Gaia, Inc. Class A Aktie

Good afternoon. Welcome to Gaia's First Quarter 2026 Earnings Conference Call. [Operator Instructions] Joining us today from Jirka Rysavy, Chairman; Kiersten Medvedich, CEO and Ned Preston, CFO. After the speaker's presentation, there will be a question-and-answer session.

Before we begin, Gaia's management team would like to remind everyone that management's prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions, including, but not limited to, statements of expectations, future events or future financial performance. These statements do not guarantee fee performance and therefore, undue reliance should not be placed upon them.

Although we believe these expectations are reasonable, CI management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company's management involve inherent risks and uncertainties, including those identified in the Risk Factors section of Gay's latest annual report on Form 10-K filed with the SEC.

All non-GAAP financial measures represent today's call are reconcilable in the company's earnings release, press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the timing date of this broadcast, May 4, 2026.

Finally, I'd like to remind everyone that the conference call is being webcast, and a recording of this will be available -- will be made available for replay on Gaia's Investor Relations website at ir.gaia.com. At this time, I'd like to turn the call over to Gaia's Chairman, Jirka Rysavy. Please go ahead.

Good afternoon, everyone. This first quarter marked the beginning of our deliberate focus back to a direct member base and a pricing discipline. In March, the price increase was implemented in about 80% of our regions for monthly members. For our annual members, the increase will be effective as the subscription renewal. During the first quarter, we delivered $1.5 million of operating and EUR 1.1 million of free cash flow.

Now Kiersten will tell you about our plan to improve both our retention and ARPU at least 20% between the fourth quarter of last year and fourth quarter of this year. Kiersten?

Thank you, Jirka. This quarter reflects an important step in Guy's evolution as we continue to execute on a strategy centered on strengthening the quality durability and profitability of our membership base. After 3 quarters in the CEO role, I have a clear view of where Gaia's greatest opportunity lies, and I am confident the strongest path forward is to prioritize our direct relationship with members where we can deliver the full guy experience, deepen engagement and capture the greatest lifetime value from our content, technology and brand.

Over the past several years, there was a meaningful focus on driving subscriber growth from third-party platforms, supported by increased marketing spend and lower CPAs in those channels. While that supported top line growth, those members generated lower ARPU, and experienced higher churn and do not have access to the core features that we believe will define Gaia's future. In addition, because those relationships sit with the platforms rather than with GAIA, we do not know who those subscribers are and have no ability to engage them directly.

That is why we are prioritizing growth in direct membership where we can deliver the full guy experience and drive stronger long-term economics. As a reflection of that focus for the fourth quarter of 2026, compared with the fourth quarter of 2025, Gaia is targeting an approximate 20% reduction in churn and a 20% to 25% increase in ARPU. As a result, we are making deliberate changes to how we grow, specifically, one, reducing our reliance on lower-value third-party member acquisition; two, taking a very disciplined approach to discounting and promotions, and three, rebuilding our direct marketing capabilities with new leadership and partners, including our recently amended CMO, Tracy Benson, who has decades of experience scaling iconic consumer brands and high-growth companies.

We also recently onboarded new agency partners across paid media and brands. These actions are intentional, and they come with a trade-off. We expect near-term pressure on revenue growth as we make this transition while still expecting growth versus last year. We are doing this because we believe these changes will materially improve the long-term economics of the business. To today, our average member lifetime value exceeds $500 before reflecting the impact of our recent price increase. This is 6x our current CPA of $85. We believe this is the metric that matters, growing a high direct -- high-value direct member base requires a more deliberate approach, 1 built on brand strength, marketing efficiency, retention and member experience, and we are giving the organization the time and focus needed to execute that transition. Now what gives us confidence is the strength of our existing direct member base.

I have mentioned this before, approximately 70% of our direct members have been with Gaia for more than 1 year, and about 40% have been with us for more than 3 years. This level of loyalty reinforces our belief that the direct model supports a more enduring and a more valuable business over time. This is also reflected in the broader recognition of our platform Guy was recently ranked the #2 mindfulness and wellness app by Newsweek, which we believe speaks to the strength of our content brand and member experience. At the same time, we continue to invest in the core elements that define the guy experience, content, AI, personalization and community.

We continue to strengthen our content slate with programming that is closely aligned with the Gaia brand and the interest of our audience. Recent releases include the Monro Institute experience, the fourth season of missing links with Gregg Braden, and we recently launched a new monthly live format that enables members to engage directly with their favorite guy hosts in real time.

Additionally, Q1 has shown meaningful product improvements across our core engagement driving initiatives. These improvements are rolled out slowly and deliberately to make sure these changes are supportive to our goals. On the AI side, we have improved our model meaningfully reducing our costs and improving the quality of responses. We are also launching AI-powered Turow and astrology features, giving members more reasons to engage with Gaia on a daily basis. All these improvements help reinforce our direct member experience.

Turning to Ignite -- we're excited that Erica will be interviewed by Dave Asbury at the Biohacking Conference on May 28. We believe this is an important opportunity for Urca to discuss the Ignatin technology and broaden awareness of the brand. Now to support our top of funnel Gaia marketing efforts, we have partnered with Amagi with the launch of fast channels, allowing us to introduce Gaia to new audiences through curated content experiences. We view this as a brand-building and discovery channel that ultimately drives users back to our direct platform for access to a bigger offering. As we said last quarter, our goal remains to reach breakeven in the fourth quarter of this year and profitable for the year 2027.

We believe the actions we are taking today are strengthening the foundation of the business in support of that objective. Now stepping back, we see Gaia as the intersection of several long-term ships. More people are seeking content that supports growth, meaning and transformation. And at the same time, they expect more personalized, interactive and connected community experiences. We believe Gaia is uniquely patient at that intersection.

Gaia has always been for people who see the world differently, people asking deeper questions and seeking greater meaning. Our role is to help them find their why and support them on their journey. When we look ahead, we see a clear opportunity to build a stronger company, one defined not just by growth, but by quality, engagement and durability. The choices we are making today reflect that focus, and we believe they will drive more meaningful long-term value for both our members and our shareholders. Now over to Ned for the financial details.

Thank you, Kiersten. Revenues for the first quarter of 2026 increased to $24.3 million from $23.8 million in the first quarter of 2025, primarily driven by increased ARPU and partially offset by the reduction of discounted pricing. Gross profit in the first quarter was $20.9 million, unchanged from last year, gross margin was 86%. Due to the initiatives Kiersten discussed, net loss was $1.3 million or negative $0.05 per share compared to a net loss of $1 million or negative $0.04 per share in the year ago quarter.

Our annualized gross profit per employee increased to $816,000, up from $806,000 in the year ago quarter, driving further improvements in our free cash flow. Operating cash flow was $1.5 million with free cash flow of $1.1 million, reflecting ongoing operational discipline and representing the ninth consecutive quarter of positive free cash flow. Our cash balance was $13.1 million as of March 31, 2026, aligned to the $13.1 million at the end of Q1 of 2025 with a fully available $10 million line of credit.

As we navigate this transition, our focus remains on maintaining a strong financial foundation while investing in long-term value creation. We continue to operate with high margins positive free cash flow and a solid balance sheet with no debt outside our small campus mortgage. While we anticipate near-term pressure on growth as we reposition the business, we believe our disciplined approach to cost management and capital allocation will drive improvement to our unit economics and profitability over time.

This approach is illustrated in the pro forma revenue benchmark scenario included in our investor presentation available on our website. This analysis outlines our business model at $100 million, $150 million and $200 million in revenue. We were pleased to nearly reach the first milestone in 2025, finishing the year at $99 million in revenue and $15.8 million in adjusted EBITDA. We are now targeting our next milestone of $150 million in revenue and $39.3 million in adjusted EBITDA by 2029.

That completes my summary. I'd now like to turn the call back over to Jirka for his closing comments.

So this concludes our remarks. So I'd like to open the call for questions. Operator?

[Operator Instructions] Our first question today is coming from Ryan Meyers from Lake Street Capital Markets. [Operator Instructions]

Sorry about that. I was on the -- first one for me, if we think about this pivot here to the direct channel, why do you feel like now is the right time to make this switch and the emphasis here on direct?

