Good morning and welcome to the Sidoti & Company June Virtual Investor Conference. The next company to present is Gaia. With us, we have the CEO, James Colquhoun, and the CFO, Ned Preston. We should have 30 minutes for the presentation. We should have time at the end for Q&A. If you do have a question, you can type that into the Q&A tab at the bottom of your screen. With that out of the way, it's all yours, guys.
Thank you, Jim. Hello, everyone. So yeah, as Jim mentioned, my name is James Colquhoun. I'm the CEO, and to my right here is Ned Preston, CFO. Gaia is a conscious community and streaming network. This business right now is a pure-play streamer. It's generating cash with high margins, and we have some very high leverage opportunities that are in front of us at this minute. Essentially, the core of the business is, quote unquote, a conscious Netflix or a spiritual Netflix. We have a community of over 860,000 members globally that are paying a monthly subscription price. If you skip to the next slide here. We have at the core of the business, the $13.99 a month or $119 a year membership tier. We also have a premium membership tier, Gaia +, at $299 a year, which includes live broadcasts.
On our campus here, we have a live broadcast center. We have about six events a year. We can seat about 300 people in person. We also live stream that, including replays, to our premium membership tier. The three content categories that we speak to are essentially an aggregate of underserved niches globally in personal growth and transformation, ancient wisdom and unexplained mysteries, and wellness yoga and meditation. Some of you may be familiar with the previous incarnation of the brand, Gaiam. If you, Ned and I often travel for work, and if you go to the gym in a hotel, you'll see a Gaiam yoga mat. This was a physical products company that we sold off in 2016.
We used part of the proceeds from that sale to buy back stock and also to accelerate the digital business, which is what is at the core of the business today. Now, demographics skew female, older, highly educated, and high disposable income. Generally, they have a lot of time on their hands, and they're very intrigued by a lot of the experts, talent, and content that we have on the site. Some sort of highlights from the core business is that we've achieved positive free cash flow for Q4 and the full year 2024. We have an 86% gross margin and a 93% cash contribution. We have this accelerating CAC to LTV ratio. Our acquisition costs have remained relatively similar since pre-COVID to today, yet our LTV has essentially doubled.
What we're seeing is that the leverage in the business, not only from a margin perspective, but also from an acquisition to LTV perspective, is accelerating as the maturity of the member base continues to expand. In terms of addressable market, I think we missed a slide. Did we miss a slide on the, no, okay. In terms of addressable market, there are some studies here done on global export households. Obviously, streaming video on demand is a category that is continuing to expand globally, even domestically. People have gone from one subscription service to having three or four in a household. This continues to sort of build our top of funnel in terms of addressable market. We look at consumers willing to pay a subscription and interested in at least one of our topics, then our total TAM, and then our subscriber target.
We're encroaching upon 1 million subscribers currently, and we believe there's a 5 million subscriber target for the business. When we look at revenue and members, you can see the step up here from 2018, $40 million, 2024, $90 million. Analysts have us at consensus is over $100 million for 2025. You see the member step up here as well. The other thing to note is sort of Q1 2025, our member count was 867,000. We're on track for a very healthy year in terms of revenue and members. When we look at ARPU and GP per employee, these are sort of two metrics that show how are we continuing to expand upon the average revenue per user alongside maintaining strict controls on OpEx and sort of proving out continued leverage in the model. ARPU is north of $107 a year.
Subscriber, we had a price increase in Q4, sort of towards the latter half of last year. We have another price increase slated for Q1 of 2026. That ARPU will continue to expand. You see here on the right-hand side, GP per employee. We finished for the full year 2024, it was over $700,000. For Q1, we're over $800,000. We see the business potential being north of $1 million GP per employee, which is one way to reverse into a metric that we do not need to expand our OpEx in line with our top line revenue. We can grow it at a fraction of our top line revenue.
One of the key things that differentiates us compared to other streamers is that we have a campus in Colorado, about 30 minutes from DIA , quite close to Boulder, where we produce a lot of our content. By doing that, we are able to not only own the vast majority of our content library, but also do it at a very efficient rate. 88% of our content is exclusive with our own in-house production team and no dependence on outside studios. Additionally, when you look at the viewership patterns of our members, it is in stark contrast to many of the major streaming companies out there. A lot of people view legacy content on our platform as opposed to just the latest series that came out.
