LiveOne, Inc. Q1 FY2021 Earnings Call

Thank you. Good morning, and welcome to LiveXLive Media's Business Update and Financial Results Conference Call for the company's first quarter ended June 30, 2020. Joining me on today's call are Rob Ellin, CEO and Chairman; Norm Pattiz, Founder and Executive Chairman of PodcastOne; Mike Zemetra, CFO; and Dermot McCormack, President. I would like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts and assumptions that involve various risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of the company, including expected future results and future growth in the business. Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the company's filings with the SEC for information about factors, which could cause the company's actual results to differ materially from these forward-looking statements, including those described in its Annual Report on Form 10-K for the year ended March 31, 2020, Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and subsequent SEC filings. You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its Investor Relations website at ir.livexlive.com. And the company encourages you to periodically visit its IR website for important content. The following discussion, including responses to your questions, contains time-sensitive information and reflects management's view as of the date of this call, August 6, 2020, and except as required by law, the company does not undertake any obligation to update or revise this information after the date of this call. I'd like to highlight to investors that the call is being recorded. The company is making it available to investors and the media via webcast, and a replay will be available on its website in the Investor Relations section shortly following the conclusion of the call. Additionally, it is the property of the company and any redistribution, retransmission or rebroadcast of the call in any form without the company's expressed written consent is strictly prohibited. Now let me turn the call over to Rob.

