Hello and welcome to the LiveOne Inc. Q3 fiscal 2023 financial results and business update webcast. My name is Elliot. I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star one on your telephone keypad. Now I'd like to hand over to Aaron Sullivan, Interim CFO. The floor is yours. Please go ahead. Thank you. Good morning and welcome to LiveOne's Business Update and Financial Results conference call for the company's third quarter ended December 31, 2022. Presenting on today's call are Rob Ellin, CEO and Chairman, and myself, Aaron Sullivan, Interim CFO. I would like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts, and assumptions that involve various risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of the company, including expected future financial results and expected future growth in the business. Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the company's filings with the SEC for information about factors which could cause the company's actual results to differ materially from these forward-looking statements, including those described in its annual report on Form 10-K for the year ended March 31, 2022 and subsequent SEC filings. You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its investor relations website, and the company encourages you to periodically visit its investor relations website for important content. The following discussion, including responses to your questions, contains time-sensitive information and reflects management's view as of the date of this call, February 9, 2023, and except as required by law, the company does not undertake any obligation to update or revise this information after the date of this call. I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and the media via webcast, and a replay will be available on its website in the investor relations section shortly following the conclusion of the call. Additionally, it is the property of the company and any redistribution, retransmission, or rebroadcast of the call or the webcast in any form without the company's express written consent is strictly prohibited. Now, I would like to turn the call over to LiveOne CEO, Rob Ellin. Thank you, Aaron. Good morning, everyone. I'd like to thank everyone for joining us today for our fiscal year 2023 third quarter business update and financial results. The consolidation, we are proud to say, 18 months of work of six acquisitions in each of our subsidiaries is complete. We've cut over 30% of our staff. The stars of our organization have risen to the top. We've been humbled by COVID variances, epic market crashes, especially in media and technology. We have survived, and we have thrived. It's time to showcase our team's expertise at building billion-dollar companies. I can proudly tell you that all of our debt is now gone, converted into preferred equity at $2.10 this week. We now have over $27.5 million in short-term assets. The company has repurchased 2 million shares of stock. Starting early next week, we'll start to buy back $2 million worth of additional shares. We've gone from a story stock to a growth stock to now a value stock, trading at 60% of revenues and 5x adjusted EBITDA, while our peers trade at 3.3x revenues. As we've consolidated, our audio division delivered record revenues of $64 million and a record adjusted EBITDA of $15 million. When we acquired Slacker Radio and acquired PodcastOne, they were both losing substantial amounts of money. I can proudly tell you now those combined businesses will do well over $85 million and over $18 million of adjusted EBITDA, an increase of 105% compared to adjusted EBITDA of last year. We're growing in every area. Our membership has exploded, adding over 620,000 paid members since December 31, 2021, and a 45% increase, taking our total membership to 1.96 million and our total members, including free, of 2.8 million. What I've told The Street is we expect to, within five years, get to 10 million members. This is a very tiny piece of the overall TAM of the audio business. Goldman Sachs come out and said there are gonna be 1.7 billion paying subscribers, up from this year's 375 million. This will be less than 1% of the TAM of the industry. We've hit record number of sponsors on the platform. We had seven pre-COVID. We have passed over 300 this year and expect by March 31st to have over 400 sponsors on our platform this year. Our B2B partnerships are getting more and more exciting. Number one obviously is our Tesla partnership, which continues to grow, and we just see telltale signs this is gonna be a spectacular year for Tesla and for LiveOne. We've added partnerships with Google, Android, Automotive to be able to white label for other car companies, as well as many other products across everything from retailers to cell carriers to social media to cable companies. Candidly, anyone with 10 million to 2.5 billion eyeballs is