So the timing reflects what we've learned -- what I've learned over the past 3 quarters. Like when I stepped into the CEO role, the company already had a growth strategy in motion with a focus on third-party channels and discounted memberships. So my role was assessed whether that strategy was still working, especially for the long term. areas marketing commitments to those channels increased, the data showed that they were generating customers with higher churn and lower margins and that didn't support the full guy experience.

And so -- but at the same time, we are making important investments into AI products and community that are designed to deepen engagement and create more value for our direct members. And so third party, like I said, third-party members just do not have access to those features of our platform. So this is a disciplined decision as newly into this role based on data, customer behavior and our long-term mission. And so I believe right now is the right time to focus our resources on higher quality growth. PAUSE stronger retention and better margins.

Okay. Makes sense. And then if we think back to last quarter, I know you guys did communicate low double-digit growth for FY '26. So based on everything that you had talked about, it sounds like we shouldn't be expecting low double-digit growth for this year. Any commentary that you can give us on what we could expect growth to be? It sounds like you guys do expect the business to grow year-on-year, but any color there would be helpful.

Yes. Ryan, it's Ned. Yes, so really, our overarching theme, as we've been talking, is our continued positive free cash flow to achieve that 20% to 25% ARPU by Q4 of this year. And then that will lead to our breakeven P&L for the fourth quarter and full year 2027 profitability for next year. We will see a short to midterm [ lul ] or kind of consistent revenue field for the next quarter or 2 with -- in the second half of the year, things upticking to achieve that Q4 breakeven P&L.

Next question comes from Jim Sidoti from Sidoti & Company.

Can you talk a little bit about gross margin? Why it was down over in the quarter and where you expect it to be as you go through this transition?

Yes. Jim, yes, so for Q1, 86%, on paper, that does look as though it's down as a percentage year-on-year. We did have a onetime true-up around royalties in Q1 of last year. So when you normalize that, it was flat at exactly 86% gross margins. With that being said, however, good question because we will see a small revenue mix shift from our non-SVOD business kind of leading to a slight decline in our gross margin percentage as we proceed through the year, just kind of making sense that some of those businesses are growing at a slightly higher growth rate.

So I can go over that in more detail with all of you when we run through your models. But we're talking about a 2 to 3-point by the end of the year on gross margins, but we'll still be running as we go into 2027, back up around 86%.

Okay. And can you break out was there a contribution from [ Minato ] and some of your marketplace initiatives in the quarter?

There were. They were nonmaterial. They were on track to what we were expecting. Really, that 86% for Q1 was on plan to what we're expecting from them. the mix shift really isn't going into effect there as much as it will in Q2 through Q4.

Okay. And I know you revised your top line guidance, but did I hear you still expect to be profitable by the fourth quarter?

That's correct. Yes.

Our next question today is coming from George Kelly from Roth Capital Partners. [Operator Instructions]

First one is just on [ Igniton. ] I think you said that your com plans to present at the May Biohacking conference. So I was curious, like what the kind of product road map is with Ignatin and marketing plan for the year? And just any kind of data around your expectations for how the year should roll out for a Ignatan.

At biohacking, we're going to introduce new products, which all REM sleep, what increases dramatically for you on sleep. And we probably also introduce a new peptide with grid of the wrinkles -- and -- but on a peptide, we're not totally sure we do it right on the conference or after. We have a few other non supplement technology as it's a technology company, and we want to be careful, so it's not viewed on some people because today, we have questions about this being a supplement company.

We don't expect the supplemental PAUSE produced majority of the revenue at all. But for this year, it would, so that's kind of the biohacking, but we will introduce some of the supplement product as a vision without launching it in a event.

Okay. Okay. And what about the capital position at Ignite do they? Like how does that look? -- still -- is there still plenty of cash there?

Yes. The company operates close to breakeven and has about $5 million cash and no debt.

Okay. Okay. And then second question from me PAUSE is on community. Can you update us just on what's launched. I'm not sure if any of that's launched or the timing around the kind of key initiatives around community?

Yes, sure. I'll take that. So community, it remains an important part of the long-term vision for Gaia because we believe it has the ability to deepen engagement and increase intention. And right now, we are on target to launch a beta version by the end of this year for community. Like we are in a testing for sharing a playlist and sharing of profiles right now.

Okay. And then maybe one last question just on the deprioritization of the third-party channel. But what percent of your revenue is still derived there? And if we look forward a year or 2, where is that going to shift? Anything else in your subscription platform that you think, whether it's third-party or something else that you're also kind of -- it's under assessment? Or are there other areas that you might de-prioritize as well?

Well, the third party historically, we always had a limit should has to be revenue below 20%. And it was there till like so 2.5 years ago, it was all of this is like high teens. And then for us 2.5 years, it shifted a lot and get to kind of low 20s and close to not quite 25, but there and needs to go back into below 20%.. Did I answer your question?

Yes. How quickly do you expect it to get back to that targeted range Jirka?

Within 12 months?

Within 12 months, okay.

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

Thank you, everyone, for joining, and we look forward to speaking with you when we will report our second quarter results in early August. PAUSE Thank you.

Thank you for joining us today for Gaia's First Quarter 2020 Earnings Conference Call. You may now disconnect.

Good afternoon. Welcome to Gaia's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Joining us today from Gaia are Jirka Rysavy, Chairman; Kiersten Medvedich, CEO; and Ned Preston, CFO. [Operator Instructions].

Before we begin, Gaia's management team would like to remind everyone that management's prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions, including, but not limited to, statements of expectations, future events or future financial performance. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. Although we believe these expectations are reasonable, Gaia management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Gaia's latest annual report on Form 10-K filed with the SEC.

All non-GAAP financial measures referenced in today's call are reconciled in the company's earnings press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, March 2, 2026.

Finally, I would like to remind everyone that this conference call is being webcast, and a recording will be made available for replay on Gaia's Investor Relations website at ir.gaia.com.

At this time, I'd like to turn the call over to Gaia's Chairman, Jirka Rysavy. Please go ahead.

Good afternoon, everyone. Our first quarter was a good one. Our revenue increased to $25.5 million with a gross margin of 87.6%, which was above 87.1% average for the year. Free cash flow increased $1.1 million to $1.7 million, and our member count reached first time over 900,000.

Revenue for the year grew 11% to $99 million, driven by increased member count and higher ARPU. Gross margin for the year improved 100 basis points to 87.1% from 86.1%. Our gross profit per employee increased to $827,000 from $730,000 during last year. Our free cash flow grew $2.2 million to $4.9 million. Our cash position end of the year improved to $13.5 million from $5.9 million a year ago.

And Kiersten will now speak about business.

Thank you, Jirka. Good afternoon, everyone. The past quarter marked an important milestone in Gaia's evolution as we continue building on our strong SVOD foundation while advancing toward a more integrated AI platform. We delivered a strong fourth quarter, growing revenue to $25.5 million and exiting the year at an annualized run rate of approximately $100 million. Subscriber growth for the quarter remained solid, adding 20,000 members.

For the year, we generated approximately $5 million in free cash flow and operating efficiency continued to improve with gross profit per employee increasing to $825,000, up from $730,000 last year. With disciplined management of operating expenses, we see a clear path to profitability in 2026.

Now before moving forward, I would like to briefly address a leadership update. In January, James Colquhoun's contract reached its conclusion, and we have transitioned his responsibilities to our new Chief Operating Officer, Yonathan Nuta. Yon previously spent over 5 years in executive leadership roles at Gaia from 2016 to 2021 before rejoining the company. He also served as Chief Product Officer at Babylon and Fabric bringing additional operational and product leadership experience to Gaia. With the leadership transition complete, we are focused on execution and building momentum across the business.

Moving forward, our direct channel remains central to our progress. Approximately 2/3 of our direct members have been with Gaia for more than 1 year, and that percentage continues to increase. That level of loyalty speaks to the strength of our community and supports long-term lifetime value expansion. With continued investment in AI and community, the direct platform delivers a differentiated experience, driving double retention and approximately double the revenue per member compared to third-party distribution. This directly shapes our distribution strategy. Third-party platforms simply do not support the AI and community capabilities that defined the next phase of Gaia. And as a result, we are intentionally concentrating our capital and innovation focus on our direct platform.