Thank you, Emily. Good morning, and thanks for joining us today. We hope everyone continues to stay safe and healthy during these very challenging times. COVID has had a meaningful impact on the entire live music industry, effectively eliminating live user concerts and festivals. LiveXLive is uniquely positioned to benefit from the industry's need to migrate to streaming live digital festivals and performances. In Q1 alone, we livestreamed 455 music events with over 76 million live streams, featuring more than 1,000 of the biggest artists in the world. Over the past 4 years, we focused on building our brand and building our traffic. Today, we have grown and evolved to be the first talent-centric platform focused on super fans and building long-term, sustainable, valuable franchises in audio music, podcasting, over the top, pay-per-view and live streaming. We give the artists the ability to simulcast globally across all digital platforms, with technology, production, distribution, marketing and sponsorship. We have positioned ourselves at the forefront of the paradigm shift driving sponsorship and ticket sales for both digital and live, leading the way, helping artists innovate and monetize content with our full stack live streaming platform. I'm happy to report our Q1 results were above consensus analyst estimates. We are in the strongest position in the history of our company, and we are just getting started. Given the momentum we see in nearly all of our business verticals, we're excited to raise our guidance from last year's $38 million to this year guidance of $62.5 to $68.5 million. We are making tremendous progress by simultaneously driving revenue growth as well as a path to profitability. It's worth noting that in Q1, our adjusted operating income for the first time was positive $1.1 million, a substantial improvement compared to a $3.1 million loss last year. We have also made enormous progress improving and strengthening our balance sheet. In July, we closed 2 common stock financings at $4.14 that resulted in $17.5 million improvement to our shareholder equity. As part of that financing, the largest music label in the world converted $10 million of accounts payable into common stock. At the same time, we extended our music licensing agreement through 2021. We've also just announced finalizing a $15 million convertible debt with one of our largest institutional shareholders, which will allow us to eliminate all of the short-term debt on the balance sheet and remove all the restrictions on our cash, giving the company flexibility to really start to mature and grow. Similar to traditional media networks, we have multiple divisions in our companies to drive unique revenue streams, including production, marketing, distribution and our own original programs. New monetization features for artists include pay per view, virtual ticketing, merchandise, subscription, digital tours and tipping, all of which create numerous revenue stream opportunities for LiveXLive. With our recent launch into live stream pay-per-view, we have sold tens of thousands of tickets in nearly 100 countries. We have the opportunity to bring in and connect with hundreds of thousands, even millions of new visitors on a weekly basis for LiveXLive, often gaining payment and card technology as well as information and interest and preferences. This information positions us to upsell or cross-sell other products and offerings, like subscription, merchandise, pay-per-view, podcast and targeted advertising. Our flywheel will continue to spin as we convert pay-per-view sales into subscribers. We have produced pay-per-view events in partnership with high-profile stars like Darius Rucker, Zac Brown, Shaquille O'Neal and Rob Gronkowski and we have upcoming pay-per-view events with international superstar Pitbull, rap star and successful entrepreneurs, Nelly, Jeremiah and the global K-Pop sensation, Monsta X. In fact, all of the Monsta X VIP packages sold out in 2 minutes and our pay-per-view livestream of Shaq's Fun House vs Gronk Beach had over 9 million views. We expect to continue to announce significant additions to our pay-per-view lineup in the near future. To enhance digital sales, marketing and promotions, we entered into separate cross-marketing and distribution deals with XUMO, FITE and Consumable TV, expanding LiveXLive's reach and content and extending beyond music into comedy, sports and other genres. Together with our growing list of over-the-top OTT partners, our audience reach now extends to over 100 million U.S. households, building brand awareness and loyalty across multiple platforms, leading to digital advertising revenues. We are fortunate to have terrific music industry partners like Live Nation, iHeart, all the labels and publishers and, of course, hundreds of talented artists to make LiveXLive special. We have an exclusive partnership with Tesla. This is our eighth year where our LiveXLive subscription is pre-installed in every Tesla car sold in America. The LiveXLive app is pre-installed in 85 other automobiles as well across major carriers, Verizon, Sprint and T-Mobile. Through our distribution partnerships with BDDs around the globe, we have been able to grow our paid subscribers to 877,000. The LiveXLive app is now on Roku, AppleTV, Amazon Fire and 40 million Samsung TVs. Our partnerships include TikTok, YouTube, Facebook, Twitch, Twitter, Tencent and Daily Motion. Across multiple platforms, including carriers and automobiles, we have the ability to monetize our content multiple times in several different ways. On the fast-growing sponsorship front, we have secured sponsorship deals with Samsung, Kia, Chipotle, Mike's Hard Lemonade, White Claw and just announced a 2-year deal in sports with Corona. Sponsored revenue has more than tripled in the past 2 quarters, and we expect this positive trend to continue. We continue to produce and live stream our own concert franchises. Music Lives ON following the massive success of Music Lives' digital event, which we call our digital Coachella. The original festival broke all of our streaming records with an audience larger than any live Coachella or Lollapalooza event. An unbelievable 50 million views in 179 countries and 5 billion video views on TikTok. An average of 200,000 concurrent users. The Music Lives event truly validated the value of live streaming. In Music Lives ON, we have just hit our 14th episode, our weekly multi-genre streaming series has received over 6 million live streams used with international artists, Anita, Marc Bassy, Jeremiah and Swae Lee. Weekly viewership continues to climb, showing a growth in brand awareness and interest in the growing franchise. Brand integrations have included artist partnerships, product placement, sponsored billboards, verbal brand mentions and thematic integrations with the festival's content. In early July, we proudly announced the acquisition of PodcastOne, which complements our music and video content stack and diversified our revenue model by adding a large advertising component alongside of our existing subscription business. PodcastOne added $27.5 million in revenues in calendar 2019. And by adding their experienced sales team and advertising team, we tripled the headcount of our sales team. With us today to give us an update on the integration and our move into podcasting and when we branded vodcasting, we have Norm Pattiz, PodcastOne's Chairman and Founder and an icon in the radio business. Welcome Norm to the team, and I proudly hand it off to you.

