Good morning or good afternoon all, welcome to the LiveOne Inc. Q1 Fiscal 2024 Financial Results and Business Update webcast. My name is Adam, and I'll be your operator for today. If you'd like to ask a question in the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I will now hand the floor to Aaron Sullivan to begin. Aaron, please go ahead when you are ready. Thank you. Good morning, and welcome to LiveOne's Business Update and Financial Results conference call for the company's first quarter ended June 30, 2023. Presenting on today's call is Rob Ellin, CEO and Chairman of LiveOne. I would like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts, and assumptions that involve various risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of the company, including expected future financial results and expected future growth in the business. Actual results may differ materially from those discussed on this call for a variety of reasons. Please refer to the company's filings with the SEC for information about factors which could cause the company's actual results to differ materially from these forward-looking statements, including those described in its annual report on Form 10-K for the year ended March 31, 2023, and subsequent SEC filings. You'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its Investor Relations website. The company encourages you to periodically visit Investor Relations website for important content. The following discussion, including responses to your questions, contains time-sensitive information and reflects management's views as of the date of this call, August 10, 2023. Except as required by law, the company does not undertake any obligation to update or revise this information after the date of the call. I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and media via webcast, and a replay will be available on its website in the Investor Relations section shortly following the conclusion of the call. Additionally, it is the property of the company. Any redistribution, transmission, or rebroadcast of this call or 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, and good morning, and thank you all for joining this very special day for LiveOne. Five years ago, my team entered the fast-growing digital audio market with the acquisition of Slacker Radio. At the time of acquisition, it was a very distressed asset, with $20 million in revenues and almost $10 million in losses. It had spent over $180 million building the assets. Today, I'm proud to say that we've just raised our guidance to $123 million-$130 million in revenues. On the audio side of it alone, we raised our guidance to $103 million-$110 million, with a staggering $18 million-$21 million EBITDA. We promised the street when I started this, that by the end of 2027, LiveOne and Slacker Radio would capture 10 million subscribers and over $1 billion in revenues by the end of 2027. The opportunity is so big that TAM for this industry, according to Goldman Sachs, is over 1.7 billion paying subscribers alone. Today, I can humbly guide by the end of 2027, we expect not only to reach that 10 million, but to pass over 15 million subscribers. We say this with confidence because LiveOne is growing over 800,000 subscribers a year at a 50% increase and an ARPU of over $3. The pipeline for our B2B partnerships has never been greater. Each of these potential partners have 10 million - 2.5 billion addressable eyeballs. At 15 million and $3 ARPU, we'll pass over $600 million in revenues. That's before any ad revenues or an increase in pricing, of which LiveOne and Slacker have been the only one in the industry to not raise prices, and we're at a 65% discount to all of our competitors today. Slacker Radio expects to begin trading in a reverse merger with ROCL SPAC by the end of October. Separately, we then acquired. In the beginning of COVID, we acquired PodcastOne, also doing about $20 million in revenues. Today, I can proudly announce that Kit and our team did over $10.6 million for the quarter, or a run rate of $42 million. When you add that together with the acquisition of the Kast Media assets, which we've been announcing multiple podcasts, and the acquisition of Fantasy Guru, our run rate will be well over $50 million. For the first time ever, we'll talk about our guidance for 2027 for podcasting well and expect that to continue to grow at this rate and hit over $250 million in revenues. The podcast industry has matured from $400 million to over $1.4 billion since COVID. Industry expects it to grow now to $5 billion-$7 billion by 2027. We've just moved up the ladder dramatically from number 13 to number 10 on Podtrac, passing the likes of CNN. We expect this year to be in the Top 7. We also, excitingly, even though it's been delayed multiple times, expect to start trading on a major exchange under the symbol PODC, in the next two to four weeks. With the largest pipeline of potential podcasts and over 10 potential acquisition candidates, we will continue to roll up. We expect to continue to grow at a 30%-50% year-over-year rate of growth. We now have over 250 podcasts on our network, a 150% increase since acquiring the company. Pre-COVID, LiveOne had 