speaker 2

Continue and they do with TikTok multiple times and those opportunities to keep getting our content into new places where already the distribution and the traffic is built is really the key. And part of the beauty is because we own our own technology, right? And all those revenues come for us, right? The more traffic, the more audience, the more revenues we derive.

Speaker 3

Okay. Thank you.

Operator

We now turn to Barry Stine with Hills Research. Your line is open. Please go ahead.

Speaker 1

Okay.

Speaker 4

Okay, likewise. On the 60 $3,000,000 pipeline, wondering if we can get a little more breakdown on that. Rob, you mentioned a number of different verticals. You're hiring senior managers for each of the verticals. How does that pipeline break down by vertical?

Speaker 4

And within that pipeline, how many of those have you tendered a contract to, so you're far along in the process? Could you give us a little more visibility on that pipeline?

Speaker 2

Yes. I mean, I think I don't know if I can get much deeper than that from a legal standpoint, but I can tell you this is, A, we absolutely will have additional auto companies this year, right? Number 2 is because our balance sheet and all the debt was converted at $2.10 that's right, our balance sheet is pretty pristine now and very it gives us the opportunity to expand globally, right? So we have opportunities with carriers around the globe. I love the opportunity, love, love, love and couldn't be more excited about where we're going with retail, right?

Speaker 2

The opportunity that you're watching Amazon, right, and Amazon has so much rich media, everyone from Best Buy to Walmart to Costco, all came all the retailers must have, right, that are competing in the digital world, right, must have content. And you're seeing that happen and starting to see some of my thoughts come to fruition as you saw Walmart buy VIZIO for 2,300,000,000 dollars It only sold for $230,000,000 only 3 years ago, right, when Charlie Collier bought it. Now they're paying $2,300,000,000 for it. That's the first telltale sign they're going to compete head on with Amazon and they're going to create their own content like Amazon Prime. And I see the same thing across all the retailers, it's really exciting.

Speaker 2

In terms of hotels and airlines and loyalty programs, really just massive opportunity for our company. We're one of 10 DSPs in the world. We're the 3rd fastest growing. We've got this very unique content and proving more and more original content like the event we're doing tonight, right, you're going to have more and more original content from music, right, to podcasting, to podcast turning to television shows that I think that more and more networks are going to use need our content. And so I'm really excited about where that's going.

Speaker 2

And yes, that 63 deals were there's way more than that in the sort of pipeline. These are the ones that we think have really moved along that are in shape that have an opportunity to close in the next 12 months.

Speaker 4

And then continuing on that, I believe you've said that there are 4 deals that are actually signed. You can't discuss who they are, but as they go live, we'll see press releases with announcements on those. Any update on that process?

Speaker 2

Yes, it's coming. So again, those were all we said before year end is coming. So the year is coming fast, right? And so you're going to see announcements on each one of those shortly. And with those, you'll see some details and highlights where they're going.

Speaker 2

And when you're talking about $1,000,000,000 to $1,000,000,000,000 multi $1,000,000,000,000 partners, right, you got to be careful what they're going to let you say and how much detail they're going to give in it, right? But for us, as you can imagine, these are very meaningful, right? Every $20,000,000 deal, if 4 more deals hit, right, and we had those 4 deals, even if they're half the size of last one, that's going to put us in the $200,000,000 range next year. What I've told The Street is, our goal is to get 10,000,000 subscribers. At 10,000,000 subscribers, we'll be doing $500,000,000 in revenues and $150,000,000 in EBITDA, And that's the goal over the next couple of years.

Speaker 4

And then I wanted to pick up on the word you've used a couple of times in the call, which is globally. In your script, you talked about serving carriers globally. And then a minute ago, in response to my question, you cited the balance sheet cleanup that will allow you to go global. So that's been a long term aspiration of the company to get global streaming rights. And one of the things I believe that kicks in almost automatically is Tesla, automatically.

Speaker 4

So is that what you're alluding to is that you're closer to getting music streaming rights on a global or at least European basis? And what would the implications of that be?

Speaker 2

I'm hoping you'll see very shortly and this is we've gone through some tough times here. We had to survive COVID. We lost our entire live business. We were inches away from having all those licenses and moving overseas to them, but it was unaffordable, right? Post COVID, we lost 30% of our revenues and a big part of the growth story of the company.

