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Operator
Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the Podcast One Inc. First Quarter Fiscal 2025 Financial Results and Business Update. All lines will be placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I would now like to turn the conference over to Aaron Sullivan, Chief Financial Officer. You may begin.
Aaron Sullivan
Thank you, and welcome to Podcast One's first quarter fiscal 2025 business update and financial results conference call and webcast. Presenting on today's call are Kit Gray, President of Podcast One, Rob Allen, CEO and Chairman of Live One and Executive Chairman of Podcast One, myself, Aaron Sullivan, CFO of Live One and Podcast One. I'd like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts, and assumptions that involve various risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of the business, 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 Podcast One'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 Podcast One Form 10-K for the year ended March 31, 2024, filed by the company with the SEC on July 1, 2024, and subsequent SEC filings made by the company. You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its investor relations website. The company encourages you to periodically visit its investor relations website for important content. The following discussion, including responses to your questions, contains time-sensitive information and reflects management's view as of the date of this call, August 13th, 2024. And as required by law, the company does not undertake any obligation to update or revise this information after the date of this call. I'd like to highlight to investors that this call is being recorded. Podcast One is making it available to investors in the media via webcast and replay will be available on Podcast One's IR website in the events section shortly following the conclusion of the call. Additionally, it is the property of the company and any redistribution, retransmission or rebroadcast of the call or the webcast in any form without the company's express written consent is strictly prohibited. I'll spend just a minute providing a very brief overview of our results for the first quarter of fiscal 2025, ended June 30th. Consolidated revenue for the three-month period ended June 30th, 24, was a record $13.2 million, an increase of 24% from the prior year period. Consolidated adjusted EBITDA for the Q1 fiscal 2025 was a loss of $300K, which is primarily driven by the timing of content acquisition costs. The company is debt-free and LiveOne owns approximately 72% of Podcast One. In the month of July 2024, the company had a US unique monthly audience of approximately 5.5 million and global downloads and streams of approximately 17.8 million. Now, I would like to turn the call over to Podcast One's president, Dick Gregg.
Dick Gregg
Thank you very much, Aaron, and thank you everyone for your time today. I hope you're having a good one. As you can see from Aaron's earlier comments, we've had a very productive and positive quarter at Podcast One. The core of our business is performing very well. We are acquiring sales representation and distribution rights of new shows at a great pace. We are growing our existing programs in terms of audience and monetization and launching some very successful new programs. In the last 12 months, We've added 37 new podcasts, bringing a total of 187 shows. This year alone, our fiscal year, we've added nine new podcasts and sold our second major show to a top five streaming platform, further solidifying our position in podcasting and creating a slate of podcasts primed for TV and film adaptations. Our downloads are 6% higher than they were in fiscal year Q4 2024. Our programmatic advertising continues to lead, and we're 18% higher than it was in fiscal year Q4 2024, allowing us to monetize not only our current consumption of podcasts, but old episodes. So as new people find our shows, they can go back and listen, and we can monetize that consumption. Our hit shows are doing great. I've had it was nominated for two iHeart podcast awards and Baby Mama No Drama won for the second year in a row a Webby. So congrats to those two terrific properties. We value those relationships. And in fact, we have just recently signed them both to extension. We're very excited about this, their corridor, our network and our future. We have new projects in line with them, and it's very exciting. We are also finding and developing new revenue channels for existing partners and company resources and using our company resources that are already existing, which limits costs and has high margins and profitability. As I mentioned earlier, we're using, we're really growing our second window slate of programming for TV and film. But you'll also hear about us in the near future launching Podcast One Pro, which is our production division. that allows our expert producers and our network of 187 shows and millions of downloads on a monthly basis attract companies that want to create their own podcast. We offer our expertise, our credibility, and we help them build their shows. We actually have been doing this for quite some time, but we're ramping this part of our business up over the next six to 12 months. We just got an extended renewal from Motor Trend, their force. We've done deals with Microsoft and one of our leading advertising agencies, Oxford Road. And we just recently signed a deal where the CEO and founder of Lovesac will be doing a podcast to talk about his business and how he grew his business and continues to grow it throughout our network. We're very excited about this new division and putting more resources into that. We are also revamping some of our paywall projects. We have the Adam Carolla Network that just relaunched their strategy, which includes new programming from Jay Moore and Adam Carolla that will be exclusively behind the paywall. We are having a relationship with Apple on the A&E slate and creating commercial free programming and other offerings on the Cold Case Files, I Survived, and their other new hit show, Crime and Investigation. And we're launching a soon-to-be housewives paywall that you guys will learn more about in the next week or two. But that's very exciting and offers really new revenue channels for us with limited work on both the talent and our side. So we're excited about those. As always, our Our focus will be, again, to launch, grow, and acquire the representation of existing podcasts. We have still a very, very strong funnel of shows that we're considering to be a part of Podcast One, and those new programs will be highlighted throughout the next year. We have many bigger deals, too, with some podcasts. eight secret B2B business deals, such as the one we mentioned earlier this year. We have probably four or five of those in the funnel. And this will help us not only with our business operations and growth on that side of things, but acquire new companies and get really on our path to being $100 million company in the next few years. So as you can see, we're really excited about what we're doing at Podcast One. Our core business is growing. We have great new revenue channels, and we're excited about the future. That being said, I'm going to hand it over to our CEO, Rob Allen, and he can take it from here. Thank you.
