LiveOne, Inc.

Good morning, my name is Angela and I will be your conference operator today. At this time, I would like to welcome everyone to Live One Earnings Call. At this time, all participants are in listen-only mode. Please be advised that this call is being recorded. You will have the opportunity to ask questions during the Q&A session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star one again. Thank you. I will now turn the conference over to Aaron Sullivan. You may begin.

Thank you. Good morning and welcome to Live One Business Update and Financial Results Conference Call for the company's second quarter, ended September 30, 2024. Presenting on today's call with me 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 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 10K for the year ended March 31, 2024, and subsequent SEC filings. Defined 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 the investor relations website for important content. Following discussion, including responses to your questions, contains time-sensitive information that reflects management's view as of the date of this call, November 7, 2024. And except this 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 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 on any forum that the company has expressed written consent is strictly prohibited. Now, I'd like to turn the call over to LiveOne CEO Rob Allen.

Thank you, Aaron. Good morning, everyone, and thank you for joining us today. We appreciate your continued support. I'll begin with a brief overview of our record-breaking financial results followed by updates on recent developments and our vision for the future. Due to financial overview, we achieved record revenues in the history of the company for the first six months. Consolidated revenues are $65.7 million with adjusted EBITDA of $6.6 million. Due to consolidated revenues our quarter was $32.6 million, a 14% increase. Our audio revenues delivered $31.7 million and .18% growth. Our adjusted EBITDA just on the audio division was $5.6 million. We closed the quarter with $11 million in cash, up over $4 million from the previous quarter. Again, earlier in the year, we converted all of our debt at $2.10. Now to our opportunity with Tesla. Tesla has been a little misconstrued in that we extended our contract through May of 2026. Under new terms. These new terms are now the seventh different iteration of a 12-year partnership with Tesla. The exciting part is this is everything that our management team has asked for Tesla, which is to give us the opportunity to market to our customers, to expand to all devices. With that, Tesla will be helping us and has started to already to market our offering to the millions of cars existing out there in North America. We got prominent space on the home screen of Tesla in perpetuity. That beachfront property, you think back to Cirrus or XM radio, they spent billions of dollars getting to this point to have that ability to convert these customers. We now have direct access to Tesla customers for cross-selling and to upsell them from a $3 subscriber who can only use it in the car to our larger opportunities of podcasting, e-books, live streaming, -per-view. Tesla will continue paying monthly fees on existing grandfathered cars. What's exciting about this opportunity is we've never been able to be valued base per sub. Subs in this space get valued between $200 and $1,000 a sub. This has also opened the floodgates to major opportunities with other automakers. We publicly said we are in deep discussions with eight of the major auto companies around the world. I humbly believe it feels like since the announcement that people believe that we were under exclusivity with Tesla, we have an opportunity now to really expand those partnerships with other auto companies. That will lead into the diversification of our business that we've been talking about for the last 12 months. We hired Bill Wilters as our head of B2B. We've now expanded that B2B team to 11 people. From one person hired a year ago, just over a year ago, to now 11 people. We see eight verticals with huge opportunities to diversify and expand the business across automotive, carriers, hardware, retail, hospitality, airlines and travel, loyalty programs, credit card companies. We announced one of those first major deals was a $24 million, $2 million a month major streaming partner. Then we announced TexNow, over 100 million users. We've announced partnerships with eBay, Facebook, TikTok. We are in active negotiations with dozens of Fortune 500 and Fortune 250 companies, including those eight auto companies. We fully expect to announce at least two before year end and two before March 31st, our fiscal year end. Now as you go into our podcast business, really exciting quarter as well, podcast one success continues. We've delivered, we've grown from 20 million to a run rate of 50 million dollars over the past four years. We have 100 podcasts in our pipeline, 10 times our normal amount in history. We have eight podcast networks in our M&A pipeline, 185 podcasts now adding 50 more in the next 24 months. We are adding almost a new podcast every two weeks. LiveOne has also acquired 224,000 additional podcast shares this quarter and over 550,000 additional podcast shares this year. We will continue to buy back additional stock and podcast one and we now own over 73% of the company. We are on our way to over $100 million over the next 24 months. Podcast to TV and film adaptations. I've talked about this a little bit on our conference calls before. This is just starting to really, really start to take off. We now have a slate of over 10 podcasts that have potential to be TV and film adaptations. We have signed two of them to streaming partners, including BarnumTown and Vigilante and a third opportunity to a documentary and we see material opportunities to turn these without any additional cost to the company and massive upside for the company. Next are celebrity brands. We've just announced with Super Duper Kyle our second celebrity band called Smile. Smiley. We see again seven to ten pot of these celebrity brands a year for the next five years. Full potential of 10 million to a billion dollars of upside with very little cost to the company as we utilize our partners in social media artists, actors, producers, podcasters, social media stars to drive these brands across their social media. Our publishing business grew over 300%. Tonight we are launching our live streaming -per-view event for Super Duper Kyle's album of which we own 50% of the publishing. Our live streaming -per-view has had over 5 billion engagements in the last four years. With that, we continue to buy back stock. We have now bought back almost four and a half million shares of stock. We have increased the buyback to 12 million and will continue to buy back at these levels. I'm proud of my team. I'm proud of what they've been able to accomplish. We've gone through tougher times than this including when COVID hit. We lost all live streaming business and came out of it stronger than ever. When you think back when COVID hit we were at 38 million in revenues, lost a third of our revenues, all of our live business, all of our live streaming and we came out of it and now we did $65 million for the six months. So we're looking forward to any questions from everyone. I'm going to hand it off to my CFO Aaron Sullivan. Thank you very much.

