Gaia, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia, Inc.' 's financial results for the first quarter ended March 31st, 2021. Joining us today are Gaia's CEO, Yorka Ricevi, and CFO, Paul Terrell. Following some prepared remarks, we'll open the call for your questions. Before we get started, however, I would like to take a minute to read the safe harbor language. The following constitutes the safe harbor statement under the Private Securities Litigation Reform Act of 1995. The matters discussed today include forward-looking statements that involve numerous assumptions, risks, and uncertainties. These include, but are not limited to, general business conditions, historical losses, competition, changing consumer preferences, subscriber cost and retention rates, acquisitions, and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q. GAIA assumes no obligation to publicly update or revise any forward-looking statements. With that, I would now like to turn the call over to GAIA's CEO, York Arisavi. Please go ahead, sir.

Thank you, and good afternoon, everyone. So, 2021, is off to a great start. We continue to execute against our plan of consistently growing revenue whilst generating positive net income and the cash flow. So revenue for quarter increased 30% to 18.9 million as we crossed the 750,000 member milestone. Gross margin increased to 87.1%. And even with the 30% growth of revenue, our operating expenses stay flat in dollars, which obviously improved significantly as the percentage of revenue to 85% from 109% a year ago. This big improvement was driven by a 39% increase in the gross profit per employee, to 531,000 from 382,000 a year ago. EBITDA grew 35 million to 35 million or 19% of revenue from a loss during a year ago quarter. We generated net income of 358,002 cents per share and cash flow from operation of 5.2 million. And Paul will talk more about these numbers.

Thanks, Jerka. Revenues for the first quarter increased 30% to $18.9 million, with gross margins also improving to 87.1%. This marks our fourth consecutive quarter of revenue growth over 20% while generating positive EBITDA. We ended the quarter with 750,100 members, which keeps us on pace for our target revenue growth of 20-plus percent for the year while maintaining profitability and positive cash flows. Beginning in October 2019, we experienced a shift in the initial plan selection for new members from 10% to 30% selecting the annual plan. Members on annual billing represent a core upsell opportunity for our $299 premium live access annual plan, which we will now begin promoting more aggressively. Total member acquisition costs during the quarter were $7.6 million, or 40% of revenues. which was improved from 52% of revenues in the year-ago quarter. We did see some relief during the quarter on the pricing in the digital advertising market, which allowed us to bring our per-customer acquisition costs in line with the prior year quarter at $68. We recently hired our new SVP of sales to build on the recent early traction in our member-driven growth initiatives. She will be focused on growing our member ambassador sales team to go after our sizable global market opportunity. Selling and operating expenses excluding marketing and member acquisition costs in the first quarter were $7 million, or 37% of revenues, which improved from 47% of revenues in the year-ago quarter. Corporate and G&A expenses in the first quarter were $1.5 million, in line with the year-ago quarter. EBITDA improved to $3.5 million, or 19% of revenues in the quarter, from negative $0.2 million, or negative 2% of revenues in the year-ago quarter. This marks our fourth consecutive quarter of generating positive EBITDA and puts us on an annualized EBITDA run rate of 14 plus million, which is almost double the full year 2020 EBITDA. We generated net income of 0.4 million or two cents per share during the first quarter of 2021, which is an improvement of 4 million from a net loss of 3.6 million or 19 cents a share in the prior year quarter. This increase reflects the fact that most of the incremental gross profit generated in the first quarter of 2021 compared to the prior year quarter flowed through to net income. Cash flow from operations increased to $5.2 million during the quarter, an improvement of $3.2 million from Q1 2020, and our sixth consecutive quarter of generating cash flows from operations. We increased our content investment during the quarter as planned, while also increasing our overall cash balance to $13 million. With 80% of our monthly viewership going to our original programming and our end-to-end content production fully in-house, we have been able to control the cost on a per hour basis to ensure that our new content is providing a high return on investment given our current member levels. With the significant improvements we have made in our operational performance over the past two years and the financial stability we have created with the sale of a portion of our corporate campus in September 2019, excuse me, 20, and predictability of our cash flows going forward. Our board has authorized a five million share repurchase program as announced in our earnings release we filed this afternoon. This will provide flexibility as we look to optimize return on shareholder capital as we continue to focus on growing revenues, operating margins, and cash flows. With that, I would like to open up the call for questions. Operator?