LiveOne, Inc. Q4 FY2025 Earnings Call

Ladies and gentlemen, welcome to the LiveOne, Inc. Q4 Fiscal 2025 Financial Results and Business Update Webcast. I will now turn the call over to Ryan Carhart, CFO. Ryan, you may begin.

Thank you. Good morning, and welcome to LiveOne's business update and financial results conference call for the company's fourth quarter and fiscal year ended March 31, 2025. Presenting on today's call with me is Rob Ellin, CEO and Chairman of LiveOne. 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 financial results and expected 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, 2024, and subsequent SEC filings. You'll 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. The company encourages you to periodically visit the Investor Relations 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, July 3, 2025. And except as required by law, the company does not undertake any obligation to update or revise this information after the date of the call. I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and media via webcast, and a replay will be available on its website in the Investor Relations section shortly following the conclusion of this call. Additionally, it is the property of the company and any redistribution, transmission or rebroadcast of this call or the webcast in any form without the company's expressed written consent is strictly prohibited. Now I would like to turn the call over to LiveOne's CEO, Rob Ellin.

Good morning, everyone. This is Rob Ellin, CEO and Chairman of LiveOne. I want to thank you all for joining. This has been a pivotal year for the company. The company has been transformed through some of its deals with Tesla and has come out stronger than we even expected. We have delivered over $112 million in revenues, $108 million from our audio business, and delivered $18 million of EBITDA, which is $6 million above what we had guided the Street to just two months ago. Our podcast business did over $52 million, up from $38 million last year. This quarter alone was $14 million with an EBITDA of over $900,000. We just raised our guidance to $55 million to $60 million with $3.5 million to $5 million of EBITDA. Other highlights from our podcast business include having 6 straight months of being a top 10 podcaster in the world. We have over a billion impressions across our network. We have introduced 46 new podcasts in the last 24 months and surpassed 200 total, with a robust pipeline of over 100 new podcasts in the making today, adding almost one a month. We also have 17 potential acquisitions in the podcast industry that we are considering as we continue to roll up and consolidate the business. As you heard earlier, Ryan has done an excellent job as CFO and has made some transformative financial moves, including replacing East West Bank's $7.5 million credit line with JGB, a partner of ours for four years who has returned with a credit facility of up to $27.5 million. This gives us the opportunity to achieve our best cash position ever. We've also eliminated over $10 million in short-term liabilities. Additionally, we cut one-third of our staff at Slacker Radio and over 70% of our workforce at CPS. With more than $40 million in total cost reductions, this is the reason our EBITDA was able to outperform even our own guidance. Now, moving on to the future, which looks quite remarkable. Out of 2 million Tesla cars, we have now converted over 1.3 million. We have over 1.5 million subscribers and ad-supported users. We've launched two significant partnerships with Amazon worth over $16.5 million and a Fortune 50 company for over $25 million. We have 75 additional B2B deals in the pipeline, and we are approaching a run rate of almost $50 million from these new partnerships via five new B2B deals. We expect to launch our biggest B2B partner, potentially the largest in the history of the company, which has nearly 10 times the subscribers of Tesla, with the first phase launching in August. As we continue to focus on the future of technology, as most of you know, my background is in transforming media companies through innovative technologies. I will be centering my efforts on AI and Web3 crypto initiatives. On the AI front, we have dramatically reduced costs by integrating AI and optimizing our hosting and marketing efforts. With our new marketing campaign, we partnered with DAX, the largest programmatic advertiser globally, and our fill rate on our Tesla users has reached over 50%. We are preparing to launch the second phase of this initiative to actively convert users into subscribers. Regarding our Web3 crypto initiatives, we’ve built a distinguished group of crypto experts, including Steve McClurg, who launched the first ETF in the history of Web3, Steve Lehman from the Board of Coinbase, and one of the top analysts from Goldman Sachs who is behind Crypto Monday. We have just launched the first-ever podcast network focused on Web3 and crypto. There’s tremendous potential for us to acquire and initiate new projects in the podcast sector, with over 75 potential podcasters in the crypto realm in our pipeline, alongside utilizing AI to create our own original intellectual property in this domain. To show our confidence in how undervalued our stock is, the company has bought back over 350,000 shares of LiveOne and over a million shares of PODC. This buyback will continue, as we have just under $6 million of additional room in our buyback plans, highlighting our confidence in the company and our commitment to increasing our holdings in both companies. As LiveOne continues to demonstrate our agility and resilience in tough times while utilizing technology to reshape the industry, this is the most exciting time we’ve experienced in the company's history, and we look forward to an exciting year ahead. Thank you, everyone, for joining, and we look forward to providing updates shortly. I'd like to hand it off to Ryan, our new CFO, who has done a brilliant job in replacing East West Bank under challenging circumstances.