Thank you, Rob. Good morning, everyone, from Los Angeles. It's a pleasure to be here as I await the sunrise. A common question I receive, especially after our recent announcement, is why we decided to proceed with the deal. Let me clarify a few points. After retiring from Westwood One, I was asked to establish a consultancy to retain the talent closely associated with me at Westwood One. I agreed to do this and achieved significant success. During that time, a mutual friend introduced me to Kit Gray, our current President and Chief Revenue Officer, who was involved in podcasting. At that point, I had limited knowledge about the podcasting industry, but by the end of our meeting, I was well-informed. I recognized that this was akin to Westwood One for the digital age, enabling direct-to-consumer access without relying on radio stations, which I found extremely appealing. Within days, we formed PodcastOne, which I financed myself without the need for external funding. At the inception, the competitive landscape was quite different, with no significant competitors. Following the strategy we successfully employed at Westwood One 35 years earlier, we aimed to create a comprehensive platform that provided everything necessary for podcast production and a network that other podcasts could join. We sought to offer a diverse range of programming across every category available on iTunes, now known as Apple Podcasts, enabling us to engage with advertising agencies I had worked with for the past 35 years. We weren't merely pitching a new medium, which often sells itself, but were also positioned to provide advertisers with any type of program across all categories. So we set out to do this, and that became the essence of our business. At that time, there was no major competition; we were offering a complete solution for both advertisers and podcasters. However, the situation has changed significantly. In the past 18 months, larger audio companies have entered the market, and now all the major players are in audio. To differentiate ourselves, we explored a partnership with LiveXLive to introduce a video component that could enable cross-marketing across multiple platforms and enhance the on-demand aspect of our business, while also allowing us to stream live events. Rob and I had been in discussions about this for a while, and the timing felt right for this collaboration. It was an all-stock transaction, and we are fully committed. My goal is to see our business thrive; simply selling the company wouldn't achieve that. Becoming a public company again provides us with greater flexibility to engage in a variety of deals.

Thank you, Norm. I've been working extremely closely with Norm for several months now, and I can only characterize him as an absolute perfect partner. We are fortunate to have him as part of the senior management team. Norm and I share the same passion, which is an Artist First, Talent First platform, right, that is focused on super fans and building franchises. And what Norman has already done with Adam Carolla and Shaquille O'Neal, and Mike Tyson and T.I., Steve Austin in wrestling, across all genres of pop culture, right? We can now expand upon and as Norman articulated, we can now expand to vodcasts. So as I previously mentioned, we recently announced a content partnership with music icon Pitbull to produce and distribute a series of pay-per-view live stream concerts and original content. As well as to launch Pitbull's first podcast/vodcast show on PodcastOne. Pitbull has a social media reach of over 100 million followers and is an ideal candidate to partner with. Pitbull and I recently interviewed on CNBC to discuss our collaboration, and I encourage everyone to watch the replay. In conclusion, I'll reiterate that LiveXLive is in the strongest position in the history of the company, and we are really just getting started. The future is now. Bands, brands and fans are coming together, right, in a revolution to build an entire new industry, very similar to what ESPN did 30 years ago. We're seeing telltale signs that all of the above modernization engines are all kicking in simultaneously. We have evolved as a major thought leader in music globally, and our success in music has opened up the floodgates for all genres of public culture. In addition, the strength of our balance sheet gives us the opportunity with respect to additional acquisitions, that could add new or complementary verticals or as a bolt-in to existing verticals. I'd now like to hand it over to my CFO, Mike Zemetra, who will review our Q1 financial results. Thank you.

