Greetings and welcome to the Arena Group Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode, a questions-and-answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to your host, Rob Fink, Investor Relations at Arena Group. You may begin.

Thank you, Operator, and thank you everyone for joining us today. Hosting the call today are Ross Levinsohn, Chairman and Chief Executive Officer; Doug Smith, Chief Financial Officer; and Andrew Kraft, Chief Operating Officer. Before we begin, I'd like to note that some of the comments made during this presentation may include forward-looking statements. All statements other than statements of historical facts are statements that could be deemed forward-looking. Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning the company's business strategy, future revenues, market growth, capital requirements, product introduction and expansion plans and the additive suite of the company's funding. Other statements contained in the presentation that are not historical facts are also considered forward-looking statements. The company cautions investors that any forward-looking statements presented in this presentation, whether made orally or in writing from time to time, are based on the beliefs, assumptions made by, and information currently available to the company. Such statements are based on assumptions, and the actual outcomes will be affected by known and unknown risks, trends, uncertainties and factors that are beyond the company's control or ability to predict. Although the company believes that its assumptions are reasonable, these assumptions are not a guarantee of future performance and some will inevitably prove to be incorrect. As a result, the company's actual future results can be expected to differ from its expectations and those differences may be material. Accordingly, investors should be cautious in relying on forward-looking statements, which are based only on known results and trends at the time they are made to anticipate future results or trends. Certain risks are discussed in the company's filings with the SEC. In addition, there will be references made to non-GAAP financial measures, adjusted EBITDA. Information regarding the reconciliation of this non-GAAP to GAAP measure can be found in the press release that was issued this afternoon on Arena Group's Investor Relations website at investors.arenagroup.net. With all that said, I'd like to turn the call over to Ross. Ross, the call is yours.

Thank you, Rob, and thanks to everyone for joining us here today. 2022 was a milestone year for the Arena Group. We have become a highly efficient company with top line and bottom line growth, successful acquisitions and partnerships, and a diversified business model. At our core, our technology platform can support rapid expansion without significantly growing expenses, which has led to our first full year of adjusted EBITDA profits with record revenues and lower operating expenses. Some highlights I'd like to share with you before I hand the call over to Doug Smith, our CFO, to take you deeper into the numbers. For the full year, we generated nearly $221 million in revenue, an all-time high for our company, driven by a 74% year over year increase in digital advertising. For the first time, we generated a profit for the full year delivering $3.1 million of adjusted EBITDA in 2022. That's a $15 million improvement from 2021. For context, this represents a positive swing of more than $26 million from 2020. We cut operating expenses by nearly $19 million year over year, which helped us improve operating income by $28 million in 2022. We acquired Parade, a morning read, which has become SI Golf, Men's Journal, Men's Fitness, Surfer, Powder, Bike, Skateboarder, and more than 70 additional domains last year while also adding over 100 new digital sites to our platform, significantly increasing the breadth and depth of brands utilizing our technology. We have built a dynamic media and tech leader. We grew pageviews by nearly 50% last year to over 6 billion. Our organic pageviews growth was 32%. We improved advertising yield, direct sales revenue, and licensing and syndication revenue, while launching an e-commerce business across our brands and expanding our online betting efforts. Since 2019, we've grown our revenue from $53 million to more than $220 million, and we believe we will generate between $255 million and $270 million this year without any further acquisitions, all while reducing certain operating expenses. We now own nearly 50 properties and power another 225 brands who utilize our technology and sales apparatus with a combined audience of more than 109 million monthly users according to comScore. We're now the 32nd largest publisher in the United States, according to comScore in January, and that's up from number 47 a year ago. Let me speak to the progress at specific properties. Our sports vertical continues to see robust growth with total pageviews up 76% to 3.6 billion during the year. The Sports Illustrated Media Group was number four in the comScore sports rankings in January of 2023. As compared to full year ‘21, the brand delivered 70% growth in pageviews, and Fan Nation grew by 66%. The Street had a particularly strong year with pageviews up 139% to 326 million. In October, the Street opened its news desk and studio on the floor of the New York Stock Exchange, enhancing our ability to bring dynamic real-time video content to our investor audience. Our lifestyle vertical continues to grow nicely. During the year, Parade and PetHelpful both delivered strong growth in pageviews, with Parade growing by 44%, and PetHelpful growing by over 360%. We have expanded into a fourth vertical, men's lifestyle, through our acquisition of Men's Journal in December, and we are very optimistic that it will see strong growth in the coming months as we apply our proprietary playbook and technology. Across our platform, we continue to focus on expanding our distribution and reducing our overall cost of content. We now have recirculation in place across our entire ecosystem, as well as third-party distribution to over 600 outlets, which helped generate 127% growth in our licensing and syndication revenue in 2022. We enter 2023 poised for accelerating full-year adjusted EBITDA and robust cash generation, all while continuing to deliver outstanding revenue growth. I also want to be transparent about our challenges. First and foremost, we continue to aggressively manage a shrinking print subscription and print ad business. But once again, in 2022, our Sports Illustrated Magazine business generated strong cash contribution and we expect it will again in 2023 with 1.2 million paying and profitable subscribers. Doug will get into the details in a minute. We have aggressively managed this business to deliver premium journalism, a beautiful product, and profits. We also managed a rapid shutdown of the Parade print operations the minute we saw it turn negative and quickly and successfully transitioned our partnerships and audience to digital-only content. Since then, we've seen strong adoption of our Parade e-edition with more than 500 newspapers offering the digital magazine to their subscribers. Parade's digital presence continues to grow with Parade.com users nearly doubling since we added it to our platform in June 2022, reaching 21 million unique users in January of 2023, according to comScore. At TheStreet, while digital subscriptions have decreased by 39% since Jim Cramer left in October of 2021, engagement growth at thestreet.com has driven monthly pages up 261% from 8.8 million in December of ‘21 to 31.6 million in December of ‘22. Clearly, there are also some inefficiencies in our capital structure. Some investors have noted that we have a significant debt expiration in December of this year. For the past several months, we have been working with our board and external advisors to either replace or extend our current facilities, and I expect we will have an announcement to make in the near term. This is one of my top priorities as CEO, and I'm confident that we will secure a positive result shortly. The results we are sharing today, especially given the backdrop of a challenging economic time, demonstrate the strength of our business plan, and the differentiated foundation we've created over the past two years. The strategic investments that we made in late 2020 and 2021 to transform our business have clearly worked, while others in the industry are struggling, our growth continues to accelerate both on the top and bottom lines. I'm extremely proud of the growth we've achieved across all of our verticals this quarter. I'd like to share more about our outlook for 2023, but first, I'd like to let Doug Smith, our Chief Financial Officer, take you through the numbers. Doug?

