Gaia Inc. reported total revenues rose 69 percent in the third quarter as 73 percent subscriber growth generated 85 percent increase in streaming revenues.
“The third quarter was once again highlighted by stronger than forecasted subscriber growth and lower than expected customer acquisition costs,” said Jirka Rysavy, Gaia’s CEO. “Subscriber growth accelerated from 64 percent in the second quarter to 73 percent in the third, ahead of our 70 percent target, with customer acquisition costs remaining flat, which helped reduce our net loss for another sequential quarter.”
Gaia’s paying subscriber count increased to 311,000 on September 30, 2017, from 180,000 on September 30, 2016. Subscriber growth rate jumped to 73 percent from 46 percent in the third quarter of 2016.
During the quarter, Gaia also expanded its content offering, with the English library growing to over 8,000 titles, grew its subscriber geographic footprint to over 160 countries, launched Gaia in Spanish, including over 500 native language titles, and is launching German in the current quarter. Gaia’s investigative documentary about Nazca in Peru, which was provided for free, has reached over 80 million views.
Third Quarter 2017 Financial Results
Total revenues in the third quarter increased 69 percent to $7.5 million from $4.5 million in the same year-ago quarter. This was due to 85 percent growth in streaming revenues, which was driven by the 73 percent increase in paying subscribers versus September 30, 2016, exceeding the company’s expectation of 70 percent.
Gross profit in the third quarter increased 72 percent to $6.5 million compared to $3.8 million in the year-ago quarter. Gross margin increased 190 basis points to 86.2 percent from 84.3 percent in the third quarter of 2016 due to increased revenues and the related leverage on streaming costs and Gaia media library investments.
Total operating expenses in the third quarter were $12.3 million compared to $8.0 million in the year-ago quarter. The increase was due to the planned increase in marketing expenses associated with the announced acceleration of subscriber growth throughout 2017. Customer acquisition costs as a percentage of revenue declined to 80 percent in the third quarter of 2017 from 91 percent and 109 percent in the second and first quarters of 2017, respectively.
Net loss in the third quarter was $5.2 million or $0.34 per share, compared to net income of $100.4 million or $6.64 per share in the year-ago quarter, which reflected the $114.5 million gain on the sale of the Gaiam branded business and the repurchase of approximately 40 percent of its outstanding common stock in July 2016.
As of September 30, 2017, Gaia had $30.1 million in cash, unencumbered ownership of its 12-acre, 150,000 square foot campus and no debt.