Thanks, Rod. I'll spend just a few minutes providing a very brief overview of results for the second quarter of fiscal 2025 and in September 30th. Consolidated revenue for the three-month period ended September 30-24 was 32.6 million and increased 14% over the prior year period. Flagler posted record revenue Q2 of 19.5 million and Podcast One posted revenue of 12.2 million. Consolidated revenue for the six-month period ended September 30-24 was a record 65.7 million and increased to 17% over the prior year period. The second quarter of fiscal 2025 revenue consists of 60% membership and 40% advertising sponsorship, merchandising and other compared to 58% membership and 42% advertising sponsorship and merchandising and other in the prior year period. Consolidated adjusted EBITDA for the three and six months ended September 30-24 was 2.9 million and 5.8 million respectively. On US GAAP basis, LiveOne posted a consolidated net loss of 2.7 million or two cents per diluted share in Q2 fiscal 2025. As of September 30, 2024 total members, which include three members, were approximately 4 million. Note that included in the total members are certain members who are currently subject to a contractual dispute, which we are not currently recognizing revenue. Rod, I'll turn it back to you.

Yeah, so I'm going to open it up to questions. So I'll look forward to any questions and then I'll close it out at the end. So thank you very much.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star one again to ask a question. Thank you. And your first question comes from the lion off, Brian Kinslinger with Alliance Global Partners. Your line is now open.

Great. Thanks so much. Great results in the quarter. Got a laundry list of questions that some investors have asked me. First question I have is how many paid subscribers do you have that are either going to be grandfathered in or that are not related to Tesla?

Yeah, we can't give that number Brian, as I told you before. But yeah, it's a percentage of the total number of subscribers out there, but it's not a number that either Tesla or us were are able to provide publicly.

Okay. And then what percentage of your Tesla users listen to your digital radio for more than 10 minutes a day or whatever timeframe you think is statistically significant?

Yeah, I think it's too. I mean, just to give you a highlight film and really exciting, even with this change that Tesla has made as an example this week, 285,000 people used our service. And then for this month, it's well over a million people have used the service. So it's really exciting to see. And the usage, right, the consumer is using it an average of about 20 minutes, which is extremely high for the industry.

Okay. I know the plan doesn't change until December 1st, but have there have you seen any conversions yet? You said Tesla is already reaching out or is it too early and no one will really sign up until after December 1st?

No, we're already seeing some nice signups. We're really excited about it. And we're going to be talking about that. I would say, you know, somewhere in the middle of December to the end of December will probably hold a conference call on it, but really exciting, even though they still give away for free, we're signing a lot of subscribers right now and in signing them. Here's what Tesla has done. They have moved. They have sent out a message, right, which shows the orange button that was previously there to finally giving us that live one branding in the car. You think about what serious and XM paint right to get that prime real estate. So in almost every car I've seen, right now, I take a lot of my been a lot of Ubers. I was in New York all last week. Every Tesla car you see, I also own five Tesla cars, right? Have now changed that orange button has now that bottom number one spot in real estate on Tesla. You're going to see that live one button that takes a little education, right? People have to figure out what it is, right? And they click on it. They immediately can hit that barcode and they can choose to convert. But it's a little tricky because you could also listen to free. So you still have another month for that, but we're really excited about the number of conversions. It's exciting. It's energized. I think we expect almost none and we're signing a lot every day.

Last question related to Tesla and I have a few others. When someone buys a new car in North America post December 1st, will they get a month or two free like you do with other cars with Sirius or will there not be a free subscription?

Can't answer that yet, right? This is the first time that the company has had the opportunity to talk to those consumers. You're going to see a lot of different things that we never could do before, right? Including advertising, right? These are things that we didn't have the capability of doing before, right? We were we were strictly paid for by Tesla, right? It was an amazing partnership, right? And that was the terms of it, right? No advertising so on now. We'll have the ability to to be able to really stretch stretch our arms and really be go out there and to be able to do the different marketing and different different price ranges, right? As you can already see if you've hit that cold Brian, we already offer a $3.99, a $34.99 for a year, right? And then $99.99 for the year. So huge discounts to everybody else in conjunction with Tesla. So it's really exciting to see us have that ability and be able to stretch our muscles and be able to showcase that and really be able to start to sign these subscribers and have you know, the individual as a customer of the company and be able to upsell them to podcasting to -per-view to live streaming to all the different verticals ebooks that we have. This is the first time we've had that opportunity to do it.

Great switching gears. Are you already integrated into text now? And if you are has there been a meaningful impact yet to the subscriber base in the first four months?

