Good afternoon, and welcome to Gaia's Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Joining us today from Gaia are Jirka Rysavy, Executive Chairman, James Colquhoun, CEO, and Ned Preston, CFO. After the speaker's presentation, there will be a question-and-answer session. Before we begin, the management team would like to remind everyone that management's prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions, including but not limited to statements of expectations, future events, or future financial performance. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. Although we believe these expectations are reasonable, Gaia’s management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company's management and involve inherent risk and uncertainties, including those identified in the risk factor section of Gaia's latest annual report on Form 10-K filed with the SEC. All non-GAAP financial measures referenced in today's call are reconciled in the company's earnings press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, March 10, 2025. Finally, I would like to remind everyone that this conference call is being webcast, and a recording will be available for replay on Gaia's investor relations website at ir.gaia.com. I will now turn the call over to Gaia’s Executive Chairman, Jirka Rysavy.

Good afternoon, everyone. During the fourth quarter, our revenue grew 18% to $24.4 million with gross margin improving to 88.3% from 85.3% in the year-ago quarter. Over the last month, we raised for the first time in our history, our subscription prices for most of our existing members by at least $2. Even with some member losses caused by the price increase, our member count grew by 6%. Revenue for the year grew 12% to $90.2 million. Our gross profit per employee for the year improved to $730,000 from $660,000. Our ratio of member lifetime value to our cost of acquisition climbed to over 6x. We had a positive free cash flow for both the quarter and full year, with free cash flow improving by about $4 million for the year. And James will now speak more about advances in the business.

Thank you, Jirka, and hello everyone. 2024 was a year of strengthening our member base, enhanced retention, and delivering strong financial performance as we continue to scale Gaia’s impact and grow our conscious community. As Jirka mentioned, we successfully executed positive free cash flow generation for Q4 and the full year. In addition, we achieved top-line revenue growth acceleration of 12%, and we aim to accelerate revenue growth further in 2025, while sustaining free cash flow and delivering year-on-year improvements in earnings per share. Despite the anticipated churn impact from our pricing increase, our members grew by 6%, demonstrating the strength of our engaged member base. Two notable facts in the strengthening of our member base that we saw 11% growth in our direct members across high LTV regions, including the U.S, Canada, and DACH markets, reinforcing strong demand for Gaia’s premium content and our commitment to long-term member retention. We paid off with 12% growth in our annual direct member count, supporting both cash flow stability and sustained revenue growth. The Gaia Plus premium membership tier grew by over 25%, highlighting the increasing demand for our exclusive content, live events, and deeper engagement opportunities. As we drove increases in our annual member base and enhanced retention, deferred revenue on the balance sheet grew by $3.4 million for the year. Switching to pricing, as Jirka mentioned, for the first time in our history, we successfully transitioned legacy members to the new pricing model in Q4 following a successful test in Q3 in the United Kingdom. This resulted in a limited 6.3% churn impact within that specific member cohort by year's end despite the 18% price increase, establishing a strong foundation for higher ARPU in future periods. ARPU continued its upward trend year-over-year and grew to $107 on an annualized basis, driven by our pricing strategy, the full launch of Gaia Marketplace in Q3, and continued expansion of Gaia Plus subscriptions. We anticipate further ARPU increases on an annualized basis, which we will report annually. Our ongoing financial discipline also led to a 19% year-over-year improvement in EPS, demonstrating our ability to drive efficiency and profitability while growing top-line revenue. We aim to continue accelerating margin expansion with further improvements in earnings for 2025 and beyond. In Q1 of 2025, we raised $8 million to accelerate our artificial intelligence and Gaia Community initiatives, which we are confident will add substantial long-term value for our members and shareholders through driving improvements in retention and growth. Regarding AI, we are on a mission to build the world's first conscious generative AI. While traditional generative AI models have focused on knowledge accumulation and reasoning, our goal is to provide wisdom, training our model on our proprietary data set of conscious content for which we have 98% worldwide rights, making this truly an international initiative. This AI will be integrated into the Gaia platform to enhance the member experience with intelligent, deeply meaningful interactions, further solidifying our leadership in the conscious media space. AI will also power expanded search and discovery tools, enhancing content discoverability, accessibility, and engagement. Additionally, we are leveraging AI to drive efficiency and language translation with our 11 Labs partnership, making Gaia's content more accessible worldwide, plus utilizing AI-driven enhancements to drive operational efficiency and expanded gross profit per employee. On the community front, Gaia has always been dedicated to fostering a global conscious community. It is at the heart of our mission. This next step in our strategic plan will be the key differentiator between Gaia and other major streamers. Our capital investment will focus on building technology and a worldwide network that will grow community engagement, create meaningful connections, and expand the network effect of our business. Imagine the best of Reddit, Meetup, WhatsApp, and Facebook; that's what we're building with Gaia Community. This deeper level of engagement will further personalize connections to Gaia, driving retention and reinforcing the network effect of our business. The AI and community initiatives are planned to roll out with our scheduled 2026 price increase at the end of Q1 next year, which we anticipate will further accelerate top-line growth and drive improvements in earnings in the long term. As we continue into 2025, our strategy remains focused on growing our community, enhancing engagement, and leveraging technology to further personalize and optimize the member experience. We remain committed to expanding the value of Gaia Plus and scaling Gaia Marketplace, ensuring that our premium subscribers receive even more exclusive content, live experiences, and unique offerings. These efforts will contribute to incremental ARPU growth while reinforcing Gaia as the world's leading conscious media and community platform. With these initiatives in place, we are well positioned for another year of accelerated growth, strong cash flow generation, and year-on-year improvements in earnings. And with that, our CFO, Ned Preston, will now provide deeper insights into our financial performance.

