This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
Operator
Hello everyone and welcome to the Live One Inc Q3 Fiscal 2024 Financial Results and Business Update call and thank you for standing by. My name is Daisy and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. And I would now like to hand the call over to your host, Aaron Sullivan, CFO to begin. So Aaron, please go ahead.
Daisy
Thank you. Good morning and welcome to Live One's Business Update and Financial Results conference call for the company's third quarter end of December 31, 2023. Presenting on today's call with me is Rob Ellen, 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 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 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 views. as of the date of this call, February 8th, 2024. As an acceptance 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 via webcast, and a 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 webcast in any form without the company's Express written consent is strictly prohibited. Now, I would like to turn the call over to Live One CEO, Rob Allen.
Rob Ellen
Thank you, Aaron, and good morning, everyone. I'd like to thank you for joining us today. It's a really exciting time at Live One, and I'm extremely pleased at how all areas of our business are performing. It was truly a spectacular quarter and one that illustrates the power of our creative-first model focused on superfans, which rewards the talent and enriches the shareholders. As we near the close of fiscal 2024, we conservatively guided consolidated revenues to 115 to 120 million, and we raised our guidance for fiscal 2025 to 145 to 155 million. Of note, our audio division, contributing revenues of 130 to 140 million, and $20 to $25 million of EBITDA with over $17 million of positive cash flow. I'm so proud of our audio team considering at the time of the acquisitions of Slacker Radio and Podcast One, the combined pro forma revenue was around $40 million with 400,000 members losing $15 million a year. Today, Slacker Radio has proudly passed 3.5 million members And this past quarter added over 300,000 members and close to 700,000 year over year. We are guiding this year over a million new members. This past quarter, we onboarded 24 new podcasts, signed some long-term contracts, and we signed almost every one of our current podcast shows. We have a pipeline of over 100 existing podcasts. That's 10 times the amount of any in history. shows that we believe and many will join our network. We focus on great creators with amazing stories that can benefit and achieve increased engagement by joining our family. These shows are averaging about $350,000 annual in revenues. It's over $7 million added. This gives us a unique clarity and strong confidence in our ability to achieve our 2025 financial guidance. Also, as we expand our podcast roster and our sponsorship, we now have over 600 advertisers and partners in growing, as well as over 10 podcast networks as potential acquisitions, very similar to what we did with Cast Media. Kit, Sue, Eli, and the rest of the podcast team have done an amazing job, and you'll have an opportunity to listen to Kit presenting at 11.30 call. I'm excited to announce this past quarter, we closed our first ever 20 plus million dollar B2B deal with one of the largest streaming platforms in the world, a Fortune 500 company. This combined with our extension of our 10 year partnership with Tesla, extending their contract for at least another 18 months ensures increasing monthly revenues, which provides us with full confidence and our business plan will provide More and more of these B2B deals, we now have over 42 potential B2B partnerships in our pipeline across eight verticals. In my 30 plus year history of high level involvement in media and technology companies, any time our companies have surpassed that $100 million in revenues, with most of this almost guaranteed recurring next year, it has always provided both myself and my management team the confidence and the runway ability to drive further revenues and sizable EBITDA for our shareholders this is the live one flywheel it starts with creative first focus on superfans driving traffic and engagements and producing multiple revenue streams from the same piece of content this quarter Our only negative EBITDA division, our merchandise, CPS, has cut over $5 million of costs and will continue to cut up to $7.5 to $10 million of costs and use that cost saving to celebrate our celebrity brands. We will launch between 8 to 12 celebrity brands, starting with Birthday Sex with Jeremiah and Russell Bevan. We sold out in our first few weeks of the first round of product. This past year, proudly, our publishing division, Drumify and Splitline, was nominated for three Grammys and took home two Grammy wins. And the awards are just the beginning. We created Sounds Productions platform to compete with Splice, where producers upload their beats and sound to a storefront for other creators to purchase them. Like Splice, this is a subscription-based service, however, the big difference is our company and the creators own the IP and receive royalty payments. There is nothing better for our young artists than receiving mailbox money every month. This model motivates and attracts creative talent to our platform, driving traffic, audience engagement. Again, with very little cost to us and unlimited revenue potential, revenues increased over 300% in our first year. I'd also like to highlight we created a subsidiary of Podcast One called Studio One, focused on ownership of scripted IP. more specifically focused on second windows of selling to television and film. This quarter, we proudly announced the acquisition and launch of four shows, Opportunist, Lost in Panama, Vigilante, and Barnumtown, which has already partnered with a major streaming platform and is waiting to be greenlit as a scripted TV show. Another one of those has partnered with a different platform and is already sold as a documentary. Our supply is deep and our possibilities are endless. I really hope everyone had an opportunity to listen to our newest podcast, Varnumtown, hosted by Carl McLaughlin. This is a great example of the type of podcast we are targeting, which have the traction to be major studio productions. We believe we currently have 8 to 12 current podcasts have the potential to turn into scripted shows and more on the horizon, either creating our own or acquiring existing podcasts and then promoting them within our communities. Once again, owning more and more IP, licensing merchandise in coming years, the division could become the most profitable division within the company. Given the current strength and future potential of our business, we believe our stock remains extremely undervalued. We increased our buyback from $4 million to $10 million, leaving approximately $6 million in capacity. Thank you, everyone, for your time and attention, and I'd like to hand it back to our CFO, Aaron Sullivan for Q3 results.