Rob Allen
Yeah, thanks, Kit, and congratulations. I think you're hearing it in Kit's voice, and I think you're hearing it in the messaging of the numbers that are coming out. This B2B deal has been spectacular. We'll add $2 million a month as this is ramping up. as you can hear you know from kit there's four or five others that are very close and if you can land a couple more of those we're going to be quickly talking about 100 million dollar plus podcast business so very much like slacker we bought it doing 20 million in revenues losing money it's now doing on a run rate to do 85 and very profitable kit's done a great job with his team with sue and eli to do the same here they've taken it from 20 million revenues Since Kit became president, we're now at a run rate to do well over $50 million, and we'll shortly be talking about how this is moving towards 100. So really exciting and really energized where the business is going. Kit didn't talk much about the television side, but we've sold our second major podcast to television. This is hugely accretive to us, has no cost to us. And I can tell you that each of the networks will be in for well over a million dollars by the time they get it off the ground. And it could be millions and millions of dollars to our company. And we've got about 10 projects in the works. We expect to have a slate of podcasts made for television. And it could be more exciting about where it's going. So the team's done a great job. We'd like to open it up to any questions and any thoughts you have. Thank you.
Operator
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 1 on your telephone keypad to raise your hand and join the queue. If you would like to redraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. Your first question comes from the line of Sean McGowan with Roth Capital. Your line is open.
Vigilante
Morning, Kit. How are you?
Dick Gregg
Hey, Sean. Good to hear from you, man. Thanks. I'm doing well. How about yourself?
Vigilante
Good. Very good. Very good. The earthquake notwithstanding, but it's all good. Yeah, crazy. Could you – I bet you felt it even more than we did down here in Newport. Yeah. something. Could you help us contextualize some of these new shows, like, you know, without giving numbers, just sort of maybe rank the some of the new shows in terms of, you know, the descending order of revenue importance, just so we have a, you know, kind of a little sense of what the key ones are?
Dick Gregg
Sure. You know, as the new shows come on, it's, it's, you It's really exciting because you've got really the focus of the talent. You're really launching a heavy marketing campaign, introducing our huge fan base to these shows. And then their fans are testing it too, right, as they use their social media and their communities to dive in and test the show, see if they like it, hear what they have to say. you know, we've had some great press with some of the most recent shows, and they're having great success. So, you know, unfortunately, like one show that we launched, the campaign managers, we had to put that on a little bit of a hiatus as David Plouffe actually got hired by Kamala Harris to be on her staff to seek out presidency. So, You know, you never really see that coming, but it's pretty neat, right? I mean, there's a show that we launched maybe three or four months ago that was growing really nicely, had some really good engagements and good press, and then David has to head off. So we're talking about doing some things that the campaign will or Kamala's team will let us do. But it was interesting. Now, the other shows that we have launched that are really in our real, you know, our sweet spot, I guess you'd say, the female acting shows, those are doing great. You know, so they're right off. They're really doing an excellent job. We've got advertisers testing them. The talent is working hard. You know, every couple weeks we do calls with the talent to make sure, you know, they're motivated and staying on path. So, you know, it's part of the process. And it's not like you just start out and have 50, 100,000 listeners. It takes a little bit of time. But we are seeing some really, really good growth in those. And, you know, so that's good news. You know, really, they're on path to what we thought they would do. um we've had uh some really neat ones too like the opportunists um had some new episodes come out and you know those are actually far exceeding what we had thought um so that's great news and and that's uh keeping that network of programs uh or seasons of programs uh doing really well too so yeah we're in line um you know um We're doing great. And really, I think the key to seeing, you know, real significant growth is acquiring shows that have an audience and then making sure the ones that we have that are successful continue to grow and evolve. I mentioned I've had it, you know, we're actually in the process, we just signed on to an extension, and they're adding a political show. Um, if you ever listened to that program, you'll, you'll know they're very political, politically motivated. Um, so they're going to actually have a, a political show that'll be running, um, two or three times a week, which, which is really exciting for us too. So you'll see more about that in the press, but, um, yeah, there's a lot of radical things. We've got another show that's about to start with, um, two, uh, wrestlers slash comedians, um, the Namath brothers, we have ownership in that show as well. So, you know, that's one that I think has a real chance to become, you know, kind of like the Pat McAfee before he got hired by ESPN of wrestling, right? And to bring the comedic side of things, aka like part of my take of Barstool, that into wrestling world. So, We're really excited about that and really excited about a lot of the conversations we have going on.
