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Operator
Hello everyone and welcome to the Live One Inc Q3 results and corporate update webcasting conference call. My name is Charlie and I'll be coordinating the call today. You will have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypads. I want to hand over to our host, Aaron Sullivan, CFO to begin. Aaron, please go ahead.
Charlie
Thank you. Good morning and welcome to Live One's Business Update and Financial Results Conference Call for the company's second quarter ended September 30, 2023. Presenting on today's call with me today is Rob Allen, CEO and Chairman of Live One. I would 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 in 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 for these forward-looking statements, including those described in its annual report on Form 10-K for the year end of March 31, 2023, and subsequent SEC filings. You'll 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. The company encourages you to periodically visit investor relations website for important content. The following discussion, including responses to your questions, contains time-sensitive information and reflects management's view, as is the date of this call, November 9th, 2023, and as acceptable is required by law, the company does not undertake any obligation to update or revise this information after the date of the call. I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and media by webcast and replay will be available on its website in the investor relations section shortly following the conclusion of the call. Additionally, it is the property of the company and any redistribution, transmission or rebroadcast of this call or the webcast in any form without the company's express written consent is strictly prohibited.
Rob Allen
Now I would like to turn the call over to Live One CEO, Rob Allen. Thank you, Aaron, and good morning, everyone. I'd like to thank everyone for joining us today. Investor appetite and demand for microcap stocks began to decline and soften almost two years ago. We made major strategic decisions then to protect our shareholders' capital, take aggressive cost-cutting measures, and solely on predictable growth units with the highest profit margins in an effort to strengthen our balance sheet, drive profits, and be a desirable place for investors when the market cycles change. We have used almost all of our resources to expand our audio division consisting of Slack or radio and Podcast One. This is the largest divergence disconnect that I've seen in 40 years in the public markets between large and micro-caps. Growth at any cost is not the way right now. Over the past two years, I'm thrilled to announce that we have done a remarkable job of delivering $32 million in consolidated cost savings and are looking at another three to 5 million over the next few months. We have purchased over 3.5 million shares in the buyback and have left room to acquire another 5 million shares. Our balance sheet is the best in company history with zero debt and over $28 million in short-term assets. On our audio business, when we acquired Slacker and Podcast One, the combined companies produced about $40 million in revenues and $15 million annually and needed a lot of work to clean up. This morning, I'm proud to announce that our management team's have reported a combined audio business now delivering 52.6 million, a record number, and $10.3 million in EBITDA just for the first six months. We raised our EBITDA and cash flow guidance on the audio business to $18.5 million to $21 million in EBITDA. That combined effort has been a 35 million dollar swing from the time of these acquisitions to clearly to clearly articulate and simplify why our hockey stick growth is coming from these key two key revenue stream streams one is subscription and two is sponsorships our subscribers have grown eight times from 400 000 to over 3.3 million in the five-year period our sponsorship has grown two and a half times with over 700 blue chip sponsors on our platform this year. In September this year, LiveOne completed the spin-out of Podcast One as a separately traded public company under the symbol PODC. Matt's commitment to increase shareholder value issued a dividend of 18% to our shareholders. The spin-out made Podcast One the first standalone podcast network to list and trade on a national exchange. And so far for the first time, investors now have the opportunity to invest directly in that fast-growing podcast business. Trading between a $60 and $100 million valuation since it started trading on NASDAQ, LiveOne owns 80%, leaving LiveOne's remaining four subsidiaries trading in a nominal valuation. Podcast one is doubling the number of top creators on its platform in the three year period, adding 18 already this year at an average of about $350,000 in revenues per podcast. We have increased revenues to $21 million to the six months and growing up from the 20 million when we acquired the business. We currently have over a hundred podcasts in the pipeline. This is about 7X our normal pipelines and over 10 potential acquisitions, the largest opportunity in the history of Podcast One. I encourage everyone to listen to the separate Podcast One earnings and business update called 130 Eastern today. Now to Slacker Radio. We just extended our Tesla partnership for the 10th straight year. Every Tesla car sold in North America comes with a paid membership certificate. to Live One. These members are paid directly to Live One by Tesla. Expanding our management team with a clear focus on B2B partnerships, we identified five verticals and have now over 27 blue chip billion dollar plus companies in our pipeline. These combined efforts, combined opportunities almost guarantee another huge growth year for next year already in place before we've even finished our ninth month of this year. I indicated last year we will pass over 10 million members within five years and over a billion dollars in revenues. Over the past 12 months, we've added 600, a record 679,000 new paid members and an average of over $3 ARPU. And now past 3.3 million total members, 2.4 million paid members, We expect to pass over 4 million total members by the end of next year and over 3 million paid members. To better understand these metrics, Goldman Sachs issued a report that industry will hit 1.7 billion paying subscribers by 2027. Livemore would only need 1% of that addressable market to easily surpass that number. Given the strength in the business, we believe our stock is extremely undervalued So we recently expanded our buyback program to $8.5 million, leaving almost $5 million of additional buying. Now I'd like to hand it off to Aaron Sullivan, our CFO. Thank you, Aaron.
