LVO - NASDAQ

Ladies and gentlemen, welcome to the LiveOne, Inc. Q4 Fiscal 2025 Financial Results and Business Update Webcast. [Operator Instructions] I will now turn the call over to Ryan Carhart, CFO. Ryan, you may begin.

Thank you. Good morning, and welcome to LiveOne's business update and financial results conference call for the company's fourth quarter and fiscal year ended March 31, 2025. Presenting on today's call with me 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, 2024, 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 the 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, July 3, 2025. And 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 this call. Additionally, it is the property of the company and any redistribution, transmission or rebroadcast of this call or the webcast in any form without the company's expressed written consent is strictly prohibited. Now I would like to turn the call over to LiveOne's CEO, Rob Ellin.

Good morning, everyone. This is Rob Ellin, CEO and Chairman of LiveOne. I want to thank you, everyone, for joining. This has been a pivotal year for the company. The company has been transformed in some of their deals with Tesla and has come out stronger than we even expected. We have delivered 100 -- first, I'm going to talk about the today's numbers, and I'm going to talk about the future and some of the really exciting moonshots that the company is now focused on. Our financial performance, we did over $112 million in revenues, $108 million on our audio business and delivered $18 million of EBITDA, $6 million above what we had guided the Street to almost only 2 months ago. Our podcast business did over $52 million, up from $38 million last year. This quarter alone was $14 million and an EBITDA of over $900,000. We just raised our guidance to $55 million to $60 million with $3.5 million to $5 million of EBITDA. Other highlights from our podcast business. We have now had 6 straight months of being a top 10 podcaster in the world. We have over a billion impressions across our network. We have 46 new podcasts in the last 24 months and passed 200-plus total with a robust pipeline of over 100 new podcasts in the pipeline today, and we are adding almost one a month. We also have 17 potential acquisitions in the podcast industry that we are looking at as we continue to roll up and consolidate the business. As you got to meet Ryan earlier, Ryan has done a brilliant job of stepping in as CFO and made some very transformative financial moves, including replacing East West Bank's $7.5 million credit line with JGB, a partner of ours for 4 years previously, has come back in with a credit facility of up to $27.5 million, giving us an opportunity of having on performance, the biggest cash position we'll ever have. We've eliminated over $10 million in short-term liabilities. We've cut 1/3 of our staff at Slacker Radio and over 70% of our [indiscernible] at CPS. With over $40 million in total cost, this is the reason that our EBITDA was able to outperform even our own guidance. Now I'm going to talk about the future. The future is pretty remarkable. Out of 2 million Tesla cars, we have now converted over 1.3 million. We now have over 1.5 million subscribers and ad-supported users. We've launched 2 massive partnerships with Amazon over $16.5 million and with a Fortune 50 company for over $25 million. We have 75 additional B2B deals in the pipeline. We're now at almost a $50 million run rate on those new partnerships across 5 new B2B deals. We're expecting to launch our biggest B2B partner potentially in the history of the company with almost 10x subscribers to Tesla, and that first phase will be launched in August. As we continue to look at the future of technology, as most of you know, my background is taking media companies and finding transformative technologies. I will be focusing almost all of my energy on AI and on Web3 crypto initiatives. On the AI side of it, we have been able to cut dramatic costs, including 1/3 of our costs at Slacker Radio by adding AI and be able to utilize hosting and be able to utilize marketing. With that marketing, we have just started our first campaign to start to advertise in conjunction with DAX, the largest programmatic advertiser in the world, and our fill rate on our Tesla users is over 50%. We are about to launch our second phase of that initiative to start converting, utilizing AI to convert those subscribers -- convert those users into subscribers. As we look at our Web3 crypto initiatives, the starting point was to build a renowned group of crypto experts with Steve McClurg joining our team who started the first ETF in the history of Web3. Steve Lehman on the Board of Coinbase and [indiscernible], one of the great analysts at Goldman Sachs who is starting Crypto Monday. We have just launched the first-ever podcast network focused on Web3 and crypto. We see a massive opportunity for us to acquire and start new initiatives in the podcast space with over 75 potential podcasters in the crypto space right now in our pipeline as well as using AI initiatives to create our own original IP and initiatives in this space. To show our confidence and our belief in how weak our stock has been and how undervalued it is, the company has just bought back over 350,000 shares of LiveOne and over a million shares of PODC. We will continue that buyback as we have over $6 million -- just under $6 million of additional room in our buyback and show our confidence in the company and explore all options to add to our holdings in both of those companies. As LiveOne continues to demonstrate our ability to be nimble, our ability to fight through difficult times, our ability to utilize technology to transform the industry. This is the most exciting time that we've seen in the history of the company and with a balance sheet to really be able to grow aggressively the business, we see this as an extremely exciting year going forward, and we look forward to talking to you at the end of the next quarter. So thank you, everyone, for joining, and we look forward to an update shortly. I'd like to hand it off to Ryan. Ryan is our new CFO, and as I stated, has just done an absolutely brilliant job of maneuvering replacing East West Bank under difficult circumstances and doubling our credit -- or more than doubling our credit facility, literally within weeks of finding out that East West Bank was pulling their line. So Ryan, with that, I'd like to hand it off to you, and thank you for your help.

