SOURCE: Gaia, Inc.

Gaia, Inc.

November 03, 2016 16:05 ET

Gaia Reports Third Quarter 2016 Results

BOULDER, CO--(Marketwired - Nov 3, 2016) - Gaia, Inc. (NASDAQ: GAIA), a conscious media company, reported financial results for the third quarter ended September 30, 2016.

During the third quarter, Gaia completed the sale of its branded consumer product business and recognized a $114.5 million pre-tax gain. In the second quarter Gaia also sold its 51.4% interest in Natural Habitat, which was acquired for $0.6 million, for $12.8 million.

Gaia used the majority of the proceeds to conduct a share repurchase tender offer. Gaia acquired 9,637,000 shares of its common stock and 840,000 vested stock options at $7.75 per share. The remaining proceeds will be used to fund the continuing growth and development of Gaia's business, as well as general corporate purposes. As of September 30, 2016, Gaia had 15.1 million shares outstanding, $62.5 million in cash, no debt, and an unencumbered 13 acre, 150,000 sq. ft. fully leased campus.

Third Quarter 2016 Financial Results

Reported results are from continuing operations and exclude the results of the branded consumer product business and Natural Habitat for all periods presented, except for certain disposition and separation costs that continued in the third quarter and costs associated with transition services, which ended on September 30, 2016.

Total revenues in the third quarter of 2016 increased 27% to $4.5 million from $3.5 million in the same quarter a year ago due to 35% growth in streaming revenue. Gaia's paying subscriber count at the end of the third quarter grew 46% to 180,000 compared to 123,000 at the end of the third quarter of 2015.

Gross profit in the third quarter increased 30% to $3.8 million compared to $2.9 million in the year-ago quarter. Gross margin increased 170 basis points to 84.3% from 82.6% in the third quarter of 2015. The increase in gross margin was due to leverage on the cost of streaming due to higher volumes and increased revenues.

Total expenses in the third quarter were $8.0 million compared to $3.5 million in the year-ago quarter. The increase was primarily due to $4.2 million in additional selling and operating expenses associated with increased marketing and re-branding of Gaia, an increase in headcount, costs of business separation activities, and the cost of transition services.

Net loss from continuing operations in the third quarter was $(0.2) million or $(0.01) per share, compared to $(0.7) million or $(0.03) per share in the year-ago quarter.

"Our results for the third quarter were ahead of our expectations," said Jirka Rysavy, Gaia's Chairman and CEO. "We exceeded our subscriber growth target, successfully completed the sale of the branded business and the tender offer, increased our geographic reach to 130 countries and expanded our library to approximately 7,500 titles. We expect to build on this momentum during the fourth quarter and reach about 200,000 paid subscribers by the end of the year."

Conference Call

Gaia is hosting a conference call today, November 3, 2016, beginning at 4:30 p.m. ET (2:30 p.m. MT). The conference call dial-in numbers are (877) 741-4251 or (719) 325-4783 for international callers, passcode 9218871. Questions will be reserved for analysts and investors. If you have any difficulty connecting with the conference call, please contact Liolios at (949) 574-3860. Following the completion of today's conference call, a replay will be available until November 17, 2016 by dialing (844) 512-2921 or (412) 317-6671 for international callers, passcode 9218871.

About Gaia

Gaia is a global digital video streaming service and online community that provides curated conscious media content to its subscribers in 130 countries. Over 90% of its 7,500 titles are available for streaming exclusively on Gaia through most devices connected to the Internet and 80% of the views are generated by content produced or owned by Gaia. For more information about Gaia, visit www.gaia.com.

Forward-Looking Statements

This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as "expect," "believe," "will," or comparable terminology or by discussions of strategy. While Gaia believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, history of operating losses, general economic conditions, competition, changing consumer preferences, acquisitions, new initiatives undertaken by us, and other risks and uncertainties included in Gaia's filings with the Securities and Exchange Commission. Gaia assumes no duty to update any forward-looking statements.

   
   
GAIA, INC.  
Condensed consolidated statements of operations  
   
    For the Three Months Ended
September 30,

    For the Nine Months Ended
September 30,

 
(in thousands, except per share data)   2016
    2015
    2016
    2015
 
    (unaudited)     (unaudited)  
Net revenues                                
  Streaming   $ 3,802     $ 2,818     $ 10,641     $ 7,933  
  DVD Subscription and other     660       683       1,849       1,959  
Total net revenues     4,462       3,501       12,490       9,892  
                                 
Cost of revenues                                
  Streaming     636       529       1,952       1,706  
  DVD Subscription and other     65       79       209       255  
Total cost of revenues     701       608       2,161       1,961  
Gross profit     3,761       2,893       10,329       7,931  
Expenses (1):                                
  Selling and operating     6,536       2,249       17,383       9,735  
  Corporate, general and administration     1,439       1,286       4,215       3,571  
    Total expenses     7,975       3,535       21,598       13,306  
Loss from operations     (4,214 )     (642 )     (11,269 )     (5,375 )
Interest and other income (expense), net     20       (18 )     (133 )     (282 )
Loss before income taxes     (4,194 )     (660 )     (11,402 )     (5,657 )
Income tax expense (benefit)     (4,043 )     --       (4,041 )     --  
Net loss from continuing operations     (151 )     (660 )     (7,361 )     (5,657 )
                                 
Income (loss) from discontinued operations, net of tax     100,595       (8,154 )     97,741       (8,165 )
Net income (loss)   $ 100,444     $ (8,814 )   $ 90,380     $ (13,822 )
                                 
Net income (loss) per share -- basic and diluted:                                
    From continuing operations   $ (0.01 )   $ (0.03 )   $ (0.34 )   $ (0.23 )
    From discontinued operations   $ 6.65     $ (0.33 )   $ 4.56     $ (0.33 )
    Net income (loss) per share   $ 6.64     $ (0.36 )   $ 4.22     $ (0.56 )
                                 
Weighted-average shares outstanding:                                
    Basic     15,138       24,517       21,417       24,507  
    Diluted     15,138       24,517       21,417       24,507  
     
(1)   Expenses during the nine months ended September 30, 2016 include one-time expenses associated with the sale of Natural Habitat, the sale of the branded consumer products business, the planned (and now cancelled) spin-off of our subscription business and certain other costs associated with these business that are not allowed to be classified as discontinued operations.
 
 
 
GAIA, INC.
Condensed consolidated balance sheets
 

(in thousands)
  September 30, 2016
  December 31,
2015

    (unaudited)    
ASSETS            
Current assets:            
  Cash   $ 62,454   $ 1,266
  Accounts receivable     604     465
  Prepaid expenses and other current assets     1,485     729
  Current assets of discontinued operations     -     68,860
    Total current assets     64,543     71,320
Property, equipment, and media library, net     28,550     29,524
Goodwill and other intangibles, net     10,680     10,816
Investments and other assets     10,882     1,549
Noncurrent assets of discontinued operations     -     15,333
    Total assets   $ 114,655   $ 128,542
LIABILITIES AND EQUITY            
Current liabilities:            
  Accounts payable and accrued liabilities   $ 6,410   $ 6,081
  Deferred revenue     1,994     1,454
  Current liabilities of discontinued operations including income taxes payable     3,690     32,214
    Total current liabilities     12,094     39,749
  Deferred taxes     1,285     -
Commitments and contingencies            
Gaia, Inc. shareholders' equity     101,276     83,940
Noncontrolling interest     -     4,853
      Total equity     101,276     88,793
    Total liabilities and equity   $ 114,655   $ 128,542
             

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