GlobeNewswire Inc | Nov 9, 2020 04:05PM EST

November 09, 2020

BOULDER, Colo., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company, reported financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights vs. Same Year-Ago Quarter

-- 28% increase in revenues -- Generated positive earnings and cash flow -- Reduced outstanding debt to $4.0 million from $17.0 million

The results for the third quarter reflect the attainment of our goal to generate positive earnings and cash flows while sustaining a revenue growth rate above 20%, said Paul Tarell, Gaias CFO. We have reached the inflection point for the business after six quarters of disciplined execution and expect to continue to generate positive earnings and cash flows while driving top line growth.

Third Quarter 2020 Financial Results

Revenues in the third quarter increased 28% to $17.5 million from $13.7 million in the year-ago quarter. This was primarily due to growth in members and an increase in average revenue per member. Paying members increased to 697,300 as of September 30, 2020 with net member additions for the quarter of 33,900.

Gross profit in the third quarter increased 29% to $15.3 million compared to $11.9 million in the year-ago quarter. Gross margin increased to 87.1% versus 86.8% in the year-ago quarter.

Total operating expenses in the third quarter decreased 6% to $14.9 million from $15.8 million in the year-ago quarter, which improved operating expenses to 85% of revenues from 115% of revenues in the year-ago quarter. This reduction is due to continued efficiency improvements in fixed operating expenses and reducing customer acquisition costs as a percentage of revenue to 41% from 49% in the year-ago quarter.

Net income in the third quarter was $6.3 million or $0.33 per share and included a $6.1 million gain on the sale of a portion of Gaias corporate campus as announced on September 9, 2020. Excluding this gain, net income was $0.2 million or $0.01 per share, which improved significantly from a loss of $4.1 million or $(0.23) per share in the year ago quarter.

EBITDA improved significantly to $3.4 million compared to $(1.4) million in the year-ago quarter and increased $2.6 million sequentially.

Gaia generated cash from operations of $7.2 million in the first nine months of 2020 compared to cash used of $5.9 million in the comparable year-ago period, an improvement of $13.1 million.

The transition to cash generation during the quarter was completed as expected, with an overall increase in Gaias cash balance of $0.3 million compared to a decrease of $5.8 million in the year ago quarter.

As of September 30, 2020, Gaia had $8.7 million in cash and reduced its outstanding debt to $4.0 million from $17.0 million.

Conference CallThe company will hold a conference call today at 4:30 p.m. Eastern time to discuss its third quarter 2020 results.

Date: Monday, November 9, 2020Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)Toll-free dial-in number: 1-866-548-4713International dial-in number: 1-323-794-2093Conference ID: 2739010

Please call the conference telephone number five 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 Investor Relations 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 23, 2020.

Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Replay ID: 2739010

About Gaia

Gaia is a global video streaming service and community that provides curated conscious media in four primary channelsSeeking Truth, Transformation, Alternative Healing and Yogato its subscribers in 185 countries with approximately 8,000 titles. Over 85% of its library is exclusive to Gaia, and approximately 80% of the views are generated by content produced or owned by Gaia. For more information about Gaia, visit www.gaia.com.

Forward-Looking Statements

This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as expect, believe, will, or comparable terminology or by discussions of strategy. While Gaia believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, operating losses, general economic conditions, competition, changing consumer preferences, acquisitions, new initiatives we undertake, costs of acquiring new subscribers, subscriber retention rates, and other risks and uncertainties included in Gaias filings with the Securities and Exchange Commission. Gaia assumes no duty to update any forward-looking statements.