Yeah, it's really just beginning. It's an exciting partnership, but we've just started to start the trials, right? They have over a hundred million users. This is a like a boost mobile for anyone that doesn't know is a low-end provider of music of phone service, right? So they're a perfect fit for us. We'll get we're going to see how well that turns out. And I think both parties are really excited and energized by the partnership. We're in the very beginning phases of

it. Great and then on podcast, did you disclose? I mean you have in the last few quarters, how many titles you added in the second quarter? How many you onboarded? And then what's the expectation for the second half of the fiscal year?

That's a great that's a great question. I don't think we put the number Aaron. If you had that we should have but we put the total for the year. It's really a staggering number. I think we've added now. Yeah for the 12 months. I think we just announced our 49th new podcast. Yeah, we're adding almost one every two weeks right now and Brian these are these are podcasts with real traffic and real revenues. So the podcast industry is heating up as you can see the elections like this is an argument. Elon Musk just came out today and said, you know, Trump won the election off the podcast. You have anyone that follows this podcasting is just exploding. You start to see that second wave. You saw a 28 billion dollars acquisitions. You start to see that second wave kicking in right now. The Kelsey's just signed for 120 million with Amazon smart list just moved over to serious for 150 million dollars. Joe Rogan just signed for 250 million dollars, right? And it's kind of the haves and haves nots right now in podcasting. The smaller podcasts are all coming available. This is our sweet spot. Those 50,000 to 250,000 maybe even 500,000 downloads of true podcasters really need a home and we're really the best place from the comments. The only place you come for a full 360 experience and you know, as I said, you know, as I said, we have over a hundred podcasts in our pipeline the largest by 10x in history. We have eight podcast acquisition acquisition mergers in discussions right now and we've just added Steve Lehman to our team is just, you know, just just a great addition to the team. Steve Steve field premier radio from 30 million public company to a billion dollar public company and is really one of the experts in radio and with lost of norm, you know, it really is a great addition to the team. I think he's going to be hugely helpful. And like I said before, I fully see us now growing from 50 to a hundred million dollars over the next 24 months.

My last question. Thank you is I know Rob, you've got your team super motivated and there's very few people more motivated than you, but even your guidance suggests you're going to shrink before you recover based on your execution and conversion of Tesla subscribers. So I just want to understand how management is thinking about overhead in the short term and if there should be, if you expect any changes until you see how things play out.

Oh, we're not, we're not going to make any changes yet, right? Because we're so excited about the opportunity, right? When you get that beachfront property, we we're going to give up some revenues, right? In the beginning, right? To now convert these subscribers, which we have the opportunity of perpetuity, but it's really going to showcase that first 90 to 180 days, right? As we get into, you know, the middle of the fourth quarter, we'll have some real decisions to make on that. Remember, you know, you got to remember in this business, almost 70% of those revenues go to the music industry, right? So you buy good news and bad news. You automatically cut 70% of your cost, right? If you don't sign those subscribers, right? So now you're just looking at 30% of that, right? So it's an easy fix. And as you know, you know, we cut from 350 people in COVID hit. Yeah, we were at a hundred and I don't know, 120. Yeah, at some point we're probably at 130 right now. Guy will do what's needed to be done and we'll do it. You know, we've proven over and over again that this team is resilient and then Adam maneuver in tough times and you know, we'll come out of this stronger than ever, but we're not going to make any moves on it right now, especially with us saying subscribers signing up every day right now, the usage not going down. It's kind of amazing that our usage is not going down when it's the conversions tricky right now, right? You're seeing in your car, right? You'll see a picture right of that beautiful green button that yeah, my son happened to create that logo. So I'm very proud of it, but that logo, right? We finally have that prime real estate. You see it in every single car. Now you click on it, you got that code, but you can still listen to it. So we're really not going to have a full clear picture, right? Until middle of December to middle of January how those conversions are going, but we could be more excited about what's happened so far.

Great. Good luck, Rob, to you and your team. Thanks Brian. Appreciate you.

Your next question comes from the line of Barry sign with light field. Your line is now open.

Hey, good morning guys. Um, just a follow-up question on Tesla. Um, do you have access to their subscriber base? Is it only through the car or do you separately have access that you can market to them?

Yeah, we got, we gotta be careful again. We're under strict NDAs with Tesla. What I could tell you is, is that they have been extraordinarily cooperative. We've worked in collaboration to put the marketing package together as best as we can, as you know, when you're reaching out to millions of people, you have to be careful what marketing you do and don't. But for anybody that's seen it, right? You see this beautiful picture that Tesla has sent out across the car, as well as in emails to, in multiple and goes out multiple times. Every time there's an upgrade, you'll continue to see that. You'll see it say live, the live streaming music has now moved from this orange button with an arrow going to a live one logo, right? Number two is, you know, and yeah, I should have shared this on this if I could, but yeah, next time we'll do that is when you look in the car, it is so exciting, Barry, to see this. You own that beachfront property, right? We lost some of our tenants for a minute, right? Now the question, can you fill that beachfront property? If we could fill that beachfront property, this is going to be a moonshot and you know, as you know, you know, whether it's yourself or it's Brian, nobody's really been able to give us a per subscriber, right? Number here, right? You look at Spotify, it's trading at $400, right? It's trading at these crazy sub numbers. We have such an opportunity right now that if we can convert 25% of these of our subs, right guy, and that doesn't count new cars coming and so we'll be in the car in perpetuity. If we can convert those, right? You're going to start talking about, you know, $200 to $1,000 a sub in the space and you're going to give us the ability to be able to upsell those and grow from $3 to a much higher number. And I fully expect that number is going to grow from three to at least five and could be as high as, you know, seven or 10.