Rob Allen
Yeah, just to answer that with the opportunists, Sean, this is round three. This is after you've had Vigilante and Barnumtown. Opportunists, which we launched for almost nothing, literally almost no cost, is having great numbers again. I'm in deep conversations about a television show on it. And that's got three seasons of it. So there's multiple different potential opportunities there. And so we're hoping to see a third television show sold this year.
Vigilante
Great segue into my next question. So as you talk about that sort of second form monetization, can you remind us what the, I know the upfront is a kind of de minimis, but what would be the timing of when these things would actually come to fruition and to be seen by an audience and related to that what's the timing of of any additional revenue to podcast one i assume that comes in through podcast one and not not through you know some other entity of live one is that right correct correct it comes comes through podcast one and it's not a small amount right you know these can be you know right up front money can be anywhere from 250 000 to a million dollars day one and
Rob Allen
I think they're going to go higher. When you think about scripts selling for a million dollars, right here you have a script, but you also have proof that you have millions of downloads. So there could be very substantial money in it, and there was a terrific amount of money in the last one. So we think we'll start to see that. The timing to get them off the ground could be anywhere from 90 days to 12 months. It depends how fast the studios are moving, what slate they're in, what time of year you sign them. So the goal is to have a slate of 12 of these, right, and keep moving these. And again, candidly, we never expect to sell two so quickly and be on to the third and potential fourth with ransom as well. So we're really excited about it. Could be, you know, very significant money over the next couple of years.
Vigilante
And what's the timing of the revenue recognition on that? You get an upfront payment, but you probably don't book that right away as revenue. And then what happens when additional cash comes in?
Rob Allen
No, I think we'd book it right away, right?
Aaron Sullivan
Yeah, the upfront we can record right away is there's no further obligation. You know, it can get a little complicated. It's all tied to future performance, right? If the upfront is associated with future obligations, we spread it over time. But generally, there is no further obligation on an upfront.
Vigilante
Okay. And then this does that kind of sort of count as a, against future royalties that, that there could be a delay between them when you, when you would, you know, that recognition and then when you could recognize additional revenue, once it gets turned out, just remind me of what the accounting.
Rob Allen
Not, not, not really, not really. It's, you know, the upper, the upper money is to buy the rights to it. Uh, but it all depends, you know, these are all negotiations as to what the structure is. So every one of them is going to look a little differently. But most of the upfront money is not going to be counted against the royalty. That's to buy the rights to it. Then they got to go spend, you know, substantial money, right? Vigilante, they're in, they've already spent, you know, studios already in for a million dollars plus scripts and, you know, and redoing the scripts and rewriting and, you know, our options coming up again shortly, they're going to have to write another check on it.
Vigilante
All right, great. Well, congratulations on the progress. Thank you.
Operator
Your next question comes from the line of Barry Sign with Litchfield Hills Research. Your line is open.
