Good afternoon. Welcome to Gaia's Second Quarter 2025 Earnings Conference Call. Joining us today from Gaia are Jirka Rysavy, Executive Chairman; Kiersten Medvedich, CEO; and Ned Preston, CFO. After the presentation, there will be a question-and-answer session. Before we begin, Gaia's management team would like to remind everyone that the prepared remarks contain forward-looking statements, and additional forward-looking statements may be made in response to your questions, including expectations, future events, or future financial performance. These statements do not guarantee future performance, and undue reliance should not be placed on them. While we believe these expectations are reasonable, Gaia management is not obligated to revise any statements to reflect changes occurring after this call. Actual events or results could differ materially. These statements are based on the current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Gaia's latest annual report on Form 10-K filed with the SEC. All non-GAAP financial measures mentioned in today's call are reconciled in the company's earnings press release to the most directly comparable GAAP measure. This call also includes time-sensitive information that is accurate only as of the time and date of this broadcast, August 11, 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. At this time, I would like to turn the call over to Gaia's Chairman, Jirka Rysavy. Please go ahead.

Good afternoon, everyone. So revenue for the quarter increased 12% and gross profit 16%. Gross margin improved 220 basis points to 86.7% from 84.5% at the year-ago quarter. Our member count grew to 878,000 and we are focusing now on high lifetime value members. Our annualized gross profit per employee increased to $814,000 from $695,000 in the year-ago quarter. Our subsidiary, Igniton, raised $6 million recently at a $106 million post-money valuation, valuing Gaia’s two-thirds ownership interest in Igniton at $70 million, a 2.5x increase from the previous $28 million. Some Igniton products are now available at Gaia Marketplace. If you want more information, you can get it at igniton.com. I will now turn the call over to our CEO, Kiersten.

Good afternoon, everyone. As we begin today's call, I want to honor this moment of transition. This is my first time speaking to you as CEO of Gaia, and let me begin by affirming our strategy is not changing. I am fully aligned with the path we've been walking, a strategy rooted in mission, discipline, and the long view. We are building on a foundation of purpose and deep intention, and we remain committed to moving forward with consistency and focus. Our core streaming business remains the heart of Gaia. It is strong, resilient, and continues to grow over time. We are focused on scaling it sustainably by improving retention and deepening member engagement. With 90% of our content exclusive to Gaia, we offer something no other platform can: an intentional, curated experience that goes beyond content and into personal transformation and connection. And we're seeing the results. So let's talk about that. In Q2, we carried our momentum from Q1 into a strong quarter, delivering double-digit revenue growth and exceeding our expectations by $300,000. The key drivers of that performance were growth in both member count and ARPU as well as the launch of our Igniton brand, which saw an enthusiastic response following its debut at the Biohacking Conference in May. This success reinforces something we've long believed: that those seeking to optimize their fiscal performance are often on the same path as those seeking to expand their consciousness. We also more than doubled our free cash flow quarter-over-quarter, reaching $1.6 million in Q2, up from $700,000 in the prior quarter. Annualized gross profit per employee increased to $814,000, up from $695,000 in the prior year quarter. This is a clear reflection of the efficiency and scalability of our model. But even more so, it is a testament to the focus and dedication of our amazing team. Our people are the heart and soul of this company, and their ability to deliver excellence while staying aligned with our mission is what makes results like this possible. And as we look ahead, we see a profound culture shift emerging. More and more people are turning inward, seeking purpose, connection, and growth. On many of the AI platforms, questions about consciousness, meaning, and awakening now rank among the most frequently asked topics. That is a global signal, and it's one Gaia is uniquely prepared to meet. So right now, we're currently planning the next phase of our platform, a foundation for a global conscious community. We are listening to what people want, and they want deeper connections and shared experiences, whether face-to-face or across the globe; the desire is the same. People want to connect, and we're creating a beautiful space for that. Our plan is to build a community around the very topics our content explores, offering members a place not just to watch, but to engage and grow together. We're designing it with the same care and intentionality that defines our content, and we believe it will become a meaningful advantage in how we serve our global member base. Our plan is to launch within the next year. While from the outside, this may look like the next evolution, it is really a return to Gaia's deeper purpose: a purpose not just to inform, but to connect. So in parallel, we're making progress on Gaia's Conscious AI Companion. We believe this will become a beautiful bridge between our exclusive content and the personal journeys of our members. Our AI companion will be sourced primarily from Gaia's original content, allowing us to offer something rare: guidance that is deeply aligned with our brand and rooted in the wisdom our members have come to love and trust. Lastly, and most importantly, our focus remains centered on long-term sustainable growth, driven by our core SVOD business and our global member community. Gaia is built for scale with a high-margin model, exclusive content, and a brand that continues to earn trust and engagement. We are staying true to our North Star while remaining agile enough to capture revenue opportunities along the way. So it is so exciting. The world is actually catching up with us. Last year, the word 'manifest' was named Word of the Year by the Cambridge Dictionary, and that is more than a headline; it is a cultural signal, and Gaia is ready to meet that moment because we've been preparing for it from the very beginning. Thank you all for being here and being part of this vision. Now, over to Ned for financial details.