going to need a music platform. We're one of 12 left on Earth to have all of the technology partnerships with the record labels and the publishers, the ability to deliver subscription sponsorship as well as all of the great things we do in media and original programming. We recently launched a very exciting division, LiveOne Brands. We've just announced a partnership between two pop culture stars, Jeremih, as well as winemaker Russell Bevan, We'll be launching the MVP version very shortly of our new consumer product. PodcastOne. We filed our S-1 on December 27th, We expect to begin trading very shortly. Company has delivered record revenues, has over 11 million unique listeners a month growing, we have over 300 podcasts on the platform, has grown from $20 million to $8.7 million for the quarter. That TAM as well, as you look at your opportunity of growth here, the TAM has just passed $1 billion in revenues for the overall podcast business, and it's on its way to $10 billion over the next five years. I'd like to hand it back over to Aaron, and I'll finish off with some comments at the end. Thank you. Thanks, Rob. I'll spend just a few minutes to provide an overview of the results for our fiscal 2023 first nine months and third quarter ended December 31, 2022. Consolidated revenue for the three and nine-month periods ended December 31, 2022, was $27.3 million and $74.1 million respectively. Our audio division posted revenue for the three and nine-month periods of $22 million and $64 million respectively. For the third quarter ended December 31, 2022, revenue was comprised of 49% membership and 51% advertising, sponsorship, merchandising, and ticketing events, compared to 33% membership and 67% advertising, sponsorship, and ticketing and events in the prior year period. Consolidated adjusted EBITDA for the three and nine months was $3.1 million and $9.4 million respectively. On a U.S. GAAP basis, LiveOne posted a consolidated net loss of $3.2 million, or $0.04 per diluted share in Q3 fiscal 2023, and a net loss of $5.3 million or $0.06 for the nine months ended December 31, 2022. Our audio division's Adjusted EBITDA for the three and nine-month periods was also a record $5.1 million and $15 million respectively. As of February 7, we had approximately 1.96 million paid members, a net increase of 620,000 or 45% compared to December 31, 2021. Total members include free memberships for approximately 2.8 million at February 7, 2023. Included in the total members are certain members who are currently the subject of a contractual dispute for which we are not currently recognizing revenue. Turning briefly to the balance sheet, we ended Q3 with cash of $8.5 million, including restricted cash of $300K. Now I will turn it back over to Rob. Just to wrap it up, everyone, I just want to highlight some of the exciting, you know, points that we've hit on in our press release as well as in this conference call. Number one, record numbers across the board. Number two, world-class management, world-class board. Huge growth in sponsorship as well as membership. LiveOne grows every time Tesla grows. Every day a car hits the road, we grow alongside of them. We're now in 68 other cars and growing, and we now have a partnership with Android Automotive to be able to white label for any car company, right, as well as many other industries in a similar fashion. We started our buyback. We bought back 2 million shares. Next week, we will begin buying back additional shares. I've personally been a buyer of stock. This company's stock is extraordinarily undervalued. I'm extremely excited to see some of the new shareholders that have joined us have been adding to their positions. I look forward to a spectacular year for the company. I want to thank everyone for joining us and be patient with us in a difficult market. We're going to be here for the long term. We're going to deliver a spectacular year this year. Thank you. Now I'd open it up to any questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. First question from Brian Kinstlinger from Alliance Global. Your line is open. Great. Thanks so much, and it's great to see the job you've done in rightsizing the business. Can you quantify podcast download trends in December, in the December quarter versus last December? I assume there is significant growth which is being offset by challenges in the advertising market. Maybe if you can quantify what you're seeing there as well. Yeah. I mean, I think it's going to be a very difficult, you know, advertising market. Part of the beauty of podcasting is that you have a huge direct response, and you actually have material numbers backing, right, you know, because in the digital side of it in podcasting, you know exactly what the numbers are. I think, you know, we're gonna have to fight that trend. At the same time, we're adding so many podcasts to our network. We