Good afternoon. Welcome to the Sidoti & Company June Investor Conference. The next company to present is Gaia, Inc. With us, we have the CFO, Ned Preston. As always, this is a 30-minute presentation. There should be some time at the end for Q&A, so if you do have a question, you can type it into the Q&A icon on the bottom of your screen. With that out of the way, Ned, it's all yours.
All right, great. Thank you, Jim. Good afternoon, everybody. My name's Ned Preston. I'm the CFO for Gaia here in Boulder, Colorado. Nice sunny day here, not a cloud in the sky, and I think it's about 100 degrees. No, it's literally 95 degrees, but I can't complain. It's a dry heat. Gaia, for those of you that aren't aware of us, I'm going to take the first couple three slides to talk a little bit about what we do, who we are, and then we'll get into some business aspects. At a high level, Gaia, our mission is creating transformational network to empower a global conscious community. Getting into slides here. We have a very seasoned, experienced management team. As I said, I'm the Chief Financial Officer. I've been here just at three years.
I grew up in Boulder, but as you can see from all of my experiences, I've spent time in the Bay Area with companies like Oracle and Cisco, some time in Chicago, and most recently out in Boston with companies like Akamai, PTC, and Motional. Our founder is much more interesting than I am. Jirka Rysavy, our Chairman, started this company over 25 years ago. Gaia's actually been on the NASDAQ for 25 plus years. He actually, in the '90s, created a company called Corporate Express, which he sold in the late 1990s to Staples Plus, a very successful office products company. He also started Wild Oats and was on the board of Whole Foods. Real Goods Solar company is something that he incubated within Gaia back in 2006 through 2012 timeframe, which he was then able to sell and bring that money back into Gaia.
It's a key point just because we're doing something similar with a subsidiary that I'll touch on in just a minute here. Our CEO, Kiersten Medvedich, she's from the Northeast New York area. She worked for a number of years at Sony Pictures but has also been here at Gaia for almost 10 years. Yonathan Nuta is our Chief Operating Officer, was actually with Gaia back when we first went to streaming around 2016 and has recently come back to be our Chief Operating Officer after some very successful runs of establishing Babylon and Fabric and selling those companies out in Silicon Valley. A little background on what our business model is all about. We're an SVOD or streaming company. It's actually interesting, there's a streaming conference going on right now, today and tomorrow, here in the Denver area.
Several of our leaders are at that streaming conference. Think of us almost like a Netflix or Disney+ but for more consciousness and a little niche market. As you can see on the slide here, we do have a monthly fee of $15.99. We just increased that $2 back on March 1st. We have an annual offering at $139.99. That was actually a $20 increase at the same time. We have a Gaia+ premium live broadcasts for $299 per year. We have six events here in a very large event center that we have. We had over 300 people here over this past weekend listening to some of our talent present around channeling, which is actually quite timely. Channeling and unexplained mysteries, UFOs, very hot right now with Spielberg's movie "Disclosure" coming out.
Had a lot of people here in person and watching it live broadcast. The main categories of our content are personal growth and transformation, ancient wisdom, and unexplained mysteries. We have a lot of people come in, much more than people think, around the UFOs, things about ancient civilizations. Very hot topics right now with a lot of members joining us to watch those shows. Really our start of Gaia was yoga, meditation, and overall wellness. Gaia actually means Mother Earth in ancient Greece. When Jirka started the company back in 1999, it was more of a yoga meditation. A lot of people that do yoga probably have a Gaiam yoga mat somewhere sitting in their basement. When I started here three years ago, I think a lot of people thought that's what we still did. We're yoga mats.
We sold that business to Sequential Brands back in 2016. You can still find a Gaiam yoga mat at a Target near you. Our core demographic is two-thirds female, 65% female, kind of in the 45 - 65 category, although we are going downstream. I'll comment on that a bit more, but we're becoming a little more mainstream in areas and with some of our technology around AI. I see our market opening up to younger people and more men. As you see, kind of a more highly educated and middle to high household income. Some finance highlights, kind of converting away from high level. A big reason why I came here three years ago is I look at Gaia almost like a conscious SaaS company.