Charlie
Thanks, Rob. I'll spend just a few minutes providing a very brief overview of our results for the second quarter of fiscal 2024, which is ended September 30th. Consolidated revenue for the three-month period ended September 30th, 23, with $28.5 million. Slacker posted record revenue for Q2 of $16.4 million, adjusted EBITDA of $5 million. And Podcast One posted revenue of $10.5 million and adjusted EBITDA of $100,000. For the second quarter of fiscal 24, revenue consists of 58% membership and 42% sponsorship, advertising, merchandising, and others. compared to 54% membership and 46% advertising, sponsorship, and merchandise in the prior year period. Consolidated adjusted EBITDA for Q2 FY24 was 2.8 million. On a US GAAP basis, LiveOne posted a consolidated net loss of 6.5 or 7 cents a share for diluted share in Q2 fiscal 24. As of September 30, 2023, we had approximately 2.4 million paid members, an increase of 697K, or 38% compared to the prior year. Total members, which includes three members, were approximately 3.3 million as of September 30. Note that included in the total members are certain members who are currently subject to a contractual dispute for which we are not currently recognizing revenue. Rob, I'll turn it back to you. We may have lost Rob operator. Do you want to open it up for questions? Sorry. Sorry guys. Sorry guys.
Rob Allen
So just to, just to wrap it up before we go to Q and a balance sheet, the strongest it's ever been in the history of the company, $28 million of short term assets, zero debt, $15 million of debt was converted at $2 and 10 cents and another 8 million of debt was converted into podcast. One stock at $3 well above both of those markets. Record subscriber growth, record listenership, largest pipeline in the history of the company, record EBITDA, record cash flows, and a largest pipeline of acquisitions in the hopper as well. So with that, I'd like to open it up to Q&A. Thank you, everyone, for joining.
Operator
Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypads. If you'd like to withdraw your question, please press star followed by two. Preparing to ask your question, please ensure you're unmuted locally. As a reminder, that's star followed by one on your telephone keypad now. Our first question comes from Brian Kistlinger of Alliance Global Partners. Brian, your line is open. Please go ahead.
Brian Kistlinger
Hi there. This is Shervin on for Brian. Thanks for taking my questions. Firstly, could you share any updates on cast, uh, more specifically, how many podcasts from cast have you onboarded and how many more do you expect to onboard and over what timeframe?
Rob Allen
Yeah, that's a great question. Thank you. So on cast, uh, we've onboarded, they had about 27 podcasts. We've onboarded around six or seven at this point. It took a little longer than we expected because of the timing of the uplisting, which took us almost five months longer than we expected. But we're seeing great telltale signs. We'll continue to add podcasts, and I think you should see an additional update over the next few days with substantial podcasts added to the network.