see just telltale, really exciting signs that are happening in the industry, not just the TAM, but also directionally, right? The competitors who are also partners of ours, like Spotify and Apple and so on, they've spent a lot of money acquiring, you know, a tremendous amount of companies at massive valuations. As you probably saw, Sirius Radio, you know, just bought a podcast business at 15 x revenues. We just raised our money in PodcastOne, yeah, literally at, you know, less than 2 x revenues at a $68 million valuation. We're about to go public with it. We see the trends look great. We were ranked number four on Podtrac as best sales team. I think we have the best sales team in the entire industry. They come out of iHeart and Sirius and have that expertise, I just see, you know, just terrific trends for our business specifically. We will have to fight overall sponsorship and advertising trends. Can you possibly, if you're able to share the December quarter download trends in 2022 versus 2023? Sorry, 2022 versus 2021 in the December quarter. I think you'll see that shortly as part of our first announcements that come out in the IPO. I don't think, and Aaron, correct me if I'm wrong, I don't think that we've reported any of those trends yet. Okay. From a high level, are they growing? With all the new content you're putting on, are they growing significantly or should we think about it as not growing significantly? All of our trends have been substantially up. Okay. then It's kind of a self-fulfilling prophecy, Brian, as you know. You know, revenues are driven based on traffic and audience, right? Our revenues have gone up substantially. Right. At the same time, our traffic gone up substantially. Some of that is, you know, in fairness, some of that is we added when we did our deal, you know, with Kevin Connolly and his company, we added an extra 14 podcasts. Every time we add podcasts, you're adding additional traffic. Yep. Can you update us on the strategy on tentpole events? Do you know of any LiveOne tentpole events that you will have in the next 12 months? If so, can you tell us roughly when you think those might occur? I mean, we just announced Music Lives, which is our biggest event we ever did in the history of the company, which reached 135 million live streams and did over 5 billion engagements, right? We just announced a competition that is the all-stars of all of the LiveOne programming that we've done, right? To launch the all-stars of Music Lives. There'll be, you know, record-breaking number of artists. I think we had over 100 the last time. Way higher than that this time. It'll be a competition with the winner winning at the end in December. There'll be an event at each of these quarters coming up. I fully expect our next social boxing coming shortly. As you know, I announced a partnership with Ben Silverman, one of the great producers, right, of television, reality TV, including The Office. We announced a partnership to launch a reality TV show around social boxing. As you know, we did, you know, well north of $15 million in EBITDA on the last one we did. We took a little bit of a step back, right, for this year to consolidate, right, the six acquisitions. Internally, we cleaned up the balance sheet dramatically. We're now debt-free, and we now put ourselves in a position of really exciting to be able to move forward this year with multiple tentpole events. Great. speaking of the debt conversion and the settlement with SoundExchange, those were both great. Can you tell us what the total shares outstanding are today with everything that's going on? Yeah. I know you had the December quarter, of course, but it's changed, right? Yeah. We have about 85 million shares outstanding, right? In that range, right? Then you'll have the debt is now convertible, which is now preferred equity at $2.10. If that 21 million converted, right, you're gonna have about 96 million shares outstanding. Say fully diluted if that all was done, right, and obviously the stock has to be extremely higher than this, you'd have about 100 million shares outstanding. Great. Lastly, Aaron, if you could quantify any non-recurring benefits in the December quarter, such as gains in accounts payable. Then, if either of you could talk about when you expect to be free cash flow positive. I know I didn't see the nine-month numbers, but for six months, you know, there were some cash uses, so maybe an update there would be great. Yeah. We haven't publicly put any, out any cash numbers. We will shortly. Obviously with that settlement of SoundExchange, which is extraordinarily exciting, right? We've had five years where we bought Slacker Radio. We took on $45 million of payables when we acquired it, right? We finally are now down to where we have no substantial payables left that haven't been settled, which really puts us in a very different position