LVO - NASDAQ

Thank you for standing by. Welcome, everyone, to the LiveOne, Inc. Third Quarter Fiscal 2026 Financial Results and Business Update. [Operator Instructions] I would now like to turn the call over to Ryan Carhart, Chief Financial Officer. You may begin, sir.

Thank you. Good morning, and welcome to LiveOne's Business Update and Financial Results Conference Call for the company's fiscal third quarter ended December 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, 2025, 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 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 12, 2026. 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 the 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, and thank you for joining us. This quarter marks a clear inflection point for our company. We delivered over $58 million in revenues for the 9 months, including $20 million in Q3, most important, expanding our adjusted EBITDA and structurally transforming the business. Operating expenses reduced by over 52% year-over-year. Our organization was streamlined with the help of AI from 350 people to 88 team members. We strengthened our balance sheet, reduced our debt, expanded our capital flexibility. We've just paid off over $2.5 million of debt. These were permanent structural improvements designed to create a scalable margin expanding platform. Over the past several years, we navigated COVID shutdowns, the collapse in media and microcap valuations, the loss of key partnerships and a disruption in the automotive channel. Many companies in our sector did not survive. We did, and we are emerging leaner, more disciplined and positioned for the next major growth cycle. Our Audio Division generated $52.2 million in 9-month revenue and over $3.7 million in adjusted EBITDA, again, showcasing those cost savings and the use of AI to materially change the staffing of this company, including $18.6 million in revenue and $2.6 million of EBITDA in Q3 alone. Looking ahead, our preliminary fiscal guidance for the first time we are putting out $85 million to $95 million in revenues and $8 million to $10 million in adjusted EBITDA. We are scaling profitably and closing the earnings delivery gap as we move forward towards year-end. Very importantly to note, we have over $125 million in net operating loss carryforwards. As we move towards profitability at the end of the year, these NOLs represent significant long-term shareholder value and tax efficiencies as we grow earnings. Industry valuation dynamics are improving. We're trading at 60% of revenues. The industry is trading over 3x revenues. The private sector in both podcasting and audio as a whole is trading over 3.7x, and there are multiple transactions in the last 120 days at well above 5x revenues. Strategic buyers understand the value of recurring engagement, monetization leverage and behavioral data. As fundamentals have normalized, valuation frameworks are starting to adjust. Our B2B pipeline is now the largest in company history, up over 30% in the last 120 days with over 100 active enterprise opportunities with $1 billion to $1 trillion companies. We are expanding our partnerships across Amazon, Apple, Paramount, Pluto TV, Telly, DAX and Tesla. This year, we expect to launch 3 major Fortune 500 partnerships across a national retailer, a leading TV platform and a major carrier. Two of those partners alone have over 50 million monthly paying subscribers. These are scaled recurring enterprise relationships designed to materially expand margins and enterprise value. At the same time, we're executing a focused strategy to convert more than 1 million free and ad-supported subscribers, including our Tesla users into highly monetized tiers. That conversion opportunity alone represents meaningful incremental revenue and EBITDA. We are also seeing a sharp acceleration in inbound M&A opportunities. As the market stabilizes and valuations normalize, strategic combinations are becoming increasingly attractive. Inbound calls continue to increase dramatically. We are disciplined in evaluating opportunities and to look at all opportunities that will increase shareholder value dramatically. We continue to expand our original IP. We have now sold our fourth television series to a major streaming platform with 100% margin economics. The costs are already built in into rolling out our podcast. And when they sell to the streaming networks, we are immediately taking in cash flow earnings. Owning intellectual properties creates long-term asset value and high-margin revenue streams. We are focused on building and controlling premium content that can travel across audio, video, streaming and live formats. We now have over 15 original projects in the pipeline and growing. Live experience is also returning a major growth sector. Prior to COVID, live events represented 50% of our revenues. That market is reaccelerating. As you watch Ari Emanuel raise over $2 billion, you watch many partners in that space growing dramatically and capital being raised, our creator community, brand relationships and audience scale position us to dramatically expand live shows across podcast, music and live events. And we're increasingly focused on owning our own products, not distribution of content and products, but actually ownership with a database exceeding 65 million consumers and billions of impressions and downloads across our platforms, we have the ability to test, launch, scale proprietary products directly to our community. That level of owned audience and data provides a powerful testing engine and distribution channel, enabling us to drive our own product margins and recurring revenue streams. The structural shift is happening across all of the major media businesses. Netflix is entering the podcast business. TikTok is expanding aggressively into audio. Audio remains the stickiest behavior in media. No one turns off their music subscription, music listening generates powerful behavioral data. Time of day patterns, mood cycles, frequency and engagement depth. That data becomes fundamental in training materially for sophisticated AI models. AI is not a feature. It's an infrastructure. Our AI partnerships are growing and initiatives are focused on leveraging behavioral audio data, enhancing personalization, optimizing monetization, and powering enterprise engagement. That is why B2B demand is accelerating. That is why the pipeline is exploding. To fully capitalize on this opportunity, we are evolving our leadership structure. We have started the process and we will shortly announce a new President, an accomplished operating executive in again, who has built and scaled and sold billion-dollar public companies and brings deep public market expertise to our team. This leader will also assume day-to-day operational roles, allowing me to dedicate 100% of my time to B2B partnerships, M&A activity and accelerating, most important, our AI initiatives and pursuing strategic growth opportunities. It's a proactive decision aligned with scale and opportunity and the fact that the restructuring has now been complete and it is now time to really focus our energy on top line growth and bottom line EBITDA numbers. Finally, our capital allocation reflects our confidence. We believe our company is materially undervalued, trading at less than 1x revenues, well below the 3.7 industry trading today. Our NOLs of over $125 million and improving industry multiples. As a result, we are expanding our share repurchase program with approximately $6 million remaining under the authorization. We are investing in growth. We are investing in ourselves. We are no longer rebuilding, we are accelerating. Revenue is scaling, EBITDA is exploding. The earnings gap is closing. B2B partnerships are growing. AI initiatives are advancing. Live experiences are returning, own products are launching. M&A opportunities and increasing industry valuations are normalizing and capital is being returned through disciplined buybacks. We survived disruption, we rebuilt the foundation, and we're now positioned at the intersection of audio, enterprise distribution, behavioral data, AI, IT ownership and scalable monetization. The next chapter is disciplined margin expanding growth. I want to thank everyone for their support and appreciate your time today, and I look forward to any questions. At this point, I'm going to hand it off to Ryan Carhart, our CFO, who has done an exceptional job of delivering on these numbers. Thank you.

