Good afternoon, everyone, and welcome to the LiveOne Inc. Fiscal 2022 Q2 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded.

At this time, I'd like to turn the conference call over to Michael Quartieri, Chief Financial Officer. Sir, please go ahead. .

Thank you. Good afternoon, and welcome to LiveOne's business update and financial results conference call for the company's second quarter and 6-month period ended September 30, 2021.

Presenting on today's call are Rob Ellin, CEO and Chairman; Dermot McCormack, President; and myself, Mike Quartieri, Executive Vice President and Chief Financial Officer.

I'd 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 the company's annual report on Form 10-K for the year ended December -- sorry, March 31, 2021, quarterly report on Form 10-Q for the quarter ended June 30, 2021, and other SEC filings.

You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its Investor Relations website at ir.liveone.com, and the company encourages you to periodically visit its IR 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, October 28, 2021. And except as required by law, the company does not undertake any obligation to update or revise this information after the date of this call.

I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and 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 property of the company and any redistribution, retransmission or rebroadcast of the call or the webcast in any form without the company's expressed written consent is strictly prohibited. Now, let me turn the call over to LiveOne CEO, Rob Ellin..

Thank you, Mike, and good afternoon, everyone, and thank you for joining us today on our fiscal 2022 Second Quarter Business Update and Financial Results Call. We plan to keep our prepared remarks somewhat brief in favor of leaving more time for any Q&A. LiveOne team, again, has survived and thrived through the COVID-19 delta variance.

-- which necessity that we push all of our planned live events into Q3 and Q4, even without live events in Q2. The LiveOne team delivered a record $60.7 million in revenue for the first 6 months of fiscal 2022, an increase of $35 million or 142% compared to the same period a year ago.

Quite often, we have spoken of the unique flywheel business model of associated and complementary businesses and how the components create a synergistic offering to consumers to listen, watch, intend, engage and transact. Let me repeat that word transacts.

We are going deeper down the funnel with our customers for further monetization through premium content and pay-per-view and live events, upselling membership packages, including merchandise NFPs and integrating consumer products that will have ownership position in. Everyone connects.

The model when fully optimized creates a unique opportunity to bridge and connect live events with digital offerings. And with the return of live music, our business model is poised to truly kick into high gear.

We have multiple subsidiaries, multibillion-dollar addressable markets in each music subscription, live events, live streaming, OTT, specialty merchandising and podcasting. We are thrilled to see the return of live music events, and we expect to report record revenues for each of the next 2 quarters.

Although we had an unfortunate and challenging weather conditions, we held our first major live music festival springer ranking, music festival, autumn Equinox, which is the Midwest largest all electronic music vessel on October 2 and third in Chicago, and we sold 33,000 tickets. We signed 25,000 members.

We currently have booked a lineup of over 100 live concerts and festivals featured over 300 artists performing over the next 6 months.

As I touch on shortly going forward, while all ticket purchases, all pay per views, all merchandise and any of our live user paper view events will receive a paid 1 year paid membership that provides for discounts to future like in-person and pay-per-view events discounted merchandise and NFPs and the enormous amount of created music and podcast content.

Our wholly owned subsidiary, PodcastOne continues to experience robust growth. The entire podcast team has done an outstanding job, both recruiting new entertain podcasts as well as aggressively pursuing advertising and sponsorship deals.

-- podcast metrics continue to impress and grow has added over 2.48 billion podcast downloads in the trailing 12 months ending September 30. And its franchise of exclusive shows has grown to more than 235 with over 50 new podcasts now producing over 300 podcast episodes per week.

We continue to grow our paid subscribers with our Slacker radio streaming audio service and now over 1.25 million paid subscribers. We had a keen eye on expanding the reach of Slacker, adding over 35,000 subscribers a month.

As many of you may know, to a 9-year exclusive partnership with Tesla, a LiveXLive Slacker radio subscription is preinstalled as default radio in every Tesla car sold in North America and LIV-1 is paid directly by test for those subscriptions.

The Lixilackrap is pre-installed now in 85 other automobiles as well as across major cell carriers, Verizon, Sprint and T-Mobile, which allows Slacker subscribers to listen in their cars as well as across their mobile devices.

We are seeing compelling growth opportunities for Slacker by partnering with other automotive OEMs as a default radio service, especially outside the U.S. as well as the other white-label B2B partnerships through Android Automotive.

Since launching pay-per-view, Pay-per-view 1, our new subsidiary platform in May of 2020, we have generated over $26 million in pay-per-view related sales and live pay-per-view events. As of October alone, pay-per-view live events and tickets sold more than 25,000 new subscribers and over 1 million live stream views.

-- coming off the outstanding success of Social gross pay-per-view events in June, we look forward to owning and producing our own next hybrid pop culture franchise pay-per-view in the January 2022 quarter called self-made K.

