Gaia Q2 2026 Earnings Call Transcript

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August 10, 2026

Key Takeaways

  • Negative Sentiment: Second-quarter revenue fell 5% year over year to $23.3 million, while net loss widened to $3.0 million from $1.8 million. Gross margin also declined to 85.3% as lower revenue weighed against a relatively fixed content-cost base.
  • Negative Sentiment: Management expects the third quarter to remain challenging, with results similar to Q2, and withdrew its prior expectation for fourth-quarter net-income break-even. The company now targets a return to positive free cash flow in Q4, with revenue expected to grow sequentially from Q3.
  • Positive Sentiment: Gaia says its customer-acquisition-cost spike from an advertising-partner algorithm change in April and May has been corrected, while efforts to reduce reliance on that partner are underway. The company also identified more than $3 million in annualized savings through marketing, technology, vendor, and overhead reductions.
  • Positive Sentiment: Management reported encouraging early engagement from AI-powered tarot, oracle, horoscope, and short-form content features, as well as strong opt-in rates for its early community product. These direct-member-only tools are intended to improve retention and support the company’s target of a 20% improvement in churn and ARPU by Q4.
  • Neutral Sentiment: Gaia continued expanding its content and Igniton supplement offerings, including a new Jim Kwik series scheduled for October, additional original programming, and new sleep and eye-serum products. Executives characterized Igniton’s first year of supplement sales as a proof of concept but provided no specific financial outlook for the business.
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Earnings Conference Call
Gaia Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Good afternoon. Welcome to Gaia's Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. Joining us today from Gaia are Kiersten Medvedich, CEO, Yon Nuta, COO, and Ned Preston, CFO. After the speakers' presentation, there will be a question and answer session. Before we begin, Gaia's management team would like to remind everyone that management's prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions, including, but not limited to, statements of expectations, future events, or future financial performance. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. Although we believe these expectations are reasonable, Gaia management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially.

Operator

These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Gaia's latest annual report on Form 10-K filed with the SEC. All non-GAAP financial measures referenced in today's call are reconciled in the company's earnings press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, August 10, 2026. Finally, I would like to remind everyone that this conference call is being webcast, and a recording will be made available for replay on Gaia's investor relations website at ir.gaia.com. At this time, I'd like to turn the call over to Gaia's CEO, Kiersten Medvedich. Please go ahead.

Kiersten Medvedich
Kiersten Medvedich
CEO at Gaia

Good afternoon, everyone. As we discussed on our last call, our business today reflects the deliberate trade-off we said we were making, prioritizing the long-term quality of our member base over near-term growth. That transition, combined with higher industry marketing costs in April and May, weighed on our results this quarter. As we told you, we were making a deliberate shift toward our direct member base, and that this transition would put near-term pressure on revenue growth as we partially pulled back from lower-value regions like Latin America and from third-party acquisition channels. In fact, the revenue decline in the second quarter came from our international business. That is exactly what you are seeing in our results, and it's consistent with the plan we laid out. We still remain focused on two metrics: reducing churn and growing ARPU, targeting a 20% improvement each by the fourth quarter of this year.

Kiersten Medvedich
Kiersten Medvedich
CEO at Gaia

We are on track against this framework. I want to be direct that we are not taking the softness in our top line lightly, and we've taken swift action across the organization in response. On the marketing side, we experienced a temporary spike in customer acquisition costs in April and May, driven by an algorithm change at a major advertising partner. We identified the issue and have since brought it back in line with our expectations. For context on why we manage acquisition costs this closely, on average, a direct member today has a lifetime value of over $500 against a customer acquisition cost of $85. That roughly 6 to 1 relationship is why we are willing to give up lower quality revenue to protect it, and an increase in CPA is something we move quickly to correct.

