and adjusted EBITDA of 6.3 million. The biggest driver of adjusted EBITDA was our slacker business with stock for service deals that covered certain past liabilities as well as credit for future services. On a U.S. gap basis for the first quarter, LiveOne posted a consolidated net loss of 3.1 million or negative 23 cents per basic and diluted share. This compares to net loss of $3.9 million or negative 40 cents per basic and diluted share in the same quarter last year. At the operating level, our podcast one business reported record revenue $16.1 million and adjusted EBITDA of $1.6 million. Our slacker business posted Q1 revenue of $2.5 million and adjusted EBITDA of $4.7 million. This was primarily driven by stock for service deals and the elimination of certain past liabilities.

So overall, we see strong momentum in the first half of fiscal 27 led by the continued growth of podcast one and as rob mentioned we have several strategic opportunities gaining traction which we believe can support the continued growth and create long-term value so rob i'll turn it back over to you and just just to finalize uh we are well in the process of our next m a transaction uh it's been a few years since we've completed one but for anyone that knows me they're usually super accretive very much like podcast one We acquired it doing $17 million in revenues and losing $5 million a year. It's now at a run rate to do well over $60 million this year as we finished off the quarter with almost what we started with five years ago when we acquired it and now is very strong EBITDA. We are going to continue to buy back stock aggressively down at these low valuations. And, you know, as a team, I couldn't be more proud of what they've accomplished this quarter to eliminate this kind of liabilities, create this kind of EBITDA, has really been special and really special to see what our team has done. And we continue to look at ways to increase each of those. And, again, we'll continue to buy back stocks. I want to thank everyone for joining, thank our shareholders for the patience, and we look forward to a really exciting end of the year. Thank you.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

If you are muted locally, please remember to unmute your device please stand by while we compile the q a roster your first question from the line of brian kingslinger with alliance global partners brian your line is open please go ahead great thanks for taking my questions um my questions will be around the b2b deals and i'll get back in the queue um at what point do you expect at&t to begin offering your plans to automotive manufacturers. Are there any manufacturers that AT&T is already offering live ones content if you buy a car? And if so, which?

Yeah, so we're under NDA on that, so we can't give names at this point. But the answer is yes. And now we'll have a hopefully very substantial update on that in the next 30 to 45 days. And I'm really excited about that partnership and um as brian you probably know you know historically this company has done and really before i was involved in it has done you know most of their revenues through carriers um starting with verizon and t-mobile and obviously 18 tv and the biggest is really exciting for us to have this opportunity to grow with them great um similar question on smart tvs you've got three of the largest that you are, who's integrating your content.

Are all three now selling TVs that consumers can buy with your content? And if so, can you talk about, you know, any evidence of usage, success, subscriptions, anything like that?

Yeah, this is just the beginning of the beginning, but the answer is yes, across all three of them, and the marketing strategies are just starting to come into place, and we'll have a lot more clarity on that in the next 60 to 90 days, but really exciting, and not only is it exciting just to have the TVs, but obviously when you're talking about the likes of Vizio, you also have potential to move into Walmart, and when you're talking about Samsung, you have the opportunity of moving into Android, and again, And Samsung was the biggest, probably was the second largest partner in the history of the company with Slack and radio and did hundreds of millions of dollars of revenues over a 20, almost 20 year period with them. So really exciting, not only just what you can do in automobiles, but getting inside of these large, massive companies and building the relationships. As you know, Brian, once you're in the door and you have contractual relationships, you can really expand to other areas of the business as well. So the distribution is well beyond just TVs that we see and really exciting to have these opportunities. And, you know, we've used very tiny numbers, as you know, you know, something like a half a percent to one percent penetration and a conversion off of that. And, you know, just just take all the numbers of each of these companies, combine them. And we just need a little tiny piece of that for the revenues to really ramp up. And we expect that fourth quarter. All right.