10 sponsors. Proudly, today, we have passed over 700 sponsors on our network. As we move from audio back into video, PPVOne has been announcing multiple different pay-per-view events across podcasters with Adam Carolla, T-Pain's music festivals and social media events, Social Gloves. We delivered over $28 million and $4 million of EBITDA during COVID into a $60 billion market and growing. Our tech team has delivered world-class technology that has live streamed to over 5 billion engagements and 350 million live streams and 3,000 artists. We humbly project by 2027, over $100 million in revenues in our pay-per-view and live streaming business, and it could easily be multiples of that number based on our size of our audience. Splitmind and Drumify, our newest acquisition publishing arm, is revolutionizing the industry, utilizing the best producers, artists, songwriters, combined with AI to deliver the first of its kind royalty sharing platform. With a TAM of over $100 billion, we guide to over $100 million in revenues by 2027. Our merchandise business has struggled, right? We acquired it during COVID. It suffered because we didn't have any of our live events or any of our partnerships with Live Nation and AEG. We've just announced a very unique collaboration, the first of many to come, with Jeremih and Russell Bevan, who is the Babe Ruth of Napa Valley, the one winemaker, more 100 point wine anywhere in the history, to launch with the brand name Birthday Sex with, with Jeremih, and we've run out of bottles already. We sold out in the first week, and we are now growing substantially. We're guiding that, that business, where we expect to have 10-20 celebrity brands this year to over $100 million as well in 2027. Together, these five divisions could easily surpass $1 billion in revenues and over $150 million in EBITDA. I want to thank everyone for their patience and staying with us. We couldn't be more excited about the company, the spin outs that are about to happen with PodcastOne and Slacker Radio, and the opportunity of each of our five divisions to grow and mature. With that, I want to open it up to any questions anyone has, and I want to thank you again for attending. As a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad now to enter the queue. When preparing to ask your question, please ensure your headset is fully plugged in and unmuted locally. That's star followed by one to ask a question today. Our first question comes from Brian Kinstlinger from Alliance Global Partners. Brian, your line is open. Please go ahead. Great. Thanks so much, and really congratulations on this turnaround. It's taken a while, but you've done great work. Can you touch on the pipeline of podcasting in terms of M&A? What are the ranges in terms of sizes you're looking at? What are the general valuations that you hope in your discipline to acquire companies at? Then just speak to maybe the mix in cash and stock and retaining management of, of, of how the plan will work. Yeah, great, great question, Brian. I think you know me long enough now, and, you know, all of our acquisitions are in that one-time revenue range. They've historically been with stock. What we've done here is because our stock is down, right, we have been acquiring it with the stock in PodcastOne. In PodcastOne, we announced the valuation is well over $200 million, you know, when the stock is trading well below that. We utilized our currency in PodcastOne to acquire both Fantasy Guru as well as the assets of Kast Media. We have over 10 acquisitions right now in the pipeline, and they're really exciting. They go anywhere from sort of the size of $5 million up to, you know, $35 million-$40 million net range. They may grow from here soon, this is that unique opportunity right now to acquire the smaller podcast networks and add them into the fold. Really, you know, our team is the best in the business. You know, Kit, Eli, and Sue have proven that over and over again, we just see the excitement and energy of it. You're seeing us announce on top of the acquisition, you're seeing us announce, you know, almost on a biweekly basis, another podcast with traffic and audience that already exists, moving over to our platform. You're going to see more and more of that. The pipeline for potential podcasts to move over is over 100, acquisitions in, in over 10 right now. It couldn't be more exciting, this is a great time to roll up the space. If I remember correctly, the acquisitions of Kast and Fantasy Guru have lower CPMs and your opportunities to increase CPMs, when they're onboarded to your platform. Is that generally how, when you look at those 10 or so in your pipeline, how it'll work? They'll have lower CPMs, they come onto you, and immediately, or at least once you negotiate, you'll be able to generate higher revenue on just what they have? Yeah, I think it's, I think it's a combination of things, because we're, because we're a full 360, you know, podcast network. I'm gonna hand this to Kit in a second. You know, broadly, our team, we do everything for those podcasts, and we act as a community, so we utilize our other podcasts to grow them, also the size of our sales force, is just dramatically