This event will come on boxing exhibitions, featuring women and prominent social media inputs and esports entertainment all buying for over 1 million in prices as well as a lineup of renowned music artists and bands. Social gloves drove over 136,000 pay-per-views in 136,000 members of LiveOne [ph].

As many of you hopefully know, in September 2021, we announced our intention to spin out our existing pay-per-view business as a separate public company and plan to distribute a portion of the new company's equity Live 1 shareholders. We anticipate that spin out to take place before March 31, 2022.

In our last call, I spoke about the significant investment in commit LiveOne is making for original programming, content and marketing events. I would now like to introduce President of LiveOne, Dermot McCormack to provide more details of those efforts. .

Thank you, Rob. And as Rob just stated, LiveOne has made a major commitment to invest in and market its original content and programming.

Because of our unique flywheel, we are not just creating shows, we are developing unique IP and franchises that can be developed into everything from a documentary to a podcast to an event to a product, creating long-term value for LiveOne and our shareholders.

Over the past 2 quarters, we have invested over $20 million in developing, implementing and marketing our franchises, which drove both revenues, new memberships and subscribers.

Over the past year, we have launched shows and events that we believe have the chance to become valuable franchises going forward, including self-made the lockdown awards, the snubbies, music lives and music lives on, like-by-like presents and lives on.

Not to mention a number of podcasts that have the potential to develop into assets for television film, music and documentaries.

We continue to grow our amenity successful and first-of-its-kind hybrid festival music lives, which is returning for its third and most ambitious installment yet this November, live from Miami Baselink and featuring a unique plan of virtual and physical performances, integrated with a global 313 basketball tournament with over 30 countries participating.

Our other live music franchises musical is on and like-by-like presents continue to expand, recently crossing the 70th episode milestone and have proven to be big hits with our advertising partners.

The second addition of our Live on awards, the breakout Edition, is scheduled for this December and will also push the boundaries of our unique and signature hybrid approach.

This month, we also announced the acquisition of Ramapo, a New York City-based artist and brand development company, which specializes in representing aspiring artists and operating services in PR, strategic marketing, brand positioning, graphic design and social media management.

The company is known for its innovative work, discovering and breaking international acts like K-Pop sensations, DTS and Monsta as well as its unique approach to public relations and artist development.

This acquisition complements our existing online talent search platform self-made and further expands our flywheel business model by providing artists with an end-to-end solution to develop and amplify their brand to audiences across LiveOne's platform and beyond.

The Gramophone acquisition builds out yet another tier in our creator service spec, but it was closer to artists and keeping liven on the leading edge of where the music and entertainment business is going.

And to finish up, I would like to add that due to the successful integration of our advertising and sales divisions, we are closing more 7-figure plus advertising deals with major advertisers than at any other time in our history. I would like to now hand it over to our CFO, Mike Quartieri, who will review our Q2 results. .

Thanks, Dermot. Let me spend a few minutes to provide a brief overview of our Q2 fiscal '22 results. We ended Q2 with strong results with revenue growing 50% year-over-year to a record $21.9 million.

Contribution margin increased 37% to $5.9 million, and our adjusted operating loss was $2.1 million, with record KPIs, including a 34% net increase in paid subscribers year-over-year.

Moreover, for the current six month period ended September 30, revenues increased 142% year-over-year to $60.7 million, while our contribution margin increased 93% to $13.7 million.

For Q2 fiscal '22 results, consolidated revenue was $21.9 million, up 50% year-over-year from $14.6 million in the prior year quarter, due in large part to growth in advertising, paid subscribers and our successful acquisition of CPS.

The growth in advertising is a result of current improvement in our podcast on operations compared to the prior year quarter that was negatively impacted by the COVID-19 pandemic. We ended Q2 with 1,256,000 paid subscribers, a net increase of 320 as compared to 936 paid subscribers reported at September 30, 2020.

Please note that included in the total paid subscribers are certain subscribers, which are subject to a contractual dispute for which we are not currently recognizing revenue. Fiscal Q2 '22 contribution margin increased 37% year-over-year to $5.9 million.

The year-over-year improvement was driven by the addition of CPS and the increase in paid subscribers. Fiscal '22 adjusted operating loss was $2.1 million compared to $1.4 million in the prior year quarter.

The consolidated adjusted operating loss is comprised of adjusted operating income from our operations segment of $1.2 million, offset by adjusted operating losses from corporate of $3.2 million. The increase in the adjusted operating loss was driven by additional costs to support the company's growth and M&A activities.

For the six months ended September 30, 2021, revenue was a record $60.7 million, up $142 million year-over-year as compared to $25 million in the prior year quarter.