Thanks, Rob. I'll spend just a few minutes providing a very brief overview of our results for the fiscal third quarter ended December 31, 2025. Consolidated revenue for the 3-month period ended December 31, 2025, was $20.3 million. Our Audio Division posted revenue for Q3 of $18.6 million and adjusted EBITDA of $2.6 million. Consolidated adjusted EBITDA for the second quarter of fiscal year 2026 was a positive $1.6 million. On a U.S. GAAP basis, LiveOne posted a consolidated net loss of $4.1 million or $0.37 per diluted share in Q3 fiscal 2026. At the operating level, our PodcastOne subsidiary posted record revenue of $15.9 million and adjusted EBITDA of $2.8 million. Our Slacker subsidiary reported Q3 revenue of $2.8 million and adjusted EBITDA of negative $0.1 million. We are pleased to report continued record growth at PodcastOne subsidiary, which we expect to continue throughout the end of the year and into next year. Concurrently, we are advancing several strategic partnerships from our business development pipeline that we believe have the potential to drive long-term growth and value creation. As we look ahead to fiscal 2027, we believe the company is well positioned for transformational growth. Rob, I'll turn it back to you.

Yes. Thanks, Ryan. I think we covered almost everything, and I think it's an opportunity for us to open up the floor for any questions. Again, we have said that we will be launching 3 massive initiatives for the company before year-end. We are looking forward to the guidance that we just put out for next year, showing again substantial growth opportunities. And with that, I'll open it up to any questions and look forward to it.

[Operator Instructions] And your first question comes from the line of Barry Sine with Litchfield.