different than these small podcast networks. Kit, why don't you take over from there? Yeah, sure. No, it's, it's a great question. Yes, the ultimate, the ultimate goal is to raise CPMs. It's a, it's a process, right? A lot of these shows that we're acquiring, whether by, you know, acquisitions or even just one-offs, where shows are leaving other networks or new shows are starting, you know, the first phase of that process is to, to, to get demand on their inventory. Start to sell out in unsold inventory, give good packages to advertisers so they invest, test, and, and work with these shows, get comfortable with these shows. That's where the CPMs start to, start to grow. We have comfort with those advertisers to do things beyond just the spots and dots of what you would hear in a podcast, to include exclusive episodes, content that, you know, just around brands, social interactions, video, all of these type of things, and that's where you're gonna see increased CPMs. The competitors out there that we go against every day are very much the spots and dots of the world, and we're able to excel on that, but excel on all the other things that we just spoke about. That's, that's really one of the main growth factors. We get these shows on the network, and we get them into our system, and they start making more money than they ever have. We do more together, we do more episodes, and we really charge for it. Then. Just to add to that. I think- Just to add to that, guys, just to add to that, we, we just recently started to move over, right, and sign some of the Kast Media podcasters, right? Who have struggled and been owed money, right, the whole works, and, you know, Kast had two salespeople. Just an example, without using names. You're gonna read a lot about this very shortly. You know, one of the first podcasts that came over, which would be one of the largest traffics of all of our podcasts, we did triple the revenues the first month than they did previously. That's because you filled their inventory or because, or because you had better advertising? Why did you do triple the revenue? Both. Both, you know, across, across the board. Across the board, we just, we have so many advertisers already on our platform. We're able to go to them and use that great talent and use those numbers to expand the, the opportunity with them and grow our existing, our existing advertisers, and then programmatic as well kicked in. Right. Two more questions for you. The first is, your numbers jumped up in the first quarter before the acquisitions. I know you had some new content coming on. You're speaking to M&A. Is there also a meaningful piece of, organically creating new shows, or will M&A dominate the content, in the, the, the, addition of content? Sorry. Kit, you wanna take that? Yeah. Yeah, I mean, what we're trying to do is, there are shows that are smaller that are on our network that, you know, we, we know we can't get to the next level, and rather than kind of use our resources, after, you know, a nine, 12-month string of trying to get it to where it needs to be, we then, you know, churn out the bottom, you know, 15%, 20% of the network. In the same time, we're growing the network by adding bigger programs with more opportunities that will be, you know, top 10, top 20 shows on our network, which will drive real revenue, right? Then we get them into our system and, and continue to grow beyond, you know, what, what we'd ever thought. Those are your, those are your strategies, right, of, of growth. You know, when you look at the network, you're always trying to, you know, clean it up, get more efficient, and bring, bring in bigger ones and, and go from there. You know, I would say, Brian, two of our newest shows we just added are already in the Top 10. You're seeing brand-new shows that are really exciting, really coming out of the box with very strong numbers. Which shows are those? We, we just acquired Brendan Schaub and his network. He has three shows, including The Golden Hour, Fighter and the Kid, and The Brendan Schaub Show. We have Some More News, which is a really big news show that, that does not only really well in the audio space, but also in the YouTube video space. And those are, those are just some of the new acquisitions that have heard that have occurred over the last, you know, two or three weeks. In the meantime, we're launching new shows that are PodcastOne owned and operated shows, and, and we're acquiring other shows from competing networks that are unhappy with their current situation, and they're coming over. For instance, I've Had It, two women out of Oklahoma, one a lawyer and one an interior decorator. They're hilarious. They were just on the Today Show, just last week. Their show came over to us with 20,000 downloads an episode. This is a bit of an anomaly, but it's a lot of hard work, not only on our end but their end. That show is doing over 125,000 downloads an episode. We'll crack seven figures in revenue. We're talking to them about launching another episode, where they'll have three episodes a week on a, one on a Saturday. That's the strategy, right? To find these people that, that, that fit into our mold and fit into our system, and, and