Thanks, Rob. I'll spend just a few minutes providing a very brief overview of our results for the fourth quarter of fiscal 2025 and the fiscal year ended March 31, 2025. Beginning with our quarterly results. Consolidated revenue for the 3-month period ended March 31, 2025, was $19.3 million. Our Audio division posted revenue for Q4 of $18.2 million and adjusted EBITDA of $4.1 million. Consolidated adjusted EBITDA for the fourth quarter of fiscal year '25 was $1.1 million. On a U.S. GAAP basis, LiveOne posted a consolidated net loss of $10.9 million or $0.07 per diluted share in Q4 2025. Our full year fiscal 2025 results posted consolidated revenue of $114.4 million and adjusted EBITDA of $8.4 million. Our Audio division posted full year revenue of $108.9 million and adjusted EBITDA of $18.2 million. Additionally, I'm excited to announce, as Rob said -- noted that we completed our financing after year-end with our partners at JGB Capital, which replaced our East West Bank line of credit. This will help facilitate the growth of our business and position us for the future. We are excited about the potential of the opportunities in our business development pipeline and are poised to see growth forward with these opportunities. Further, our growth in the PodcastOne subsidiary is expected to continue, and we expect to see a tremendous year ahead for them. Rob, I'll turn it back to you.

And just to wrap up, and thank you, Ryan. Our B2B initiatives are really starting to move in place. As we said, over 5 B2B partnerships signed, over $50 million of revenues. Our largest potential opportunity to be launched in August. We will have partnerships this year with additional carriers, retailers, streaming networks, auto companies and really just focused our energy around those B2B deals and really those initiatives that can move the needle that will be tens of millions to hundreds of millions of dollars over a 5-year period. With that, our initiative to move into the Web3 space is moving fast and aggressively. You'll continue to see additional names in Web3 joining our platform as well as podcasters and Web3 crypto joining our platform. Our AI initiatives have allowed us to make substantial cuts in the business. We have over 500 music channels. We used to have over 120 hosts. We now have a handful of hosts that are able to host those. We also are very excited about our TV and film initiative. We sold our third television show, third podcast, moving to second windows to television as you start to see the dynamics of where podcasting is going and how much is moving to video. As we sell these to television, these are brand-new revenue streams that could be tens of millions of dollars with 0 additional cost to the business. So we're going to continue to buy back stock. We're going to continue to strengthen our balance sheet. We're going to continue to strengthen our B2B deals, and we look forward to a really exciting year. And I want to thank everyone for joining and open up for any questions.

[Operator Instructions] And your first question comes from the line of Sean McGowan from ROTH Capital Partners.

A couple of questions on some of the details that you talked about. Rob, when you say fill rate of over 50%, can you just clarify what exactly that means from a financial standpoint?