This gives us a strategic advantage in that people value content that we produced in 2014 somewhat equally to content that we just released this year. One of the ways we measure that is that we measure the return on content based on a royalty pool where we attribute a dollar per minute to viewership on the content. We're able to track the performance of legacy and new content. There's a cohort of content that we produced in 2014 when the streaming service started. It cost us $2 million to produce, and that has returned over $23 million in gross profit since its inception. We're continuing to see returns on that content asset.
Another way to sort of look at this content efficiency score or multiple is to look at our gross profit for the full year 2024, look at the amortized value of content on our balance sheet, and then look at the efficiency multiple. Comping us to Netflix, you see that we did just on $80 million last year. Oh, sorry, $80 million in GP, yes. The amortized value of the content was close to $40 million. We have a 2x multiple of efficiency. Netflix on their content and GP was a 0.6. Just another way to look at how efficient it is for us to produce this content. In terms of our capacity to expand internationally, we have rights for 98% of our content library internationally.
We also have our foreign language teams located in-house in our campus here, so we do not need to set up foreign offices with foreign teams. We are currently live in Spanish, German, and French as alternate languages to English. We have also native language titles that are sort of localized in each of those languages. Right now, our international members are at 44% outside of the U.S. We anticipate that being north of 50% within three years, sort of in line with other streamers. We currently have members in 185 countries. When it comes to distribution, we have our direct platform, of course, via the web. If you go to gaia.com, you will see that. We also have what we call "second party," which are apps that we own, and we have the customer data. That is iPhone, Android, iPad, Roku, Fire TV, and Apple TV.
If you look down the bottom there, you'll see that we have quite a lot of ratings from our community that are public. On the App Store, 128,000 ratings, 4.8 out of 5. On Amazon, nearly 15,000 ratings, 4.1, and Trustpilot, 4.3, 10,000 ratings. An enormous amount of social proof. Up the top right here, you'll see some logos, and this refers to our third-party distribution. This is where we have distribution partnerships on a revenue share model with YouTube, Amazon Prime, Xfinity and Chrome cast. With Amazon, we're one of the fastest growing channels in their specialty channel sort of category in the U.S. We also have Amazon Prime distribution in Mexico, the U.K., Australia, and New Zealand. These are just here are some sort of growth levers in the business on the core business side that are recently launched or upcoming.
At the end of last year, we launched Gaia Marketplace, which is essentially like a conscious Costco for our members. So where members get a 10% discount off retreats, courses, and physical products. This business is early in its inception, but we have very high hopes for it in terms of maximizing the ARPU of our member base. And if you think about our member base, they're very educated, high disposable income, and we've only ever asked them for roughly $119 a year with our core membership. Now, we've just had a sold-out retreat experience in Peru, which was circa $9,000, and we're doubling the capacity on that tour in the fall, and it's already over half sold out. To take someone from $119 to $9,000 proves the opportunity in our member base. And with this marketplace initiative, we're not booking any of the gross sales.
We're booking the margin that we keep on that. For instance, a $10,000 tour, members get a 10% discount. Say it's $11,000, then we charge them $10,000, and then we keep all of that cash until we pay the vendor, and then we net about $2,000 on average from that sale, which we book as a 100% gross margin, which is why you've seen a little bit of a step up in our margin in 2024 and sort of as analysts have us for 2025. We had the price increase, as I mentioned, slated for March 2026 alongside the rollout of some product feature expansion. We did a capital raise recently where we're applying this capital to building our own conscious AI generative chat model within the product and also a Gaia community platform.
This is essentially the final differentiator for us from most streamers. If you're walking down the street, you don't say to somebody, "Oh, wow, you're a Netflix subscriber as well," but our Gaia members do say that about each other. Ned has a Gaia backpack, and he often gets spotted on the trains at Denver Airport and so forth. It is a very active community, and people feel a much stronger affinity with the brand than they would other streamers. One other thing I'd add here at this point is we have a private subsidiary that we own 70% of, which recently launched at a biohacking conference called Igniton. This is a quantum healing technology supplement play that Jirka is really focused on. Jirka is the Founder and chairman, has done six IPOs. One of his first businesses went north of $4 billion.
