The Arena Group Holdings, Inc.

Today, and welcome to the Arena Group first quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to Rob Fink. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us today. Hosting the call are Ross Levinson, Chairman, Chief Executive Officer, Doug Smith, Chief Financial Officer, and Andrew Kraft, Chief Operating Officer. Before we begin, I'd like to note some of the comments made during this presentation may include forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking. Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning the company's business strategy, future revenues, market growth, capital requirements, product introductions, and expansion plans, and the adequacy of the company's funding. The company cautions investors that any forward-looking statements presented in this presentation or that the company may orally or in writing from time to time are based on beliefs, assumptions made by, and information currently available to the company. Such statements are based on assumptions and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and other factors that are beyond the company's control or ability to predict. Although the company believes that its assumptions are reasonable, these assumptions are not guaranteed of future performance, and some will inevitably prove to be incorrect. As a result, the company's actual future results can be expected to differ from its expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements, which are based only on known results and trends at the time they are made, to anticipate future results or trends. Certain risks are discussed in the company's filings with the SEC. The company disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. The company will reference non-GAAP financial measures, adjusted EBITDA. Information regarding reconciliation of this non-GAAP measure to the closest GAAP measure can be found in the press release that was issued this afternoon. And our press release is on our website, investors.reunigroup.net. With all that said, I'd like to turn the call over to Ross. Ross, the call is yours.

Thanks, Rob, and thanks to everyone for joining us here today. I've always believed that the real value of a differentiated and durable business strategy is not how it performs in strong markets when a rising tide lifts all boats, but how it performs when the market is challenging, and in particular, how it is performing versus others in its sector. During the first quarter, the ARENA Group continued its growth trajectory and outpaced peers in the competitive digital publishing space. Overall, we focused our efforts in three core areas. First, on driving revenue growth. Second, on focusing on operational efficiencies while expanding our brand portfolio and our margins. And third, investing in new growth areas, in particular e-commerce with creators and AI. The results reflect our dedication and focus, and I'm extremely proud of the team members who continue to over-deliver day in and day out, even as the industry evolves at a rapid pace. Overall, we continued our revenue growth. We drove digital ad revenue growth. We held our expenses steady. We added cash to the balance sheet. We used significantly less cash from operations versus Q1 of last year. We added and transitioned significant brands to our platform, including Men's Journal, Men's Fitness, Powder, surf, and bike. We expanded our e-commerce efforts and dramatically grew our licensing and content syndication partnerships to more than 200 outlets. We signed two deals in the AI space and started integrating these transformative technologies into our workflow. The immediate impact we are seeing is significant. More on that later, but since I first got involved in the internet in 1994, AI is the most important and impactful opportunity I've seen. We have fully embraced the potential and I couldn't be more excited about what is to come. Similarly, we've been integrating machine learning expertise into our experiences and Q1, we have recognized a significant positive financial impact to our content operations across our video experiences. This is certain to grow and will have a real positive impact to our earnings this year. And finally, over the past two years, we have invested significantly and embraced social platforms and the creator and influencer space. Just as we've become home to hundreds of independent publishers who utilize our platform, distribution, and monetization operations, today we are a platform for creators. Over the past six months, more than 50 such creators have begun creating and distributing content with us in the sports, finance, food, and entertainment categories, and we are in discussions with dozens more. In fact, just this past weekend, we partnered with creators in the Formula One space to cover the races and events surrounding the F1 Miami experience, and the results were exceptional. Unique content across all platforms, sponsorship dollars and other ad opportunities, and a new audience experiencing our storied brands. This focus and ability to execute in rapid fashion has helped us to outperform our peers across important KPIs, including CPMs during the quarter. We expanded gross margins and we exceeded expectations from the analyst community, even during what was a challenging quarter for our sector. The power and durability of our iconic brands and the strong foundation that we have built over the past two years has withstood the impact of many macroeconomic headwinds. The performance is testament to our talented team, our differentiated strategy, and in particular, our brand equity. Our business is strong, and we are seeing growth in several areas, which I'll elaborate on shortly. We believe we are well positioned for continued