And just to help us think about how to get at that number of subscribers, I believe in the past you've released the number of Tesla subscribers within your base. I don't know if you've done so recently and then also we have to look back at pre-2018. You were giving, even back then you were giving out subscriber numbers. So presumably those were mainly Tesla. Those would stay on if I understand correctly and then the delta between what you've announced as customers in 2018 numbers would be the jump ball that you're going after with marketing and we're hoping, I don't know, 25% penetration at $5 a month. Is that the right, I'm not asking if the numbers are right, but is that the right way to think about it?

I think it's a good thought, right? I think that's a good thought, right? You know, again, we can't give the exact numbers that are grandfathered, but we fully expect a lot of them and we fully expect to convert a lot. And again, we're cautious, right, in this, right? This has some risk in it, right? You definitely have some risk in losing some revenues in Emitda in the beginning, but you have an opportunity to grow massively and really be valued properly and valued against your peers afterwards in a much more unique way.

And Rob, on the broader pipeline, you did an update over the summer and I think if I recall correctly, there was about 60 substantial customers in that pipeline. Wonder if you could help us on an update there. Obviously, we've won, you've announced that you've won two major customers. You said by the end of the year, two more, by the first quarter, by the March quarter, I think two more. Do we still have 60 total opportunities? Has that grown? You've certainly grown the size of the team that's going after that base, but what does that pipeline look like now in your ERP system?

Yeah, so we didn't increase that number yet, but I fully expect that as we do an update call the middle of December to middle of January, we'll be talking about that number growing. I wouldn't be hiring. As you know, Barry, I was cutting substantially, right? And some of that was going to happen anyway because it was consolidation and some of it was because of COVID and some is because we closed our side business and the merchant business, right? But the reality is, is I wouldn't be growing it to 11 people if those deals aren't moving fast and we don't feel that confident that we're going to be announcing sizable deals. And, you know, I don't know why people discount it, but the first deal we announced, right? It not only did it happen, right? Which is 24 million, but you see it in the revenues, right? It's it actually not only happened, but it's working, right? That deal may get bigger, right? So we could be more excited about this. You don't need to kneel to land too many $24 million deals to change the history of this company, right? And as you know, Barry, you know me a long time and you have people that know me whether it was I won a digital turbine, it was Majesto. I built so many of these companies off the backs of B2B deals. We never really had the opportunity to do it because we had a messy balance sheet, right? We had COVID, we lost our live business. Some of the acquisitions we did, which, you know, you know, unfortunately and merch on the merch side of it never really panned out because of COVID. We had a pivot, right? We've had a pivot over and over again. Now we don't have to pivot right now. We got to focus our energy on those B2B deals and landing those B2B deals and I would say it's way higher than 65, right? I can't give you the exact number yet, but I think we'll be talking about it a lot. And I think you're going to see more streaming partners. You can see more auto partners. You're going to see a retail partner, right? I stayed in the last call. I expect a higher. It made a B2B for retail. I see a massive opportunity there, right? Everybody in that space has to compete with Amazon, right? You see Walmart just did a massive deal. They bought Vizio 2.3 billion. I see telltale signs that music subscription should be synonymous with every one of those retailers. And if you want to keep your customers in the funnel and get them to buy more things, it's certainly working amazingly well for Amazon. If they're going to compete with Amazon, they're going to have to do more of it. They're going to have to do it fast. We see that as a next big vertical for us. But again, just going back on the auto side of it, it's kind of amazing what's happening. Yeah, Aaron and I just talked about this yesterday. So like all of a sudden it almost feels like people felt we were in exclusivity with Tesla when it wasn't the case. They were exclusive awesome paying us, but it seems like the the floodgates may be opening up to big opportunities with other auto companies now that we've been talking to but the dialogue has gotten way more serious, you know, since the announcement.

And you know, one thing you haven't talked about on this call that I believe you've said in the past is an opportunity is the upsell of flesh cross-sell opportunity. So whether it's with the Tesla customers or others where you may have the customer relationship information, you know, you've talked about the celebrity brands line. Will you have an opportunity to cross-sell? You know, let's say somebody from Tesla signs up for a subscription. Can you then cross-sell them some of these celebrity brands products or other live products?

Absolutely. And you know, I mean all this opportunity to open up advertising right is game-changing for us. We've never been able to talk to our customers before. Right. We it was a beautiful deal. They were great partner, right? They were paying us $3 a month, right? But we couldn't talk to those customers, right? We just had we got we got a customer we got paid and we were able to deliver the music to him, which was great. Now we can start to start to do a lot of that. And you know, I see a lot of telltale signs tonight. Tonight, you know, we're doing this amazing event tonight. We're going to crossover this will cross over multiple parts of our business guy. We're launching super duper Kyle's new album. He's over at over a billion streams. We're launching it literally at a place called Harry's which is around the corner from my house next to the troubadour, right? They gave us the entire place tonight to do it. We're live streaming it. We're launching his coffee tonight, right? It's a product that we own as well as we own 50% of that song. Do you see that pollination that we've talked about Barry where we get from the same piece of content same celebrity same piece of content. We get multiple revenue streams with no additional cost us.