with the music labels, music publishers. Multiple music partnerships have happened where they've taken equity at $2.10 or higher, some as high as $4. It really puts us in a great position. We haven't yet talked about free cash flow, you can see our cash is up from the last time we announced. You know, separate from the old payables, right? You can really look at, you know, substantial improvement in bottom line and cash flows of the company. Great. Aaron, just if you can quantify your non-recurring. Non-recurring, there was just over about $700K of non-recurring items in the quarter. Great. All right. Thanks so much. Thanks, Brian, as always. Thanks. We now turn to Jon Hickman from Ladenburg. Your line is open. Hey, maybe this is a question for Aaron, but operating expenses were $8.5 million this quarter. Could you maybe give us a little guidance about operating expense growth for the next 12 months or so? Hey, Jon. As I just noted, there was a one-time benefit in there of about $700K. You can expect to see that when you're trying to come back in. Yeah. Right. Yeah. In terms of growth in the expenses, I wouldn't expect substantial growth. You're gonna see a little bit of kind of variability in terms of when expenses hit, and that's mainly on, you know, around the corporate side where we have audit fees will kind of hit in certain quarters. You know, I wouldn't expect it just to be substantially higher than where we're at. You know, we're gonna see the benefits of full year of cost saves going forward, right? We've continued to reduce expenses kind of throughout the year. I would expect, you know, a pretty consistent run rate to what we have right now, you know, adding the $700K back in. Oh, okay. In the press release, you said that, Slacker was growing about 40% on an annual basis. Do you have a number for that for the PodcastOne business? We don't have a number. We kind of mentioned earlier, we don't have that download number yet, but expect to see that shortly. Okay. Thank you. Obviously, you know, Jon, as you know, we're in a quiet period in PodcastOne. We'll be talking a lot more about it as the SEC has approved the, you know, we just got back the comment letters, and we expect to start trading hopefully in the next 15 days-45 days maximum. Okay. Thanks. Our next question comes from Kevin Dede from H.C. Wainwright. Your line is open. Thanks. Good morning, everybody. Rob, you talked about the white label with Android. Is that baked in so that any car that runs Android Auto has LiveOne access, or is it an additional thing that each car owner chooses upon purchase? No, it's a little bit different than that. The Android Automotive is the opportunity for us to give a white label solution. What are the advantages of Slacker Radio? Number one is our AI and our technology, right? People just love the individual behavior and the understanding of our AI and those 44 patents we have to be able to deliver your next song, your next music, your next so on, right? Number two is our pricing, right? We're less than 30%, right, of our competitors, now they're all raising prices, right? Sirius just announced they're raising their price by $1. Spotify announced they're raising their price. We're gonna be even lower than everyone, right? Number three is we're the only ones that I know of that are willing to white label and give you Tesla Radio, give you Cadillac Radio, give you BMW Radio. There's a huge opportunity, and this is not just for the audio industry. It's for anything from Watches to gym equipment to Walmart to Costco. You know, as you know, I've built all my businesses off the back of massive partnerships with B2B partners. This is our opportunity now to really expand that business. While we made all these cuts and cut 30% of our staff, we are adding in B2B because we're seeing, you know, unique opportunities to really grow the business with partners who have 10 million to 2.5 billion eyeballs. You know, for Android, it's just a great opportunity for them to sell, to upsell to other car companies, for them to be able to do what Elon did, which is just smarter than everybody else. To brand their radio Cadillac Radio or BMW Radio is just brilliant. It's just a great marketing strategy. It makes them look cooler and smarter. Could you give us an update on where you are in the international spectrum in attaining licenses you can provide service there? Say that one more time. Yeah. Rob, I'm sorry. just I'm curious about where you are in obtaining the licenses you need to offer service internationally? Great question. This is the year to pull that off. I know we've talked about it before, but, you know, with market conditions and COVID, you know, and really not raising capital throughout this process, it just took us time to clean up the balance sheet, clean up the payables, right, settle with the publishers and the record labels, and