we can grow their revenues from, you know, low six figures to, to seven figures, you know, even, even, even, you know, potentially even, even more, right? That's, that's really the strategy. Okay, one other question. One of the other great things, Brian... one of the other great- Yep. Thing that's happening in this space is, is because it's not nearly as competitive, where everyone's willing to pay these crazy MGs or crazy prices, we're negotiating way better deals than we've ever negotiated before. Kit and the team, as I've always described it, have always played Moneyball, but now playing Moneyball, you're gonna see a lot more 60/40 deals and 50/50 deals than you did previously. Yeah, we've, we've always stayed away from those 80/20 deals, and it's proven to be the right methodology, and the team really understood what the right deals were. Okay. Lastly, does the Kast and Fantasy Guru acquisitions, does closing them depend on PodcastOne going trading on its own, or is there any obstacle in closing those acquisitions? No, it's already, it's already happening, right? Kast Media, we're buying certain assets of theirs. We've already announced, a couple of shows, and I fully expect you're gonna see us announce some massive shows any minute now. With Fantasy Guru, I, I expect it to close in the next 30 days, right? You know, it's an exciting time to close it 'cause you go right into football season. We're really excited about this. They've never done any advertising and sponsorship, and it obviously crosses over radio as well as podcasting. We see a really exciting opportunity to expand that business dramatically and utilize our creators and our podcasters to drive more subscribers. Okay, thanks for taking all my questions. Thanks, Brian. The next question comes from Jon Hickman from Ladenburg. Jon, your line is open. Please go ahead. Hey, Rob, can you elaborate on, you know, you said two to four weeks before a Podcast starts trading on a national exchange. Can you elaborate on why you think it's gonna be that soon after all the delays? Yeah, I mean, I can't, I can't say too much, but what we said in the press release is that after being approved by the SEC, Nasdaq asked us for our audited statements, right? Which was, which was. It's not an unreasonable ask, it was just, it was eight months into the process. As you know, we've delivered those audits, right? Those are filed publicly. So that's all completed, and so I, I'm, I'm very, very confident that we will trade on a major exchange shortly. You know, it, it'll probably be up to us as to what day we choose to trade and make sure that we do the right roadshow in advance, get, you know, get out to the street in advance. You know, this has obviously taken a little bit longer than we expected, and like everything, none of these are easy. It's the first time ever done that you've done an uplisting and a partial dividend at the same time. What's happened is, it's turned out to be a blessing in disguise. We increased the dividend dramatically, we pulled in two acquisitions, and we're not done, right? This is a really exciting time for the company and a really exciting time for PodcastOne. We got to showcase the numbers for this quarter, you know, showcasing a $10.6 million number. That's a big jump from where we were. I'm really proud of the team, and I'm really proud of where this is going, and I'm really excited about these acquisitions. You know, Kit just mentioned Brendan, he's already on our network. He'll be one of the top three trafficked guys on our network and brings more and more male sports-related, right? We have a massive female network. We're just gonna keep growing, and we see telltale signs it's just the right time, the right place for us to go public. One last question. You raised guidance, but the Kast Media and the Guru, those revenues aren't in the new guidance until... Because they haven't closed yet, right? Correct. Okay, thanks. The next question comes from Joseph Salino from Joseph Stone Capital. Joseph, the line is open. Please go ahead. Hey, Rob, how's it going? Congratulations on a job well done, you and your team. Hats off to you guys. My question was already answered by a previous investor, so you could take the next call. Thank you. Great, thank you. Thanks for joining. Just a reminder that star followed by one on your telephone keypad to enter the queue. The next question comes from Sean McGowan from ROTH MKM. Sean, the line is open. Please go ahead. Thank you. Good morning, guys. Let me start with a couple of housekeeping things. The change in the terms of the Podcast spin-off, you know, the dividend, I mean, that was already announced, right? That's that change was already out there, the 19%? Yeah. Correct, correct. Yeah, okay. That was already in the public, the public filings. That was already in the public filings as, as we- Right. ... Approved the SEC's approval. Okay. On the valuation of, podcast... Well, first on the, on the trading. There's, there's not anything material yet to be done that you need to do, it's just a question of, you know, when it actually goes effective. Is, is that the right way to read what you're saying? Yeah, I think it, I think