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PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Gaia Reports Fourth Quarter and Full Year 2019 Results

February 24, 2020 GMT

Positive EBITDA and Cash Flows from Operations for Q4 29% Revenue Growth for 2019

BOULDER, Colo., Feb. 24, 2020 (GLOBE NEWSWIRE) -- Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company, reported financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 vs. Same Year-Ago Quarter

-- Generated $0.2 million of positive EBITDA, an improvement of $9.6 million. -- Generated $3.3 million in cash flows from operations, an improvement of $11.5 million. -- 24% increase in revenues.

“We successfully completed our pivot to positive EBITDA for the quarter with mid 20’s percentage revenue growth,” said Paul Tarell, Gaia’s CFO. “We also demonstrated the power of our negative working capital model with $3.3 million in cash flows generated from operations during the quarter.”

Fourth Quarter 2019 Financial Results

Revenues in the fourth quarter increased 24% to $14.7 million from $11.9 million in the year-ago quarter. This was primarily due to growth in paying members and an increase in average revenue per member. Gaia ended 2019 with 29% revenue growth and 598,600 paying members compared to 510,300 at the end of 2018, a 17% increase. With the elimination of the $0.99 introductory trial offer in October 2019, the comparative member count was adjusted to remove 37,500 members who were in their trial period at December 31, 2018.

Gross profit in the fourth quarter increased 23% to $12.8 million compared to $10.4 million in the year-ago quarter. Gross margin declined slightly to 86.9% versus 87.5% in the year-ago quarter primarily due to increased content amortization for shows released in 2019 but was up from 86.8% in the third quarter of 2019.

Total operating expenses in the fourth quarter decreased to $15.3 million from $21.8 million in the year-ago quarter. Customer acquisition costs as a percentage of revenue decreased to 50% in the fourth quarter of 2019 from 120% in the year-ago quarter.

Net loss in the fourth quarter was $2.8 million, or $(0.15) per share, compared to a net loss of $11.1 million, or $(0.62) per share, in the year-ago quarter.

Gaia generated cash from operations of $3.3 million in the fourth quarter of 2019 compared to cash used of $8.2 million in the year ago quarter, an improvement of $11.5 million.

As of December 31, 2019, Gaia had $11.5 million in cash compared to $11.6 million as of September 30, 2019.

2019 Financial Results

Revenues in 2019 increased 29% to $54.0 million from $42.0 million in the year-ago quarter. This was primarily due to growth in paying members and an increase in average revenue per member.

Gross profit in 2019 increased 28% to $46.9 million compared to $36.6 million in the year-ago quarter. Gross margin declined slightly to 86.8% versus 87.3% in the year-ago quarter primarily due to increased content amortization for shows released in 2019.

Total operating expenses in 2019 decreased to $64.1 million from $73.1 million in the year-ago quarter. Customer acquisition costs as a percentage of revenue decreased to 56% in 2019 from 110% in 2018.

Net loss in 2019 was $18.2 million, or $(1.00) per share, compared to a net loss of $33.8 million, or $(1.96) per share, in 2018.

Cash used in operations was $2.6 million in 2019 compared to $21.4 million in 2018, an improvement of $18.8 million.

Conference Call

The company will hold a conference call today at 4:30 p.m. Eastern time to discuss its fourth quarter and full year 2019 results.

Date: Monday, February 24, 2020Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)Toll-free dial-in number: (800) 263-0877International dial-in number: (646) 828-8143Conference ID: 5742177

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.gaia.com. A telephonic replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through March 9, 2020.

Toll-free replay number: (844) 512-2921International replay number: (412) 317-6671Replay ID: 5742177

About Gaia

Gaia is a global video streaming service and community that provides curated conscious media in four primary channels—Seeking Truth, Transformation, Alternative Healing and Yoga—to its subscribers in 185 countries with approximately 8,000 titles. Over 85% of its library is exclusive to Gaia, and approximately 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, operating losses, general economic conditions, competition, changing consumer preferences, acquisitions, new initiatives we undertake, costs of acquiring new subscribers, subscriber retention rates, 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.

