Investor Presentation - Equisolve...This presentation includes forward -looking statements that...
Transcript of Investor Presentation - Equisolve...This presentation includes forward -looking statements that...
Investor Presentation
DISCLOSUREThis presentation includes forward-looking statements that involve numerous assumptions, risks and uncertainties. These include,
but are not limited to, general business conditions, historical losses, competition, changing consumer preferences, subscriber costs
and retention rates, acquisitions, and other risks and uncertainties. Actual results may differ materially from those expressed in
these forward-looking statements due to such risks and uncertainties, including those factors detailed under the caption “Risk
Factors” and elsewhere in the documents we file from time to time in our filings with the Securities and Exchange Commission,
including our reports on Form 10-K and Form 10-Q. Gaia assumes no obligation to publicly update or revise any forward-
looking statements. Research results discussed today are based on information that the Company considered reliable at the
time the study was conducted, but the Company does not represent the results are accurate or complete and they should not be
relied on as such. The information, opinions, estimates and forecasts presented are as of the date thereof and are subject to
change without prior notification.
WHAT IS GAIA
• Global video subscription service (SVOD) @ $11.99/month (Ad Free)
• Network of niche channels for an underserved subscriber base with 8,000+ original programs and curated videos
• 90+% of content is exclusive to Gaia including worldwide rights
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TARGET DEMOGRAPHIC Consumption across channels 50% Female / 50% Male
28-60 years old $75k+ HH income
PROVEN MANAGEMENT TEAM
JIRKA RYSAVYCHAIRMAN & CEO
• Founder & CEO – Crystal Market → Wild Oats Market (ex-NASDAQ), Whole Foods Market (now Amazon)
• Founder & CEO –Corporate Express (ex-NASDAQ) former Fortune 500 & largest Colorado company, now Staples Advantage
• Founder & CEO – Gaiamnow Sequential Brands
BRAD WARKINSPRESIDENT AND COO
• Joined Company in 2007
• Previously served as President of Conscious Media, Inc., a company majority owned by Gaia, and purchased by Gaia in 2007
• Formerly head of Ecommerce with Corporate Express and 8+ years with Anderson Consulting (now Accenture)
• At Gaia since 2013, previously VP Finance at SET Media, Inc. (acquired by Conversant)
• Formerly Senior Director of Finance at Velti, Inc., a mobile advertising technology company
• 8+ years at KPMG and Armanino
PAUL TARELLCFO
JAYMI BAUERCMO
• At Gaia since 2014
• Previously held various leadership positions over 11+ years at Microsoft in the Xbox and Interactive Entertainment divisions
• Led the launch of Xbox 360 in US Channel, Global Marketing Head for Xbox 1st Party Games and Lifestyle & Entertainment experiences on Xbox One
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Create a transformational network that empowers a global conscious community
UNPARALLELED CUSTOMER LOYALTY
70
15
-11
Sources: customer.guru, Gaia NPS internal survey 3/14/19
NPS = % Promoters – % Detractors
9 – 10: Promoters7 – 8: Passives
0 – 6: Detractors
Range: -100 to +100
Net Promoter Scores (NPS)
4
Hulu HBONetflix Amazon Prime Video
64
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MODEL HAS SCALED TO SUPPORT GROWTHSubscribers Annualized Revenue Run Rate
Gross Margin
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$14.4 $19.2
$33.6
$49.6
4Q15 4Q16 4Q17 4Q18
($ in millions)
82.1%
85.7%86.2%
87.2%
4Q15 4Q16 4Q17 4Q18
(% of revenue)
133,000202,000
364,500
550,000
4Q15 4Q16 4Q17 4Q18
(# of Subscribers)
MASSIVE CATEGORY MOMENTUM
Projected Global SVOD SubscriptionsGlobal OTT Revenue ($ Billions)