The increase in revenue was driven from all aspects of our flywheel, continued growth in paid subscribers, the additions of podcast 1, which is driving our increase in advertising and CPS, which represents our merchandising revenue, along with the return of live events, which is driving pay-per-view, ticketing and events and sponsorship revenues.

Contribution margin for the 6-month period ended September 30 was $13.7 million, an increase of 93% compared to the prior year period. The increase is driven by the increase in revenues previously outlined.

Our contribution margin percentage for the quarter was negatively impacted by strategic investment in marketing campaign to grow our listener base across the entire flywheel and our continued investment in our live event franchises, which we believe will yield attractive returns over the long run.

Adjusted operating loss for the six month period ended September 30 was $3.8 million compared to $1.4 million in the prior year period. The increase in adjusted operating loss is a result of the strategic investments into content and increased marketing to drive future revenue growth beyond the current year. Turning to the balance sheet.

We ended with cash of $16.7 million, including restricted cash of $260,000.

Turning to financial guidance for the fiscal year 2022, we are reaffirming our revenue guidance of $115 million to $125 million, and reducing our estimate for adjusted operating income from our operations segment to between breakeven and $3 million as a result of the impacts of the COVID-19 Delta variant on live events, inclement weather and our long-term investments in original and exclusive content and franchises as well as continue our increased spend on marketing associated with driving new paid memberships.

And now, let me hand it back over to Rob. .

This is a truly exciting time for LiveOne. We will soon be announcing a major development in our subscription and membership model, one that we believe will be compelling for fans and consumers.

Next Thursday after the close, we will be holding a press conference with members of the press, and we welcome existing shareholders and analysts to join John as well. This is a unique time for the company that we have now driven 170,000 members at an average of over $60 per person.

This is uniquely positioning our subscription and membership to where the business is heading going forward. As you opening a live events, we're now prepared are now in position to really press the envelope and really hit that flywheel running.

We are reiterating our $2 million share buyback and -- We're excited that we had announced previously that we have got a credit line for the banks, right, which we hope to increase in the near future at very low interest rates and really position the company that we will pass 1.3 million subscribers, 170,000 members.

And each of the subsidiaries of our business are now growing substantially. This is an exciting time for the company, and I want to thank everyone for joining. And we look forward to any Q&A for today's call. Thank you..

[Operator Instructions] And our first question today comes from Brian Kinstlinger from Alliance Global Partners. Please go ahead with your question..

Hi, great. Thanks, and great results. Can you talk about -- you gave us the numbers on spring awakenings.

Can you maybe speak to average ticket price, sponsorship revenue, maybe other parts of the platform as well and how you monetize this event that you own?.

Yes. So we can't go into too much detail, as you know, but what I could tell you is the average ticket price is in the range of $100 a ticket, right? Each one of those ticket buyers becomes a member of live by live and will now be offered opportunities to buy tickets to our next events as well as to our paper views as well as NFTs and merchandise.

So exciting time for the company to truly prove that flywheel. Sponsorship was the highest that we've ever had. And we've just passed over 100 sponsors for the company. And as you know, Brian, as we go back, we had 1 sponsor 2 years ago before COVID. We now have over 100 sponsors in this company. .

And just to be clear, when they become a member, are you paying for a paid subscription for them for a year? Or is that different than a member?.

Well, we're going to get into next Thursday, we'll be holding the special conference call for the press, right, as well as for the music industry. Then you'll get a little more color on that. But with your purchase, you're automatically becoming a subscriber, whether it's 1 month, 3 months or a year, you'll hear a lot more of that.

But you pump a subscriber, which obviously drives more advertising revenues, right? And then we'll obviously bring them in at the top of the funnel, which the objective is to convert them into long-term paying subscribers and members... .

Got it. And to be clear, whereas the first quarter social gloves, you didn't own the event, and so your margins were pretty thin. You own this event. You also own self-made, which I think is happening still in this quarter. And so the margin profile of those 2 events should be substantially better than the event of social gloves.

Is that an accurate statement?.

No. Social clubs was extremely profitable, right? And we'll have way more clarity on that very shortly. When you look at these events, right, when you own them, right, we get to test our franchises and bring our franchises to life and control the environment in it. So we're building out those franchises substantially.

So we'll have a lot more clarity on that. But Brian, it's really exciting to watch these franchises come together. And as you know, all of my businesses I've built over the years have been built off of franchises, including we did the Movie 300. These franchises have enormous upside value to them.

And when we own them, we get to trigger and test them in a much more unique way. .

Okay. Lastly, and then I'll get back in the queue. Can you talk about podcast one, you're adding a lot of new content demand for advertising your brand seems to be strengthening. Maybe talk about how that business is performing in this improving environment. .