Thank you, Ross. Let me turn to the results in the fourth quarter. Revenue from continuing operations is approximately $61.7 million, up only slightly from $61.2 million for the fourth quarter of last year, reflecting great growth in our digital business and a planned reduction in print. Total digital revenue of $45.2 million represented over two thirds of our total revenue and grew 36% versus the fourth quarter of last year. This was largely driven by a 47% increase in digital advertising revenue to $34.5 million versus the fourth quarter of last year. The growth was due to a 22% increase in pageviews and a 14% rise in revenue per pageviews, and 80% of the increase was organic. Digital subscription revenue was $4.6 million, down 36% as compared to $7.2 million in the prior year quarter. Other digital revenue, which was principally licensing and syndication, increased by 129% year-over-year to $6.1 million during the fourth quarter. We expect continued robust growth in this area as we drive existing partners and expand to new ones as Ross referred to earlier. Print revenue decreased to $16.5 million from $27.9 million in the prior quarter, which reflects the planned reduction in the rate base we implemented in December of 2021. This decrease in revenue was accompanied by an $8.8 million decrease in subscription acquisition costs, reflecting the elimination of the less profitable subscribers in our rate-based reduction. Gross profit decreased to $27.5 million compared to a gross profit of $33.9 million in the prior year quarter. This decrease reflects the previously mentioned reduction in print subscription revenue. However, the offsetting cost reduction at $8.8 million appears in operating expenses, not in cost of revenue. Total operating expenses were $35.6 million, down 30% as compared to $50.8 million in the prior year quarter, and reflected an $8.3 million reduction in selling and marketing costs to $19.4 million, and a $6.4 million decrease in general and administrative expenses to $11.7 million. The decrease in selling and marketing expenses was primarily due to the previously mentioned $8.8 million or 49% decrease in subscription acquisition costs to $9 million. The decrease in G&A expense is primarily related to the reduction in payroll and other related expenses, offset a little bit by the acquisition of the Parade properties, which we acquired on April 1 in 2022. As a result of these significant cost reductions, the net loss was $13.7 million as compared to $19.9 million in the prior year fourth quarter, an improvement of $5.4 million or 28%. Over 100% of 2022’s fourth quarter loss was due to non-cash charges, including stock-based compensation, depreciation, amortization, and other non-cash charges. 2022 fourth quarter adjusted EBITDA was $5.4 million, an improvement of $4.3 million from the $1.1 million reported in the fourth quarter of the prior year. Turning now to the results for the full year, revenue from continuing operations was approximately $221 million, up 17% as compared to $189 million last year. Again, for the full year, a substantial growth in digital revenue more than offset a planned reduction in print revenues. Total digital revenue was $150 million, up 48% from $101 million last year. Digital advertising represented $109 million of that and was up 74% versus last year, reflecting a 47% increase in pageviews and a 13% increase in revenue. The organic growth in digital advertising for the year was also 80% of the total growth. Digital subscription revenue was $21 million, down 29% as compared to $30 million last year. Other digital revenue, principally licensing and syndication, increased by 127% or $11 million year-over-year to $19 million. Print revenue decreased by 19% to $71 million from $88 million last year. Again, this is related to the planned reduction in our print subscriber rate base. But I want to take a moment just to discuss how we focus on print. We compared the $71 million revenue to the two main print expenses, printing, distribution, and fulfillment cost, which was $15 million, and subscription acquisition cost of $37 million. The net difference of $19 million was a positive contribution that helps offset our shared content and editorial expenses, as well as our overhead. And while print is generally a declining business, as Ross referenced, we've been focused on reducing the less profitable portion of our subscribers and thereby maximizing its contribution, and we'll continue to do that going forward. Gross profit increased 12% to $88 million in 2022 compared to a gross profit of $79 million last year. However, our margin narrowed by 2 points to 40%. Again, this reflects the reduction in print revenues where the largest expense is actually shown below the gross profit line. And of course, we had significant savings in that large subscription acquisition cost line. However, going forward, as digital revenue is now two-thirds of our total revenue, we anticipate expansion of our gross profit margin going forward. Total operating expenses were $144 million as compared to $163 million last year, a decrease of 12% against our 17% revenue growth. Net loss of $71 million as compared to $90 million in the prior year showed an improvement of $19 million or 21%, and 2022 adjusted EBITDA was a positive $3.1 million, a positive swing of $15.2 million from the loss of $12.1 million last year. Looking at our balance sheet and liquidity, we ended the year with $13.9 million in cash and cash equivalents compared to $9.3 million at December 31, 2021. In today's environment, I should point out that essentially all of our cash is held at tier-one financial institutions. In the quarter, net cash generated by operating activities was $3.4 million and we had $14 million borrowed under our $40 million working capital line of credit. As Ross discussed, our senior notes come due at the end of the year and therefore they are showing as a hundred million 0.5 in current debt. And as Ross mentioned, we have had ongoing discussions regarding refinancing and extension options and expect to make an announcement in the near future about this. Before I wrap up, I wanted to mention that we filed an extension today for the filing of our annual 10-K for the year ended December 31, 2022. As you may know, this is the first annual report for the company, and we are required to include Section 404 B of the Sarbanes-Oxley auditor attestation on the company's assessment of its internal control over financial reporting. We needed additional time to complete the 10-K and our independent accounting firm has not yet completed its audit procedures. We do expect that the financial statements in the 10-K will be substantially consistent with the numbers that we released in today's earnings, and we also expect that the 10-K will be filed within the 15-calendar day extension period provided by Rule 12 B ‘25. With that, I'll turn the call back to Ross for closing comments.