Two questions, if you don't mind. First, on the B2B business. It seems to me that no 2 deals are alike. Every single one seems to be customized. And it looks like you're doing that with AI because your staff is down pretty dramatically. I wonder if you could elaborate on that, talk a little bit about what you're doing in terms of customization, some of the options that you're giving customers. And then on a related note, the potential risk, one or the other music streaming companies comes into the B2B space.

I think it's -- to start with, it's very hard for any of them to come into the B2B space in the fashion that we have. right? Number one, and you know my background also well, Barry, it's been built off of B2B deals, right, whether it was iWon, whether it's Digital Turbine, it's Majesco, all of them have built off these massive distributors who already have an audience, right? We're not in the business of chasing an individual and spending $86 a sub, right? So number one is none of those -- there's only a few, right? In the United States, only like 7. In the world, there's probably 12 altogether of what's called DSPs. All of those are massive in size, okay? And when you look at the competition in the U.S., they're all our partners, right, iHeart, Sirius, Spotify, Apple, Amazon, YouTube, okay? The smallest valuation is $6 billion, then it goes to $1 trillion, right? So -- and none of them are going to give up their brand. None of them are going to be able to white label and be a white label solution. So the best way I can describe as these B2B deals are being launched, right, we publicly said that our Amazon deal has grown to over $20 million from originally starting very small. Same thing with our streaming partner, Fortune 250 company grew from $2 million, it's now well over $26 million and growing, right? You're going to see the same type of transactions happening with those B2B partners. And when you look at the structure of them, number one, the reason that we're able to do this is we're the lowest price. We're the Walmart of the music space. Number two is we're the most nimble. Because of the size of the company, we have the capability of servicing them in a very different way. And then very important is the ability that we have to be able to white label, right? None of those companies are going to give up their brands. And part of the excitement and energy in this is all those competitors are partners of ours. We're all great friends and great partners, right? We're a small company, but our content is provided and put on to their platforms and their content is on our platforms. So really exciting to be in this time where the cycle is changing. And for any of you that have been in any of my companies, I talk about these cycles, the cycle is changing so fast. And with the initiatives of AI and what's happening and how critical data is, all these companies are competing with each other head on. It's kind of amazing to watch whether it's a retailer, whether it's social media, whether it's a streaming network, they're all crossing over each other's business in such a dynamic way. To think that Netflix has just entered the podcast space, right? Why are they entering? I humbly believe that you're going to see this year, one of the streaming platforms buy a music platform or maybe each one of them. It makes so much logical sense for them to acquire one and maybe that's why iHeart stock is up 6x. Maybe that's why Spotify was up $80 this week, right? It's so fundamentally makes so much sense for a streaming platform to buy one of the audio platforms because they're fighting to raise their ARPUs, right, by $0.50 or $1 every 2 years. Well, if they added audio, they could add $3 to $10 a month without any additional cost upfront. You don't have to make a movie, you don't have to make a television show, you don't have to spend $1 billion. Now here's the Wild West that is happening. Because of AI, every retailer, right? Everyone's got to compete with Amazon. So Amazon has got to compete with Walmart and Costco and Best Buy and Shopify, right? They're all competing. And now you've got Facebook entering the retail market doing billions of dollars and TikTok entering. Social media is entering, retail is entering. Anyone that has an online presence has to figure out how to keep that consumer engaged. There's no one on this call that doesn't have at least one music subscription. There's no one on this call that probably spends more time in media than anything other music because you can take the music with you, right, go everywhere, whether it's audio or video, you can take it everywhere. And especially as they've added podcasting into it and especially as you add video into it. So I think we're uniquely positioned as a B2B partner that we could either be a strategic partner. We could -- there could be a strategic investment from a major partner here across all those different verticals I just articulated, right, and the ones we're already partners with and there could be an M&A activity of someone trying to buy us. All of those are very possible, especially with us currently trading at this huge discount.

And that's great. If I could ask one more question just on Slacker. It seems to me that you have a huge largely untapped opportunity to sell advertising into that base of nonsubscription customers ad-supported. How is that going? I don't know if Ryan can give us the advertising revenue for Slacker in the quarter. I know you've added some partners in AI to kind of ramp that up. How is that process going? And what is the potential for ad revenue from Slacker ad-supported customers?