The next became Whole Foods as Wild Oats rolled up there. A sola company, Gaiam, Gaia, and now this new subsidiary. We have raised some capital in that entity. It is its own private entity. It has its own capital, and it is going to market officially in Q3. A lot of our investor base, if you look at our cap table, a lot of the comments we get from particularly investment banks is that we have a cap table that precedes our market cap. I think many of the investors are also seeing this private subsidiary as an unvalued call option in the business. I will pass over to Ned now to speak about some of the finances.
Yeah, just a couple of slides, and we will make sure we leave at least 10 minutes at the end to answer some questions.
Just to look back at our 2024 performance, as James mentioned earlier, we did top $90 million, which is over 11% year-on-year growth. Our gross profit was at just under $79 million or 86% gross profit margin. Our cash contribution margin is 93%. For those of you that have heard James and I speak in the past, we very much look at those margins, the fact that we have a growing recurring revenue base and deferred revenue. We really do want to angle ourselves as almost like a conscious or spiritual SaaS company, lifestyle SaaS company, because we feel as though we will not only stay at these levels, but some of these percentages will improve. If you just look down the P&L, our adjusted EBITDA was over $15 million or 17% EBITDA margin.
Our free cash flow last year was just under $3 million or 3%. Good lead into kind of our benchmarking outlook on what we believe our business model looks like at $100-$200 million in revenue. That left-hand column will be approximately where we would be this year. That's $100 million on average across the year, and we'll top $100 million for a total year in 2025. As you can see, we retain those very nice cash contribution margin at 93%. Our gross margin will actually increase to 87% at that stage. We're letting $5.5 million or 6% drop to the bottom line from a free cash flow standpoint. The leverage that James speaks of really takes off in the years or revenue levels beyond that.
Because as you can see, at $150 million and $200 million, you have our free cash flow more than tripling as a percentage and from a pure dollar standpoint, a lot of acceleration in that regard. Lastly, just to take a peek at our balance sheet, and this is through Q1, we finished the quarter at just over $13 million in cash and equivalents. That was up from $5 million or $6 million at the end of last year due to the raise. We are putting that money to work at this point in time, but we do foresee that our cash and cash equivalents will stay up and over that $11 million-$12 million level here in the short term.
This does not include the access that we have to a $10 million line of credit, which we have not had to lean in on over the last couple of years that we've been here at the end of any quarter. Total assets, that's increasing with that cash balance to just under $150 million. I mentioned earlier our deferred revenue in the time that we've been here, that's more than doubled. It's up over $21 million at this point in time. We do have our accounts payable and payments under and a very good best practices type of form. Overall, our total liabilities and assets at just under $150 million. As I said, one thing that's not on our balance sheet that we like to point out to investors is the fact that we do have a media library that's valued at over $182 million.
A member base, if you were just to take conservative numbers of our 867,000 members, that would be over $300 million. Our net operating loss, we have some NOLs at just under $19 million. We just kind of put that out there as kind of a little bit of a drastic if we were ever to kind of go and sell off our company, which we have no anticipation of doing, just on paper, our company would be worth over $20 per share. Even if we were to kind of sell that off, it would be in the mid-teens. Just a way to look at the strength of our balance sheet and overall business. With that, Jim, I'm going to ask you to come back on here, and we'd be happy to field some questions.
Perfect. All right. Great.
The first one, you talked about growing revenue up to $150 million-$200 million over the next few several years, but what's the strategy? Is it to add more subscribers or to increase the average revenue per subscriber?
I think it's a combination of both, Jim, and I would see it in this way. First of all, we tend to lag the streaming industry in terms of price increase and our current pricing. We're $13.99 a month currently. If you look at Netflix and other streamers, they're north of $16 or more. We feel there's still headroom for us to increase prices on our membership tier, which we anticipate doing in March next year, which will bring some growth.