Thanks, Doug. This was truly a milestone year for the Arena Group with tremendous growth, the creation of our third and fourth major verticals through the acquisitions of Parade and Men's Journal, and continued success of our proprietary playbook. Perhaps more importantly, this growth is translating into expanded operating margins, leading to positive adjusted EBITDA and cash generation for the first time in our history. We have built a strategy and platform for profitable growth, and incremental organic and inorganic growth will only add to this. Upon reaching scale and critical mass with our infrastructure a year ago, we have also focused on driving efficiencies. As you've seen in our earnings announcement, we have reduced operating expenses throughout 2022 and will continue to focus on efficiencies in 2023, including tuning our staff, partnerships, vendors, and overall expenses to maximize profits and free cash flow. Adding partners and advertising inventory is one way we do this, giving us incremental traffic and additional advertising inventory with no added fixed costs. Continued improvements to our ad tech stack continue to drive yield across our inventory, outpacing industry-wide benchmarks, and eliminating unprofitable print operations while doubling down on our digital revenue as another tactic. In the last few weeks, we announced two partnerships with innovative AI firms. We are now using AI and solutions like Jasper and ChatGPT to give our reporters and editors the ability to quickly and efficiently search and pull content from our rich archives for news stories. Keep in mind, we have nearly seven decades of content from Sports Illustrated and Parade Magazine dating back to 1941. Searching these records can be time-consuming, but there is immense value in our history and using AI to tap into that content and accelerate workflows makes great sense. We've already seen productivity improvements in just the last few weeks on a pilot basis. We do not intend for this to replace our talented writers and editors, but we do believe this initiative will make our great teams even more productive. These are just a few examples of how we are proactively adjusting our cost structure to ensure that we hit our 2023 adjusted EBITDA target. Profitability and operating cash flow are our focus. I want to take a moment to summarize our journey and thank those investors who've supported us and the employees of the Arena Group for their tireless work and efforts to drive this brand. I was asked to lead this business in the fall of 2020. For context, that year we generated $128 million in revenue, three quarters of which was derived from TheStreet and Sports Illustrated, two recently acquired businesses, and we lost $23 million of adjusted EBITDA. We reset that business in the spring of ‘21, so about two years ago to the day of this earnings call, armed with a new strategy, a refocused team, and support from our largest investors. Twenty-one months later, we have nearly doubled revenue and added $26 million to the adjusted EBITDA line to show our first full year profit. This progress comes even as print revenue significantly decreased while we refocused the company on our growing digital lines, managing print for profitability. This year with a projected $30 million to $35 million of adjusted EBITDA, we will have achieved a significant transformation for some of the most iconic brands in publishing while firmly establishing our efficient business model that has unlimited potential to drive profitable growth. And with that, I'd like to turn it over to you all for questions. Operator?

