Gaia, Inc.

Ladies and gentlemen, you're currently on hold for today's Guy, Inc. financial results for the third quarter ended September 30th conference call. At this time, we are still admitting additional participants and do plan to be underway momentarily. Please stand by, we're about to begin. Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaius, Inc.' 's financial results for the third quarter ended September 30th, 2021. Joining us today is Gaius CFO and Office of President, Mr. Paul Terrell. Following some prepared remarks, we will open the call for your questions. Before we get started, however, I would like to take a minute and 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 costs 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 like to now turn the call over to GAIA's CFO and Office of President, Paul Terrell. Please go ahead.

Thank you, Cody, and good afternoon, everyone. I'm stepping in for Yurka today, as he is currently at home battling a stomach bug. Revenues are up 22% year-to-date, with third-quarter revenues up to $20.4 million and gross margins steady at 87.1%. We ended the quarter with 790,500 paying members, which we believe to be a solid result when considering Q3 last year reflected the heart of the pandemic. Total member acquisition costs during the quarter were 7.8 million or 39% of revenues. As we've noted on prior earnings calls, the digital advertising market continues to be crowded and competitive. While the recent trend in CPA is elevated from the levels we saw during the initial COVID period in 2020, It is still favorable compared to our historical trends. We are continuing to execute on our strategic plan to reduce dependency on paid media to drive member growth with a concerted focus on scaling our ambassador program globally. Despite the challenging paid media market, we were able to drive over 20,000 net ads during the quarter while staying within our overall target spend level. This was primarily the result of improvements in our overall retention as our member base continues to season. Selling and operating expenses excluding marketing and member acquisition costs in the third quarter were $7.7 million, or 38% of revenues. Corporate and G&A expenses in the quarter were $1.5 million, or 7% of revenues. For the nine months ended September 30th, 2021, we improved total operating expenses to 84% of revenues compared to 98% of revenues in the year-ago period. The current year reflects the stabilizations of our cost structure since turning profitable in the third quarter of 2020. EBITDA improved to $4 million or 20% of revenues in the quarter from $3.4 million or 19% of revenues in the year-ago quarter. This marks our sixth consecutive quarter of generating positive EBITDA. Year-to-date, we've generated $11.5 million of EBITDA compared to $3.9 million in the prior year. The current year results reflect a flow through of 72% of the incremental revenues generated during 2021 to the EBITDA line compared to 2020. We generated net income of 0.6 million or three cents per share during the third quarter of 2021 compared to 0.2 million or one cent per share in the year ago period, which excludes the 6.1 million gain we recorded in the prior year quarter related to the sale of a portion of our corporate campus. Year to date, we have generated $1.6 million of net income, or $0.08 per share. Cash flow from operations increased to $5.1 million during the quarter, an improvement of $1.8 million from Q3 2020, and our eighth consecutive quarter of generating positive cash flows from operations. We increased our content investment during the year as planned, while also increasing our overall cash balance to $14.4 million. We continue to see 80-plus percent of our monthly viewership on our original programming With our end-to-end content production fully in-house, we continue to focus on investing in our content library at a cost per hour that allows us to recoup our initial cash investment quickly. In addition to this quick recovery of our initial investment, we also benefit from the long-tail viewership of our content to improve the overall return on our content investment. We held successful live events at the Gaiosphere, our state-of-the-art event center, in September and October with sold-out crowds which allowed us to promote our premium EventsPlus $299.99 annual subscription to those that couldn't attend in person. EventsPlus is the rebranded name for what we previously called our live access annual plan. The early results of our focus on promoting EventsPlus to our existing members has been positive. With that, I would like to open up the call for questions. Operator?

Thank you. If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Once again, that is star 1 if you'd like to ask a question. And we'll take our first question from Eric Wold with B Reilly Securities. Please go ahead.