We have growth in our core member base and these alternate revenue streams that I spoke to, which was around Marketplace and also the Igniton subsidiary and so forth. These give us an opportunity to derive revenue growth from not only subscribers, but also price increase and alternate revenue streams.
James, can you talk about your new role with the company? I know there's management transition occurring, and Kiersten will assume the role of CEO, I assume, if she hasn't already over the next couple of weeks. Are you going to be focused on that, increasing the average revenue per subscriber? Where do you look to do that?
Jim, essentially, following some exciting discussions at our last board meeting, we're keeping the same three core executives, myself, Ned, and Kiersten, and we're shuffling our roles to sort of best suit the opportunities that we see are at hand for the business. Three key opportunities we see that can create a breakout event in the stock, of which I'm the second largest internal shareholder, are around the new subsidiary, Igniton, which we own 70% of. This recently launched at the biohacking event at a biohacking conference in Austin. After the presentation, we sold out of stock within about five hours. This is a very strong signal that this could be a high-growth private subsidiary in the business. I'm going to be supporting that business in terms of its go-to-market potential capital raises.
Just to put a double-click on that, that will have no dilutive effect on Gaia. It is its own private subsidiary. Also, license deals for that Igniton subsidiary. This is a quantum technology for healing. We can enhance other products or pharmaceuticals or so forth to provide additional revenue streams to ramp up the revenue rate of that business faster than just the direct supplement sales. You said that is a huge growth accelerant to the business. The third thing is licensing our media library to AI and other sort of distributors where we are able to generate more returns on this asset that we have been building since 2014, and we have been very guarded about, and we are beginning the process of licensing that to the market, in particular for training data for these AI companies.
Over the past two years in my role as COO and CEO, I've had a lot of investors say, "What's going to cause a breakout of the stock?" We were trading at a multiple that was vastly different pre-COVID. Now here we sit in 2025, and the business has never been in better shape. We're generating cash. We're growing. There's an exciting opportunity for us to create a breakout in the stock as we sort of lean into some of these initiatives. That's what I'm going to be focused on.
Jim, if I may just elaborate on our new CEO, Kiersten Medvedich. She's not so new. She's been here for over nine years with the company as our president and leader of our content and has had over half the company reporting into her.
We look forward to having her on virtual meetings like this, and she'll be hitting the roads with us to investor conferences here this fall. There is a lot of excitement around there. She and I can kind of hold down the fort and get James out here and working on these upside revenue opportunities to kind of bring us to that tipping point as a company as a whole.
It sounds like that initial launch of the Igniton supplements went fairly well down in Texas. Have you disclosed pricing for their product, and will it be accretive to operating margins?
Look, investors can go to igniton.com currently. It's an early version of the site. The purpose of releasing the product at this conference was sort of our coming out party. We're officially going to be "launching" this publicly in July.
Let's just say we were expecting X, and it was X times two to three that happened at the conference. We had huge lines of people there. We had two investors that were in attendance that are major shareholders of the business. Plus, we had an analyst there from another investment bank, Roth, that have written up on this. It was so impressive to them. We want to just chop wood, carry wood with that business, just continue to execute on bringing it to market. It is a great first signal that it could be something that is very accretive in value to the business. We see it as, like I mentioned earlier, an unvalued call option in the business. We are getting no value recognition for this private subsidiary so far. We are very excited to scale it out.
It's not the first time that Jirka, our Founder and Chairman, has done this before. He's done this with two or three other companies that he eventually took public. If you speak to him about it, he anticipates building and then selling this business within a two- to three-year timeframe, and that's the current focus.
Do you have capacity to meet the current demand levels? Do you have to ramp up? Do you need investing CapEx, or do you think what you have in place now will suffice?
We have the capacity to produce stock consummate to about $100 million in revenue with our current lab and our current staffing here. We're very ready for upside in that business, and it's not difficult for us to expand capacity with minimal investments in CapEx.
Can you talk about your investments in AI?
The easy one is using AI to translate into other languages. What are the other uses of AI to retain subscribers and to grow the subscriber base?