Yes. I mean I can't give too much details yet on the financial on what the revenues are going to be. You'll see that shortly because we haven't put out guidance, but we will at the end of next quarter. But what really means is really simply, Sean, is that 50% of that inventory is being filled now and it's well over 50%, but 50-plus percent of the inventory that previous was 0. Now that does 2 things, right? Number one is it drives revenues. But number two, it also is that is setting the stage, right? Spotify claims at 60% of their subscriber -- of their free supporters and the reason they have free, right, convert to paid eventually. One of those reasons is that some people don't like advertising. Some people do, right? So hopefully, we'll start to convert through that. And that will be the first phase of the next big AI initiative, which is going to be launched imminently, is to really press to convert as many as possible these to paid subscribers as well. And I think that 50% inventory will go to 75% very quickly. And as you know, our partner in that is DAX, which is the largest programmatic advertiser in the world.

So the 50% refers to the inventory of available advertising account.

Correct.

That's what I understand. Okay. And at the moment, right, you're still broadening the funnel and getting advertising driven. But at the moment, there are no -- not a significant number of paid subscribers. Is that the right way to interpret it?

No. I mean I wouldn't say that at all. I mean, we have added 1.5-plus million, right? We have well over 250,000 paid subscribers, right? Now it's going to be the time we're really going to be pressing to convert a sizable amount and hopefully, we can convert anywhere from 25% to 30% of them over the next year. If we do, it will be very, very substantial revenues to kick back in as you do that.

Okay. Thanks for clarifying that. Shifting gears for a second. So when you're talking about things like Web3 and crypto, are you talking primarily about podcast content? Or is it something else.

Yes. I mean I can't get into much more detail than that, as you know, Sean, right? But what I would say to you is, as Steve McClurg has joined and Steve's background is running on the first ETF and selling it to Coinbase, right? And Steve Lehman sits on the Board of Coinbase, right? We have very aggressively moved in this space and that there's only 3 megaphones to the Web3 crypto industry, which is Twitter, YouTube and podcasting. So the first phase of that is we've just announced our podcast network, where we will start to both create our own host and our own IP, right, using AI to create those. And second is we'll be acquiring, just like we do with the rest of our podcast, we were building a community of crypto podcasters in there. And then the opportunity, right, to do much more with Web3 is certainly there for us to expand. And when you have a community of our size and you have a billion impressions, there's certainly tremendous opportunity to expand that opportunity financially.

Okay. But just to be clear, like just because I'm a novice at this, you're not talking about getting directly into the crypto business with mining or trading or exchanges and -- you're talking about around content, right, and being a [indiscernible] for information.

Yes. So again, I can't -- yes, I can't answer much more. We're not going into the mining business for sure. But the tokenization business, right, as you're watching the Robinhood announcement and what the stock did right in tokenization. Tokenization of podcasters is really interesting, right? And there's just tremendous opportunities of where we can go with this and what we can leverage by being one of those megaphones. And when you have a billion impressions a month, right, and the kind of downloads we have, we just have a huge influence over it. And our demographic audience certainly fits in with the Web3 crypto audience in a very unique way.

Okay. Last question, and then I'll jump back in the queue. Ryan, when will the 10-K be filed?

Yes, it should be filed. We're hoping early next week. Everything is there. We're just waiting. The auditors have to just do some documentation to wrap it up. So it's in final form. We're just waiting for them to do that, and then we'll get it out to you early next week.

And our next question again from Sean McGowan from ROTH Capital Partners.

[indiscernible] jump in the queue quickly there. So Rob to the extent that you can, can you talk about any change in the types of deals, some new deals that you're working on versus what you talked about before, you've done a great job laying the table, setting the table for what areas you might be looking at new that you can add to that, anything different from what we talked about before?

Yes. I'm sorry, you're cutting out a little bit, Sean, but you're talking about the B2B deals?

Yes. You talked in the past about the kinds of verticals [Technical Difficulty] different from [Technical Difficulty] before.