Brian Kistlinger
Great, thank you. And then outside of CAS, could you talk about what reasonable goals are for the numbers of titles you hope to onboard annually?
Rob Allen
Yeah, so this is going to be a really special year in that we've onboarded 18 podcasts already this year. We have over 100 in our pipeline that we're bidding on today. And these are existing, almost all of them are existing podcasts, right, that are moving from other networks that the The doors have opened that right now. For the last three years, this has been a seller's market for podcasters. Right now, it's a buyer's market for podcast networks. There's great opportunities and way better deals and economics for the networks than there were previously. I see the floodgates opening. The second half of the year should be very similar to the first half of the year. I can see us adding well over 30 podcasts this year.
Brian Kistlinger
And lastly, can you touch on the lower revenue guidance range for fiscal 24? How much is the result of the ad market versus the pace of onboarding new podcasts or any other factors that I might be missing?
Rob Allen
Yeah, great. Good question. So, so most of that is coming from the merchandise business. Um, uh, we have two things. One is as I articulated in the call, we made the determination to focus all of our energy on our audio business, right. And in buying back stock, and in cleaning and strengthening the balance sheet. So the merchandise business, we are starting to cut. We just took $2 million of costs out of it. We announced a couple of weeks ago. We're looking at costs and revenues that are not as profitable. A little bit of it is. Some of the cast ones are going to take a little bit to sign on board, but most of it is coming from the merchandise side of the business.
Brian Kistlinger
All righty. Thanks so much. I'll hop back in the queue.
Operator
Thank you. As a reminder, if you'd like to ask a question, please dial star followed by one on your telephone keypad now. Our next question comes from Thierry Willaud of Water Tower Research. Thierry, your line is open. Please proceed.
Thierry Willaud of Water Tower Research
Yes, good morning. Rob, a couple of questions. You mentioned five verticals. Can you give us a sense for what they are for new potential FLACA partners?
Rob Allen
Yeah, and these are just the beginning, right? This is going to be way more vertical. So, you know, for anyone that knows my background and knows, you know, what I built with Digital Turbine, right, you're going to have carriers, which we've already been a partner with Verizon, T-Mobile, right, and have been partners with many others. So carriers, additional auto companies like Tesla, additional – Merchandise companies, right? And being careful and giving names because as we said in the last call, you know, this pipeline is very meaningful. It's over 27 companies in that pipeline and we expect to announce some of those shortly. So retailers, right? Anyone that is competing with Amazon is going to need that. Cable and satellite operators, right? As well as personal gym equipment, anything from the Pelotons in the world to gym equipment. There's going to be way more verticals that you're going to hear us talking about very shortly. We just hired a whole B2B team, and you'll be seeing us expanding that B2B team dramatically throughout the next few months.
Thierry Willaud of Water Tower Research
That's great. You mentioned 675,000 increase in paid numbers. Do you have a way to – is it new partners that you brought in, or is it existing partners that are – that are growing the members, you know, that are, that are, that are on, on, on the platform?
Rob Allen
All, all, all the above, right? You know, we have, we have, we have a, uh, we have a spectacular relationship with Tesla, right? That is continuing to grow and now has been extended for its 10th year. Um, but we're, we're going to continue to grow our partnerships, you know, utilizing, um, All of our podcast creators, all of our social media creators, all of our talent creators, as well as our B2B partnerships. And we're really special in where we separate ourselves from the rest of the crowd is threefold. There's number one in pricing. We're by far the lowest in the industry, right? We're a third of the price of most of our competitors. Number two in service and that we can be nimble and have the ability to do things that we do for our customers that others can't do. And number three is white labeling. being able to provide a white-label solution and be able to call it Tesla Radio or Verizon Radio or, for that matter, almost any one of our partners that is 10 million to a billion users have the ability to white-label and utilize that solution, which there really is no one else in the industry has that capability of doing based on their size.
Thierry Willaud of Water Tower Research
Great. Maybe just one last question. You mentioned 58% of the revenue from membership and 42% from sponsorship. Is that, do you see that trending higher on membership as time goes or you think that's a good balance? How should we think about that?