Subscriber growth remains important. However, as this strategy progresses, beginning this quarter, we will no longer report total subscriber count as a primary metric. As our business matures, we believe revenue growth, free cash flow, lifetime value and earnings provide a clear reflection of the health of our model consistent with broader SVOD industry trends. Importantly, this strategic focus is translating into financial performance, and we expect to achieve profitability in the fourth quarter this year. With high gross margins and continued operating discipline, incremental revenue is increasingly flowing through to the bottom line, positioning Gaia for sustained profitability and long-term value creation.

This year, we will continue to integrate AI across the business. AI is now embedded across major functions from our code base to content production and creative workflows, improving speed, scalability and efficiency. This is reflected in our continued improvement in gross profit per employee. Late last year, we launched a beta version of our AI Guide to direct members, generating more than 2 million prompts in its first 60 days. Early engagement data showed deeper session activity and increased repeat usage following interaction with the feature. Although still early, these trends reinforce our view that combining purpose-built AI with our predominantly exclusive content library enhances the direct member experience.

Now as rollout expands, we are extending AI-driven capabilities, including personalized onboarding, intelligent recommendations, enhanced search and contextual guidance, further strengthening the engagement and long-term value member. Given the strength of our direct member relationships and engagement trends, we are implementing a price increase that begins this quarter and will roll out progressively throughout the year. We are approaching this thoughtfully and churn patterns are tracking favorably relative to the prior price increase.

In closing, 2026 represents an important year for Gaia. We're entering it from a position of financial strength, strong performance and a clear commitment to our members. We are staying focused on the steady progress as we build a stronger company for the long term.

Now over to Ned for the financial details.

Thank you, Kiersten. Revenues for the fourth quarter 2025 increased to $25.5 million from $25.1 million (sic) [ $24.1 million ] in the fourth quarter of 2024, primarily driven by growth of our member base and increasing ARPU. Gross profit in the fourth quarter increased to $22.3 million from $21.3 million in the fourth quarter of 2024. Gross margin was 87.6% for the fourth quarter. Net loss improved to negative $0.5 million or negative $0.02 per share as compared to a net loss of negative $0.8 million or negative $0.03 per share in the year ago quarter. Operating cash flow was $1.8 million for the fourth quarter with free cash flow improving $1.1 million from a year ago quarter to $1.7 million, representing the eighth consecutive quarter of positive free cash flow.

Shifting to the 2025 full year financial results. Revenue for the year was $99.0 million as compared to $89.3 million in 2024, representing 11% growth on a year-over-year basis. Gross profit increased to $86.2 million from $76.9 million in 2024. Gross margin increased to 87.1% from 86.1% -- we expect gross margin to remain at this level for fiscal year 2026. Loss for the year was negative $4.5 million or negative $0.18 per share as compared to a loss of $5.2 million or negative $0.22 per share for 2024, with increased marketing spend and amortization and an operating cash flow of $5.7 million.

For the year, free cash flow improved by $2.2 million to $4.9 million from $2.7 million in the prior year, further reflecting ongoing operational discipline. Our cash balance increased to $13.5 million as of December 31, 2025, up from $5.9 million a year ago with a fully available $10 million line of credit.

The company's financial position continues to strengthen with double-digit revenue growth, improving margins and a growing cash balance through accelerating cash flow generation. We have all of this with 0 debt outside our mortgage on our campus, which we finalized a new 5-year extension in December.

In summary, Gaia has a strengthening balance sheet. We continue to manage costs carefully and maintain healthy margins while investing in the strategic areas that will create long-term value for our shareholders.

That completes my summary. I'd now like to turn the call back over to Jirka for his closing comments.

For a summary, in this year, we expect similar annual revenue growth rate as we just had with continuing growth of ARPU and focus on direct member, increasing gross profit per employee and continued generation of positive cash flow.

This concludes our remarks. So I would like to open the call for questions. Operator, please?

[Operator Instructions] Our first question comes from Ryan Meyers with Lake Street Capital.

Kiersten, congrats on the great quarter and being able to deliver on both the ARPU and the member growth. So just thinking about the member growth that you have seen, can you just speak to the willingness of your customers and their ability to continue to pay these higher prices as you guys enact the price increases as you did in the fourth quarter? And then how you're thinking about that in Q4 -- or sorry, in 2026?

Sure. Well, our member growth in Q4 was driven by strong execution and typical seasonal strength within our core SVOD business. And as far as our price increase, we are delivering more value to our members between rolling out our AI Guide and a very strong content slate and our AI personalization. So as the price increase, we already rolled it out this quarter, and we're already seeing lower churn as compared to last year or the previous price increase.

Got it. And then -- as we think about 2026 and some of the initiatives that you guys do have, Igniton is obviously one of those, how should we think about potentially the ability to monetize that? And then just how you're thinking about that double-digit growth in 2026, maybe the balance across ARPU, and I know you're not going to be giving the member growth or the member number anymore, but just kind of unpack that double-digit growth rate for us in 2026 and what we should be watching for?

Yes. Ryan, it's Ned. So for 2026, our growth will really be coming mostly from our core business. So in regards to the price increase, our shift to more of a direct member base as well as just general momentum that we have. That will be the driver, and we'll be watching ARPU quite closely. We will, on top of that, have some of these new business initiatives. You just mentioned Igniton, but we have some others that will add, and we've given some numbers in the past. But really at this point, on a nearly $100 million revenue business, those are not material yet. The majority of our growth will come from our core business.

On the question about Igniton, Igniton did $3.2 million in 2025. And we really introduced the Igniton products in the second part of the year. Otherwise, it was helped by Photonics. So it will grow. I don't want to speak how fast, but it's definitely -- will probably grow faster than the core business. And I think it was all the questions.

The next question comes from the line of George Kelly with ROTH Capital Partners.

First, just wanted to make sure I didn't miss something. Did you reiterate the guidance for double-digit revenue growth in 2026?

Yes. George, it's Ned. Yes, that's correct. We are reiterating the numbers that you have for 2026. No changes there.

What I said in the call will be roughly same as this year.

And then how much pricing are you taking?

So we're between 14% and 17% price increases. And again, that's to all new customers and to all existing customers in opt-out countries, similar to what we did in October of '24.

Okay. And then a couple of other questions for me. AI licensing, I was wondering if you could give any detail just on the status, if that's still something you're contemplating? And if so, what's the expected timing and materiality of any of those potential AI licensing deals?

Yes. So that really didn't factor in, in Q4. We're really still at the beginning stages of our AI and content licensing efforts. We're still going down that path, and we anticipate maybe a small pickup. But again, these are onetime nonrecurring revenue streams. And anything that would hit here in 2026 would really drive a little bit of upside. The numbers that we've reiterated to you are really our core business, and we're not reliant on those really nonmaterial numbers from licensing. So nothing yet. It's not something that we're going to stop pursuing, but it's not something that we're dependent on either.

Okay. Okay. And then last one for me is just about community. I was wondering if you could go to the mailback -- can you hear me...

Can you repeat that question?

Yes. Sorry about that. So community. Can you give more detail just about the sort of timing of different community initiatives and what you're most excited about, I guess, with respect to the community offering in 2026?

Okay. So for community, we remain on track to launch the community experience later this year, and I will be very, very excited to talk about it when we're closer to launch. But right now, we're still building it.

It's kind of closer to -- that means we might do the different tests, but actual launching is closer to the end of the year.

Yes.

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

Can you give us a sense on what percentage of your 900,000 subscribers are third-party subscribers and what the plan is to convert those subscribers to direct subscribers?

Yes. Jim, it's Ned. So really, we have shared that in the past. I think we've, in the past, talked about trying to limit that to 20% from a number of third-party members as well as revenue attribution. So we'll work towards kind of bringing that down a couple of percentage points to Kiersten's earlier points around kind of a focus on first party. So for 2025, it was around that 20% level, and we'll take it from there going forward.

Okay. And do you have specific things you can do to convert those that 20% to direct members? And can you give us a sense on how that -- how you can accomplish that?

We're not going to planning to per se actively convert a lot. We'll convert some percentage. But I think it's a valid channel. We just need to focus on marketing on our direct channel.

Yes. And we'll be coming out with really strong brand campaigns this year so to let the broader audience know what the value prop is for coming to Gaia as a direct member.