Source: Digital TV Research July 2016, January and December 2017; Business Wire Global SVOD Forecasts October 2017
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$6
$47
$83
$158
2010 2017 2022 2025
248 mil
375 mil
546 mil
2016 2017 2022
TREMENDOUS ADDRESSABLE MARKET
(1) Digital TV Research December 2017(2) Gaia Segmentation and Market Size study 2018
546MGlobal OTT video service subscriptions by 2022(1)
377MWilling to pay a subscription & interested in
at least one Gaia topic = 69%(2)
26MGaia Target
= 7%(2)
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POISED FOR INTERNATIONAL EXPANSION
• International rights for 90% of content viewed
• Expand by adding languages without need for foreign operations
• Live in Spanish, German and French, including native language titles
• Gaia international subscribers 4y 50% / 8y 60-65%
Subscribers in 185+ Countries
~25% of Subscriber Base Outside the US
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CROSS-PLATFORM PARTNERSHIPS
Subscription Sales Partnerships
Cable PartnersGaia Reseller
Strategic partnerships drive brand awareness and reach
Keep under 20% of Gaia’s revenue
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THE GAIA CAMPUS
• 150,000 sf. ft (Boulder, CO)
• 12 landscaped acres
• Live streaming theater with 250 in person capacity
• Powerful recruiting tool
• Full-service cafeteria and onsite gym
• ~$30 million, owned by Gaia
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CONTENT CREATION
• 80+% of viewership on Gaia original content
• Full in-house production capabilities
• No dependence on studios
Cost per hour: Gaia $10K (Netflix $10M)
• Gross profit generated in subsequent years by titles published in 2013:
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$1.0M
$3.3M
2014 2018Total cost: $2.2M
Lifetime gross profit:$9.2M
INVESTING FOR LONG TERM GROWTH
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2014 2015 2016 2017
Target LTV: CPA Ratio 2:1 2:1 2:1 2:1
Year 1 Cash Return on Acquisition Costs 1.0x 0.9x 1.0x 1.1x
Cumulative Cash Return at Dec 2018 2.7x 2.8x 1.3x 1.1x
Projected Cash Return at Dec 2019 2.9x 3.2x 1.8x 1.7x
($ millions)
Customer Acquisition Investment(1)
$3.6 $4.1 $12.5 $24.6
Cumulative Cash Collected(2)
$9.6 $11.6 $16.8 $27.6
Annualized Cash Collection(3)
$0.9 $1.4 $6.2 $13.6
Note: Data only includes cohorts with a minimum of one year of history(1) Represents total dollars spent in the indicated year on marketing to acquire subscribers(2) Through December 31, 2018(3) Based on December 2018 cash collections
INCOME STATEMENT
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2016(1) 2017 2018
Gross Profit(% Margin)
83.5% 86.1% 87.0%
Total Operating Expenses (% of Revenue)
179.6% 175.0% 169.3%
Customer Acquisition Expenses (% of Revenue)
76.4% 90.8% 105.6%
Other Operating Expenses (% of Revenue)
103.2% 84.2% 63.7%
Operating Profit (Loss)(% of Revenue)
(96.1)% (88.9)% (82.3)%
EBITDA(2)
(% of Revenue)(72.9)% (63.7)% (61.8)%
Gross Profit per Employee(3) $153K $243K $322K
(1) Excludes results from discontinued operations associated with 2016 divestitures(2) Earnings before income taxes, depreciation, amortization and share based compensation(3) Based on Q4 of the indicated year
BALANCE SHEET
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DEC 31, 2018Cash $ 29,964,000 Building and Land, net 21,688,000 Media Library, net 20,036,000 Member Base - 550,000 members* -Net Operating Losses (Full VA)+ -Website and Other Assets 24,854,000 Goodwill 10,609,000
Total Assets $107,151,000
Liabilities $ 8,156,000 Line of Credit 12,500,000Deferred Revenue 5,028,000 Equity 81,467,000
Total Liabilities and Equity $107,151,000
Shares Outstanding 17,900,139
* Not capitalized on Gaia’s balance sheet+Gross NOL’s of $71 million federal and $20 million state