Great. Thank you, Rob. We ended fiscal Q1 2021 with our strongest quarter-to-date, posting record revenue, record adjusted operating income across the core operations of our business and record KPIs, including 45 live events, over 76 million live views and 20% net paid subscriber growth year-over-year. My commentary will include year-over-year comparisons unless otherwise specified. Turning to consolidated financials. Q1 2021 consolidated revenue was a record $10.5 million, up 11%, due in large part to the growth in our live event sponsorship, pay-per-view services and our paid subscribers, offset by declines in our programmatic advertising and live system services. Paid subscribers grew 20% to a record 877,000 or a net 144,000 additions. 84% of our revenue came from subscription in the period and 16% from sponsorship, advertising and licensing and pay-per-view ticket sales. Q1 2021 contribution margin grew over 450% to $2.8 million, a year-over-year improvement of $2.3 million, which was driven by the increase in revenue coupled with overall gross margin improvements to 27.1% in Q1 2021 as compared to 5.1%. Q1 2021 adjusted operating results were near breakeven at a $0.1 million loss in Q1 2021, a massive 98% improvement. As Rob mentioned, this shift towards breakeven at the operating level was driven by our music operations, which generated positive $1.1 million adjusted operating income, a substantial improvement compared to a negative $3.1 million in the prior year. In addition, management enacted certain one-time cost reduction initiatives in the period, including pay reductions, saving approximately $1.1 million in Q1 2021. Now I would like to discuss the Q1 financial performance across our Music Operations and Corporate divisions. Turning to Music Operations. As a reminder, our Music Operations consist of our audio and Internet radio services along with our livestream operations, including sales, marketing and product development and to a lesser extent, certain general and administrative costs. During Q1 2021, Music Operations generated $1.4 million in sponsorship advertising and license revenue, up from $0.9 million. The increase was driven by paid sponsorship and licensing which increased over 350%, offset by a 63% decline in programmatic advertising resulting from an overall decline in advertising demand from the current COVID-19 environment. Subscription revenue was $8.9 million as compared to $8.6 million, driven by the net increase in ending paid subscribers. With the onset of the COVID-19, our subscriber growth and corresponding revenue began to slow across both our direct-to-consumer B2B partners. We expect this trend to continue at least through the remainder of the first half of fiscal 2021, which is reflected in our fiscal 2021 guidance. Finally, we generated $0.2 million in ticket sales from the launch of our pay-per-view platform in May 2020. We expect the number of events and average revenue per pay-per-view event will continue to grow. Q1 2021 contribution margin of $2.8 million increased over 450% from 1 year ago, largely driven by the revenue growth from our Live Events business coupled with substantial reduction in the average cost to produce live events. In Q1 2021, we spent approximately $1.4 million to produce 45 live events at an average cost of less than $30,000 per live event, after excluding certain nonrecurring production expenses. This was a significant improvement compared to $251,000 per event in Q1 last year. The improvement was largely driven by cost efficiencies realized from the scale of our business, coupled with our transition to more profitable, digital-only and pay-per-view live events in the current period. Q1 Music Operations' adjusted operating income was $1.1 million as compared to an adjusted operating loss of $3.1 million. The improvement of $4.2 million was largely driven by the increased contribution margin, coupled with lower marketing, product and personnel-related costs, driven partly by one-time COVID-19 cost reduction initiatives enacted in the period, coupled with slightly higher capitalized internally developed software costs. Turning to Corporate. After including Corporate and public company overhead, Q1 overhead adjusted operating loss was $1.2 million as compared to negative $1.5 million in Q1 2020. The decrease was largely due to lower personnel costs, driven by one-time COVID-19 cost reduction initiatives. Excluding non-cash based compensation, amortization expense, depreciation and certain nonrecurring operating expenses, our consolidated operating expenses decreased $2 million or 40% to $3 million in Q1 2021, largely due to the $1.1 million one-time COVID-19 cost reduction initiatives. Turning to our balance sheet. Our balance sheet is in the strongest position in our history. We ended Q1 2022 with cash and restricted cash of $17.1 million, up $4.7 million. The increase was largely driven by net cash proceeds from operations of $4.5 million and financing of $1 million, offset by net cash outflows from investing activities of $0.8 million. The quarter-to-date net cash savings from operations was largely driven by working capital savings from active management of our payables during the period. Now I would like to update you on a few additional items. In July 2020, we executed on several key financing events, which substantially improved our net equity position by over 300% and $40 million versus June 30, 2020 through positive changes in our liquidity from unrestricted cash plus our AR, incurred payables plus our current debt. More specifically, we provided notice to repay our senior secured debenture holders by August 31, 2020. As of today, we owe approximately $8.9 million in principal and $6.5 million of restricted cash will be fully released upon the payment. We entered into a $15 million, 8.5% senior secured convertible financing arrangement with a significant existing institutional shareholder. The agreement is for 2-year debt and is convertible at $4.50 per share. Upon closing, we would also issue the holder approximately 800,000 shares of registered common stock. We completed a $17.5 million common stock financing at $4.14 per share including the conversion of $10 million of liabilities into equity by a major music partner, improving our balance sheet and bringing our ending cash to over $20 million as of today. Turning to financial guidance. We are raising our full year fiscal revenue 2021 guidance and updating our fiscal 2021 guidance as follows: revenue of $62.5 to $68.5 million, an increase of $1.5 million from prior 2021 guidance; annualized contribution margin of 30% to 35% of revenue, an improvement of over 100% year-over-year versus fiscal 2020; adjusted operating loss of $2.5 million to $5 million, representing a 70% improvement year-over-year at the midpoint. Consistent with Q1 2021, we are forecasting our combined Music Operations service segment to be profitable in fiscal 2021 with only corporate overhead adjusted loss between $4 million to $5 million. Capital expenditures, which principally consist of internally capitalized labor costs in the range of $3.5 million to $5 million and we're expected to live stream over 100 music events, an increase of 140% year-over-year. That concludes our prepared remarks. At this point, I would like to hand it back to Rob.

