Loop Media, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Loop Media's financial results for the fiscal fourth quarter and full year ended September 30th, 2022. Joining us today are Loop's CEO, Mr. John Nierman, and the company's CFO, Mr. Neil Watanabe. By now, everyone should have access to the fiscal fourth quarter and full year 2022 earnings press release, which was issued earlier today at approximately 4.05 p.m. Eastern Time. The release is available in the Investor Relations section of Loop's website at www.loop.tv. This call will also be available for webcast replay on the company's website. Following management remarks, we'll open the call for your questions. Certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in the forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place any undue reliance on any forward-looking statements which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. Our presentation also includes certain non-GAAP financial measures, including adjusted EBITDA as supplemental measures of performance of our business. Non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts and other important information in the earnings press release and form 8K we furnished to the SEC. I would now like to turn the call over to Loop's CEO, Mr. John Neerman.

Thank you, and good afternoon, everyone. We are very pleased to be speaking with you on our first earnings conference call. 2022 has been a year of exceptional growth for Loop as we've ramped distribution of our Loop players and launched our new retail media partner platform business. Our financial profile has been completely reshaped from fiscal 2021 as we have increased revenue six times while delivering significantly higher gross margins. Although Loop was founded in 2016, we will look back on fiscal 22 as a transformational year where our business was first truly delivered to the market, capped off by our significant transition from an OTC listed company to the NYSE American in September. Before getting into the details of our results, let's discuss the digital out-of-home market for those newer to our story and industry. The digital out-of-home market is revolutionizing out-of-home media consumption, similar to how cord cutting has disrupted home cable viewership over the past five to seven years. According to the Outdoor Advertising Association of America, the digital out-of-home advertising market is predicted to hit $33.37 billion by 2026, led by digital spin, which is where Loop exists, while ad spin on traditional areas like linear and cable TV is expected to fall annually. Business owners have not had a viable streaming option the way consumers in their homes have, so cord cutting from businesses has not generally been an option. Instead, most businesses are still utilizing outdated cable or satellite services, which are costly and less effective for out-of-home viewership given their long-form content. You don't go to a bar or restaurant and sit to watch a full episode of Judge Judy or a Hollywood movie, for example. And this is where Loop comes in. Our hand-curated short-form content is perfectly suited for the out-of-home experience, as we have one of the largest libraries of content that includes music videos, movie trailers, and live performances. We also have non-music thematic content that can play without sound, such as the TikTok channel, trivia questions, drone footage, and other viral videos. This wide range of content enables us to target a very large market of business operators and out-of-home locations from small convenience stores to large university campuses. The scope of that opportunity has a compounding effect as it enables us to attract a wide group of advertisers that want access to highly targeted viewership at these different types of venues. Look no further than our significant and consistent ramp in active units over the past year to gauge how quickly businesses are adopting our loop player. Our quarterly active units were up 45% from fiscal Q3 alone and up three times from one year ago. Simply put, the word is getting out on loop, in part due to the launch of our affiliate sales program and partner platform business. Earlier this fiscal year, we established an affiliate program to incentivize third parties that have connections with out-of-home venues to market and distribute our loop players. These third parties act as an outsourced sales force that supplements our internal sales efforts with a very cost-effective structure. This creates a highly efficient model to scale our distribution. We also launched our partner platform business earlier this fiscal year, which allows us to offer curated content to third parties and advertise on their screens and hardware without a physical loop player. We launched this business in May with one partner on 17,000 of their screens and are in the process of finalizing an additional approximately 13,500 screens and a second partner platform for a total of approximately 30,500 screens across our partner platforms business in the near term. We have focused our partner platforms business in the retail media space, which continues to show strong potential for revenue growth. Quickly touching on the Loop platform, we have continued to cost-effectively expand our content library over the past year. Loop runs a revenue-sharing business, so there is minimal upfront content cost. For example, In October, we partnered with TikTok to launch a new dedicated channel from them that brings their highly engaging content to over 18,000 Loop players across the country. TikTok is the leading destination for short-form mobile video. Together, we have curated a new channel that captures the diversity and popularity of this world-class platform, which is currently only available on Loop. Also in October, we added four new channels from Blossom, Wired to Fish, Breezy Golf, and Newsnet, which adds to our already 200-plus music and non-music channel library. As I mentioned earlier, continuing to broaden our content offering helps us diversify the locations we serve as well as our advertising partners. Last week, we announced a strategic partnership with ActivateMe, a global ad monetization, engagement, and attribution measurement platform. This alliance will give our brand advertisers new monetization and attribution capabilities to target, reach, and engage consumers inside of businesses, enabling measurable outcomes, which is so key for advertisers. For example, when consumers enter or exit a geo-fenced boundary line at a specified retail location, they will be prompted with a calculated message that inspires an immediate response. Using Loop Media's geographic footprint and Activate Me's technology, advertisers will create a unique experience for consumers and continually reconnect and be at the forefront of the consumer's mind. This partnership is just as significant for all stakeholders in digital out-of-home as it is for Loop, given the new and different experiences we are bringing to the marketplace. Looking ahead, although the broader advertising industry has experienced well-documented softness in recent months, the digital out-of-home advertising market, including the retail media sector, continues to grow and is the main area of focus, as referenced earlier. We are not experiencing the same trends to the same extent as other companies that operate in display ads or web search, and our strong growth and margin expansion this past fiscal year reflect that. More than 32 million small and medium-sized businesses can leverage our loop players compared only to 18,000 we currently have in circulation. This positions us well for continued revenue growth and turning adjusted EBITDA positive in the back half of fiscal 23. So the quick math on that will tell you that there is tremendous greenfield ahead of us in the digital out-of-home video streaming market. With that, I will turn the call over to Neil to take you through the financial results. Neil?