And it sounds like you expect to continue to be free cash flow positive. Any plans for that cash? Are there acquisition targets out there? Do you plan to share buyback? Can you share what your plans are for that?

Yes. So Jim, just to be clear, our plan is to continue to be free cash flow positive. We've been free cash flow positive the last 8 quarters. But what Kiersten shared earlier is for us to be P&L positive by Q4 of this year and really not to comment on any of those other specifics. We have a strong business model with our SVOD business. We are rolling out some of these new strategic initiatives, but not really ready to comment on any sort of acquisition or other elements at this time.

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

Well, thank you, everyone, for joining, and we look forward to speaking with you when we report the first quarter results in early May. Thank you.

Thank you for joining us today for Gaia's Fourth Quarter 2025 Earnings Conference Call. You may now disconnect.

Good afternoon. Welcome to Gaia's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

Joining us today from Gaia are Jirka Rysavy, Executive Chairman; Kiersten Medvedich, CEO; and Ned Preston, CFO. [Operator Instructions]

Before we begin, Gaia's management team would like to remind everyone that management's prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions, including, but not limited to, statements of expectations, future events or future financial performance. These statements do not guarantee future performance and, therefore, undue reliance should not be placed upon them.

Although we believe these expectations are reasonable, Gaia management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of Gaia's latest annual report on Form 10-K filed with the SEC.

All non-GAAP financial measures referenced in today's call are reconciled in the company's earnings press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, November 3, 2025.

Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay on Gaia's Investor Relations website at ir.gaia.com.

At this time, I'd like to turn the call over to Gaia's Chairman, Jirka Rysavy. Please go ahead.

Good afternoon, everyone. During the third quarter, we grew our revenue 14% and our gross margin improved an additional 30 basis points to 86.4% from 86.1% a year ago quarter. Member count at the same period grew to 883,000.

A year ago, we raised our subscription prices for most of our members by $2. So while the losses from the price increase resulted in lower member growth, our revenue grew to $100 million run rate or $25 million during the quarter, up from $22 million in the last year quarter.

Our annualized gross profit per employee increased to $814,000, up from $703,000 in the year-ago quarter, which is also obviously driving further improvement in our free cash flow.

The value of our subsidiary, Igniton, using pricing from its recent fundraising, it's about $106 million. But valuing Gaia's 2/3 ownership interest in Igniton, it's about $70 million. Igniton products are now available on Gaia Marketplace. You can get more information on igniton.com.

The Gaia cash position improved significantly to $14.2 million from $4.4 million a year ago.

Now Kiersten will speak more about business. Kiersten?

Thank you, Jirka. So last week marked an important step in Gaia's evolution as we continue moving from a traditional SVOD model to an AI-forward company, one that brings together conscious media, community and technology. We launched our new AI Guide in beta to our direct members.

And the early results have been very encouraging. Session depth and repeat usage are both trending upward, confirming what we believed from the start: that Gaia's curated content library, paired with our customized, AI creates a truly distinctive and engaging experience. Now as we move towards full rollout, this experience will expand to include personalized guidance, contextual recommendations and integrated chats across both app and web.

Beyond helping members discover content that fits their evolving interests, our AI acts as a research companion, helping members find what's relevant to them faster while keeping the experience fresh and evolving. This direction reflects our commitment to grow in step with our members and the world around us, integrating intelligent technology in service of human potential and positioning Gaia at the leading edge of how people connect, how they learn and transform in an increasingly digital world.

AI will also play a central role in how we express our brand. It will become an integral part of our marketing, helping people discover Gaia, understand our mission and meet them where they are on their spiritual path.

In addition to AI, we're actively developing Gaia's community platform. While we're not ready to share specifics yet, we plan to launch next year. Our vision is for members to explore, learn, transform and then naturally find their community of like-minded individuals to learn and share together.

We expect 2026 to be a key transition year for us, focused on advancing the technology and infrastructure that will deliver outstanding value to our direct gaia.com members. This work will position Gaia for the next stage of growth as we fully integrate content, community and AI into a seamless, cohesive experience.

As part of this evolution, we're also reframing how we define success. Traditional viewership metrics no longer capture the actual depth of connection we're building. With the intersection of AI, content and community, engagement actually becomes a true measure of value. This shift better reflects our mission, our technology and the growing residents within our direct member base.

That being said, our third-party members don't have access to these new AI or community features as they're not supported on external platforms. And with churn nearly double on the larger platforms and revenue per subscriber roughly half compared to our direct members, we believe our focus is better spent on deepening those direct member relationships.

So going forward, we'll prioritize revenue and members with higher ARPU. Today, about 2/3 of our direct members have been with Gaia for more than a year, and that number continues to grow. This ongoing loyalty strengthens our foundation and positions Gaia for a greater long-term profitability.

Now, over to Ned to talk about the financials.

Thank you, Kiersten. For the third quarter of 2025, Gaia delivered revenue of $25.0 million, up from $3.0 million, or 14% year-over-year, driven by growth in both ARPU and member count. Total members increased in Q3 to 883,000.

Gross profit increased 14% to $21.6 million from $19.0 million in Q3 of 2024, with gross margins expanding to 86.4%, up from 86.1%. Net loss was negative $1.2 million or negative $0.05 per share, versus negative $1.2 million or negative $0.05 per share in Q3 of 2024.

Operating cash flow was $0.3 million, with free cash flow of $0.9 million, representing the seventh consecutive quarter of positive free cash flow and further reflecting ongoing operational discipline. For the first 9 months of 2025, free cash flow was $3.2 million, up from $1.8 million during the same period of last year.

Our cash balance increased to $14.2 million as of September 30, 2025, up from $4.4 million a year ago, with a fully available $10 million line of credit. In July, Gaia also renewed its credit line for an additional 3 years with improved terms, including a lower interest rate and a wider range of permitted use.

The company's financial position continues to strengthen with double-digit revenue growth, improving margins and a growing cash balance through accelerating cash flow generation. And we have all of this with 0 debt outside of the mortgage on our campus, which we are in the process of renewing by the end of this year.

In summary, we continue to manage costs carefully and maintain healthy margins while investing in the strategic areas that will create long-term value for shareholders. I will now turn the call back over to Jirka.

So for the summary, so we expect our annual growth rate for this year to be in low double digits and similar probably revenue growth for the next year, thus continually increasing our ARPU and obviously generating positive free cash flow.

So this concludes our remarks. So I would like to open the call for the questions. Operator, Sachi?

[Operator Instructions] The first question is from Ryan Meyers from Lake Street Capital.

First one for me, you called out some losses from the customers on price increases. So just curious what the churn number was during the quarter and kind of how that compares to what churn is historically.

Well, for the price increases, you can roughly figure out you lose about half the price increase as additional churn from the -- because you increase prices. So there's definitely some people, they kind of respond to it. But if you get the delta, about half of it. And we kind of view it positively. That's where we kind of expect it. And we, based on the experience, we'll probably do another price increase next year.

The churn, we don't really use a specific number because we try to do it and everybody does it different. Like for, let's say, Netflix, if the customer comes back in 10 months, it's the same customer. For us, it's a different customer. And pretty much 80% of losses happen first 6 months. So it's -- the numbers on its own doesn't really make sense.

Okay. Fair enough. And then with the AI offering that you guys talked a little bit about, how do you think that changes the core subscription model? Any additional details on that, I think, would be helpful.

Well, I think keep in mind, it's still in beta, but it is considered a conversational experience that will connect our members with the right content. And the interaction will now be measured as an engagement. So our feeling is ARPU will increase and so will -- and churn will decrease.

Okay. Got it. And then lastly, did you guys see any significant growth in the Igniton offering on the actual Gaia Marketplace?

Well, we didn't really launch Igniton on Gaia Marketplace until after Labor Day. So we started, I think, selling it like -- so we have only like 3 weeks in the quarter. And so it went pretty well. Obviously, there is no cost to that. We probably sold about $300,000. But it also was a new item.

So it's, still for Igniton, it's to kind of stabilize all the lines. We find different outside fulfillment houses and stuff. And they will probably continue until end of the quarter, fourth quarter. So I don't expect to really push revenue in Igniton for this year until next year.

The next question is from George Kelly from ROTH Capital Partners.

