Earnings Call Transcript - PODC Q4 2025

Ryan Carhart, Chief Financial Officer

Good morning, ladies and gentlemen. Thank you for joining us. Welcome to PodcastOne's Fiscal Fourth Quarter 2025 Business Update and Financial Results Conference Call and Webcast. On our call today are Kit Gray, President and Founder of PodcastOne, and myself, Ryan Carhart, Chief Financial Officer. I would like to remind you that some of the statements made during this call are forward-looking and based on current expectations, forecasts, and assumptions that involve various risks and uncertainties. These statements include, but are not limited to, expectations about the company's future performance, including anticipated financial results and growth. Actual results may differ significantly from those discussed today for a variety of reasons. Please refer to PodcastOne's filings with the SEC for information regarding factors that could cause actual results to differ from these forward-looking statements, including those outlined in PodcastOne's Form 10-K for the year ended March 31, 2025, filed with the SEC on July 2, 2025, along with subsequent SEC filings. Reconciling non-GAAP financial measures to the most comparable GAAP financial measures mentioned today can be found in the company's earnings release, available on its Investor Relations website. We encourage you to regularly check the Investor Relations website for important updates. The following discussion, including responses to your questions, contains time-sensitive information and reflects management's view as of July 3, 2025. Except as required by law, the company does not commit to update or revise this information after this call. I want to inform investors that this call is being recorded. PodcastOne is making it accessible to investors and the media via webcast, and a replay will soon be available on PodcastOne's Investor Relations website in the Events section following the conclusion of the call. Additionally, the content of this call is the property of the company, and any redistribution, retransmission, or rebroadcast of the call or webcast in any form without the company's written consent is strictly prohibited. Now, I would like to hand the call over to PodcastOne's President, Kit Gray.

Kit Gray, President and Founder

Thank you, and welcome to our fiscal fourth quarter 2025 earnings call. As a reminder, we are not on a calendar reporting year and our fiscal year 2025 ends on March 31. Today, I will provide a brief overview of PodcastOne in the continuously growing podcast market and highlight our recent successes before passing on to Ryan for the financial results. After his comments, I will close with an update on our strategic initiatives and what we are looking forward to in the quarters to come. Lastly, we will open it up for Q&A. PodcastOne is a premier podcasting network that has played a key role in the evolution of the podcast industry since its founding in 2012. As the only pure-play publicly traded podcast company in the United States, PodcastOne provides a platform for top-tier content creators, offering comprehensive support across production, marketing, sales and distribution. Podcasting has become one of the most trusted and engaging media formats with over 4 million podcasts registered worldwide as of 2025. The industry continues to grow with advertisers projected to invest over $2.4 billion in podcast advertising this year. PodcastOne is a sales network for over 500 of the largest advertisers to reach core demographics effectively and efficiently. PodcastOne and its 206 shows are positioned at the center of this growth, capitalizing on both the increasing audience demand and the effectiveness of podcast advertising as a high ROI media channel. PodcastOne has been ranked as a top 10 U.S. podcast publisher for the sixth consecutive month by Podtrac with a monthly unique U.S. audience of 6 million and 16.9 million U.S. downloads and streams. With our industry-leading platform, we empower podcast hosts to reach their full potential by providing comprehensive world-class support. Our 360-degree marketing capabilities drive growth and exposure, enabling talent to focus on what they do best, creating great content. This support includes access to studio space, marketing, production, editing, distribution and public relations. Additionally, our experienced direct sales team leverages long-standing relationships with advertisers and brands seeking to connect with the highly engaged audiences of podcasts on our platform. In Q4, we renewed several of our highest performing legacy shows, including the Adam Carolla Show, Off the Vine, the Adam and Drew Show and the Brendan Schaub Network, further solidifying our foundation of long-standing high-engagement content. We also expanded our partnership with A&E and the History Channel by adding Ancient Aliens to our roster, a key addition that blends mass appeal with cult fandom. New original titles this quarter include Cate & Ty Break it Down and Detox Retox with Tom Schwartz, each drawing strong early audiences. We successfully began our official migration to Amazon's ART19 platform, hitting our minimum guarantee milestone in April. This migration introduces a new core monetization channel alongside our direct sales and programmatic revenue streams. Additionally, our innovative PodRoll network and PodcastOne Pro services have begun contributing meaningfully to our revenue mix. PodcastOne Pro, launched with our new state-of-the-art studio in Beverly Hills, has quickly become a draw for brands like Lovesac and MotorTrend. These clients rely on our infrastructure and talent to produce high-quality branded content. PodcastOne Pro offers a la carte or full 360-degree production solutions, empowering brands to harness podcasting with unmatched efficiency. We also completed a full renovation of our Beverly Hills studio, further elevating the quality, flexibility and aesthetic appeal of our in-house production capabilities. We continue to drive value through brand integration, celebrity guest appearances and experiential events. Q4 guest highlights include Mel Robbins on both Off the Vine and I've Had It, Sebastian Maniscalco on the Adam Carolla Show, and Cameron Hall on LadyGang. Speaking of LadyGang, we are proud to announce the upcoming Lady World Tour, which builds on their incredible brand equity and community. We expect this initiative to drive incremental audience growth, brand sponsorships, and live event revenue in the second half of 2025. Thanks to these expanding revenue streams, ART19, PodRoll, PodcastOne Pro, and premium subscriptions, we saw a 20% year-over-year increase in revenue from Q4 2024 to Q4 2025. This performance reflects our continued focus on monetization, diversification, and premium content. Now before going any further, I'd like to turn the call over to Ryan, our CFO, to walk through the financial results for the fiscal fourth quarter.