Kiersten Medvedich
Kiersten Medvedich
CEO at Gaia

We view this as a reminder of the importance of diversifying our acquisition channels as we build out our direct marketing capabilities, and it is an area we have actively been addressing. More broadly, since late February, we've undertaken a systematic review of spend across the organization in marketing, technology, and overhead, and we've made targeted reductions to our vendor costs. We expect to benefit from all the cost reductions by the end of the year. These are not one-time cuts. We believe they reflect a more disciplined, sustainable cost structure going forward. As an example, our annualized gross profit per employee increased both annually and sequentially to $819,000, demonstrating our continued efforts to increase efficiency. Now, turning to content. We continue to invest in expanding and strengthening Gaia's programming slates.

Kiersten Medvedich
Kiersten Medvedich
CEO at Gaia

This quarter, we signed best-selling author, transformational coach, and hypnotherapist Jim Kwik to host a new series launching in October. The series will feature conversations with leading voices across wellness, spirituality, and culture, including guests such as Judd Apatow and Jack Osbourne. We believe Jim's strong public profile, engaged following, and notable guest lineup will help us reach a broader audience. This, combined with a much larger slate of new returning content launched during the quarter, including the fourth season of Gregg Braden's "Missing Links," "Astrology 101," reflecting the continued popularity of astrology, and "The Pulse," a new podcast hosted by Ben Stewart. We also introduced Gaia Shorts, the best of our long-form content, as a new way to help members discover more of our vast library.

Kiersten Medvedich
Kiersten Medvedich
CEO at Gaia

These five-minute clips highlight key moments and ideas from our deeper long-form programming, making it easier for members to explore more of what Gaia has to offer. Gaia Shorts consistently rank as the most popular content when released, and we believe they can become an important tool for increasing content discovery and engagement across the platform. Lastly, an update on Igniton. In May, we introduced two new products at the Biohacking Conference. First was IgniREM Sleep. It supports longer REM sleep, fewer sleep interruptions, and an easier return to sleep after waking, helping deliver a better quality sleep overall. And then second was IgniPeptide Eye Serum, which is designed to support more hydrated, youthful-looking eyes while reducing the appearance of wrinkles, puffiness, and dark spots.

Kiersten Medvedich
Kiersten Medvedich
CEO at Gaia

In Igniton's first year of supplement sales, we've been encouraged by the results, which serve as a strong proof of concept for the Igniton Quantum Wellness Technology. And while we don't comment on future products, we believe we're only beginning to scratch the surface of the Igniton technology's potential applications. With that, I'd like to turn the call over to Yon Nuta, our Chief Operating Officer, to talk more about how we are evolving the Gaia product experience and using AI to support that work. Yon rejoined Gaia last October after previously spending several years with the company as an executive between 2016 and 2021. Yon?

Yon Nuta
Yon Nuta
COO at Gaia

Thanks, Kiersten. It's great to speak with you today. Before I get into product, I want to talk about AI, because at Gaia, it is both how we operate and what we build. Internally, we use it across content production, product development, and marketing operations. It is a productivity accelerator that lets lean teams scale their impact and respond to market dynamics faster than we otherwise could, and it is a direct contributor to the cost savings Ned will walk you through in a moment. Externally, it is increasingly how members find and experience our content, and those experiences are available only to our direct members. Our AI guide has proven to be a leading engagement driver, and that is what informed our decision to build the AI-powered tarot, oracle, and horoscope experiences we launched this quarter. The early data is strong.

Yon Nuta
Yon Nuta
COO at Gaia

Members spend more time per session with the AI tarot experience than with any previous AI feature we have launched. More importantly, it drives incremental return visits and incremental content viewership. This is not engagement sitting beside the library. It is engagement that pulls members back into it. That is how a daily habit becomes retention. On discovery, we are testing Moments, our vertical short-form experience generated with AI, which brings the best moments in our library into the format people are already used to on their phone. Early signals are encouraging on two dimensions: engagement with the feature itself and incremental long-form viewership. We will size that for you as the rollout broadens. Turning to community, we have launched the ability for members to build and share rich profiles and to find and share playlists and individual titles with both members and non-members.