I mean I'd be a little bit careful to separate just Slacker because we have a very robust advertising business, right, across audio with our podcasting. But specifically on our free subscribers, there's multiple reasons to have those free subscribers. Spotify claims that 60% of all of their free subscribers and the reason they have a free tier eventually convert to long-term subscription and paid subscription, right? I don't know whether it's over 3 months, 6 months, 12 months or over 3 years, but that's a staggering number. So when we see our base of over 1 million free subscribers, number one is we've added advertising. We partnered with DAX, the #1 programmatic advertising company in the world. We started with them only a couple of months ago. We've just raised our ARPUs by over 30%, right? And with that, it's just the beginning, right? It means that the inventory is getting filled, which means that people are listening, which is a great sign, and we'll continue to grow that. Now you do that as a loss leader for a couple of things. One is you drive revenues. Two is you're going to lose some subscribers, right, who are going to go away. But most important is you're going to convert subscribers into paid subscription. So we look at all of those. With that, because of the unique B2B deals that we're doing and because of the structure of these deals, you could also see your partners bringing their own advertisers into the fold that won't be about CPMs and CPAs, they'll be about a customer who's looking for those products and driving those products because of those relationships with that B2B partner.

Next question comes from the line of Brian Kinstlinger with Alliance Global Partners.

Way to get back to profit. You highlighted the big streaming services will not white label their music, which gives you a competitive advantage. What is the competitive landscape to provide content for these brands look like? And are the Spotifys of the world trying to partner with the same large brands to offer a non-white label solution to brands?

I mean there's a little bit of that, but it's very hard to do the same thing we're doing, right? Obviously, the music business has been built off the backs of carriers, right? And the carriers kind of lost their way and that they were in a robust market with low interest rates, right, where they're enjoying that low interest rate and it's okay for them. But the reality is as AI has exploded, everyone is waking up and saying, everybody is competing for every piece of the business. The crossover to think that Tesla, Elon Musk, Starlink could be competing with Verizon, T-Mobile and AT&T, right, is kind of scary, right? And that goes across almost everything as AI continues to expand. So I think what you're going to see is you're going to see a little bit of that where you may see some of the Spotify app, AT&T, Verizon, T-Mobile deals. But again, it's hard for them ever to white label or to be able to really offer them the same kind of offering that we give them with the flexibility or to service them in the same way because it's just not as meaningful, right? They've got a massive business, billions, billions of dollars, right? We got a small business. It's very important to us as we get those B2B deals to be able to service them and give their clients exactly what they need. Tailor the music, tailor the pricing, understand the needs of the exact consumer of each of those B2B partners and understand that AI data and what we can deliver with it. And so I think we're uniquely positioned. I don't think there's anybody else in the space that can do what we're doing right now. And I think that you're going to get some competition a little bit in carriers probably, but you're not going to really see it in the other verticals that we've talked about across streaming, social media, retailers. I don't think that, that's going to be a competitor because they want their own brands, right? We recently had a conversation with one of our B2B partners that we're launching and they were like we don't need you as a brand. We need you because of your service. You got 22 years of history, right? Remember, before we got here, that NOL was built by the likes of Columbia, Mission and Rho, who put in $180 million into Slacker Radio, right? So the infrastructure is built, right? It's all that -- all the labels, all the publishers, all the dynamics and all the payouts, right? You got to pay out 50 partners, right? It's a very complicated algorithm that if someone tried, in fact, Tesla tried it, and they realized afterwards, it's impossible. A, it's really hard to build and it costs hundreds of millions of dollars. The second is you got to deal with all these partners and be able to pay all of them. It's a very complicated algorithm. So I think we're uniquely positioned there as 1 of 10, right, really in the country and 1 of 12 in the world, right, who is doing this, that we're really uniquely positioned to be able to grab those B2B deals and have enough of them, right? We won't get every one of them. We only need a couple of them, right? A few more of these deals, you keep adding to Amazon and Paramount and Telly and Spotify and you add to these deals. These are all $10 million-plus deals. You keep growing those, and there's no reason you can't see this company doing $0.25 billion and getting back to that $25 million to $50 million of EBITDA over the next couple of years.