Barry
Hey, good morning, folks. Hey, Barry, how are you doing? Hey, in terms of additional monetization, you guys covered a lot on TV and film rights. You also have a live event, I know, coming up in October, and I guess you're planning more of those. Could you talk a little bit more about
Dick Gregg
about um live events i know there's one and what else are you doing there and might that be a more significant revenue driver going forward yeah so we just did a live event in new york city with a show called the gals on the go um they went down to a new store opening and did a podcast there um the they they did some social media around it and um You know, it was a substantial six-figure deal for maybe an hour and a half of work for us. So it was tremendous. It didn't take into our already existing revenue. It was just an added show that they did. And that was, you know, that was awesome. I think we're looking at doing more of those when they come across our desk. you'll be seeing more of that. It's a big initiative of ours. Part of the Podcast One Pro that I mentioned earlier, that will be some of the things that we incorporate into those deals as well, where once the brands get their feet wet, they'll start to work with our talent to do live shows from stores and stuff like that. Those types of opportunities are really neat for us. I think you'll see with us over the next six months, especially with the I've Had It team, we might do some, you know, special debate podcasting that will be live, you know, so you'll be able to hear their take. They'll be able to do some live pay-per-view, meet-and-greet type stuff coming up around the elections with their new show. That's part of the deal. So,
Barry
uh you'll see more and more of that as we we get into it our fans love that kind of stuff so there's that and then from a revenue standpoint the uh top line was obviously very strong uh in the quarter was there uh was that on all advertising i assume there's some non-advertising revenue from some of these licensing deals that's starting to contribute to the top line
Dick Gregg
Yeah, some of it will be, you know, mostly still advertising is our core business, but you'll see, you know, we've had some production deals as well. Like I said, the Motor Trend and those other deals that they've added to our bottom line. Some of these live shows will be in it as well. And we're revamping our, you know, our paint wall experience, like I mentioned. So that will also be... included into our revenue when we move forward.
Rob Allen
Yeah. And what you're also seeing is you're starting to see that $20 million plus contract kicked in, right? As that's ramping up. So that distribution will ramp up and you'll start to see better margins later in the year on that. There's just some costs going into it. And then eventually it'll be way more profitable to us. But it's a great win for us in revenues, but even more importantly, how much traffic and audiences There isn't in that traffic and audience and, you know, having these mass distribution deals and, you know, kid again, just just repeating it is, you know, very shortly going to be announcing multiple deals like that. They're going to give us distribution in other places. And we've done a brilliant job. The team has done a great job. We're in Spotify, Apple, Amazon, Samsung TV's. He is right across this big streaming platform. You're going to see, you know, multiple, you know, B2B deals that have 10 million to 3 billion in audience that want to have podcasts on their network.
Barry
Okay. And then turning to EBITDA, EBITDA was slightly negative in the quarter. And I know, Kit, you and I have discussed, you know, a goal to get that positive and to grow that. in line with what LiveOne is doing on an overall basis. It would seem to me there's some drivers that are going to help drive that positive, which are the rights you've talked about and then this $24 million contract. The other thing within EBITDA I want to confirm, and maybe this is for Aaron, is it looks like there was an impairment charge that's not backed out of the EBITDA, and that's non-cash. So the real EBITDA loss, I would think, is a little bit less than what you've reported. So, if you can comment on EBITDA, please.
Aaron Sullivan
Yeah, so that impairment charge was related to a show we acquired that we're no longer pursuing. So, that's that. Yeah, look, we're very close to kind of adjusted EBITDA break-even. We've had some additional content acquisition costs that are hurting that number and that's just simply kind of volume of of new shows right so we we expect those to be profitable in the in in the you know in the in the near term over the over the next kind of 12 months or so um so we we expect to see that um as we're adding those shows contribute uh contribution margin increases a little bit and that'll that'll flow right down to our adjusted equal alliance
Barry
And, Aaron, just to confirm, that impairment was not backed out in the reconciliation you did on EBITDA, even though it's non-cash?
Aaron Sullivan
Let me get back to you on that, Barry. It might be in the depreciation line. Okay. Let me confirm.
Barry
Okay. And then, Kit, can you kind of elaborate a bit more on the corporate strategies? I think I understand some of them. that's going to drive that EBITDA line positive?