Daisy
Thanks, Rob. I'll spend just a few minutes providing a very brief overview of our results for the third quarter of fiscal 2024. The quarter ended December 31st, 2023. Consolidated revenue for the three-month period ended December 31-23 was $31.2 million. Slacker posted record revenue for Q3 of $16.8 million. Adjusted EBITDA of $6.8 million. Podcast 1 posted revenue of $10.4 million and adjusted EBITDA loss of $400,000. For the third quarter of fiscal 24, revenue consists of 54% membership and 46% advertising, sponsorship, merchandise and other, compared to 49% membership and 51% advertising, sponsorship and merchandise and other in the prior year period. Consolidated adjusted EBITDA for Q3 fiscal 24 was $3.3 million. And on a U.S. GAAP basis, Slide 1 posted a consolidated net loss of $2.6 million or $0.03 per diluted share for Q3 fiscal 24. Rob, I'll turn it back to you.
Rob Ellen
Great. Thank you, Aaron. Again, a spectacular quarter for the company. Huge growth again. In conclusion, I just want to reiterate, as each of my prior companies has broken that $100 million mark in revenues, whether it was Digital Turbine, IWON, JAX, THQ, Forward Industries, Grant Toys, each have had substantial five to 100 times runs for their shareholders. I'm confident and excited because I believe this is the biggest opportunity in my career. I personally invested over 18 million in this company and I increased our company stock buyback to $10 million because I see where we're headed and strongly believe our stock is undervalued. We've said we were gonna achieve hitting 10 million subscribers is over a five year period. We're well on that way and super confident we're gonna hit there. If we do, we'll be over a billion dollars in revenues and the stock will be substantially higher. I wanna thank everyone for their support and look forward to any questions. Thank you.
Operator
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. And when preparing to ask your question, please ensure you are unmuted locally. So that's star followed by one on your telephone keypad to register a question. Our first question today comes from Brian Kingslinger from Alliance Global Partners. Brian, please go ahead. Your line is open.
Brian Kingslinger
Great. Thank you. Congrats on your eight-figure sponsorship deal with Podcast One. First, is this a new sponsor or a larger agreement from an existing sponsor? I guess I'm trying to understand if this is all incremental revenue to podcasts' current run rate.
Rob Ellen
Yeah, so this is a brand new partner. It started the end of last year when we announced it. It will continue to grow. And it's way more than eight figures. It's well over $20 million. And you'll start to see that incremental growth in this quarter and substantially higher as each quarter goes forward. This gives us a streaming partner, one of the biggest in the world, the Fortune 500 company, and gives us a massive audience to reach to showcase our content.
Brian Kingslinger
Fantastic. And then more broadly, we've heard from the Googles and Facebooks of the world that the ad market is finally beginning to strengthen. And then we also have an election year ahead, which usually helps the ad market. First, are you seeing the same signs in the market where pricing might begin to strengthen and then will podcast benefit from political ad trends?