As we've said throughout the year, it takes time as you put these in. you know people need to see them you know multiple times right they need to they need to experience they got to see the branding they got to build a relationship with it um but we see you know again at a very tiny percentage conversion with these partners just a massive opportunity i'm going to slip one thank you i'm going to slip one more in then i'll get back in the queue you made a comment rob that you have a b2b deal with one of the largest retailers in the world you've obviously you're working with animals and everyone knows that but is that something new i you know is it one quick comment i wasn't quite sure what to make of it or am i uh drawing maybe a blank on

on uh another announcement you had no i mean we all all i said is that there was a four-year contract right we can't give names as you know um and no different than we originally had our paramount field we couldn't talk about the name for almost we didn't talk about for almost two years and now it's well over 27 million dollars in revenues right um this could be a massive massive partnership and uh um you know shortly we fully expect to be able to talk about it in detail okay thanks i'll get back in the queue yeah i mean to add to that brian i think you're going to see us had ahead of uh partnerships in in the retail area you'll probably see the same thing in the carrier area. So as we've now shrunk the team dramatically, you will see some add-on team members coming shortly, including a president of the company, right, as well as area heads and sales heads of B2B, you know, divisions of where we're growing, right, carriers, auto, retailers, et cetera.

Your next question from the line of Barry Sheena with Lynchfield Hills Research. Barry, your line is open. Please go ahead.

Hey, good morning, gentlemen. I want to start off and continue on the topic of B2B partners. Rob, you mentioned Netflix at the beginning of the call, and obviously that's a big partner. Are you at liberty to expand on what you're doing with them? And if I was a Netflix subscriber, what would I see from a live one? Would I just see podcasts, or is it also music?

No, you're just going to see podcasts to start, right? But this is my fumble opinion. I did a podcast on this, I think it was three months ago, and I said, and maybe for once I'll be right, right? I came out and said very clearly that I fully expect that every streaming network will move into audio, right? No different than cable and satellite did, right? There are still more channels on cable and satellite for music choice than there is anything else. I fully expect that you're going to see the likes of Netflix, Warner, Paramount, Hulu, Disney, every one of these streaming networks are going to add audio to their platforms. Whether they add it as a distributor or they acquire them. And I see it as really intellectually smart for them to acquire them, right? you're seeing Netflix doing deals with iHeart. You saw Disney do a deal with iHeart. You see Sirius trying to buy iHeart. All this is coming in when you think about it, that audio streaming is charging the same price as Netflix's, whether it's Spotify, Apple. They're basically almost the exact same price, except for the differences in audio. The music's already made. They don't have the risk of spending $10 billion, $20 billion producing content. So as they try so hard every year to increase their ARPUs, it makes so much sense to me that a Netflix should have an audio network, right? And having an audio network will give them the ability to raise their ARPUs way more than they can raise in the dollar a year that they're doing today. And I think the same thing on the audio side. So I think you're going to see a roll-up happening. We're going to see Every streaming platform, including Apple, Amazon, who already have theirs, right? And YouTube, those have a music network, but they're going to go harder into podcasting. And then you're going to see the other streaming platforms that are competing with them, right, are going to have to have an audio platform. It's going to be so important to them. And I think you'll see acquisitions happening in the space quickly.

Okay. And then my second question is around M&A specifically. You said you're close on a deal, and you've talked about criteria where you gave one, the deal being a creative. Where are you shopping? Are you shopping only in podcasting? I know Kit is always looking for perhaps to pick up companies. No, no, no, no. Or Live One.

Yeah, so we brought in Steve Lehman, right? Steve is vice chairman of Live One, and Steve's background is rolling up audio. He's done some video as well, but rolling up audio as a whole. So there's massive opportunities there, and there's a fractured market. You're either big or you're small and kind of left out there. We're looking at both. From the M&A side is we fully expect another acquisition that will be similar to Slack or Slim at a Podcast One, or we acquire it extremely cheaply, right? It fits into our flywheel and it picks up substantial EBITDA for us and is extremely accretive. At the same time, we're looking at big chess moves that could be anything from a buy to a sell, right? The inbound calls are coming in on a regular basis. You guys are all watching as companies, again, podcast networks were bought up at like five to 15 times revenues five years ago when the industry was a $600 million industry. Now it's a $25 billion industry and growing, right? As video has been added, it's just going to continue to grow. And as that happens, I think you're going to see very aggressive moves in the media space. And you've started to see for the first time in seven years, media stocks really moving, right? Media stocks have had just a miserable, miserable seven years. And now you see Starz stock has gone to 3X. And iHeart stock was up 6.5X, 7X. Now it's still up 5X. Same thing with Lionsgate. All of a sudden, you're waking up. And part of that is because people are realizing how valuable the data is. That data may not just be valuable to other content partners. It could be enormously value to the AI models. As you're figuring out human behavior, human movement, so on, you're going to need a substantial amount of content to keep feeding these LLMs and continue to feed them quickly. and they're not going to be able to get content from the majors, right? You just saw the settlement, right, that Anthropic just did. They paid a staggering $1.2 billion just to the book industry, right, for stealing some books. Imagine what's going to happen and how long it's going to take to settle the film, music, television, right, stuff that has been effectively taken, whether intentionally or not, by the AI models, right, that is now all blocked. So I think we're going to have enormous value in the content we have, which content is data. And when you have data, it gives just huge value to these AI models.

