Rob Ellin - Chief Executive Officer, Chairman Aaron Sullivan - Interim Chief Financial Officer.

Good afternoon. Thank you for attending today’s LiveOne Inc. Q2 Fiscal 2023 Business Update and Earnings Call. My name is Tamia and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions].

It is now my pleasure to pass the conference over to your host Aaron Sullivan, Interim CFO. Please proceed..

Thank you. Good afternoon and welcome to LiveOne’s business updated and financial results conference call for the company’s second quarter of the fiscal year ended March 31, 2023. Presenting on today's call are Rob Ellin, CEO and Chairman and myself, Aaron Sullivan, Interim CFO.

I would like to remind you that some of the statements made on today's call are forward-looking and are based on current expectations, forecasts and assumptions that involve various risks and uncertainties.

These statements include, but are not limited to statements regarding the future performance of the company, including expected future financial results and expected future growth in the business. Actual results may differ materially from those discussed on this call for a variety of reasons.

Please refer to the company's filings with the SEC for more information about factors which could cause the company's actual results to differ materially from these forward-looking statements, including those described in its annual report on Form 10-K for the year ended March 31, 2022, and subsequent SEC filings.

You will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed today in the company's earnings release, which is posted on its Investor Relations website 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, contain time-sensitive information and reflects management's views as of the date of this call, November 10, 2022, and except as required by law, the company does not undertake any obligation to update or revise this information after the date of this call.

I'd like to highlight to investors that this call is being recorded. The company is making it available to investors and the media via webcast, and a replay will be available on its website in the Investor Relations section shortly following the conclusion of the call.

Additionally, it is the property of the company, and any redistribution, retransmission or rebroadcast of the call or the webcast in any form without the company's expressed written consent is strictly prohibited. Now, I would like to turn the call over to LiveOne's CEO, Rob Ellin..

Thank you, Aaron, and good afternoon, everyone. I'd like to thank you for joining us for today's our fiscal 2023 first quarter business update and financial results. As reported, over the past three quarters, LiveOne’s team has made a strategic decision to execute on a concise and specific number of initiatives.

Number one, consolidate and integrate our six previous acquisitions with a focus on reducing cost and overhead, and cherry picking the superstar talent in those divisions with positive EBITDA. Number two, to focus our resources and capital and growing our business, that are profitable and to aggressively grow our member subscribers and sponsors.

Number three, to substantially improve our balance sheet. Number four, to forego producing or investing any large tentpole events without a sponsor paying for and being profitable. Number five, to buy back a substantial piece of stock in the open market at this giant discount to what fair market value would be.

So what have we done today? To date, through the consolidation of our prior six acquisitions, we’ve implemented cost and expense reductions that will result in $25 million in cost savings, including $2 million this quarter.

These cost savings include substantial headcount reductions, but we selectively retained our strongest managers and employees to focus on generating positive adjusted EBITDA.

With respect to focus on our profitable business and growing our members and subscribers, we announced today that our audio division, which is comprised of streaming music, business Slacker as well as podcast business delivered six-month revenues of $42 million and a staggering $9.8 million of adjusted EBITDA.

And we expect the audio division to achieve revenues in excess of $88 million this year and approximately $17 million of EBITDA. We have posted record growth in paid subscription members having added 181,000 subscribers this quarter and passing 1.8 million total members. Including free and sponsored members, we have now hit 2.6 million.

We've grown our sponsors from seven pre-COVID to now over 300 last year and I would expect the number to surpass over 500 sponsors on our platform this year. We are greatly expanding our B2B partnerships, which includes our nine-year exclusive partnership with Tesla, 86 other cars.

Adding Google Android automotive gives us the opportunity to white label any other car within a matter of days to be able to immediately change them from Ford cars to Ford radio, hardware makers, retailers, cell carriers, social media companies, media companies, all with 10 million to 2.5 billion eyeballs must have Live and must have music.

You’ll see more and more B2B deals on a weekly and biweekly basis over the next six months. We recently launched LiveOne brands, a division featuring celebrity backed branded products.

We are utilizing our community of 55 billion listens, 2.4 billion downloads of our podcast and 5 billion engagements across our live streaming, to attempt to see whether or not we can launch specific brands starting with Jeremih, with Russell Bevan, number one winemaker in the country, more 100 point wines than anyone in history to launch the first ever white wine for Jeremih in the second quarter this year.

We also have new initiatives in publishing NFT with Polygon as our partner.

On the balance sheet, we've extinguished posted $20 million available in just six months without raising any capital and we have also paid in advance many of the record labels, and we expect the maturity of our $7 million secured facility with East West Bank, which was just extended to 2024.

All of our senior debt has been extended to 2024 or two years out.

Regarding our tentpole and pay-per-view events, we have kept our powder dry in fiscal 2023, but see substantial opportunity to produce and be part of some of the largest live events in fiscal 2024, which includes pay-per-view for festivals, social media events, boxing that will create the opportunity to finish the financing of our pay-per-view business and our spin off into its own public company sometime by the end of 2024 – fiscal 2024.