First, just a couple of follow-ups from the prior questions. It sounded like you're a little uncertain about taking pricing -- core subscription pricing early next year. Did I hear that right? Is that still in the plan? And if so, how much do you plan to take?

Our plan is to go like probably somewhere in mid-April time for another $2.

Okay. Understood. And then there was also a discussion on the call about -- with your AI features really prioritizing the direct channel. How should we think about that as far as partner marketing spend and you just allocating sort of marketing resources behind partners? Like is there going to be some churn or some slower growth by channel next year as you sort of really emphasize the direct? And how is that going to -- I mean, how are you thinking about subscriber growth next year with those kind of changes?

Well, if we're going to raise prices, typically most of the hit you take the months you introduce it, because all the monthly, which is like half of the business, monthly subscription compared to annual, will kind of decide if they will continue or not. So that's typically I said about if we don't raise the prices, the revenue growth and member growth as a percentage is about same. If we do price increase, the member growth is maybe half of the revenue growth. So you're going to -- I assume that's what we saw this year, that's what we're going to see next year.

And also, we continue to see challenges with advertising efficiencies and targeting on our third-party platforms, which we can't fully control. So our focus will remain on sustainable profitable member growth and not short-term volume.

Then as Kiersten said, because if you have -- go to third party, their churn is more than double of ours, and the revenue, what we book, is half of ours. So it's really we need 1 person -- for the same revenue, just 1 person on our direct rather than 4 on outside parties. So it's just -- that's what she meant by the higher value members.

Okay. Understood. And then still on the core business, as you improve the sort of curation tools, and you're discovering, I know it's still early days, but you're discovering sort of what people are most interested and wanting and learning about, do you expect to raise your content spend? Or do you think it's in a good place where it sits now?

No, we are raising our content spend about 23% from the prior year. So we will continue to make more content.

So next year, I'm just thinking of round numbers, I mean, next year, like what's a good kind of ballpark? Maybe you're not ready to give that. But how should we think about content spend next year?

We're not ready to give that, but I could say it's 23% more.

No. I mean in a rough figure, because we're going to right now look at engagement, which includes community and AI, but if you would strip that and just look at pure content investment, probably about $15 million.

Okay. And then just a last one for me, just back to Igniton. I thought that the official big launch was in September. It sounds like maybe you're pushing it out a little bit. Like what have you seen? Did you put much marketing oomph behind it in September, or is there any more detail you can give there? And that's all I had.

All we did is to put it in Gaia Marketplace and send e-mail to Gaia members. We didn't do any marketing push, and we probably won't do anything until like Christmas time.

The next question is from Jim Sidoti from Sidoti & Co.

Jirka, I think I heard you say the Igniton revenue was about $300,000. Was that for the month or for the quarter?

No. That was just Igniton product on Gaia Marketplace, the revenue for the quarter was I think -- yes, probably $700,000.

So once this is fully launched, do you think this is an over $3 million a year product?

We expect to be pretty much close to it in this year.

Close to $3 million in 2025.

Well -- yes.

Jim, I can get into it in a little more detail. Actually, for this year -- it's going to be on a run rate of around $3 million. But for this year, because we launched it kind of 2/3 of the way through the year, we'll finish this year about half -- approximately half of that. Heading into 2026, I think that's when you would expect the higher number.

And what will the impact on gross margin be?

It's right now 82%, so it's slightly below the 86% which Gaia does.

Okay. But still a pretty healthy gross margin.

Yes.

Okay. Right. And in terms of the AI, can you just kind of detail, how do you monetize that? Is that going to be greater member retention or helps support price increases. What is the ultimate goal of the AI investment?

Well, there's several of them. But I kind of believe it would have pretty good engagement on its own as we see some people really spend more time on search through AI. We spend a lot of time incorporating a lot of ancient books and videos from our side, so it's quite different than other AIs could be. So it's really proprietary.

And then it will really function also as a search for Gaia for all the videos. So if you ask any questions, we will recommend videos which we have on the topics. So that's really the kind of main function. And based by early indication, it was a good call because the engagements are already very good and increasing. And we launched it like a week ago.

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

Well, thank you, everyone, for joining, and we look forward to speaking with you when we report our fourth quarter results, which will be in early March next year. Thank you.

Thank you for joining us today for Gaia's Third Quarter 2025 Earnings Conference Call. You may now disconnect.

Good afternoon. Welcome to Gaia's Second Quarter [indiscernible] 2025 Earnings Conference Call. [Operator Instructions] Joining us today from Gaia are Jirka Rysavy, Executive Chairman; Kiersten Medvedich, CEO; and Ned Preston, CFO. After the speaker's presentation, there will be a question-and-answer session.

Before we begin, Gaia's management team would like to remind everyone that management's prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. included, but not limited to, statements of expectations, future events or future financial performance. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them.

Although we believe these expectations are reasonable, Gaia management undertakes no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of its latest annual report on Form 10-K filed with the SEC. All non-GAAP financial measures referenced in today's call are reconciled in the company's earnings press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, August 11, 2025.

Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay on Gaia's Investor Relations website at ir.gaia.com. At this time, I would like to turn the call over to Gaia's Chairman, Jirka Rysavy. Please go ahead.

Good afternoon, everyone. So revenue for the quarter increased 12% and gross profit 16%. Gross margin improved 120 basis points to 86.7% from 84.5% at the year-ago quarter. Our member count grew to 878,000 and we are focusing now on high lifetime value members. Our annualized gross profit per employee increased to $814,000 from $695,000 in the year [indiscernible] quarter. Our subsidiary, Ignition, raised $6 million recently at $106 million post-money valuation. Value in Gaia 2/3 ownership [indiscernible] at $70 million, 2.5x increase from previous $28 million.

Some Ignition products, you can now -- is also now available at Gaia marketplace. And if you want more information, you can get it at igniton.com. And I would call -- I will turn the call over to our CEO, Kiersten.

Good afternoon, everyone. As we begin today's call, I want to honor this moment of transition. This is my first time speaking to you as CEO of Gaia, and let me begin by affirming our strategy is not changing. I am fully aligned with the path we've been walking a strategy rooted admission, discipline and the long view. We are building on a foundation of purpose and deep intention, and we remain committed to moving forward with consistency and focus. Our core streaming business remains the heart of Gaia. It is strong, resilient and continues to grow over time. we are focused on scaling it sustainably by improving retention and deepening member engagement. With 90% of our content exclusive to Gaia, we offer something no other platform can an intentional, curated experience that goes beyond content and into personal transformation and connection. And we're seeing the results.

So let's talk about that. In Q2, we carried our momentum from Q1 into a strong quarter, delivering double-digit revenue growth and exceeding our expectations by $300,000. The key drivers of that performance were growth in both member count and ARPU as well as the launch of our Ignition brand, which saw an enthusiastic response following its debut at the Biohacking conference in May. This success reinforces something we've long believed that those seeking to optimize their fiscal performance are often on the same path as those seeking to expand their consciousness. We also more than doubled our free cash flow quarter-over-quarter, reaching $1.6 million in Q2, up from $700,000 in the prior quarter. Annualized gross profit per employee increased to $814,000, up from $695,000 in the prior year quarter. This is a clear reflection of the efficiency and scalability of our model. But even more so, it is a testament to the focus and dedication of our amazing team. Our people are the heart and soul of this company and their ability to deliver excellence while staying aligned with our mission is what makes results like this possible.

And as we look ahead, we see a profound culture shift emerging. More and more people are turning inward, seeking purpose, connection and growth. On many of the AI platforms, questions about consciousness, [indiscernible] and awakening now ranked among the most frequently asked topics. That is a global [indiscernible], and it's one Gaia that is uniquely prepared to meet. So right now, we're currently planning the next phase of our platform, a foundation for a global conscious community. We are listening to what people want and they want deeper connections and shared experiences, whether it be face-to-face or across the globe, the desire is the same. People want to connect. And we're creating a beautiful space for that.

Our plan is to build a community around the very topics our content explorers, offering members a place not just a watch, but to engage and grow together. We're designing it with the same care and intentionality that defines our content, and we believe it will become a meaningful advantage in how we serve our global member base. Our plan is to launch within the next year.