Do you own the first half of the song or the second half of the song? I'm just nevermind on the eight companies in the eight verticals that you've talked about. Can you talk about which one or two are the most promising were you seeing the most traction and what are the customers telling you where you're getting further down in the process?

Yeah, I mean, I think you're going to hear a lot of this. You know, obviously the live streaming partner to do two million dollars a month placing our content inside of you know, the streaming partners, right? Is it telltale sign you're watching all these streaming partners struggle tremendously, right? The cost of content is skyrocketed minimum wage has gone up tremendously cost of production has gone up tremendously competition is spears, right Netflix is eating everybody's lunch and it's costing a million six an hour for content. I well, we got this great luxury of that audio content right podcasting content -per-view content music content is way cheaper, right? So we have 3,000 hours of programming 3000 artists, right? It will perform on our platform everyone from Justin Bieber to Bruce Springsteen the Rolling Stones that we own that video, right? We own the interviews in the backstage in the green rooms, right? You know, some of the biggest stars in the world all that MTV like content has unique value our podcasting you just watching it again, you just to highlight the presidential election. You just watch the other numbers that that Trump delivered on Joe Rogan and Tucker Carlson and yell across the board every politician in there and it's like, you know, it's just magical what's happening to podcasting. I'd be calling for this right COVID podcasting grew from 400 to 2 billion dollars. It's on its way to 25 billion and it's not just plus a podcasting. It's now every television host every radio host is becoming a podcaster. Right. It's a it's a better medium and it's starting to reach globally as well. So we see big opportunities there and you're going to start to see those celebrity brands from our podcast is right all podcast is just think about this right 50% of the revenues come from direct response. They're selling everything from insurance right to better health to Viagra, right? Well, this is superstars talking to super fans. They've got massive influence over it. I fully expect to see multiple podcasts of ours launching their own products over the next 24 months.

And I can't wait for the Vaughanam down movie. Thank you very much. That's my questions Rob.

Great. Well, just just to hit on that Barry because I think it's important, you know, and I say this very humbly to everyone. I own 48% of atmosphere films. It's the first thing I did when I moved to Los Angeles. I invested less than 3 million dollars into that company, right? We had a slate of a hundred potential films. Those were books. Scripts and stories. These are podcasts that have proven audiences proven track record and we already know the demographics and now when you're walking in the streaming partners, you're walking in the missile on our last conference call. I promised everybody that we were going to sell Vaughanam Town in a bidding war and within six weeks. There was a bidding war on it and we'll talk about a lot more and we'll talk about our partner in the middle of January. We'll start talking about it, but the biggest producers, the biggest writers, right have been hired on that and millions of dollars are being spent between vigilante and Vaughanam Town of both being spent for those to be greenlit knock on what if they get greenlit? You know, this could be those could be game changers for the company, right? And I say this humbly when I did atmosphere. I own the product. We own 5% of the royalties from a movie called 300 and 5% of the royalties are moved close by to iconicals and those movies did 1.3 billion dollars. So if you can own a television show, you can own multiple. We'd have two. We have one documentary and we have seven or eight more in the pipeline now that we're going out with. There's another great opportunity. So I hope you all get to listen to it. It's a really it's a sad story and interesting story, but it's Tim Fallon who was very famous for going around the world stopping sex trafficking and then it turned out that he the story goes and I'll be careful in my words because I want you to get an opportunity to listen to as you listen to it. This they made a huge movie about the guy as a CIA agent and all the great things he did and it turned out he may be on the other side of the tracks and if you have an opportunity to listen to it, I'm positive. This one is going to be, you know, sold again to one of the streaming networks.

All right, your next question comes from the line of John Hickman with Latin Berg. Your line is now open.

Hey, I have a question for Aaron. Can you hear me?

Okay. Yeah. Hello.

Okay. So the GNA expense was up quite a bit this quarter. Is there something in there that is different?

There's a little bit more stock-based compensation running through. Are you comparing it to sequentially or year-over

-year? Sequentially.

Yeah, there's a little bit more stock-based content there and there's a little bit more audit fees. That's just the timing of when the work for the we have some reviews and audits fill over from the part period, but that kind of

normalizes itself out over the year. Okay. Thank you. And then my other questions have been answered. I just wanted to maybe ask a little bit about the other B2B opportunities. I mean, it seems to me like if you could sign one or two more like the first streaming one you have, your issues with Tesla would kind of disappear. Is that not the case?

Yeah, I think that's, you know, if we can sign, I mean, we're, I mean the answer to that is we don't think, A, we're excited about the Tesla opportunity. I'm super excited about it, right? This is mass optionality for us, right? Number two is in terms of the B2B deals. It's not that we're, it's not where we have signed and we're going to expand those deals and we're going to have more deals like that deal and it's coming, it's coming very shortly. So I don't look at them as a replacement. I look at it as an enhancement.