With over 900,000 members, very high margins as you see, 86% gross margins and 94% cash contribution margin. We've had a positive free cash flow for the last nine quarters. A growing recurring revenue stream, and an accelerating CAC to LTV growth efficiency. Our long-term value and what we pay to acquire our customers is an area of improvement that we're really concentrating on here in 2026, and I'll comment more on that. Addressable market. We believe at the bottom there that while we're closing in on a million members, we feel as though our market is five times that. We really are trying to get out there and do more branding and connecting to things like "Disclosure" movie from Spielberg, to ensure people know what we're all about.
I've spent time, as I said earlier, on both coasts and in the Midwest, and a lot of people still don't know what Gaia is. We're really trying to get the word out there, to make sure that we're hitting people's radar screens much more so through a number of efforts, through partners like Roku, which obviously big news this week with Roku being sold to Fox, Apple, Amazon. We're doing a lot of advertising on platforms such as Meta, Facebook, also with Rumble, TikTok, and YouTube. Here's a look at a members growth curve. Over the last three years that I've been here, actually 2023, we're actually also around $81 million-$82 million. It's been real nice. We've been growing about $9 million-$10 million a year, mid to teens growth, from 2023 to 2024 to 2025.
Just knocking on the door of $100 million last year. Our members, also as I said earlier, getting close to a million. We finished last year at just over 900,000 members, and that has been growing. As I mentioned earlier, it's not all about the members. We have been doing some price increases over the last two years. We've done two price increases. Not only because we could, I'm sure all of you that have Netflix or Disney+ or Paramount accounts have seen those prices go even higher, but really because we're providing a better quality product to our customers. More content, more relevant content, AI, community, and e-commerce. Some items I'll get into later.
From an ARPU standpoint, that's a big reason why we're jumping from low $100-$114 at the end of last year, and that will climb again here in 2026 with our recent price increase. It's also not just our price increase, it is that we have some other products that are going to be at a higher price point. We are transitioning away a little bit of our business from a third-party perspective, where we revenue share with people like Amazon, to more of a direct member, where we're getting 100% business on that. Our ARPU will be north of $120 here by the end of the year. Our gross profit per employee, extremely productive and efficient business model.
I'll show you a scale model a little bit later, where we, in the last two to three years, have gone from $600 gross profit, not revenue, but gross profit per employee, to over $800 gross profit per employee. Imagine, if you will, a $100 million revenue company with high margins, and we only have about 110 employees here, all here in Boulder, Colorado. Kind of the secret sauce, if you will. We have a beautiful campus just over seeing Boulder Valley and the Flatirons. It's on 14 acres, and 150,000 sq ft building with studios. We do our production in-house, the majority of it, and that is very efficient. First of all, a lot cheaper. As you can see at the bottom there, our gross profit to content multiple is very high. It goes back to our focus on margins and highly scalable business.
A lot of our content is also something that doesn't age. We try to come out with stuff that's timely around when a movie comes out around UFOs. A lot of our content was created back in the mid-2000 teens. Over that timeframe, $2 million of content produced has returned over $27 million in gross profit. Means that a lot of our members come in here, and they can watch content from 10 years ago, and it's still relevant. A lot of that's because people are catching up to a lot of this information as we become more mainstream. Just the way the quality of our content and the topics lend itself to that dynamic. From an international standpoint, because we have international rights of 98% of our library, we have it in Spanish, German, and French, so very big in places like Canada and France.
Germany and the German-speaking countries are very great customers of ours. Spanish, of course, not only in Spain, but Mexico and Central Latin America. That's gotten easier and cheaper to translate and dub into these languages with AI. There's these companies like ElevenLabs and Twelve Labs that have made that faster, better, and cheaper. One language that we're interested in getting into soon would be Portuguese. Not necessarily because of Portugal, but huge market down in Brazil, with what we think would be people that would be very interested in our content. Currently our members are 40% international, and we think it'll take three years for that to get to 50%, but it's not from lack of interest.