Contacts

Paul TarellGaia, Inc.(303) 222-3330Paul.Tarell@gaia.com

Cody SlachGateway Investor Relations(949) 574-3860GAIA@gatewayir.com

GAIA, INC.Condensed Consolidated Statements of Operations

For the Three Months For the Nine Months Ended September30, Ended September30,(in thousands, except 2020 2019 2020 2019 per share data) (unaudited) (unaudited) Revenues, net $ 17,537 $ 13,660 $ 48,201 $ 39,291 Cost of revenues 2,264 1,801 6,248 5,186 Gross profit 15,273 11,859 41,953 34,105 Expenses: Selling and operating 13,479 14,319 42,354 44,214 Corporate, general and 1,426 1,440 4,716 4,526 administrationTotal operating 14,905 15,759 47,070 48,740 expensesIncome (loss) from 368 (3,900 ) (5,117 ) (14,635 )operationsInterest and other 5,946 (241 ) 5,395 (400 )income (expense), netIncome (loss) before 6,314 (4,141 ) 278 (15,035 )income taxesProvision for income ? 3 69 45 taxesIncome (loss) from 6,314 (4,144 ) 209 (15,080 )continuing operationsIncome (loss) from ? ? ? (258 )discontinued operationsNet income (loss) $ 6,314 $ (4,144 ) $ 209 $ (15,338 ) Earnings per share: Basic: Continuing operations $ 0.33 $ (0.23 ) $ 0.01 $ (0.83 )Discontinued operations ? ? ? (0.01 )Basic net income (loss) $ 0.33 $ (0.23 ) $ 0.01 $ (0.84 )per shareDiluted: Continuing operations $ 0.32 $ (0.23 ) $ 0.01 $ (0.83 )Discontinued operations ? ? ? (0.01 )Diluted net income $ 0.32 $ (0.23 ) $ 0.01 $ (0.84 )(loss) per shareWeighted-average shares outstanding:Basic 19,183 18,375 18,834 18,070 Diluted 19,737 18,375 19,442 18,070 EBITDA $ 3,372 $ (1,412 ) $ 3,909 $ (8,044 )

* See definition and reconciliation on following page.

GAIA, INC.Summary of Cash Flows

For the Three Months For the Nine Months Ended September30, Ended September30,(in thousands) 2020 2019 2020 2019 (unaudited) (unaudited) Net cash provided by (used in):Operating activities - $ 3,333 $ (679 ) $ 7,197 $ (5,996 )continuing operationsOperating activities - ? ? ? 76 discontinued operationsOperating activities 3,333 (679 ) 7,197 (5,920 )Investing activities 9,862 (5,151 ) 2,781 (16,489 )Financing activities (12,932 ) ? (12,751 ) 4,092 Net change in cash $ 263 $ (5,830 ) $ (2,773 ) $ (18,317 )

Reconciliation of Income (loss) from Continuing Operations to EBITDA and Adjusted EBITDA

For the Three Months For the Nine Months Ended September30, Ended September30,(in thousands) 2020 2019 2020 2019 (unaudited) (unaudited) Income (loss) from $ 6,314 $ (4,144 ) $ 209 $ (15,080 )continuing operationsInterest expense 179 241 730 400 (income), netProvision for (benefit ? 3 69 45 from) income taxesGain on sale of real (6,125 ) ? (6,125 ) ? estateDepreciation and 3,004 2,488 9,026 6,849 amortization expenseEBITDA 3,372 (1,412 ) 3,909 (7,786 )Share-based 336 488 1,864 1,597 compensation expenseAdjusted EBITDA $ 3,708 $ (924 ) $ 5,773 $ (6,189 )

EBITDA represents net loss before interest expense, provision for income taxes, other income, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to remove share-based compensation expense. 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 (loss) 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

September30, December31, (in thousands, except share and per 2020 2019 share data) (unaudited) ASSETS Current assets: Cash $ 8,721 $ 11,494 Accounts receivable 2,358 2,310 Prepaid expenses and other current 2,043 2,443 assetsTotal current assets 13,122 16,247 Building and land, net 24,653 22,681 Media library, software and equipment, 39,084 36,921 netGoodwill 17,289 17,289 Investments and other assets 12,647 13,034 Total assets $ 106,795 $ 106,172 LIABILITIES AND EQUITY Current liabilities: Accounts payable, accrued and other $ 8,385 $ 10,594 liabilitiesDeferred revenue 12,556 8,025 Total current liabilities 20,941 18,619 Long-term debt and other liabilities, 12,127 18,433 netDeferred taxes 276 206 Total liabilities 33,344 37,258 Total equity 73,451 68,914 Total liabilities and equity $ 106,795 $ 106,172