expansion, and the macroeconomic headwinds will, in fact, create opportunities for us. allowing us to capture market share from distressed competitors. In short, the performance of our company during this quarter was encouraging, validating our strategy and giving us increased confidence in continued success. I'd like to highlight a few key results up front. Our total first quarter revenue increased by 7% to $51.4 million as compared to $48.2 million in the prior year quarter. Q1 is typically our softest quarter, and despite a volatile macroeconomic environment, we still delivered growth year over year. Our operating expenses remained flat, increasing by just 2% to $35.9 million, as compared to $35.2 million in the prior year quarter, even as we added headcount from our newly acquired businesses, including Men's Journal, Men's Fitness, Surfer, and Powder, which we acquired in December of 2022, and Fexy Studios, which we acquired in January of 2023, and Parade Athlon Media Group, which we acquired in April 2022. The slight increase contrasted with higher revenue growth is a reflection of the operational discipline we exercise with regard to our cost base. Our adjusted EBITDA was negative 4.5 million as compared to negative 1.1 million in the prior year quarter. This is partially due to the acquisitions we made in December and January of Men's Journal and FECSI, respectively, which had little revenue contribution initially, but included all expenses in the quarter. Additionally, we made some reductions in our cost base that will be reflected over the balance of this year, but are not reflected in the first quarter. On the advertising side, our RPMs have grown by 10% year over year. while others across the industry are reporting declining RPMs. According to Stack Benchmarking, a market norm reporting service provided by Operative, our programmatic CPMs grew consistently through the quarter and outpaced industry benchmarks by 30% to 40%, reflecting the strength of our brands and our advertising partnerships. Broadly speaking, sports traffic was stable. but was impacted this quarter by the absence of the Winter Olympics versus the first quarter of last year, and a somewhat lackluster March Madness tournament that featured fewer well-known powerhouses as compared to previous years. Despite these facts, Sports Illustrated's monthly average page views were flat compared to the first quarter of last year. Consumer and advertisers continue to seek out SI's industry-leading sports journalism, with consistent top-tier major sports league coverage and an expanded and reimagined SI golf experience benefiting from the acquisition of the Morning Read last year. According to the Alliance for Audited Media of the top U.S. magazine brands, Sports Illustrated had the second highest monthly average total brand audience in Q1 2023. Our work continues to resonate not only with consumers and advertisers, but within the industry as the Associated Press Sports Editor Awards recognized four of our writers as finalists this year. Our Sports Illustrated Swimsuit franchise, which continues to break boundaries and act as a catalyst for change within the industry, has seen tremendous growth this quarter as we've implemented our operational and content playbook for the first time across the brand. Swim has already nearly surpassed its full year 2022 page views at the end of Q1, and we are looking forward to the launch of our annual SI Swimsuit Edition next week on May 18th. Our lifestyle content base grew substantially in the quarter due to the integration of Men's Journal and the Adventure Network, which has gone smoothly. These well-known and respected titles maintain strong brand equity in the market, And we're staffing up these businesses to execute our playbook and bring them back into mainstream relevance, just as we did with Sports Illustrated, The Street, and Parade. While these brands had little revenue contribution in Q1, having just moved to our technical platform in March, we anticipate strong growth over the course of this year. Parade.com, which we acquired in April of 2022, has continued to grow. with nearly 30% monthly average page view growth since its acquisition according to Google Analytics, and an 89% increase in year-over-year first quarter social engagements across all platforms according to Listen First. Our finance vertical anchored by the street saw dramatic growth through our publisher and platform partnerships, reaching 106 million total page views on Apple News during the quarter. the largest number in our history, offsetting a slight 6% year-over-year decline in monthly average page views on the website, according to Google Analytics. The street continued to focus on expanding its social presence, launching its first annual Finfluencers to Watch franchise, which reached nearly 7 million followers on Instagram. A majority of these influencers and creators have agreed to participate in sponsored channels hosted by the street, The street has also greatly expanded its video content with its news desk and studio on the floor of the New York Stock Exchange, driving a 61% growth in social video views as compared to this quarter last year. We continue to be vigilant and disciplined with our cost base, and while we have undertaken some cost-cutting exercises across our business this quarter, this has allowed us to invest in high-growth areas like e-commerce, on a cost neutral basis. Our e-commerce business has more than quadrupled year over year, and we expect continued growth throughout 2023. I'm extremely proud of what our team has accomplished this quarter. Before we talk about our outlook for the remainder of the year, I'd like to let Doug Smith, our Chief Financial Officer, take you through the numbers. Doug?