Yes. Kira [ph] is just doing a spectacular job of taking podcast on which, as you know, required right in the hardcoded advertising was dramatically off at the time. He's done an amazing job of really turning that business now. And we've added, I think it's now like 43 new podcasts.

And you're starting to see podcast that are moving over with substantial traffic. If you watch the news last 1.5 weeks, we've announced 2 of them with over 50 million views already on them.

So people are recognizing the brand and the 10-year history of it and understand that we give them a full 360 play, not only do we help them the production, we deliver revenues for them on the sales side, the marketing side of it and overall performance from -- so I couldn't be more excited about where podcast 1 is going and what Kit and the team have done with that franchise.

.

[Operator Instructions] And we do have a follow-up question from Brian Kinstlinger from Alliance Global Partners..

Sure I tried to see the phone, but can you go into Gramophone, a little bit and maybe talk about the revenue and EBITDA in trailing 12 months. And then as being part of your flywheel you've discussed how you can build upon those results. .

Yes. So we haven't disclosed the revenue on it; this is not a gigantic acquisition. It is a gigantic chess move though, right. Eshai [ph], who is the President and Founder of this, runs a management company over at Maverick.

He has had a history of breaking unique talent, including BTS, the biggest band on Earth today as well as Monsterx [ph] and many others, has a huge footprint into the K-Pop market as you continue to watch our pay-per-view events, our pay-per-view events are really growing fast and both the revenues as well as the bottom line and is really exciting to watch what's happening.

And echoing brings together as he joins our team continues to hit exactly in the heart of we are a talent-first platform focused on the super fans. These are the ultimate super fans that our ARPUs are going up. Our ARPU went from 280 last year to 3.41% this year, right, on our subscription.

And as I said, in our membership, our membership is over $60 today. .

Great. And then, Hertz ordered 100,000 Tesla's. I take it, obviously, none of that's in your results right now. And you're having several events that are increasing the members that hopefully are going to be converted into paid subscribers.

-- where -- as you look out longer term, maybe a year out or so, where do you think this -- the paid subscriber base can get to as the flywheel is starting to build?.

Well, I think this is the first of many corporate contracts that Tesla is going to get, right? That $100,000 is really exciting, and we're just stating we're just starting to see that momentum kick in.

As I mentioned, we're going to pass 1.3 million monthly subscribers any minute now, right? And both our membership and our subscription we're going to continue to grow at a fast pace now.

So as you watch that grow, we've talked about a 5-year model of getting to 10 million subscribers, right? We're more confident than ever that we're going to be able to achieve those goals. And as you look out this year, we talked about 30,000 subscribers per month. Now we're talking about 350-plus thousand subscribers.

We may have to raise that number substantially as we start to see that 100,000 come in. But I'm starting to see taxis, Uber's corporate fleets, right, rental car companies, you're going to start seeing those corporate orders. And all of that -- all of the North American side falls in with us.

And we're excited about expanding our relationships with the record labels globally, right? And hopefully, the same thing with Tesla globally. And this is a unique time to be in this space. And we've built now a technology that allows us to be able to do this in white label for any core company right, around the globe to be able to do that.

And our team has really done a magnificent job of growing from 40 cars to now over 85 cars, and we'll be over 100 very shortly..

And ladies and gentlemen, with that, we're going to end today's question-and-answer session. I'd like to turn the floor back over to Rob Ellin for any closing remarks. .

Just finalized, I want to thank everyone for joining and thank my team for fighting through another round of COVID. It's pretty amazing that we hit the $60 million revenue number. As everyone knows, we only did $6 million last year, right, which was up from $38 million. So this is growth of almost 100% now, right, 2 years in a row.

We have reiterated our guidance between $115 million and $125 million. And if the COVID variance in it, we would have had raised the guidance again substantially. We see telltale signs that -- The variance is still here, but live is opening up.

Our flywheel opens up dramatically, and we look forward to the next 2 quarters, again, with record revenues and record growth. And it's a really exciting time for us, and I want to thank everyone for their patience. I thank my team for really surviving a unique time in the market that we've gone through. We lost all of our live business.

We lost our live partners. We lost them again to this quarter, but I see everything coming back right now and it's starting to move fast. And I think I talked about in the last quarter that the telltale signs here are that this is going to be the roaring 20s that are coming.

If we can continue, we have over 100 live events coming for the rest of the year. We have our tentpole events coming.

Our next social glove [ph] is coming every single time the consumer buys a ticket, buys merchandise like tips, like Bison NFT, they are now going to become a member LiveXLive, but and I'm looking forward to exposing way more of that in our conference call next Thursday. Thank you, everyone, and I appreciate your time..

Ladies and gentlemen, with that we'll conclude today's conference call. We thank you for attending. You may now disconnect your lines..