Ryan Carhart, Chief Financial Officer

Thank you, Kit. As Kit mentioned at the beginning of the call, I want to again remind listeners that our fiscal year ends on March 31. As a review of the fiscal fourth quarter financial results, revenue in the fiscal fourth quarter of 2025 increased 20% to $14.1 million compared to $11.7 million in the same quarter a year ago. Operating loss in the fiscal fourth quarter of 2025 was $1.8 million compared to an operating loss of $1.2 million in the same quarter a year ago. This was primarily driven by higher noncash stock compensation expense. Net loss in the fiscal fourth quarter of 2025 was $1.8 million or a loss of $0.06 per basic and diluted share compared to a net loss of $1 million or $0.05 per basic and diluted share in the quarter a year ago. Adjusted EBITDA in the fiscal fourth quarter of 2025 was positive $0.9 million compared to adjusted EBITDA of positive $0.3 million in the same quarter a year ago. The change in adjusted EBITDA was primarily due to the timing of content acquisition costs. We ended the fiscal fourth quarter with no debt on our balance sheet and $1.1 million in cash and cash equivalents as of March 31, 2025. As a review of the fiscal FY '25 financial results, revenue in the fiscal year of 2025 increased 20% to $52.1 million compared to $43.3 million in fiscal year 2024. Operating loss in the fiscal year of 2025 was $6.4 million compared to an operating loss of $5 million in fiscal year 2024. This was primarily driven by higher noncash stock compensation expense. Net loss in the fiscal year 2025 was $6.4 million or $0.27 per basic and diluted share compared to a net loss of $14.7 million or a 68% loss per basic and diluted share in fiscal year 2024. Adjusted EBITDA in the fiscal year of 2025 was negative $0.5 million compared to adjusted EBITDA of positive $0.5 million in fiscal year 2024. As we look ahead, I'd like to also briefly touch on guidance. We are pleased with the progress this quarter. And given the revenue-generating deals that are currently in place for fiscal year 2026, along with the equity-based revenue share deals with certain podcast talent, we are comfortable raising our fiscal year 2026 guidance. We expect revenues for the full year to be between $55 million and $60 million. We are also expecting adjusted EBITDA for the full year to be between positive $3 million and $5 million. Additionally, we have completed our financing after year-end with our partners at JGB Capital, replacing our East West Bank line of credit. This will help facilitate the growth of our business, allowing us to sign new podcasts and potentially acquire podcast networks. We are poised for the future and excited about our next phase of growth. Now I'd like to turn the call back to Kit for some additional comments on the quarter and fiscal year before wrapping up with questions from the audience.