While from the outside, this may look like the next evolution, but it's really returned to Gaia's deeper purpose, our purpose not just to inform but to connect. So in parallel, we're making progress on Gaia's conscious AI companion. We believe this will become a beautiful bridge between our exclusive content and the personal journeys of our members. Our AI companion will be sourced primarily from Gaia's original content. This allows us to offer something rare, guidance that is deeply aligned with our brand and rooted in the wisdom our members have come to love and trust.

Lastly, and most importantly, our focus remains centered on long-term sustainable growth, driven by our core SFI business and our global member community. Gaia is built for scale with a high-margin model exclusive content and a brand that continues to earn trust and engagement. We are staying true to our North Star while remaining agile enough to capture revenue opportunities along the way.

So it is so exciting. The world is actually catching up with us. Last year, the word manifest was named Word of the Year by the Cambridge Dictionary and that is more than a headline. It is a cultural signal and Gaia is ready to meet that moment because we've been preparing for it from the very, very beginning. Thank you all for being here and being part of this vision.

Now over to Ned for financial details.

Thanks, Kiersten. For the second quarter of 2025, Gaia delivered revenue of $24.6 million, up $2.7 million or 12% year-over-year, driven by growth in both member count and ARPU as well as the launch of Igniton. Total members increased in Q2 to $878,000. Gross profit increased 16% to $21.3 million from $18.5 million in Q2 of 2024 with gross margin expanding to 86.7%, up from 84.5%. Net loss was negative $1.8 million or $0.07 per share versus negative $2.2 million or negative $0.09 per share in Q2 of 2024.

Operating cash flow was $2.3 million with free cash flow of $1.6 million reflecting ongoing operational discipline. Our cash balance at the end of June 30, 2025, was $13.9 million with a fully available $10 million line of credit. In July, Gaia also renewed its credit line for an additional 3 years with improved terms, including a lower interest rate and a wider range of permitted use.

We continue to manage costs carefully and maintain healthy margins while investing in the strategic areas that will create long-term value for our shareholders. As mentioned earlier and is further outlined in Gaia's 10-Q, our subsidiary, Igniton, raised $6 million of private common equity financing in the month of July, which included $2 million from Gaia.

Igniton's implied post-money valuation is now $106 million, up from an implied post-money valuation of $40 million from last year's raise. The proceeds from the financing will be used by Igniton for product line, general operating expenses and certain capital expenditures to support future growth. Gaia now owns approximately 2/3 of Igniton equity. More information about Igniton can be found at wwww.igniton.com, and Gaia members can purchase Igniton products at a discount through Gaia's marketplace. I will now turn the call back over to Jirka.

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

[Operator Instructions] And our first question comes from Mark Argento with Lake Street.

Yes, I just wanted -- maybe if you could just provide a little bit of your background and kind of your main focus here over the next 3 to 6 months in terms of kind of key priorities.

Sure. So my background is in content. I was at Sony for 15 years, and I came on to Gaia to run the content team about 9 years ago and somehow worked my way up to where I am today as CEO. And my focus going forward for the next 6 months is in 3 areas. One is early tenure engagement which consists of specifically 3 to 6 -- 0 to 3 months, which will consist of product improvements, better marketing targeting, which means basically fishing in new ponds and then also increase content publishing. And then the other 2 areas, as I talked about were investments in our AI and investment in our community.

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

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

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

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

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

Yes, we introduced the product in last few [indiscernible] May in Austin, there was a Biohacking conference it's one of the largest one in this field. The response was absolutely stunning. There was a line on our both basically through all conference about 50, 200 yards. So they never saw anything like that. We sold all the products we brought by far, taking a lot of back orders, which we now filled. And -- so because of that, we kind of decided to actually raise some money. So we took -- we just did that at least the first part of it. And we just introduced it recently, we put it also a gai marketplace, so you can get someone on the Gaia marketplace starting now. And we plan to use some of this money raised for bigger launch because there response, and we expect that to be after Labor Day.

And do you anticipate doing any kind of partnership deals, either the technology or where you guys -- will be all branded under your own brand?

Yes. We would not this year, but I would kind of say we might -- we probably [indiscernible] we have a lot of order requests existing from existing brands, can we enhance the product because Igniton technology can increase efficiency pretty much all other molecules would have any trace of water. So all organic molecules. So we would focus on hydrogen and so we probably would might license improve some product with some upfront license fee and then the regular margin on selling the product, but we would obviously always have a license fee first. So -- but we don't expect to do any of that this year.

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

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

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

It is going to be in all countries because some countries are input. So it depends that we would -- that doesn't mean we would raise pricing on all our customers, but it would be probably in 80-plus percent.

Okay. And then a couple more questions on Igniton. Can you help us at all understand the sort of revenue opportunity maybe that you've seen coming out of the Biohacking conference and just your expectations for the back half of the year? I don't -- not to get too specific on guidance or anything, but how much could this sort of help lift the overall business just as you look out in the next few quarters?

Well, we don't really -- it's -- we kind of focus on the launch, which will be like after Labor Day. So it would be probably better to ask questions because we only so far did the Biohacking conference where you've been there, so how the success will we have. So it's -- the bottle -- $200 per bottle. And we had all the feedback was positive. There was no issues on that. So we're establishing distributorship, obviously, we have distributors in some countries, but we have to get it approved some of the countries. But I think it's kind of hard to say because we don't really have an experience. So we focused right now on from what we shipped so far because we're getting order now was kind of to finalize the packaging not the bottles, but the boxes, how we charge the distributors and all that stuff. And I can -- probably on the third quarter call, I can answer that question. But -- we basically -- we get something budgeted in the third quarter because we thought we're going to launch it in July. But then when we did the introduction and we get a meaningful sales, so they will give us probably 250,000 more than we expected in second quarter. But then in the third quarter, we didn't launch it in July. So we basically postponed our second quarter revenue until like March, so we'll probably offset what we kind of generated in the second, we will not generate in third. And otherwise, it's -- the fourth quarter, there might be some upside, but we don't really know yet until we launch it. But since it was so successful, our launch probably will be bigger than we originally planned, but not probably right in Labor Day, we start slow, and we probably will push it before Christmas.

Okay. Understood. That's helpful. And then just on the launch, you mentioned the Labor Day sort of a fiducial launch. Can you [indiscernible]

It won't be Labor Day. It will be probably somewhere in like second week.

Can you detail what that launch is going to look like though? What's the marketing plan? We don't really know yet because the success that we have and now the original and extra funding we're looking some stuff, but we didn't look before. So we would not have the finalized still probably next 3 weeks.

George, this is Ned. And just real quick, as you probably picked up on some of our commentary, I would consider a very soft launch back at the end of May Biohacking conference. And then as of the end of last week, the site has changed. It's been updated. Any customer can go in and buy off of our igniton.com website. And then Gaia members are now able to also purchase off of our Gaia marketplace at certainly a discounted rate. So the larger launch that you're talking about will be in the September time frame, but I did want to point out that we have officially launched out and are seeing an uptick.

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

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

[Operator Instructions] And our next question comes from James Sidoti with Sidoti & Company.

Can you give us a sense on how you're going to spend the $6 million your [indiscernible] Igniton? Is that to build capacity and build up sales and marketing? Where is that money going to go?

We don't really -- in the capacity we as spend the money before we kind of getting one more unit to boost the production. However, we don't need it from any other production. However, the [indiscernible] was so surprising that we'd rather be kind of ready, but I think we would not really see that until we push it somewhere around Christmas. So it's -- now the capacity by far exceeds what we can sell.

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

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

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

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

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

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

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

Well, yes, subscribers and other point of touch point with the our members. And they -- as we do build community, obviously, they can -- the community platforms around the topic of geographically can go together on these trips. That's one of the ideas.

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

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

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

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Summer Investment Conference 2025. The next presenting company is Gaia, Inc. [Operator Instructions] I'd now like to turn the call over to Ned Preston, CFO; and James Colquhoun, CEO at Gaia, Inc.

Gentlemen, the floor is yours.

Thank you, and good morning, everyone. Apologies for our tardiness. I'm going to go over a few slides here to kick off. My name is James Colquhoun, the CEO. And...

Hi, this is Ned Preston, the CFO for Gaia.

AAnd by way of short introduction, I came to the company via an acquisition in 2019. I sold another streaming company into Gaia, became the second largest internal shareholder, I was on the Board for a number of years and joined around 2 years ago, the same day as Ned as CEO -- COO and then CEO.