Rob Ellen
The answer to both is yes. Uh, we're already seeing that and we're seeing telltale signs that, uh, this is going to be a fantastic year. As you can see by the numbers we announced this morning in Podcast One, we almost matched last year, right? We did $32 million last year. We're at $31 million and change already with a quarter to go. And obviously our fourth quarter, especially with this new contract, is going to be the biggest quarter ever in the history of the company. So we're seeing telltale signs it's strong. Politics does work in advertising. But I think the biggest thing, Brian, to look at is the trends in podcasting. The usage changes. the number of people that are moving the podcast, the demographics that are moving. It's getting younger and younger as well. And also the number of sponsors that are moving in into podcasting. It's really a maturing business. And what I've told everyone is this business was going to grow when we bought podcast from $4 million to eventually $5 to $7 million. What I would tell you now, it's going to be way more like $7 to $10 million by 2030. So there's a big market developing. And this is really a unique time for our advertising and podcast business.
Brian Kingslinger
Right. The heart of the question, it's clear podcast one revenue is growing. Growth is a function of downloads versus price. I think you grew downloads 15% if I read an article correctly or unique visitors. So I guess I'm wondering what are the pricing trends as I speak to the ad market? Is pricing generally been flat and you expect to increase? Has it been increasing? Just speak to pricing on the ad side if you could.
Rob Ellen
Yeah. I mean, I can talk from the overall market, right. Is increasing somewhat. Right. But really what's happening for us is because we built this community, right. We're able to sell across the community and part of the excitement. And you'll see, you know, when, when you see podcasts like Brendan Schwab move over and Brendan moved over doing, you know, doing, he's already doing two times what he was doing before. Part of our community, we're able to upsell and sell at very different CPAs than CPMs and some of the bigger guys are who are mostly doing programmatic advertising. So it's a trend. The trend is our friend. The industry itself is going up. But for us, we're going up even higher because our community continues to grow.
Brian Kingslinger
Great. I have a couple more, if you don't mind. First, and I ask this every quarter, I may have missed it. Can you speak to the number of podcasts that are pending onboarding? And speak to the expected timeframe. I could be wrong, but I think last quarter you had six of the 27 from cast. It might be reading my notes wrong. So if I'm wrong, sorry. And then there's probably others pending. So just maybe take us through what's pending in the timeframe.
Rob Ellen
Yeah. So we announced, we added 24 this year. That's by far a record for the company, right? We're now up to close to 180 podcasts. Um, we said is for the first time in history, we have over a hundred podcasts in our pipeline. And the reason that that's happening is if you read the announcement from Spotify, they hired a massive team with very talented team of creators, and they just got rid of all of them. And they woke up and realized they're the best at distribution, right? And we're a great partner for them distribution, but they're really managing these small podcasts is not, does not make sense for them. So a lot of these contracts, there was $28 billion of acquisitions in the industry. The industry was the trend was it was a seller's market for podcasts, both podcast networks, as well as podcasters right now as a buyer's market, you're going to see from Amazon and Spotify and Apple and serious. A lot of these podcasts that do 250,000 to $5 million in revenues. Their contracts are coming up and they really need a place that can can't hold them and support them right in this market. And it's really not going to happen in these big companies. It's not really the right place to be. So this is the biggest pipeline we've ever had. And I fully expect to beat that 24 number. We'll have still a lot more coming this fourth quarter. And I expect to beat that number of, you know, call it 27 to 30 this year. I fully expect to beat that next year. And just looking at our pipeline and how close we are on many of these, I think you'll see some really exciting announcements. You'll see some major, major podcasters moving over to our platform like Brendan did. It's rare that you see those kind of moves, but you're going to see them in a unique way. And the big guys, they're going to control distribution, which is wonderful that we have these partnerships with Spotify and Apple and Samson's and so on, right? But they're also going to be focused on the Joe Rogans of the world, who signed a new $250 million contract. And the show just moved over from Amazon, $100 million a year for SmartList. So there's more and more money pouring into the system, but the big guys are going to focus on the Howard Sterns and the Joe Rogans. And we're going to have an unbelievable opportunity to acquire existing podcasts with traffic and audience, as well as like we did with Cast Media. I fully expect, we said we have 10 acquisitions in the pipeline. I fully expect additional acquisitions in the podcast space as well this year that are hugely accretive to our bottom line.