Thanks, Mike. Before we open up for questions, I'd like to congratulate our President, Dermot McCormack, who you're going to hear a lot more from on our next conference call. He recently was named Pollstar's "Impact 50" Annual Power List for 2020 in the Maestro's category of executives. We take a concept revision and turn it into a brilliant show or event. Dermot was recognized for producing Live's history-making live streaming festival, Music Lives. Congratulations, Dermot, on the award. Well-deserved, and we look forward to hearing a lot more from you on upcoming calls. With that, I'm going to open this up now. If the operator can open it up now for questions, it will be terrific.

Our first question comes from the line of David Bain with Roth Capital.

Great. Maybe, Mike, maybe I can start with understanding the balance sheet. Just so I'm clear, the $15 million convert proceeds, they no longer have to go towards an acquisition, it looks like. So that debt will swap out the current. And with the other transactions, can we assume that the payable bucket will be close to cut in half by the time you report the September quarter before including any other additional relief from major music partners, similar to the $10 million transaction? Is that the way to look at it?

Yes. I mean, you're absolutely right on the financing. As far as the payables, yes, you can assume, I think half is probably a good proxy.

Okay. Fantastic. And then now that PodcastOne is folded in, have the front-end loaded cost synergies begun? And can those get us to EBITDA breakeven in the relative near term? Maybe put differently, does the higher end of your operating loss range contemplate a December or March breakeven? And then if you could discuss maybe the mix of subscription versus advertising you expect as you near that level?

Sure. So yes, we are starting to realize day 1 synergies. As far as profitability, I mean, we've always indicated that PodcastOne is incredibly accretive to our business. And just to note, in Q1, that was all organic in terms of even showing our core music operations sort of getting to profitability. So we expect that trend to continue. As far as the mix, we said anywhere from 50% to 65% of our revenue will come from subscription. And the remainder will come from the other, including the advertising.

Our next question comes from Jon Hickman with Ladenburg.

Could you talk a little bit more about how you're generating sponsorship revenues, in particular? You have three or four dedicated salespeople, but could you elaborate on that process?

So Jon, I'm going to turn this over to Dermot. Just to give you an update, we are no longer just a few sales representatives. One of the advantages of the acquisition and bringing in Norman and his team is that we now have over 15 people in sales. Dermot, why don't you take it from here and discuss some of the opportunities you see, as well as the recent Corona announcement we've made?