We're growing internationally, but it's really because our English-speaking countries, or just here in the U.S., we feel as though we have so much room to grow here as we become more of a recognizable brand and people know what we have to offer. It's a nice growth opportunity internationally, but we also have the opportunity here in the U.S., or else this would happen even faster. We're nowhere even close to being maxed out. We have members in over 185 countries already. That actually has built up very quickly. Back to some comments around our partners and our distribution channels. I mentioned earlier our third party, our major third-party partner is Amazon. As you can see in the middle there, we have a very high rating on the Amazon Appstore, 4.1 out of five.
We have a close partnership with Amazon. We have over 20% of our members come through Amazon. We are purposefully pivoting and taking some of that marketing dollars from Amazon and trying to plug it over to partners like Apple and Roku, because they are, we consider, our direct customers. When they go through Amazon, they're Amazon's customers, and we don't have their email or personal information to advertise to them, to get them involved in our community and allow them to interact with our artificial intelligence. If they go through Apple or Roku or directly into Gaia, it's, first of all, more profitable. They have a longer-term value. There's less churn. Most importantly, they're our customers. We can communicate with them. We can give them promotions and hear from them around what content that they want to watch. Again, great relationships overall.
We're not going to get out of third-party Amazon altogether. We're just going to focus a bit more on our direct business. Here's some future areas for growth, and growth not only from new customers, but retaining our existing customers. Like I mentioned before, I came in here mostly from a tech background, so I was really thinking of it more as like a SaaS model. I was really saying it's a lot cheaper to retain your customers rather than purchasing new ones. Really what we think with our AI expansion, back in November of last year, we launched an AI agent on our gaia.com site.
Not only could members go in there, it's kind of like all of us that are on Netflix or Apple and say, "Well, if you liked this show, then you'll probably like this other show that's similar to that." We've had that for a while, and that's kind of table stakes. When I talk about an AI agent, it's almost like a ChatGPT for all the Gaia topics. People can come in and ask our AI agent questions about certain shows they've watched. They could say, "I don't have time to watch a 45-minute show about the pyramids of Giza.
Could you just give me some highlights, and maybe some snippets from content on your site that are two to five minutes long?" It's really interesting because when we launched that back in November, we're getting millions of queries every month from our customer base, that means that's a retention driver. We also think it's helping us find our members. As I said before, here in the U.S., we're convinced a lot of people just don't know what we're about. Well, AI will help us find them, and it'll help them understand that we're much more than just a streaming company with shows. You can come to our site as a destination to gain knowledge about all these topics.
It's actually really caught fire in the first six or seven months that we've launched this AI agent, and we're really looking forward to what it can bring us in the future. I mentioned we did a price increase back on March 1st, the latter part of this year, we're going to launch a Gaia community, which is this digital member hub with events. We already have the live events here in person. Think of this almost like a hub where people of like interests can come and say, "Hey, I've watched this show by this talent on this topic." It allows you virtually to meet with people with similar interests.
They can also say, "Hey, let's go on a trip together to Peru or to Greece or to Egypt." Because we have this interest and then the talent that we have on our content is then leading a lot of these trips. We have an e-commerce site or marketplace that will connect our community and all of our members to do that. Lastly here on the future, this is really something that's already on the truck to sell, is we have Igniton. Igniton is a technology company subsidiary of Gaia that we've been incubating for the last six-plus years. As you can see there, it's currently a quantum wellness supplements. To kind of go to the next page to describe this a bit more, it really is technology placed.
Currently we're using this technology to charge these ignitons, which are these quasi particles from the sun. Last year we launched a cognition and a longevity supplement in late May 2025. When we launched that at a biohacking conference down in Texas, it's really right now, a lot of people back then were into supplements. Now, the name of the game is Peptides. I'll comment on that in just a minute. People started, "No, this is interesting." This is a subsidiary. We went to our member base at Gaia, got them interested in trying these supplements, and it's really sticking. A lot of people are buying it. They come back, they look at the science around it. You can see the third bullet there. We've had tests done by Concordia University up in Montreal. We've been in medical journals.