Brian Kingslinger
Great. Last question I have. I don't think you discussed it, but I think it's a really important point that you and I have discussed in the past. So maybe you can share any stats for recently onboarded podcasts, how they perform compared to when they were on other platforms, not on the Podcast One platform in the first six months or so. I think that we've had a good discussion, and I think it would be helpful if you could share some stats.
Rob Ellen
And I think this is a credit to Kit, Eli, and Sue. And they've got 65 years of history and doing billions of dollars of revenues in radio. Sue ran all the sales for Howard Stern and Mel Karmazin, and all three of them trained under Norm Patton, who was a pioneer in radio and created one of the great public companies in radio with his company previously, with Westwood once. our team has been able to move over podcasts and without giving names, we moved over one podcast that literally had 20,000 downloads. It was making a couple of dollars, very talented, two women, very talented from a small town. We moved them onto our platform. We put them on with the Vanderpumps. We put them onto all the housewives. We put them on all of our female network, which we're most powerful. And they've now grown to 150,000 downloads and they're doing millions of dollars of revenues. So, And there's multiple stories like that. And very few companies are left that can do that where they have a community that they're really working on the sales, the marketing, the PR, the production, all of it in one and working with that talent to deliver them way better CPAs, way more traffic, way more audience. We also put them on Good Morning America and put them on TV and did all the cross work of PR for them to really grow them. And I couldn't be more proud of it. Brendan's show has exploded since it came on the network. It's up two and a half times since being over at Cast Media.
Brian Kingslinger
Great. Thanks for all the details.
Rob Ellen
Thanks, Brian. Appreciate you. Thank you.
Operator
Our next question is from John Hickman from Leidenberg. John, please go ahead. Your line is open.
John Hickman
Hey, Rob, could you walk through like how a podcast becomes a, you know, a streaming or television type asset and what the revenues, what your portion of the revenues could be? Yeah.
Rob Ellen
Yeah, great. Thanks, Sean. I mean, you and I go back a long way. I think I met you when I owned Atmosphere Films and I had a slate of television and film that I was very fortunate, you know, those films turned out to be one, One turned out to be the movie 300. Another one turned out to be Spiderwood Chronicle. And we did well over a billion dollars in revenues. Here's the beauty of this model. You take a podcast like Barnumtown. My partner and board member, Patrick Waxberger, one of the great creators of content maybe in history, just won an Academy Award for CODA, created Twilight, La La Land, came to us with a show called Barnumtown. An amazing story. I'll make it really brief. But 300 people, little town. For any of you old enough to know this, this band called REO Speedwagon. A plane lands in this little town of 300 people in North Carolina, and all of a sudden, everybody explodes and becomes rich. Money's coming out of their pockets. It's so wild how much money is created in the system. And of course, what happens, murders, and CIA, and FBI, and drug enforcement, and tax authorities, and so on. This little town of 300 people. That show is... I highly believe this could become a bidding war for the streaming networks. It's the story of Pablo Escobar infiltrating in little town in North Carolina. And, you know, for anyone who has an opportunity to listen to it, I think you're going to really enjoy it. If you've seen the show Ozark or you've seen, you know, any of these true crime type shows, this is one of the best I've ever seen. And I think that's one of our four shows we've announced so far. You know, stay tuned because there's going to be a lot more announced any minute now. These four are all in this quarter. right? Opportunist, vigilante is already sold to a major studio. They just wired a $70,000 just to start with. So John, when you look at these things, you're going to start to get production money. You're going to start to get, you know, backend money. And as we grow it, we expect to do 10 to 12 of those shows a year, which we're doing anyway, right? They're on our platform, you know, make some money off the podcast, but then sell to that second window where there's no risk and Netflix or Apple or Amazon or HBO buys the rights to it. And, you know, we sit there with the catchers and collect money for the rest of our lives. I'm very fortunate when I did 300, it's now almost 20 years. You know, those royalty checks come into life. And so it's really exciting, you know, next generation of where podcast is going.
John Hickman
So is there any cost to you to do that? Zero. I mean, zero. In fact, in fact, whatever you make on those is 100% margin. Correct.