Thank you for the question. There are several strategies we've implemented in previous quarters that are now starting to show results. A significant part of this is our recent hiring of Jason Miller as the head of sales and the expansion of our team in various regions, which is yielding positive outcomes. During the COVID period, live music was put on hold, but now we are beginning to see financial benefits as we produce original programs like Music Lives ON and Livezone. Our partnerships with companies like iHeart, where we co-sell, are also proving beneficial. We own Spring Awakening, a physical festival, and we aim to lead in merging physical and digital festivals, which presents a substantial opportunity as live events return. We have signed a multi-year deal with Corona Beer to support the digital Spring Awakening this year and the physical event next year. We are also enhancing our distribution, with a previously announced deal with XUMO and more agreements on the way. Our audience continues to grow, which increases market opportunities, and the addition of headcount and original programming is fueling our ad sales. Pay-per-view also presents an advertising sales opportunity. By featuring well-known names like Pitbull, we have strengthened our relationships with artists, allowing us to connect them more closely with their fans and advertisers. In summary, we are witnessing positive momentum, and we anticipate this to continue. Moreover, there are numerous synergies with our podcast sales team as we combine podcasts to develop innovative advertising opportunities, featuring notable figures like Adam Corolla and video products. We have many exciting developments underway, and advertisers are beginning to see the benefits of these efforts.

Rob, can I add something?

Yes, absolutely, Norm.

Sure. One of the things that I think it's important to understand is the PodcastOne network in the last 12 months was downloaded about 2 billion times, that's tens of millions of listeners. Just as advertisers use that to reach consumers, we also use that to reach podcast listeners. The ability to be able to promote what's going on both at LiveXLive and PodcastOne is enormous. Our ability to be able to drive consumers to the events that are taking place is second to none. That can translate, and we expect that it will translate into more subscription revenue, more pay-per-view revenue as well as more consumption across both platforms that can then be redirected towards advertisers. So it's just getting that rolling. And we've started that rolling. It is going to have a tremendous effect on the ability to reach those super consumers, the ones who will subscribe and the ones who will listen to the benefit of our advertisers.

Okay. And Mike, if you could just elaborate on the pay-per-view side, when you sell a ticket, do you have to wait for the event to recognize that revenue?

Yes, yes. So in terms of fulfilling our obligation, any presale events will show up on our balance sheet as deferred revenue, to the extent we've collected cash.

Our next question comes from Ron Josey with JMP.

Just two questions, please. Norman, you mentioned that the timing was right for the acquisition and I appreciate your remarks on the downloads and listener reach. Could you discuss the podcast market in general and explain why you chose to work with LiveX moving forward? Additionally, a common question we receive about podcasts is how you retain talent on the platform, so any insights on that would be helpful. Rob and Mike, we spoke briefly about advertising, but with the revenue mix shifting significantly towards advertising this quarter, can you discuss the increase in sponsorship and demand? Also, Mike, you were cut off while talking about expectations for advertising going forward.

Since the original question was directed to me, I'll start with the current state of podcasting. Podcasting is a very active area right now, and it hasn't yet reached a critical turning point. By critical turning point, I mean that when podcasting becomes a distinct line on an advertiser's annual budget, that will signify its major growth phase. Some advertisers are beginning to see it that way, but most are not. We're still working to capture ad dollars from other audio formats. However, once we reach that point, which I've witnessed in the past with network radio, we'll see significant changes. When network and syndicated radio became a budget item for advertisers, the business grew substantially. It's anticipated that next year, podcasting revenue will exceed $1 billion. Therefore, considering that even before reaching this critical turning point, we could see a business generating $1 billion in gross revenue, the future appears very promising in terms of growth potential. This is why we see companies like Spotify, Satellite Networks, and major radio firms entering this market with enthusiasm, especially as many of their core businesses have stagnated or even declined. Moving into the digital space makes perfect sense because it's a compelling narrative. The potential for increased revenue in podcasting and digital audio on demand needs to be conveyed by companies in the industry. We realized from the outset that this area would experience rapid growth, a perspective I gained from 35 years as the Chairman and CEO of Westwood One. The reason this deal made sense to me is that the upcoming growth in the business will be fueled by innovation. We're focused on leveraging our strong position in audio and combining it with live streaming our content, creating video-on-demand vodcasts or podcasts, which can extend the lifecycle of products initially streamed as live events. This strategy positions us uniquely and gives us a competitive edge, allowing us to approach advertisers with comprehensive multi-platform offerings that include live video, on-demand video, live events, and both audio and video podcasts, while also utilizing social media to broaden our offerings for podcasters and talent. Regarding your last question about talent retention, our deals are primarily structured as partnerships, aligning our interests with those of our partners.

