The Arena Group Holdings, Inc.

Welcome to the Arena Group Q2 2023 Earnings Conference Call. I will now turn the call over to Rob Fink, Investor Relations. You may begin.

Thank you, Operator. Hosting the call today are Ross Levinson, Chairman and Chief Executive Officer, Doug Smith, Chief Financial Officer, and Andrew Kaff, Chief Operating Officer. Before we begin, I'd like to note that 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, the company's proposed transaction, but simplify inventions, future revenues, market growth, capital requirements, product introductions, and expansion plans, and the adequacy of the company's funding. Company cautions investors that any forward-looking statements presented in this presentation or that the company may make orally or in writing from time to time are based on the beliefs of assumptions made by an information currently available to the company. Such statements based on assumptions and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond the company's control or ability to predict. Although the company believes that this assumptions are reasonable, these assumptions are not guarantees 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 these 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, and 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. In addition, reference will be made to non-GAAP financial measure adjusted EBITDA. Information regarding the reconciliation of this non-GAAP measure to the closest GAAP measure can be found in the press release that was issued this afternoon on the Investor Relations website and Investors With that, I'd now like to turn on the call over to Ross. Ross, the call is yours.

Thank you, Rob, and thanks to everyone for joining us here today. The Arena Group has come a long way over the last three years since I was asked to assume the role of CEO, and today I'm thrilled to share with all of you the next phase of our evolution. Just after the market closed today, we announced that we have signed a binding letter of intent with Simplify Inventions to combine our assets with those of their subsidiary, Bridge Media Networks. Bridge Media Networks is a dynamic and innovative media group whose portfolio includes more than 100 owned and affiliated over-the-air television stations, two national television networks, cutting-edge streaming platforms, and new sports and programming distributed over 35 OTT, connected TV, MVPD, and cable outlets. They also have a state-of-the-art production facility and operate two content verticals in travel through their brand Travel Host and automotive through their brand Driven. As part of this proposed transformative partnership and in addition to the strategic assets I just mentioned, the Arena Group will receive a $50 million cash investment and a five-year guaranteed advertising commitment of approximately $60 million from a group of consumer brands also owned by Simplify Inventions, including Five Hour Energy. We intend to use a portion of this cash to reduce our term debt held by B. Reilly, and B. Reilly has agreed to extend the maturity of our remaining senior notes by three years at a fixed rate of 10%. That is a great outcome and a final solution for what has been an overhang of our company for the last several months. I'm truly grateful to Bryant Riley and the B. Riley team for working so closely with us on this deal and on this solution. They have been amazing partners for us, and I couldn't ask for more. Not only is this partnership expected to strengthen our balance sheet, But it also allows us to dramatically broaden our reach, diversify our business, and expand into some of the fastest growing segments of the video market. As part of this transaction and subject to the final terms, completion of due diligence and shareholder approval, and the receipt of any required regulatory approvals. We will merge the Bridge Media Network's two 24-hour networks, Newsnet and Sports News Highlights, into the Arena Group, as well as acquire their travel and automotive businesses, Travel Host and Driven, further expanding into two highly lucrative verticals. This transaction gives us a platform to create, distribute, and monetize high-quality content from our iconic and premium brands in all forms, long form, trending news, social, and now video. This capability is anticipated to deepen our relationships with advertisers, allowing us to create integrated sales and marketing packages across all platforms. I'm grateful for the entire team at Bridge Media Networks and Five Hour Energy and Simplify Inventions for their commitment to this incredible step forward for our businesses. Over the past three years, we have laid a strong foundation and have successfully revitalized iconic brands like Sports Illustrated, Parade, Men's Journal, and The Street, while accelerating upstart brands like Fan Nation, The Spun, Pet Helpful, and Hub Pages. This transaction brings a diverse portfolio of assets to greatly enhance the proven business model that we've established. Together with Bridge Media, we are creating a vibrant, multi-platform video vehicle that we expect will allow us to dramatically broaden our audience. We began our expansion into video when we acquired Fexy Studios late last year, and this transaction advances our video strategy by many years and accomplishes in a single transaction what we would have spent tens of millions of dollars and many years to develop on our own. The progress we have made in advancing our business model, including revenue growth, margin expansion, and expense management, made this transaction possible. With the capital infusion, debt extension, and consolidation, and a new experienced, well-capitalized partner, the ARENA