Press Releases

Gaia Reports Third Quarter 2022 Results

Tenth Consecutive Quarter of Positive EBITDA

BOULDER, Colo., Nov. 07, 2022 (GLOBE NEWSWIRE) -- Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company, reported financial results for the third quarter ended September 30, 2022.

Highlights

  • Tenth consecutive quarter of positive EBITDA
  • Secured $10 million revolving line of credit

“The third quarter continued to be impacted by the trends that developed in the spring,” said Paul Tarell, Gaia’s CFO. “Consumers shifted their attention and spending to travel and recreational activities, which affected our ability to cost efficiently add new members. We also experienced elevated cancellations in March through July from members that joined us during the peak COVID periods in 2020 and 2021. While these cancellations began to dissipate in the second half of August, the combination of both headwinds impacted our member and revenue growth objectives in the quarter. We remain focused on continuing to attract and retain high lifetime value members, albeit at a lower volume, which allows us to focus on our long-term plan of growing a highly engaged community that generates significant cashflows over many years.”

Third Quarter 2022 Financial Results

Revenues decreased 2.5% to $19.9 million from $20.4 million in the year-ago quarter. For the nine months ended September 30, revenues increased 6.3% to $62.5 million in 2022 from $58.7 million from the same period in 2021. The member count as of September 30, 2021 was 776,000 compared to 790,500 as of September 30, 2021.

Gross profit in the third quarter decreased to $17.2 million compared to $17.8 million in the year-ago quarter as a result of the decreased revenues. Gross margin decreased slightly to 86.7% from 87.1% in the year ago quarter as a result of increased content amortization from our investment in exclusive and compelling original content.

Total operating expenses were $17.6 million or 88% of revenues compared to $17.1 million or 84% of revenues in the year-ago quarter. The slight increase is primarily related to elevated legal expenses during 2022 related to an SEC investigation and a $2.0 million accrual for the anticipated settlement, which would resolve the investigation. The anticipated resolution with the SEC concerns certain historical matters that are described in the Form 10-Q filed today.

As a result of the elevated legal fees and the anticipated settlement accrual, EBITDA decreased to $1.8 million compared to $4.0 million in the year ago quarter, with EBITDA margin at 9%. Excluding the impact of the anticipated settlement accrual, adjusted EBITDA for the quarter was $4.1 million, with adjusted EBITDA margin of 21%. This is down $0.5 million from the year ago quarter primarily due to elevated legal fees incurred in 2022. Excluding the impact of the legal fees and the anticipated settlement accrual, Gaia has been able to successfully balance its expenses to offset the declines in revenues.

Net loss was $2.4 million or $(0.11) per share compared to net income of $0.6 million or $0.03 per share in the year ago quarter due to the factors noted. Excluding the impact of legal fees and anticipated settlement accrual Gaia had slightly positive earnings for the third quarter of 2022.

Cash flows from operations was $1.7 million for the third quarter, which reflects the paydown of approximately $1.2 million in payables from June 30, 2022, and a reduction in deferred revenues that Gaia has typically experienced in the third quarter as a result of the timing and volume of annual renewals. The cash balance as of September 30, 2022, was $10.8 million, which reflects $7.5 million of borrowings under the $10.0 million revolving line of credit facility. On August 25, 2022, Gaia entered into the facility to fund working capital and for general corporate purposes.

Conference Call

Date: Monday, November 7, 2022
Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)
Toll-free dial-in number: 1-888-409-1555
International dial-in number: 1-323-701-0225
Conference ID: 8967702

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at (949) 574-3860.

The conference call will be broadcast live and available for replay here and via ir.gaia.com.

A telephonic replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 21, 2022.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 8967702

About Gaia

Gaia is a member-supported global video streaming service and community that produces and curates conscious media through four primary channels—Seeking Truth, Transformation, Alternative Healing and Yoga—in four languages (English, Spanish, French and German) to its members in 185 countries. Gaia’s library includes over 10,000 titles, 80% of which is exclusive to Gaia, and approximately 75% of viewership is generated by content produced or owned by Gaia. Gaia is available on Apple TV, iOS, Android, Roku, Chromecast, and sold through Amazon Prime Video and Comcast Xfinity. For more information about Gaia, visit www.gaia.com.

Company Contact:
Paul Tarell
Chief Financial Officer
Gaia, Inc.
Investors@gaia.com

Investor Relations:
Gateway Group, Inc.
Cody Slach
(949) 574-3860
GAIA@gatewayir.com


GAIA, INC.