Okay. Thank you.

Your next question comes from the line of Sean Migoan with Roth Capital Partners. Your line is now open.

Thank you. I want to pivot for a second back to something you mentioned earlier in the podcast world. It seemed like there was a period there where it was red hot and then some of the big players were backing away from it and that created an opportunity for you guys to pick up some shows. Are you seeing that kind of, is the space heating back up and is that affecting kind of the tenor or the tone of the negotiations that you're having with some of these shows? You know, are deals, are hot deals coming back and are the costs of getting these shows rising?

No, you know, it's an interesting thing. It's kind of the haves and have nots, right? The big shows you can't compete on. I even if you had a pool of money, right? These deals, the Kelsey's and the smart lists. I mean, they're really just, you know, they're multiple multiples, five, ten, ten times revenues, right? You're not going to compete in those but the smaller deals, you know, there's very few of us left. There's very few competition that can really compete in it. There's a little bit of VC money that came in. So there's a couple deals and done, but I could tell you today we just signed another million dollar podcast. Just got signed to be announced next week. We're we're we're we're signing pretty fast and we're in the trenches right now. We just bid on 12 million dollars of podcast deals in the last 10 days. There's there's a lot of opportunities for the small to mid-size podcast. There's not opportunities for the big ones. The big ones you're not getting close to.

Okay, and the heat on the big ones is not indicative of the cost of getting the small ones going up.

You know, this is a little bit of competition you see, but it's interesting. You know, I think I've told this before Sean, you know, we were just an active negotiations. We just announced in our extension with Adam Corolla. We just announced our extension with Lady Gang. So all of our biggest podcasts that would be just in that same fray, we never lose them. And now what humbly is happening is we're starting to get a lot of the other a you're getting from Spotify Apple. Amazon you're getting a lot of podcasts from them that are just too small for them to manage right there. They're still distributing the distributing for us, right? They're falling into a lap, right? Then you're getting then you're getting, you know, the opportunity that some of the mid-size ones that wouldn't really weren't available for a while. We're starting to see opportunities. There are some other bidders in it, but we're seeing a real opportunity to grab some of those and knock on wood. I mean, if we could grab, you know, your half of this 12 million, we just got a million of it. If we get, you know, half of it, which is what I think we're going to get, it's going to be a big jump giant jump for us, you know, over the next couple of quarters.

Okay. Thanks. And turning for a minute to the celebrity brands, some of these categories, you've been talking about a while and you've got a lot more that you've announced and the new talking about when do we really start to see some kind of needle moving revenue from these lines? Are we on the threshold of that?

Well, let's cross our fingers. We just got distribution for our wine with Jeremiah. We just got him to the state of California, Georgia. We're about to get Pennsylvania. We got 600 cases in the first week. All right. Not a giant number, but but once you start to get those you get 600 cases. They sell the next order thousands and thousands of cases. Well, we see a real opportunity there. We see you don't have to get to in that business, as you know, Sean, right? You know, when we built our beyond and authorized it only got to 20 million revenues and sold for $250 million. If the Jack trajectory is there, you're going to get a lot of money and you're going to need to be able to raise money at a substantial valuation into those right. And part of the beauty of this is there's no real cost to us. We're getting ready to launch our second line, which is our purple Rosé. We're really excited about this. We haven't announced the celebrity talent, but it'll be a massive huge talent that surround this. And then, you know, we get this double whammy with super duper Kyle, right? We get multiple prongs guy. We haven't announced yet, but he's going to do a podcast too, right? He's like the good guy rapper. He's done over a billion streams, right? And he's got an album coming out that we produce. So our producers on split mining drumify produced it. So we own half the music guy. We're launching a live stream with them, right? Which is going to happen tonight. And then we're launching the coffee is part of that. And so you're going to get three pieces of the pie on that and you're going to get some of the biggest talent in the world, including Anderson pack who invited us to hold the event and his, his venue tonight. And he's done this for us before. I'm hoping he shows up who, you know, is one of the biggest stars in the world. So really excited to see that. And I think you're going to see us have eight to 10 celebrity brands. We may even have some brands that, you know, come into us that are already brands that are out there doing real revenues that may come into the fold that need our skills. And yeah, we haven't announced fully. Some people know, but we hired charred the bulb who's consulting for us, but we haven't brought her in full time yet, right? That may happen soon. She ran all the marketing for whitewash from 600,000 to the current $8 billion. And then subsequent to that, she wants Kevin Hart's tequila, which sold more tequila than cost amigos in the first year. So we've got a world-class team here between Josh and the music side of it and talent side of it, right? And our talent team at podcast one, I love celebrity brands with podcasters. The fact that, you know, direct response works so well, you'll know how those products do so quickly and so fast at the shoot. And you know, we've signed in the van to pumps and we just expanded that lineup as you'll see next week dramatically, right? And all the housewives and so there's so many opportunities to have products that can really work work from cosmetics to multiple different brands expanding way beyond coffee and alcohol.

Okay, and help me out with the economics on the music business, which can be pretty opaque sometimes. When you say you own half the song, you mean you get half the economics of up and down the stream on that song?