And just to follow up on that, where are you in the process of monetizing for AI licensing? And have you looked at doing that via tokenization, which would make the content much easier to slice and dice and price and sell?

Well, here's what I would tell you. What's really exciting is, as of this morning, my team just sent me a message. We're in discussions with 17 AI businesses and growing. All of them looking at somewhere between $100 and $500 an hour for content. So we're very smartly and very carefully working with our talent, right? Because they're a partner in that, right? If it's Dr. Phil or it's Adam Carolla or it's any one of them, we're working with that content. And the same with our music content, which we own. We still have to work with our music partners, right, to monetize that. And we couldn't be more excited about the opportunity. And, you know, just to give you color, I personally invested in the company just a couple of dollars. But I saw a friend of mine who started the company and literally he's gotten 17 million of contracts up front just to literally give content from security guards, cleaning people, people washing dishes, washing laundry. This is if you're going to build robotics and you're going to build AI, they're going to need a staggering amount of content to keep feeding the system, keep it alive. And we have real content. Right. so what i'm talking about is only for the practice models imagine you know it's worth a hundred to five hundred dollars a mile an hour from practice models what is this content worth when it really goes to market yeah where it is exclusive deals to someone it could be multiples of that so we see a great sign in that we fully expect to start to monetize it um in the next quarter great lots of good info thanks rob thanks barry appreciate a reminder if you would like to ask a question please press star one to raise your hand.

To withdraw your question, press star one again. Your next question from the line of Brian Kingslinger with Alliance Global Partners. Brian, your line is open. Please go ahead.

Great. Great. Thanks. A few follow-ups. The first one is it relates to Netflix.

Are they paying annual fees for the content or based on usage? we're not we're not at liberty to to give what the model is today but you could read if you read these stories of bill simmons and you read the story stories with disney yesterday you can get a little bit of an idea that some of it is going to be free and it's going to be ad driven right and traffic driven and some of it's going to is going to be some it's going to be paid for right it depends on which content it is you can be sure that you're not going to see us give the likes of of a major talent to him, right, without monetizing it. And I can just tell you that our video content, you know, is probably now 30% of our revenues. I couldn't give you an exact number of it, but it was zero when I bought this company, right? So video content is just exploding. And there was a great CNBC interview this morning that literally walked through, you know, how much money is being monetized in video and what kind of revenues are being driven in video. And I just see great telltale signs that the TAM of our business is going to explode over the next three years.

Great. I have two numbers questions. The gross margin has drastically improved. Craig, you made some comments that I wasn't quite sure how to decipher. But when I back into the gross margin of non-podcast one, you're at 63%, And three quarters ago, you were in the 20s for several quarters. Is there any non-recording benefits in there? And if so, can you quantify them? Otherwise, is this sustainable?

Yeah, Brian, you're right. There was some one-time pickups in Q1, in Slacker. As I mentioned in my remarks, we had an elimination of some liabilities. It was about $1.5 million. So that gets you back to a more normal margin on a gap basis. But then on top of that, we had some stock-for-service deals. and that's what drove the adjusted EBITDA. So yeah, there are one-time pickups there. We expect the margin to kind of sustain back to normal unless we can continue to drive those stock-for-service deals.

Yeah, well, that was going to be my next question. We saw the share count jump significantly in the three months. Is that related to that stock comp? And how should we think about maybe stock comp and the share count for the remainder of the year?

I think when you answer that, You know, we've basically given that number, which was around $15 million, right? It's $7.5 a share, right? We picked up some great partners with that, Brian, that we've announced, right? And they've announced, right? Including a fund that now is part of BMI that owns 7%, 8% of the company now. So it's been great for us. Not only is it great from a balance sheet standpoint, right? but it also is great from having real long-term deals with the music industry right which we haven't had in the eight years since we acquired it because of the payables that existed on the books previously so and we'll continue to do some deals at seven and a half dollars a share or better um and i fully expect there'll be more of those as part of that 15 million dollars over the next 60 to 90 days.

Thank you.

Your next question from the line of Barry Sheena with Lynchfield Hills Research. Barry, your line is open. You may now go ahead.