Speaker 2

We had to pivot it, right, and turn it. This team has just done a magical job of fighting through adversity in difficult times, and we've proven we're going to survive it, but not only we're going to survive, we're going to expand around the globe. And for anyone that knows me, my last two companies, including Digital Turbine, was built off the backs of carriers, right, overseas. But we have tremendous relationships over there. So it's definitely in the forefront of positioning where the company is going.

Speaker 2

And absolutely, if you look at all the if you look at all the memberships, whether it's Netflix or it's Spotify, half their revenues come in the U. S. And half come overseas, right? We have 25%, 28% of our traffic is overseas. We're not deriving any revenues from it.

Speaker 2

But it had to be affordable, it had to make sense and now is the time where we're ready and in way better position to be able to do that. And I think you'll start to see long term deals with our partners, right, our existing partners, not only those 63 right there in the pipeline, but also our existing partners start to see for the first time long term partnerships and expansion of where we can where our content can live.

Speaker 4

Okay, that's great. And then my last question, you just alluded to my last question. You started to mention live events. And I know in the early history of the company pre COVID that was the main event, live events. I saw and I thought it was interesting that you put a press release that you're doing a live event in the Hamptons.

Speaker 4

And previously what you've said is that you would not do live events unless they were profitable and you would need to get a sponsor to do that. So are we is the company dipping its toes back in the water on live events? And does that mean you found a way to do this more profitably?

Speaker 2

Yes, absolutely. And the event that we're doing tonight, we have great sponsors from 11 vodka on, right? We're positioning ourselves again that we've proven, right? And Josh Olbero runs our music, has proven, we had Teddy Swims play at our studio in Beverly Hills, right? And next thing you know, after seeing them on streaming platform, God becomes one of the biggest stars in the world, right?

Speaker 2

We had Kid Laro before anyone heard of him. So we're going back to our thesis that as a thought leader in music, it is critical to be a thought leader in not just audio, but video. And now that we have the resources, right, and we obviously have the relationships with the talent as well to the industry. This is the time to really step on the gas. And you're going to watch something pretty spectacular tonight.

Speaker 2

You're going to see 12 artists perform of all genre of music. You're going to see one of the greatest pianists, classical pianists play all the way up to the main squeeze. And in between, you're going to see some of the great R and B and hip hop artists performing. So it's going to be a really special night and our talent is getting closer to our company as you can see by the celebrity deals, right, the celebrity partnerships. We don't only want to be able to derive revenues just by putting music up.

Speaker 2

We're starting to own products in conjunction with that talent. And I'm really proud of the team and what they've done. Sarah, who's joined us is Head of our Celebrity Brands, brings a unique talent to the company, unique skill driving massive revenues. She was at White Claw when they were doing 600,000 of revenues. I think she left when they were doing about 4,000,000,000 dollars We see a huge opportunity to be able to drive more and more revenues off of those relationships with podcasters as well as with the social media stars, including artists.

Speaker 4

Okay. That's my questions. Congratulations on a great quarter, guys.

Speaker 2

Thanks, Barry. Thanks for your support.

Operator

We now turn to Sean McGowan with ROTH Capital Partners. Your line is open. Please go ahead.

Speaker 5

Thank you. I apologize if these questions have been asked or I got dropped from the call a couple of times. First, Aaron, on cost of sales seems to be a little higher than we had expected, particularly at podcast 1. Can you talk about what's driving that?

Speaker 1

Yes. Hi, Sean. How are you? Yes. So our content acquisition costs have been a little bit higher than we anticipated.

Speaker 1

That's kind of the upfront cost to signing some of these deals and new podcasts. Going forward, we expect it to level out over the next couple of quarters about where we're at today and then start to improve from there.

Speaker 5

Yes. I'm tying that, but a question for Rob then. Is this surprising to you? I thought we were in an environment where it was actually going to be easier to pick up shows that were either getting dropped or not getting renewed on the same terms from other networks. Is that proving not to be the case or less of the case than you had expected?

Speaker 2

No. It's actually really exciting. I mean, we're just signing so many podcasts. We're announcing one almost every week and there's a cost to it, right? The way that it works, Sean, in podcasting, you and I talked about this a little bit is, is you sign the podcast, right?