Thank you, James. Revenues for the fourth quarter of 2024 increased 18% to $24.4 million from $20.7 million in the fourth quarter of 2023, primarily driven by growth of our member base and increasing ARPU. Member growth increased during the year, growing sequentially during the fourth quarter. As James mentioned, despite some member losses due to the price increase, we ended 2024 with a member count of 856,000, up from 806,000 at the end of 2023. Gross profit in the fourth quarter increased to $21.6 million from $17.7 million in the fourth quarter of 2023. Gross margin was 88.3% for the fourth quarter, up from 85.3% in the fourth quarter of last year. Net loss was negative $800,000 or negative $0.03 per share as compared to a net loss of $1.8 million or negative $0.08 per share in the year-ago quarter. With free cash flow improving by $2.2 million, $2.6 million up from $1.6 million year-over-year. Shifting to the 2024 full year financial results, revenue for the year was $90.4 million as compared to $80.4 million in 2023, representing 12% growth on a year-over-year basis. Gross profit increased to $77.8 million from $68.8 million in 2023. Gross margin increased to 86.1% from 85.5%. We expect gross margins to be around 86% for fiscal year 2025. Loss for the year was negative $5.4 million or negative $0.22 per share as compared to a loss of $5.6 million or negative $0.27 per share for 2023, with increased marketing spend and amortization and an operating cash flow improvement of $1 million. For the year, free cash flow improved by $4 million to $2.7 million, up from negative $1.3 million in the prior year. The cash balance as of December 31, 2024, was $5.9 million with an unused $10 million line of credit. That completes my summary. I'd like to now turn the call back over to Jirka for his closing comments.

For the summary, we expect for this year the increasing annual growth rate with continued growth of ARPU, and increasing gross profit per employee. Of course, continued generation of positive free cash flow. The price increase we executed last year combined with some new investments in content, increased investment in artificial intelligence and community shall further improve our position. So, and this concludes our remarks. I would like to open the call for questions.

Thank you. At this time, we will take questions from the company's publishing analysts. Our first question comes from Mark Argento from Lake Street Capital. Please go ahead with your question.

Hey, good afternoon, guys. Just wanted to drill down a little bit on commentary around expectations of growth in 2025. I think you said growth will accelerate. Maybe you could just expand on that. Are we looking on a year-over-year basis? Are we looking sequentially up from Q4? Maybe if you could drill down on that a little bit, that would be helpful.

Yes. Hey Mark, it's Ned Preston. So, yeah, really our statement there is really on an annual basis. You just heard us say that we grew 12% on an annual basis. So we look to accelerate there, north of 12%. We did make a significant sequential move back in Q4 of last year with our quarterly revenue moving up from around $22 million to over $24 million. So we do look to sequentially grow, and starting here in Q1 as well. But really the suggestions earlier were really north of 12% on an annual basis.

That's helpful. And then just quickly on AI, maybe you could just talk a little bit about what you – kind of what you're intending to do there. You're launching your own, like, language model. Are you going to leverage some existing AI tech? What could we expect to see from you guys in and around AI?

Yeah. Thanks, Mark. Regarding AI, we're essentially a rapid play. We're building the infrastructure now where we will be piped into multiple LLMs so we can switch between them. Essentially, we're building an integrated version of search, a generative AI model where people can have conversations essentially with our content library and also with experts on our platform that have large amounts of content. And it'll be fully integrated into the product experience just like other major tech companies have integrated AI into their product experience. And this is something we'll be rolling out in Q1 of next year alongside the price increase. We see it as a really positive way for members to interact in a more deep way with our content in a modern way that they're used to with these AI models becoming more mainstream.

Great. Thanks. I'll hop back in the queue.

Yeah. It's just since James mentioned the price increase, we're planning to do another $2.

Thank you. And our next question comes from George Kelly with ROTH Capital Partners. Please proceed with your question.

Hey, everybody. Thanks for taking the questions. First, curious with respect to the pricing increase that you took in late '24, how much has filtered through your member base at this point? And are you still in early ’25 seeing kind of stable retention in all the member metrics? Is it consistent with your expectations?