Rob Allen
You know, you know, what's nice to see is we got two horses in the race now, you know, running fast, right? And so the podcast business has grown dramatically from 34 million to You know, we gave guidance of $47 to $52 million, right, on a run rate, right? And the same thing on the Slacker side of it, on the audio side of it. You know, we've grown from 20 million. Each of these businesses started at $20 million when we're acquiring them. Slacker, which we've owned for two years longer, is now doing, this year will be $65 million, right? And the same thing on podcast was doing $20 million. These were both losing a lot of money. They're now profitable, right? They're now EBITDA, size of EBITDA coming out of it. And on the podcast side, you know, as you grow up from 20 million, you're seeing some real sizable growth. And, um, I see, I see a two horse race here where they're going to be pretty neck and neck over the next three years.
Thierry Willaud of Water Tower Research
Great. Hey, thanks for the, uh, thanks for the answers and, uh, nice quarter. I, I appreciate your comments on the micro cap sectors and, and how kind of unprecedented that, um, the current situation is, but, um, hopefully better times ahead. Thanks again.
Rob Allen
Thank you. Appreciate you, Johnny.
Operator
Thank you. As a reminder, if you wish to submit a question, please dial star followed by 1 on your telephone keypad. Our next question comes from John Hickman of Leidenberg Tolman. John, your line is open. Please proceed.
John Hickman
Rob, just one quick question. Will you elaborate on your comment that the current quarter, the December quarter, is going to be a record? Does that mean the best quarter you've had in corporate history or the best third quarter you've ever had?
Rob Allen
Yeah, it'll be the best quarter in the history of the company. And, you know, you can see by a lot of the metrics that we've already announced, right? We've already given telltale signs of of where the growth is and what the growth is. We're growing about 60,000 subscribers a month, right? We're announcing almost a new podcast every two weeks. So it's really kind of now the model has become really easy, as you know, John. Every new podcast, we're adding $350,000 to $500,000 of revenues. So you see those announcements, you can easily figure those out, right? And somewhere in the 10% to 15%, you know, net margins to those, right, and profits to them. Same thing in subscribers, right? Every subscriber that we're adding, right, every paid subscriber that we're adding, you know we're adding between $3 to $3.50 ARPU, right, with about 30% margins. So if we can continue to do that, if we continue to add those, you know the quarter is just going to be a very special quarter coming up. And that's the reason we, again, raised our EBITDA guidance, even though our revenues won't hit It won't hit the numbers we would like to because the IPO took longer than we expected or the uplisting took longer than we expected. But I see telltale signs that the cast media as well as the pipeline of podcasts are kicking in fast right now.
John Hickman
So with the lower revenue guidance and the higher EBITDA, is that difference coming out of expense control or better margins?
Rob Allen
No, we're being very cautious. We just took another $2 million of costs out of the business. We're being very cautious on what pieces of business we do. Any risk business, we're not doing any of those live shows unless we're getting paid on them, as you and I have talked about before. We'll start to see telltale signs. We're going to start to get paid a lot of money next year for us to produce those shows with margins, very much like social gloves, but we're not going to do any of them unless there is money up front. Unless there is money up front with a guaranteed profit on them, we're going to focus our energy on the core businesses that are working right now and delivering revenues. And we're going to use our capital to continue to strengthen the balance sheet and continue to buy back stock. If our stock is going to trade at almost a nominal valuation right now, we're just going to keep buying back stock right now.
Operator
Okay, thank you. Thank you. As a final reminder, if you'd like to ask a question, please dial star followed by one on your telephone keypad. At this stage, we have no further questions, so I'll hand back over to Rob Ellin for any closing remarks.
Rob Allen
I just want to thank everyone. Thank you for joining and appreciate it. And we look forward to next quarter's numbers. Please join the podcast call in a short period. Thank you, everyone.
Operator
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.
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