Hey, hello again. Just as a follow up on that, on the music partners, the record labels, now that you've kind of cleaned that up, You brought some in as shareholders, as partners. In the past, Rob, you've talked about going global, and many of your B2B partners, like a Netflix, do have global businesses.

And I know you're not yet licensing music to them, just podcasts, but can you talk about the prospects for taking the music part of the business global and adding global licenses so you're not just in North America? i think i think the answer is you know the minute we have our first partner that is um that is a global partner that needs this across the board will be the minute we go sit down and start negotiating and we're in a completely different position than we've been in the last eight years right we've had these you know massive payables from the acquisition of slacker in the beginning right now that that's strengthened cleaned up and so many of the music partners we've signed just about every one of them now. So we got a couple left to do over the next, as I said, 30 to 90 days. But if we can get that cleaned up, we will certainly be exploring that and looking at that opportunity. And also podcasting is exploding around the world too, right? So there's a real opportunity with it globally as well to expand that.

And my last question, you threw out a number that's a pretty significant aspirational number of $250 million in revenue three years out. I know that's not guidance, but could you flesh out that vision a little bit more? What does that look like in terms of balance between podcasting, between B2B deals, and then financially, what does that look like from an EBITDA standpoint? What's the vision on this company with that $250 million in revenue three years out?

Yeah, I think we want to get to adjusted EBITDA, like we're doing now, right? We've taken our cost structure down. As you know, if COVID didn't hit, we were on our way to $250 million six years ago, right? If Tesla didn't change the contract on us, we were on our way to $250 million a year ago, right? A year and four months ago. So we're back on track now. We're highly confident, right? And when you talk about $10 trillion worth of companies that we're in partnerships with, we just got to keep growing them, right? A paramount could grow. It's growing from $2 million to over $27 million. Amazon's growing, you know, literally just starting off as a test is now growing to $20 million, right? We're now in position with, you know, 10, 12, 14 partners that all have, you know, they're all multi-billion to trillion dollar companies. We just got to execute, right? We've got to execute, we've got to deliver for them, and we've got to continue to sign more and more of those partnerships. And then it's just a numbers game. The bigger their distribution partners are, the more traffic we're going to get, the more revenues we're going to drive. When you go onto a Netflix, as an example, you put a couple of shows on to start, you've got 700 million subscribers right around the world. I can't tell you exactly what that number is going to be day one, but there's going to be some numbers. right and so that's just the beginning when you control that right that environment when we go into netflix no different than we're on youtube or on spotify whatever advertising is is played during that show we get the revenues from then there could be subscription revenues right our subscription revenues all of a sudden ramped up with one of our big podcasters which started to be a real real number every month um and i i just see you know that is just a big opportunity for us to grow. And I think Netflix is missing an audio network. I think Walmart is missing an audio network. I think Costco is missing an audio network. I think that Facebook is missing an audio network. I think Microsoft is missing an audio network. I think every carrier is missing one. Everyone is coming back. AI is running the world. Everybody's scared. Everybody's infringing on each other's businesses and is so critical right now for people to own their own data. There is nothing that is used more than audio content, no matter what. More than video is always going to be audio, right? There's still going to be two hours a day in a car. There's going to be usage on mobile. It's hard to watch as much on a mobile device as you're going to listen on a mobile device. I think we're right in the sweet spot. And I think with Craig's help and a new president at the company, right, and a couple of more B2B people, 250 million is very achievable in the next three years.

Great. Thank you.

There are no further questions at this time. I will now turn the call back to Rob Allen for closing remarks.

Well, I think I said everything today. Very humbly, right? We are humbled by where our stock is today. We're pretty shocked because media has had some life to it. It looked like the stock was going to run last quarter, had a little run up to seven. Yeah, couldn't break those levels. But we're going to keep buying back stock. We're going to keep our foot on the pedal. We are going to continue to clean the balance sheet until we get rid of any of the outstanding issues that are out there. And we're going to continue to build massive real partnerships with billion to trillion dollar companies. And again, I just want to thank everyone for their patience. We're right there next to you. We'll be buying stock as soon as the restriction is off, as soon as we get legal restriction off, which is any day now. I will continue to buy more stock, and I just couldn't be more proud of my team and what we got accomplished this year, but just in this quarter. It's just amazing to see $7 million added net equity, $3 million of extra cash. This is a telltale sign of where we're going, and we're going to continue to grow these So thank you, everyone, and we look forward to talk to you soon with the next update.

This concludes today's call. Thank you for attending. You may now disconnect.