We have a team, it's all here on site. We have a lab here where we produce and create it, put it into the tablets, we actually have it shipped and boxed in a nearby location. It's really taking hold. This is a business that a year ago didn't exist. It's now north of $3 million a year. It's had a great track record of raising money. There's been two rounds of raising for this private company, Igniton, in April of 2024. It was a post-money valuation of $40 million. We finished a second round close in October of last year at $107 million post-money valuation. It's an area that we still own 67% of Igniton. Down the line, when Igniton is sold or goes public, Gaia shareholders stand to benefit greatly.
We'll take that money into our financials, into our balance sheet as gains. It's a similar play to what I mentioned earlier when Jirka and the company did the solar company back in 2012, sold that company. Very similar results where we get the cash back into the mothership, Gaia. We've launched two new products at the Biohacking Conference just three weeks ago. This Biohacking Conference is in Austin, Texas. We launched in addition to cognition and longevity, we launched an REM sleep supplement in a very similar bottle, taken like vitamins. We also introduced a peptide eye serum. This is more of an ointment that you have in a little vial and rub under your eyes at night. It has been tested, it helps with age spots and wrinkles. That actually got a lot of attention.
I think we sold out of that at the conference. Cognition and longevity is still going very well. Those were very popular, even a year after being released, as well as the sleep. We're getting a lot of people saying that the REM sleep is already making some good progress. I always say if they could come up with a supplement or a peptide that helped me stop snoring, my wife would buy that in bulk. We haven't figured that one out yet. All right. Here's a slide that I've been using for the last two and a half years or so. When I started showing this pro forma revenue benchmark scenario, it used to be at $80 million, $90 million, and $100 million, we adapted it to be this kind of $100 million, $150 million, and $200 million.
The nice thing is, we got there. We got to $99 million, close enough to $100 million in 2025 on the left there. You can see our high gross margins and high contribution margin. We're spending about 44% on marketing expenses to acquire customers. We let almost $5 million drop to the bottom line in free cash flow. I think a lot of people two years ago didn't know if we'd be able to do that, we were able to accomplish it for FY 2025. Three things to take away from this conversation and what I shared at our last earnings call is that for 2026, our plan is to be P&L positive, net income positive for the fourth quarter this year. So for October through December, we will be breakeven from a EPS standpoint.
For full year 2027, we will be net income EPS positive for the full year. The third thing I shared was because a lot of people were asking us, "When will you get to that next major milestone of $150 million?" We see that happening by 2029. About three years out, we would be at that $150 million revenue, still high margins, EBITDA of almost $40 million, $39.3 million, 26% EBITDA margin, almost $22 million of free cash flow. Really, the idea behind this chart is really just to show people how scalable, how our business really doesn't need a lot of fixed costs to keep growing and to become profitable, which we will be doing later this year. Last slide, it wouldn't be a finance person if I didn't present a balance sheet in a presentation like this.
For our Q1 ending, we had a healthy balance sheet, over $13 million in cash. We have a growing deferred revenue balance of over $20 million. What's not on our balance sheet that we always like to point out is that we have a media library that really the estimated value is over $150 million. Our member base, we believe the replacement cost of that member base would be over $300 million. We have NOLs that we've been building up over the years from being not profitable. Actually, very interesting, back to what I was commenting on earlier about Igniton and what we did with Solar company back in 2012, is that when Igniton does sell or go public, Gaia stands to benefit greatly by bringing that money back in into our balance sheet as a gain. Really, that's what it's all about.
Our stock's not where it needs to be currently, but we really want to concentrate on creating shareholder value. We just want to make sure that we get more people interested and knowledgeable about our stock. You'll notice we've had a lot of insider buyers lately. We have board members and executives buying stock. We think this is a great price point because the future looks bright. With that, I'm going to turn it back over to you, Jim, and we can take questions as appropriate.