Kit Gray, President and Founder

Thanks, Ryan. In closing, we delivered a strong fiscal fourth calendar first quarter, achieving double-digit revenue growth, once again signifying PodcastOne's largest ever revenue result for the period. The momentum continued into the start of calendar 2025, marked by major accomplishments, including the new relationship with Amazon's ART19, the extension of flagship podcasts from Adam Carolla, Brendan Schaub, and Kaitlyn Bristowe, as well as the expansion of Kail Lowry's award-winning slate of shows through the Killer Network under PodcastOne's umbrella. PodcastOne now hosts 206 shows, having added 64 new programs in 2024 and 10 exciting new shows this last quarter alone. PodcastOne's talent roster continues to expand, supported by a debt-free balance sheet and multiple accretive growth opportunities. We are actively evaluating M&A prospects, not only to acquire top content and networks, but also to enhance our platform with production, sales, and technology acquisitions that strengthen our offerings for hosts, advertisers, and shareholders. PodcastOne remains the only pure-play publicly traded podcast company in the U.S. Our consistently expanding and evolving content portfolio, strategic partnerships, diversification of revenue streams, and our innovative approach to audience growth and retention continues to create long-term shareholder value. Thank you for joining us. And at this time, I'd like to turn the call over to the operator for Q&A.

Steve Lehman, Vice Chairman

Thanks, Kit. Hi, everybody. So as Kit just mentioned, I was brought into PodcastOne to look at strategic opportunities in M&A. We continue to head down that path and are looking at some interesting things for the company. That role has now been expanded to look at strategic opportunities in crypto and Web3. By way of background, I am on the Board of Valkyrie Crypto ETFs owned by Coinbase. There is, I think, an incredible opportunity for consolidation in the crypto podcast space. There are hundreds of crypto podcasts, and I think this creates a really interesting opportunity for PodcastOne to not only look at roll-up and consolidation, but to really form powerful strategic alignments. It's an opportunity for PodcastOne to become a crypto megaphone in both audio and video and to become what I see as a credible source of crypto information. This could lead to expanded opportunities in showcasing new coins, new players in the industry and other opportunities. So I think this crypto initiative, which I'm really excited about, is very timely for PodcastOne and could create a powerful new vertical within the company.

Sean Patrick McGowan, Analyst

A couple of things I wanted to ask about that you've talked about on previous calls, and I just want to see if things are kind of in line with what you'd expected. So stock-based compensation up fairly meaningfully. Is this related to the initiatives that you have discussed in the past of making that a bigger component of compensation to the talent? And is this current level something we should expect? Or could it go up or down from here?

Kit Gray, President and Founder

Sean, thanks for the question. Yes, the answer is that's definitely part of the reason why it's gone up. And yes, it's a really exciting opportunity for our talent, something that's unique that other networks and other companies aren't able to offer, part of the reason why we're on the NASDAQ and publicly traded. We're able to offer our partners in the content space the ability to be a part of the bigger picture, being part of PodcastOne. So we talk to hundreds and hundreds of podcasts and podcast networks and companies, and stock is always a part of that conversation and will be moving forward. But it's worked out quite nicely for our initiatives and talent acquisition so far. And I think everybody is pretty happy with it, and we'll continue to do more of it.

Sean Patrick McGowan, Analyst

Okay. And kind of a follow-up, maybe Ryan can chime in on this that it looks like the increase in stock-based comp was bigger in dollars than the increase in G&A. So was there a reduction in the kind of non-stock-based comp G&A? And what's going on there? And what can we expect in the future?

Ryan Carhart, Chief Financial Officer

Yes. Thanks for the question. The stock compensation was up, I think you nailed it. General and Administrative (G&A) was up as well. I think going forward, what you saw here at the end of this year is kind of what you can expect going forward. We're always looking for efficiencies, and we're going to continue to do that. But yes, on a run rate, the operating expenses that we saw coming out of Q4 is going to get reduced a bit in Q1, and then the stock compensation will stay where it's at.

Sean Patrick McGowan, Analyst

Okay. All right. Very helpful. Back to you. Regarding the ART19 deal, have you gotten the benefits so far that you expected? Or is there a lot more to come? And how is that whole thing going?