Rob Ellen
Once we, yeah, so as an example, right, on Vigilante, we just got a $70,000 check, right? We get that check, right? It's already handed off, right? They've already hired the writers to produce on it, right? We're executive producers on it, and we'll continue to get paid as producers on it. We'll continue to get paid back in if it's successful. And, you know, literally if it makes it, you know, you make it the first year, you're going to get paid a lot of money. If it makes it second and third year, yeah, this becomes mailbox money for life. So who, who, who in your shop is shepherding that initiative? Yeah. So this is a team of people. So remember it starts as a podcast, right? So the podcast, imagine, imagine that now you can go instead of scripts and books sell for a million dollars, $2 million, right? Then you got to hire a writer here. You already have proof that the show's already up. The traffic's already there. The audience is already there. And now you're selling to Netflix and you're going, okay, the show is already number four on Apple, right? It's already had 100,000 downloads in the first week. They've got proof of concept. They've got proof of customer base. It's a very unique model. And, you know, I'm really excited about this. I think it's going to be a real winner for us. And it'll take a little bit of time, but, you know, just as the small bits of money coming in come next year could be very substantial. Money coming in and growing every year.
John Hickman
Real quick, can you remind the four that you've already announced? Vigilante, Barmentown, what are the other two?
Rob Ellen
Yep. So Opportunist, which amazingly just the reruns, just the reruns are doing 100,000 downloads. We're making a lot of money just off the reruns already, right? So that first three years of it, we acquired that from Cast Media. Vigilante is already sold to a major network, guys. Opportunist is partnered with a network to do a documentary of just one season of it. Guy, we're out with two other seasons to the networks. And the other one is called Lost in Panama. Okay. Thank you. And I think we'll add another one almost. We'll probably add another one every couple of weeks, John, right now.
John Hickman
Okay.
Rob Ellen
Okay. Go and do. Thank you. Appreciate you.
Operator
Thank you. Our next question is from Sam Lee. Sam, please go ahead. Your line is open.
Sam Lee
Sam, please unmute yourself locally.
Operator
It appears that Sam has disconnected, so I'll move on to our next question. Our next question is from Sean McGowan from Roth MKM. Sean, please go ahead. Your line is open.
Sam
Are you able to hear me? Yeah. Hey, Sean.
Rob Ellen
How you doing, buddy?
Sam
Yes. Pretty good. How are you? Let me start with Aaron. First of all, congratulations, Aaron, on the recent promotions. But second, can you give us an idea of exactly when the 10Q will be out?
Daisy
Thanks, Sean. Appreciate it. So we are looking at, so it'll be early next week. You know, deadline is Wednesday the 14th. We're hoping to get it out maybe a day or two sooner.
Sam
Okay. Um, would you mind repeating those percentage, uh, breakdowns on the revenue, you know, between subscription and ad and, you know, and, and any kind of color you could provide on revenue outside of those two categories?
Daisy
Yeah, sure. Um, so let's see, I think we mentioned that slacker revenue was, was 16.8 million for the quarter. And podcast one was 10.4. So that's two big buckets there. And then in terms of the percentage, it's 54% membership. And then 46% advertising, sponsorship, merchandise, and other for the current quarter. And then the prior year quarter was 49% membership and 51% advertising, sponsorship, merchandising, and other.
Sam
Correct. But that's just within audio, but can you just give me any color on revenue outside of that, just any meaningful trends going on there?
Daisy
So outside of that, you've got basically merchandise revenue makes up the remainder.
Sam
Okay. And then on the $20 million deal, if you could provide a little bit more color on that, for example, What timeframe does that cover? And is all of that revenue going to be booked in kind of in one bucket or will it be spread around?
Daisy
That's over the course of calendar 24. So you should see it in a relatively straight line manner over that period. And that will be in the advertising category.
Sam
Okay, so it's all podcast? Correct. Okay. Then back to Slack for a second. Any updates or color on expanded relationship with Tesla or with any other equipment manufacturers? I think you've hinted in the past that there could be some additional partners for audio streaming, anything new there?