And the first question today is coming from Mark Argento from Lake Street. Mark, your line is live.

Congratulations on a successful year. I have a broader macro question and another specific one related to some of the numbers. It seems, Ross and Doug, that in the press release, you referenced some wider market trends in the online advertising sector. Can you share where you are noticing strengths and how you’re setting yourselves apart, including details on CPMs, RPMs, or any macro insights that could help us understand your navigation strategy?

Hi, Mark. So, some of the things we mentioned in the call, and certainly in our release, we've seen expansion on the yield side of things that comes from better sales apparatus, better technology, more partnerships in the programmatic landscape, and also growth in our direct sales year-over-year. So, we achieved significant upticks in the number of direct campaigns. Obviously, when you sell direct advertising to sponsors and advertisers, you generally have a higher CPM. So, the more direct deals that we can layer in, the higher our yield is on the pages we have. That's part one. Part two is growing our overall inventory. As you know, we added 113 new sites in 2022. That trend continues in 2023. So those things combined obviously lent to a pretty significant growth in advertising. And as we also mentioned, by distributing the content that we have to hundreds of new outlets, we're seeing increased revenue there. As we've sort of entered 2023, there's no question that the markets as a whole, both the stock markets and the ad markets are seeing a little bit more stress this year than in years past. But we started to see that in Q4 last year. I think the combination, as we've talked about in the past of growing our overall inventory pie through better content that we're doing on our sites, more engagement from consumers, and then driving yield has really enabled us to see the type of growth that we've seen. Doug, chime in if he has anything, or obviously have you follow up if you want to.

Yeah, no, I would just add to that. In addition to the growth in our direct advertising side of the business, even with our programmatic side, we've continued to push on premium programmatic products such as private marketplace and programmatic guaranteed as well as other products like that have considerably higher CPM. So even within the programmatic inventory, we've managed to upscale to more premium products.

It's helpful. And then we can only think about how that manifests itself into the numbers, obviously, hopefully higher revenues, higher margin revenues, but pretty decent move from last year to this year in terms of the adjusted EBITDA loss, the positive, but obviously, you guys are looking for a nice step up from low single digits to, I think it was $30 to $35 million or whatever you guys ended up guiding to. Could you just kind of walk us through some of the key drivers? We're going to see it mostly in gross margins. I know the incremental margins you just mentioned on some of this additional content are obviously pretty decent, but maybe at a high level you could kind of just walk us through where you're going to see some leverage in the model as you go from modest profitability to hopefully much more profitable.

Sure. Doug, you can chime in whenever. Go ahead, Doug. Didn't need to step on you.

That's all right. No, I was going to say, first of all, we acquired the Men's Journal and Active Network properties in latter December of last year, which will have a positive impact on our business, both in that it's in addition to our business, but we see a lot of growth opportunity that we can generate in those properties as well. We continue to see strong growth in digital advertising and in our licensing and syndication business. The margins on digital advertising are north of 70%, and licensing and syndication really has almost no cost associated with it. So that drops to the gross profit margin as well as the bottom line. We saw significant cost reductions in our operating expenses year-over-year. We're anticipating a continued focus on our operating expenses to keep those in line, and that'll help us generate that rather significant growth in our EBITDA.