really strengthen that position. I think this is our year to do that, and I think it's a massive opportunity to expand overseas. You know, if you remember when I used to talk about Digital Turbine, every time I always repeated, when the cycles change, right, you're gonna see the carriers and others fight back, and they're gonna start to battle to have a deeper and stronger relationship with their customers, right? That means they're gonna have to own content. I see telltale signs that's gonna grow dramatically. We're in, you know, very active negotiations, discussion to expand our licenses in either a partnership, and maybe with someone who already has them, or ourselves overseas. Obviously, Tesla would be number one, right? They're paying over $8 per sub, you know, to Spotify right now. It would be a huge cost savings for them. I think there are every carrier, car company, there's huge opportunities for expand, first and foremost in Europe before anywhere else. We are in discussion in India, Japan, and many other countries. As you know, almost every one of my companies has had partnerships with global carriers. This time, because it's audio and video, it's way more than just carriers, right? It can be cable, it can be satellite. It can be Candle, it can be any of the, you know, streaming platforms. I believe they all have to have audio on their platforms, and I think we offer them something so unique, you know, with the content we have. You mentioned, I think, what, 400 sponsors? You just offered a lot of data really quickly, and I can't hear that fast, so I apologize. Could you just review where you are with sponsors on which programs and which platforms, rather, and where you think that goes? I mean, with, the sponsorship that you have with Slacker, the sponsors that you have with PodcastOne versus, the LiveOne platform. Okay. To try to simplify it for a second, right? You know, start with the fact that we bought PodcastOne, right? We had one salesperson, right? We now have a 15-person sales team, right? That sales team, led by Sue McNamara and Alex Brough, have combined 50 years, you know, background of selling for Sirius, iHeartMedia, and so on, right? Our sponsorships across the entire platform have grown. We're growing our sponsors in podcasting, we're growing our sponsors across audio. We've just added podcasting to every Tesla car. Obviously it's only in the free tier of audio that you're gonna get sponsorship, right? Most of that is gonna be programmatic. In podcasting, you get both. You get programmatic as well as direct response, as well as great sponsors. Across our live programs, you've seen so many of them this year, from Hyundai to Volkswagen to a huge event we just did with eBay, and you're just gonna see those grow. You're gonna see more and more of those. The only events that we're doing now have to have a sponsor behind it who is paying for it with at least 20% net margins on it. Okay. All right, just taking a step back, you offered your prepared remarks. I think it was, what, 400 total sponsors currently now across all of your platforms? By year-end. On March, your March 31st year-end. We've had over 300 so far, right? On our way to closing the year with over 400. Okay. I know you offered a data point for year-end March 2022. What was that number? Year-end March 2022? For the number of sponsors? I think Yeah, I think you had a number that. We've grown from seven pre-COVID to about 300 last year to over 400 this year. Okay. All right. Next year will be well over 500. Okay. Okay. All right. Thanks. That's all I was curious about for now. Thanks so much, Rob. Appreciate it. Yeah. Thanks as always, John. I appreciate you. Our next question comes from Calvin Hori from Hori Capital. Your line is open. Hey, Rob. Good morning. Hey, y'all. Did I miss something? Did you say you settled the SoundExchange lawsuit? Yeah. Yeah, we did. We filed it in 8-K. We settled the SoundExchange lawsuit, paid out over two years with a healthy discount on it. What we announced is about $5.4 million of payables moving from short term to long term. Okay. You know, both the same day, you know, it was a $42 million swing in getting all the debt converted at $2.10. We also moved $5.4 million to long term. Really exciting week for the company and, you know, really strengthens our balance sheet dramatically. We also said this morning that our short-term assets went up by $2.5 million from $25 million, we reported like, three weeks ago, to $27.5 million. It's very likely the next thing you're gonna see is, you know, a credit facility that we'll be able to borrow somewhere between, you know, $17 million-$20 million against those short-term assets. This is a dramatic improvement for us. You know, if the stock stays down at these levels, you know, we'll increase that buyback from $2 million to way more than that down the line. Okay, great. One