Group is well positioned for further growth in the years ahead. During the quarter, we have continued to reap the benefits of our continued cost vigilance and operational discipline while allocating resources to our most promising growth opportunities. A few key highlights. Our total second quarter revenue increased by 9% to $58.8 million, driven largely by a 19% increase in digital advertising revenue. Despite a challenging ad market, our RPMs grew by 35% as compared to the prior year quarter. We continue to see premium digital monetization as compared to our competitors as our second quarter programmatic CPMs were 41% higher on average than industry benchmarks according to Stack Benchmarking, a market norm reporting service provided by Operative. Additionally, we began to see significant contribution from our revenue diversification efforts through e-commerce and video during the quarter. These strengths offset the impact of a decrease in monthly average page views in certain categories, according to Google Analytics. Our second quarter operating expenses decreased even as we grew revenue, a reflection of the headcount and cost reductions we have made throughout the year. Our second quarter adjusted EBITDA was nearly break-even, a loss of 76,000, as compared to a loss of 4.2 million in the prior year quarter, representing a significant improvement of 4.1 million, even in a very tough environment. Our sports vertical, anchored by Sports Illustrated, saw an overall 4% decrease in monthly average page views, according to Google Analytics. The Spun, which focuses on breaking and trending news in sports, was somewhat impacted by Facebook and Google Search and Google Discover. However, this was partially offset by strong growth in our Fan Nation brand. And of note, earlier today we received word from Comscore that the Sports Illustrated Network in the sports category on Comscore finished at number two for the month of July, our highest ranking ever. We recently launched an F1 Fan Nation site, which eight months post-launch is now the second largest F1 focus site, according to data from Comscore and MRI Simmons. Additionally, SI Golf, rebranded from our acquisition of the Morning Read late last year, saw a boost in traffic from breaking and trending news and in-depth live golf and PGA Tour coverage. We anticipate strong growth in our sports vertical traffic through the remainder of the year as we kick off football season. Our 2023 Sports Illustrated Swimsuit Edition launch, traffic broke every record, more than doubling traffic versus last year. The announcement of the four covers, Martha Stewart, Megan Fox, Brooks Nader, and Kim Petras, guarded an amazing 108 billion media impressions over 13,500 articles written about the release, according to data from Comscore and similar web. As we continue to evolve Swim into a dynamic brand representing women's empowerment, we see growing interest from advertisers as we more than doubled the number of sponsors in this year's launch. We have also launched an SI swimsuit Amazon storefront with deals on fashion, beauty, and everything in between with promising early results. Our finance vertical, anchored by the street, had a record quarter with 38.2 million monthly average page views, according to Google Analytics, an increase of 31% as compared to the prior year quarter, and in May reached the top 10 business websites by traffic, according to Comscore. In June, we launched our partnership with Fundstrat Global Advisors and Tom Lee, expanding and diversifying the exclusive investing content that is offered in our subscription products. Also, in partnership with Tornado, The Street recently launched a first-of-its-kind app, The Street Powered by Tornado, which provides users of all levels a one-stop investing experience with personalized financial education and a comprehensive set of investing tools. April marked a year since we acquired Parade, and the property continues to see strong growth in digital with a 33% increase in monthly average page views as compared to the prior year quarter, according to Google Analytics. We are expanding our content base by adding new publishing partners covering entertainment and astrology. Men's Journal, which we acquired in December, recently announced our partnership with Club Random, a weekly podcast hosted by Bill Maher and featuring engaging conversations with guests like Ice Cube, Jon Hamm, and John Mellencamp. We also added publishing partnerships in specialized topics such as sneakers, wine, and streaming TV to broaden our editorial coverage at minimal upfront cost. The brand continues to resonate with consumers and advertisers as we continue to execute our playbook. Our adventure network sites, including Surfer, Powder, and Bike Magazine, have dramatically increased their content since acquisition, and we recently signed an agreement to launch five new fast channels featuring these brands. More broadly, we continue to diversify our revenue streams across all of our verticals. If you are one of the millions of Galaxy device users, you may have seen news stories from Sports Illustrated, The Street, and Parade across the new Samsung News app launched in April. We continue to seek new syndication partners for our content. We have seen extremely strong growth in our e-commerce business this quarter, with second quarter revenue growing 240% year over year. We expect that this will continue to grow through the back half of the year, particularly as we head into the holiday season. Before we talk about next steps in our partnership with Bridge Media and our outlook for the remainder of the year, I'd like to let Doug Smith, our Chief Financial Officer, take you further through the numbers. Doug?