Yon Nuta
Yon Nuta
COO at Gaia

We opened an early alpha Circle, which lets members chat directly with one another. In our test groups, more than 70% of members have opted in. Here's why that matters. Gaia's content is about transformation. Members come to us while they are questioning something, healing something, or changing the way they see the world, and that is usually a solitary experience. The people closest to them are often not on the same path. Members tell us this directly. The community they already have does not understand the transformation they are going through, so they have been doing the meaningful work of their lives alone. Circle is built to change that. The commercial logic follows. A member can cancel a content library. It is much harder to leave people who understand you.

Yon Nuta
Yon Nuta
COO at Gaia

Connection is the most durable retention mechanic in any subscription business, and it is the one thing we have never offered. Every one of these experiences, the AI feature, Moments, Circles, is only available to a direct member. That is the mechanism behind the churn improvement we are targeting for the fourth quarter, and it is why we are willing to trade near-term revenue to get there. Now, over to Ned for the financial details.

Ned Preston
Ned Preston
CFO at Gaia

Thank you, Yon. Revenues for the second quarter of 2026 were $23.3 million, a decrease of 5% from the year-ago quarter. This primarily reflects the impact of our shift in marketing away from discounted members with a lower dependency on third-party partners toward direct member acquisition. It also reflects continued competition for consumer spending and engagement across the broader SVOD industry, which we anticipated at the beginning of this year. Gross profit was $19.9 million, down from the prior year, with gross margin of 85.3% compared to 86.7% in the second quarter of 2025. The decline in margin was primarily attributable to lower revenue against a relatively fixed content cost base. Selling and operating expenses were $21.6 million, compared to $20.6 million in the prior year period, reflecting our change in marketing headwinds and continued investment in Igniton.

Ned Preston
Ned Preston
CFO at Gaia

Corporate general and administrative expenses decreased to $1.5 million from $2.9 million, reflecting our ongoing concentration on cost reductions. Net loss for the quarter was $3.0 million, or negative $0.12 per share as planned, compared to a net loss of $1.8 million, or negative $0.07 per share in the second quarter of 2025. Our cash balance was $5.3 million as of June 30th, 2026, with a fully available $10 million line of credit. The seasonality of annual member renewals impacted our cash inflows by $2.4 million versus the first quarter. This, together with lower revenue and higher marketing costs, were the primary drivers of our cash position this quarter. Since the start of our cost review, we've executed or identified over $3 million in annualized savings.

Ned Preston
Ned Preston
CFO at Gaia

Given the transition we're managing through, we expect the third quarter to remain challenging, with results similar to what we're reporting today. With the added pressure of the advertising cost spike that impacted our business in April and May, we are no longer forecasting break-even net income for the fourth quarter of this year. Instead, our focus is on returning to positive free cash flow in Q4. We continue to operate with a solid balance sheet and no debt outside our small campus mortgage, and we have full access to our $10 million line of credit if needed. That completes my summary, and that concludes our remarks. I would like to open the call for questions. Operator?

Operator

Thank you. At this time, we'll open the line for questions from the company's publishing analysts. We ask that you limit yourself to two questions. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. Now we will take our first question from Ryan Meyers with Lake Street Capital. Excuse me, Lake Street Capital. Please proceed.

Ryan Meyers
Ryan Meyers
Analyst at Lake Street Capital

Hey, guys. Thanks for taking my questions. First one for me, Ned, I appreciate the commentary that you gave us on the Q3 revenue. But as we think about the Q4, I think if I remember back to last earnings call, you guys talked about maybe a return to double-digit growth in Q4. Based on the commentary and what you guys have seen thus far, how should we be thinking about the Q4 from a revenue perspective?

