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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 Third Quarter 2019 Results

November 4, 2019

BOULDER, Colo., Nov. 04, 2019 (GLOBE NEWSWIRE) -- Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company, reported financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 vs. Same Year-Ago Quarter

-- 25% increase in revenues -- Subscriber count increased to 595,000 -- Successful launch of “Gaia Sphere” event center and $299 Annual Live Access subscription

“We made great progress on reducing our cash used in operations on our path to sustained free cash flows beginning in July 2020,” said Jirka Rysavy, Gaia’s CEO. “We also successfully completed our first full capacity event at ‘Gaia Sphere’ on our campus in October and have started to gain traction on our new $299 Live Access subscription.”

Paul Tarell, Gaia’s CFO said: “During September, we achieved our target of reaching EBITDA profitability for the month while generating 25% revenue growth for the quarter, which has us on track for sustained EBITDA profitability in the fourth quarter of 2019 and beyond.”

Third Quarter 2019 Financial Results

Revenues in the third quarter increased 25% to $13.7 million from $10.9 million in the year-ago quarter. This was primarily due to a 16% increase in paying subscribers since September 30, 2018 and increases in average revenue per subscriber.

Gross profit in the third quarter increased 24% to $11.9 million compared to $9.6 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 but was up from 86.4% in the second quarter of 2019.

Total operating expenses in the third quarter decreased to $15.8 million from $20.1 million in the year-ago quarter. Customer acquisition costs as a percentage of revenue decreased to 49% in the third quarter of 2019 from 125% in the year-ago quarter.

Net loss in the third quarter was $4.1 million, or $(0.23) per share, compared to a net loss of $10.3 million, or $(0.58) per share, in the year-ago quarter.

Cash used in operations in the third quarter improved 89% to $0.7 million compared to $6.3 million in the year ago quarter, assisted by reaching positive EBITDA in September 2019.

As of September 30, 2019, Gaia had $11.6 million in cash.

Conference Call

Gaia is hosting a conference call today, November 4, 2019, beginning at 4:30 p.m. ET (2:30 p.m. MT). The conference call dial-in numbers are (800) 263-0877 (or (646) 828-8143 for international callers), passcode 2950669. Questions will be reserved for analysts and investors. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860. Following the completion of today’s conference call, a replay will be available until November 18, 2019 by dialing (844) 512-2921 (or (412) 317-6671 for international callers), passcode 2950669.

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 90% 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 Balance Sheets

September December 30, 31, --------- --------- (in thousands) 2019 2018 ----------------------------------------------- --------- --------- (unaudited ) ASSETS Current assets: Cash $ 11,647 $ 29,964 Accounts receivable 2,075 1,334 Prepaid expenses and other current assets 3,362 3,192 - ------- - ------- Total current assets 17,084 34,490 Building and land, net 22,836 21,688 Media library, software and equipment, net 35,588 27,623 Goodwill 17,289 10,609 Investments and other assets 13,680 12,741 - ------- - ------- Total assets $ 106,477 $ 107,151 - ------- - ------- LIABILITIES AND EQUITY Current liabilities: Accounts payable, accrued and other liabilities $ 10,127 $ 7,993 Deferred revenue 6,521 5,029 - ------- - ------- Total current liabilities 16,648 13,022 Long-term debt 18,399 12,500 Deferred taxes 206 164 - ------- - ------- Total liabilities 35,253 25,686 - ------- - ------- Total equity 71,224 81,465 - ------- - ------- Total liabilities and equity $ 106,477 $ 107,151 - ------- - -------

GAIA, INC.Condensed Consolidated Statements of Operations

For the Three Months For the Nine Months Ended Ended September 30, September 30, --------------------- ---------------------- (in thousands, except per share data) 2019 2018 2019 2018 ------------------------------------------ -------- --------- --------- --------- (unaudited) (unaudited) Revenues, net $ 13,660 $ 10,942 $ 39,291 $ 30,080 Cost of revenues 1,801 1,386 5,186 3,857 - ------ - ------- - ------- - ------- Gross profit 11,859 9,556 34,105 26,223 Expenses: Selling and operating 14,319 18,618 44,214 47,096 Corporate, general and administration 1,440 1,454 4,526 4,205 - ------ - ------- - ------- - ------- Total operating expenses 15,759 20,072 48,740 51,301 - ------ - ------- - ------- - ------- Loss from operations (3,900 ) (10,516 ) (14,635 ) (25,078 ) Interest and other income (expense), net (241 ) 120 (400 ) 297 - ------ - ------- - ------- - ------- Loss before income taxes (4,141 ) (10,396 ) (15,035 ) (24,781 ) Income tax expense (benefit) 3 — 45 (1,826 ) - ------ - ------- - ------- - ------- Loss from continuing operations (4,144 ) (10,396 ) (15,080 ) (22,955 ) Income (loss) from discontinued operations — 67 (258 ) 242 - ------ - ------- - ------- - ------- Net loss $ (4,144 ) $ (10,329 ) $ (15,338 ) $ (22,713 ) - ------ - ------- - ------- - ------- Income (loss) per share-basic and diluted: Continuing operations $ (0.23 ) $ (0.58 ) $ (0.83 ) $ (1.34 ) Discontinued operations — — (0.01 ) 0.01 - ------ - ------- - ------- - ------- Basic and diluted net loss per share $ (0.23 ) $ (0.58 ) $ (0.84 ) $ (1.33 ) - ------ - ------- - ------- - ------- Weighted-average shares outstanding: Basic and diluted 18,375 17,890 18,070 17,048 - ------ - ------- - ------- - -------

GAIA, INC.Summary of Cash Flows

For the Three Months For the Nine Months Ended September 30, Ended September 30, --------------------- ---------------------- (in thousands) 2019 2018 2019 2018 ---------------------------------------------- -------- --------- --------- --------- (unaudited) (unaudited) Net cash provided by (used in): Operating activities - continuing operations $ (679 ) $ (6,380 ) $ (5,996 ) $ (13,384 ) Operating activities - discontinued operations — 67 76 242 - ------ - ------- - ------- - ------- Operating activities (679 ) (6,313 ) (5,920 ) (13,142 ) - ------ - ------- - ------- - ------- Investing activities (5,151 ) (4,321 ) (16,489 ) (13,753 ) - ------ - ------- - ------- - ------- Financing activities — 287 4,092 24,930 - ------ - ------- - ------- - ------- Net change in cash $ (5,830 ) $ (10,347 ) $ (18,317 ) $ (1,965 ) - ------ - ------- - ------- - -------

GAIA, INC.Reconciliation of Loss from Continuing Operations to EBITDA and Adjusted EBITDA

For the Three Months For the Nine Months Ended September 30, Ended September 30, --------------------- ---------------------- (in thousands) 2019 2018 2019 2018 ----------------------------------------- -------- --------- --------- --------- (unaudited) (unaudited) Loss from continuing operations $ (4,144 ) $ (10,396 ) $ (15,080 ) $ (22,955 ) Interest expense (income), net 241 (120 ) 400 (297 ) Provision for (benefit from) income taxes 3 — 45 (1,826 ) Depreciation and amortization expense 2,488 1,828 6,849 5,045 - ------ - ------- - ------- - ------- EBITDA (1,412 ) (8,688 ) (7,786 ) (20,033 ) - ------ - ------- - ------- - ------- Share-based compensation expense 488 147 1,597 1,138 - ------ - ------- - ------- - ------- Adjusted EBITDA $ (924 ) $ (8,541 ) $ (6,189 ) $ (18,895 ) - ------ - ------- - ------- - -------

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.