GlobeNewswire Inc | Aug 3, 2020 04:06PM EDT

August 03, 2020

BOULDER, Colo., Aug. 03, 2020 (GLOBE NEWSWIRE) -- Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company, reported financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 Highlights vs. Same Year-Ago Quarter

-- 23% increase in revenues to $16.2 million. -- Generated $1.9 million in Adjusted EBITDA, an improvement of $3.5 million. -- Generated $1.9 million in cash flow from operations, an improvement of $4.4 million.

The results for the second quarter represent 18 months of disciplined execution to drive operating efficiencies across the business while balancing growth initiatives and spend discipline, said Paul Tarell, Gaias CFO. We have continued to benefit from higher member growth due to the success of our exclusive content, smart marketing spend and improved retention, which has allowed Gaia to transition to positive earnings and free cash flows starting in July.

Second Quarter 2020 Financial Results

Revenues in the second quarter increased 23% to $16.2 million from $13.2 million in the year-ago quarter. This was primarily due to growth in paying members and an increase in average revenue per member. Paying members increased to 663,400 as of June 30, 2020 with net member additions for the quarter of 58,300.

Gross profit in the second quarter increased 24% to $14.1 million compared to $11.4 million in the year-ago quarter. Gross margin increased to 87.1% versus 86.4% in the year-ago quarter.

Total operating expenses in the second quarter increased 4% to $16.3 million from $15.7 million in the year-ago quarter, primarily due to $0.7 million in non-recurring share-based expense in the second quarter of 2020 for earn out consideration related to the strong performance of the acquisition Gaia completed in June 2019. Excluding this one-time charge, operating expenses improved to $15.6 million or 96% of revenues from $15.7 million or 119% of revenues in the year ago quarter. Customer acquisition costs as a percentage of revenue were 52% for the second quarter, an improvement from 57% in the year-ago quarter.

Net loss in the second quarter improved significantly to $2.5 million, or $(0.13) per share, compared to a net loss of $4.5 million, or $(0.25) per share, in the year-ago quarter.

Adjusted EBITDA also improved to $1.9 million compared to $(1.6) million in the year-ago quarter.

Gaia generated cash from operations of $3.9 million in the first half of 2020 compared to cash used of $5.2 million in the comparable year-ago period, an improvement of $9.1 million.

Gaias cash conversion cycle has continued to improve, with overall cash used during the quarter of $1.6 million compared to a use of $8.9 million in the year ago quarter (excluding incremental proceeds from Gaias real estate refinancing).

As of June 30, 2020, Gaia had $8.5 million in cash. Gaia intends to generate positive net income and free cash flow in the third quarter.

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

Date: Monday, August 3, 2020Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)Toll-free dial-in number: (800) 239-9838International dial-in number: (323) 794-2551Conference ID: 3953218

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 August 17, 2020.

Toll-free replay number: (844) 512-2921International replay number: (412) 317-6671Replay ID: 3953218

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 Six Months Ended June30, Ended June30,(in thousands, except 2020 2019 2020 2019 per share data) (unaudited) (unaudited) Revenues, net $ 16,153 $ 13,164 $ 30,664 $ 25,631 Cost of revenues 2,083 1,785 3,984 3,385 Gross profit 14,070 11,379 26,680 22,246 Expenses: Selling and operating 14,417 14,173 28,875 29,895 Corporate, general and 1,873 1,493 3,290 3,086 administrationTotal operating expenses 16,290 15,666 32,165 32,981 Loss from operations (2,220 ) (4,287 ) (5,485 ) (10,735 )Interest and other (305 ) (196 ) (551 ) (159 )income (expense), netLoss before income taxes (2,525 ) (4,483 ) (6,036 ) (10,894 )Income tax expense ? 42 69 42 Loss from continuing (2,525 ) (4,525 ) (6,105 ) (10,936 )operationsLoss from discontinued ? 57 ? (258 )operationsNet loss $ (2,525 ) $ (4,468 ) $ (6,105 ) $ (11,194 )Loss per share-basic and diluted:Continuing operations $ (0.13 ) $ (0.25 ) $ (0.33 ) $ (0.61 )Discontinued operations ? ? - (0.01 )Basic and diluted net $ (0.13 ) $ (0.25 ) $ (0.33 ) $ (0.62 )loss per shareWeighted-average shares outstanding:Basic and diluted 18,837 17,944 18,660 17,917 Adjusted EBITDA $ 1,896 $ (1,574 ) $ 2,065 $ (5,523 )

* See definition and reconciliation on following page.

GAIA, INC.Summary of Cash Flows

For the Three Months For the Six Months Ended June30, Ended June30,(in thousands) 2020 2019 2020 2019 (unaudited) (unaudited) Net cash provided by (used in):Operating activities - $ 1,858 $ (2,557 ) $ 3,864 $ (5,317 )continuing operationsOperating activities - ? 57 ? 76 discontinued operationsOperating activities 1,858 (2,500 ) 3,864 (5,241 )Investing activities (3,480 ) (6,414 ) (7,081 ) (11,338 )Financing activities 61 4,092 181 4,092 Net change in cash $ (1,561 ) $ (4,822 ) $ (3,036 ) $ (12,487 )

Reconciliation of Loss from Continuing Operations to EBITDA and Adjusted EBITDA

For the Three Months For the Six Months Ended June30, Ended June30,(in thousands) 2020 2019 2020 2019 (unaudited) (unaudited) Net loss $ (2,525 ) $ (4,468 ) $ (6,105 ) $ (11,194 )Interest expense, net 305 196 551 159 Provision for income ? 42 69 42 taxesDepreciation and 3,053 2,141 6,022 4,361 amortization expenseEBITDA 833 (2,089 ) 537 (6,632 )Share-based 1,063 515 1,528 1,109 compensation expenseAdjusted EBITDA $ 1,896 $ (1,574 ) $ 2,065 $ (5,523 )

EBITDA represents net loss before interest expense, provision for income taxes, 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

June30, December31, (in thousands, except share and per share 2020 2019 data) (unaudited) ASSETS Current assets: Cash $ 8,458 $ 11,494 Accounts receivable 2,617 2,310 Prepaid expenses and other current assets 1,767 2,443 Total current assets 12,842 16,247 Building and land, net 22,351 22,681 Media library, software and equipment, net 38,580 36,921 Goodwill 17,289 17,289 Investments and other assets 13,117 13,034 Total assets $ 104,179 $ 106,172 LIABILITIES AND EQUITY Current liabilities: Accounts payable, accrued and other $ 8,099 $ 10,594 liabilitiesDeferred revenue 12,320 8,025 Total current liabilities 20,419 18,619 Long-term debt 16,751 18,433 Deferred taxes 276 206 Total liabilities 37,446 37,258 Total equity 66,733 68,914 Total liabilities and equity $ 104,179 $ 106,172