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spk02: Good afternoon, everyone, and welcome to the Live One Incorporated Fiscal 2022 Q2 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Michael Corteri, Chief Financial Officer. Sir, please go ahead.
spk00: Thank you. Good afternoon and welcome to Live One's business update and financial results conference call for the company's second quarter and six-month period ended September 30, 2021. Presenting on today's call are Rob Ellen, CEO and Chairman, Dermot McCormick, President, and myself, Mike Corteri, Executive Vice President and Chief Financial Officer. I'd like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts, and assumptions that involve various risks and uncertainties. These statements include but are not limited to statements regarding the future performance of the company, including expected future financial results and expected future growth in the business. Actual results may differ materially from those discussed on this call, for a variety of reasons. Please refer to the company's filings with the SEC for information about factors which could cause the company's actual results to differ materially from these forward-looking statements, including those described in the company's annual report on Form 10-K for the year ended December, sorry, March 31, 2021, quarterly report on Form 10-Q for the quarter ended June 30, 2021, and other SEC filings. You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its investor relations website at ir.liveone.com, and the company encourages you to periodically visit its IR website for important content. The following discussion, including responses to your questions, contains time-sensitive information and reflects management's view as of the date of this call, October 28, 2021, and except as required by law, the company does not undertake any obligation to update or revise this information after the date of this call. I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and media via webcast, and a replay will be available on its website in the Investors Relations section shortly following the conclusion of the call. Additionally, it is property of the company, and any redistribution, retransmission, or rebroadcast of the call or the webcast in any form without the company's express written consent is strictly prohibited. Now, let me turn the call over to LiveOne CEO, Rob Ellen.
spk03: Thank you, Mike, and good afternoon, everyone, and thank you for joining us today on our fiscal 2022 call. second quarter business update and financial results call. We plan to keep our prepared remarks somewhat brief in favor of leaving more time for any Q&A. Live One team again has survived and thrived through the COVID-19 Delta variants, which necessitate that we push all of our planned live events into Q3 and Q4. Even without live events in Q2, the Live One team delivered a record 60.7 million in revenue for the first six months of fiscal 2022, an increase of $35 million or 142% compared to the same period a year ago. Quite often we've spoken of unique flywheel business model of associated and complimentary businesses and how the components create a synergistic offering to consumers. to listen, watch, intend, engage, and transact. Let me repeat that word, transact. We are going deeper down the funnel with our customers for further modernization through premium content and pay-per-view and live events, upselling memberships, packages, including merchandise, NFPs, and integrating consumer products that will have ownership positioning. Everyone connects. The model, when fully optimized, creates a unique opportunity to bridge and connect live events with digital offerings. And with the return of live music, our business model is poised to truly kick into high gear. We have multiple subsidiaries, multi-billion dollar addressable markets in each, music subscription, live events, live streaming, OTT, specialty merchandising, and podcasting. We are thrilled to see the return of live music events, and we expect to report record revenues for each of the next two quarters. Although we had an unfortunate and challenging weather conditions, we held our first major live music festival, Spring Awakening Music Festival Autumn Equinox, which is the Midwest's largest all electronic music festival on October 2nd and 3rd in Chicago, and we sold 33,000 tickets. We signed 25,000 members. We currently have booked a lineup of over 100 live concerts and festivals featuring over 300 artists performing over the next six months. As I touch on shortly going forward, all ticket purchases, all pay-per-views, all merchandise, and any of our live musical pay-per-view events will receive a paid one-year paid membership that provides for discounts to future live in-person and pay-per-view events, discounted merchandise and NFTs, and the enormous amount of curated music and podcast content. Our wholly owned subsidiary, Podcast One, continues to experience robust growth. The entire podcast team has done an outstanding job both recruiting new entertainers in podcasts as well as aggressively pursuing advertising and sponsorship deals. podcast metrics continue to impress and grow, as it had over 2.48 billion podcast downloads in the trailing 12 months ending September 30th. And its franchise of exclusive shows has grown to more than 235, with over 50 new podcasts now