Dick Gregg
Yeah, sure. Basically, as we add shows and start up new shows, the costs are pretty insignificant. We don't need to hire more salespeople or really more producers currently at the current pace that we're at. when we add these shows, it will mostly decide to like sales commission and some, you know, bandwidth costs and stuff like that. The margins will be great. Right. So that's where we need to just continue to harp on, you know, acquiring more shows, launching more shows again, because, you know, that baseline costs won't, you know, expand that much. Right. So we continue doing that. And then, doing like what Rob said about the second window, um, using our content that we have and our access to talent to sell things like the gals on the go live show, which, which isn't really adding to our costs and more work and stuff like that. It's just, um, just doing a little bit more to get a lot more in terms of revenue and better margins. Um, you'll see, um, you know, making sure, you know, we have social media involved in it to kind of add more to what we have where we're not actually doing more shows and do more programming, but we're getting more stuff to sell, bigger deals. You'll see the same thing with the paywall. And again, with Podcast One Pro, you know, we're charging really good money for, you know, these clients to do podcasts and run promotion through our um our network of podcast fans which is there's no cost to that really um we'll be able to just use existing producers and so forth so um that's all going to be high margin type stuff so we'll start to put more and more focus on to those type of things um and keeping our core business going and and it should it should see uh you should see some great even the next year or next quarter okay we'll hold you to that thank you very much gentlemen
Barry
Thanks, Mary.
Operator
Again, if you would like to ask a question, press star, then the number one on your telephone keypad. And we have our next question comes from the line of Leo Carpio with Junar. Your line is open.
Junar
Good morning, gentlemen. I'm Kate Todd. I wanted to dig in onto the advertising environment for podcasting. What have you been seeing in terms of the rate as an economic impact? And what's the potential impact of the upcoming 2024 presidential election on your audience?
Dick Gregg
Thanks. You know, we don't have as much of an impact, you know, really besides David taking that job, which we didn't see coming. You know, which isn't necessarily the worst thing if that show comes back, depending on you know, what happens to him if he, he stays with Kamala or, or, you know, if Trump wins, however that works out, uh, I think it gives him even more credibility and in terms of having a good show. So, um, there's that, but besides that, we don't, we don't have a lot. I mean, what I think you're going to see in podcasting is people will try to, you know, the, the campaigns will try to get, um, advertising into a lot of the shows, but, um, A lot of the talent won't let those types of advertisements be part of their programs, understanding that half of the people in the world like one side and half of the people like the other side. And it usually creates conflict. Such an intimate listening experience. So they don't really like having that involved. What it will help is you'll see cable and prints and online marketing spends will be you know pushed and and i believe that will fall or trickle down into podcasting where you're going to see um advertisers that still need to advertise and grow um that aren't going to buy into the cluttered world of you know local media prints um all that type of stuff and and that should help us out in terms of advertising rates and dollars flowing into podcasting
Junar
And then turning to talent, how's the pipeline for new talent and potential acquisitions? Is it still the same 100 plus shows you're looking at or has it changed?
Dick Gregg
Yeah, you know, we win one, we lose one, another new one comes in, right? So there's a constant influx of podcasts either reaching out to us or we have a team. that goes out and reaches directly to podcasts, to managers, to agents. We're in constant review of a lot of shows. We've got a bunch of M&A-type opportunities, so I think that's probably remaining pretty consistent and growing a little bit, I would say, in our list, if I were to guess. So, yeah, still really strong on that front. A lot of shows that need some help,
Junar
uh we're there to take them off so it's exciting uh it's exciting to be you know us right now okay and the last question looking back like two three years ago versus today uh the conversations with podcast talent is it a case where they're coming to you now whereas two years ago three years ago you had to go and make the pitch to them is that the situation you're having now
Dick Gregg
Oh, you know, I think there's more agents involved in the process now that are reaching out just like we are reaching out to shows. What I think you're finding is that there's more shows that aren't getting the deals that they got the first or second time around. Those are changing. Maybe they're not getting as much in terms of a minimum guarantee payment or the right split. The big ones seem to still be getting those big deals. You see the SmartList and the Dax Shepherds and the Call Our Daddy type shows. They're still seeing pretty significant deals, even with Rogan and so forth. But these middle tiers, it's competitive out there. I'm not going to mislead you guys, but there's a lot more conversations There are a lot of people that are saying, hey, I want the right partner, understanding that they might get a bigger piece of or a smaller piece of a much larger pie rather than a big piece of a small pie. So there's a lot of conversations going on. It's just always evolving.
Junar
All right. Thanks. And congrats on the quarter. Thank you. Appreciate it.
Operator
There are no further questions at this time. Mr. Gray, I turn the call back over to you.
Dick Gregg
Okay. Thank you so much, everyone. I really appreciate it and look forward to having another great quarter. And I'm always available if you guys need to do a call or have some questions. Please feel free to reach out and listen to your podcast on Podcast One. Thank you very much. Bye.
Operator
Ladies and gentlemen, this concludes today's conference call. You may now disconnect.
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