other thing. You mentioned that, probably gonna spin off Slacker, sometime this year. Is there any sort of timing on that as well as the pay-per-view unit? Yeah. I mean, I think you're gonna see, you know, something happen, you know, pretty imminently. You know, the success of PodcastOne and the fact that now the PodcastOne S-1 is filed, right? Shortly it'll be up and trading. You know, we're aggressively and actively in negotiations for who will be the right partners to come in there. Obviously Slacker, we've said, throws off over $10 million of cash. We just increased the EBITDA of the overall audio business, right? I think we said $18 million today, right? Okay. Obviously that $10 million of cash flow is going up substantially. You'll see a much, I would expect, a much higher valuation, right? Our peers are trading at 3.3x revenues, right? If our audio division does $80 million, right, you know, over $80 million, right, you're gonna see, you know, substantially higher than the $68 million that we did in PodcastOne, right? Otherwise, we'll pass, right? If it's not, you know, a multiple of that, right, we would pass on it. We're seeing a lot of aggressive, you know, active interest in it. On the pay-per-view side, it's really interesting because we haven't really pressed the envelope on this year as we've spent most of the time, right, consolidating, right, taking the EBITDA up dramatically. That pay-per-view business has $1 billion of upside, and we're seeing a lot of really smart, you know, really serious interest around that division and that upside. You probably know, I started Independent Entertainment, you know, 30 years ago and took that to like, you know, went over $1 billion, but traded, you know, at, you know, at almost $0.5 billion For an extended period of time. That's 30 years ago. I'm really, really excited about where we're going with pay-per-view. We're doing an event, I think Aaron wins our Emblem3. We just shot it the other night. When's the pay-per-view? Oh, that was yeah, air Tuesday. T-Tuesday. Okay. Right. We're doing pay-per-views, but this time a lot of those are coming from, they'll come from the record labels, they'll come from publishers, they'll come from managers who are bringing it in. They're bringing it in with a sponsor with it. It's really exciting and really energetic around it. As you know, we've streamed over 3,000 artists, right? We've had over 5 billion engagements. The plan was always pre-COVID to launch pay-per-view for music festivals, big artists, right? We've done a lot of K-pop, as you probably read about, the whole works. Yeah. Now's the time to really step on the gas on that. We're gonna be very cautious and very careful about it, right? Really focus those on ones that are backed by a sponsor, or they're backed and paid for directly from us. We did T-Pain. Okay. They paid us $75,000 up front with 30% margins on it to stream it, and then with the upside of the pay-per-view as well. Okay. Then finally, can you just clarify how much of PodcastOne will be spun off to shareholders, existing shareholders? Yeah. between 5% and 10%. you know. Okay ... think in between, thinking about 7.5%, 7.5%. If you know, the public filing says it's going to start trading at a $150 million valuation. A lot of equity is going to be divvying that out to our shareholders, you know, in the next few weeks. That means. Yeah, myself as a shareholder, What's that? LiveOne will own 93% then? Yeah, it's gonna be less than that because remember we sold $8 million. Less than $60 million. ... at a $68 million valuation. LiveOne's- Okay. LiveOne's gonna own about 80%. Yeah, a little bit higher than 80% of it. you know, if you take 80% of 150, it's a big number. Okay, great. All right. Thanks, Rob. Good luck. Yeah. Guys, just to add to it, I just got a note from Sue McNamara, my Head of Sales, telling me our advertisers are actually way higher than that this year, including programmatic. We would add hundreds of additional advertisers, guys, right, you know, on top of the 400 that of direct sales that we have. This concludes our Q&A. I'll hand back to Rob Ellin, CEO, for any final remarks. Just to wrap it up, I just wanna thank everyone for their patience, right? This has been a humbling, you know, couple of years. I think we recognized very differently than most 18 months ago that the market was gonna change and the temperature was gonna change. I've gone through this before in my career for any of you that have been investors before, and I'm so proud of my team. They've come together, right? It's been tough battle making cuts, but my team has come together, and we just have a world-class team, laser-focused on winning for all of our shareholders, and I think we're gonna have a dramatic win this year. Thank you, everyone. Thank you for joining. Today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your line.