Thanks, Kiersten. For the second quarter of 2025, Gaia delivered revenue of $24.6 million, up $2.7 million or 12% year-over-year, driven by growth in both member count and ARPU as well as the launch of Igniton. Total members increased in Q2 to 878,000. Gross profit increased 16% to $21.3 million from $18.5 million in Q2 of 2024, with gross margin expanding to 86.7%, up from 84.5%. Net loss was negative $1.8 million or $0.07 per share versus negative $2.2 million or negative $0.09 per share in Q2 of 2024. Operating cash flow was $2.3 million, with free cash flow of $1.6 million, reflecting ongoing operational discipline. Our cash balance at the end of June 30, 2025, was $13.9 million, with a fully available $10 million line of credit. In July, Gaia also renewed its credit line for an additional three years with improved terms, including a lower interest rate and a wider range of permitted use. We continue to manage costs carefully and maintain healthy margins while investing in the strategic areas that will create long-term value for our shareholders. As mentioned earlier and as further outlined in Gaia's 10-Q, our subsidiary, Igniton, raised $6 million of private common equity financing in the month of July, which included $2 million from Gaia. Igniton's implied post-money valuation is now $106 million, up from an implied post-money valuation of $40 million from last year's raise. The proceeds from the financing will be used by Igniton for product launch, general operating expenses, and certain capital expenditures to support future growth. Gaia now owns approximately two-thirds of Igniton equity. More information about Igniton can be found at www.igniton.com, and Gaia members can purchase Igniton products at a discount through Gaia's Marketplace. I will now turn the call back over to Jirka.

Yes, just for the summary, we expect continued growth of our revenue and ARPU as well, increasing gross profit per employee as we have pretty good results for this last year and also continued generation of positive free cash flow. And this concludes our remarks. So I'd like to open it to questions. So please, operator.

And our first question comes from Mark Argento with Lake Street.

It's great to have you on the call. Could you please share a bit about your background and your main focus over the next 3 to 6 months, particularly regarding key priorities?

Sure. So my background is in content. I was at Sony for 15 years, and I came on to Gaia to run the content team about nine years ago and somehow worked my way up to where I am today as CEO. My focus going forward for the next six months is in three areas. One is early tenure engagement, which consists of specifically zero to three months, which will consist of product improvements, better marketing targeting, which means basically fishing in new ponds, and then also increasing content publishing. The other two areas, as I talked about, were investments in our AI and investment in our community.

Got it. In terms of AI, are you thinking about using AI more as a tool for a better user experience? Or will you guys get into having an AI user interface that the community or other customers can engage with?

We're looking at both. One, from using AI to get better member learnings and to become smarter in delivering our members a better experience from a content perspective. The other is an AI companion right now that we're in the process of tweaking, and we feel that that's definitely going to deliver meaningful value to our members.

Got it. So I think in the press release, you guys talked about potentially taking pricing in Q1. What do you plan when you take price? Are you guys going to expand additional content? Or what's the value proposition going to be there for the consumer?

Mark, this is Ned, and I'll take that one. Yes. So as we've discussed in the past, we are still looking to raise prices in March of 2026. At that time, we do foresee that our AI solution will be progressing and so we'll be adding value to retention and other marketing activities. But the customer experience by then will also start seeing some of those benefits as well as some new content. So the premise around the price increase in March of '26 will have added value for our customers, and they will continue to see added value throughout the rest of 2026 as other elements come to bear.

That's helpful. And then last question from me on Igniton. Obviously, raised some additional capital there. Can you provide us any updates in terms of how you're thinking about the go-to-market or any new updates on that side of the house?

Yes, we introduced the product in the last few days of May. In Austin, there was a Biohacking Conference, it was one of the largest in this field. The response was absolutely stunning. There was a line at our booth basically throughout the hall conference about 50 to 200 yards. They never saw anything like that. We sold all the products we brought by far, taking a lot of back orders, which we now filled. Because of that, we decided to actually raise some money. We just did that with at least the first part of it. We just introduced it. Recently, we put it also in Gaia Marketplace, so you can get someone in the Gaia Marketplace starting now. We plan to use some of this money raised for a bigger launch because of the response, and we expect that to be after Labor Day.

And do you anticipate doing any kind of partnership deals using the technology, or will it be all branded under your own brand?

Yes. We would, not this year, but we might have a lot of order requests from existing brands asking if we can enhance the product because Igniton technology can increase efficiency for pretty much all organic molecules. So we would focus on hydrogen, and we might license some products with some upfront license fee and then the regular margin on selling the product, but we don't expect to do any of that this year.

Our next question comes from George Kelly with ROTH Capital Partners.

First, just a follow-up on one of the prior questions. How much pricing do you expect to take in March?

Yes. So similar to what we did last time, George, it was $2 on monthly, and we'll take a look at the annual increase as well. So it will be in that mid- to high teens area.