We own half the publishing, right? So we own only half the publishing. If you know, if it did like I Spy, you know, it did what Kyle was selling did last time. We'd make, you know, tens of millions of dollars off it. All right. I can't tell you it's going to do that. But even if it made us, you know, hundreds of thousands, this is all brand new money, brand new revenue streams coming in, right? Publishing business was up 300%. I just thought they're really grow. We've just announced a partnership. I'm surprised the street didn't read into but I announced an AI partnership that that secret Intel Intel is obviously, you know competing with the video. It's yeah, was the biggest chip maker in the world. They got to come back somehow and they're entering the AI world in a positive way. And so they're building and spending all the money on it to build out the entire platform for us for beats and sounds across drumify between drumify and splitline in publishing. As you know, you know, you know, you know it all too well from Renaissance, right? These publishing sells for 16 to 25 times. Even though right we have we have an opportunity here. We don't have to get that big to have a division. That's worth a lot of money. So you got you got massive optionality in our publishing and Josh Valbert who ran Division of Rock Nations and had multiple number one songs. We get another number one song. We just hit it with Brett Fiaz and and Whizkit number one African song ever to come come to the markets and it's already done. I think 13 million streams about to hit radio. One of those songs could be millions to tens of millions of dollars of cash flow the company. So, you know, keep your fingers crossed and you know, again, these aren't guaranteed but there's a lot of optionality when you start to see those kind of numbers and the amount we have we own a piece of a thousand songs right now and growing.

Okay, thanks for that clarity couple questions for Aaron Aaron something back to question on GNA. Are you suggesting that the GNA level that we see in the September quarter is you know, there are reasons for that to be higher than what we should expect in in December and subsequent quarters because of the timing of some of those

Yeah, exactly. So I you know, I would expect GNA to drop down back to kind of historical levels. I'm going to take the final quarter.

Thank you. And Aaron when will the 10Q be filed?

10Q will be filed at I'll say early next week. So maybe one or two days before the deadline.

All right. Thanks. And I'll just close my questions with a comment. Rob, I echo what you said about the opportunist podcast on Tim Ballard was really excellent. You know, some of the more recent podcast I felt were a little weak, frankly in that series, but this was outstanding. Good job to the team.

Your next question comes from the line of John Liviakis with Liviakis Financial. Your line is now open.

Hey Rob, what a what a amazing story. I you know, the markets overreacted to the change in the Tesla evolving of the Tesla relationship. And down to a 0.71 cap to sales in a peer group that's around three to three to one. So we're so under priced. I would argue anyway, although it's showing some turning here. Really amazing. It's gotten this low. Any comments you can make about two things. One is the as you're consolidating the fragmented space with the smaller podcasters. What kind of benefits by consolidating are you getting some SG&A overlap reduction? Are you getting what kind of benefits are you seeing from that by consolidating?

Not following the full question. Aaron could probably answer that, but most of the consolidating was we were already done, right? That's something that's happening now, John. That happened in previous previous quarters. But what I could tell you in Yale and I think where you're heading for is is that you know trading at 70% of revenues with the industry is trading at, you know, three and a half at this point. I think it's 3.4 times revenues, right? You know, we've been humbled again. Our stock has had multiple lives to it, right? It's dropped to these levels and we've gone through tough cycles both business so on. We're a public venture capital company, right? And I've been through this with it was digital turbine when there was I-1, when there was Jasko, when there was THQ for my entire career. We've gone through cycles where stocks go up and go down and they almost look like a heart attack, right? And you know, fortunately, you know, some people made fortunes in the stock and they get an opportunity to do it again, right? We're going to go through a little bit of a difficult time to fight through when the revenues kick in for Tesla and when those subscribers convert. But at the same time, when you look at the optionality of this and you think about how much upside is, you know, you got to think about all of it, right? We have 46 patents. We have one of 10 with the number 10 largest music subscription platform in the world, word of winning, right? There's multiple parties who may have the bias as well in this, right? So there's big opportunities there, but you also have a 220 million dollar NOL and you're looking at a podcast network. That's number 11 or 12 in the world. I now you go into our publishing and our celebrity branch brands, right? Now live streaming you have five verticals here that could have a billion to a hundred billion dollars of upside. And when I say that I don't say a Cavalier Lee right Spotify just came out and said they're going to be 1 billion subscribers to music right by 2027 and Goldman Sachs said there's going to be 1.7 billion paying subscribers, let alone free. So probably be like 5 billion. You just need to get to 10 million subscribers, right? Which we're going to get to right one big B2B deal can take you there tomorrow. If Tesla convergence happened as well as we think right. I mean that could that could be taking you you're quickly as well. And so we have massive opportunity here massive optionality and to trade down to these levels is only two things we can do we can get into the bunkers and fight we did it during covid stock dropped 60 cents and six months later went back to seven and a half. We went to do the same thing in 2021. We've had almost every two years. We've had this cycle. This been a really tough microcat market for everybody, but no excuses. What are we doing with buying back stock? We bought back four and a half million shares of live one and average is set 173 obviously we're going to buy a lot more lot more back here right same thing in podcast one we spun it out right. We convert all of our debts and there's no debt all the debt converted to $2.10. In podcast all the converted at $3 right. So those are out of the way. So we got you know, the major missiles out of the way now we got massive upside in you know, previously we went through these cycles. We had a lot of debt, right? We don't have that anymore. So Aaron and I excited the team is the team is excited and we'll put our money where our mouth is you'll see that myself as well. I bought back a bunch of podcasts one when the window was open. We'll do the same thing here and yeah, I couldn't be more excited to where this is going and I look forward to the updates and giving you guys updates on the b2b deals as well as the conversions of Tesla as well as the celebrity branch. So all those all those massive optionality we got work to do. I've always said we're going to win on hard work. Why we're going to outwork any of our competitors. We're going to stay in the game and we're going to we're going to tough it out. We go through tough times. We just we get stronger and we get a little angry right. I can tell you my team is literally working through the night on a b2b deal, you know until 4 o'clock in the morning this morning. All right. It's not easy. It's not just the signing of the deal. It's actually the launching of these deals, right? And I could be more proud of Brad and the tech team and kit and the podcast team and Josh music side of it and Sarah and the celebrity side of it. This is the 18th. All right, and what they do, you know that first b2b deal 24 million dollars. We've proven not only did we sign it because it's great to sign it, but it actually worked. All right. And yeah, I'm hoping that deal is going to expand this year. Maybe that deal goes to 30 or 40 or 50 million.

