Gaiam Inc. (NASDAQ:GAIA) Q2 2020 Earnings Conference Call - Final Transcript

Aug 03, 2020 • 04:30 pm ET

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Gaiam Inc. (NASDAQ:GAIA) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Gaia, Inc.'s financial results for the second quarter ended June 30, 2020. Joining us today are Gaia's CEO, Jirka Rysavy and CFO, Paul Tarell. [Operator Instructions]

Before we get started, however, I would like to take a minute to read the safe harbor language. The following constitutes the safe harbor statement under the Private Securities Litigation Reform Act of 1995. The matters discussed today include 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 detailed 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.

With that, I would now like to turn the call over to Gaia's CEO, Jirka Rysavy.

Executive
Jirka Rysavy

Thank you, Kathy, and good afternoon, everyone. So our revenue for second quarter increased 23% to $16.2 million. We ended the quarter with 663,000 members, which is 59,000 above the first quarter. Our gross margin increased to 87.1% from 86.4% in the year ago quarter. We also achieved 39% improvement in our gross profit per employee to $436,000 from $314,000 a year ago.

During the quarter, we generated a gain, not only the $1.9 million positive adjusted EBITDA, an improvement of $3.5 million, but also $1.9 million in cash flow from operation, which was $4.4 million improvement. Cash used in the quarter was $1.6 million, which was an operational improvement of $6.9 million, and we ended the quarter with $8.5 million in cash.

We did achieve positive earnings for month of June, which is months earlier than planned, and we fully expect to reach our key milestone of positive earnings and free cash flow in July as planned and communicated 18 months ago.

With that, I will get Paul to talk to you more about the quarter results. Paul?

Executive
Paul Tarell

Revenues in the second quarter increased 23% to $16.2 million compared to the year ago quarter. Gross profit in the second quarter increased 24% to $14.1 million from $11.4 million in the year ago quarter with an improvement in gross margins to 87.1% compared to 86.4% in the year ago quarter and also up from 86.9% in the first quarter of 2020.

We ended the quarter with 663,400 members and we have continued to see increased interest in our unique and exclusive content library, which is evidenced by our Alexa global site rankings improving 37% from 8,375 in April of 2020 to 5,317 in July of 2020.

Selling and operating expenses, excluding marketing and member acquisition costs in the second quarter, were $6 million or 37% of revenues, which is down from $6.7 million or 51% of revenues in the year ago quarter. Our focus on continued operating efficiency and expense rationalization over the last 18