Kit Gray, President and Founder

Yes, it's been great so far. We've identified significant operational efficiencies and cost savings from that deal. As we implement more efficient and improved services to replace our previous partners, this process is currently underway. We expect notable cost savings throughout the year. On the revenue side, it has been exceptional. I mentioned earlier that we reached the minimum guarantee in April, which is really exciting. We also hit that milestone in May, and we’re close to the next level. This is a tiered arrangement, so as we grow, that deal expands too. We’re seeing increased demand for our inventory, resulting in high fill rates and better CPMs. When it comes to our other programmatic revenue, which represents the third tier, we have our direct sales team, ART19 Amazon's platform, and the programmatic desks that we are connected to and expanding upon. You’ll notice a decline in that third tier revenue, but that’s intentional as the other two areas are gaining traction. Overall, it's been a positive experience so far, and we are really looking forward to the future.

Sean Patrick McGowan, Analyst

Last question, and then I'll jump back in the queue. So cost of sales as a percentage of revenue was down. I think we've talked about this maybe last quarter being unusually high, and we would expect to see it drop down. So I was wondering if this just was what you expected. And should this level of around 89%, 90% be what we should expect going forward? Or could there be further reductions?

Ryan Carhart, Chief Financial Officer

Yes, thank you, Sean. I believe you saw an improvement in Q4, and I think that trend will continue. At the very least, we expect it to remain stable and ideally to increase from there. So we anticipate ongoing improvement and hopefully even better results.

Sean Patrick McGowan, Analyst

When you say jump up, you mean gross margin will drop as a percentage of revenue, right? The cost of goods sold?

Ryan Carhart, Chief Financial Officer

Yes. Basically, our contribution margin should be improving going forward. And it should be similar or better than what was in Q4.

Leo Federico Carpio, Analyst

A couple of questions. First question is regarding the advertising environment. Given the uncertainty we're having in the economy, have you seen any shift in terms of advertisers' appetite for putting ads on your network?

Kit Gray, President and Founder

No, we're having a good quarter. We are seeing higher CPMs and more advertisers entering the space, engaging in various initiatives beyond what we've previously discussed. The revenue channels have diversified, encompassing more than just ad spots, with notable growth in programmatic, dynamic ad insertion, embedded content, live shows, social media, campaign expansion, and live events. Overall, this aspect of our business is performing well in the advertising sector. However, competition remains strong. Major players like iHeart and Spotify are bundling radio stations with music streaming services to capture more advertising dollars. That's simply part of the business landscape. Nevertheless, we effectively manage and collaborate with our talent. They are engaged and enthusiastic about creating outstanding ads for our advertisers, aware of the existing competition. Consequently, we need to produce exceptional audio and video ads and elevate our standards. Given our company's size, we can strategically position ourselves with advertisers as a reliable network that delivers great content, ensuring they can trust us to meet their advertising needs. Overall, everything looks promising. It’s great to hear from you, Leo.

Leo Federico Carpio, Analyst

Likewise. So the follow-up question is regarding talent acquisition. What is the environment you see? Is there still good talent that's available? And can you negotiate favorable terms? Or just trying to get a sense in terms of how fast we can continue growing the shows on the platform.

Kit Gray, President and Founder

Yes. Like we said, I think we added 10 shows. We've got a funnel of a lot of really exciting ones that should be announced within the next week, to be honest. The talent pool is out there. There's a lot of great shows out there that may not be getting the services that they want or need. We have a great reputation out there for servicing those partners, working with them to monetize their content, not only to add to what they're doing but get higher CPMs, higher demand on their impressions, monetize the backlog, market their shows, and help them grow. So we're in a good spot to just acquire more and more shows and grow. It's interesting. The time never stops, right? And a lot of the shows maybe that we lost a year ago for whatever reason, they're starting to come around now. So we're seeing the strengths and weaknesses of other networks, and we're able to tell our story, and I'm hopeful that we can land some of those shows as well. The great thing is our current partners are adding to it, right? And we talk about A&E and now their History Channel and adding more shows there and the Killer Network with Kail Lowry adding more shows under their network. So the people that we are working with are continuing to grow and evolve, and that's helpful as well.

Leo Federico Carpio, Analyst

Okay. And then another question. On the Amazon deal you have, could you remind us what are the terms and what you need to fulfill to reach the minimum thresholds?