Condensed Consolidated Statements of Operations

    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
(in thousands, except per share data)   2022     2021     2022     2021  
             
Revenues, net   $ 19,907     $ 20,405     $ 62,458     $ 58,744  
Cost of revenues     2,648       2,626       8,312       7,573  
Gross profit     17,259       17,779       54,146       51,171  
Gross profit margin     86.7 %     87.1 %     86.7 %     87.1 %
Expenses:                                
Selling and operating     15,543       15,544       48,197       44,820  
Corporate, general and administration     2,019       1,509       5,598       4,506  
Acquisition costs                 49        
Total operating expenses     17,562       17,053       53,844       49,326  
Income (loss) from operations     (303 )     726       302       1,845  
Interest and other expense, net     (65 )     (79 )     (175 )     (197 )
Anticipated SEC Settlement     (2,000 )           (2,000 )      
Income (loss) before income taxes     (2,368 )     647       (1,873 )     1,648  
Provision for (benefit from) income taxes                        
Income (loss) from continuing operations     (2,368 )     647       (1,873 )     1,648  
Loss from discontinued operations     (7 )           (300 )      
Net income (loss)   $ (2,375 )   $ 647     $ (2,173 )   $ 1,648  
                                 
Earnings (loss) per share:                                
Basic                                
Continuing operations   $ (0.11 )   $ 0.03     $ (0.09 )   $ 0.09  
Discontinued operations                 (0.01 )      
Basic earnings (loss) per share   $ (0.11 )   $ 0.03     $ (0.10 )   $ 0.09  
Diluted                                
Continuing operations   $ (0.11 )   $ 0.03     $ (0.09 )   $ 0.08  
Discontinued operations                 (0.01 )      
Diluted earnings (loss) per share   $ (0.11 )   $ 0.03     $ (0.10 )   $ 0.08  
Weighted-average shares outstanding:                                
Basic     20,806       19,318       20,686       19,262  
Diluted     20,806       19,812       20,686       19,787  
                                 
EBITDA*   $ 1,795     $ 4,036     $ 10,011     $ 11,486  

* See definition and reconciliation below.


GAIA, INC.

Summary of Cash Flows

    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
(in thousands)   2022     2021     2022     2021  
             
Net cash provided by (used in):                                
Operating activities - continuing operations   $ 1,686     $ 5,146     $ 8,373     $ 14,586  
Operating activities - discontinued operations     (7 )           (300 )      
Investing activities     (4,484 )     (4,376 )     (14,903 )     (13,355 )
Financing activities     7,451       (81 )     7,402       592  
Net change in cash   $ 4,646     $ 689     $ 572     $ 1,823  


Reconciliation of Net Income to EBITDA and Adjusted EBITDA

    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
(in thousands)   2022     2021     2022     2021  
             
Net income   $ (2,375 )   $ 647     $ (2,173 )   $ 1,648  
Interest expense, net     65       79       175       197  
Provision for (benefit from) income taxes                        
Depreciation and amortization expense     4,105       3,310       12,009       9,641  
EBITDA     1,795       4,036       10,011       11,486  
Acquisition costs                 49        
Share-based compensation expense     338       533       1,267       1,236  
Discontinued operations     7             300        
Anticipated SEC settlement     2,000             2,000        
Adjusted EBITDA   $ 4,140     $ 4,569     $ 13,627     $ 12,722  

EBITDA represents net income before interest expense, provision for income taxes, other income, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to remove acquisition costs, share-based compensation expense, the anticipated SEC settlement and the results of discontinued operations. EBITDA and Adjusted EBITDA do not represent net income, as that term is defined under GAAP, and should not be considered as an alternative to net income as an indicator of our operating performance.

Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow available for management or discretionary use as such measures do not consider certain cash requirements such as capital expenditures, tax payments and debt service requirements. EBITDA and Adjusted EBITDA as presented herein are not necessarily comparable to similarly titled measures.


GAIA, INC.

Condensed Consolidated Balance Sheets

    September 30,     December 31,  
(in thousands, except share and per share data)   2022     2021  
                 
ASSETS                
Current assets:                
Cash   $ 10,841     $ 10,269  
Accounts receivable     3,121       2,728  
Prepaid expenses and other current assets     2,738       1,986  
Total current assets     16,700       14,983  
Media library, software and equipment, net     53,160       50,558  
Right-of-use lease asset, net     7,290       7,871  
Real estate, investment and other assets, net     30,839       31,394  
Goodwill     28,870       28,870  
Total assets   $ 136,859     $ 133,676  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
Accounts payable, accrued and other liabilities   $ 12,303     $ 14,822  
Short-term debt and lease liability     7,647       140  
Deferred revenue     14,574       14,847  
Total current liabilities     34,524       29,809  
Long-term mortgage, net     5,996       6,109  
Long-term lease liability     6,678       7,234  
Deferred taxes     309       309  
Total liabilities     47,507       43,461  
Total shareholders' equity     89,352       90,215  
Total liabilities and shareholders' equity   $ 136,859     $ 133,676  


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Source: Gaia, Inc.