Rob Ellen
Yeah. So let me jump in on that, Sean. So what we just announced is that we expanded our pipeline from 35 to 42 partners, right? Our streaming partner is the first of many of these B2B deals. And we fully expect that at those 42, you know, somewhere in the five to 10% of those will close this year. So anywhere from two to four of those. And each of those are with billion to multi-trillion dollar companies, very similar to this type of deal. And so we couldn't be more excited about the pipeline. We brought a great team out of Microsoft who has done billions of dollars in B2B deals. And as you know, John, my entire business in Digital Turbine was built off the backs of B2B deals. That was just with carriers and hardware companies. We have eight verticals here. So we fully expect to expand our auto business. We fully expect to expand our carrier business. And historically, Slacker has had partnerships with everybody from Samsung to Verizon to T-Mobile, and as interest rates rise, and you're going to hear this theme exactly as I described in Digital Turbine for almost seven years, the same trend is here. As interest rates are going up, those commodity businesses must have a closer relationship and must own the data of their customers. And you're seeing more and more of those partners now signing up with content and owning their own content. having their own content deals versus giving it to apple and android and just allowing them to own all that data so really exciting pipeline the biggest by far in the history of the company it's the one area that we're adding people we're now up to four people in our b2b we'll continue to add to to that group and you'll probably see some announcements around that and expanding that b2b as we announce the next the next deal okay and when you talk about those 35 to 42
Sam
partners, is that all within Blacker or does that include partnerships that would be in podcast?
Rob Ellen
You know, audio partnerships, right? So even though this first deal is per podcast, that doesn't mean it can't expand to radio, right? And it doesn't mean it can't expand to our live streaming of our pay-per-view. We have these massive libraries of video. So don't be surprised if you start to see announcements that cross over both of them.
Sam
Okay. Um, thank you. And then, uh, last thing, Rob, can you give us a little bit more color on what we should expect to see and other products, you know, coming soon in celebrity? Is there any, can you give us a little peek there? I mean, the wine is off to a great start, but one of the things should we expect to see in the coming quarters?
Rob Ellen
Yeah. Yeah. I mean, you know, be patient cause it's coming any minute now. Right. You know what I said is you're going to see another two or three products launch. So we have two wines already. that are being launched you're going to see us across big spaces things like coffee right cosmetics so when you think about what's happening in the industry these social media stars which we live with every day whether they're podcasts or they're musicians with social media stars we work with all of them right you think of logan paul and prime and how it's now doing a billion half thousand revenues right you think you think of kim kardashian 700 million dollars of revenue is in two years and what she's done to the cosmetic industry. And you think of, you know, go back, go back to, you know, you know, to Avion right inside of Entourage and, you know, Tequila being created inside of it. We see this great opportunity with very little to no cost to us to be able to partner with our creators with already having the rev shares built and be able to launch products and find out if their social media drives it. If their social media drives it, you're going to have a great brand. If it doesn't drive it, there's a pretty good chance that's going to be one you're going to pass on. So we expect to launch 10 to 12, um, I'm sorry, eight to 12 this year. And we'll expand it 10 to 12 the year after and further the year after it, these will all be with very little cost to us. It's really just an extension of our content and new revenue streams that come out of it. And I can't wait to do the ones with podcasters because with podcasters, just think about it, right? You know, 50% of the business is direct response. So they have proven records that you're selling products. right, directly off that podcast because these podcasts have super fans. So they don't have to be massive businesses, but they can be hugely creative and hugely grow our business overnight.
Sam Lee
Great. Thank you very much.
Operator
Thank you. Our next question is a follow-up from Brian Kintzlinger. Brian, please go ahead. Your line is open.
Brian Kingslinger
Thank you. I have two. The first one, I'm sure lots of people are thinking this about this $20 million deal, so I want to ask it to make sure we're all thinking about it the right way. If I look at Podcast One's revenues, you've been at about $10.5 million for each of the first three quarters, plus or minus. Is the way to think about it that you're going to do 42 million ish this year, whatever it is, plus or minus. And next year is you're already off to $20 million higher. So 50% growth based on that $20 million deal, or is there something I'm not thinking about the right way there?
Rob Ellen
Yeah, we'll, we'll come out, Brian. We can't go any deeper than we publicly announced. What we said is we expect to be on a run rate of 45 to 50 million with four to 5% We're going to have to update that shortly and give us a minute to do that. But we haven't publicly announced anything deeper there. But, you know, you're certainly thinking the right way, right? And one of the exciting things here is you now have your advertising business growing almost as fast as your audio business, right? So this is the first time we have two moonshots, you know, happening at the same time.