Great. And then can you share any more information on the B2B partnership with the 30 million-plus subscribers? Is that contract signed? What is the timing? What industry is this partner? And if it's not signed, what are the items that you need to get accomplished to get you over the finish line?

Yes. So what I said was, and I'm going to be very careful in my words, but I crystal clear said, these are being launched, right? And what I crystal clear is these are already signed, right? And what I said on the call today was there are multiple partners, right, in there who have over 50 million. So I've increased that number from $30 million to over $50 million, right? So -- and that's about as much detail as I can give. But what you can start to do is you can start to -- like we did with Tesla, right, shockingly, right, out of 2 million cars, we re-signed 1.2 million approximately between free and paid, right? If you use a number, that's crazy. That's a 60% staggering number, right? If you use a 1% number, even 0.5% number, right, that signs up from these partners. And like I said, there are 3 of them of very serious sized Fortune 500 companies, and there's 100 more in the pipeline. When we last talked, Brian, that 100 was -- I think we were 65 or 70. That pipeline is increasingly and is staggeringly increasing. And it's not because we're so smart. It's because we're the only ones who can truly do this right now. And like I said, you're seeing Netflix and TikTok entering the podcast space. You're seeing the likes of audio businesses, these podcast businesses are getting bought up at aggressive, aggressive, aggressive valuation. It's 3x revenues, 5x revenues. A deal that just got done on Friday at 7x revenues, right? Why is that? The data is so critical. These are right? These are super humans, superstars who have super fans. When you can get that data, the super fans, it's really hard for any that are using AI, you're watching, you try to put things into the model now and things you used to be able to do. I put a little joke in from my daughter's wedding the other day where I wanted to put a picture from Scarface with my son who happens to be a great-looking kid. It literally looks like I was going to make them look like. You cannot do that anymore. So they're starting to block that content because all lawsuits are starting. The beauty of this is because we have the licenses, we have the capability of having the biggest stars in the world, right, the biggest musicians go across the board. You want Bad Bunny, you want Drake, you want Post Malone. If you go to sports, right, LeBron James can only play for the Lakers. In music, they're playing for everybody. And they play for Spotify, they play for Apple and they play for us. We have all the same music that anybody else has. We have all the same content. We have 46 patents around it. We have $125 million NOL, and we have the flexibility to provide a unique service because of our middle tier that we can price lower than anybody else. And because of our infrastructure, which is getting smaller and smaller and more powerful, it's getting better, right? It's not like the more people we had, the better we are at this. We're actually getting better at it every day. We're getting stronger at it. We're able to deliver more music channels with way less cost. So we're really well positioned that if we can stay in the game long enough, there are going to be enough B2B partners. I say this humbly, right? Everyone who is in Digital Turbine with me anyone who knows what I did with iWon, anyone who knows what we did with Majesco, they're all built off of 1 to 5 of these B2B deals that you're leveraging someone who already has built that massive audience holding their hands, right, literally giving a full 360, right? We do anything they need to do to make sure that we service them. And if we can just land a few more of those, right, who would imagine that Amazon has already grown to 20 and Paramount is over 26 now, right? These are growing fast. These are massive partners that have 10 million to 3 billion eyeballs like Facebook and just think of every one of them who is missing a music subscription, a podcast piece, an audience like ours, right? We have billions of impressions, right? You think about network's history historically. If you listen to the all-in podcast and Ari Emmanuel, he said, right now, you're watching the new future. Syndications coming back. There's only a few streaming partners, right? And then there's these trillion dollar companies of Apple, Amazon and YouTube, right? And they're all starting to buy Seinfeld. They're all starting to buy The Office. They're paying South Park, billions of dollars. But what is going to be the biggest syndication as always, is going to be talking heads. Who was the biggest before? Oprah, Dr. Phil. We just signed Dr. Film to our network. The biggest talent we've ever had in the history of our platform, okay? We got to grow them. We've got to build them again, right? He's just coming back to podcasting from the television side of it. But this was a guy who was paid $50 million to $70 million by CBS. Those talking heads are desperately needed on these platforms. You just watched the Red Network. It's now bought -- Fox has now brought up the Red Network. With that, they just bought Tucker Carlson and Megyn Kelly. They continue every week, take those talking heads. The consolidation back to the reality of where the business was, whether it was audio and video, audio and video come together in neat package, just like CBS Radio and CBS Television, right? Those talking heads across audio and video are going to be the largest pay base, just like Howard Stern, just like Ryan Seacrest, just like Joe Rogan is today. We're right in that sweet spot. So I think we have a very unique advantage of the proposition that we're offering and the pricing that we're offering.