producing over 300 podcast episodes per week. We continue to grow our paid subscribers with our Slacker Radio streaming audio service to now over 1.25 million paid subscribers. We have a keen eye on expanding the reach of Slacker, adding over 35,000 subscribers a month. As many of you may know, through a nine-year exclusive partnership with Tesla, a LiveXLive Slacker Radio subscription is pre-installed as default radio in every Tesla car sold in North America, and LiveOne is paid directly by Tesla for those subscriptions. The LiveX Live Slacker app is pre-installed now in 85 other automobiles, as well as across major cell carriers, Verizon, Sprint, and T-Mobile, which allows Slacker subscribers to listen in their cars, as well as across their mobile devices. We are seeing compelling growth opportunities for Slacker by partnering with other automotive OEMs as a default radio service, especially outside the US, as well as the other white label B2B partnerships through Android Automotive. Since launching Pay-Per-View, Pay-Per-View One, our new subsidiary platform in May of 2020, we have generated over $26 million in Pay-Per-View related sales and live Pay-Per-View events. As of October alone, pay-per-view live events and tickets sold more than 25,000 new subscribers and over 1 million live stream views. Coming off the outstanding success of Social Glow's pay-per-view events in June, we look forward to owning and producing our own next hybrid pop culture franchise pay-per-view in the January 2022 quarter called Self Made K.O. This event will combine boxing exhibitions featuring women in prominent social media influence in e-sports entertainment, all vying for over 1 million in prizes, as well as a lineup of renowned music artists and bands. Social Gloves drove over 136,000 pay-per-views and 136,000 members of Live One. As many of you hopefully know, in September 2021, We announced our intention to spin out our existing pay-per-view business as a separate public company and plan to distribute a portion of the new company's equity to LiveOne shareholders. We anticipate that spin out to take place before March 31st, 2022. In our last call, I spoke about the significant investment that LiveOne is making for original programming, content, and marketing events. I would now like to introduce President of LiveONE, Dermot McCormick, to provide more details of those efforts.
spk01: Thank you, Rob. And as Rob just stated, LiveONE has made a major commitment to invest in and market its original content and programming. Because of our unique flywheel, we are not just creating shows. We are developing unique IP and franchises that can be developed into everything from a documentary to a podcast to an event to a product. creating long-term value for LiveOne and our shareholders. Over the past two quarters, we have invested over $20 million in developing, implementing, and marketing our franchises, which drove both revenues, new memberships, and subscribers. Over the past year, we have launched shows and events that we believe have the chance to become valuable franchises going forward, including Selfmade, the Lockdown Awards, the Snubbies, Music Lives and Music Lives On, Live by Live Presents and Live Zone, not to mention a number of podcasts that have the potential to develop into assets for television, film, music, and documentaries. We continue to grow our immensely successful and first of its kind hybrid festival, Music Lives, which is returning for its third and most ambitious installment yet this November, live from Miami's Bayfront Park and featuring a unique blend of virtual and physical performances. integrated with a global three-on-three basketball tournament with over 30 countries participating. Our other live music franchises, Music Lives On and Live by Life Presents, continue to expand, recently crossing the 70th episode milestone, and have proven to be big hits with our advertising partners. The second edition of our Live One Awards, the breakout edition, is scheduled for this December, And we'll also push the boundaries of our unique and signature hybrid approach. This month, we also announced the acquisition of Grammarfall, a New York City-based artist and brand development company, which specializes in representing aspiring artists and offering services in PR, strategic marketing, brand positioning, graphic design, and social media management. The company is known for its innovative work discovering and breaking international acts like K-pop sensations, BTS and Monsta X, as well as its unique approach to public relations and artist development. This acquisition complements our existing online talent search platform, Selfmade, and further expands our flywheel business model by providing artists with an end-to-end solution to develop and amplify their brand to audiences across Live One's platform and beyond. The Gramophone acquisition builds out yet another tier in our creator services stack. But it was closer to artists and keeping Live One on the leading edge of where the music and entertainment business is going. And to finish up, I would like to add that due to the successful integration of our advertising and sales divisions, we are closing more seven-figure-plus advertising deals with major advertisers than at any other time in our history. I would like to now hand it over to our CFO, Mike Quateri, who will review our Q2 results.