Brian Kingslinger
Okay, that's good to hear. The second one, I just, maybe for Aaron on the cost side, the pros and cons, if you could just walk me through it. The first, on the OPEX side, it's substantially down in the December quarter to September quarter. I assume that's your cost-cutting efforts. I want to make sure there's nothing one time, and this is kind of indicative of the near term or lower, as you've talked about in the past. And then on the gross margin side, I'm not sure what impacted the mix. It was a little bit lower than it's been for the last many quarters. So just if you could just take me through the dynamics on the cost side and how we should think about them going forward. And that's all the questions I have. Thank you.
Daisy
Yeah, thanks, Brian. So the OPEX question, I think we're, you know, there's not, overall, there's not any one-time, significant one-time matters in here. It came down a little bit from last quarter simply because We have substantial costs related to spinning off podcast one. So you had accounting and legal costs, et cetera, public filing costs in previous quarters. So you don't have that noise kind of going forward. So that's that. And then on the margin side, there's about three percentage points of additional spend in the current quarter where we're out acquiring content. You know, we expect that to kind of normalize in the coming quarters. So, you should see an increase of about, you know, 2%, 3% there. And I think that's kind of the runway we've been on previously. So, it dropped down this quarter. It should pick back up in coming quarters.
Brian Kingslinger
Great. Thanks for the explanation.
Daisy
Thanks, Brian.
Operator
Thank you. Before we take our next question, I'd just like to remind everyone to register a question, please press star followed by one on your telephone keypad. Our next question is from Thierry Williams from Watertowel Research. Thierry, please go ahead. Your line is open.
Thierry Williams
Yes, thank you very much. Good quarter, guys, and you've already covered a lot of ground, so I just have just one question. You're guiding to a very substantial jump in EBITDA for the fourth quarter, and I was wondering if you could give us some color, how much of that is seasonal, if it's driven by a one-time deal, and what part of it is maybe leveraging in the model?
Sam Lee
I'll take this, Rob, and then you can jump in.
Daisy
For Q4, as I mentioned earlier, we had a lot of one-time noise in Q2, Q1, Q2, with a little bit bleeding into the current quarter on our efforts to spin out Podcast One. That's behind us. We're expecting to see some cost savings there. As the audio business continues to grow into into q4 we just see additional contribution down to the down to the bottom line there and that's that's really kind of the the two driving trends there in um the ebitda for are expected for q4 i don't know rob if you have anything else to add yeah i mean i would just say you know not just podcast one we had also filed a public offering for slack radio to merge into a spac which we subsequently pulled because the market was so terrible but also because
Rob Ellen
the company is growing so fast, right? Revenues and EBITDA. So we had the cost of, of three, you know, three audits, uh, legal fees, so on was very expensive. And, uh, and Aaron, who has just made CFO, it's just done a great job of that and, you know, great job of managing it. And you'll see, you'll, I think you'll see those, those margins, uh, come back this coming quarter.
Thierry Williams
Great. So, I mean, if I summarize that, the EBITDA level you're forecasting for the fourth quarter is maybe a sustainable level going forward and kind of a new quarterly basis.
Rob Ellen
Yeah, I mean, our EBITDA, as you can see, and, you know, we don't break down by quarter, but we did put out guidance for next year where we said our audio business is going to do 130 to 140 million. with $20 to $25 million of EBITDA. So you're starting to see some real traction and real move towards cash flow and bottom line.
Thierry Williams
Great. That's it for me, guys. Thank you very much.
Rob Ellen
Thank you.
Operator
Thank you. We have no further questions, so I'd like to hand back to Robert Allen for any closing or further remarks.
Rob Ellen
I just want to thank everyone and appreciate your time. And in a difficult market like this, you know, this is a great time for our company and growth. We're going to continue to buy stock. And, you know, we'll be able to buy stock in the next couple of days now if the earnings are off. And we'll continue to buy stock. And if we're going to trade down at these low levels, we'll expand that buyback again if we need to. So I want to thank everyone. Thank you for spending the time. And we appreciate your support in a tough market.
Operator
Thank you everyone for joining today's call. You may now disconnect your lines and have a lovely day.
Disclaimer