Contacts

Paul TarellGaia, Inc.(303) 222-3330 Paul.Tarell@gaia.com

Cody SlachGateway Investor Relations(949) 574-3860 GAIA@gatewayir.com

GAIA, INC.Condensed Consolidated Statements of Operations

For the Three Months For the Year Ended Ended December31, December31, --------------------- ---------------------- (in thousands, except per share data) 2019 2018 2019 2018 ------------------------------------------ -------- --------- --------- --------- (unaudited) Revenues, net $ 14,688 $ 11,917 $ 53,979 $ 41,997 Cost of revenues 1,925 1,495 7,111 5,352 - ------ - ------- - ------- - ------- Gross profit 12,763 10,422 46,868 36,645 Expenses: Selling and operating 14,078 20,052 58,292 67,148 Corporate, general and administration 1,254 1,704 5,780 5,909 - ------ - ------- - ------- - ------- Total operating expenses 15,332 21,756 64,072 73,057 - ------ - ------- - ------- - ------- Loss from operations (2,569 ) (11,334 ) (17,204 ) (36,412 ) Interest and other income (expense), net (243 ) 58 (643 ) 355 - ------ - ------- - ------- - ------- Loss before income taxes (2,812 ) (11,276 ) (17,847 ) (36,057 ) Income tax expense (benefit) — (118 ) 45 (1,944 ) - ------ - ------- - ------- - ------- Loss from continuing operations (2,812 ) (11,158 ) (17,892 ) (34,113 ) Income (loss) from discontinued operations — 78 (258 ) 320 - ------ - ------- - ------- - ------- Net loss $ (2,812 ) $ (11,080 ) $ (18,150 ) $ (33,793 ) - ------ - ------- - ------- - ------- Income (loss) per share-basic and diluted: Continuing operations $ (0.15 ) $ (0.62 ) $ (0.99 ) $ (1.98 ) Discontinued operations — — (0.01 ) 0.02 - ------ - ------- - ------- - ------- Basic and diluted net loss per share $ (0.15 ) $ (0.62 ) $ (1.00 ) $ (1.96 ) - ------ - ------- - ------- - ------- Weighted-average shares outstanding: Basic and diluted 18,402 17,890 18,160 17,259 - ------ - ------- - ------- - ------- EBITDA* $ 177 $ (9,390 ) $ (7,609 ) $ (29,423 )

* See definition and reconciliation on following page. GAIA, INC.Summary of Cash Flows

For the Three Months For the Year Ended Ended December31, December31, -------------------- ---------------------- (in thousands) 2019 2018 2019 2018 ---------------------------------------------- -------- -------- --------- --------- (unaudited) Net cash provided by (used in): Operating activities - continuing operations $ 3,346 $ (8,321 ) $ (2,650 ) $ (21,705 ) Operating activities - discontinued operations — 78 76 320 - ------ - ------ - ------- - ------- Operating activities 3,346 (8,243 ) (2,574 ) (21,385 ) - ------ - ------ - ------- - ------- Investing activities (3,786 ) (5,106 ) (20,275 ) (18,859 ) - ------ - ------ - ------- - ------- Financing activities 287 12,500 4,379 37,430 - ------ - ------ - ------- - ------- Net change in cash $ (153 ) $ (849 ) $ (18,470 ) $ (2,814 ) - ------ - ------ - ------- - -------

Reconciliation of Loss from Continuing Operations to EBITDA and Adjusted EBITDA

For the Three Months For the Year Ended Ended December31, December31, --------------------- ---------------------- (in thousands) 2019 2018 2019 2018 ----------------------------------------- -------- --------- --------- --------- (unaudited) Loss from continuing operations $ (2,812 ) $ (11,158 ) $ (17,892 ) $ (34,113 ) Interest expense (income), net 243 (58 ) 643 (355 ) Provision for (benefit from) income taxes — (118 ) 45 (1,944 ) Depreciation and amortization expense 2,746 1,944 9,595 6,989 - ------ - ------- - ------- - ------- EBITDA 177 (9,390 ) (7,609 ) (29,423 ) - ------ - ------- - ------- - ------- Share-based compensation expense 215 512 1,812 1,650 - ------ - ------- - ------- - ------- Adjusted EBITDA $ 392 $ (8,878 ) $ (5,797 ) $ (27,773 ) - ------ - ------- - ------- - -------

EBITDA represents net loss before interest expense, provision for income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to remove share-based compensation expense. EBITDA and Adjusted EBITDA do not represent net income, as that term is defined under GAAP, and should not be considered as an alternative to net income (loss) as an indicator of our operating performance.

Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow available for management or discretionary use as such measures do not consider certain cash requirements such as capital expenditures, tax payments and debt service requirements. EBITDA and Adjusted EBITDA as presented herein are not necessarily comparable to similarly titled measures.

GAIA, INC.Condensed Consolidated Balance Sheets

December31 December31 , , --------- --------- (in thousands) 2019 2018 ----------------------------------------------- --------- --------- ASSETS Current assets: Cash $ 11,494 $ 29,964 Accounts receivable 2,310 1,334 Prepaid expenses and other current assets 2,443 3,192 - ------- - ------- Total current assets 16,247 34,490 Building and land, net 22,681 21,688 Media library, software and equipment, net 36,921 27,623 Goodwill 17,289 10,609 Investments and other assets 13,034 12,741 - ------- - ------- Total assets $ 106,172 $ 107,151 - ------- - ------- LIABILITIES AND EQUITY Current liabilities: Accounts payable, accrued and other liabilities $ 10,594 $ 7,993 Deferred revenue 8,025 5,029 - ------- - ------- Total current liabilities 18,619 13,022 Long-term debt 18,433 12,500 Deferred taxes 206 164 - ------- - ------- Total liabilities 37,258 25,686 - ------- - ------- Total equity 68,914 81,465 - ------- - ------- Total liabilities and equity $ 106,172 $ 107,151 - ------- - -------