Thanks, Rob. I'll spend just a few minutes providing a very brief overview of our results for the fourth quarter of fiscal 2025 and the fiscal year ended March 31, 2025. Beginning with our quarterly results, consolidated revenue for the 3-month period ended March 31, 2025, was $19.3 million. Our Audio division posted revenue for Q4 of $18.2 million and adjusted EBITDA of $4.1 million. Consolidated adjusted EBITDA for the fourth quarter of fiscal year '25 was $1.1 million. On a U.S. GAAP basis, LiveOne posted a consolidated net loss of $10.9 million or $0.07 per diluted share in Q4 2025. Our full-year fiscal 2025 results posted consolidated revenue of $114.4 million and adjusted EBITDA of $8.4 million. Our Audio division posted full-year revenue of $108.9 million and adjusted EBITDA of $18.2 million. Additionally, I'm excited to announce, as Rob noted, that we completed our financing after year-end with our partners at JGB Capital, which replaced our East West Bank line of credit. This will help facilitate the growth of our business and position us for the future. We are enthusiastic about the potential opportunities in our business development pipeline and are poised for growth with these initiatives. Moreover, our PodcastOne subsidiary is expected to continue to thrive, and we anticipate a tremendous year ahead for them. Rob, I'll turn it back to you.

And just to wrap up, thank you, Ryan. Our B2B initiatives are really coming together. As we mentioned, we have over 5 B2B partnerships signed, generating over $50 million in revenues. Our largest potential opportunity is scheduled for launch in August. We will engage in partnerships this year with a variety of carriers, retailers, streaming networks, and automotive companies, directing our energy towards B2B deals that can yield tens to hundreds of millions of dollars over a five-year period. Our initiative to venture into the Web3 space is progressing rapidly and aggressively. Expect to see more names in the Web3 sector joining our platform, along with podcasters focused on the crypto industry. Our AI initiatives have led to significant reductions in our operational costs. We have over 500 music channels now, down from over 120 hosts, and we now operate with only a handful of hosts. Additionally, we’re excited about our TV and film initiative. We sold our third television show and our third podcast, transitioning to second windows on television as we witness the dynamics of podcasting evolve into video content. These transitions will generate brand-new revenue streams at no additional cost to the business. We will continue to Buy back stock, strengthen our balance sheet, and focus on expanding our B2B deals. We look forward to an exciting year ahead and appreciate everyone for joining. I'm now open to any questions.

And your first question comes from the line of Sean McGowan from ROTH Capital Partners.

A couple of questions on some of the details that you talked about. Rob, when you say a fill rate of over 50%, can you just clarify what exactly that means from a financial standpoint?

Yes. I mean I can't give too much detail yet on the financials or what the revenues are going to be. You'll see that shortly because we haven't put out guidance, but we will at the end of the next quarter. But what that really means, Sean, is that 50% of that inventory is being filled now, and it's well over 50%, but 50-plus percent of the inventory that previously was at 0. Now that accomplishes two things: number one, it drives revenues. But number two, it also sets the stage. Spotify claims that 60% of their subscribers' free supporters convert to paid eventually. One reason for this is that some people don't like advertising; some do. So hopefully, we'll start converting through that. The first phase of the next big AI initiative will be launched imminently to convert as many of these users to paid subscribers as possible. I think that 50% inventory will increase to 75% very quickly. Our partner in this is DAX, the largest programmatic advertiser in the world.

So the 50% refers to the inventory of available advertising accounts?

Correct.

That's what I understand. Okay. And at the moment, right, you're still broadening the funnel and driving advertising. But at the moment, there are not a significant number of paid subscribers. Is that the right way to interpret it?

No. I wouldn't say that at all. I mean, we have added over 1.5 million total, right? We have well over 250,000 paid subscribers now. It's time to really press and convert a substantial number of them, and hopefully, we can convert anywhere from 25% to 30% of those over the next year. If we do, that will generate very substantial revenues.