The strategic decisions to forego live events in fiscal 2023 has resulted in adjustment for our fiscal 2023 consolidated revenue guidance of between $100 million to $110 million in revenues. But most important is, it moves our EBITDA number to $9 million to $11.5 million. This is more than a $20 million swing, positive swing from last year.

With respect to PodcastOne, we will file our S-1 by December 15. We closed – 90 days ago approximately, we closed $8 million and a $68 million valuation.

All of our shareholders of record will receive a dividend of 5% to 10% of PodcastOne, who owned the stock as of December 15 and we will list that on a national exchange, NASDAQ or New York Stock Exchange, in the early parts of next year.

I believe we have made enormous progress in a very short amount of time, which positions LiveOne with its shareholders to win big. The LiveOne Board and I believe that shares of LiveOne have been significantly undervalued.

We have repurchased 2 million shares of LiveOne common stock in the open market and we announced today we'll be expanding that program to repurchase $2 million of additional stock. This is an additional substantial amount of open market inside of buying LiveOne shares by myself and other members of our Board.

With that, I would like to hand it back over to Aaron Sullivan, who will review our Q2 fiscal 2023 results and after that I have a few closing remarks. Thank you, Aaron..

Thanks, Rob. I’ll spend just a few minutes to provide an overview of the results for our fiscal ’23 second quarter ended September 30, 2022. Consolidated revenue for the three and six-month periods ended September 30, 2022 was $23.5 million and $46.8 million, respectively.

Our audio division posted revenue for the three and six-month periods ended September 30, 2022 of $21.1 million and $42 million, respectively.

For the second quarter ended September 30, 2022, revenue was comprised of 53% subscription, 47% advertising, sponsorship merchandise and ticketing events compared to 45% subscription and 55% advertising sponsorship and ticketing events in the prior year.

Consolidated adjusted EBITDA for the three and six months ended September 30, 2022 was a record $4.4 million and $6.4 million, respectively. On a U.S.

GAAP basis, LiveOne posted a consolidated net loss of $3.4 million or negative $0.04 per diluted share in Q2 fiscal 2023 and a net loss of $21.1 million or $0.02 per share for the six months ended September 30, 2022.

Our audio divisions adjusted EBITDA for the three and six-month periods ended September 30 was also a record $6.5 million and $9.8 million, respectively. As of November 9, we had $1.8 million paid subscribers, a net increase of 209,000 compared to June 30, 2022. Total members, including free memberships, were 2.6 million at November 9.

Included in this total members are certain members who are the subject of a contractual dispute for which we are not currently recognizing revenue. Briefly turning to the balance sheet, we ended Q2 with cash for $7.4 million, including restricted cash of 300K. And now, let me hand it back over to Rob..

Thank you, Aaron. Highlight for everyone, why we have proven as a management team to be resilient. When COVID hit, we lost all of our live partners, all the exciting energy around Live, the revenues we were driving and yet we've grown the business from $38 million to over $100 million.

Today, as we enter a very difficult market and a very different environment for buying, we look at very carefully right at where the opportunities are and where the cash flows are.

We are really excited to look at the growth in our subscription, the growth in our sponsorship, the growth in our audience and we built here is, we built a massive traffic of 2.4 billion downloads of our podcast, Number 7 podcast network and a bar stool, CNN on Podtrac.

55 billion listens across our audio and 5 billion engagements across our Music Live Streaming. As we take that traffic and audience, more and more of them will convert to subscription.

As our subscription grows, what I've said is we will pass 2 million paid subscribers and over 3 million subscribers by year-end, and I fully expect within a five-year period, 10 million subscribers, where 10 million subscribers will do over $1 billion in revenues and over $150 million in EBITDA.

And as you can see by the numbers Aaron walked you through, $88 million and $17 million on our audio business alone. This is a staggering number and a game changing number for the company and for the company going forward as you look forward to 2024.

If we grow at the same rate, you'll have over $25 million of EBITDA, if you just grow at that exact same rate. So we're really excited. We're really energized. The management team is working hard. We're looking forward to launching our IPO, our PodcastOne.

We're looking forward to finalizing, completing our financing of our pay-per-view business, all completely non-diluted to our shareholders and we're looking forward to buying back stock.

If the stock maintains in this level, we're looking forward to buying back a substantial amount of stock and showing our hands and our feet and our mouth all move in the same direction. We're all huge believers in this company and you will see myself, as well as other management and board buying stock. I want to thank everyone for your support.

I want to thank everyone for spending your time in this and I look forward to next quarter, our biggest quarter, our third quarter, and look forward to updating everyone at the end of this quarter. So, thank you very much and thank you for spending the time on the company..

This concludes the LiveOne Inc. Q2 fiscal 2023 business update and earnings call. Thank you for your participation. You may now disconnect your line..