Great. My last question is with the 3 massive B2B partnerships that are signed, maybe help us with how these might ramp. I think I heard you gave guidance of $85 million to $95 million for next fiscal year, coming from plus or minus $78 million this year, what's contemplating the high end and low end?

Yes. I mean, again, we're trying to be super conservative in this because, again, we're running -- as you run the traps on these, right, if you have 2 partners over $50 million, right, and you have another partner with millions and millions, right, just take the $100 million. If you took 0.5% or 1% right on conversion, right? And you're going to have multiple different pricing tiers, just like every music subscription, just like LiveOne has been since the time I've acquired it and the 17 years before me, right? This company has had hundreds of millions of dollars of revenues from carriers. There have been hundreds of millions of dollars of revenues from the likes of Samsung way before I was involved in it, from Milk Studio, right? You're just going back to that cycle again right now. And as you ramp this up, take a super conservative model, take -- I just sat with one of your peers, right, in the industry and walked through it and I said, just take 0.5 to 1%, 1%, right? The 60% that we signed in free and paid from Tesla is staggering. We're all shocked, right? We thought it would be like 25% maximum. It's been 60%. But if you sign 1%, 0.5% to 1% of those numbers, you're going to rebuild way past where we were with Tesla. We lost $56 million of revenues. We're ramping back up and catching back up on those. We got a little bit of ways to go, but you can easily see this year and next year, this company heading towards well over $100 million on its way to $0.25 billion by just getting a little tiny percentage of these partnerships.

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

You're able to hear me?

Yes, I can hear you. It's a little bit quiet, but I can hear you.

Okay. Will try to speak up. A couple of quick questions. So when will the 10-Qs be out for both LiveOne and Podcast?

Should be out tomorrow. Yes, Sean, they should be out tomorrow.

Tomorrow. Okay. Great. That's helpful. Shifting to costs, a big part of the story here is a massive positive inflection in EBITDA relative to revenue. So can you help us with how sustainable the various cost buckets are at these current levels that we're seeing really for both companies, but let's say, in the aggregate for LiveOne. Like do you think G&A at this level is what we should expect for the next several quarters on a quarterly basis?

Yes, Sean, thank you. Yes, I think you should absolutely model that forward, if not down. We continue to do everything we can to reduce that. It's an ongoing effort. So our expectation is that next quarter, the G&A should go down even further. But where we're at right now reflects something we're sitting on positive EBITDA. But yes, I would expect that to go down next quarter slightly, and we'll continue to fine-tune that as we go forward.

And same question for sales and marketing?

Yes, same. It's really a reflection of all of OpEx, Sean.

Okay. Well, some of the ones that get added back for EBITDA, I'm also interested in. So depreciation and amortization seems to be leveling up. Should we expect that to increase?

Nothing material. Really, the depreciation and amortization is going to be driven by [ cap software ]. So same as kind of what you're seeing right now is about what we expect. It could go up slightly over the next year as we continue to code out new products for our new partnerships. But for now, in the short term, I think you can roll that forward.

And stock-based comp is something that on the podcast side, I know they've been using more of stock for the talent, and we saw an increase there. It should -- but it also depends on grants and things like that. So what should we be expecting on stock-based comp over the next several quarters?

Yes. You should expect similar levels to this quarter going into next and then it potentially could increase depending on how it goes with getting our talent online with our equity plans. So kind of you can roll it forward and potentially expect some increase there.

Okay. And then I'm going to circle back a couple of questions that have been touched on, but I want to see if we can get a little bit more precise. So let's say, this 30 million subscriber deal, when -- what's the timing on when that -- when revenue from that deal would be expected to start to show up?

Do you want to take that, Ryan?