spk00: Thanks, Dermot. Let me spend a few minutes to provide a brief overview of our Q2 fiscal 22 results. We ended Q2 with strong results with revenue growing 50% year-over-year to a record $21.9 million. Contribution margin increased 37% to $5.9 million, and our adjusted operating loss was $2.1 million. with record KPIs including a 34% net increase in paid subscribers year over year. Moreover, for the current six-month period ended September 30th, revenues increased 142% year over year to $60.7 million, while our contribution margin increased 93% to $13.7 million. For Q2 fiscal 22 results, consolidated revenue was 21.9, up 50% year-over-year from $14.6 million in the prior year quarter, due in large part to growth in advertising, paid subscribers, and our successful acquisition of CPS. The growth in advertising is the result of current improvements in our Podcast One operations compared to the prior year quarter that was negatively impacted by the COVID-19 pandemic. We ended Q2 with 1,256,000 paid subscribers, a net increase of 320 as compared to 936 paid subscribers reported at September 30, 2020. Please note that included in the total paid subscribers are certain subscribers which are subject to a contractual dispute for which we are not currently recognizing revenue. Fiscal Q2-22 contribution margin increased 37% year-over-year to 5.9 million. The year-over-year improvement was driven by the addition of CPS and the increase in paid subscribers. Fiscal 22 adjusted operating loss was 2.1 million compared to 1.4 million in the prior year quarter. The consolidated adjusted operating loss is comprised of adjusted operating income from our operations segment of $1.2 million, offset by adjusted operating losses from corporate of $3.2 million. The increase in the adjusted operating loss was driven by additional costs to support the company's growth and M&A activities. For the six months ended September 30, 2021, revenue was a record $60.7 million, up $142 million year-over-year as compared to $25 million in the prior year quarter. The increase in revenue was driven from all aspects of our flywheel, continued growth in paid subscribers, the additions of Podcast One, which is driving our increase in advertising, and CPS, which represents our merchandising revenue, along with the return of live events, which is driving pay-per-view, ticketing and events, and sponsorship revenues. Contribution margin for the six-month period ended September 30th was $13.7 million. an increase of 93% compared to the prior year period. The increase is driven by the increase in revenues previously outlined. Our contribution margin percentage for the quarter was negatively impacted by strategic investment and marketing campaign to grow our listener base across the entire flywheel and our continued investment in our live event franchises, which we believe will yield attractive returns over the long run. Adjusted operating loss for the six-month period ended September 30th was $3.8 million, compared to $1.4 in the prior year period. The increase in adjusted operating loss is a result of the strategic investments into content and increased marketing to drive future revenue growth beyond the current year. Turning to the balance sheet, we ended with cash of $16.7 million, including restricted cash of $260,000. Turning to financial guidance for the fiscal year 2022, we are reaffirming our revenue guidance of $115 to $125 million and reducing our estimate for adjusted operating income from our operations segment to between break-even and $3 million as a result of the impacts of the COVID-19 Delta variant on live events, inclement weather, and our long-term investments in original and exclusive content and franchises, as well as continue our increased spend on marketing associated with driving new paid memberships. And now let me hand it back over to Rob.
spk03: This is a truly exciting time for Live1. We will soon be announcing a major development in our subscription and membership model, one that we believe will be compelling for fans and consumers. Next Thursday after the close, we'll be holding a press conference with members of the press, and we welcome existing shareholders and analysts to join as well. This is a unique time for the company that we have now driven 170,000 members at an average of over $60 per person. This is uniquely positioning our subscription and membership to where the business is heading going forward. As the opening of live events, we're now prepared and now in position to really press the envelope and really hit that flywheel while running. We are reiterating our 2 million share buyback. We're excited that we had announced previously that we have got a credit line from the banks, which we hope to increase in the near future at very low interest rates, and really positioned the company that we will pass 1.3 million subscribers, 170,000 members, And each of the subsidiaries of our business are now growing substantially. This is an exciting time for the company, and I want to thank everyone for joining, and we look forward to any Q&A for today's call. Thank you.