And I think Norm, if you don't mind, I'll just jump in for a minute. One of the exciting aspects of adding Pitbull to the lineup is that he connects with all five different subsidiaries of our company, including audio, live streaming, over-the-top content, podcasting, and pay-per-view. This creates a unique model where each of these areas has significant potential. By combining them, we provide opportunities across the board, and with the skills of these two teams, we can cross-promote and generate more revenue from the same content. This presents a truly unique chance. I believe that Pitbull is just the start, and more music artists and their fans will join our platform. We are the only artist-centric platform that prioritizes the artists and their super fans, allowing them to participate in aspects like subscriptions, sponsorships, and ownership of their work. This approach fosters long-term relationships rather than short-term engagements, similar to what we've done with Pitbull, Nas, Nelly, and Jeremiah. You can expect to see more Artist First deals. If you look at global social media statistics, artists dominate as the top social media stars, with seventy-five of the top 100 being artists or bands. We aim to collaborate with a select few who share our passion for unity and building franchises. With Norman joining and his franchises, we now have multiple franchises within our business, including LiveZone, SportsCenter of Music, and a long-missing authentic news program in music called Music Lives, which Dermot helped develop. This platform has likely created the biggest digital festival in history, featuring names like Shaquille O'Neal, T.I., and Adam Carolla. We will continue to build franchises and treat artists well. Moving forward, you'll frequently hear us emphasize the concept of Artist First and Talent First.

That's great. And then, Mike, anything on advertising? Super helpful, Norman and Rob.

Yes. I think I can take the next 2. So listen, I mean, we aren't seeing anything but huge demand for everything that we're doing as far as sponsorship. So going forward, we don't expect there to be anything but positive things in relation to that. As far as expectation of sort of consolidated advertising, I mentioned that probably 40%, upwards of 40% of our revenue by the end of the year will be some form of advertising, sponsorship, licensing and our pay-per-view ticketing.

And our next question comes from the line of Barry Sine with Spartan Capital.

I want to follow-up and also ask a question around advertising. So the PodcastOne transaction closed July 1, and I know that's a huge increase in the size of the sales force. What's the process and what's the timeline for us to start to see results from a unified sales force? I'm assuming March quarter, and Mike just talked about the implications in terms of ad revenue for guidance. And then on an ancillary note, the impact of political advertising in this presidential election year. Do you expect that to be significant? I know there's going to be a lot of ad spend and a lot on digital and a lot targeting a younger audience. Do you expect that to be a material driver of your advertising results this fiscal year?

Should I take a swing at that?

Go ahead, Norm.

Yes, I'll take that. Regarding political advertising, we're noticing some activity, but this year is quite unusual due to ongoing divisions and heightened emotions surrounding the political climate. More advertisers prefer to avoid political programming than those looking to invest in it, which makes it challenging to predict a significant revenue increase from political ads. While we anticipate receiving some advertising revenue from this sector, and we have seen it already, the impact of COVID and the number of advertisers steering clear of controversial content, especially in talk shows, complicates predictions for a substantial uptick in political advertising. There's been talk about large amounts of money set to be spent, and while I believe it will happen, we haven't seen a significant impact yet. The adjustments in political campaigns are clear. We all hope that the COVID situation can be put behind us, but it seems that we will need to manage it for a while longer. We're still receiving plenty of requests for proposals, but some advertisers are facing challenges with their supply chains and are not marketing their products as they usually would. Our initial forecast for 2020 projected surpassing the $1 billion mark, but that looks unlikely for the industry this year. The expectation is to reach that milestone next year. We are observing a lot of proposal requests for the fourth quarter, during which we will also be preparing for the 2021 upfronts. Therefore, we expect to see a surge in that period, giving us a clearer picture of what lies ahead. Nevertheless, it seems that the medium continues to grow despite the challenges posed by COVID and the uniquely unusual political landscape we are experiencing.