Kit Gray, President and Founder

Sure. Essentially, they provide us with a monthly minimum guarantee that's adjusted based on the impressions we deliver for them to sell. We monitor our progress almost daily to ensure we meet that goal. Currently, the first threshold is 90 million impressions, and the next is 110 million. We're very close to reaching that target, and I'm optimistic we'll achieve it in June. According to the contract, we need to maintain that next threshold for three months to secure a higher minimum guarantee. Additionally, they have more inventory to sell, and as demand increases and Amazon bundles podcasting with their other advertising offerings, we're seeing higher CPMs and better sellout rates, which is encouraging. I believe it's a three-year deal, and we're pleased with Andy and his team at ART19; they have an excellent group. Our shows are having a positive experience too, with a smooth transition in production. We've been able to provide valuable insights to our shows regarding their audience and fill rates. Our management and tech teams have done well identifying new companies to collaborate with, including Podroll, among others, to improve efficiency and optimize our inventory. We're beginning to work with these companies, and it's looking promising for our overall strategy.

Leo Federico Carpio, Analyst

Okay. And then the last question, can you walk us through the rationale for entering the crypto space and creating the network aimed at that market?

Kit Gray, President and Founder

Yes. I spoke with Steve this morning about this, and we're beginning to connect with some exciting individuals in the crypto space. They utilize social media, blogs, podcasts, and YouTube channels. They're hosting live and virtual shows, which align with what we do for our partners. What stands out when you speak with them is their enthusiasm for the crypto space. Podcasting is all about communities, passion, and connection to hosts, whether it's a crime show or a Beverly Hills reality star; the fan base shares that same level of connection and passion. The crypto space is particularly thrilling because it has a highly engaged, passionate, and loyal fan base. If we can compile several of these together, cross-promote them, and introduce other revenue channels and services that allow them to generate more content, we have a fantastic opportunity to create an engaging podcast network that generates revenue and value while providing a great platform for people to explore the expanding crypto space.

Steve Lehman, Vice Chairman

Yes. This is a really passionate group. And I think it opens PodcastOne up to a new slate of advertisers. For example, Bitcoin miners are advertising on crypto podcasts. So this is an opportunity to not only expand into the content of a new vertical but also opens us up to a slate of new advertisers.

Sean Patrick McGowan, Analyst

You mentioned some of my questions already, but I have a broader question regarding your 20% year-over-year growth this quarter and your ranking at #10, which is impressive. Are you growing faster than the overall industry? Are you gaining market share in measurable ways? Should we anticipate an acceleration in that growth?

Kit Gray, President and Founder

Yes. I think there's two levels of it. We want to grow and acquire new exciting content producers and new exciting communities, but we also want to make sure that we're really maximizing our opportunities with our current inventory and our current partnerships, right? So to become profitable and do what we need to do as a company, we need to make sure the producers of the content and all the content that they have are getting those premium CPMs, those high sellout rates, those diversified revenues. It's really two things, right? We want to make sure we're doing that for our current partners and growing there. But as we acquire new shows, new content providers, we want to make sure we put them in the right spot for them to be successful where they can have higher CPMs, higher sell-out rates, we can make them more efficient to do more content for us and grow because that's really important when we look at the margins on our deals and minimum guarantees and revenue splits and all that. So we look at it two ways. When you compare us to the industry, look, there are companies out there, competitors that don't care about losing money and throwing money at some big shows. We're not that company. We've talked about that in the past. We do a calculated look at what the demand is out there in the marketplace, where the CPMs are, where we can get good margins, how we can make the shows better, how they fit into our network and how they work with advertisers, all of these things before we just sign a bunch of shows, right? That would be a mistake that would let down some of those shows and might even let down some of our current shows, and that's not the business that we're in. So we are growing, as you know, but it's really important for us to grow on a revenue basis as well.

Operator, Operator

And that will conclude our question-and-answer session. I'll hand the call back over to Kit for any closing comments.

Kit Gray, President and Founder

Well, I appreciate everybody. I hope you guys all have a fantastic 4th of July weekend with your families and be safe and keep listening to those podcasts as you sit in traffic around the country. And we're really excited about the future. I think the team is just fantastic. We're in a great position. We appreciate your support, and stay tuned. You're going to hear some great things.

Operator, Operator

This will conclude today's call. Thank you all for joining. You may now disconnect.