Yes. Actually, we're coming up on our 2-year anniversary. It was June 26, '23. So great to meet you all. I grew up in Boulder, Colorado, have spent the last almost 30 years in San Francisco, Chicago and most recently in Boston. So great to come back to Colorado and be a part of Gaia.

So to kick off on the slides here, Gaia essentially serves an aggregate of niches that are historically underserved. And the mission is to really create a transformational network that empowers a global conscious community. First and foremost, we consider ourselves a community company, and our main go-to-market right now is streaming video-on-demand platform, which I'll share some insights on here in the upcoming slide. Essentially, we have a monthly and annual subscription, which is $13.99 a month and $119 a year. We also have a $299 a year premium membership tier, which includes live broadcasts.

So we conduct about 6 events a year from our headquarters here in Boulder, Colorado, which are live streamed to the premium membership tier and available for replay. And also, we have an in-person audience of about 300 people that can attend. Just last weekend, we had a sold-out event BioGeometry with Ibrahim Karim. So the content categories, this aggregate of underserved niches I was talking about earlier, encompass sort of 3 core areas: the first being personal growth and transformation, the second being aged wisdom and unexplained mysteries and the final being wellness, yoga and meditation. You may be familiar with the company's previous incarnation, GAIAM, which was a consumer packaged goods company that sold yoga mats and blocks and products.

We sold that business off in 2016, and we used part of the proceeds from that sale to buy back stock and to invest in a pure digital play business, which is the core of what we are today. In terms of our demographic, we skew older, we skew female, we skew highly educated and we skew higher household income. We call this market segment Avatar Celeste. She is a huge fan of Gaia, often attends our live events and loves many of the experts and talent that we have on our platform.

If we look here at some of the finance highlights, what's core and unique to our business, we believe, is the high cash contribution and gross margin. So we operate on a 93% cash contribution and an 86% gross margin. We also have, since Ned and I have joined, as we mentioned at the top of the call, coming up for 2 years, operated on positive free cash flow, which we've announced also for Q4 and the full year 2024. We operate on a negative working capital model business, which means that we're generating cash flow while still negative P&L.

And we'll look at some more of the cash flow pro forma metrics in terms of forecasting as we get towards the end of the presentation. But one other point of note here on the finance highlights is that our acquisition costs for a customer have remained relatively steady over the past 8 years, and yet our LTV has tripled. So what we're seeing is that we're able to continue to solidify the retention of our member cohorts to expand on ARPU through price increases and alternate revenue streams as we launch new initiatives, which I'll talk a little bit about later in the presentation, all the while maintaining a relatively stable CAC or customer acquisition cost over this period. And this -- this speaks to the expanding health of the business as we grow, and we're very excited about this metric, which you can see in the chart there. In terms of TAM, or total addressable market, obviously, global SVOD households has ballooned dramatically with research showing that there's an estimated 1.8 billion global SVOD households by 2029.

We then sort of chunk that down into buckets of those willing to pay a subscription and interested in at least one of our topics, then we go to our total addressable market and then we go to our subscriber target. So at the end of last year, we published data that we were 860,000 subscribers. And right now, we have a subscriber target of 5 million. In terms of subscribers and ARPU on this next slide here -- sorry, revenue and members, we'll get to subscribers and ARPU on the next slide. You can see the step-up in revenue here, reasonably commensurate with member growth. And you can see that in the first quarter of '25, we announced 867,000 members. So we're continuing to grow not only net members but also revenue in line there. If we go to the next slide, you'll start to see that underneath the hood, we're not only growing those 2 metrics side by side, but we're also expanding upon ARPU and GP per employee. So ARPU is going to be relative to price increases plus also alternate revenue streams.

For the first time in the company's history, we did a price increase for existing members in Q4 of last year. We did some tests previous to that in some other markets that were very successful. We had previously grandfathered members on existing pricing. And this was something that was uncommon in the industry, and we decided to sort of bite the bullet and increase prices for existing members that have been on these legacy prices. We had a very good result in that.

We had, I would say, on average, around an 18% to 20% price increase. It was about 18% in the U.S. if you go from $11.99 to $13.99 monthly. And we had a low 7% churn on that cohort in total, not monthly churn, but a total churn of that, which means we're making a 10%, 11% margin on average. And the price increase was even higher in some other territories. So this has given us the confidence to schedule another price increase in March 2026, which has been approved by the Board, and we're working towards that.

Additionally, on GP per employee, in Q1 '25, we were over $800,000. We anticipate this being north of $1 million and continuing to expand as the business grows. We want to keep this metric in here to prove that we can grow OpEx, including payroll and related at a fraction of the rate at which we increase top line revenue growth and continue to prove out leverage in the model. And AI will continue to help us do that as we improve upon efficiencies in operations and also in other areas of the business. One of the sort of unique points of difference that we have if you comp us to other streamers is that we have our own facility and campus here in Colorado. So we have 150,000 square foot 13-acre campus about 30 minutes from DIA and just outside of Boulder. We produced primarily on site, which gives us an enormous strategic advantage. I have a media background. I've produced 5 different movies, 2 went to Netflix and all of them are now on Gaia.

The most recent one had Joaquin Phoenix as executive producer. And when you travel and produce and if you're outsourcing your production to a production house, which most streamers do, it can really accelerate the expenses of a production. And so we're able to produce much more efficiently as we have all of our production team on staff. We also sit outside of any constraints that might happen in relation to labor strikes or so forth. And so over the years, as we continue to expand upon our exclusive and owned content library, we have 88% exclusive content. And like I said, no dependence on outside studios. Additionally, the way that consumers watch our content is unique in the streaming space. Often, streaming subscribers tend to oscillate between platforms based on the latest series or show and they'll subscribe in and out. Our members tend to consume quite a lot of legacy content.

One way we measure that is we look at the $2 million of content we produced in the first year of our operation in 2014. That has returned over $23 million in gross profit over the lifetime of that content. And we're seeing the highest return in that content cohort actually in more recent years. And so that shows that people tend to view a broad array of content regardless of release date. Additionally, we did some calculations at the end of last year comparing our gross profit to the amortized value of the content on our balance sheet to create a content efficiency multiple of sorts. You can see here for last year, we had $78.8 million in GP content was $39 million on our balance sheet. So we had 2x efficiency multiple. If you compare us to Netflix, who spends more on their content on a per hour basis, that $18 billion in GP, $32.5 billion in content, which was a 0.6 efficiency multiple.

So this is something we want to continue to do in order to sort of keep check of our efficiency and production. When it comes to distribution, we are distributed on all major platforms. Sorry, there's an additional slide here on international. So we have international rights for almost 100% of our library, 98%. And we're also able to expand into foreign languages without the need for foreign operations. So we have all of our foreign language teams here at our Boulder campus. Currently, we're live in Spanish, German and French, including native language titles. So we sub and dub our English content library, but we also have a localization content strategy so that we're acquiring and producing content in these markets in the native languages. We're currently 44% international. We do anticipate it will be north of 50% within 3 years, content with the industry standards, and we have members in 185 countries. When we look at distribution, we are distributed on all the major platforms. So we see our distribution in 3 buckets.

We see it as first party, second party and third party. So first party is web direct. Second party is wholly owned apps, things like iPhone, Android, Apple TV, Roku, iPad, Fire TV, et cetera. And I'm not sure if you can see there, but the ratings and reviews on our app stores are quite impressive. On the iOS store, we have 128,000 ratings with 4.8 stars. Amazon App Store, nearly 15,000 ratings, 4.1 and Trustpilot over 10,000 ratings at 4.3. So quite a lot of social proof in our category. Additionally, when it comes to third-party distribution, we have channel stores within the Amazon Prime infrastructure, YouTube, Fios, Xfinity and Comcast. Amazon has noted that we're one of their fastest-growing specialty channels in the U.S. We also have Amazon Prime distribution in the U.K., Mexico and more recently, Australia and New Zealand. And we have one of our team going to meet with them this week in L.A. with an eye to expanding into some European territories and further into LatAm.