spk02: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then 1 on a touch-tone telephone. If you are using a speaker phone, we do ask that you please pick up your hands. That's before pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. And our first question today comes from Brian Kitzlinger from Alliance Global Partners. Please go ahead with your question.
spk04: Hi, great, thanks, and great results. Can you talk about, you gave us the numbers on Spring Awakenings. Can you maybe speak to average ticket price, sponsorship revenue, maybe other parts of the platform as well, and how you monetized this event that you own?
spk03: Yeah, so we can't go into too much detail as you know, but what I can tell you is the average ticket price is in the range of $100 a ticket, right? Each one of those ticket buyers becomes a member of LiveXLive and will now be offered opportunities to buy tickets to our next events, as well as to our pay-per-views, as well as to NFTs and merchandise. So exciting time for the company to truly move that flywheel. Sponsorship was the highest that we've ever had. And we've just passed over 100 sponsors for the company. And, you know, as you know, Brian, as we go back, you know, we had one sponsor two years ago before COVID-19. We now have over 100 sponsors in this company.
spk04: And just to be clear, when they become a member, are you paying for a paid subscription for them for a year, or is that different than a member?
spk03: Well, we're going to get into next Thursday. We'll be holding the special conference call for the press, right, as well as for the music industry. You'll get a little more color on that. But with your purchase, you're automatically becoming a subscriber. Whether it's one month, three months, or a year, you'll hear a lot more of that. But you've become a subscriber, which obviously drives more advertising revenues. Right. And then we'll obviously be bringing them in at the top of the funnel, which the objective is to convert them into long-term paying subscribers and members. Got it.
spk04: And to be clear, whereas the first quarter social gloves, you didn't own the event. And so your margins were pretty thin. You own this event. You also own self-made, which I think is happening still in this quarter. And so the margin profile of those two events should be substantially better than the event of Social Gloves. Is that an accurate statement?
spk03: No. Social Gloves was extremely profitable, right? And we'll have way more clarity on that very shortly. When you look at these events, right, when you own them, right, we get to test our franchises and bring our franchises to life and control the environment in it. So we're building out those franchises substantially. So we'll have a lot more clarity on that. But, you know, Brian, it's really exciting to watch these franchises come together. And as you know, all of my businesses I've built over the years have been built off of franchises, including we did the movie 300. These franchises have enormous upside value to them. And when we own them, we get to trigger and test them in a much more unique way.
spk04: Okay. Lastly, and then I'll get back in the queue. Can you talk about Podcast One? You're adding a lot of new content. Demand for advertising your brand seems to be strengthening. Maybe talk about how that business is performing in this improving environment.
spk03: Yeah, Kit Gray has just done a spectacular job of taking Podcast One, which, as you know, required right in the heart of COVID. Advertising was dramatically off at the time. He's done an amazing job of really turning that business now. And we've added, I think it's now like 43 new podcasts. And you're starting to see podcasts that are moving over with substantial traffic. If you watch the news in the last week and a half, we've announced two of them with over 50 million views already on them. So people are recognizing the brand and the 10-year history of it and understand that we give them a full 360 play. Not only do we help them in production, but we deliver results. revenues for them on the sales side, marketing side of it, and overall performance for them. So I couldn't be more excited about where Podcast One is going and what Kit and the team have done with that franchise.
spk04: Okay. Thank you.
spk02: Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Again, that is star and then one to ask a question. We do have a follow-up question from Brian Kitzlinger from Alliance Global Partners. Please go ahead with your follow-up.