Ned Preston
Ned Preston
CFO at Gaia

Yep. Hey, Ryan, thanks for the question. We, as I mentioned, expect Q3 to be similar to Q2. But we look to that to be the bottom of the revenue. We will grow from Q3 to Q4 sequentially. Q4, as I said, will not drive us to profitability. We are really looking for Q4 to get us back on the free cash flow front at this time.

Ryan Meyers
Ryan Meyers
Analyst at Lake Street Capital

Okay. With that not driving in the Q4 the profitability, and you covered a couple of things on the call, but just so we are aware, can you just walk us through what those couple of things were just so it is at top of mind and we can fully understand sort of the change there from the commentary last quarter?

Ned Preston
Ned Preston
CFO at Gaia

Yeah, absolutely. It was really the seasonality of our annual member renewals impacted our cash inflows. But really from a revenue standpoint, it had to do with the higher marketing costs that Kiersten commented on in the April and May timeframe. Those headwinds really have kind of proven to push back our expectations for the year, but we are getting that back on track, as Kiersten had said. That is really the main difference.

Ryan Meyers
Ryan Meyers
Analyst at Lake Street Capital

Okay. Got it. Well, thank you for taking my question.

Ned Preston
Ned Preston
CFO at Gaia

Yep. Thanks, Ryan.

Operator

Our next question is from James Sidoti with Sidoti & Company. Please proceed.

James Sidoti
James Sidoti
Analyst at Sidoti & Company

Hi, good afternoon. Thanks for taking the question. Ned, how do you get those marketing costs back on track?

Ned Preston
Ned Preston
CFO at Gaia

I'll comment, and I'll look for Yon and Kiersten to give a little bit of color. We saw these headwinds in kind of the April and May timeframe, and it caused a higher CPA than we've been accustomed to or had been planning. We've been working very closely with our marketing team to go out and, while we're going through this change to the direct customers, we really weren't anticipating some of these headwinds. We had a different algorithm with one of our major advertising partners. We have that back on a better track. Maybe Yon, you could elaborate a little bit.

Yon Nuta
Yon Nuta
COO at Gaia

Yeah. Hey, James. Just one thing to clarify, we already have done this. There were three things that happened at once during that early Q2 time period. One, rebuilding our direct acquisition without discounting is a huge piece. Two, our price increase. Third, the algorithm changes at a major advertising partner. We've taken deliberate steps since then to reduce our dependency on said advertising partner so this doesn't happen again.

James Sidoti
James Sidoti
Analyst at Sidoti & Company

Okay. All right. You continue to invest in the AI and to build the community. What's your sense in timing for those investments to pay off?

Yon Nuta
Yon Nuta
COO at Gaia

Yeah, that's a great question, James. As we said previously, our plan is still to continue working on community and launching it through the end of Q4. As we launch it, we're measuring very closely its impact on retention so we can get a sense of timing and payoff.

James Sidoti
James Sidoti
Analyst at Sidoti & Company

All right. Do you still think that annual price increases are something you can count on, or are you starting to back off from that strategy?

Ned Preston
Ned Preston
CFO at Gaia

So we actually, as you know, we increased our pricing as of March 1st of this year. We don't anticipate raising our pricing again until 2028. I think that answers your question, Jim.

James Sidoti
James Sidoti
Analyst at Sidoti & Company

Right. Okay. All right. Thank you.

Operator

At this time, this concludes our question and answer session. I'd now like to turn the call back over to Ms. Medvedich for her closing remarks.

Kiersten Medvedich
Kiersten Medvedich
CEO at Gaia

Thank you, everyone, for joining, and we look forward to speaking with you when we report our third quarter results in early November.

Operator

Thank you for joining us today for Gaia's second quarter 2026 earnings conference call. You may now disconnect.

Executives
    • Kiersten Medvedich
      Kiersten Medvedich
      CEO
    • Yon Nuta
      Yon Nuta
      COO
    • Ned Preston
      Ned Preston
      CFO
Analysts
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