When we look at alternate revenue streams, I think this is something that is a huge sort of growth lever for the business. We launched marketplace at the end of last year, which includes retreats, tours and curated physical products for our members at member-only discount prices. You could think of this as a conscious Costco model. We are essentially booking the keep from this initiative. So if we do an $11,000 tour, members get a 10% discount. So it's $10,000, and we keep about 20%, give or take. So it's about $2,000 we would book as 100% gross margin. So keep an eye on if you look at some analyst projections. Our gross margin is not going to contract. It will actually continue to hold or expand slightly. Then we have price increase slated for March '26, which is another future driver there. And we've got 2 product initiatives. We raised some capital in Q1 of this year to fund some initiatives around AI and community where we are building our own generative wrapper to create a conscious AI chatbot experience within the product and within the apps, which will launch on or around the price increase in March '26.

And then additionally, a community tech platform, which will launch around that time as well to help our members connect together and feel more part of a global community. And there's one other bullet on here, I'd add that's sort of coming to prominence now, and that's one of our subsidiaries, which is a private company, of which we own 71% Igniton has been in development for some time. We recently had a coming out party and did sort of a prelaunch at a Biohacking Conference in Austin, and we sold out within 5 hours and took some presales. We've got an incredible -- what many investors are calling an unvalued call option sitting within the business currently, and we're very excited about the prospect of that contributing to the expansion in our market cap over time.

I'll pass it over to Ned now for some finance highlights.

Yes, I'll just quickly go over about 2 or 3 slides here, and we'll make sure we leave 10 minutes for Q&A here at the end. So a look back at our performance from last fiscal year 2024, we finished just over $90 million, which represented an 11% year-on-year revenue increase. Our gross profits and gross margins were stable at 86%, and that continues to improve slightly in the first -- over the first 6 months of this year, and our cash contribution margin continued to be over 93%. Really, what we like to transition from this P&L slide to a milestone or pro forma of looking ahead. So really, what's nice is the stability or the leverage within our business model. So the current analyst estimate for our company is just over $100 million here in 2025. So that will be up another 12%. We have accelerating revenue growth. And so really that left-hand column is approximately what we expect here in 2025.

So we'll be generating north of $5 million in free cash flow, and that represents 6% of revenue. However, as we accelerate in the years ahead to $150 million and [ $200,000, ] which, of course, is very important to those alternative revenue stream that James just mentioned, we will be able to continue to do those levels without adding a lot of fixed costs. And so as you can see from $100 million to $200 million on top line, our free cash flow actually more than triples, almost quadruples. And so this is a slide that gets a lot of attention as we talk to investors, and we've actually adjusted this over the 2 years that we've been here and then see it come to fruition thus far.

Quick look at our balance sheet, and now I'll turn it over to Q&A is just simply, we have a strong balance sheet with over $13 million in cash. That does not include an additional $10 million access to a line of credit that we have not had to lean into at the end of any quarter since we've been here, although it's good to have through operations during the quarter and going forward, the potential of M&A, it's an opportunity there. But outside of our balance sheet itself, which is improving overall on assets and within our liabilities and equity, we're extremely happy with our deferred revenue almost doubling in the couple of years that James and I have been here. This really kind of indicates that, as James and I like to say, we are fierce offenders of margin, and we think of our business as a SaaS-like company because we have a growing deferred revenue line.

We have an increasing membership base or recurring revenue stream and a strong balance sheet. And what's not included on the balance sheet is our media library, which we value at just over $180 million, our member base of 867,000 members at the end of last quarter, which would be valued about $300 million and then our NOL is just south of $19 million. So that -- those are all interesting points to our balance sheet. And with that, I think I'm going to close it up here and take a peek at questions coming in so we can address some of those. Let's see.

So great stuff, Ned. That's 20 minutes and 20 seconds. So we have some time for Q&A here. We can probably just handle it from the top here. So there's a question here for Cyril. Q1 shows less revenue than Q4. Does that mean the business is shrinking despite a lot of cash and [indiscernible], the FC free cash flow looks far away from the $5.7 million objective for 2025. I'll get started on that. I'll let Ned jump in a little bit. As we shared in our earnings transcript for the Q1 results, we had some one-off business line items that performed a little better than expected in Q4 and a little less well than expected in Q1. If you look at our performance compared to analyst projections, we're around 1% or less of that target. As I mentioned on the earnings transcript, this was primarily related to our marketplace initiative. So Marketplace was a new business that launched in August '24, so Q3. And it has more of a lumpy revenue stream than we anticipated. It's a new business, so it's a little more difficult for us to project.

We also had some Egypt tours as a reasonably large part of the marketplace initiative in Q1. And at the end of last year, the U.S. government issued a travel advisory to Egypt, and that severely impacted the numbers that took these tours in Q1. So -- and I'm sure you're aware why. I mean there's some instability in the Middle East and in particular, Egypt borders on Israel. So we have made up for that by expanding upon the tours that we're running in Peru for Q2. We had a sold-out tour, and we have a tour where we're doubling capacity in Q4. and that's like almost 60%, 70% sold out already. So...

And let me pick up from there because really, Q1 was down sequentially a little bit, but it was double-digit growth on a year-over-year basis, perfectly into the free cash flow. It was $700,000 for Q1. It will accelerate from there in the subsequent quarters. And so as James said, we feel as though the sequential growth will come into play and we'll continue to grow north of 11% on a year-on-year basis by quarter. So by the end of the year, finishing over $100 million and 12%. That free cash flow question leads right into the second question we're seeing how much incremental cash flow could add Igniton for '25 and '26.

I would say currently for that, we're not going to speak specifically to Igniton. It's clearly a large upside opportunity for us on revenue stream. A portion of that is included into that pro forma that we just presented, but we're not going to talk specifically about Igniton until later this year until after our official launch here in Q3.

And again, to this question on the ownership of [ Telameron ] and the valuations there, what we're most interested here is in the valuation of Igniton, which is the private subsidiary. We raised capital in that entity. We own 71%. That's where our focus is. And to second what Ned is saying, we'll be sharing more details on this subsidiary as it becomes material. Until then, we're focused on bringing it to market and scaling it as quickly as possible. In terms of CAC to LTV with members, I think one thing that we don't share, which I could share a little bit here is that at the end of last year or sort of around mid last year, we're focusing on higher LTV customers. And so while the member growth is not as fast as previous years, this is likely related to a price increase and also focused on higher LTV markets like the U.S., Canada, Deutschland, Austria and Switzerland or the DACH region.

So for our business, like Ned mentioned, the deferred revenue is growing, which means we have more members securing longer tenured membership upfront, which typically come from our higher LTV territories. This is improving the stabilization of the business. which is really important for us moving forward.

Let me take the next one and just -- I mean, you probably aren't seeing the question, so I'll just read it off quickly. So what are the primary drivers behind the sequential growth in subscriber count? And how sustainable is that trend? I'll start, and I'd love for James to give some color on this. But we mentioned some of our alternative revenue streams and really a lot of that's going to be retention and bringing in new customers. So we really do feel is that the material that we stream whereas in the past was very niche, it's becoming more mainstream.

I'm sure you all hear podcasts and whatnot all the time. And it really is leaning into our space, not just about yoga and meditation, but around spirituality, manifestation, all kinds of trends. And so we feel as though going back to that TAM slide that we showed earlier that there's going to be more people coming in our space in general. And we'll also leverage some of the community and the AI aspects that James touched upon earlier, which will really, we believe, allow us to grow that subscription -- subscriber count well over $1 million in the quarters and years ahead.

So I want to acknowledge we're just at 25 minutes, 30 seconds here. The last question is from Chris around companies making money off selling or licensing content to hyperscalers. Per the most recent earnings transcript, I'm going to be moving towards focusing on this as well as capital needs for Igniton as a private entity. So that will have no dilutive effect on Gaia as the primary entity and also licensing deals for Igniton coming up from this summer onwards. And Kiersten Medvedich, tenured 9-plus years at the company, professional from Sony, Pictures will be taking over my role as CEO so that I can go work on this. I think it's a huge opportunity for the business, and we're hopeful that we should expect some additional revenue streams from this channel in 2026 as we move towards P&L positive. So thank you very much, everyone, and I appreciate your time.

Yes. Looking forward to talking to several of you in one-on-ones. And feel free to reach out any time with questions. We're very open when it comes to talking to investors. Pleasure talking to you all today.

That concludes Gaia Inc.'s presentation. You may now disconnect.