And the next question is coming from Daniel Day from B. Riley Securities. Daniel, your line is live.

Maybe this first one for me, an update on Men's Journal, you started acquiring and integrating those assets. Just first question, are they fully integrated at this point? Still more work to do there? And then second, curious whether anything surprised you so far, either positive or negative as you've dug a bit more into that post-acquisition. Anything you think worth mentioning? Thanks.

Yes, we have successfully completed the integration onto our platform, with the last of the sites coming on board last week. We have started hiring new staff to expand those brands. We're very excited about some of the enthusiast titles we acquired, especially in bike, surf, and skiing. These have exceeded our expectations regarding audience engagement and social reach, considering they had been somewhat dormant in recent years. This has been a great discovery for us in acquiring those brands. On the Men's Journal side, as we’ve explored further, it has opened up many new categories. A lifestyle title like Men's Journal allows us to cover a wide range of topics including health and wellness, fitness, sports, travel, and food. This opens new categories targeting the male audience, where we already have a significant presence, leading to some nice overlap. There weren't any real surprises; the transition onto our platform went smoothly and quickly for brands that have been established for this long and have this much content. We added 113 sites last year, averaging a little over two sites each week. We're becoming adept at acquiring or partnering with brands and integrating them into our content management system and ad stack, which is driving new revenue. As Doug mentioned earlier, we expect a significant boost to our bottom line from these titles, and we're seeing considerable interest from both consumers and advertisers.

Thank you. And then just on the licensing and syndication revenue, maybe just a little more detail on what's in this bucket. You're at a little shy of $6 million in revenue there in the quarter. Is there anything kind of one-time in there or seasonality in there, and just how we should be modeling that moving forward? And then the margin typically associated with that revenue? Is it generally accretive to your overall growth in EBITDA margins?

Yeah. On the margin side, it's the beauty of create once, sell many, similar to a SaaS business on the tech side. We're producing so much high-end brand safe content with Sports Illustrated, Parade, The Street, and now Men's Journal that third parties ranging from very large newspaper brands and companies to digital outlets like Apple News, MSN, Yahoo, and others are very aggressive in wanting to partner with us and redistribute that content. And of course, there's no real cost to us to do that. So, the margin is pretty tremendous. There's no real one-time items in here. We've grown really substantially. I mean, a year ago we had very few newspaper partners. We were seeing the majority of the revenue we were generating coming from digital outlets. In large part, thanks to the work that our team has done from the Parade acquisition, we've managed to sign some really exciting partnerships with local newspaper groups and also local television companies, the biggest in the country. So, we're starting to see our content show up on sites all across premier media brands. And as I mentioned earlier, that number is north of 500 outlets that are taking one or more pieces of our portfolio. So, we expect that to continue to grow very, very high margin and as we transition more and more away from sort of the traditional print business, we're very excited about this part of this segment of our overall company.

Great. One more question from me before I hand it over. I imagine the downturn in ad spending is likely putting significant pressure on some of the smaller publishers. This may be reviving discussions you have had previously, perhaps regarding valuations. Can you comment on whether you notice that trend, how your acquisition pipeline looks right now, and your capability to finalize an acquisition given your current cash balance and working capital needs in the next few months?

Yeah, sure. So, we have spent a lot of time in the last couple of months, well, two months or so, three months really focused on integrating the assets we had. None of us thought it would be prudent to go out and try to do another big acquisition of any sort until we platformed the ones we did in December. And so now with that checked off and beginning operations there, we're freed up a little bit. We have added a bunch of new titles to the platform this year already. Those are not acquisitions; those are platform partners. So, we're seeing additional revenue and opportunities there. The pipeline for acquisitions is pretty robust. Probably no surprise to you, as you said in your question, there are a lot of companies struggling out there, and I think we've proven that we're successful in acquiring, platforming, and growing businesses. So, we've gotten a lot of inbounds, more inbounds this year so far than I've seen in the time that I've been here. That said, we have work to do on the assets that we own and also on our overall balance sheet. So, we're not really doing anything too aggressively there, although we're starting to free up a little bit on our time. But that said, we do, as I said in my remarks, we do want to really focus on our capital structure, our debt, and ensure that we generate real free cash this year. So, we're taking a cautious approach. Prices are cheaper for sure out there for assets that we consider to be really strong brands.

Thank you. There were no other questions in queue. I would now like to hand the call back to Ross Levinsohn for some closing remarks.

Okay. Thanks so much everybody. Appreciate you being on once again, and we'll talk to you next quarter.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.