Norm, could you discuss the process of integrating the sales team? You've brought over a much larger sales team than LiveXLive had. What has been their impression of the legacy LiveXLive product inventory, and how do you plan to increase monetization of that inventory?

Yes, we are already making progress on that. In fact, we began our efforts even before the deal officially closed because it was evident that even without the deal, we would have pursued these initiatives as they were so beneficial. Our team is very excited about the opportunity to sell products that our competitors lack. Integration has already commenced, with new programming added to each platform. For example, many podcasts from LiveXLive are now available on PodcastOne, and we are also moving PodcastOne podcasts to the LiveXLive platform. This will lead to a larger audience. Whenever I discuss new plans with my sales team and seek their feedback, they always emphasize that if there is an audience, we can sell it. Ultimately, this is about our ability to generate a substantial audience, which enables us to secure premium rates due to the numerous advantages associated with podcasting. There are numerous benefits to reaching audiences that are fully engaged with the programming on LiveXLive and PodcastOne. For example, Apple reports that the average time spent listening to a podcast is 48.3 minutes, which is notable since many podcasts are shorter than that. This indicates that, regardless of the podcast's length, our listeners tend to consume it in its entirety. Over 90% of our audience listens from beginning to end, and even though they might not do it in one go, there’s a pause button they can use. Thus, commercials read by the hosts to an engaged audience are incredibly valuable to advertisers. Particularly on the women-centric programming side, when someone like Kaitlyn Bristowe enthusiastically reads a commercial for a product she genuinely uses, it holds great value for the advertiser. Just as our priority is with the artists, we also place significant importance on our advertisers. We must provide the necessary resources to effectively support both our programming audiences and our advertisers. And podcasting has proven in its growth to be of great value, not only to major brands who have really only discovered podcasting in the last maybe 3 or 4 years, but also to direct response advertisers. The ones who say, to get this product go to this website and use the promo code ADAM or call this 800 number. It works. Advertisers know it works. So the more personalities that we can get committed to doing what we're doing, and we're having very, very good success doing that, the more intriguing and more salable this becomes the advertisers. It's a growth curve that is not going to go down. It's going to continue to go up in spite of the kinds of things that we're seeing right now, which nobody has ever seen before in the environment.

And lastly, just the timing on how long will it take you to fully impact reported advertising results. I know there's a long lead time RFPs and so on. I'm assuming that we won't really see the full impact of the integrated sales team until perhaps the March quarter, is that fair?

I'm cautious about discussing future expectations. When I was a private company, I could address many topics. Now, as a public company, I prefer not to speak about the future in such specific terms. However, I can say that we are already seeing results. We are effectively cross-marketing across various platforms. Once we can enhance our use of music programming in podcasting, which currently mainly consists of spoken word content, we will likely see significant growth. It’s challenging to make concrete predictions given the current environment, as there are factors that could influence our trajectory even if we do experience growth.

No, I'm not trying to interrupt you, Barry, but let's discuss this in a call afterwards. To summarize, this is a pivotal moment for the company. We're noticing clear indications that the integration of our two businesses is progressing well, especially since our offices are nearby. Norman and I communicate frequently throughout the day. Together with Dermot, we are aligned on every aspect of this. When considering pay-per-view and selling thousands of tickets, it's important to recognize who is entering our ecosystem and sales funnel. We are now attracting credit card-paying customers to our music platform, which connects all our businesses. Regarding Pitbull, his involvement will bring along several advertisers that support him, and we know he has numerous brands behind him. This enhances the opportunities for talent to collaborate across different areas. For instance, Norman and I have already seen Shaquille O'Neal transition from podcasting to hosting a live event that attracted 9 million viewers. We're confident that the consolidation of our sales, finance, and acquisition teams is gaining momentum. We anticipate more significant announcements in the coming weeks. I believe I'm being prompted to conclude, so I don’t think we have time for additional questions, but I look forward to speaking with most of you soon. Do we have time for one more question? Hello?

I'm not showing any further questions in queue at this time.

So thank you, everyone. Thank you, everyone, for spending the time this morning, and we look forward to the follow-ups.

And with that, ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.