Yes, sure. Sean, I think right now, with one of them, we're on the cusp of launching something. It will be a test phase. So I think we're going to be pushing that through this quarter. We don't expect it to really ramp until the following year. We're not putting any numbers against that or anything right now, Sean. But I think you could start to see a little bit come in this quarter and then the following quarter, the ramp coming in -- maybe...

The $85 million to $95 million audio guidance, that does contemplate revenue from that deal, right?

Yes, the $85 million -- Rob mentioned this earlier, Sean, I mean, the $85 million to $95 million is a very, very conservative look forward. So we would consider that to be a baseline case, a very baseline case, and it would only go up from there.

Okay. Yes, I'm trying to get my arms around because it's easy to pencil out some numbers if you look at multiple deals that get to much higher numbers than that. So I'm just trying to figure out if there's any revenue from that particular B2B deal that is embedded in the $85 million to $95 million. If you're saying there's some, but it could be better, that's one answer. But if you say there's none in there for that, then that's a different answer. So I'm just trying to figure out, have you contemplated any revenue from that particular deal in that guidance?

Nickels and dimes, Sean.

Okay.

Okay? We're being -- as you can see, we're being very careful because this is happening as we speak, right? This is real time now, right? The first phase is done. The second phase is going, and the other ones are being launched shortly. But as we said, we expect all 3 of them to be out there publicly by year-end. So we're going to be very conservative, but we look forward to the fourth quarter and really talking about the highlights of where we think next year can be.

Okay. And then my last question is on -- is back on these Tesla users that have converted from the old model to the new. Right now, it's ad-supported. What kind of conversion are you seeing to paid so far? And are you expecting that to contribute more revenue? Are you expecting that number to grow the revenue from Tesla subscribers? Are you expecting that number to grow next fiscal year?

Absolutely. And what I would say now is to kind of highlight is we just paid off $2.5 million of debt. One of the beauties, right, of what happens with this is you get year-long subscriptions. So you get a chunk of money upfront. And so that should be very, very helpful, right, in building balance sheet, using to buy back stock, pay down debt. And we couldn't be more excited that we've paid off all of our junior debt and now part of our senior debt is starting to be paid. We couldn't be more excited to do that and to continue to strengthen the balance sheet. And I think you'll see a lot more excitement coming this quarter, right, around the additional cleanup of that balance sheet and strengthening of the balance sheet over the next literally 30 to 60 days.

I'm not showing any further questions in the queue. I would now like to turn it over to Mr. Ellin for closing remarks.

I think we've covered everything. I just want to thank everyone for your patience. Thank you for being supportive. We couldn't be more excited about the business. And I say this very humbly, I really think that right now, the current B2B deals and the ones imminently coming out put us in a position that this could be the biggest opportunity that I've been involved in my career. I am looking forward to stepping down as President right in the very near future and bringing in an operating President, which we've had previously and had great success with, right, pre-COVID, bringing in someone, again, adding to it and putting them next to me in a position that they have both public experience in building as well as selling public companies for $1 billion or better, just like I've done before. And done before in my other companies and really focusing my energy on M&A side. We have not done an acquisition in a substantial period of time, which is unique. We usually have one acquisition a year, and we haven't done one in a few years. This is now becoming an exciting time for that as well as on the other side of it is we have to really explore those strategic partners or potential buyers of a subsidiary or the whole company at some point and that the inbound calls are coming in. So I want to focus my energy on that. And then my key energy right now is I am so really fascinated and excited about what AI is doing for our company and doing for the industry. I want to focus the energy on that and on our B2B deals. And that crossover between them, I really believe that the data of music is so critical to building these data -- all of these AI models right, that music is going to be a very important component of that. And I think we're right in the center of the ring of that. And having the talent we have behind it is going to give us the ability to really expand those. So I'm going to spend a lot of energy on that. Now that the restructuring is completed, we're really going to focus on that $125 million NOL. As everyone knows, in Digital Turbine, when we started eating away at that NOL and started showing profits, which I expect at the end of this year, right, you're going to get GAAP earnings and you can have just a massive, massive run in the stock under GAAP earnings. So I'm laser-focused on that. And I think fully expect that you'll see an operating president here in the very near future with a big background at building and selling a multibillion-dollar public company.