Okay. Thanks for clarifying that. Shifting gears for a second. When you're talking about things like Web3 and crypto, are you discussing primarily podcast content? Or is it something else?

Yes. I can't get into too much detail on that, as you know, Sean. What I can say is, as Steve McClurg joined us, who has experience in running the first ETF and selling it to Coinbase, and Steve Lehman, who sits on the Board of Coinbase, we have aggressively entered this space. There are only three megaphones in the Web3 crypto industry: Twitter, YouTube, and podcasting. The first phase is our podcast network, where we will create our own hosts and intellectual property using AI. Additionally, we will be acquiring, as we do with our other podcasts, to build a community of crypto podcasters. There is a significant opportunity for expanding the Web3 initiatives, especially with our scale and a billion impressions monthly.

Okay. Just to clarify, Ashi I'm a novice at this, you're not talking about directly engaging in the crypto business with mining, trading, or exchanges. You're focused on content, right, and being a platform for information?

Yes. I can't share much more than that. We're definitely not entering into mining. However, the tokenization business is intriguing, especially with trends seen in tokenization like the Robinhood announcement. The idea of tokenizing podcasters is incredibly interesting and presents numerous opportunities for us to leverage our role as one of those megaphones. Given our substantial impressions every month, we have considerable influence, and our demographic audience aligns with the Web3 crypto audience uniquely.

Okay. Last question, then I'll jump back in the queue. Ryan, when will the 10-K be filed?

Yes, it should be filed early next week. Everything is there. We're just waiting for the auditors to finalize some documentation. So it's in its final form and we'll get it out to you early next week.

And our next question again from Sean McGowan from ROTH Capital Partners.

So Rob, to the extent that you can, can you talk about any change in the types of deals, or some new deals that you're working on versus what you talked about before? You've done a great job laying out the table, setting the stage for what areas you might be looking at new. Can you add anything different from what we discussed before?

Yes. I'm sorry, you're cutting out a bit, Sean, but you're talking about the B2B deals?

Yes. You mentioned earlier the types of verticals that are different from before.

Yes. This is potentially the most exciting time in the company's history, perhaps since the original Tesla deal, which was first thought to be just a couple hundred thousand dollars. Tesla has 2 million subscribers. We are about to launch with a partner that has 10 times the amount of subscribers, and the momentum is building as we land deals worth $25 million and $16.5 million with Amazon. We're gaining momentum similar to how I built Digital Turbine and my other companies. We’re positioned well with B2B opportunities with carriers, auto companies, retailers, streaming networks, and anyone with a significant audience—all seeking subscription products. We're one of only ten DSPs left globally, and companies like Napster, which sold for $200 million, while we did far more in revenues, show our market position.

Okay. Is there anything new regarding discussions about that relationship? I think it's changed?

No, I mean, it's quite positive. If you're in almost any Tesla car now, you'll see the LiveOne logo, contributing significantly to our brand value. We converted 1.3 million out of 2 million cars, which is almost unprecedented, especially with competition from Apple and Sirius. This shows appreciation for our product and brand. We see users engaging for an average of 40 minutes multiple times a day, showing their respect for the product. Now we can communicate directly with these consumers and control our database, which is a significant shift. This means we have a real relationship with our subscribers, collecting key demographic data that could be tremendously valuable. We're looking to aggressively market to convert these users into higher ARPU subscribers.

And your next question comes from the line of Brian Kinstlinger from Alliance Global Partners.

Just one, I wanted to confirm if I heard you correctly that in August, you hope to launch your largest B2B deal with a bigger subscriber base or consumer base than Tesla. Is that a signed deal already that you're hoping to announce? When does revenue generation begin, and how does that ramp?

Yes. As we've previously mentioned, we've already signed several deals. This is actually a launch, but we'll see how it performs. We have a high level of confidence based on Tesla's profitability, showing the magnetism of our product and the technology we offer. Our new partner boasts over ten times the subscribers, providing a substantial opportunity. We will keep you updated as more details emerge.

A lot more signed, and you hope to launch, is that correct?

Correct.

Have you announced who that is? Or are you not able to announce it?

We cannot announce who it is yet, but you will see shortly.

There are no further questions at this time. I will now turn the call over to Robert Ellin for closing remarks.

Yes, thank you, everyone. I appreciate your time and support, and we look forward to a terrific year ahead. We will be in touch shortly regarding our next quarter.

This concludes today's call. You may now disconnect.