spk04: Sure. I tried to seed the phone, but can you go into Gramophone a little bit and maybe talk about the revenue in EBITDA and trailing 12 months and then as being part of your flywheel, as you've discussed, how you can build upon those results?
spk03: Yeah, so we haven't disclosed the revenue on it. This is not a gigantic acquisition. It is a gigantic chess move, though, right? Ishai, who is the president and founder of this, runs a management company over at Maverick. He has had a history of breaking unique talent, including BTS, the biggest band on Earth today, as well as Monsta X and many others. He has a huge footprint into the K-pop market. As you continue to watch our pay-per-view events, our pay-per-view events are really growing fast and rapidly. both the revenues as well as the bottom line. It is really exciting to watch what's happening. And Isha brings together, as he joins our team, continues to hit exactly in the heart of, we are a talent-first platform focused on those superfans. These are the ultimate superfans that are our poos going up. Our poo went from 280 last year to 341 this year, right on our subscription. And as I said in our membership, Our membership is over $60 today.
spk04: Great. And then Hertz ordered 100,000 Teslas. I take it obviously none of that's in your results right now. And you're having several events that are increasing the members that hopefully are going to be converted into paid subscribers. As you look out longer term, maybe a year out or so, Where do you think the paid subscriber base can get to as the flywheel is starting to build?
spk03: Well, I think this is the first of many corporate contracts that Tesla is going to get, right? That 100,000 is really exciting, and we're just starting to see that momentum kick in. As I mentioned, we're going to pass 1.3 million monthly subscribers any minute now, right? And both our membership and our subscription are going to continue to grow at a fast pace now. So as you watch that grow, we've talked about a five-year model of getting to 10 million subscribers, right? We're more confident than ever that we're going to be able to achieve those goals. And as you look out this year, we talked about 30,000 subscribers per month. Now we're talking about 35-plus thousand subscribers. We may have to raise that number substantially as we start to see that 100,000 come in. But I'm starting to see taxis, Ubers, corporate fleets, right, rental car companies, you're going to start seeing those corporate orders. And all of that, you know, all of the North American side falls in with us. And, you know, we're excited about expanding our relationships with the record labels globally, right, and hopefully the same thing with Tesla globally. And, you know, this is a unique time to be in this space. And we've built now technology that allows us to be able to do this and white label for any car company, right, around the globe, to be able to do that. And, you know, our team has really done a magnificent job of growing from 40 cars to now over 85 cars and we'll be over a hundred very shortly. Great.
spk04: Thank you.
spk02: And ladies and gentlemen, with that, we're going to end today's question and answer session. I'd like to turn the floor back over to Rob Ellen for any closing remarks.
spk03: Yeah, just to finalize, I want to thank everyone for joining and, Thank my team for fighting through another round of COVID. It's pretty amazing that we hit this $60 million revenue number. As everyone knows, we only did 65 million last year, which was up from 38. So this is growth of almost 100% now, two years in a row. We have reiterated our guidance between 115 and 125 million. And if the COVID variance didn't hit, we would have had to raise the guidance again substantially We see telltale signs that the variance is still here, but live is opening up. Our flywheel opens up dramatically, and we look forward to the next two quarters, again, with record revenues and record growth. And it's a really exciting time for us, and I want to thank everyone for their patience. Thank my team for really surviving a unique time in the market that we've gone through. We lost all of our live business. We lost all our live partners. We lost them again for this quarter. But I see everything coming back right now, and it's starting to move fast. And I think I talked about in the last quarter that, you know, the telltale signs here are that this is going to be the roaring 20s that are coming. If we can continue, we have over 100 live events coming for the rest of the year. We have our tentpole events coming, our next social gloves coming. Every single time the consumer buys a ticket, buys merchandise, like TIPS, like Bison NFT, they're now going to become a member of LiveXLive, and I look forward to exposing way more of that in our conference call next Thursday. Thank you, everyone, and I appreciate your time.
spk02: Ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for attending. You may now disconnect your lines.
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