Thank you, John, and good afternoon, everyone. As we review our financial results, I want to remind everyone that our comparisons and variance commentary refer to the prior quarter or year, unless otherwise specified. As reported in our earnings press release, revenues for the fourth quarter increased five times to $12.2 million compared to $2.4 million in the year-ago quarter. the dramatic increase was driven by significantly more loot players deployed in the market, as well as the benefit from our partner platform business that was launched in May of 2022. Going a layer deeper on our loot player penetration, as of September 30th, 2022, we had approximately 18,200 quarterly active units in the market compared to 12,600 active units on June 30th of 2022, a roughly 45% sequential increase in just three months. It's important to note that this does not include any partner platform screens. As John mentioned, we are finalizing a new deal that will bring our total partner platform screens to 30,500 in the near term. We did not have any partner platform screens one year ago as we launched that initiative in May of 2022. Gross profit in the fiscal fourth quarter increased significantly to $4.7 million compared to 0.2 million in the year-ago period. Gross margin also increased significantly to 38.5%, compared to 8.1% for the same period in 2021. The increase was primarily driven by our ability to leverage the increased revenue with cost of sales and improved advertising revenue productivity generated by our loop players. Total SG&A expenses in the fiscal fourth quarter were $14.8 million, compared to $5.1 million for the same period in 2021. The increase in SG&A was primarily due to an increase in headcount, greater customer acquisition and retention spend, and higher public company costs related to our uplist to the New York Stock Exchange American. As a percentage of revenue, SG&A was reduced significantly in 2022 over 2021 as we improved our operating leverage. in the fiscal fourth quarter of 2022 was 14.6 million or a loss of 28 cents per share compared to a net loss of 13.1 million or a loss of 31 cents per share for the comparable period in 2021. Adjusted EBITDA in the fiscal fourth quarter remained relatively flat at a negative 2.7 million compared to the same period in 2021. Quickly reviewing our full year results, For the fiscal year 2022, our revenues increased six times to $30.8 million compared to $5.1 million. Gross profit in fiscal year 2022 increased significantly to $11.4 million compared to $0.9 million in fiscal year 2021, with gross margin rates more than doubling to 36.9% in fiscal 2022 compared to 17.8%. was 29.5 million compared to a loss of 31 million in fiscal 2021. Significant investments were made in 2022 to position the company for growth and becoming a public company trading on a major exchange. We also made efforts to clean up our balance sheet and impair goodwill on certain assets, which is reflected as a non-cash charge. Adjusted EBITDA for fiscal year 2022 was a negative 10.3 million compared to a negative 7.8 million in the fiscal year 2021. Turning to our balance sheet, cash and cash equivalents were 14.1 million on September 30th, 2022, compared to 4.2 million on September 30th, 2021. The increase was primarily driven by net proceeds from our sale of common stock of approximately 12.1 million in September of 2022. As of September 30th, of 2022, we had $7.1 million of total debt compared to $4.4 million on September 30, 2021. In conjunction with our capital raise in September, we effected a reverse stock split and uplisted to the NYSD American, which represents an important milestone for both our company and shareholders. We believe that this new listing will enable us to generate greater long-term value for shareholders by increasing our liquidity and improving access to institutional capital as we continue to deliver on our growth and profitability objectives. As you can see from many of our key business metrics and improved financial results, this is not the same loop media that closed out fiscal 2021. Instead, we are a very lean company today with a deep bench of key talent across the organization with a more substantial growth and margin profile, a fortified balance sheet, and better financial controls. As we look ahead, we plan to continue executing our expansion plan and delivering another year of strong growth in fiscal 2023 while expanding gross margins and turning it just even a positive by the end of the year. This concludes our prepared remarks and we will now like to open it up for questions. Operator, back to you.