it's more than that. I mean, we're effective already, right? Effectively, you're a public company. Yes, to, to prove it, we've just been waiting for an exchange, right, to be ready for that trading. You know, I'm, I'm very, very hopeful that we are, we are on the. Right ... We're on the five-yard line. We're in the five-yard line. We may even be on the two-yard line as of today. Right. I, I meant that there's nothing, you know, material that you have to deliver. Like, it's this, it, it's kind of, the ball's in their court, if I can mix the metaphor. Yeah. Is that right? Yeah, that's fair. It's not like they're waiting on you to do something. It's, you've done everything you gotta do, right? Correct. Correct. you know, you know- Okay. ... one of the things we should make clear, and we've made this before, but I should make clear on the call, Sean, you know, just to give you round numbers, for anyone who owns 100,000 shares of LiveOne, you're going to receive about 4,800 shares of PodcastOne between $8 and $12. If you take the low end of the range at $8, this is, this is a very sizable dividend, right? That's only going to be shareholders of record who own it at the time that we're actually up and, and listed in the next couple of weeks. Yeah. Now, on the valuation that, you know, you, you've referenced a couple of times, that was done, the third-party valuation, there's been some changes in the industry, over the, you know, last half year or so. I guess the flip side of you being able to get content, you know, at more favorable deals is, you know, maybe the mood around the, the, the category is a little different. Can you talk a little bit about your confidence in the, the prior valuations that were done? Yeah, I mean, I would say the confidence is even higher. I mean, SiriusXM bought a podcasting network doing $10 million in revenues for $150 million in cash only six months ago, right? If anything, Spotify and SiriusXM's stocks have gone up substantially. Spotify came back down a little bit, but they're up very, very substantially from when, when that valuation was done. If anything, the valuations have gone higher in the space. We're, we're pretty excited, we're pretty excited about it, and, you know, I think the opportunity of acquiring small ones is, is that Spotify and Apple and SiriusXM and iHeartMedia, they're not going to buy these little ones anymore. They're just too small for them, right? They've gobbled up a tremendous amount. They have big, big, big, you know, market shares in these, and I think it's an exciting time for us to be able to roll the small ones up because there really is no home for them anymore. As you know, you know, you got, you got Audacy and Westwood, and, you know, there's a lot of debt out there amongst the radio companies that have built podcast networks. I think there's a huge opportunity to consolidate this space and really grow it. For us, I think we're the only game in town that can buy the small ones and do the things that Kit and his team do. Yeah, makes sense. circling around to Splitmind, can you just give us a little bit more color on this, you know, Madden deal? like, this could be an example, right, of things that, that, that could happen. How, how does this work economically? Yeah, great. I'm going to hand that to Josh, and, you know, I love, I love the ask that because you and I have been, Sean, you and I have been in the trenches of the game business and watched how much money is generated. I, I love music inside of these games. My kids play Madden, you know, literally nonstop, and it's really exciting. Josh, why don't you jump in and talk about where that's going, not just for games, but film, television, right, and overall, where the publishing side of our business is going. Yeah. Yeah. Thanks, Rob. You know what? I mean, in general, you know, publishing revenue comes from syncs and licenses, and I think that as we've gotten involved in this asset, you know, we're really already showing how much value we can add on making revenue from, from that side of the business. You know, Madden is the most prized, you know, video game in the U.S. I think it actually is the highest-selling video game in the U.S. or at least the highest-selling sports game. And we're track one, you know, we're the title track. We're the one that's on every commercial, on the, the, all the internet commercials and the, the, the nationwide commercials. I think that, you know, that mixed with, you know, the, the scoring the music for the new Gerard Butler film, Kandahar, that just came out, and doing the music for the Emmys last year, we're on track to really continue to grow the publishing business more on the sync and licensing side of the business. You know, we're always focused on creating hit songs. That's a given. That's, that's our, that's our daily life of, of actual music creation, but it... You can't discount how much money you can really be making from the sync and licensing side. As we grow, we'll continue to have more assets to be able to put inside of making money on that side of the business. Thanks. I, I think this is such a high profile, kind of almost like a first real public test case on this model. Can