Speaker 2

You pay them some money, right? They even if they start doing the podcast the next morning, you're paying them for the next 3 months and you're not collecting back your money for 3 to 4 months. So there's a window of time. So I would say, Aaron hit it right in the nose, but it's really exciting how many podcasts we're signing and they're adding about $350,000 to $500,000 on average per revenue, every single one of these podcasts is a joint. So there's going to be a little cost to it in the beginning, but can't really be can't be better than growing the revenues right now and doing that.

Speaker 2

And we'll achieve we'll get that in the back end. We'll get those back in the back end when we start to get paid by the advertisers.

Speaker 5

So it's not so much that you have to pay more per podcast to get them, it's just that you're signing more than you had expected to, so that's why the cost is higher?

Speaker 2

Yes. Yes. And this has been really exciting there's been some really exciting signings as well that there's a little bit of money, it's got to go out the door day 1.

Speaker 5

Okay, got it. And then in terms of you talked a lot about these deals that you're in process with and signing and lining up more partners. So is your strategy then to only update or improve or increase the revenue guidance once the deals are signed? Because I would have thought that if you're signing new deals and you're close on some others, maybe you can increase the revenue guidance. Is it you're just going to wait until they're nailed down?

Speaker 2

Well, I think the guidance is a good number right now and we're going to as we announced the next B2B deals, right? Again, the bigger our distribution is, the bigger our audience is, right, the more revenues we're going to drive. So I'd be surprised if we don't raise those guidance again at the end of next quarter, but let's look carefully. This is great growth, spectacular growth for Podcast 1. And let's look at that number again at the end of this quarter and really make sure that we're going to beat the number, right?

Speaker 2

It's a tough market out there, as you know. We want to make sure we beat the numbers.

Speaker 3

All right.

Speaker 5

Thank you very much. Appreciate it.

Operator

We now turn to John Laviekis with Laviekis Financial. Your line is open. Please go ahead.

Speaker 6

Hey, guys. Congratulations on a strong quarter and sorry for the technical problems on the conference call with Sean. There were some issues. But anyway, excellent presentation. Quick question for you.

Speaker 6

So at one time the company disclosed its relationship with JPMorgan and represent them in strategic dialogue. Any comments you want to make and what your plans are there and how it's progressing?

Speaker 2

I mean, we've always been an acquisition vehicle and we've been hampered over the last couple of years from doing that with all the different difficulties that have been out there. This is certainly a time that both offensive and defensively, we are continuing to aggressively explore and are extremely excited about the opportunities that are out there, right? And as we keep moving up the ladder, we're number 11 in the world in podcasting, we're number 10 in audio, right? We're certainly a candidate that so this could come aggressively try to buy us, but we're also looking at some great assets that media assets have been decimated. And probably even more on the public side than the private, there's some great assets out there that we will aggressively look at.

Speaker 2

If we could find another Slacker, we could find another Podcast 1, we bought both of those companies doing $20,000,000 of revenues, right? Slacker is now on a run rate to do $85,000,000 right? We bought Podcast 1 doing $20,000,000 It's now on a run rate to do over $50,000,000 If we can find another great asset that is accretive to us, and fits in with the team and the skills that we have, we are absolutely aggressively looking on both sides, both offensively and defensively. And the entire JPMorgan team is coming in for the event tonight. So we're deep in the trenches with them on a regular basis on all the excitement and energy around both sides, both offensively and defensively.

Speaker 6

Sounds great. The Slacker acquisition looks to be brilliant and what a job that Brad has been doing. And any quick comment on that? You mentioned 63 B2B contracts in a pipeline, but actually now you're saying that that's really the core opportunities and there's vastly more than that in a pipeline. That's an interesting comment.

Speaker 6

And what's the intellectual property there that how many patents do you have and what how that differentiates from the rest? It seems to be really taking off that business, its unique model, etcetera?

Speaker 2

Yes. Well, we have over 40 patents. I think from a patent standpoint, we're one of the thought leaders in the space. I think from the standpoint of our IP, This is the first time we're starting to showcase how valuable IP can be. And just think about taking a podcast, right?

Speaker 2

And I said Barnum Town would be a bidding war, right? We just sold the rights to it and we'll talk about who the partner is very shortly, right? And in taking a podcast that cost us almost no money, right, literally limited money and now selling it to television, but very serious money. My background previously and my team's background, we've made a lot of movies, we've made a lot of television shows. The cost is 0 to us going forward.