Hi, George. It's James here. Yes, so correct. We increased it in Q4 of last year and we had the UK cohort start in Q3. We have a blend of monthly and annual members. So all of the annual members will have transitioned to new pricing by the end of Q4. Yet we still have the annual members that will be upgrading throughout the rest of the year. So we're seeing that continue through till October, which was when we first announced the price increase on the majority of our member base, our direct member base. So, I would say we had more than half of the price increase go through by the end of the year and we have a little bit less than 50% that will be flowing through from January on to October of 2025. In terms of the churn impact, the second part of your question, as we've gone through the member base in Q1 of this year, it has gone up slightly from our 6.3% rate at the end of last year, but we're still more than making the delta on the price increase. So the price increase was roughly 18%, half of that is 7.5%. We're still sitting under that from a churn impact perspective, so making more than the delta on that increase.

Okay, understood. Thank you. And then second question on Igniton. I was curious if you're still planning to launch sometime this spring and if you could give any detail around price point and expectations. You mentioned Mark's question just about your revenue guidance expecting an acceleration this year; how are you baking in Igniton and just anything about that launch would be helpful?

Okay. So we plan to actually launch the brand somewhere in the May-June timeframe and start to sell in July. So it would be the second part of the year. We made a recent decision that last week on the board to discontinue our direct stand-alone courses, which was for last year about $1.1 million, and we expect the Igniton will bring more than that in the second part of the year.

Okay, understood. Thank you.

And did you want to ask more about that?

Are you asking me, Jirka?

Yeah. If the answer is what you're looking for.

Sure. I appreciate your patience. The figure of over $1.1 million is somewhat vague. It's an open-ended issue, and perhaps you feel the same way. You're hesitant to share too much information, but what do you actually want to convey?

We have no idea till we sell the first few months how it's going to be received.

Okay, fair enough. We'll just leave it there for now then.

Okay. Thanks.

Thank you. Our next question comes from James Sidoti with Sidoti & Company. Please go ahead with your question.

Hi, good afternoon. Thanks for taking the questions. So, I think I heard Jirka say that you put another $2 price increase. When does that go into effect?

Hi, Jim. It's James here. So, yes, Jirka mentioned it would be a $2 increase. Last year, we increased from $11.99 to $13.99 on our monthly membership, and we plan to increase that to $15.99 by the end of Q1 in 2026. We would then parlay that U.S. dollar amount into overseas currencies generally on a one-for-one basis. Some territories we are more localized, and we might be a little lower. For instance, in Latin America, we have slightly lower pricing compared to USD, but for most other territories, we're on parity or even slightly above.

All right. So I take it the fact that you're putting us another round of price increases means you're pretty happy with the results of the first round and the attrition rate from the first round?

That's correct, Jim. I think we're very impressed with the results from the first round of price increases. It was something sensitive for us as an organization as typically we'd grandfather members on legacy pricing. So like Jirka and I mentioned, this was the first time in the company's history where we increased prices for legacy members on old pricing. And the results were excellent. I also feel that the market in the streaming space is much more familiar and comfortable with price increases that roll out to existing members. So it's more that we're just coming to the standard in the market now and still trailing generally in terms of Netflix's standard pricing in most territories, but accelerating further to stay in lockstep with them.

Yeah, on the March, just for James said before, our net gain was roughly 10% of the price.

And Jim, one other point on, hey Jim, it's Ned. One other point on net price increase just to connect a couple of the dots we've talked about today is a lot of the investment that we went into on the AI and community front. A lot of those improvements will be coming out in the same time of next year. So as we're increasing the prices and for all the reasons that James and Jirka just shared with you, we'll also be having some enhancements from AI and community standpoint that our members, both existing and new, would benefit from.

Okay. And when you launch the Igniton products, I assume that's going to be launched to your existing customer base. Should that minimize the amount of increased sales and marketing costs since you're basically going to be selling to your own customers now, or do you expect to invest in additional sales and marketing?

I would say the sales and marketing costs will be roughly the same around 40% because we're selling through Gaia Marketplace, but also we'll sell them independently and obviously will have a launch. So, that's going to be the launch of a new product, which will be distributed through Igniton; already have distribution, have about 50-70 distributors in about 50 countries today. So it will go through that network as well to start.

And then last one is a balance sheet question. You have about $6 million in debt, it's moved into short-term debt. Will you finance that with another loan or use a lot of credit? What's the plan for that?

Yeah. Good catch there, Jim. That just is the change from an accounting standpoint based on our current loan. We plan to re-up and do a very similar arrangement going forward later this year, and it just flipped into a new category. But our expectation is to continue on with the same approach.

This is a mortgage on our campus. It's not really, how we don't draw anything on our $10 million credit line. So, this is about $5.9 million I think we have a mortgage on real estate, which is probably three to four times the value.

Correct.

But if we are going to definitely pay a little more interest than we had before on a mortgage, but we also grow our cash balance and we start to gain some interest.

Correct. Thanks for clarifying.

Okay. All right. Thank you.

Thank you. At this time, this does conclude our question-and-answer session. I'd now like to turn the call back to Mr. Rysavy for closing remarks.

Thank you everyone for joining. We look forward to speaking with you when we report our Q1 results on May 12. Thank you very much.

Thank you for joining us today for Gaia's fourth quarter and full year conference call. You may now disconnect at this time.