Great. First question. You mentioned you put in 2 price increases in the last 18 months. How has that impacted the number of subscribers?
Really back when we increased prices in October of 2024, we'd never increased prices for existing customers, and it had been four years since we'd increased prices for new customers. That was more of, it's been a long time, and Netflix's and Disney's and Paramount's of the world, let's get on with this. There was a churn event. We were expecting the churn event to be maybe as much as 8%-10%, and it actually ended up being a little bit lower, about 7%. This time, when we did a price increase on March of 2026, we did it differently.
We proactively went out to our members, it was more of a value, "Hey, since we last increased our pricing, we've added a lot more content, more shows, better technology around AI, the promise of a community." Again, we were expecting there to be a churn event, and probably in that kind of 7%-8%. So far, it's been lower than that. It's been more around 5%-6% churn event. It really tells us that people that come on and are members of ours will stay with us. We're not planning on doing another price increase anytime soon, not probably until early 2028. The two price increases that we've done have gone extremely well from our perspective.
I guess maybe that leads into this next question is, you made the tough decision to get away from Amazon. Why'd you think this was the right time to do that?
It really came down to what I touched on several times around becoming profitable. As I've shared with several of the one-on-one investors I've talked to the last couple of days, we want to be in control of our own destiny. We missed a quarter back in 2025, really because we were overly reliant on Amazon, and they didn't take our marketing dollars and took someone else's dollars and left us short. I think we learned a valuable lesson. We don't want to be over-reliant on them. We want to do it now, this year, before Q4, so that when we become profitable, our member base will be at a higher LTV, stickier, less churn, higher profitability level. As we go into 2027, we have a stronger base of our members as we grow and become profitable to those higher levels.
It's just important to do it now here in the Q1, Q2 timeframe, because longer term, it'll really pay benefits from a profitability standpoint.
You indicated that you think you'll get to that 150 milestone, 150 million milestone in the next three years or so. Does that include acquisitions?
It could. Yeah. Right now, $150, we could get there just based off our core business and everything that we have on the truck. As we generate cash, we could accelerate that with acquisitions, right? The $150, we could get there without it, just based on what we have, but we could get there faster with acquisitions. Great question, Jim.
Okay. You talked about Igniton, and the possibility of spinning that out or an acquisition there. What do you think Igniton has to show before they can attract some outside investors, outside interest?
What's interesting, it's attracting outside investors. When Jirka was just down at the biohacking conference, he always comes back with a new list of people that want to invest in this private company. It's a very hot area right now, as I'm sure a lot of your investors know. It's not from lack of investors wanting to take part in it. I will say that my tone has probably changed, where we were at 72% ownership, now we're at 67% ownership. Really from a Gaia officer standpoint and for our Gaia investors, we're really not getting a lot from that consolidation. I can consolidate Igniton as long as we own over 50% of that.
Our market cap's only $60 million right now, and here we are, a $100-million company generating free cash flow, and we're not really getting anything for our ownership within Igniton. I guess what I'm saying is, we foresee that we will go down as a percent of ownership of Igniton from 67%, possibly to slightly less than 50%, either by raising at a higher valuation here later this summer, and possibly Gaia selling some of its shares to bring some of that cash back in to Gaia. That's exciting for me as an officer for Gaia, for our investors, because I think that's a little faster than what a lot of people were thinking what we would do after just over a year and a half into this. It's really gaining momentum.
Well, if they do come out with that supplement for controlling snoring, I know my wife would be a big customer as well.
Yeah. Mrs. Preston and Mrs. Sidoti, we'll get them into the lab. They'll figure it out.
All right. Great. All right. Well, we are at time. Thank you as always for spending the time with us. I know we kept you busy the past couple of days with meetings. We appreciate that, appreciate you being here to present. It always feels like we're two weeks to the end of a quarter.
That's right. There's never a dull moment around here. I hope you have a great summer, Jim, and all of you out there. Look forward to seeing you down the road.
All right. We'll talk to you at the next call. Thank you.
Bye. Bye now.
All right.