Well given your track record Rob some of your big success stories in the past and given the 46 patents and the five verticals and it's amazing. This is price down here. It's really seems strange. I I can't believe it. I think the JP Morgan relationship people are asking me if you could give a little more definition to what's happening there and what your thoughts your plans are and as well as some of the b2b's people want to know can you give a little more deep color on the b2b's that are signed and those in the pipeline some detail?

Yeah, I don't think I can give anything more than I've given today. I've been pretty clear on it. But on the on the banking side of it, I did just I just just flew out to Dallas met with Craig Ross up to head of media. Craig has been an amazing part. She stuck with us in good times and bad and then he keeps battling through and you know, obviously when you're one of 10 DSPs in the world, right and you look at who the others are right. You got I've already called 6 billion and the next level up is serious at 25 billion and then it goes to Spotify. I think there's 70 billion or 80 billion today goes up every day, right? And then you go to Amazon Apple Google, right? There really is nobody else right with the only ones truly they can white label with the only ones that could be a partner and so I think Facebook's museum is missing music service Microsoft is missing a music service. Osco's missing a music service Walmart missing music service at many others out there right there. We can point to that could use their own music subscription including Twitter. By Twitter's in a lawsuit with the record labels for hundreds of millions of dollars already right and as you know all of these platforms only social platforms eventually settle with the record labels can't beat it. I need you can't have music and I don't see any platform that has content not having music on it. So there's a lot of opportunities here a lot of optionality will continue to explore different things that are creative to our shareholders will continue to buy back stock as I said, I'll personally be buying stock as I said, and it's a very tough market. This media market is collapsed the microcap market. You know, I've been I've been outspoken about this because it's the first time my career I've ever seen it where to get onto the Russell 2000 this year to get on last year was 156 million. The Russell's up 20%. You would think the lowest and to get on this year for 156 to be 190 and it's crazy to get on this year was 131 million. We proudly got back on the Russell which it didn't help us you got on the Russell and then you hit the algorithms and the algorithms are so powerful and they have so much money that can quickly knock you down because they know that you can have when the when the Rebalance happens every quarter. They can knock you down those Rebalances. Maybe we're starting to see that come the other way now right so they killed us in the last quarter. We had 12 million shares of buying on the when we got onto the Russell right then you had all the selling come in the Rebalance because we were down maybe we'll start to see that now and you could get millions and millions of shares and yell and I'm a big fan of shorts. I've been telling everyone this for years digital turbine would have never run to $100 in a million years. It was never worth $12 billion. Right and but it ran there because the shorts got clobbered and you're starting to see that happen. You may see that now we get we want one little short run here and stock could have a run back into a big range and we've never really had the opportunity to really get sizable acquisitions on which you guys know I've done my whole career right because we've never had a currency that's really been in a position to do it. I've always told everyone it takes me seven to ten years. I'm in my seventh year guy. So I'm in my seventh year. I turned 60 in March. I'm not going anywhere. The only thing I want to do I love going to work every day. I love my team. I love what we built here. We got obstacles. We got to fight through and you know, I fully expect that this will be the biggest this will be the biggest company I've built in my career and the team that I have is the best in the world. You look at all board no management team. They built over a hundred billion dollars worth of media and tech teams and nobody's walked away. They just get stronger.

Brilliant presentation Rob. Thank you so much.

And so. Okay, any other questions? I know we're getting pretty pretty late here now.

There are no further questions. I will not hand the conference back over to Robert Ellen CEO for closing remarks.

Yeah, I think you guys have heard my voice enough. I'm super excited. I'm super energized. Super focused. My team is super focused. Super focused. We're going to be here for a long time and we're going to build an amazing business here and continue to grow this and I just want to thank everyone for their support the good times and bad times and we're going to fight through this and win again. Thank you very much.

That concludes today's conference call. Thank you all for joining you may now disconnect.