Speaker 2

So when you own that IP, you get a second window of money that could be staggered, right? And I said we're going to sell 1 a year for the next couple of years. Now we've sold 2 this year. If we could sell 2 a year, it could be tens of 1,000,000 of dollars in profits, let alone revenues, but profits that come to the company over the next few years with no additional cost to us. And just to give you an idea on both Vigilante and Barnum Town, their streaming partners are going to be in by the time we turn the corner of Vigilante, they've already spent well over $1,000,000 on Barnum Town, it will be well over $1,000,000 shortly that studios are spending money on.

Speaker 2

And because we have a proven not only do we have proven IP, but on top of having the IP, we have proof that there's an audience. When we go into those negotiations, we go with a very different bullet than you go in when you just go in and you got a book or a script or great story. I see really, really super opportunities and excitement around that. And for anyone who doesn't know, I owned atmosphere films previously and was fortunate enough to have the movie 300 in Spiderwick Chronicles. And when the studios are paying for these things, you never know how they can go.

Speaker 2

And 300 ended up doing it, dollars 1,100,000,000 in revenues. So we're really energized about owning our own IP and it's kind of this team skill is owning our own IP.

Speaker 6

Great. Thank you, Rob.

Operator

We now turn to Sakhem Ismailoiz with sorry, a Private Investor. Your line is open. Please go ahead. Sakan, your line is open.

Speaker 7

Sorry, I was muted. Thank you all for your presentation and congratulations on your remarkable results. And most of my questions have already been answered, but I still have some more questions. And first of all is, I noticed that general and administrative costs quite increased. And could you explain it?

Speaker 7

How can you spread these girls?

Speaker 2

I don't want to take it. I'm having a little trouble hearing it.

Speaker 1

No, I'll take that one. Yes, I think the question was our G and A expenses have increased. So yes, there are 2 drivers to that. 1 is additional stock based compensation. We've had some executive contracts that have some stock based comp in them and that's kind of across the business unit.

Speaker 1

And then specifically as it relates to Podcast 1 and this is kind of included in consolidated results as well, there's additional G and A just as it's a separate public entity. So you've got additional legal accounting and just general public company expenses. That's really what's driving the increase in G and A.

Speaker 7

So there's no extraordinary costs included there.

Speaker 1

Sorry, I didn't quite catch that. Can you repeat that?

Speaker 7

Well, some extra ordinary costs were included in G and A costs.

Speaker 3

Yes. I think that was I think if we

Speaker 2

can hear you right, it's really yes, I think it's really hard to hear you. But I think just to answer you, Aaron and our finance team have done a brilliant job in that we're filing 2 audited financials rights as additional costs there, both legal and accounting for both the public companies Live 1 and Podcast 1. And then we also explored the opportunity of doing a stack with Slacker Radio, right? And so there was also additional costs of doing the audits on Slacker. So stay tuned on that.

Speaker 2

There'll be some excitement and energy around that as well. But there is additional both legal and accounting costs to this.

Speaker 7

Okay. Thank you. And one more question. Is that revenue from Audi division maybe in some extent, it's going by seasonal factor.

Speaker 1

I'll

Speaker 2

have you try that one more time. And I really apologize.

Speaker 1

I think the question is there seasonal pressure across the business units, I

Speaker 7

think that was the question,

Speaker 1

and seasonal factors?

Speaker 2

Yes. We have some

Speaker 3

you got

Speaker 2

it there?

Speaker 1

Go ahead Rob. All right. So I'll take it. So in our merchandise business and in podcast, our Q3, which is fiscal Q3 or calendar Q4, that's our largest quarter. But other than that, our subscription business, no seasonality there and that kind of even seems out a little bit.

Speaker 7

Okay. Thank you.

Operator

We have no further questions. I'll now hand back to Robert Ellin for any final remarks.

Speaker 2

Yes, I think we covered a lot today. I think we covered a lot in the earnings and how spectacular the numbers were. I want to thank everyone for joining and thank everyone for the support. And we look forward to updating everyone very shortly on some major B2B partnerships. And those 4 that we have already signed will be announced shortly and there will be more to come.

Speaker 2

So thank you everyone and appreciate it and we look forward to the next call.

Operator

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

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