you without getting into specifics of dollars or even the percentages, but just kinda conceptually, how does this work? If, what, what's the basis of the revenue that you get from Madden? Is it a flat rate? Is it the number of times the game is played? Is it the number of times the, the music actually plays? What's the basis of the revenue? It's all-encompassing, but there, there is a significant, per side flat fee, when you initially sign up for that. If you look at all the other artists that are involved in that Madden project, they're, they're not artists that do low, low fees. It really is the most coveted placement in the video game space, in my opinion. Okay. Thank you. Couple of other questions. Rob, is the trading, little bit more color on the Slacker trading, like, is that a little sooner than you thought? Assuming that it actually happens then, or is, is that what you guys had in mind? Yeah. Yeah, I mean, I think, I think you're gonna get a lot of clarity in the next two weeks, right? We signed the merger agreement a couple of weeks ago. I, I happen to be with, with Byron in the Hamptons right now. I was with him yesterday and just finalizing, so we're, we're ready to go. We have to, our audits have to be filed, right, for Slacker. It'll be the first time we're filing them, which will be really exciting, right? People are gonna get to see the numbers. I've been in, I've been in the audio music business for a long time. I owned Kazaa previously. As you know, Sean had an amazing run with the stock in it, but no one could ever make money. We make a ton of money, right? This is, this is printing cash, and obviously, having the Tesla partnership is, you know, and this being our 10th year in business with them, and Tesla having a spectacular year is all, you know, exciting, obviously just an amazing partnership, right? That's gonna, that's gonna continue to grow. Our B2B deals, our pipeline to B2B, you'll probably see on LinkedIn and out there, we're out there aggressively, even though we cut... You know, we consolidated 150 people in staff and took $31 million in costs out. We're hiring B2B people, revenue, salespeople, revenues people, because right now the flywheel is explosive, so we're gonna be hiring nonstop, and we're seeing telltale signs that I said I'm gonna blow through the 10 million subscribers now before 2027, and we see telltale signs. Any one of those, one more automobile company, one international carrier, right, comes along, one social media company. All these guys have been partners over the years, and as you know, I built Digital Turbine off the backs of carriers. There's no reason that we can't pick up a carrier and really partner with them and give them content and give them the full 360 play. The fact that we're the lowest price, and the fact that we're the fact that we are willing to white label like we do with Tesla, we're the only ones in the world that can do that. There's only 15 companies in this space. It's growing to 1.7 billion paying subscribers, and probably three-quarters of the world will have a music subscription. I, I think we're gonna take a chunk of that space, and I think you're gonna see, you know, another car company, you're gonna see international, right? You're gonna see them all coming this year. Finally, we've got the balance sheet in shape, and the flywheel is kicking in so fast that there's no reason that we can't land a huge B2B partnership very shortly. Okay, thanks. Last quick question, maybe for Aaron. When, when do you expect the 10-Q to be filed? Hey, Sean, we expect, Monday, 14th. Monday. Okay, thank you. Sean, Sean, just before you jump, just one more thing I forgot to add to it. One of the things that I said to the street is, when we announced the deal, right, to merge into the SPAC, I wouldn't do that deal unless, just like PodcastOne, we had other roll-up acquisition opportunities that could fit in there. That may give us expansive growth, and again, it, you know, at super accretive acquisition value- valuations, and there's some great assets right now that are coming available. You may see that coming as well. Okay, thanks. Thanks, Rob. Just a final reminder, that star followed by one on your telephone keypad to the queue today. We have no further questions, so I'll hand it back to the management team for any concluding remarks. No, I just I wanna thank everyone for their patience, for being our partners in this, right? We couldn't be more excited about the company, and as I said on the call, I fully expect by 2027, we will be a billion-dollar-plus company. It's just math, right? When you look at these numbers, and you look at the trajectory and the growth that we're growing right now, we're gonna grow over 800,000 subscribers this year. All right, so over 50% year-over-year. Our podcast business is doing very similar. Our sponsors have grown from seven sponsors pre-COVID to over 700. I couldn't be more proud of this team, and I think we really have this now. We have this in the perfect direction to really, to really be able to run the table. I just wanna thank everyone for attending and continue to support the company. This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.