It won't necessarily be in all countries because some countries operate on opt-in, opt-out. So it doesn't mean we would raise pricing on all our customers, but it would be probably in 80-plus percent.

Can you provide insight into the revenue potential you've observed following the Biohacking Conference and what your expectations are for the second half of the year? I don't want to request overly specific guidance, but how could this positively impact the business as you look ahead to the upcoming quarters?

We are currently focusing on our upcoming launch, which is scheduled for after Labor Day. It would be more appropriate to ask questions about this once we have more information, as we have only held the Biohacking Conference, which you attended and saw the success we experienced. The product is priced at $200 per bottle, and we received entirely positive feedback without any issues. We are in the process of establishing distributorship agreements; while we already have distributors in some regions, some require additional approvals. Given our limited experience, it's difficult to provide precise insights at this time. Right now, we are concentrating on the products that we have shipped as we are receiving orders to finalize packaging—not just for the bottles but also the boxes and our shipping and pricing structure for distributors. I can give more details during the third-quarter call, as we had budgeted for this quarter anticipating a July launch. Based on our early sales, we expect to exceed our second-quarter revenue expectations by around $250,000. However, since we postponed some of our second-quarter revenue to March, we will likely balance that with projections for the third quarter. There might be some benefits in the fourth quarter, but we won't know for sure until we launch. Given the success we've encountered, our launch will likely be larger than we initially planned, but it will start slowly and ramp up before Christmas.

Okay. Understood. That's helpful. And then just on the launch, you mentioned the Labor Day sort of official launch. Can you detail what that launch is going to look like? What's the marketing plan?

We don't really know yet because of the success we had and now the original and extra funding; we're looking at some stuff that we didn't look at before. We would not have the finalized details for probably the next three weeks.

George, this is Ned. Just real quick, as you probably picked up on some of our commentary, I would consider it a very soft launch back at the end of May during the Biohacking Conference. As of the end of last week, the site has changed and been updated. Any customer can go in and buy off of our igniton.com website. Gaia members can also purchase from our Gaia Marketplace at a slightly discounted rate. The larger launch will be in the September time frame but I did want to point out that we have officially launched and are seeing an uptick.

Okay. And then last one for me, just a modeling question. G&A in the quarter stepped up a little bit. Was there anything kind of one-time? Maybe it was the Biohacking conference. Is there anything else? And can you quantify that, if there was?

Yes, it definitely wasn't people-related. G&A was up for one-time items like the Biohacking Conference and a couple of other things that will come back into shape in future quarters. It wasn't fixed; it was a one-time event.

Our next question comes from James Sidoti with Sidoti & Company.

Can you give us a sense of how you're going to spend the $6 million you raised for Igniton? Is that to build capacity, to build sales and marketing? Where is that money going to go?

We have already spent the money we needed for capacity. We're getting one more unit to increase production, but we don't require it for any additional production. The level of success we experienced was unexpected, so we want to be prepared, but we don't anticipate seeing the results until around Christmas. Our capacity greatly exceeds our sales potential.

Okay. All right. And then in terms of the base business, you grew revenue by 10% in the March quarter, about 12% in the June quarter. I think in the past, you said you expect to grow revenue about 12% for the year. Do you still feel like you're on track to hit that?

Yes, Jim, it's Ned. Yes, that absolutely is our expectation that 12% for the year. As we said earlier, it was a great performance across all of our core business in the quarter. So firing on all cylinders regarding our core SVOD business and then a little bit of upside from Igniton, but I can't emphasize enough that the big reason for our accelerating growth is because of the increasing ARPU and adding another 10-plus thousand net members.

Okay. And then last one, can you talk a little bit about how Marketplace is going? I know you kind of changed some of the travel destinations because of some of the world events so far this year. How is that going? Are there other products or services that you started to launch in Marketplace in 2025?

I would just want to say that we see Marketplace as a part of the community, and I will get Kiersten to answer the question.

That's exactly what I was going to say. Our Marketplace continues to be a strong foundation for community building, which has always been its core purpose. I think James mentioned on the call earlier this year that we had a pivot away from Egypt, which led us to introduce trips to Peru instead. The spring crew trip quickly sold out and our fall crew trip is already at capacity as well. So we're seeing a strong demand for where we've made adjustments. New products will slowly come on, but just to reiterate, it has always been the foundation of community.

The Marketplace goal is not to chase revenue. Marketplace is becoming one of the aspects of the community. So this is not something to chase revenue with.

So the goal is really to help build that subscriber base and retain subscribers?

Yes, subscribers are another point of touch with our members. As we build community, they can form around the topics of geography and can go together on these trips. That's one of the ideas.

At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Rysavy for his closing remarks.

Well, thank you, everyone, for joining, and we look forward to speaking with you when we report our third Q, which will be in early November. Thank you very much.

Thank you for joining us today for Gaia's Second Quarter 2025 Earnings Conference Call. You may now disconnect, and have a great day.