Yes. This is the most exciting time maybe in the history of the company. Now probably since the original Tesla deal, which when it first thought it was only a couple of hundred thousand dollars, right? Tesla has 2 million subscribers. We'll be launching with a partner that has 10 times the amount of subscribers and we're in deep conversations as I've described before, where I totally expect the momentum is now building where after you land $25 million deal, $16.5 million deal with Amazon, the momentum is building in the direction, very much like I built Digital Turbine and I built my other companies, right? You're feeling that momentum that across carriers, across auto companies, across retailers, across streaming networks, cable, satellite, anyone with 10 million to 3 billion eyeballs like Facebook who has a need for a subscription product, which we're just watching everybody going in, right? You watch Walmart going to VI

Okay. And then my last question is, is there anything new on the discussions with [indiscernible] that relationship, I think it's changed [indiscernible].

No, I mean it's kind of a beautiful thing. I mean if you go in almost any Tesla car now and a lot of people have called me and it's really -- we're really proud of this, Sean. It's like we used to have a little red button, right? And we had a great subscriber number, right? We got paid $3 a month when the industry was moving up to $12 a month, right? And it was beautiful. You made some money out of it. But we really got no branding. We got no database. And now today is if you go in almost any Tesla car, you're going to see the LiveOne logo, so they're building brand value there. Think about your phone and seeing on your phone and if you saw LiveOne on the front of your phone every single time, what that means to you, right? I'm really proud of the fact that somehow we converted 1.3 million out of 2 million cars have converted, right? It's a staggering number. It's almost unheard of, especially when you got competition from Apple and Cirrus and so on. It shows the appreciation and respect for the product, right, and the brand. And then they're using it for an average of like 40 minutes, multiple times a day. So you can see that how much people really enjoyed, how much respect they have for the brand and why it fits with their needs. I think the next component of that is that we now have advertising there. We've never been able to talk to those consumers. Now we're talking to them. And then last but not least, and maybe the most important part is, we never control the database, right? Sean, you would be VIN number 1.25 million, right? Now it's Sean McGowan, who lives in Orange County or now in New York, right, your age, your credit card. So we're actually building a real relationship and real foundation for a database that could be worth a fortune. Like think about with that database of actually having 1.3 million wealthy Tesla owners as subscribers and knowing the demographics and knowing they're from. So it's really exciting. It's obviously -- it takes time to bring those revenues back up, right, and bring some of those profits back up. But from our standpoint of it is -- this is what we've always hoped for. We hope for the opportunity to be able to take those ARPUs up from $3, right, which are 12 years old. It'd be like owning a piece of real estate on the ocean and you're renting it for $3 a month, but you can never raise your rents, right? Now we own the real estate, we can raise the rent. So our ARPUs are up from $3 to $5. Now we got to really aggressively market. You're going to see it coming very, very aggressively. You're going to see us marketing to convert those people and then literally starting in the next couple of weeks.

And your next question comes from the line of Brian Kinstlinger from Alliance Global Partners.

Just one, I wanted to understand, if I heard you right in August, you hope to launch your largest B2B deal with a bigger subscriber base or bigger base of consumers than Tesla. Is that a signed deal already, something you're hoping to announce in the -- and when does revenue generate? And how does that ramp?

Yes. As we've said before, Brian, we've already signed other deals, right? This is an actual launch, right? Does that mean it will work? You never know, right? But we're highly confident. And I think Tesla is a profitable, is profit to literally showing right, how magnetic this technology is and what our platform does. But we'll be launching with a partner that has over 10x the amount of subscribers, right? You can start to guess numbers and figure it out, but we're not going to do that today. What we're going to do is we're going to very confidently right, do that just like we did with Tesla years ago. We have a high level of confidence that this will be -- potentially be our biggest partner in history and that we have an opportunity that proving the Tesla that this number of people converted again, shows the affection for our product. And I think that's why these B2B deals are starting to fall and get signed. So stay tuned. You're going to get lot more value.

A lot more signed and you hope to launch, is that right?

Correct.

And have you announced who that is? Or can you not announce who that is?

We cannot announce yet who it is, but you will see shortly.

[Operator Instructions] There are no further questions at this time. I will now turn the call over to Robert Allen for closing remarks. Robert?

Yes, thank you, everyone. I appreciate your time and I appreciate your support, and we look forward to a terrific year, and we look forward to talking to you again shortly about the next quarter.