As you mentioned, of course, AI is helping us reduce our translation costs significantly on our current language stack, which is Spanish, French, and German. We do anticipate at some point in the future adding multiple other languages. For right now, we're using AI to vastly reduce the cost of translation, subbing, and dubbing. Additionally, we have seen that there's this large-scale sort of ramp-up of monthly active users on OpenAI and Gemini. Essentially, what we're building ourselves is a conscious generative AI chat experience that we'll be launching within our product, specifically trained on our own data.
Our members, as they're watching content, will be able to query this model, this retrieval augmentation generation model, and ask questions about the content, about the purpose of their life, about healing, about transformation, topics that are very close to our members' heart. We believe our thesis is that if we're able to keep our members and engage them on platform longer, we'll be able to generate higher retention rates moving forward. We've seen already Q1 2024- Q1 2025 improvements in retention on top of a price increase. We think that this AI initiative will be able to drive further retention and help us grow our member base and recurring revenue.
Can you update us on the launch of the Marketplace initiatives?
I know you had to transition some of your Egyptian trips because of the geopolitical situations there to Peru. How's that doing? And in general, how's the Marketplace initiative been ramping?
Sure. So with Marketplace, we see it as an opportunity for us to expand our pool on our member base with these high-value use of tours, courses, and training programs. When we launched, we had a lot of interest early on with some tours in Egypt, which correlates with one of our series, Ancient Civilizations. Based on that signal, we had extra inventory in Q1 of this year for Egypt. At the very end of last year, the U.S. government issued a travel warning to Egypt. Obviously, there's a little bit of instability there. And so less people traveled.
That caused us to be a little softer on that revenue prediction for that business unit that we anticipated. Like I mentioned, we've pivoted to sort of more Peru travel, and we're seeing a great result there. I think a lot of the inventory or sort of demand has shifted to sort of continental U.S. and South America. That business is something that we see as an opportunity for us to sort of go to our members and offer them the next step on their journey without them, again, having to go off platform. We can sort of own the "conscious lifecycle" of the consumer that comes into Gaia. They can watch content and then do tours, training programs, courses, physical products that are in the space.
Plus, also, it's an opportunity for us to sort of precede the Igniton launch, which we'll be launching to our community in July. That's a great opportunity for us to sort of kickstart that business as well.
The last one, when you would, and the board, when you look at the business, what are you looking at to see if your plans are actually starting to take hold? Are you looking at the revenue growth, the margin expansion, the cash flow? Is it a combination of all? Which ones really should investors be looking at?
Yeah, I'll take that. I think when James and I arrived here just two years ago, almost exactly, that internally and externally, people were focused just so much on our member base, which is important, obviously. I think what we look at now are more the revenue, the ARPU.
Back to my thoughts around being considered a SaaS company, it's going to be things like retention of our customer base and then really just managing our portfolio of our capital spend. I think historically, we've been having to spend over 40% of our revenue on marketing. I think what James and Kiersten and myself and the board are really looking at is ways to go fish in the right ponds to find our Gaia members using technology such as AI to find the right customers, retain them, and maybe spend a little bit less on marketing, a little bit more in other areas, or let it drop to the bottom line. We really are, I think, with Kirsten coming on board, going to be looking at adjusting our content a little bit and potentially opening up our market.
We feel as though maybe consciousness and spirituality is not completely mainstream, but it is becoming more mainstream. I think we have the opportunity to go downstream and start getting a younger member base. It is all of those things, Jim. We have definitely shifted in the last couple of years to more of a pure revenue. We want to get to higher valuation and multiples for our share price for our shareholders.
It sounds like you are also focused on reducing the cost to acquire new subscribers,
or at a minimum, be more smart about it. Yeah. I do not think it is going to be a massive drop from like 42- 32. I think through using AI and bots and things like that, we can continue to grow our member base, as I said, using different levers that maybe were not available to us before.
Okay.
Great. All right. We are out of time. I want to thank you for presenting today and taking the meetings yesterday and today. I know we've kept you busy. Appreciate your time. I guess we'll be talking in about a month or so as the quarter is just about to end.
That's right. Thanks, Jim.
Thank you, Jim.
Thank you.
Bye.